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, 1996.
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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
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(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
- ------------------------------------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (513)786-8350
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 .
---- ----
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 not 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-
affiliates.
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:
4,865,559 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The 1996 Annual Report to the shareholders of the Company for the
fiscal year ended April 30, 1996, 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, a Cincinnati-based company has two business
units: Electronic Document Management Systems (EDMS) and
Customer Support (component and systems maintenance).
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' EDMS business unit provides software and
professional services to assist its customers in the design,
configuration, installation and maintenance of electronic
document systems. The Customer Support business unit is
comprised of hardware and software service which is provided to
the Company's installed base of customers and third-party
maintenance customers. It also provides media and parts on a
worldwide basis to the Company's installed customer base.
EDMS BUSINESS UNIT
- --------------------
ACCESS Corporation is dedicated to enhancing the quality
of its customers' products by providing software and professional
services for their document based processes. 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,
document and workflow management. ACCESS provides document and
workflow management in three distinct markets: Discrete
Manufacturing, Oil & Gas, and Utilities. ACCESS provides both
software and professional services to configure, install and
maintain electronic document management solutions. ACCESS'
extensive history in sales and service of document based
retrieval technology has allowed the Company to build an
expertise in applying current state of the art technologies to
customers' document management products.
The EDMS Business Unit experienced significant growth in
fiscal 1996, in terms of both revenues and staffing. In the
first quarter of fiscal 1996, ACCESS acquired CimSoft, Inc., a
systems integrator servicing a wide base of EDMS customers within
the United States. At the same time, ACCESS also formalized a
strategic alliance with Cimage Enterprise Systems Ltd., making
ACCESS the exclusive distribution and support provider for Cimage
products within North America. These two business ventures
positioned ACCESS for rapid growth through three changes: an
increased customer base, an additional leading edge software
offering, and additional personnel skilled in the sale and
support of EDMS applications. In addition to this new role as a
software reseller, ACCESS continues to maintain and develop
Document Management Software and still provides the industry's
only large format EDMS available on the IBM AS/400 computer.
Throughout fiscal 1996, ACCESS increased staff within
the EDMS Business Unit to meet the growing demand for software
products and professional support services. Through the
continued recruitment of EDMS experienced personnel, ACCESS was
able to minimize the training time and costs associated with
expanding our EDMS business. As a result of the business
ventures previously mentioned, this business unit enjoyed a 198%
growth in revenues during fiscal 1996, compared with fiscal 1995.
Equally important, ACCESS was able to meet its originally stated
goal of sustaining a consistent increased profit throughout this
growth period.
ACCESS' EDMS software offerings fall into two product
areas: EDICS (Engineering Document Image Control System) and the
Cimage Document Manager System. EDICS is primarily focused at
providing Document Life Cycle Management on the IBM AS/400
platform, while the Cimage Document Management is focused on
Document Distribution applications using UNIX and Microsoft
Windows NT servers.
Both products utilize a powerful database application
for managing documents and related information, including paper-
based documents, A through J-size drawings, Computer Aided Design
(CAD) data, company procedures and office correspondence. These
documents come from multiple sources in multiple formats. The
EDMS applications integrate all of them into a single system
which fully automates the revision and distribution processes,
and also provides flexible tools for viewing, editing, and
printing.
ACCESS also provides high added professional services to
its customers. ACCESS' industry specialization allows it to
apply its document system expertise to its customer business
problem in Document Management Applications. While the various
software modules are the same at each customer, each
implementation is unique through the "tailoring" of the document
organizational structure, document-to-document relationships, and
user interface presentation. Through ACCESS' understanding of
Document Management requirements, customers have been able to
achieve industry compliance with regulatory agencies, become ISO
9000 certified, and achieve system implementations in extremely
short time periods. ACCESS increased fiscal 1996 professional
services revenue by 6% as compared to fiscal 1995. This increase
is primarily due to the delivery of professional services to our
customers utilizing the Cimage product.
CUSTOMER SUPPORT BUSINESS
- -------------------------
ACCESS' Customer Support business unit provides quality
hardware and software service on a nationwide basis to both the
Company's installed base of EDMS customers and third-party
maintenance customers. The Software Support revenue from our
EDMS customers grew by 42% in fiscal 1996 over fiscal 1995. This
growth is attributed to the Company bringing Cimage customers
under maintenance contracts.
Third-party maintenance includes the support of non-
ACCESS electronic and electromechanical equipment such as card
embossers, microfiche duplicators, microfilm scanners, large
drawing format scanners, large format plotters, highly
sophisticated 5-1/4" and 12" laser drives, and optical jukebox
systems. ACCESS has a number of hardware manufacturers and
vendors, Support Partners that recommend ACCESS as their
nationwide service provider. The Company's third-party
maintenance revenue increased by 41% in fiscal 1996 over fiscal
1995.
Growth in third-party maintenance is an ACCESS strategic
objective. ACCESS continues to pursue additional third-party
service opportunities with manufacturers and distributors of
electronic and electromechanical products. ACCESS' key to
success in third-party maintenance is the ability to provide its
Support Partners with all of the benefits of having their own
national service company without having to build and support the
infrastructure of a nationwide service organization. ACCESS
offers its business partners a 24 hour-a-day, toll-free dispatch
center; rapid on-site service response, quality repairs and
preventive maintenance for their customers.
MARKETING
- ---------
The Company markets its products for the most part
directly in the United States. Marketing operations are
conducted primarily from the Company's headquarters in
Cincinnati, Ohio. The Company employs ten sales and marketing
personnel.
Electrical Document Management Systems (EDMS), as well
as related computer systems, are produced and configured only in
response to firm orders. At the end of fiscal years 1996 and
1995, EDMS backlog totaled approximately $600,100 and $1,053,900,
respectively. The EDMS backlog at the end of 1996 fiscal year is
expected to be delivered within the 1997 fiscal year.
EDMS 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.
Aggregate sales to international customers represented 1%
of the Company's annual sales in fiscal 1996. In fiscal year
1996, no domestic distributors were employed.
ACCESS' primary marketing focus is the sale of the
Electronic 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.
No single customer accounts for a significant percentage
of the Company's revenues on a continuing basis. Net sales to
the utilities industry were 33.8% of fiscal 1996 revenues and
4.6% of fiscal 1995 revenues; net sales to the various agencies
of the federal government represented 10.9% of fiscal 1996
revenues and 18% of fiscal 1995 revenues, (these contracts could
have been canceled at the election of the government); net sales
to the manufacturing industry were 1.5% of fiscal 1996 revenues
and 12.4% of fiscal 1995 revenues; and net sales to the aerospace
industry were 14.9% of fiscal 1996 revenues and 18.8% of fiscal
1995 revenues. See Note 7 of Notes to Financial Statements
included on page __ of the 1996 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
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Increases in Electronic Document Management Systems
(EDMS) competition continue to push system prices down to
historically unprecedented low levels. The highly publicized
changes within IBM have inhibited the growth of the Company's
relationship with that organization. IBM discontinued many
partner programs which previously helped in marketing the
Company's product.
PURCHASING AND PRODUCTION
- --------------------------
The majority of the EDMS software is supplied by Cimage.
The EDMS 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 EDMS hardware and software.
PATENTS
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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.
PRODUCT DEVELOPMENT
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Development to enhance the current technical document
management and distributions systems is in process. In its
development operations, the Company currently employs
approximately 11 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 1996 and fiscal year 1995, the Company spent $922,036 and
$1,018,486, respectively, on these activities. See Note 5 of
Notes to Financial Statements included on page 18 of the 1996
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.
EMPLOYEE RELATIONS
- -------------------
The Company employs approximately 54 persons, all on a
full-time basis and all of whom are non-union. Approximately ten
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 also operates a sales office in Irvine,
California. The Irvine property is occupied under a lease which
extends through July 2, 1998. The annual rent under this lease
is $44,956.
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 EDMS 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 EDMS 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 21 of the 1996 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 6. SELECTED FINANCIAL DATA
Information with respect to selected financial data of
the Company is set forth on page 7 of the 1996 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 8
through 10 of the 1996 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 12 through 15 of the 1996 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 62. 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 60. 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.
ROBERT J. KALTHOFF, age 70. 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 64. 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 47. 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 68. 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.
JAMES H. HARDIE, age 66. 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-van der Grinten,
N.V. and certain of its subsidiaries since 1967. Mr. Hardie is
also a director of Kiene Diesel Accessories, Inc., Respironics,
Inc., and several U.S. subsidiaries of Oce. 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.
Name Age Position & Business Experience
------ ---- --------------------------------
Scott D. Watkins 47 President and Chief Operating
Officer since April 1989, and
Chief Executive Officer since
May 1989.
Newton D. Baker 62 Executive Vice President of the
Company since October 1986;
Treasurer and Assistant Secre
tary of the Company since prior
to 1982.
Kim Bollinger 38 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.
Marc D. Baines 36 Vice President of Sales for the Company
since August 1995; Vice President,
CimSoft Inc. June 1995 to August 1995;
Sales Director, Cimage Corporation
March 1990 to May 1995.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years
ended April 30, 1996, 1995 and 1994, 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 $100,000 in all capacities in which they served.
<PAGE>
<TABLE>
I. SUMMARY COMPENSATION TABLE
<CAPTION> Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Underlying All
Compen- Stock Options/ LTIP Other
Fiscal Salary(1) Bonus(1) sation Award SARS Payouts Compen.
Name and Principal Year ($) ($) ($) ($) (#)(3) ($) ($)(4)
Position
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scott D. Watkins 1996 155,000.04 50,000.00 - - 200,000.00 - 7,103.88
President and 1995 155,000.04 32,000.00 - - - - 6,717.50
Chief Executive 1994 113,916.56 10,000.00 - - 100,000.00 - 6,901.10
Officer
Newton D. Baker 1996 115,009.09 25,000.00 - - 100,000.00 - 4,965.25
Exec. Vice President 1995 115,009.09 18,000.00 - - - - 4,000.00
Treasurer 1994 115,249.62 3,333.28 - - 75,000.00 - 4,540.00
& Asst. Secretary
Kimberly A. Bollinger 1996 82,500.05 28,000.00 - - - - -
Vice President 1995 77,500.00 12,500.00 - - - - -
Customer Services 1994 73,878.38 3,124.90 - - - - -
Marc D. Baines 1996 68,726.68 - 71,818.07(5) - 50,000.00 - -
Vice President 1995 - - - - - - -
Sales 1994 - - - - - - -
<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 1996, 1995 or
1994 which exceeded the lesser of $50,000 or 10% of the
total annual salary and bonus reported for such named
Executive Officer.
(3) These numbers represent options for shares of Common Stock
awarded pursuant to the Company's stock option plans. See the
next table titled, "Option/SAR Exercises and Year-End Value
Table" for more detailed information on such options.
(4) Represents life insurance compensation.
(5) Represents commissions.
</TABLE>
<PAGE>
(a) Cash Compensation of Executive Officers
----------------------------------------
Compensation Committee Interlocks and Insider Participation.
------------------------------------------------------------
The Board has established an Executive Compensation Committee which
considers and makes recommendations to the Board of Directors concerning
the compensation of the executives of the Company. During the fiscal year
ended April 30, 1996, this committee met six times and consisted of
Messrs. Friel, Hardie and Sullivan.
Neither Mr. Hardie nor Mr. Sullivan was an officer or employee
of the Company or any of its subsidiaries in fiscal 1996 or any prior year.
As noted above, Mr. Friel, who is not an employee of the Company, has been
Chairman of the Board of the Company since April 1986 and was President and
Chief Executive Officer of the Company from February 1986 through May 1989.
II. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information with respect to the
named Executive Officers concerning the exercise of options and/or
SAR's during fiscal year 1996 and unexercised options and SAR's held
at April 30, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY- END
OPTION/SAR VALUE
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Value at FY-End (#) at FY-End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
- -----------------------------------------------------------------------------
Scott D. Watkins 0 0 145,000/235,000 *
Newton D. Baker 0 0 103,750/126,250 *
Kimberly A. Bollinger 0 0 32,500/17,500 *
Marc D. Baines 0 0 0/50,000 *
* ACCESS Common Stock is not traded actively; therefore, there
is no established market value and the value of the Options/SARs
is not quantifiable.
(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 $2,000 annually for each position held. In addition,
each such director is reimbursed for expenses incurred in
connection with his attendance at any Board or Committee meeting.
(Mr. Hardie is to be compensated on the same basis as the other
non-employee directors until the meeting.) Directors may be
granted options under one of the Company's Stock Option plans;
however, no options were granted in fiscal 1996 to non-employee
directors.
In fiscal 1996, Stock Options, with respect to 350,000
shares of Common Stock were granted 255,100 under the 1993 Plan,
72,400 under the 1991 Plan, and 22,500 under the 1985 Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
(a) (b) (c) (d) (e)
% of Total
Number of Options/
Securities SARs
Underlying Granted to
Options/SARs Employees Exercise or Base
Name Granted(#) in Fiscal Year Price($/Sh) Exp. Date
- -----------------------------------------------------------------------------
Scott D. Watkins 200,000 57% 0.15 2005
Newton D. Baker 100,000 29% 0.15 2005
Marc D. Baines 50,000 14% 0.15 2005
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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of July 12, 1996, 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 and named
Executive Officer 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.
Amount & Nature
Name and, with of Beneficial
Respect to 5% Ownership
Ownership, ----------------- Percent of
Address Direct Indirect Common Stock
________________ _______ ________ _____________
Oce-van der Grinten
N.V. (1) 100 2,180,854 44.67%
St. Urbanusweg 43
5900 MA Venlo
The Netherlands
Kent P. Friel, 2,180,854 -- 44.67%
Dennis J. Sullivan, Jr.,
John W. Weil, and
Scott D. Watkins as
Voting Trustees (1)(2)
Newton D. Baker (2)(3) 894,520 -- 17.94%
Kimberly A. Bollinger 34,500 -- .70%
Marc D. Baines -- -- --
Kent P. Friel (4) 10,742 -- .22%
James H. Hardie (5) -- -- --
Robert J. Kalthoff 133,564 58,181 3.93%
Dennis J.Sullivan,Jr.(4) 20,100 -- .41%
Scott D. Watkins(2)(3)(4) 953,210 -- 18.96%
John W. Weil (4) 15,000 -- .31%
All directors and 2,085,336 58,181 41.5%
officers as a group
(11 persons)(2)(3)(4)
(1) On April 27, 1992, 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 specified terms 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) The address of the Voting Trustees, Mr. Baker and Mr.
Watkins is: ACCESS Corporation, 4350 Glendale-Milford Road,
Suite 250, Cincinnati, Ohio 45242.
(3) Includes 281,250 shares which all directors and officers
as a group have the right to acquire upon the exercise of
immediately exercisable stock options, including 145,000
exercisable by Mr. Watkins, 103,750 exercisable by Mr. Baker, and
32,500 exercisable by Ms. Bollinger.
(4) Does not include shares held by the Voting
Trustees in their capacity as such.
(5) Does not include shares held by Oce.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A) Oce holds 10,000 shares of 7% Class One Preferred Stock and
5,000 shares of 9% Class One Preferred Stock.
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, 1996,
$102,511 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. 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, 1996, the Company had authorized and issued a total of 15,000
shares of Class One Preferred Stock. The Company was not
required to and has not redeemed any Class One Preferred Stock in
fiscal 1996.
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.)
In November 1995, each of Messrs. Watkins and Baker
acquired 714,286 shares of Class A Common Stock from The
Prudential Insurance Company of America at a price of $.20 per
share and converted such shares into Common Stock. Messrs.
Watkins and Baker offered the opportunity to purchase such shares
to the Company but the Board determined that such purchase would
not be a prudent investment of its limited working capital.
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 11 through 19 of the 1996
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:
(i) Independent Auditors' Report;
(ii) Balance sheets as of April 30, 1996 and
April 30, 1995;
(iii) Statements of Operations for the years ended
April 30, 1996, April 30, 1995 and April 30, 1994;
(iv) Statements of Capital Stock and Other
Stockholders' Equity for the
years ended April 30, 1996, April 30, 1995
and April 30, 1994;
(v) Statements of Cash Flows for the years
ended April 30, 1996, April 30, 1995 and
April 30, 1994; 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 1996
Proxy Statement and form of proxy relating to its Annual Meeting
of Shareholders to be held August 22, 1996.
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 26th day of July, 1996.
ACCESS CORPORATION
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 26th day of July, 1996.
SCOTT D. WATKINS
- ---------------------------- President & Chief Executive Officer
Scott D. Watkins
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
NEWTON D. BAKER
- ---------------------
Newton D. Baker
Attorney-In-Fact
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
<CASH> 2071772
<SECURITIES> 0
<RECEIVABLES> 2080358
<ALLOWANCES> 189685
<INVENTORY> 188510
<CURRENT-ASSETS> 4369238
<PP&E> 2445557
<DEPRECIATION> 2187785
<TOTAL-ASSETS> 6241633
<CURRENT-LIABILITIES> 1444021
<BONDS> 0
1500000
0
<COMMON> 488183
<OTHER-SE> 2113224
<TOTAL-LIABILITY-AND-EQUITY> 6241633
<SALES> 8704452
<TOTAL-REVENUES> 8704452
<CGS> 5394394
<TOTAL-COSTS> 8439065
<OTHER-EXPENSES> (54612)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9378
<INCOME-PRETAX> 310612
<INCOME-TAX> 105600
<INCOME-CONTINUING> 205021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129370
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
<TABLE>
EXHIBIT 11
ACCESS CORPORATION
CALCULATION OF NET EARNINGS (LOSS) PER COMMON SHARE
AND COMMON SHARE EQUIVALENTS
YEAR ENDED APRIL 30
<CAPTION>
1992 1993 1994 1995 1996
<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 $614,008 ($182,731) ($615,239) $129,370 $205,021
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) ($102,510)
Net earnings (loss) applicable to
Common Shares and Common
Share Equivalents After
Cumulative Effect and
Preferred Dividend $614,008 $547,269 ($615,239) $64,685 $102,511
------------ ----------- ------------- ---------- ----------
Calculation of primary net earnings
(loss) per Common Share and
Common Share Equivalents:
Average number of Common Shares
and Common Share Equivalents
outstanding; 4,865,559 4,865,559 4,865,559 4,865,559 4,865,559
------------- ------------- ------------ ------------ ------------
Average number of Common Shares
and Common Share Equivalents
outstanding; 4,865,559 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 $0.13 ($0.04) ($0.13) $0.01 $0.02
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 $0.13 $0.11 ($0.13) $0.01 $0.02
</TABLE>
<TABLE>
Contents
<CAPTION>
<S> <C>
Letter to Shareholders 1
Selected Financial Data 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Independent Auditors' Report 11
Statements of Operations 12
Statements of Capital Stock and Other Stockholder's Equity 13
Balance Sheets 14
Statements of Cash Flows 15
Notes to Financial Statements 16
Corporate Profile 20
ACCESS Directors, Officers and Shareholder Information 22
</TABLE>
<PAGE>
To Our Shareholders:
By all accounts, Fiscal Year 1996 was an extremely successful year
for your company. In large part due to a successful acquisition
in July 1995, revenue and profits improved dramatically over FY
ended April 30, 1995. We continued several very positive trends
in efficiency, profitability and cash balances. Each of our two
business units contributed to this success. Our Electronic
Document Management System (EDMS) business experienced tremendous
revenue growth facilitated by the acquisition of CimSoft Inc. The
Customer Support business once again added numerous new accounts
in both the Third Party Hardware and Software Maintenance areas.
Financial Success:
It is a pleasure to report the financial results of our business
for FY 1996. Revenue increased by 44% to $8.7 million, the
highest in 4 years. This was primarily due to a tremendous 198%
increase in EDMS business, growing from $1.3 million in FY 1995 to
$3.8 million in FY 1996. Customer Support revenue grew a modest
3% overall to $4.9 million in FY 1996, camouflaging a dynamic
shift in this business to third party maintenance from proprietary
product maintenance.
Net profit after tax improved by 58% to $205,000, owing largely to
a significant improvement in contribution profit from the EDMS
business unit. Operating efficiencies, as measured by revenue per
<PAGE>
employee, also played an important part in our profit growth.
Continuing a 4 year trend of improvement, revenue per employee
grew an incredible 48% to $175,000 in FY 96, well above the
average for our industry.
Access' cash balance at year end increased by 134% to over $2
million, with operating activities providing $1.6 million of cash.
This is the third year in a row of significant cash balance
growth. Profitability combined with large non-cash amortization
of capitalized software and tax loss carry forward benefits
continue to produce positive cash results. As the chart below
shows, removing the effects of these non-cash items reveals the
steady growth in the bottom line performance from continuing
operations of your company over the past 4 years.
CimSoft Acquisition:
Perhaps the most dramatic change in your company this past year
occurred on July 31, 1995, when we completed the acquisition of
CimSoft Inc. Only months old at the time, CimSoft was established
by former employees of the Cimage Corporation. A competitor of
<PAGE>
Access, Cimage had recently fallen on hard times and had been
purchased by Tarmac PLC, a $4 billion construction company
headquartered in the United Kingdom. By acquiring CimSoft, Access
became the exclusive North American distributor for the Cimage
product line, an industry leading EDMS software product offering.
Although CimSoft had no revenue, Access purchased the opportunity
to support and market to a sizable customer base in the US. We
also acquired an excellent sales organization located in an
Irvine, California office providing us an important presence on
the west coast.
Our Customer Support staff rose to the challenge, providing
support to Cimage customers within days of the acquisition.
Financially, the acquisition has been very successful. The
purchase price has been fully recovered through collection of
Cimage receivables, and the Cimage related revenue has grown
quickly and been profitable. In fact, Cimage related revenue
(software, services and hardware) accounted for 42% of Access'
revenue in Fiscal Year 1996.
Tarmac PLC established a separate business unit for the Cimage
product line, Cimage Enterprise Systems (CES), the new incarnation
of the Cimage organization, is a part of the Professional Services
Division of Tarmac PLC. CES is investing heavily in product
development and worldwide marketing. Access and CES have an
excellent working relationship.
EDMS Business Unit
Access' EDMS business unit benefited from significant investments
in Fiscal Year 1996. The acquisition of CimSoft combined with
becoming the exclusive North American distributor for the Cimage
product line provided an opportunity to rapidly grow this
business. In addition to acquisition costs, we also invested
heavily in EDMS Sales and Marketing, increasing these operating
expenses by 130% over the previous year. The investments paid off
almost immediately as EDMS revenue jumped by 198% to $3.8 million
in FY 1996. EDMS sales staff productivity also increased nearly
100%, as EDMS revenue per EDMS sales employee grew to $550,000 in
FY 1996.
Much of this growth resulted from the Cimage product line. The
large installed base of Cimage customers in North America is very
happy with the functionality and quality of the product as well as
the high level of support provided by Access' Customer Support
organization. As a result, there is a strong market for add-on
purchases of software and services. With strong, referenceable
installations in our target markets of Manufacturing,
Petrochemicals, and Utilities, we have a solid foundation for
increasing this installed base in FY 1997.
Access' own EDICS/400 EDMS product also continues to expand at
existing customer sites. The product is still the only full
function EDMS product running on IBM's AS/400 platform. Product
quality and reliability are exceptional, and functionality is
<PAGE>
competitive, if not advanced in the areas of Engineering Change
Control and Life Cycle Management. Although the AS/400 market is
much smaller than that for UNIX based systems, it has a strong,
loyal following. We continue to look for ways of working with IBM
sales & marketing staff to market this product line. EDICS/400 is
particularly strong in providing regulatory compliance, especially
for FDA and OSHA (hazardous materials) regulated industries.
Customer Support Business Unit
A modest 3% growth in revenue masks the dramatic changes that are
taking place in our Customer Support business unit. As Access'
older proprietary hardware systems are replaced by newer
technologies, maintenance revenue from this hardware steadily
decreases. This trend is inevitable, and has been evident for
several years. In response, our Customer Support business unit
began an intense program to offer very high quality, flexible,
quick response third party maintenance services. We focused on
markets such as scanners, plotters, optical juke boxes, and
similar electromechanical products. The results have been a
continual increase in Third Party Maintenance revenue in each of
the last 4 years.
Our Customer Support organization continues to focus on providing
exceptional levels of customer satisfaction. We now support over
600 customers worldwide, covering 117 cities in the US alone. We
can add coverage to new cities within 5 days. Access provides 24
hour, 7 days per week, 365 days per year toll free dispatch for
our customers. Our Support Partner program offers immediate, high
quality customer support services for vendors who do not have this
capability. Currently we have 9 companies who have chosen Access
to take care of their customers. Perhaps the success of this
<PAGE>
program is best expressed in a letter of recommendation from one
of our Support Partners:
"The people at Access Corporation.seem to be better equipped to
adapt to individual customer wants and needs than any other
maintenance provider I have been associated with. Their technical
support staff.know that the customer's needs come first."
Access Customer Locations
Over 600 Customers in 117 Cities
Business Strategy for the Future:
Your management's objectives have been and continue to be to
provide value and liquidity for Access' shareholders. Our
performance in Fiscal Year 1996 is another important step toward
that goal. Culpepper & Associates, a leading consulting and
research firm in the software industry, annually publishes
"Financial Operating Ratios for Software Companies". In their most
recent edition, they conclude that "as the software industry
continues to mature, companies are shifting their staffing efforts
towards customer support and professional services." Furthermore,
their analysis indicates that the most profitable firms in the
software industry are those with high sales growth rates (20% -
30% per year). The financial performance of Access in Fiscal Year
1996 reflects these conclusions. These principles also provide the
foundation for Access's business strategy for growth:
<PAGE>
1. Provide very high quality products, support and services.
2. Very high levels of customer satisfaction.
3. Provide an ever increasing array of solutions to our existing
customers.
4. Acquire new customers and solutions.
5. Focus on our existing market space.
6. Focus on quarterly and annual increases in profitability.
We believe that our current operations offer solid revenue growth
opportunities. However, the growth potential inherent in current
operations falls short of the growth targets we believe are
necessary to achieve our shareholder goals of value and liquidity.
As a result, we have been actively seeking additional acquisitions
that can contribute to your company's growth. Our search is
focused on companies that can profitably provide:
1. Additional on-going service revenue.
2. Additional customers to which we can sell our existing products
and services.
3. Additional solutions (products and services) that we can sell
to our customers.
Fiscal Year 1996 was an extremely successful year for your
company, in large part due to the successful acquisition in July
1995 (For additional information about Fiscal Year 1996 and our
future, please see the Management Discussion and Analysis
elsewhere in this report). Healthy cash flow and cash balances
combined with zero bank borrowing give your company the ability to
aggressively pursue additional revenue and profit growth
opportunities in Fiscal year 1997.
Sincerely,
SCOTT D. WATKINS
- --------------------------------------------
Scott D. Watkins
President and Chief Executive Officer
<PAGE>
<TABLE>
ACCESS CORPORATION
SELECTED FINANCIAL DATA
<CAPTION>
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED April 30, 1996 April 30 1995 April 30 1994 April 30 1993 April 30 1992
Summary of Earnings (Loss) from Operations
Net Sales $ 8,704,452 $ 6,041,782 $ 6,896,352 $ 7,020,074 $ 8,744,752
Gross Profit 3,310,059 2,352,750 2,573,260 2,871,200 3,836,484
Gross Profit as percentage
of net sales 38% 39% 37% 41% 44%
Interest Expense 9,378 31,911 26,450 53,246 7,543
Net Earnings (Loss) from
Continuing Operations 205,021 129,370 (551,376) (23,947) 889,808
Net Earnings (Loss) before
cumulative effect of
accounting change 205,021 129,370 (615,239) (182,731) 614,008
Cumulative effect of
accounting change 730,000
Net Earnings (Loss) 205,021 129,370 (615,239) 547,269 614,008
Preferred Dividend 102,510 64,685 - - -
Income(loss) applicable to
common shares $ 102,511 $ 64,685 $ (615,239) $ 547,269 $ 614,008
=========== =========== =========== =========== ===========
Average common and common
share equivalents
outstanding 4,865,559 4,865,559 4,865,559 4,865,559 4,865,559
Per Common Share Statistics
Net Earnings (Loss) from
Continuing Operations $ 0.02 $ 0.01 $ (0.11) $ (0.00) $ 0.18
Net Earnings (Loss) before
cumulative effect of
accounting change 0.02 0.01 (0.13) (0.04) 0.13
Cumulative effect of
accounting change 0.15
----------- ----------- ----------- ----------- -----------
Net Earnings (Loss) $ 0.02 $ 0.01 $ (0.13) $ 0.11 $ 0.13
=========== =========== =========== =========== ===========
Balance Sheet Data
Working Capital $ 2,925,217 $ 1,734,779 $ 695,922 $ 342,444 $ 1,193,459
Working Capital Ratio 3.0:1 3.3:1 1.7:1 1.1:1 1.5:1
Total Assets 6,241,633 5,129,248 5,132,511 7,242,855 5,027,295
Long-term debt 250,000
Mandatorily redeemable
preferred stock 1,500,000 1,500,000 1,500,000 1,500,000
Capital Stock and Other
Stockholders' equity $ 2,586,024 $ 2,483,512 $ 2,418,826 $ 3,035,419 $ 2,488,150
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
NET REVENUES
(In thousands)
1996 Change 1995 Change 1994
Net Revenues $8,704 44% 6,042 (12%) $6,896
ACCESS Corporation has two primary lines of business. Over the years
the Company has built a substantial customer support 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
Electronic Document Management Systems (EDMS) software business. In
this line of business, the Company develops and markets software solutions
for its customers' technical processes.
The fluctuations in the Company's revenues overall are a result of the
changes in its EDMS operations. System sales from these operations were
$3,800,800, $1,275,000, and $2,189,200 in fiscal years 1996, 1995 and 1994,
respectively. These sales represented 44%, 21% and 32% of total revenues,
respectively. The increase between 1995 and 1996 sales was the result of
the acquisition of CimSoft Incorporated, a distributor of Cimage Software
and services.
The Company continues to have a stable 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 $4,768,800, $4,538,900 and
$4,320,300 in fiscal years 1996, 1995 and 1994, respectively. These sales
made up 55%, 75% and 63% of total revenues in these fiscal years,
respectively. The decrease in the percentage of total sales in fiscal 1996
reflects the increase in sales in the EDMS line of business.
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. In 1994 the
Company completed or transferred to third parties all contracts and commit-
ments for its Engineering and Contract Manufacturing customers.
Revenues from the continuing manufacturing operations, a support group to
the Service line of business, were $134,800, $227,800 and $386,800 in fiscal
years 1996, 1995 and 1994, respectively which were 1%, 4% and 5% of the total
revenues in these fiscal years, respectively.
In fiscal year 1996 sales to the U.S. commercial market continued to
exceed those to the federal government and international markets. Sales to
<PAGE>
the U.S. commercial market represented 88% of the total revenue in fiscal
1996, compared with 78% in fiscal 1995 and 73% in fiscal 1994. The federal
government accounted for 11% of total revenue in fiscal 1996, compared with
18% in 1995 and 17% in 1994. This reflects the Company's emphasis on
marketing to the commercial market. Sales to international markets accounted
for 1% of fiscal 1996 revenues, compared with 4% in 1995 and 10% in 1994.
Gross Profits
(In Thousands) 1996 Change 1995 Change 1994
Gross Profits $3,310.1 41% $2,352.8 (8%) $2,573.3
Percentage of net revenues 38% 39% 37%
The above Gross Profits for 1996, 1995 and 1994 were net of $673,700,
$673,700 and $839,900 of amortization of computer software costs, respective-
ly. EDMS gross margins before amortization in fiscal 1996 were 46%, which was
a increase from fiscal 1995 level of 43% and an decrease from the fiscal
1994 level of 59%. EDMS gross margins after amortization in fiscal 1996
were 28%, which was an increase from fiscal 1995 and 1994 levels of (10%)
and 20%, respectively. Service gross margins of 46% decreased from fiscal
1995 and 1994 levels of 55% and 53%, respectively. This decrease in gross
margin in fiscal 1996 is the result of the CimSoft acquisition. The Cimage
software maintenance requires the Company to pay a royalty to the proprietor
of the Cimage software. Manufacturing gross margins of (75%) in fiscal
year 1996 were less favorable than those reported in fiscal years 1995 of 1%
and in fiscal 1994 of (45%).
Selling, general and administrative expenses increased from
$1,528,500 in fiscal 1995 to $2,433,400 in fiscal 1996. The primary
contributor to this increase in expenses was the increase in personnel
and related expenses. CimSoft,Incorporated had a sales office and personnel
in Irvine, California, which the Company took at the time of the acquisition.
Engineering, Research and Development (R&D) expenditures were
incurred for maintaining and upgrading existing products. Engineering and
development expenses for the current period increased from $592,500 in fiscal
1995 to $611,300. Fiscal 1996 operating expenses for R&D were 3% higher than
fiscal 1995 and 46% lower than fiscal 1994. In fiscal 1994 the Company
completed the development work on the AS/400.
The Net Income Before Income Tax in fiscal 1996 of $310,600 increased
$114,600 over that of fiscal 1995. The Company's gross margin decreased 1% in
fiscal 1996. The Company increased operating expenses by $923,700 in fiscal
1996. Revenues increased more than cost of goods sold and operating
expenses, thus yielding the above increase in the net income before income
tax in fiscal 1996.
The Company provided $105,600 of income taxes in fiscal 1996. This
expense resulted in a reduction in deferred income tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 1996, the Company provided approximately $1,621,500 of cash
from operating activities. The Company did not utilize the bank line of
credit. The result was a cash balance of $2,071,800 and zero bank borrowing
at April 30, 1996.
<PAGE>
Accounts receivable decreased approximately $163,000 during fiscal
1996. This decrease is the result of a steady flow of sales throughout fiscal
1996.
Inventories at April 30, 1996 decreased approximately $224,400 from
the balance at April 30, 1995. This decrease is primarily due to the
completion of projects for the EDMS product line.
Accounts Payable at April 30, 1996 increased approximately $86,200
from April 30, 1995. This increase reflected primarily the spending required
to resell the Cimage product line.
Prepaid maintenance contracts at April 30, 1996 increased approx-
imately $294,300 from April 30, 1995. This increase reflected the increase
in annual prepaid maintenances for the Cimage product line.
The Company requires progress payments on its large EDMS System
orders based on predetermined events. Reported as current liabilities,
these progress payments totaled approximately $408,500 at April 30, 1996,
which represents a decrease of approximately $449,000 from April 30, 1995.
Working capital on April 30, 1996 was $2,925,200, compared with
$1,734,800 on April 30, 1995. The Company has a loan agreement which
provides for a line of credit through April 7, 1998 (See Note 2 of the Notes
to the Financial Statements). The bank line of credit was $400,000 at
April 30, 1996, of which none was outstanding.
The Company's plans are structured so that revenues from its AS/400
and Cimage 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 $1,068,900 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 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.
While Access has just completed a very successful year and is well
positioned for the future, the Company is relatively a small player in the
technically dynamic market which is populated by large players like Microsoft
and IBM, as well as many middle and small size firms. In this fragmented
market, a great many companies are competing for each new customer order.
Access faces a future filled with opportunities but also filled with a great
many risks, many of which are beyond its control.
<PAGE>
Independent Auditors' Report
Stockholders and Board of Directors:
We have audited the accompanying balance sheets of ACCESS Corporation as
of April 30, 1996 and 1995, 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, 1996. 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 30,1996 and 1995, and the results of its operations
and its cash flows for each of the three years in the period ended
April 30, 1996, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
- ---------------------
Deloitte & Touche LLP
Cincinnati, Ohio
May 24, 1996
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
REVENUE:
System Sales $3,800,795 $1,274,996 $2,189,248
Service 4,768,837 4,538,938 4,320,323
Manufacturing 134,820 227,848 386,781
--------- --------- ---------
Total 8,704,452 6,041,782 6,896,352
--------- --------- ---------
COST:
System sales, exclusive of amoritization shown separately below 2,052,266 729,965 902,566
Service 2,432,402 2,059,347 2,020,136
Manufacturing 236,022 226,016 560,486
--------- --------- ---------
Total 4,720,690 3,015,328 3,483,188
--------- --------- ---------
GROSS PROFIT BEFORE AMORTIZATION 3,983,762 3,026,454 3,413,164
AMORTIZATION OF COMPUTER SOFTWARE COST 673,704 673,704 839,904
--------- --------- ---------
GROSS PROFIT 3,310,058 2,352,750 2,573,260
OPERATING EXPENSES:
Selling, general and administrative 2,433,376 1,528,460 2,007,953
Engineering, research and development 611,295 592,504 1,124,789
--------- --------- ---------
OPERATING INCOME (LOSS) 265,387 231,786 (559,482)
OTHER INCOME(EXPENSE) 54,612 (3,805) 24,047
INTEREST EXPENSE (9,378) (31,911) (26,450)
--------- --------- ---------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 310,621 196,070 (561,885)
INCOME TAXES (BENEFIT) (Note 6) 105,600 66,700 (10,509)
--------- --------- ---------
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS 205,021 129,370 (551,376)
DISCONTINUED OPERATIONS (Note 9):
Net loss from operations of discontinued E&M business (73,812)
Income on disposal of discontinued operations 9,949
--------- --------- ---------
NET EARNINGS (LOSS) 205,021 129,370 (615,239)
PREFERRED DIVIDEND 102,510 64,685 -
--------- --------- ---------
INCOME (LOSS) APPLICABLE TO COMMON SHARES $ 102,511 $ 64,685 $ (615,239)
========= ========= =========
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 $ 0.02 $ 0.01 $ (0.11)
Net earnings (loss) $ 0.02 $ 0.01 $ (0.13)
========= ========= =========
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CAPITAL STOCK AND OTHER STOCKHOLDERS' EQUITY
APRIL 30, 1996, 1995 AND 1994
Additional Retained
Treasury Common Class A Common Paid-in Earnings
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares Amount Shares Amount Shares Amount Capital (Deficit)
--------------------------------------------------------------------------------------------
BALANCE, April 30, 1993 16,270 $(15,383) 3,453,257 $345,326 1,428,572 $142,857 $10,826,201 $(8,263,580)
Deferred compensation under
restricted stock plan (1,354)
Net loss (615,239)
------ -------- --------- -------- --------- -------- ----------- ------------
BALANCE, April 30, 1994 16,270 (15,383) 3,453,257 345,326 1,428,572 142,857 10,824,847 (8,878,819)
Class One Preferred Stock
dividends (64,685)
Net earnings 129,370
------ -------- --------- -------- --------- -------- ----------- -----------
BALANCE, April 30,1995 16,270 (15,383) 3,453,257 345,326 1,428,572 142,857 10,760,162 (8,749,449)
Class One Preferred Stock
dividends (102,510)
Conversion of Class A Common
Stock to Common Stock 1,428,572 142,857 (1,428,572) (142,857)
Net earnings 205,021
------ -------- --------- -------- --------- -------- ----------- -----------
BALANCE, April 30, 1996 16,270 $(15,383) 4,881,829 $488,183 - $ - $10,657,652 $(8,544,428)
====== ======== ========= ======== ========= ======== =========== ===========
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
<CAPTION>
<S> <C> <C> <C> <C> <C>
BALANCE SHEETS
APRIL 30, 1996 AND 1995
LIABILITIES AND CAPITAL STOCK AND
ASSETS 1996 1995 OTHER STOCKHOLDERS' EQUITY 1996 1995
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents $2,071,772 $ 883,487 Accounts payable $ 285,703 $ 95,864
Accounts receivable, less allowance Accrued salaries, wages and commissions 367,282 120,054
for doubtful accounts of $189,685 in 1996 Accrued taxes 22,400 24,429
and $18,100 in 1995 (Note 2): 1,890,673 1,015,811 Accrued warranty expense - 44,275
Inventories (Note 2): Other accrued liabilities 49,385 40,256
Raw materials and purchased parts 64,553 79,495 Accrued Royalty 291,192 37,427
Work-in-process 102,900 318,598 Advances from customers 408,460 339,456
Finished goods 21,057 14,772 Capital leases 19,599 56,613
---------- --------- --------- ---------
Total inventories 188,510 412,865 Total current liabilities 1,444,021 758,374
Prepaid expenses 106,283 68,990
Deferred income tax, net of valuation PREPAID MAINTENANCE CONTRACTS 609,078 299,578
allowance of $300,000 (Note 6) 112,000 112,000
---------- ---------
Total current assets 4,369,238 2,493,153 CAPITAL LEASES - 23,099
EQUIPMENT AND LEASEHOLD MANDATORY REDEEMABLE CLASS ONE
IMPROVEMENTS (Note 2): PREFERRED STOCK (Note 3) 1,500,000 1,500,000
Computer hardware and software 1,449,310 1,952,220 Preferred Dividends - Accrued 102,510 64,685
Machinery and equipment 503,337 503,337
Office and service equipment 364,492 313,431 CAPITAL STOCK AND OTHER
Leasehold improvements 13,405 5,000 STOCKHOLDERS' EQUITY (Notes 2,4):
Tools, dies and fixtures 115,013 115,013 Capital Stock:
---------- --------- Common Stock, no par value,authorized,Ep
Total 2,445,557 2,889,001 8,000,000 shares; issued and outstanding
Less accumulated depreciation 2,187,785 2,646,833 4,881,829 in 1996 and 3,453,257 shares in 1995 488,183 345,325
---------- --------- Class A Common Stock, no par value,
Net equipment and leasehold authorized 2,000,000 shares; issued and
improvements 257,772 242,168 outstanding 1,428,572 shares in 1995 142,857
Additional paid-in capital 10,657,652 10,760,162
COMPUTER SOFTWARE COSTS, net of Deficit from April 1, 1985 (8,544,428 (8,749,449)
accumulated amortization of $2,299,595 in 16,270 Common Stock shares in treasury,
1996 and $1,625,891 in 1995 1,068,923 1,742,627 at cost (15,383) (15,383)
---------- ----------
Total capital stock and other
DEFERRED INCOME TAX BENEFIT, stockholders' equity 2,586,024 2,483,512
net of valuation allowance of $2,134,000 in ---------- ---------
1996 and 1995 (Note 6) 545,700 651,300
--------- ---------
TOTAL $6,241,633 $5,129,248 TOTAL $6,241,633 $5,129,248
========== ========= ========== ==========
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ACCESS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 205,021 $ 129,370 $ (615,239)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Amortization 673,704 673,704 839,904
Depreciation 143,027 139,819 254,943
Deferred income taxes 105,600 66,700
Deferred compensation under restricted stock plan (1,354)
Loss (gain) on disposal of fixed assets 1,111 7,028 (3,608)
Prepaid maintenance contracts 294,324 100,606 66,704
Change in assets and liabilities:
Accounts receivable 162,968 (124,211) 1,106,941
Inventories 224,355 103,163 60,411
Prepaid expenses (37,293) 37,672 70,470
Accounts payable 86,215 (62,481) (133,824)
Accrued liabilities 211,417 (54,023) (283,155)
Advances from customers (448,994) 30,151 (449,309)
---------- ---------- ----------
Net cash provided by operating activities 1,621,455 1,047,498 912,884
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash received (148,629)
Capital additions (166,010) (22,779) (84,316)
Proceeds from disposal of fixed assets 6,267 2,156 22,459
---------- ---------- ----------
Net cash used in investing activities (308,372) (20,623) (61,857)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on bank line of credit (71,807) (848,959)
Dividends on Class One Preferred Stock (64,685)
Payments on capital leases (60,112) (75,081) (52,068)
---------- ---------- ----------
Net cash used in financing activities (124,797) (146,888) (901,027)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,188,286 879,987 (50,000)
CASH AND CASH EQUIVALENTS, Beginning of year 883,487 3,500 53,500
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, End of year $2,071,773 $ 883,487 $ 3,500
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest $ 31,911 $ 31,911 $ 26,616
During 1994, the Company entered into capital leases
totaling $206,860 (Note 8).
Dividends declared but unpaid on Class One Preferred Stock totaled
$102,510 (1996) and $64,685 (1995)
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS ACCESS Corporation
for the years ended April 30, 1996, 1995 and 1994
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.
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, $673,704 and $839,904 for fiscal years 1996, 1995 and 1994,
respectively.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
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.
Stock-Based Compensation
The FASB issued Statement of Financial Accounting Standards No.
123 - Accounting for Stock-Based Compensation in October 1995. The standard
defines a fair-value based method of accounting for stock-based compensation
but permits compensation expense to continue to be measured using the
intrinsic value-based method previously used. The Company intends to
continue measuring compensation expense using the intrinsic value-based
method and under the provisions of the standard, which must be adopted in
1997, will be required to make pro forma disclosures of net income and
earnings per share as if the fair value method had been used.
Note 2: Bank Line of Credit
The Company's current line of credit agreement ($400,000 as of April 7,
1996) extends through April 7, 1998. Borrowings under the agreement bear
interest at one percent over the prime rate, 8 1/4% at April 30, 1996.
Borrowing is based upon the levels (as set forth in the loan agreement) of
eligible accounts receivable. To secure any borrowing, the Company has
<PAGE>
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>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------
Maximum borrowings
during the year $ -0- $127,354 $790,249
Average outstanding balance
during the year $ -0- $ 27,956 $302,652
Weighted average
interest rate 9.1% 7.5%
(determined on a monthly basis)
</TABLE>
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 Class One Preferred
Stock. In April 1993, the Company issued to Oce an additional 5,000 shares
of mandatorily redeemable Class One Preferred Stock for $500,000.
The Class One Preferred Stock is divided into three series: 10,000
shares of 7% Class One Preferred Stock ($1,000,000); 2,500 shares of 9% Class
One Preferred Stock ($250,000), and 2,500 shares of variable rate Class One
Preferred Stock ($250,000). The variable rate Class One Preferred Stock was
issued at the rate of 9%. Dividends on the Class One 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 Class
One 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 Class One 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, 1996, the
Company had authorized and issued a total of 15,000 shares of Class One
Preferred Stock. The Company was not required to and has not redeemed any
Class One Preferred Stock in Fiscal 1996.
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 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
<PAGE>
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. In Fiscal 1996, the Class A Common Stock was converted
to Common Stock.
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 1994 - 1996.
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 non-qualified 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.
Changes in stock options were as follows:
<TABLE>
____________________________________________________________________________
Number of Shares
Reserved Granted
- ----------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
Balance, April 30, 1994 878,200 435,800
Canceled ( 500) ( 73,400)
_______ _______
Balance, April 30, 1995 877,700 362,400
Issued 350,000
Canceled ( 2,400) ( 2,400)
_______ _______
Balance, April 30, 1996 875,300 710,000
======= =======
</TABLE>
At April 30, 1996, options to purchase 281,250 shares of Common Stock
were exercisable at $.50 to $1.00 per share.
Note 5: Engineering, Research and Development
Engineering, research and development costs for the years ended
April 30, 1996, 1995 and 1994 are as follows:
<TABLE>
- ----------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Charged to specific
customer orders $380,741 $ 495,887 $ 820,614
Charged directly to
engineering, research
and development 611,295 592,504 1,124,789
_________ ________ _________
Total cost of engineering,
research and develop-
ment efforts $922,036 $1,088,391 $1,945,403
======= ========= =========
</TABLE>
Note 6: Income Taxes
The provision for income taxes (benefit) includes the following:
<TABLE>
- ------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Federal:
Deferred $105,600 $ 66,700 ($214,100)
Currently payable
(Refundable) 164,000 66,700 ( 10,509)
Tax benefit of net
operating loss
carryforward (164,000) (66,700)
Valuation Allowance 214,100
________ ________ ________
Total $105,600 $66,700 ($10,509)
======= ======= ========
</TABLE>
Deferred income taxes reflect the net income tax effects of (a) temp-
orary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes,
<PAGE>
and (b) net operating loss carryforwards. The income tax effects of signif-
icant items comprising the Company's net deferred income tax asset as of
April 30, 1996 and 1995 are as follows:
<TABLE>
- -----------------------------------------------------------------------------
1996 1995
- -----------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
Net operating loss carryforwards
Federal $2,826,600 $3,100,700
State 75,800 37,000
Temporary differences:
Customer Deposits 67,500
Accrued warranty expense 25,000
Inventory capitalization 96,400 96,000
Other 131,100 44,300
_________ _________
Total $3,197,400 $3,303,000
Less Valuation Allowance (2,539,700) (2,539,700)
_________ _________
Net deferred income tax asset $ 657,700 $ 763,300
======== ========
</TABLE>
The amounts and expiration dates for the Company's net operating loss
carryforwards for income tax return purposes are summarized as follows:
<TABLE>
Year Ending April 30 Federal
-------------------- ----------
<S> <C>
2002 $1,622,000
2004 2,762,000
2005 3,027,000
2008 459,000
2009 803,000
---------
Total $8,673,000
=========
</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:
<TABLE>
- -----------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Federal Government 10.9% 18.4% 16.6%
Aerospace 14.9% 18.8% 5.4%
Petroleum 4.5% 4.9% 4.4%
Computer 10.5% 10.5% 2.1%
Medical 8.6% 7.2% 20.6%
Manufacturing 1.5% 12.4% 3.0%
Utilities 33.4% 4.6% -0-
</TABLE>
Accounts receivable from these customers at April 30, 1996 and
April 30, 1995 were $1,100,800 and $778,100, respectively.
Note 8: Lease Commitments
The Company leases office and manufacturing facilities and equipment
under operating leases. Rent expense was $244,718 (1996), $223,977 (1995),
and $342,311 (1994) of which $64,313 (1996), $60,281 (1995) and $131,268
(1994), were under short-term cancelable leases.
As of April 30, 1996, minimum annual payments under all non-cancelable
long-term operating lease agreements are: $186,780 (1997), $166,780 (1998),
$170,950 (1999), and $170,950 (2000).
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 for fiscal year
1994.
Note 10: CimSoft Acquisition
On July 31, 1995, the Company acquired CimSoft Incorpoated, which started
business in June 1995, for $257,500 in a business combinatiuon which was
accounted for using the purchase method. The results of operations of the
company include CimSoft from the date of acquisition. Proforma results of
operations of CimSoft are not material. CimSoft was a distributor of Cimage
software and a Cimage service provider in North America.
<PAGE>
CORPORATE PROFILE
Access, a Cincinnati based company has two business units: Electronic
Document Management Systems (EDMS) and Customer Support (component and
systems maintenance).
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' EDMS business unit provides software and professional
services to assist its customers in the design, configuration, installation
and maintenance of electronic document systems. The Customer Support
business unit is comprised of hardware and software service which is
provided to the Company's installed base of customers and third-party
maintenance customers. It also provides media and parts on a worldwide basis
to the Company's installed customer base.
Access EDMS Business Unit
Access Corporation is dedicated to enhancing the quality of its
customers' products by providing world class software and professional
services for their document based processes. 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, document and workflow management. Access
provides document and workflow management in three distinct markets: Discrete
Manufacturing, Oil & Gas, and Utilities. Access provides both software and
professional services to configure, install and maintain electronic document
management solutions. Access' extensive history in sales and service of
document based retrieval technology has allowed the company to build
an expertise in applying current state of the technologies to customers'
document management products.
The EDMS Business Unit experienced significant growth in fiscal 1996, in
terms of both revenues and staffing. In the first quarter of fiscal 1996,
Access acquired CimSoft Inc., a systems integrator servicing a wide base
of EDMS customers within the United States. At the same time, Access also
formalized a partnership with Cimage Enterprise Systems Ltd., making
Access the exclusive distribution and support provider for Cimage products
within North America. These two business ventures well positioned Access
for rapid growth through three changes: an increased customer base, an
additional leading edge software offering, and additional personnel
skilled in the sale and support of EDMS applications. In addition to this
new role as a software reseller, Access continues to maintain and develop
Document Management Software and still provides the industry's only large
format EDMS available on the IBM AS/400 computer.
Throughout fiscal 1996, Access increased staff within the EDMS
Business Unit to meet the growing demand for software products and
professional support services. Through the continued recruitment
of EDMS experienced personnel, Access was able to minimize the training time
and costs associated with expanding our EDMS business. As a result
of the business ventures previously mentioned, this business unit enjoyed
a 198% growth in revenues during fiscal 1996, compared with fiscal 1995.
Equally importantly, Access was able to meet its originally stated goal
of sustaining a consistent increased profit throughout this growth period.
Access' EDMS software offerings fall into two product areas: EDICS
(Engineering Document Image Control System) and the Cimage Document Manager
System. EDICS is primarily focused at providing Document Life Cycle
Management on the IBM AS/400 platform, while the Cimage Document Management
is focused on Document Distribution applications using UNIX and Microsoft
Windows NT servers.
Both products utilize a powerful database application for managing
documents and related information, including paper based documents, A through
J size drawings, Computer Aided Design (CAD) data, company procedures and
office correspondence. These documents both come from multiple sources,
and are in multiple formats. The EDMS applications integrate all of these
into a single system which fully automates the revision process, the
distribution process, and also provides flexible tools for viewing, editing,
and printing.
Access also delivers high-quality, high-value Professional Services
to its customers. Access' industry specialization allows it to apply its
document system expertise to its customers' business problems in Document
Management Applications. While the various software modules are the same
<PAGE>
at each customer, each implementation is unique through the "tailoring" of
the document organizational structure, document-to-document relationships,
and user interface presentation. Through Access' understanding of Document
Management requirements, customers have been able to achieve industry
compliance with regulatory agencies, become ISO 9000 certified, and
achieve system implementations in extremely short time periods. Access
increased fiscal 1996 Professional Services revenue by 6% as compared to
fiscal 1995. This increase is primarily due to the delivery of Professional
Services to our customers utilizing the Cimage product.
Customer Support
Access' Customer Support business unit provides quality hardware and
software service on a nationwide basis to both the company's installed base
of EDMS customers and third-party maintenance customers. The Software Support
revenue from our EDMS customers grew by 42% in fiscal 1996 over fiscal 1995.
This growth is attributed to the Company bringing Cimage customers under
maintenance contracts.
Third-party maintenance includes the support of non-Access
electronic and electromechanical equipment such as card embossers, microfiche
duplicators, microfilm scanners, large drawing format scanners, large format
plotters, highly sophisticated 5-1/4" and 12" laser drives, and optical
jukebox systems. Access has a number of Support Partners that recommend
Access as their nationwide service provider. The Company's third-party
maintenance revenue increased by 41% in fiscal 1996 over fiscal 1995.
Growth in third-party maintenance is an Access strategic objective.
Access continues to pursue additional third-party service opportunities
with manufacturers and distributors of electronic and electromechanical
products. Access' key to success in third-party maintenance is the ability
to provide their Support Partners with all of the benefits of having
their own national service company without having to build and support the
infrastructure of a nationwide service organization. Access offers its
business partners a 24 hour a day, toll free dispatch center; rapid
on-site service response; quality repairs and preventive maintenance for
their customers.
Sales
EDMS 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.
Access' primary marketing focus is the sale of its EDMS products to
discrete manufacturers, oil and gas, and utility providers. The market
segment which accounted for the highest percentage of the Company's revenue
was telecommunications, at 34% of total company revenues.
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, 1996, was 381.
Form 10-K Available
An Annual Report of Form 10-K will be filed with the Securities and
Exchange Commission for the fiscal year ending April 30, 1996. 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>
ACCESS Directors, Officers and Shareholder Information
Board of Directors Officers Shareholder Information
Kent P. Friel Scott D. Watkins Transfer Agent/Registrar
Chairman of the Board President and Chief Fifth Third Bank
President, Schonberg Executive Officer Fifth Third Center
Associates, Inc. Corporate Trust
Cincinnati, Ohio Cincinnati, OH 45263
Scott D. Watkins Newton D. Baker Independent Auditors
President and Chief Executive Vice President Deloitte & Touche LLP
Executive Officer and Treasurer 250 East Fifth Street
Cincinnati, OH
Newton D. Baker Kim Bollinger 45201-5340
Executive Vice President Vice President,
and Treasurer Customer Services General Counsel
Taft,Stettinius & Hollister
1800 Star Bank Center
James H. Hardie Marc Baines Cincinnati, Ohio 45202
Partner in law firm Vice President,
of Reed Smith Shaw Sales and Marketing Patent Counsel
& McClay Wood, Herron & Evans
Pittsburgh, Pennsylvania 2700 Carew Tower
Cincinnati, Ohio 45202
Robert J. Kalthoff James M. Anderson
Chairman of the Kalthoff Secretary, Partner in law
Group, Inc. firm of Taft, Stettinius
Cincinnati, Ohio & Hollister
Cincinnati, Ohio
Dennis J. Sullivan, Jr.
Executive Counselor
Dan Pinger Relations,Inc.
Cincinnati, Ohio
John W. Weil
President
Weil Associates, Inc.
Bloomfield Hills, Michigan
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 2-67785, 2-91016, 33-00158, 33-38194 and
33-48195 of ACCESS Corporation on Forms S-8 of our reports
dated May 24, 1996, appearing in and incorporated by
reference in the Annual Report on Form 10-K of ACCESS
Corporation for the year ended April 30, 1996.
Deloitte & Touche LLP
Cincinnati, Ohio
July 24, 1996.
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 1996
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
1996 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 22nd day of July, 1996.
KENT P. FREIL
------------------------------
Kent P. Friel
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 1996
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
1996 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 16th day of July, 1996.
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 1996
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
1996 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 17th day of July, 1996.
ROBERT J. KALTHOFF
------------------------------
Robert J. Kalthoff
Exhibit 24(v)
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 1996
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
1996 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
22nd day of July, 1996.
DENNIS P. SULLIVAN
------------------------------
- -------------
Dennis P. Sullivan
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 1996
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
1996 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 16th day of July, 1996.
JOHN W. WEIL
------------------------------
John W. Weil
Independent Auditors' Report
Stockholders and Board of Directors:
We have audited the accompanying balance sheets of
ACCESS Corporation as of April 30, 1996 and 1995, 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, 1996.
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,
1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended
April 30, 1996, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Cincinnati, Ohio
May 24, 1996
FIRST AMENDMENT TO
CREDIT AGREEMENT
This First Amendment to the Credit Agreement (the "Amendment")
entered into as of this 7th day of April, 1996, by and between THE FIFTH
THIRD BANK, an Ohio banking corporation (the "Bank") and ACCESS CORPORATION,
an Ohio corporation (the "Borrower").
WHEREAS, Bank and Borrower entered into that certain Credit
Agreement, dated as of April 7, 1994 (the "Agreement");
WHEREAS, in connection with the transactions contemplated by the
Agreement, Borrower executed and delivered to Bank the following additional
loan documents, each dated as of April 7, 1994: (a) a Revolving Note in the
original principal amount of $400,000 (the "Note"); (b) a Security Agreement
between Borrower and Bank; and (c) UCC-1 Financing Statements (the Agreement
and all of the foregoing documents and all other loan documents executed in
connection with the loan evidenced by the Agreement, as such have been
amended and/or restated will be collectively referred to herein as the
"Loan Documents");
WHEREAS, Borrower and Bank desire to amend the Agreement and the Note
to extend the term thereof, subject to the terms and conditions set forth
herein;
NOW THEREFORE, intending to be legally bound, the parties hereto
agree as follows:
1. Amendments.
(a) Section 2, Subsection 2.1(c) of the Agreement is hereby
amended and restated in its entirety as follows:
2.1 (c) On the date of execution of the First Amendment to
the Credit Agreement (the "Amendment"), Borrower shall duly
execute and deliver to Bank an amended and restated Revolving
Note in the form attached as Exhibit 2.1 to the Amendment, in
the principal amount of $400,000, bearing interest as
specified in such Revolving Note (the "Revolving Note") and
will be delivered to Bank in substitution for the Revolving
Note originally executed by Borrower on April 7, 1994.
(b) Section 2, Subsection 2.1 (d) of the Agreement is hereby
amended and restated in its entirety as follows:
(d) The term of the Facility will expire on April 7, 1998
(the "Due Date"), and the Revolving Note will become payable
in full on that date. Borrower may prepay the principal
balance of the Revolving Note in whole or part at any time.
(c) Section 2, Subsection 2.2 (b) of the Agreement is hereby
amended and restated in its entirety as follows:
(b) When proceeds of the Collateral are deposited to the
Collection Account, after a reasonable time for clearance or
payment (currently one (1) business days after receipt
thereof), they will be credited by Bank against the
outstanding principal amount of the Revolving Loans
outstanding under the Facility. All such credits will be
conditional credits subject to collection. Any item not
finally paid will be charged to Borrower whether or not the
item is returned.
<PAGE>
(d) Section 4, Subsection 4.10 of the Agreement is hereby amended
and restated in its entirety as follows:
4.10 Depository/Banking Services. So long as this Agreement
is in effect, Bank will be the principal depository in which
substantially all of Borrower's funds are deposited, and the
principal bank of account of Borrower. Borrower will also
maintain a non-interest bearing account with Bank at all
times during the term hereof with a collected balance of at
least $75,000 deposited therein. Borrower will also grant
Bank the first opportunity to provide any corporate banking
services required by Borrower and its Affiliates, including,
without limitation, payroll, cash management and employee
benefit plan services.
2. Representations, Warranties and Covenants of Borrower. To
induce Bank to enter into this Amendment, Borrower represents and warrants as
follows:
(a) The representations and warranties of Borrower contained in
Section of the Agreement are deemed to have been made again
on and as of the date of execution of this Amendment, and are
true and correct as of the date of execution hereof.
(b) No Event of Default (as such term is defined in Section 6 of
the Agreement) or event or condition which, with the lapse of
time or giving of notice or both, would constitute an Event
of Default exists on the date hereof.
(c) The person executing this Amendment and the Amended and
Restated Revolving Note, is a duly elected and acting officer
of Borrower and is duly authorized by the Board of Directors
of Borrower to execute and deliver this Amendment and such
note on behalf of Borrower.
3. Conditions. Bank's obligations under this Amendment are
subject to the following conditions:
(a) Borrower shall have executed and delivered to Bank the Amended
and Restated Revolving Note in the form attached hereto as
Exhibit 2.1.
(b) The Bank shall have been furnished copies, certified by the
Secretary or assistant Secretary of Borrower, of resolutions
of the Board of Directors of Borrower authorizing the
execution of this Amendment, the Exhibits hereto and all
other documents executed in connection herewith which
resolutions will be in the form attached hereto as Exhibit A.
(c) The representations and warranties of Borrower in Section 2
hereof shall be true and correct on the date of execution of
this Amendment.
(d) Borrower shall pay all expenses and attorneys' fees incurred
by Bank in connection with the preparation, execution and
delivery of this Amendment and related documents.
4. General.
(a) Except as expressly modified hereby, the Agreement remains
unaltered and in full force and effect. Borrower acknow-
ledges that Bank has made no oral representations to Borrower
with respect to the Agreement and this Amendment thereto and
that all prior understandings between the parties are merged
into the Agreement as amended by this writing. All Loans
outstanding on the date of execution of this Amendment shall
be considered for all purposes to be Loans outstanding under
the Agreement as amended by this Amendment.
<PAGE>
(b) Capitalized terms used and not otherwise defined herein will
have the meanings set forth in the Agreement.
(c) Nothing contained herein will be construed as waiving any
default or Event of Default under the Agreement or will
affect or impair any right, power or remedy of the Bank under
or with respect to the Loans, the Agreement, as amended, the
Note, as amended and restated, or any agreement or instrument
guaranteeing, securing or otherwise relating to the Loans.
(d) This Amendment shall be considered an integral part of the
Agreement, and all references to the Agreement in the Agree-
ment itself or any document referring thereto shall, on and
after the date of execution of this Amendment, be deemed to
be references to the Agreement as amended by this Amendment.
(e) This Amendment will be binding upon and inure to the benefit
of Borrower and Bank and their respective successors and
assigns.
(f) All representations, warranties and covenants made by
Borrower herein will survive the execution and delivery of
this Amendment.
(g) This Amendment will, in all respects, be governed and
construed in accordance with the laws of the State of Ohio.
(h) This Amendment may be executed in one or more counterparts,
each of which will be deemed an original and all of which
together will constitute one and the same instrument.
(i) Borrower authorizes any attorney of record to appear for it
in any court of record in the State of Ohio, after an
Obligation becomes due and payable whether by its terms or
upon default, waives the issuance and service of process,
releases all errors and rights of appeal, and confesses a
judgment against it in favor of the holder of such
Obligation, for the principal amount of such Obligation
plus interest thereon, together with court costs and
attorneys'fees. Stay of Execution and all exemptions are
hereby waived. If an Obligation is referred to an attorney
for collection, and the payment is obtained without the entry
of a judgment, the obligors will pay to the holder of such
Obligation its attorneys' fees.
<PAGE>
IN WITNESS WHEREOF, Borrower and Bank have executed this Agreement by
their duly authorized officers as of the date first above written.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY
BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF
A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS
YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS,
FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR
ANY OTHER CAUSE.
ACCESS CORPORATION
By: NEWTON D. BAKER
------------------------
Its: Executive Vice President
THE FIFTH THIRD BANK
By: ANDREW G. AGGER
-----------------------------
Its: Assistant Cashier
<PAGE>
EXHIBIT 2.1
AMENDED AND RESTATED
REVOLVING NOTE
$400,000 Cincinnati, Ohio
April 7, 1994
First Amendment and Restatement April 7, 1996
On April 7, 1998, ACCESS CORPORATION, an Ohio corporation, for value
received, hereby promises to pay to the order of THE FIFTH THIRD BANK, an
Ohio banking corporation (the "Bank"), at its offices, located at 38
Fountain Square Plaza, Cincinnati, Ohio 45263, in lawful money of the United
States of America and in immediately available funds, the principal sum of
Four Hundred Thousand Dollars ($400,000) or such lesser unpaid principal
amount as may be advanced by Bank pursuant to the terms of the Credit
Agreement, dated April 7, 1994 and the First Amendment thereto, dated of even
date herewith by and between Borrower and Bank, as the same may be amended
from time to time (the "Agreement").
The principal balance outstanding hereunder, will bear interest from
the date of the first advance until paid at an annual floating rate of
interest equal to one percent (1%) in excess of the Prime Rate (as defined
below) of Bank in effect from time to time. The interest rate charged
hereunder will change automatically upon each change in the Prime Rate.
Accrued and unpaid interest will be due and payable monthly commencing on the
15th day of May, 1996 and continuing on the 15th day of each calendar month
thereafter during the term hereof. Interest will be calculated based on a
360-day year and charged for the actual number of days elapsed, and will be
payable on the first day of each calendar month. After maturity, whether by
acceleration or otherwise, this Note will bear interest (computed and
adjusted in the same manner, and with the same effect, as interest hereon
prior to maturity) payable on demand, at a rate per annum equal to the
Default Rate, until paid, and whether before or after the entry of
judgment hereon.
On April 7, 1998, all outstanding principal and all accrued and unpaid
interest will be due and payable.
The Prime Rate means the rate of interest per annum announced to be its
Prime Rate from time to time by Bank at its principal office in Cincinnati,
Ohio whether or not Bank will at times lend to borrowers at lower rates of
interest, or, if there is no such Prime Rate, then its base rate or such
other rate as may be substituted by Bank for the Prime Rate.
The principal amount of each loan made by Bank under this Note and the
amount of each prepayment made by Borrower under this Note will be recorded
by Bank in the regularly maintained data processing records of Bank. The
aggregate unpaid principal amount of all loans set forth in such records will
be presumptive evidence of the principal amount owing and unpaid on this
Note. However, failure by Bank to make any such entry will not limit or
otherwise affect Borrower's obligations under this Note or the Agreement.
All payments received by Bank under this Note will be applied first to
payment of amounts advanced by Bank on behalf of Borrower or which may be due
for insurance, taxes and attorneys' fees or other charges to be paid by
Borrower pursuant to the Agreement and the Loan Documents (as defined in the
Agreement), then to accrued interest on this Note, then to principal which
will be repaid in the inverse order of maturity.
This Note is the Revolving Note referred to in the Agreement, and is
entitled to the benefits, and is subject to the terms, of the Agreement.
Capitalized terms used but not otherwise defined herein will have the
meanings attributed thereto in the Agreement. The principal of this Note
<PAGE>
is prepayable in the amounts and under the circumstances, and its maturity is
subject to acceleration upon the terms, set forth in the Agreement. Except
as otherwise expressly provided in the Agreement, if any payment on this Note
becomes due and payable on a day other than one on which Bank is open for
business (a "Business Day"), the maturity thereof will be extended to the
next Business Day, and interest will be payable at the rate specified herein
during such extension period.
After the occurrence of an Event of Default and the expiration of any
notice and cure periods, all amounts of principal outstanding as of the date
of the occurrence of such Event of Default will bear interest at the Default
Rate, in Bank's sole discretion, without notice to Borrower. This provision
does not constitute a waiver of any Events of Default or an agreement by Bank
to permit any late payments whatsoever.
If any payment of principal is not paid when due (whether by accel-
eration or otherwise after the expiration of applicable notice grace and cure
periods), Borrower agrees to pay to Bank a late payment fee equal to five
percent (5%) of the payment amount then due.
Borrower may prepay any portion of this Note in part at any time with-
out premium or penalty. Any prepayments under this Note in advance of any
amortized payments will be applied to reduce the outstanding principal amount
of this Note in the inverse chronological order of maturity.
In no event will the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction will, in a
final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note
in excess of the highest permissible rate applicable hereto, such excess will
be deemed received on account of, and will automatically be applied to reduce
the amounts due to Bank from Borrower under this Note, other than interest, and
the provisions hereof will be deemed amended to provide for the highest
permissible rate. If there are no such amounts outstanding, Bank will refund
to Borrower such excess.
Borrower and all endorsers, sureties, guarantors and other persons
liable on this Note hereby waive presentment for payment, demand, notice of
dishonor, protest, notice of protest and all other demands and notices in
connection with the delivery, performance and enforcement of this Note, and
consent to one or more renewals or extensions of this Note (except as
provided for in the Agreement).
This Note is being executed in substitution for the Note, originally
dated April 7,1994,in the principal amount of $400,000, and is not delivered
in repayment thereof.
This Note may not be changed orally, but only by an instrument in
writing.
This Note is being delivered in, is intended to be performed in, will
be construed and enforceable in accordance with, and be governed by the
internal laws of, the State of Ohio without regard to principles of conflict
of laws. Borrower agrees that the State and Federal courts in Hamilton
County, Ohio or any other court in which Bank initiates proceedings will have
exclusive jurisdiction over all matters arising out of this Note, and that
service of process in any such proceeding will be effective if mailed to
Borrower at its address described in the Notices section of the Agreement.
BORROWER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT
OF THIS NOTE.
Borrower authorizes any attorney of record to appear for it in any
court of record in the State of Ohio, after this Note becomes due and
payable, whether by its terms or upon default, waives the issuance and
service of process, and releases all errors and rights of appeal, and
confesses a judgment against it in favor of the holder of such obligation,
for the principal amount of such obligation plus interest thereon, together
with court costs and attorneys' fees. Stay of execution and all exemptions
are hereby waived. If an obligation is referred to an attorney for
collection, and the payment is obtained without the entry of a judgment,
the obligors will pay to the holder of such obligation its attorneys' fees.
<PAGE>
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY
BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF
A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS
YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS,
FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR
ANY OTHER CAUSE.
ACCESS CORPORATION
By: __________________
Its: _________________
<PAGE>
EXHIBIT A
ACCESS CORPORATION
CERTIFICATE OF BORROWER
re: Amendments to Loans from
The Fifth Third Bank
The undersigned does hereby certify that he is the duly elected,
qualified and acting Secretary of Access Corporation, an Ohio corporation
(the "Borrower"), and the undersigned does hereby further certify as follows:
1. Attached hereto, marked Attachment A, is a true and correct copy
of the current Articles of Incorporation of Borrower together
with all amendments thereto. (Previously furnished)
2. Attached hereto, marked Attachment B, is a true and correct copy
of the current Code of Regulations\Bylaws of Borrower together
with all amendments thereto. (Previously furnished)
3. Attached hereto, marked Attachment C, is a true and correct copy
of a certain resolution of the board of directors of Borrower
similar in all material respects to the one expected to be
adopted at the next meeting.
4. The following persons are the duly elected officers of Borrower,
holding the office set forth opposite their respective names.
Each officer who has executed or will execute any documents in
connection with this loan transaction has set forth his true and
customary signature opposite his name.
Name Title Signature
Kent P. Friel Chairman See Signature Cards
Scott D. Watkins President & CEO See Signature Cards
Newton D. Baker Treasurer & Asst. Sec.See Signature Cards
Barbara A. Sommer Asst. Treasurer See Signature Cards
James M. Anderson Secretary See Signature Cards
Dennis J. Sullivan, Jr.Director See Signature Cards
5. Each officer whose personal signature appears above has been duly
authorized by resolution of the board of directors of Borrower to
execute any and all instruments or documents which he may deem
necessary or appropriate in connection with this loan
transaction.
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby certifies the above to
be true and has executed this certificate this 12th day of April, 1996.
JAMES M. ANDERSON , Secretary
-------------------------------
James M. Anderson
The undersigned does hereby certify that he is the Executive Vice
President of Borrower, and does further certify that James M. Anderson is the
Secretary of Borrower, and that his signature set forth above is his true and
customary signature.
NEWTON D. BAKER, Executive Vice President
---------------------------
Newton D. Baker
<PAGE>
ATTACHMENT C
to ACCESS CORPORATION
DIRECTORS' ACTION
BY WRITTEN CONSENT
The undersigned, being all of the Directors of Access Corporation, an
Ohio corporation (the "Corporation") who would be entitled to notice of a
meeting of the Board of Directors, do hereby authorize, approve and agree to
the adoption of the following action by their written consent without a
meeting, pursuant to Section 1701.54 of the Ohio Revised Code:
WHEREAS, the Board of Directors of the Corporation deem it in the best
interest of the Corporation to amend the terms of certain loans in the
original principal amount of $400,000 from The Fifth Third Bank ("Bank") to
finance various operations of the Corporation;
WHEREAS, negotiations have been carried on by and between the Corpor-
ation and Bank relating to the structuring of the transaction and the form of
documents to be used in connection with the financing; and
WHEREAS, the following documents (collectively called the "Loan
Documents") have been substantially finalized:
1. The First Amendment to the Credit Agreement between Corporation and
Bank; and
2. The Amended and Restated Revolving Note between Corporation as
Maker, and Bank in the principal amount of $400,000.
NOW THEREFORE, BE IT RESOLVED, that the Loan Documents are hereby
approved with such additional terms and provisions as the officer executing
the same shall approve and the execution and delivery of such documents by
such officer shall be conclusive evidence that the same has been authorized
by this resolution; and
RESOLVED FURTHER, that any one of the following officers of the
Corporation are hereby authorized to execute and deliver the Loan Documents
on behalf of the Corporation, and any and all other documents that he deems
necessary and advisable in order to complete the transaction authorized by
these resolutions and to perform such other acts, as in his judgment may be
necessary or appropriate in order to effectuate the financing and the intent
and purposes of the foregoing resolutions, the signature of only one such
officer being necessary:
Chairman of the Board
President
Vice President
Secretary
Treasurer
RESOLVED FURTHER, that the Chairman of the Board, President, Vice
President, Secretary and Treasurer of the Corporation are hereby authorized
to execute, the signature of only one such officer being necessary, and any
and all closing documents including but not limited to closing certificates
and financing statements necessary to obtain the financing with such add-
itional terms and provisions as the officer executing the same shall approve
and the execution and delivery of such documents by such officer shall be
conclusive evidence that the same has been authorized by this resolution.
Dated:
access.no1
