<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to ________________
Commission File Number: 0-9220
METATEC CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
FLORIDA 59-1698890
(State of Incorporation) (I.R.S. Employer Identification No.)
7001 Metatec Boulevard
Dublin, Ohio 43017
(Address of principal executive office) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (614) 761-2000
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, $.10 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K 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. [X]
The aggregate market value of the Common Shares held by nonaffiliates
of the Registrant as of March 22, 1996, was $57,936,141.
On March 22, 1996, the Registrant had 7,054,479 Common Shares
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's proxy statement for its annual meeting of
shareholders to be held on April 24, 1996, which proxy statement was filed with
the Securities and Exchange Commission on March 21, 1996, are incorporated by
reference into Part III, Items 10, 11, 12, and 13 of this Report.
<PAGE> 2
METATEC CORPORATION
FORM 10-K
PART I
ITEM 1. BUSINESS
GENERAL
Metatec Corporation, a Florida corporation (Metatec Corporation and
its subsidiaries are hereinafter collectively referred to as the "Company"), is
a leading information industry services company offering optical disc
manufacturing and distribution, software development, and network services.
The Company is organized into two business divisions, the Manufacturing
Services Group and the New Media Solutions Group. The Manufacturing Services
Group provides CD-ROM (compact disc-read only memory) mastering, replication,
and distribution services in addition to providing similar services to radio
syndication customers for audio compact discs ("Audio CDs"). The New Media
Solutions Group provides a broad range of software development and media
preparation services for customers creating custom CD-ROM products and
frequently published periodicals on optical media, offers network services for
information publishers desiring integrated worldwide web access to support
their CD-ROM publications, and produces and publishes NautilusCD, the first
subscription-based monthly multimedia CD-ROM magazine.
CD-ROM technology combines audio, video, text, and graphics in one
medium with the capability to store, search, and retrieve vast quantities of
information. One CD-ROM can contain up to 650 megabytes of data. The Company
believes that businesses and individuals are increasingly turning to CD-ROM
technology as a cost-effective means of organizing, storing, and disseminating
large quantities of information quickly to widely diversified groups of users.
The Company was incorporated as a Florida corporation on September 9,
1976. Since 1990, information distribution services have been the primary
business of the Company. Prior to that time, the Company's primary business
was the development and sale of real estate. In 1992, the Company discontinued
its real estate operations through a distribution of its real estate assets in
exchange for all of its outstanding Class B Common Shares. Pursuant to a
recapitalization effected in May 1993, the Company's Class B Common Shares were
eliminated as a class of shares.
INDUSTRY OVERVIEW
The principal methods for the distribution of business information
currently include print, CD-ROM, and on-line services. CD-ROM technology was
initially used primarily by institutions, such as libraries, for storing and
searching vast quantities of data. Although print remains the dominant vehicle
for business information distribution, publishers and other companies are
increasingly using CD-ROM as a cost-effective and portable format for
distributing and providing access to large amounts of information, including
multimedia applications and interactive software, to widely dispersed groups of
users. In 1993, CD-ROM became one of the fastest-growing segments of the
information services industry.
CD-ROM drives were first available commercially in the mid-1980s, and,
based on published industry information, the North American installed base of
CD-ROM disc drives increased from less than 1.5 million in 1991 to
approximately 50 million in 1995, and is estimated to be more than 80 million
by the end of 1996. A major factor contributing to the successful
establishment of CD-ROM is the degree of standardization achieved in the early
stages of market development. Adherence to these standards has created a
climate of acceptance among both publishers and device users. Domestic
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manufacturers of personal computers now offer CD-ROM drives as standard options
on virtually all of their desk-top models.
As a method of distributing business information, on-line services
lend themselves to information which requires frequent or continuous updating.
CD-ROM is a more cost-effective distribution method for large amounts of
information which require less frequent updating and provides audio, video,
text, and graphics capabilities in one medium.
The Company believes that only a small percentage of applications
suitable for CD-ROM have actually been implemented to date for both individuals
and business. As a result of the proliferation of CD-ROM drives through
embracement of CD-ROM technology by major computer hardware and software firms
and the untapped number of applications of CD-ROM technology, the Company
believes that the distribution of information to individuals and businesses
through the use of CD-ROM technology will increase significantly.
PRINCIPAL PRODUCTS AND SERVICES
Through its two business divisions which focus on market-specific
CD-ROM product offerings, the Company serves as a one-stop source of CD-ROM
solutions. The Manufacturing Services Group provides CD-ROM mastering,
replication, and distribution services in addition to providing similar
services to radio syndication customers for Audio CDs. In 1995, the New Media
Solutions Group was formed which combined the previously reported Software
Services and Publishing Services Groups. The New Media Solutions Group better
reflects the Company's approach to the evolving markets it serves. This Group
provides a broad range of software development and media preparation services
for customers creating custom CD-ROM products and frequently published
periodicals on optical media. This Group also offers network services for
customers desiring integrated worldwide web access to support their CD-ROM
publications.
The following table sets forth the revenues from each of the
foregoing activities and their approximate percentage contribution to sales
during the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
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1995 1994 1993
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Sales Percent Sales Percent Sales Percent
----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Manufacturing Services
Group:
CD-ROM . . . . . . $26,945,000 69% $17,949,000 62% $10,918,000 51%
Radio . . . . . . 5,578,000 14 5,666,000 20 5,650,000 27
New Media Solutions
Group . . . . . . . 6,738,000 17 5,328,000 18 4,394,000 20
Audio CD(1) . . . . . -0- -- -0- -- 356,000 2
------------ ------- ------------ ------- ----------- ----
Total Revenues . . . 39,261,000 100% $28,943,000 100% $21,318,000 100%
============ ======= ============ ======= =========== ====
<FN>
- ---------------------------
(1) The Company has exited the Audio CD manufacturing business except for
the radio syndication market.
</TABLE>
The Company focuses on increasing revenues from its CD-ROM
manufacturing services and new media solutions services while maintaining its
current market position within the mature radio syndication market. The
Company's strategy targets customers which require turn-key CD-ROM publication
services. Such customers generally have time-sensitive and recurring
information
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distribution requirements and evolving technical and creative needs, demand
high quality disc manufacturing, and may require fulfillment and distribution
services directed to the ultimate user base. As an established independent
manufacturer with the ability to produce efficiently the smaller production
runs generally required by CD-ROM orders, the Company believes that it is
strategically positioned to satisfy the needs of CD-ROM producers which require
responsive turnaround on smaller orders and a high degree of personalized
support and design services.
MANUFACTURING SERVICES GROUP. The Company manufactures CD-ROMs and
provides technical and creative services to design and assist in the marketing
of new CD-ROM applications by its customers. The Company's services performed
through the manufacturing process include conversion of data provided by
customers to a digital format, encoding of the data on a master disc,
replication from the master disc, data verification, quality control testing,
and design and printing of the disc label. The Company provides full-service
disc packaging and either ships the finished product back to its customers or
distributes the product to the ultimate end user on behalf of its customers.
The Company also manufactures Audio CDs for the radio syndication
programming services market. Radio syndication customers utilize the Company's
quick turn automated production lines, strict quality control, and end user
distribution services to provide them a competitive advantage. The Company
provides a full range of services to radio syndication customers from digital
format conversion to fulfillment.
The Company operates its automated production facility seven days a
week, 24 hours per day in a state-of-the-art facility, permitting it to offer
one-day turnaround of a master CD and high quality CD replicas for distribution
for both its CD-ROM and radio syndication customers.
NEW MEDIA SOLUTIONS GROUP. The Company provides a full range of
software services to assist customers with designing and producing multimedia
products integrating text, video, audio, graphics, and animation. These
services include working with customers to develop CD-ROM applications and
marketing strategies from technical and business consultation through the
conversion of raw data to the final replication of information on disc. For
example, the Company provides software programming services to develop indexing
and user interfaces providing search and retrieval capabilities. Such user
interfaces allow an ultimate end user to manipulate efficiently the information
being distributed. In order to provide software development services, the
Company currently uses search and retrieval software licensed to it by an
independent third party for an indefinite term at a rate tied to the level of
usage of the software. The Company believes that this software will continue
to be available from this supplier and other suppliers. The services provided
by the New Media Solutions Group often result in customers using the
Manufacturing Services Group for, among other things, replication, printing,
and fulfillment of a given project.
The Company also offers network services which integrate worldwide web
access to support CD-ROM publications.
The Company has developed the first subscription-based multimedia
magazine regularly distributed on CD-ROM. Each issue of NautilusCD, which is
published monthly, includes a variety of software demonstrations and
presentations, multimedia applications, directories and databases, educational
products, and a cumulative index. As of February 29, 1996, NautilusCD had
approximately 5,000 subscribers.
MARKETING. The Company markets its products and services, other than
NautilusCD, through its own sales force of 25 employed associates based in San
Jose, Chicago, Washington, D.C., New York, Denver, Dallas, and Boston, in
addition to Dublin, Ohio, where its principal offices are located. These
associates are responsible for maintaining relationships with existing
customers and developing new business relationships. The associates are
supported by a customer service staff that is
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responsible for ensuring that each order is processed in a timely manner and
all required support materials are in place. The Company markets NautilusCD
through direct mail with advertising and promotional support.
MANUFACTURING. The Company operates from an approximately 125,000
square foot facility in Dublin, Ohio, of which approximately 60,000 square feet
are used for manufacturing and distribution activities. The Company's
manufacturing services include premastering and mastering of discs, from which
duplicate CD-ROMs and Audio CDs can be made, disc label design and printing,
packaging, distribution, and fulfillment services. During the last four years,
the Company increased its mastering capacity and converted its disc
manufacturing process from batch processing to monoline, or in-line,
manufacturing. The Company believes that its increased mastering capacity is a
competitive advantage, allowing the Company to react more responsively to
customer timing requirements. The monoline process, which moves each disc
through the various operations separately, reduces production time, permits the
production of automated inspection equipment to detect flaws at an early stage,
and improves quality. Each replicating machine is self-contained, eliminating
the need for establishing and maintaining a separate production area clean
room.
In 1995, the Manufacturing Services Group received ISO 9002 quality
system certification. This certification means that the Company's
manufacturing facilities meet worldwide standards for quality practices.
During 1995, the Company continued a capacity expansion program which
doubled the Company's disc production capacities over 1994 levels. Additional
capacity expansion activities will continue as market demand requires.
The Company utilizes certain patents and technology in its
manufacturing activities which it licenses from third parties and which the
Company believes to be generally available to other manufacturers. Although
only one vendor currently produces a key raw material used by the Company in
its manufacturing process, the Company generally maintains a six-month supply
of this material and has obtained the rights to manufacture the material itself
or through other third parties. The Company has multiple sources for all other
raw materials and supplies used in its manufacturing operations.
COMPETITION. The Company has a number of competitors in each of its
lines of business. Many of the Company's competitors are larger and have
greater financial resources than the Company. The Company believes that the
principal competitive factors in the CD-ROM marketplace consist of service,
quality, and reliability for the timely delivery of products. These factors,
in addition to price, also affect the Audio CD marketplace. The Company
believes it competes favorably with respect to these factors in the CD-ROM
market and the radio syndication segment of the Audio CD market.
In its Manufacturing Services Group and New Media Solutions Group, the
Company differentiates itself from its competitors by providing short-run
manufacturing flexibility (including quick turnaround times), personalized
customer service, software development services, and complete CD-ROM solutions.
Many firms demand a manufacturer like the Company which can provide additional
services such as label design and printing, packaging, and distribution. In
addition to the foregoing, the New Media Solutions Group competes based on
product innovation and content.
EMPLOYEES
The Company employed approximately 340 associates as of March 21,
1996. Approximately 200 employees are directly involved in the manufacturing
and distribution process, approximately 55 employees are involved in the New
Media Solutions Group, and the remainder are involved in sales, administration,
and support. The Company believes that its relation with its associates is
good.
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ITEM 2. PROPERTIES
The Company owns an approximately 125,000 square foot office and
manufacturing facility situated on approximately 20 acres located at 7001
Metatec Boulevard, Dublin, Ohio. The Company's principal executive offices are
located in this facility. The Company also leases office space in San Jose,
Chicago, Washington, D.C., New York, Denver, Dallas, and Boston.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceeding,
nor, to the Company's knowledge, is any material legal proceeding threatened
against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the Company's fiscal year.
EXECUTIVE OFFICERS OF THE REGISTRANT
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The executive officers of the Company and their respective ages and
present positions with the Company are as follows:
<TABLE>
<CAPTION>
Officers Age Present Position(s) with the Company
-------- --- -------------------------------------
<S> <C> <C>
Jeffrey M. Wilkins 51 Chairman of the Board and Chief Executive Officer
Gregory T. Tillar 43 President and Chief Operating Officer
William H. Largent 40 Executive Vice President, Secretary,
Treasurer, and Chief Financial Officer
Alexander P. Deak 35 Vice President and Chief Information Officer
John R. Rue 37 Vice President, Business Development
Brad D. Warnick 43 Vice President, New Media Solutions
Christopher L. Winslow 34 Vice President, Manufacturing Services
</TABLE>
Mr. Wilkins has been Chairman of the Board and Chief Executive Officer
of the Company since August 1989.
Mr. Tillar has been President of the Company since February 1995, and
Chief Operating Officer of the Company since April 1993, and was Vice
President, responsible for various operating and sales functions, with the
Company since May 1990.
Mr. Largent has been Chief Financial Officer of the Company since
March 1993, Treasurer of the Company since May 1993, and Executive Vice
President and Secretary of the Company since October 1995. From October 1992
to March 1993, Mr. Largent was president of Liebert Capital Management
Corporation, an investment management company. From April 1990 to September
1992,
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Mr. Largent was executive vice president of L Corporation, an affiliate of
Liebert Capital Management Corporation.
Mr. Deak has been Vice President and Chief Information Officer of the
Company since December 1994, and has held information services and product
management positions with the Company since 1990.
Mr. Rue has been Vice President, Business Development, of the Company
since October 1995, and was Vice President, Software Services, from January
1994 until September 1995, and has held various management positions with the
Company since 1990.
Mr. Warnick has been Vice President, New Media Solutions, of the
Company since October 1995 and was Vice President, Publishing Services, from
October 1994 until September 1995, and has held various product development and
management positions with the Company since 1989.
Mr. Winslow has been Vice President, Manufacturing Services, of the
Company since 1992. From 1984 to 1992, Mr. Winslow was in sales and product
management with CompuServe Incorporated.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Shares are traded on the Nasdaq National Market
system under the symbol META. The following table reflects the range of
reported high and low last sales prices for the Common Shares for the periods
indicated.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
For the quarter ended 1994
March 31 . . . . . . . . . . . . . . $ 16.00 $11.50
June 30 . . . . . . . . . . . . . . 12.75 9.50
September 30 . . . . . . . . . . . . 12.25 9.25
December 31 . . . . . . . . . . . . 10.75 8.25
For the quarter ended 1995
March 31 . . . . . . . . . . . . . . $ 14.25 $8.75
June 30 . . . . . . . . . . . . . . 14.00 10.75
September 30 . . . . . . . . . . . . 14.75 11.75
December 31 . . . . . . . . . . . . 12.50 8.25
</TABLE>
As of March 21, 1996, there were 4,434 holders of record of the Common
Shares.
The Company has never paid cash dividends on the Common Shares. The
payment of dividends is within the discretion of the Company's board of
directors and depends upon the earnings, the capital requirements, and the
operating and financial condition of the Company, among other factors. The
Company currently expects to retain its earnings to finance the growth and
development of its business and does not expect to pay cash dividends in the
foreseeable future. In addition, under the terms of a loan agreement with a
bank, the Company is restricted from paying dividends in excess of 20% of its
consolidated net income after tax during each fiscal year. See Note 3 of the
Notes to Consolidated Financial Statements.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Sales . . . . . . . . . . . . . . . . . . . $39,261,463 $28,942,748 $21,318,416 $16,877,079 $13,614,834
Earnings (loss) from continuing
operations before income taxes . . . . . $ 4,140,980 $ 2,424,653 $ 1,061,984 $ (370,738) $(1,073,129)
Net earnings (loss) from continuing
operations . . . . . . . . . . . . . . . $ 2,808,980 $ 1,692,653 $ 1,061,984 $ (370,738) $(1,008,129)
Net earnings (loss) . . . . . . . . . . . . $ 2,808,980 $ 1,692,653 $ 1,061,984 $ (370,738) $ (427,908)
Earnings (loss) per common share from
continuing operations:
Primary . . . . . . . . . . . . . . . . $ 0.43 $ 0.33 $ 0.25 $ (0.11) $ (0.30)
Fully diluted . . . . . . . . . . . . . $ 0.43 $ 0.32 $ 0.21 $ (0.11) $ (0.30)
Primary earnings (loss) per common
share . . . . . . . . . . . . . . . . . . $ 0.43 $ 0.33 $ 0.25 $ (0.11) $ (0.13)
Weighted average number of common
shares outstanding:
Primary . . . . . . . . . . . . . . . . 6,480,326 5,134,656 4,260,806 3,371,956 3,370,293
Fully diluted . . . . . . . . . . . . . 6,485,010 5,323,503 4,953,412 3,371,956 3,370,293
FINANCIAL CONDITION:
Total assets . . . . . . . . . . . . . . . $50,076,076 $32,556,004 $19,347,362 $12,551,599 $13,920,218
Long-term liabilities . . . . . . . . . . . $ 845,875 $ 7,959,634 $ 151,316 $ 2,821,969 $ 2,325,284
Shareholders' equity . . . . . . . . . . . $43,301,079 $18,276,129 $16,206,703 $ 6,719,711 $ 9,155,949
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - 1995 COMPARED TO 1994
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Net sales in 1995 were at a record level of $39,261,000, an increase
of $10,319,000, or 36% over 1994. This increase resulted primarily from the
Manufacturing Services Group, which includes CD-ROM and Radio Syndication
manufacturing, increasing $8,908,000 to $32,523,000 for 1995, or 38%. The New
Media Solutions Group, previously reported as Software Services and Publishing
Services separately, increased $1,411,000 to $6,738,000 for 1995, or 26%. This
combined net sales increase was primarily as a result of strong market growth
which resulted in a significant increase in volume. The Company increased the
number of new customers it serves, as well as its existing customers introduced
new CD-ROM products and increased the size of their existing product orders.
Within the New Media Solutions Group the number of subscribers to
NautilusCD, the Company published CD-ROM monthly multimedia magazine, decreased
from 17,000 as of December 31, 1994 to 5,000 as of December 31, 1995. All of
the current NautilusCD subscribers are of the Macintosh version. This decrease
in subscribers during 1995 was a result of the PC/Windows version of NautilusCD
being converted to a CD-ROM publication not published by the Company. The
Company continues to provide software development and manufacturing services to
the new publisher.
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Gross profit was 42% of net sales for 1995 as compared to 44% of net
sales for 1994. This decrease is primarily attributed to an under utilization
of manufacturing capacity during the second half of 1995 as a result of a
doubling in the capacity during that same time period. The Company increased
capacity in the second half of 1995 in anticipation of increased volume in late
1995 and into 1996. Net sales in the first half of 1995 were $17,932,000 as
compared to $21,329,000 in the second half of 1995. The Company operated at
closer to capacity in the first half of 1995 than in the second half with the
result being higher fixed costs in relation to net sales during the second half
of the year.
Selling, general and administrative expenses increased to $12,121,000,
or 31% of net sales, for 1995 as compared to $10,061,000, or 35% of net sales,
for 1994. This increase of $2,060,000 is primarily attributed to increased
personnel costs and higher occupancy related costs due to the increased
corporate office space.
Investment income was $303,000 and $161,000 for 1995 and 1994,
respectively. The increase was a result of additional investment income from
higher cash and cash equivalents balances. These higher balances were as a
result of proceeds received from the second quarter of 1995 sale, by the
Company, of an additional 1,725,000 common shares. Other expense of $75,000 in
1995 compares to other income of $62,000 in 1994. This unfavorable change of
$137,000 is a result of a loss on the sale of property, plant and equipment in
1995.
Interest expense for 1995 was $323,000 as compared to $380,000 for
1994. During 1995 the Company paid off all of its long-term bank debt utilizing
$8,100,000 of the proceeds from the previously mentioned 1995 sale of shares.
The income tax expense was $1,332,000 in 1995, or an effective tax
rate of 32%, as compared to $732,000 in 1994, or an effective tax rate of 30%.
The 1995 provision reflects a benefit from state investment tax credits while
the 1994 provision reflects a benefit of the usage of net operating loss
carryforwards partially offset by the provision for state and local taxes.
Net earnings for 1995 were $2,809,000, or primary and fully diluted
earnings per common share of $.43, as compared to 1994 net earnings of
$1,693,000, or primary earnings per common share of $.33 and fully diluted
earnings per common share of $.32. This improvement was primarily a result of
higher net sales and a reduction in the rate of growth in selling, general and
administrative expenses relative to net sales growth, partially offset by a
slightly higher effective tax rate.
RESULTS OF OPERATIONS - 1994 COMPARED TO 1993
Net sales in 1994 were at $28,943,000, an increase of $7,625,000, or
36% over 1993. This increase resulted primarily from the Manufacturing
Services Group, which includes CD-ROM and Radio Syndication manufacturing,
increasing $6,691,000 to $23,615,000 for 1994, or 40%. The New Media Solutions
Group, previously reported as Software Services and Publishing Services
separately, increased $934,000 to $5,328,000 for 1994, or 21%. This combined
net sales increase was primarily as a result of strong market growth which
resulted in a significant increase in volume.
Within the New Media Solutions Group the number of subscribers to
NautilusCD, the Company published CD-ROM monthly multimedia magazine, increased
from 11,000 as of December 31, 1993 to 17,000 as of December 31, 1994. This
increase in subscribers resulted in minimal net sales growth due to a decrease
in the per-issue sales price of NautilusCD in 1994.
Gross profit was 44% of net sales for 1994 as compared to 43% of net
sales for 1993. This increase is primarily attributed to greater manufacturing
efficiencies and increased production volumes. The Company's 1994 increase in
capacity, which more than doubled the capacity over the 1993 level, was fully
operational in the second half of 1994.
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Selling, general and administrative expenses increased to $10,061,000,
or 35% of net sales, for 1994 as compared to $8,226,000, or 39% of net sales,
for 1993. This increase of $1,835,000 is primarily attributed to increased
personnel costs and higher levels of product advertising and promotion incurred
in 1994.
Investment income was $161,000 and $135,000 for 1994 and 1993,
respectively. The 1994 amount is primarily due to a $106,000 gain on the sale
of securities with the balance representing earnings on cash and cash
equivalents balances. The 1993 amount resulted from earnings on cash and cash
equivalents balances. There was minimal change in other income of $62,000 in
1994 and $42,000 in 1993.
Interest expense for 1994 was $380,000 as compared to $136,000 for
1993. This increase of $244,000 in 1994 was due to an increase in long-term
debt incurred as a result of the Company's facility acquisition and expansion
in 1994.
The income tax expense was $732,000 in 1994, or an effective tax rate
of 30% , which reflects a benefit of the recognition of net operating loss
carryforwards partially offset by the provision for state and local taxes. No
provision for income taxes was necessary in 1993 due to the utilization of net
operating loss carryforwards from prior years.
Net earnings for 1994 were $1,693,000, or primary earnings per common
share of $.33 and fully diluted earnings per common share of $.32, as compared
to 1993 net earnings of $1,062,000, or primary earnings per common share of
$.25 and fully diluted earnings per common share of $.21. This improvement was
primarily a result of higher net sales and greater manufacturing efficiencies
obtained in 1994, partially offset by a higher effective tax rate.
IMPACT OF INFLATION
The Company's operations are not significantly affected by
inflationary pressures. Although inflation does affect salaries, employee
benefits and other operating expenses, after considering general inflationary
trends, total sales of the Company produced growth in real terms in 1995 and
1994. Net sales increased primarily due to increased sales of CD-ROM and
related products, rather than increases in inflation.
FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES
The Company financed its business in 1995 through cash generated from
operations and through the issuance of common stock. Historically, the Company
also financed business needs through the use of debt. Cash flow from operating
activities was $5,119,000, $5,215,000, and $3,859,000 for 1995, 1994 and 1993,
respectively.
In 1995, the Company doubled its manufacturing capacity over the 1994
level. The capacity increase along with recurring capital needs resulted in
the purchase of $12,235,000 in property, plant and equipment during 1995 as
compared to $17,752,000 in 1994 (which included the acquisition and expansion
of the Company's principal facility) and $5,329,000 in 1993. The Company will
continue to expand its operations in 1996 through the addition of manufacturing
and distribution capacity.
In 1995, the Company completed a public common stock offering of
1,725,000 common shares that generated net cash proceeds of $17,915,000. A
portion of these proceeds was used to reduce its long-term bank debt in full
in 1995 and to purchase property, plant and equipment necessary to complete
the capacity expansion.
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<PAGE> 11
The Company has cash and cash equivalents of $5,899,000 as of December
31, 1995 and additionally has available $4,000,000 under its revolving loan
agreement (which matures in April of 1996). Management believes that the
revolving loan agreement will be renewed and that these funding sources, plus
cash to be generated from future operations and funds which may be obtained
from future financing activities should provide sufficient capital to meet the
current business needs of the Company.
STATEMENT OF MANAGEMENT RESPONSIBILITY
The consolidated financial statements of Metatec Corporation are the
responsibility of management, and those statements have been prepared in
accordance with generally accepted accounting principles. All available
information and management's judgment of current conditions and circumstances
have been reflected. Management accepts full responsibility for the accuracy,
integrity and objectivity of the financial information included in this report.
To provide reasonable assurance that assets are safeguarded against
loss from unauthorized use or disposition and that accounting records are
reliable for preparing financial statements, management maintains systems of
accounting and internal controls, including written policies and procedures,
which are communicated to all levels of the Company. Management believes that
the Company's accounting and internal control systems provide reasonable
assurance that assets are safeguarded and financial information is reliable.
Maintenance of sound internal control by division of responsibilities
is augmented by internal review programs and an Audit Committee of the Board of
Directors comprised solely of directors independent of management. The Audit
Committee reviews the scope of the audits performed by the independent public
accountants, Deloitte & Touche LLP, together with their audit report and any
recommendations made by them. The independent accountants have free access to
meet with the Audit Committee and Board of Directors with or without management
representatives present.
Jeffrey M. Wilkins William H. Largent
Chairman and Executive Vice President and
Chief Executive Officer Chief Financial Officer
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF EARNINGS
Metatec Corporation Financial Statements
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES $ 39,261,463 $ 28,942,748 $ 21,318,416
Cost of sales 22,904,728 16,300,693 12,071,515
------------ ------------ ------------
Gross profit 16,356,735 12,642,055 9,246,901
Selling, general and administrative expenses 12,120,839 10,060,600 8,225,564
------------ ------------ ------------
OPERATING EARNINGS 4,235,896 2,581,455 1,021,337
Other income and (expense):
Investment income 302,642 160,616 134,637
Other - net (74,599) 62,288 41,857
Interest expense (322,959) (379,706) (135,847
------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES 4,140,980 2,424,653 1,061,984
Income taxes 1,332,000 732,000
------------ ------------ ------------
NET EARNINGS $ 2,808,980 $ 1,692,653 $ 1,061,984
============ ============ ============
NET EARNINGS PER COMMON SHARE:
Primary $ 0.43 $ 0.33 $ 0.25
============ ============ ============
Fully Diluted $ 0.43 $ 0.32 $ 0.21
============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 6,480,326 5,134,656 4,260,806
============ ============ ============
Fully Diluted 6,485,010 5,323,503 4,953,412
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
- 11 -
<PAGE> 12
CONSOLIDATED BALANCE SHEETS
At December 31
<TABLE>
<CAPTION>
At December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,898,928 $ 2,167,518
Accounts receivable, net of allowance for doubtful accounts of
$338,000 and $269,000 6,281,460 4,092,038
Inventory 885,107 602,773
Prepaid expenses 606,271 460,258
Deferred income taxes 674,000 522,000
Current portion of long-term note receivable 12,374 11,597
------------ ------------
Total current assets 14,358,140 7,856,184
------------ ------------
Long-term note receivable, less current portion 213,851 226,225
------------ ------------
Property, plant and equipment - net 31,337,322 24,081,612
------------ ------------
Other assets:
Goodwill - net 4,166,763 314,283
Other 77,700
------------ ------------
Total other assets 4,166,763 391,983
------------ ------------
TOTAL ASSETS $ 50,076,076 $ 32,556,004
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,328,255 $ 2,462,243
Accrued royalties 1,173,252 559,157
Accrued personal property taxes 541,228 378,210
Other accrued expenses 530,728 411,585
Accrued payroll 465,371 359,400
Accrued income taxes 444,008 285,371
Unearned income 370,421 888,940
Current maturities of long-term debt and capital lease obligations 75,859 975,335
------------ ------------
Total current liabilities 5,929,122 6,320,241
Long-term debt and capital lease obligations, less current maturities 117,875 7,644,634
Deferred income taxes 728,000 315,000
------------ ------------
Total liabilities 6,774,997 14,279,875
------------ ------------
Shareholders' equity:
Common stock, $.10 par value; authorized 10,083,500 shares; issued 1995 -
7,054,734 shares; 1994 - 5,272,219 shares 705,474 527,222
Additional paid-in capital 33,781,631 15,643,913
Retained earnings 8,850,515 6,041,535
Treasury stock, at cost - 2,755 shares (36,541) (36,541)
Unamortized restricted stock (3,900,000)
------------ ------------
Total shareholders' equity 43,301,079 18,276,129
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 50,076,076 $ 32,556,004
============ ============
</TABLE>
See notes to consolidated financial statements.
- 12-
<PAGE> 13
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Class B Additional Unamortized
Common Common Paid-in Retained Treasury Restricted
Stock Stock Capital Earnings Stock Stock Total
--------- ------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 $ 338,030 $ 260 $ 5,194,523 $ 3,286,898 $(2,100,000) $ 6,719,711
Net earnings 1,061,984 1,061,984
Shares issued pursuant to a public
offering, net of costs of $596,979 115,000 8,182,529 8,297,529
Stock options exercised 7,932 156,088 164,020
Issuance of restricted shares 60,000 3,840,000 $(3,900,000) 0
Elimination of Class B common stock (260) (2,099,740) 2,100,000 0
Treasury shares acquired (36,541) (36,541)
--------- ------- ----------- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1993 520,962 $ 0 15,273,400 4,348,882 (36,541) (3,900,000) 16,206,703
=======
Net earnings 1,692,653 1,692,653
Stock options exercised 6,260 176,513 182,773
Tax benefit relating to stock options 194,000 194,000
--------- ----------- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1994 527,222 15,643,913 6,041,535 (36,541) (3,900,000) 18,276,129
Net earnings 2,808,980 2,808,980
Shares issued pursuant to a public
offering, net of costs of $283,968 172,500 17,742,282 17,914,782
Stock options exercised 5,752 225,436 231,188
Restricted shares earned 3,900,000 3,900,000
Tax benefit relating to stock options 170,000 170,000
========= =========== =========== =========== =========== ===========
BALANCE AT DECEMBER 31, 1995 $ 705,474 $33,781,631 $ 8,850,515 $ (36,541) $ 0 $43,301,079
========= =========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
- 13-
<PAGE> 14
Metatec Corporation Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 2,808,980 $ 1,692,653 $ 1,061,984
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 4,533,907 3,227,325 2,128,620
Deferred income taxes 261,000 (207,000)
Gain on sale of marketable securities (25,900) (106,000)
Net loss on sales of property, plant and equipment 144,711 37,305 5,258
Changes in assets and liabilities:
Accounts receivable (2,189,422) (1,114,703) (229,096)
Inventory (282,334) (252,698) (25,345)
Prepaid expenses and other assets (146,013) 6,584 190,689
Accounts payable and accrued expenses 532,644 2,083,876 233,171
Unearned income (518,519) (152,371) 493,283
------------ ------------ -----------
Net cash provided by operating activities 5,119,054 5,214,971 3,858,564
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in long-term note receivable 11,597 10,869 131,629
Purchase of property, plant and equipment (11,740,876) (17,119,750) (5,144,985)
Proceeds from the sale of property, plant and equipment 348,300 177,000 3,866
Decrease in goodwill 178,000
Proceeds from the sale of marketable securities 103,600 219,576
------------ ------------ -----------
Net cash used in investing activities (11,277,379) (16,534,305) (5,009,490)
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock, net of offering expenses 17,914,782 8,297,529
Increase in long-term debt 8,750,000
Payment of long-term debt and capital lease obligations (8,426,235) (489,631) (3,601,585)
Stock options exercised, including tax benefit 401,188 376,773 164,020
Treasury stock acquired (36,541)
------------ ------------ -----------
Net cash provided by financing activities 9,889,735 8,637,142 4,823,423
------------ ------------ -----------
Increase (decrease) in cash and cash equivalents 3,731,410 (2,682,192) 3,672,497
Cash and cash equivalents at beginning of year 2,167,518 4,849,710 1,177,213
------------ ------------ -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,898,928 $ 2,167,518 $ 4,849,710
============ ============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 322,959 $ 379,706 $ 172,311
============ ============ ===========
Income taxes paid $ 730,271 $ 252,235 $ 118,000
============ ============ ===========
Increase in goodwill related to 600,000 restricted common
shares earned $ 3,900,000
============
Assets purchased for the assumption of a liability $ 494,232 $ 632,342 $ 183,902
============ ============ ===========
Issuance of 600,000 restricted common shares $ 3,900,000
===========
Elimination of Class B common stock $ 2,100,000
===========
</TABLE>
See notes to consolidated financial statements.
- 14 -
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the accounts of
Metatec Corporation and its subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements.
Management believes those estimates and assumptions utilized in preparing the
financial statements are reasonable.
NATURE OF OPERATIONS - The operations of the Company are in the information
industry primarily providing optical disc manufacturing and distribution in
addition to software development and related network services, for specific
customers primarily in North America, with a majority of the customers under
contract. The Company maintains one manufacturing, distribution and development
facility with sales offices located in eight different locations around the
United States. The revenues from product sales are recognized at the time the
products are shipped. Subscription revenues are recognized ratably over the
subscription period. For software development services, the Company recognizes
profit using the percentage of completion method, measured by the percentage of
the cost of services completed to date compared to total planned cost of
services. Earned revenue is determined on the basis of the profit recognized
plus the contract costs incurred during the period.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents consist of highly liquid
instruments such as certificates of deposit, time deposits, treasury notes and
other money market instruments which generally have maturities of less than
three months. The carrying amounts reported in the balance sheet approximate
fair value. The Company holds cash primarily in one financial institution.
INVENTORY - Inventory consists primarily of raw materials and are valued at the
lower of cost or market with cost determined by the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are recorded at
cost. The cost of maintenance and repairs is charged against results of
operations as incurred. Property, plant and equipment are depreciated using the
straight-line method over the estimated useful lives of the related assets which
range from three to thirty years. For income tax purposes, accelerated methods
are used for all eligible assets. In 1994 interest costs of $96,000 were
capitalized.
GOODWILL - Goodwill represents the excess of cost over net assets acquired and
was being amortized using the straight-line method over 25 years. Effective
April 1, 1993, the Company reduced the amortization period to 15 years
prospectively from April 1, 1993, based upon a current evaluation by the
Company. During 1994, the Company recognized the tax benefit of acquired net
operating loss carryforwards and, accordingly, reduced goodwill by such benefit
totaling $178,000. At December 31, 1995 goodwill and shareholders' equity were
increased $3,900,000 to reflect the vesting of the restricted shares earned by
an officer/shareholder. The additional $3,900,000 in goodwill, beginning in
1996, will be amortized using the straight-line method through 2005.
At each balance sheet date, a determination is made by management to ascertain
whether goodwill has been impaired based on several criteria, including, but not
limited to, revenue trends, undiscounted operating cash flows and other
operating factors.
During 1995, the Company early adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS 121"). This statement requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS 121 had no effect on the Company's financial
condition or results from operations.
ADVERTISING - The Company expenses advertising costs as incurred. Advertising
expense was $370,157, $784,039 and $401,577 for 1995, 1994 and 1993,
respectively.
NET EARNINGS PER COMMON SHARE - Net earnings per common share is computed based
on the weighted average number of common shares outstanding during the period,
including, when their effect is dilutive, common stock equivalents consisting of
shares subject to options and contingently issuable shares of stock.
- 15 -
<PAGE> 16
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
December 31 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Land $ 1,292,679 $ 1,289,129
Buildings and improvements 10,897,039 10,231,804
Machinery and equipment 20,392,705 14,425,553
Furniture and fixtures 2,486,726 1,845,433
Computer equipment and related software 5,149,679 3,880,956
Transportation equipment 12,725 12,725
Equipment installation-in-progress 1,001,412 62,139
----------- -----------
Total 41,232,965 31,747,739
Less accumulated depreciation (9,895,643) (7,666,127)
----------- -----------
Net property, plant and equipment $31,337,322 $24,081,612
=========== ===========
</TABLE>
3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C>
Term loan paid in full in 1995 $ 3,540,000
Mortgage loan paid in full in 1995 4,800,000
-----------
Total 8,340,000
-----------
Capital lease obligations (see note 4) $ 193,734 279,969
Less current maturities (75,859) (975,335)
--------- -----------
Long-term debt and capital lease obligations, less
current maturities $ 117,875 $ 7,644,634
========= ===========
</TABLE>
The Company has an agreement with a bank that provides for advances of
$4,000,000 on an unsecured revolving loan. The revolving loan bears interest at
2% in excess of the London Interbank Offered Rate ("LIBOR") (at December 31,
1995 the 30 day LIBOR was at 5.69%) and is due April 30, 1996. No amounts were
outstanding on the revolving loan at December 31, 1995 or 1994. The loan
agreement contains restrictive covenants which, among others, require the
Company to maintain a certain level of tangible net worth, limit dividends to
20% of net earnings, maintain certain financial ratios and limit capital
expenditures.
4. LEASES
The Company leases office equipment under noncancellable capital lease
agreements expiring at various dates through 1999. Maintenance, insurance, and
tax expenses are the responsibility of the Company under the agreements. The
Company also leased certain equipment under a capital lease agreement with an
officer/shareholder of the Company which was purchased by the Company during
1994.
The Company previously leased its principal manufacturing and office facility
from an officer/shareholder under an operating lease. In 1994 the Company
entered into a new capital lease for the facilities and then subsequently
exercised an option in the lease agreement to purchase the facilities from the
officer/shareholder for $4,800,000. Total rent expense under the operating lease
was $87,786 and $526,717 for 1994 and 1993, respectively. Total lease payments
under the capital lease were $291,114 in 1994.
The future annual minimum lease payments under all capital leases, together with
the present value of the minimum lease payments, and the future minimum rental
payments required under all operating leases that have initial or remaining
lease terms in excess of one year are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
- ---------------------------------------------------------------------------
<S> <C> <C>
Year ending December 31:
1996 $ 86,394 $ 211,277
1997 69,378 72,736
1998 45,371 37,534
1999 13,088 13,033
2000 13,033
--------- ----------
Total minimum lease payments 214,231 $ 347,613
==========
Less amount representing interest (20,497)
---------
Present value of net minimum payments $ 193,734
=========
</TABLE>
- 16 -
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following assets capitalized under lease agreements are included in
property, plant and equipment at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
- -----------------------------------------------------------------------
<S> <C> <C>
Machinery and equipment $ 543,469
Computer equipment and related software $ 84,399 84,399
Furniture and fixtures 355,356 400,895
------------ -----------
Total 439,755 1,028,763
Less accumulated depreciation (291,231) (706,677)
------------ -----------
Total $ 148,524 $ 322,086
============ ===========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
SELF-INSURANCE - The Company is self-insured with respect to medical and dental
claims. The Company has obtained stop-loss insurance for claims in excess of
$45,000 per individual per year and $1,000,000 lifetime maximum per individual.
The Company has recorded an estimated liability at December 31, 1995 and 1994 of
$170,000 for self-insured claims incurred but not reported.
PROPERTY, PLANT AND EQUIPMENT - The Company has commitments under contracts for
the purchase of property, plant and equipment. Portions of such contracts at
December 31, 1995 are not reflected in the consolidated financial statements.
These unrecorded commitments amounted to approximately $234,500.
6. INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." This standard
requires, among other things, recognition of future tax benefits, measured by
enacted tax rates, attributable to deductible temporary differences between the
financial statement basis and income tax basis of assets and liabilities and net
operating loss carryforwards to the extent realization is more likely than not.
The components of income tax expense (benefit) for the years ended December 31,
1995 and 1994, were as follows:
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------
Federal:
<S> <C> <C>
Current $ 793,000 $ 778,000
Deferred 549,000 (207,000)
----------- ----------
Total Federal 1,342,000 571,000
State and Local:
Current 278,000 161,000
Deferred (288,000)
----------- ----------
Total State and Local (10,000) 161,000
----------- ----------
Total $ 1,332,000 $ 732,000
=========== ==========
</TABLE>
In 1993, no tax provision was necessary as the Company utilized a net operating
loss carryforward. In 1995 the state and local income tax expense was reduced by
a state investment tax credit which resulted in a net benefit for the year of
$500,000 of which $288,000 will reduce future years state tax payable.
Significant differences between income taxes recorded for financial reporting
purposes and income taxes calculated using the Federal statutory rate of 34% are
as follows:
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
Tax expense at statutory rate $ 1,408,000 $ 824,000
State and local tax expense (benefit), net of
federal benefit (7,000) 106,000
Reversal of valuation allowance, net of
goodwill adjustment (367,000)
Other (69,000) 169,000
----------- -----------
Total $ 1,332,000 $ 732,000
=========== ===========
</TABLE>
- 17 -
<PAGE> 18
Deferred income taxes recorded in the consolidated balance sheets at December
31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
State tax credit (expires 1998) $ 288,000
AMT carryforwards (no expiration date) 198,000 $ 403,000
Allowance for doubtful accounts 121,000 92,000
Net operating loss carryforwards 116,000 122,000
Inventory 66,000
Medical self-insurance accrual 61,000 58,000
Other 3,000 4,000
--------- -----------
Total deferred tax assets 853,000 679,000
Deferred tax liabilities:
Depreciation 844,000 438,000
Other 63,000 34,000
--------- -----------
Total deferred tax liabilities 907,000 472,000
--------- -----------
Net deferred tax asset (liability) $ (54,000) $ 207,000
========= ===========
</TABLE>
During 1994, the Company eliminated the valuation allowance based on its
assessment that realization of its deferred tax assets is more likely than not
given the nature and expected timing of its temporary differences and the recent
and expected future profitable operations of the Company. The valuation
allowance was reduced during 1993 by approximately $115,000 which reflected the
usage of a portion of the net operating loss carryforwards to offset income
before income taxes.
The Company has available net operating loss carryforwards for tax purposes of
approximately $323,000 which expire in 2005 which may only be used to offset
future taxable income of Metatec/Discovery Systems, Inc. (a wholly-owned
subsidiary of the Company).
7. EMPLOYMENT AGREEMENT AND BENEFIT PLAN
The Company has an employment agreement with an executive officer/shareholder of
the Company. The agreement continues until terminated by the executive or the
Company and provides for a lump sum payment of one year's compensation upon the
occurrence of certain events. The executive is entitled to an annual cash bonus
in addition to base salary.
The same executive officer/shareholder was issued 600,000 common shares under a
Restricted Share Agreement (the "Agreement") dated March 23, 1993. These shares
were issued subject to a risk of forfeiture of all of the shares if his
employment is terminated by the Company for cause or by the officer/shareholder
without good reason (as those terms are defined in the Employment Agreement) on
or before February 29, 1996. These shares are also subject to a risk of
forfeiture of all or part of the shares as determined pursuant to an earnings
formula as defined in the Agreement. Additionally, the Company has agreed to pay
the officer/shareholder an amount equal to any tax savings resulting to the
Company from the issuance and vesting of the shares and the payment of such
additional amount, up to the amount of the officer's/shareholder's individual
tax liability.
At December 31, 1995, all 600,000 common shares have been earned in accordance
with the Agreement. The shares issued under this agreement were treated as an
adjustment to goodwill and will be amortized beginning in 1996, using the
straight-line method, over a ten year period ending in 2005. The adjustment to
goodwill at December 31, 1995 was $3,900,000.
Substantially all associates are enrolled in a Company-sponsored defined
contribution plan established under Section 401(k) of the Internal Revenue Code.
The plan was established in 1993 and the Company contribution was approximately
$68,900, $49,400 and $41,500 for 1995, 1994 and 1993, respectively. The Company
contribution is 20% of the associate's contribution up to maximum of 1% of the
associate's annual compensation. The funds are invested in mutual funds.
8. STOCK OPTION PLANS
The Company implemented two stock option plans effective July 1, 1990. The first
plan, the 1990 Directors' Stock Option Plan, was available only to directors who
were not employees or officer/shareholders of the Company. As of December 31,
1995, there have been 27,500 options granted of which 5,000 were forfeited,
20,000 were exercised and 2,500 are exercisable. The plan expired in 1992 and no
additional options may be granted under this Plan. All options under the 1990
Directors' Plan were fully vested on the first anniversary date of the grant.
In 1992, an additional Directors' Stock Option Plan was implemented under which
a maximum of 160,000 of Common Shares may be issued. This Plan, as amended,
provides for each person who is an eligible director on the day after the
Company's annual meeting of shareholders to be automatically granted an option
for 2,500 shares, vesting on the grant date, and each person who first becomes
an eligible director will automatical-
- 18 -
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ly receive a one time grant of options for 10,000 shares. This one time option
vests in equal installments over a four year period. As of December 31, 1995,
there have been 117,425 options granted of which 7,500 were forfeited, 16,923
were exercised and 53,002 are exercisable.
The option price of shares subject to an option for the Directors' Stock Option
Plans is the fair market value of the shares at the time the option is granted.
No options issued are exercisable after five years from the date of grant.
The second plan, the 1990 Stock Option Plan, is available to officers and key
employees of the Company or its subsidiary corporations and, in the case of
non-qualified options, directors of subsidiaries of the Company (other than
directors of such subsidiaries who are also directors of the Company). The
maximum aggregate number of common shares which may be granted under the 1990
Stock Option Plan is 510,000 shares. As of December 31, 1995, there have been
548,750 options granted of which 52,950 were forfeited, 185,825 were exercised
and 283,150 are exercisable.
The Company's Compensation Committee, which administers the plan, has the
authority to grant incentive options and non-qualified options. Only officers
and other key employees of the Company or its subsidiary corporations are
eligible for grants of incentive options. At December 31, 1995, no incentive
options had been granted. An incentive option vests one year from the date of
grant, and is not exercisable after 10 years from the date of grant. The option
price of an incentive option is equal to the fair market value of the shares at
the time the incentive option is granted.
The following summarizes all stock option transactions from January 1, 1993
through December 31, 1995:
<TABLE>
<CAPTION>
Option Aggregate
Shares Price $ Amount
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at
December 31, 1992 252,055 $1.50 to $3.69 $ 469,313
Granted 90,370 $5.50 to $10.50 501,493
Exercised (79,633) $1.50 to $3.69 (164,020)
Expired (500) $6.00 (3,000)
-------- ----------
Outstanding at
December 31, 1993 262,292 $1.50 to $10.50 803,786
Granted 229,425 $10.00 to $11.50 2,630,888
Exercised (62,600) $1.50 to $6.00 (182,773)
Expired (3,525) $6.00 to $11.50 (35,038)
-------- ----------
Outstanding at
December 31, 1994 425,592 $1.50 to $11.50 3,216,863
Granted 51,825 $9.37 to $11.25 540,452
Exercised (57,515) $1.50 to $11.50 (231,188)
Expired (14,425) $11.50 (165,888)
-------- ----------
Outstanding at
December 31, 1995 405,477 $1.50 to $11.50 $3,360,239
======== ==========
</TABLE>
At December 31, 1995, 338,652 common shares under option were exercisable and
50,075 and 14,200 common shares (total of 64,275) were reserved for future grant
under the 1992 Directors' Stock Option Plan and the 1990 Stock Option Plan,
respectively.
9. RELATED PARTY TRANSACTIONS
Effective April 26, 1993, the Company sold its interest in a partnership (which
primarily held real estate) for a note receivable in the amount of $255,555. The
note was received from a corporation which is wholly owned by the adult
daughters of a director/shareholder of the Company. The note bears interest at
6.5% and is payable in monthly installments of principal and interest of $2,226
with the balance due in 60 months. The balance receivable at December 31, 1995
was $226,225.
Effective January 19, 1994, the Company purchased, for cash, real estate from a
partnership, in which an officer/shareholder of the Company is a partner. The
tract of land included approximately eight acres and the purchase price totalled
approximately $694,000. The land was used for the expansion at the existing
facility.
- 19 -
<PAGE> 20
10. SUBSEQUENT EVENT
Effective January 26, 1996, the Company purchased, for cash, real estate from a
partnership, in which an officer/shareholder of the Company is a partner. The
tract of land included approximately five acres adjacent to the existing
facility of the Company and the purchase price totalled approximately $485,000.
The land will be used for future expansion at the existing facility.
11. RECENTLY ISSUED ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 123, "Accounting for Stock-Based Compensation," which
requires adoption no later than fiscal years beginning after December 15, 1995.
The new standard defines a fair value method of accounting for stock options and
similar equity instruments. Under the fair value method, compensation cost is
measured at the grant date based on the fair value of the award and is
recognized over the service period, which is usually the vesting period.
Pursuant to the new standard, companies are encouraged, but not required, to
adopt the fair value method of accounting for employee stock-based transactions.
Companies are also permitted to continue to account for such transactions under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," but would be required to disclose in a note to the financial
statements pro forma net earnings and earnings per share as if the company had
applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption. The Company
has not yet determined if it will elect to change to the fair value method, nor
has it determined the effect the new standard will have on net earnings and
earnings per share should it elect to make such a change. Adoption of the new
standard will have no effect on the Company's cash flow.
12. CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended March 31 June 30 September 30 December 31
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Net Sales $9,178,622 $8,754,016 $9,434,662 $11,894,163
Gross Profit 4,044,668 3,661,448 3,743,796 4,906,823
Net earnings 542,618 367,895 626,480 1,271,987
Net earnings
per common share:
Primary $ 0.10 $ 0.06 $ 0.09 $ 0.18
Fully diluted $ 0.10 $ 0.06 $ 0.09 $ 0.18
1994
Net Sales $6,006,937 $6,538,579 $7,694,259 $ 8,702,973
Gross Profit 2,394,453 2,802,730 3,378,152 4,066,720
Net earnings 120,424 308,625 384,962 878,642
Net earnings
per common share:
Primary $ 0.02 $ 0.06 $ 0.08 $ 0.17
Fully diluted $ 0.02 $ 0.06 $ 0.08 $ 0.17
</TABLE>
- 20 -
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Metatec Corporation:
We have audited the accompanying consolidated balance sheets of
Metatec Corporation and its subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these 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, such consolidated financial statements present fairly,
in all material respects, the financial position of Metatec Corporation and its
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
February 9, 1996
Columbus, Ohio
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Information required under this Item with respect to directors is
contained in the Company's proxy statement which was filed with the Securities
and Exchange Commission on March 21, 1996, and is hereby incorporated herein by
reference. Information regarding the executive officers of the Company may be
found under the caption "Executive Officers of the Company" in Part I and is
also incorporated by reference into this Item 10.
ITEM 11. EXECUTIVE COMPENSATION
Information required under this Item is contained in the Company's
proxy statement which was filed with the Securities and Exchange Commission on
March 21, 1996, and is hereby incorporated herein by reference.
- 21 -
<PAGE> 22
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required under this Item is contained in the Company's
proxy statement which was filed with the Securities and Exchange Commission on
March 21, 1996, and is hereby incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item is contained in the Company's
proxy statement which was filed with the Securities and Exchange Commission on
March 21, 1996, and is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a)(1) Financial Statements
--------------------
The following financial statements of the Company are included
in Item 8:
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Earnings for the Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a)(2) Financial Statement Schedules
-----------------------------
The following independent auditors' report and financial
statement schedule for the years ended December 31, 1995, 1994
and 1993 are included in this report following the signatures
and should be read in conjunction with the Consolidated
Financial Statements included in Item 8:
Independent Auditors' Report
Schedule II - Consolidated Valuation and Qualifying Accounts
All other financial statement schedules have been omitted
because they are not applicable or the required information is
included in the Company's consolidated financial statements or
notes thereto.
- 22 -
<PAGE> 23
(a)(3) Listing of Exhibits
-------------------
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
3(a) Amended and Restated Amendment No. 2 to Registration
Articles of Incorporation Statement on Form S-1, File No. 33-60878
of Metatec Corporation (see Exhibit 3(a) therein).
3(b) Amended and Restated By-laws Registration Statement on Form S-1, File
of Metatec Corporation No. 33-60878 (see Exhibit 3(d) therein).
4 Form of Share Certificate Amendment No. 2 to Registration
Statement on Form S-1, File No.
33-60878 (see Exhibit 4 therein).
10(a)* Metatec Corporation 1990 Registration Statement on Form S-8, File
Directors' Stock Option Plan and No. 33-48021 (see Exhibit 4(d) therein).
Amendment No. 1 thereto
10(b)* Amended and Restated Employment Annual Report on Form 10-K for the fiscal
Agreement dated March 23, 1993, year ended December 31, 1992 (See Exhibit
between Metatec Corporation and 10(h) therein).
Jeffrey M. Wilkins
10(c)* First Amendment to Amended and Contained herein.
Restated Employment Agreement
dated March 21, 1996, between
Metatec Corporation and
Jeffrey M. Wilkins
10(d)* Metatec Corporation 1990 Stock Annual Report on Form 10-K for the fiscal
Option Plan year ended December 31, 1991 (see Exhibit
10(k) therein).
10(e)* Amendment No. 1 to Metatec Registration Statement on Form S-8, File
Corporation 1990 Stock Option No. 33-48022 (see Exhibit 4(d) therein).
Plan
10(f)* Amendment No. 2 to Metatec Annual Report on Form 10-K for the fiscal
Corporation 1990 Stock Option year ended December 31, 1992 (see Exhibit
Plan 10(k) therein).
10(g)* Amendment No. 3 to Metatec Annual Report on Form 10-K for the fiscal
Corporation 1990 Stock Option year ended December 31, 1993 (see Exhibit
Plan 10(g) therein).
10(h)* Amendment No. 4 to Metatec Contained herein.
Corporation 1990 Stock Option
Plan
</TABLE>
- 23 -
<PAGE> 24
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
10(i)* Metatec Corporation 1992 Registration Statement on Form S-8, File
Directors' Stock Option Plan No. 33-5200 (see Exhibit 4(c)
therein).
10(j)* Amendment No. 1 to Metatec Annual Report on Form 10-K for the fiscal
Corporation 1992 Directors' Stock year ended December 31, 1993 (see Exhibit
Option Plan 10(i) therein).
10(k)* Amendment No. 2 to Metatec Contained herein.
Corporation 1992 Directors' Stock
Option Plan
10(l)* Amendment No. 3 to Metatec Contained herein.
Corporation 1992 Directors' Stock
Option Plan
10(m)* Metatec Corporation 1992 Annual Report on Form 10-K for the fiscal
Incentive Compensation Plan year ended December 31, 1992 (see Exhibit
10(p) therein).
10(n) Form of Indemnification Agreement Annual Report on Form 10-K for the fiscal
between Metatec Corporation and year ended December 31, 1992 (see Exhibit
each of its officers and 10(q) therein).
directors
10(o) Restricted Share Agreement dated Annual Report on Form 10-K for the fiscal
March 23, 1993, between Metatec year ended December 31, 1992 (see Exhibit
Corporation and Jeffrey M. 10(r) therein).
Wilkins
10(p) Amendment to Restricted Share Amendment No. 1 to Registration
Agreement dated April 8, 1993, Statement on Form S-1, File No. 33-60878
between Metatec Corporation and (see Exhibit 10(o) therein).
Jeffrey M. Wilkins
10(q) Patent License Agreement for Disc Amendment No. 1 to Registration
Products dated July 1, 1986, Statement on Form S-1, File No. 33-60878
between Metatec/Discovery (see Exhibit 10(t) therein).
Systems, Inc. and Discovision
Associates
10(r) CD Disc License Agreement dated Amendment No. 1 to Registration
January 1, 1986, Statement on Form S-1, File No. 33-60878
between U.S. Philips (see Exhibit 10(u) therein).
Corporation and Metatec/
Discovery Systems, Inc.
</TABLE>
- 24 -
<PAGE> 25
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
10(s) Optical Disc Corporation NPR Amendment No. 1 to Registration
Technology License Agreement Statement on Form S-1, File No. 33-60878
between Optical Disc Corporation (see Exhibit 10(v) therein).
and Metatec/Discovery Systems
effective March 2, 1992
10(t) Real Estate Purchase Contract Annual Report on Form 10-K for the fiscal
dated January 19, 1994, between year ended December 31, 1993 (see Exhibit
Metatec Corporation and Olde 10(s) therein).
Poste Properties
10(u) Lease and Option Agreement dated Current Report on Form 8-K filed with the
March 1, 1994, between Metatec Securities and Exchange Commission on
Corporation and Jeffrey M. March 28, 1995 (see Exhibit 10(a)
Wilkins therein).
10(v) Real Estate Purchase Agreement Current Report on Form 8-K filed with the
dated September 1, 1994, between Securities and Exchange Commission on
Metatec Corporation and Jeffrey March 28, 1995 (see Exhibit 10(b)
M. Wilkins. therein).
10(w) Real Estate Purchase Contract Contained herein.
dated January 5, 1996, between
Metatec Corporation and Olde
Poste Properties.
10(x) Loan Agreement dated May 13, Current Report on Form 8-K filed with the
1994, between The Huntington Securities and Exchange Commission on
National Bank, Metatec March 28, 1995 (see Exhibit 10(c)
Corporation, and therein).
Metatec/Discovery Systems, Inc.
10(y) First Amendment to Loan Agreement Current Report on Form 8-K filed with the
dated September 1, 1994, between Securities and Exchange Commission on
The Huntington National Bank, March 28, 1995 (see Exhibit 10(d)
Metatec Corporation, and therein).
Metatec/Discovery Systems, Inc.
</TABLE>
- 25 -
<PAGE> 26
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
10(z) Second Amendment to Loan Current Report on Form 8-K filed with the
Agreement dated February 1, 1995, Securities and Exchange Commission on
between The Huntington National March 28, 1995 (see Exhibit 10(e)
Bank, Metatec Corporation, and therein).
Metatec/Discovery Systems, Inc.
21 Subsidiaries of Metatec Annual Report on Form 10-K for the fiscal
Corporation year ended December 31, 1993 (see Exhibit
21 therein).
23 Consent of Deloitte & Touche LLP Contained herein.
24(a) Powers of Attorney for Peter J. Annual Report on Form 10-K for the fiscal
Kight, E. David Crockett, and A. year ended December 31, 1994 (see Exhibit
Grant Bowen 24 therein).
24(b) Power of Attorney for Jerry D. Annual Report on Form 10-K for the fiscal
Miller year ended December 31, 1993 (see Exhibit
24 therein).
24(c) Power of Attorney for James V. Contained herein.
Pickett
27 Financial Data Schedule Contained herein.
</TABLE>
*Executive compensation plans and arrangements required to be filed pursuant to
Item 601(b)(10) of Regulation S-K.
(b) Reports on Form 8-K
-------------------
The Company did not file any Form 8-K current reports during
the fourth quarter of the Company's year ended
December 31, 1995.
(c) Exhibits
--------
The exhibits in response to this portion of Item 14 are
submitted following the signatures.
(d) Financial Statement Schedules
-----------------------------
The financial statement schedule and the independent auditors'
report thereon are submitted following the signatures.
- 26 -
<PAGE> 27
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
METATEC CORPORATION
Date: March 26, 1996 By /s/Jeffrey M. Wilkins
----------------------------------------
Jeffrey M. Wilkins, Chairman of the Board
and 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
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Jeffrey M. Wilkins Chairman of the Board, March 26, 1996
- ------------------------------------- Chief Executive Officer
Jeffrey M. Wilkins (principal executive
officer) and Director
/s/Gregory T. Tillar President, Chief Operating March 26, 1996
- ------------------------------------- Officer and Director
Gregory T. Tillar
/s/William H. Largent Executive Vice President, Secretary, March 26, 1996
- ------------------------------------- Treasurer, Chief Financial
William H. Largent Officer (principal
financial officer and principal
accounting officer) and Director
E. David Crockett* Director March 26, 1996
- ------------------------------------
E. David Crockett
Peter J. Kight* Director March 26, 1996
- --------------------------------------
Peter J. Kight
Jerry D. Miller* Director March 26, 1996
- --------------------------------------
Jerry D. Miller
A. Grant Bowen* Director March 26, 1996
- ---------------------------------
A. Grant Bowen
James V. Pickett* Director March 26, 1996
- --------------------------------
James V. Pickett
*Jeffrey M. Wilkins, by signing his name hereto, does sign this
document on behalf of the person indicated above pursuant to a Power of
Attorney duly executed by such person.
By /s/ Jeffrey M. Wilkins March 26, 1996
------------------------------------
Jeffrey M. Wilkins, Attorney In Fact
</TABLE>
- 27 -
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Metatec Corporation:
We have audited the consolidated financial statements of Metatec Corporation
and subsidiaries as of December 31, 1995 and 1994, and for each of the three
years in the period ended December 31, 1995, and have issued our report thereon
dated February 9, 1996; such report is included elsewhere in this Form 10-K.
Our audits also included the consolidated financial statement schedule of
Metatec Corporation and subsidiaries, listed in Item 14. This consolidated
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our
opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
February 9, 1996
Columbus, Ohio
<PAGE> 29
METATEC CORPORATION AND SUBSIDIARIES
SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS
ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-----------------------------
Balance at Charged to
Beginning of Costs and Charged to Other Balance At End Of
Description Period Expenses Accounts Deductions Period
<S> <C> <C> <C> <C>
1995
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
$269,000 $ 86,694 $ 17,694 $338,000
======== ======== ======== ========
1994
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
$235,000 $178,679 $144,679 $269,000
======== ======== ======== ========
1993
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
$206,000 $112,578 $ 83,578 $235,000
======== ======== ======== ========
</TABLE>
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
3(a) Amended and Restated Amendment No. 2 to Registration
Articles of Incorporation Statement on Form S-1, File No. 33-60878
of Metatec Corporation (see Exhibit 3(a) therein).
3(b) Amended and Restated By-laws Registration Statement on Form S-1, File
of Metatec Corporation No. 33-60878 (see Exhibit 3(d) therein).
4 Form of Share Certificate Amendment No. 2 to Registration
Statement on Form S-1, File No.
33-60878 (see Exhibit 4 therein).
10(a)* Metatec Corporation 1990 Registration Statement on Form S-8, File
Directors' Stock Option Plan and No. 33-48021 (see Exhibit 4(d) therein).
Amendment No. 1 thereto
10(b)* Amended and Restated Employment Annual Report on Form 10-K for the fiscal
Agreement dated March 23, 1993, year ended December 31, 1992 (See Exhibit
between Metatec Corporation and 10(h) therein).
Jeffrey M. Wilkins
10(c)* First Amendment to Amended and Contained herein.
Restated Employment Agreement
dated March 21, 1996, between
Metatec Corporation and
Jeffrey M. Wilkins
10(d)* Metatec Corporation 1990 Stock Annual Report on Form 10-K for the fiscal
Option Plan year ended December 31, 1991 (see Exhibit
10(k) therein).
10(e)* Amendment No. 1 to Metatec Registration Statement on Form S-8, File
Corporation 1990 Stock Option No. 33-48022 (see Exhibit 4(d) therein).
Plan
10(f)* Amendment No. 2 to Metatec Annual Report on Form 10-K for the fiscal
Corporation 1990 Stock Option year ended December 31, 1992 (see Exhibit
Plan 10(k) therein).
10(g)* Amendment No. 3 to Metatec Annual Report on Form 10-K for the fiscal
Corporation 1990 Stock Option year ended December 31, 1993 (see Exhibit
Plan 10(g) therein).
10(h)* Amendment No. 4 to Metatec Contained herein.
Corporation 1990 Stock Option
Plan
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
10(i)* Metatec Corporation 1992 Registration Statement on Form S-8, File
Directors' Stock Option Plan No. 33-5200 (see Exhibit 4(c)
therein).
10(j)* Amendment No. 1 to Metatec Annual Report on Form 10-K for the fiscal
Corporation 1992 Directors' Stock year ended December 31, 1993 (see Exhibit
Option Plan 10(i) therein).
10(k)* Amendment No. 2 to Metatec Contained herein.
Corporation 1992 Directors' Stock
Option Plan
10(l)* Amendment No. 3 to Metatec Contained herein.
Corporation 1992 Directors' Stock
Option Plan
10(m)* Metatec Corporation 1992 Annual Report on Form 10-K for the fiscal
Incentive Compensation Plan year ended December 31, 1992 (see Exhibit
10(p) therein).
10(n) Form of Indemnification Agreement Annual Report on Form 10-K for the fiscal
between Metatec Corporation and year ended December 31, 1992 (see Exhibit
each of its officers and 10(q) therein).
directors
10(o) Restricted Share Agreement dated Annual Report on Form 10-K for the fiscal
March 23, 1993, between Metatec year ended December 31, 1992 (see Exhibit
Corporation and Jeffrey M. 10(r) therein).
Wilkins
10(p) Amendment to Restricted Share Amendment No. 1 to Registration
Agreement dated April 8, 1993, Statement on Form S-1, File No. 33-60878
between Metatec Corporation and (see Exhibit 10(o) therein).
Jeffrey M. Wilkins
10(q) Patent License Agreement for Disc Amendment No. 1 to Registration
Products dated July 1, 1986, Statement on Form S-1, File No. 33-60878
between Metatec/Discovery (see Exhibit 10(t) therein).
Systems, Inc. and Discovision
Associates
10(r) CD Disc License Agreement dated Amendment No. 1 to Registration
January 1, 1986, Statement on Form S-1, File No. 33-60878
between U.S. Philips (see Exhibit 10(u) therein).
Corporation and Metatec/
Discovery Systems, Inc.
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
10(s) Optical Disc Corporation NPR Amendment No. 1 to Registration
Technology License Agreement Statement on Form S-1, File No. 33-60878
between Optical Disc Corporation (see Exhibit 10(v) therein).
and Metatec/Discovery Systems
effective March 2, 1992
10(t) Real Estate Purchase Contract Annual Report on Form 10-K for the fiscal
dated January 19, 1994, between year ended December 31, 1993 (see Exhibit
Metatec Corporation and Olde 10(s) therein).
Poste Properties
10(u) Lease and Option Agreement dated Current Report on Form 8-K filed with the
March 1, 1994, between Metatec Securities and Exchange Commission on
Corporation and Jeffrey M. March 28, 1995 (see Exhibit 10(a)
Wilkins therein).
10(v) Real Estate Purchase Agreement Current Report on Form 8-K filed with the
dated September 1, 1994, between Securities and Exchange Commission on
Metatec Corporation and Jeffrey March 28, 1995 (see Exhibit 10(b)
M. Wilkins. therein).
10(w) Real Estate Purchase Contract Contained herein.
dated January 5, 1996, between
Metatec Corporation and Olde
Poste Properties.
10(x) Loan Agreement dated May 13, Current Report on Form 8-K filed with the
1994, between The Huntington Securities and Exchange Commission on
National Bank, Metatec March 28, 1995 (see Exhibit 10(c)
Corporation, and therein).
Metatec/Discovery Systems, Inc.
10(y) First Amendment to Loan Agreement Current Report on Form 8-K filed with the
dated September 1, 1994, between Securities and Exchange Commission on
The Huntington National Bank, March 28, 1995 (see Exhibit 10(d)
Metatec Corporation, and therein).
Metatec/Discovery Systems, Inc.
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
- ------- ---------------------- ----------------------------------------
<S> <C> <C>
10(z) Second Amendment to Loan Current Report on Form 8-K filed with the
Agreement dated February 1, 1995, Securities and Exchange Commission on
between The Huntington National March 28, 1995 (see Exhibit 10(e)
Bank, Metatec Corporation, and therein).
Metatec/Discovery Systems, Inc.
21 Subsidiaries of Metatec Annual Report on Form 10-K for the fiscal
Corporation year ended December 31, 1993 (see Exhibit
21 therein).
23 Consent of Deloitte & Touche LLP Contained herein.
24(a) Power of Attorney for Peter J. Annual Report on Form 10-K for the fiscal
Kight, E. David Crockett, and A. year ended December 31, 1994 (see Exhibit
Grant Bowen 24 therein).
24(b) Power of Attorney for Jerry D. Annual Report on Form 10-K for the fiscal
Miller year ended December 31, 1993 (see Exhibit
24 therein).
24(c) Power of Attorney for James V. Contained herein.
Pickett
27 Financial Data Schedule Contained herein.
</TABLE>
<PAGE> 1
EXHIBIT 10(c)
First Amendment to Amended and Restated Employment
Agreement dated March 21, 1996, between
Metatec Corporation and Jeffrey M. Wilkins
FIRST AMENDMENT TO AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
---------------------------------
This is an amendment made effective March 21, 1996, to the Amended and
Restated Employment Agreement dated March 23, 1993 (the "Agreement"), between
Metatec Corporation, a Florida corporation (the "Company"), and Jeffrey M.
Wilkins ("Mr. Wilkins"), who hereby agree as follows:
Section 1. INCENTIVE BONUS PAYMENTS. The annual bonuses payable
to Mr. Wilkins under Section 6 of the Agreement hereafter shall be payable in
quarterly installments, under the same general policies and procedures
applicable to the payment of incentive bonuses to the Company's other executive
personnel; provided that in the event Mr. Wilkins receives payments for any or
all of the first three fiscal quarters in any fiscal year in an aggregate
amount which exceeds the annual bonus payable for that fiscal year, the Company
shall have the right to offset such excess against the amounts next payable by
the Company under the Agreement until such excess is fully recovered by the
Company or, if such offsets are insufficient to permit the recovery of such
excess, require Mr. Wilkins to repay the unrecovered portion of such excess.
Section 2. CONSTRUCTION. In the event of any inconsistency
between the provisions of this amendment and the Agreement, the provisions of
this amendment shall control. Except as modified by this amendment, the
Agreement shall continue in full force and effect without change.
METATEC CORPORATION
By /s/ William H. Largent
----------------------------------
William H. Largent, Executive
Vice President
/s/ Jeffrey M. Wilkins
----------------------------------
JEFFREY M. WILKINS
<PAGE> 1
EXHIBIT 10(h)
Amendment No. 4 to
Metatec Corporation 1990 Stock Option Plan
The Metatec Corporation 1990 Stock Option Plan (the "Original Plan"),
as previously amended by Amendment No. 1 dated May 1, 1992, Amendment No. 2
dated February 22, 1993, and Amendment No. 3 dated March 21, 1994 (together
with the Original Plan, collectively, the "Plan"), is hereby amended pursuant
to the following provisions:
Section 1. Definitions.
------------
All capitalized terms used in this amendment which are not otherwise
defined herein shall have the respective meanings given such terms in the Plan.
Section 2. Shares Subject To Plan.
-----------------------
The maximum aggregate number of Shares with respect to which Options
may be granted under the Plan is increased by 500,000 Shares to a total of
1,010,000 Shares. Such aggregate number of Shares shall be subject to
adjustment as provided in the Plan.
Section 3. Effective Date; Construction.
-----------------------------
The effective date of this amendment is October 26, 1995, and this
amendment shall be deemed to be a part of the Plan as of such date. In the
event of any inconsistencies between the provisions of the Plan and this
amendment, the provisions of this amendment shall control. Except as modified
by this amendment, the Plan shall continue in full force and effect without
change.
This amendment shall be submitted to the shareholders of the Company
for approval as soon as practicable but in any event not later than 12 months
after this amendment has been approved by the board of directors of the
Company. Notwithstanding the preceding paragraph or any other provisions of
this amendment to the contrary, if this amendment is not approved by the
shareholders of the Company within such 12-month period, this amendment and all
Options granted with respect to the additional Shares subject to the Plan as a
result of this amendment shall automatically become null and void and have no
further force or effect.
<PAGE> 1
EXHIBIT 10(k)
Amendment No. 2 to
Metatec Corporation 1992 Directors' Stock Option Plan
The Metatec Corporation 1992 Directors' Stock Option Plan (the
"Original Plan"), as previously amended by Amendment No. 1 to the Original Plan
(collectively, the "Plan"), is hereby amended pursuant to the following
provisions:
Section 1. Definitions.
------------
All capitalized terms used in this amendment which are not otherwise
defined herein shall have the respective meanings given such terms in the Plan.
Section 2. Term of Options.
----------------
If, after a Grantee reaches the age of 70, that Grantee ceases to be
an Eligible Director for any reason other than his death or discharge for
cause, then: (a) any unvested portion of any One-Time Option granted to that
Grantee automatically shall vest and become exercisable at that time; and (b)
any Option or portion of an Option (hereinafter, simply an "Option") which is
otherwise then exercisable by that Grantee (including without limitation any
unexercised portion of a One-Time Option) shall not terminate as provided in
Section 5(iv) of the Original Plan and shall continue to be exercisable during
the remainder of the original term of that Option; provided that if such
Grantee thereafter dies, then each such Option shall terminate unless exercised
within one year after the date of that Grantee's death (but in no event after
expiration of the original term of that Option).
The preceding provisions shall not be construed to modify the
provisions of the Plan relating to termination of any unexercised Options held
by any Grantee who ceases to be an Eligible Director as the result of that
Grantee's death or discharge for cause.
Section 3. Effective Date; Construction.
-----------------------------
The effective date of this amendment is January 25, 1995, and this
amendment shall be deemed to be a part of the Plan as of such date. In the
event of any inconsistencies between the provisions of the Plan and this
amendment, the provisions of this amendment shall control. Except as modified
by this amendment, the Plan shall continue in full force and effect without
change.
This amendment shall be submitted to the shareholders of the Company
for their approval as soon as practicable, but in any event not later than 12
months after this amendment has been adopted by the board of directors of the
Company. Notwithstanding the preceding paragraph or any other provisions of
this amendment to the contrary, if this amendment is not approved by the
shareholders of the Company within such 12- month period, this amendment shall
automatically become null and void and have no further force or effect, and the
Plan shall continue in effect without this amendment.
<PAGE> 1
EXHIBIT 10(l)
Amendment No. 3 to
Metatec Corporation 1992 Directors' Stock Option Plan
The Metatec Corporation 1992 Directors' Stock Option Plan (the
"Original Plan"), as previously amended by Amendment No. 1 dated March 21, 1994
("Amendment No. 1"), and Amendment No. 2 dated January 25, 1995 (together with
the Original Plan, collectively, the "Plan"), is hereby amended pursuant to the
following provisions:
Section 1. Definitions.
------------
All capitalized terms used in this amendment which are not otherwise
defined herein shall have the respective meanings given such terms in the Plan.
Section 2. Annual Grants.
--------------
The annual Option grants provided for in Section 5 of the Original
Plan, as amended by Section 3 of Amendment No. 1, shall continue through the
first seven annual meetings of the shareholders of the Company following the
effective date of the Original Plan.
Section 3. Effective Date; Construction.
-----------------------------
The effective date of this amendment is January 24, 1996, and this
amendment shall be deemed to be a part of the Plan as of such date. In the
event of any inconsistencies between the provisions of the Plan and this
amendment, the provisions of this amendment shall control. Except as modified
by this amendment, the Plan shall continue in full force and effect without
change.
This amendment shall be submitted to the shareholders of the Company
for their approval as soon as practicable, but in any event not later than 12
months after this amendment has been approved by the board of directors of the
Company. Notwithstanding the preceding paragraph or any other provisions of
this amendment to the contrary, if this amendment is not approved by the
shareholders of the Company within such 12-month period, this amendment shall
automatically become null and void and have no further force or effect, and the
Plan shall continue in effect without this amendment.
<PAGE> 1
EXHIBIT 10(w)
Real Estate Purchase Contract dated January 5, 1996,
between Metatec Corporation and Olde Poste Properties
Real Estate Purchase Contract
1. PROPERTY DESCRIPTION: The undersigned Buyer agrees to purchase from
the undersigned Seller, and the Seller agrees to convey to the Buyer,
the 5.309+ acre tract of real estate located at the northwest corner
of Perimeter Drive and Metatec Boulevard in Franklin County, Ohio
known as a part of Franklin County Parcels #273-4087 and #273-3444 and
further described on Exhibit A attached hereto and made a part hereof,
together with all improvements, fixtures, appurtenant rights,
privileges and easements appurtenant thereto (the "Premises").
2. PRICE AND TERMS: The purchase price (the "Purchase Price") shall be
calculated as $85,000.00 multiplied by the number of "usable acres"
(as that term is defined below) within the Premises as determined by
the survey obtained by Buyer pursuant to Section 7, below. The term
"usable acres" shall mean the gross acreage comprising the Premises
less the number of acres (or fractions thereof) of the Premises which
are within the rights of way of Perimeter Road or Metatec Boulevard.
3. CONTINGENCIES:
a) Environmental Inspection: For a period of twenty-one
(21) days after the acceptance hereof, Seller agrees to permit the
Buyer, the Buyer's lender and the qualified, professional
environmental consultant of either of them to enter the Premises to
conduct, at the expense of the Buyer, an environmental site
assessment. Buyer agrees to indemnify and hold Seller harmless from
any injury to persons or damage to the Premises caused by such
inspection. If the Buyer is not satisfied, in Buyer's sole
discretion, with the results of any such assessment, the Buyer may
notify the Seller in writing within the above-specified 21-day period
that the contract is terminated. Failure of Buyer to deliver written
notice of such termination within such 21-day period shall constitute
a waiver of Buyer's right to terminate pursuant to this provision.
b) Property Inspection: Buyer, at Buyer's expense, shall
have twenty-one (21) days after the acceptance hereof to determine the
suitability of the Premises for Buyer's intended use (as described in
Section 7(c), below), which inspection may include a geotechnical
assessment of the Premises and confirmation that the Premises are
zoned for Buyer's anticipated use and such other determinations as
Buyer deems necessary in Buyer's sole discretion Seller shall
cooperate in making the Premises available for such inspection(s).
Buyer agrees to indemnify and hold Seller harmless from any injury to
persons or damage to the Premises caused by such inspection(s). If
Buyer is not, in Buyer's sole discretion, satisfied with the
information disclosed by such inspection(s), Buyer may terminate this
contract by delivering written notice of such termination to Seller,
along with a written copy of such inspection report(s), within the
time period specified above. Failure of Buyer to so deliver written
notice and copy of the inspection report(s) within such time period
shall constitute a waiver of Buyer's right to terminate pursuant to
this provision.
4. POSSESSION: Exclusive possession of the Premises shall be given upon
closing.
5. TAKING, DAMAGE OR DESTRUCTION OF PROPERTY: Risk of physical loss to
the Premises
1
<PAGE> 2
shall be borne by Seller until closing, provided that if the Premises
shall be substantially taken by eminent domain, damaged or destroyed
before this transaction is closed, Buyer may a) proceed with the
transaction and be entitled to all insurance money or condemnation
proceeds, if any, payable to Seller under all policies covering the
Premises, or b) rescind the contract and thereby release all parties
from liability hereunder by giving written notice to Seller within ten
(10) days after Buyer has written notice of such damage or
destruction, in which event the deposit shall be returned to Buyer.
Failure by Buyer to so notify Seller shall constitute an election to
proceed with the transaction.
6. CONDITION OF PREMISES: Seller agrees that upon delivery of deed, the
Premises constituting part of the real estate shall be in the same
condition as they are on the date of this offer, reasonable wear and
tear excepted.
7. EVIDENCE OF TITLE: Seller shall furnish and Buyer shall pay for any
owner's title insurance commitment and policy [ALTA Form (1970 REV.
10-17-70 & REV. 10-17-84) covering the Premises in the amount of the
Purchase Price. The title commitment shall be certified to within
thirty (30) days prior to closing with endorsement 8:00 a.m. on the
business day prior to the date of closing, all in accordance with the
standards of the Columbus Bar Association, and shall show in Seller
marketable title in fee simple free and clear of all liens and
encumbrances except: a) zoning ordinances; b) the legal highways of
Perimeter Road and Metatec Boulevard; c) covenants, restrictions,
conditions and easements of record that do not unreasonably interfere
with Buyer's intended use of the Premises, which is the construction
and operation of a compact disc manufacturing and distribution
facility and related functions; and d) real estate taxes not yet due
and payable. Buyer also shall pay any additional costs incurred in
connection with mortgagee title insurance issued for the protection of
Buyer's lender. If title to all or part of the real estate is
unmarketable, as determined by Ohio law with reference to the Ohio
State Bar Association's Standard of Title Examination, or is subject
to liens, encumbrances, easements, conditions, restrictions or
encroachments other than those excepted in this contract, Seller
shall, within thirty (30) days after written notice thereof, remedy or
remove any such defect, lien, encumbrance, easement, condition,
restriction or encroachment or obtain title insurance without
exception thereof. In the event Seller is unable to remedy or insure
against the defect to Buyer's satisfaction within the thirty (30) day
period, the Buyer may terminate this contract. At closing, Seller
shall sign an affidavit with respect to off-record title matters in
accordance with the community custom and cause the title insurance
company issuing the owner's title insurance policy described above to
commit to remove all standard, pre-printed exceptions from the policy.
Within twenty-one (21) days after the date of this contract, Buyer
shall obtain, at Buyer's cost, and deliver to Seller a survey plat and
legal description of the Premises prepared by a surveyor registered in
the State of Ohio, certified by such surveyor in accordance with the
"Minimum Standard Requirements for Land Title Surveys" adopted in 1992
by the American Land Title Association, depicting and labeling by
volume and page number all easements shown in the title commitment
described above, and stating the gross acres within the Premises and
the acres (or fractions thereof) of the Premises located within the
rights of way of Perimeter Road and Metatec Boulevard. Such survey
plat shall be used to determine the "usable acres" of the Premises
under Section 2, above.
8. CONVEYANCE AND CLOSING: At closing, Seller shall convey marketable
title (as described in paragraph 7) to the Premises by delivery of a
duly executed and recordable general warranty deed, subject only to
the matters described in Section 7(a) through (d), above. All
subdivision and other approvals required from any governmental
authority to permit the deed to be recorded shall be obtained by
Seller and stamped on the deed prior to closing. In addition to the
deed, Seller shall execute and deliver to Buyer at closing the
affidavit and other documents required
2
<PAGE> 3
under Section 7, evidence of Seller's authority to convey the
Premises pursuant to this agreement, a closing statement and a
"non-foreign" affidavit. The date of closing shall be within fifteen
(15) days after satisfaction or waiver of all contingencies set forth
in Section 3, above, but in not event later than January 31, 1996.
9. TAXES AND ASSESSMENTS: At closing, Seller shall pay or credit on the
Purchase Price all delinquent taxes, including penalty and interest,
all assessments that are a lien on the date of contract and all
agricultural use tax recoupments for years prior to the year of
closing. At closing, Seller also shall pay or credit on the Purchase
Price all other unpaid real estate taxes that are a lien for years
prior to closing and a portion of such taxes and agricultural use tax
recoupments for year of closing, prorated through date of closing and
based on a 365-day year and, if undetermined, on most recently
available tax rate and valuation, giving effect to applicable
exemptions, recently voted millage, change in valuation, etc., whether
or not certified.
With regard to future assessments, Seller warrants that, as of the
date of the acceptance hereof, no improvements or services to the site
or area have been installed or furnished that would result in the
costs being assessed against the Premises, and no written notification
has been received by Seller from public authority of future
improvements that would result in costs being assessed against the
Premises.
Real estate taxes and assessments are subject to retroactive change by
governmental authority. The real estate taxes for the Premises for
the current tax year may change as a result of the transfer or as a
result of a change in the tax rate.
10. BUYER'S EXAMINATION: BUYER IS RELYING SOLELY UPON ITS OWN EXAMINATION
OF THE PREMISES AND INSPECTIONS HEREIN PROVIDED FOR, IF ANY, FOR ITS
PHYSICAL CONDITION, CHARACTER, AND SUITABILITY FOR BUYER'S INTENDED
USE AND IS NOT RELYING UPON ANY REPRESENTATIONS BY THE BROKER(S),
EXCEPT FOR THOSE MADE BY BROKER(S) DIRECTLY TO THE BUYER IN WRITING.
11. INDEMNITY: Seller agrees to defend, indemnify and hold harmless
Broker(s), and their agents and employees for any cost or liability
that may be incurred by or imposed on Broker(s) for any breach by
Seller of any representation or warranty or for any misrepresentation
or concealment of fact by Seller in connection with the Premises.
12. DEPOSIT: Buyer has deposited with Broker the sum receipted for below,
which shall be returned to Buyer, upon Buyer's request, if no contract
shall have been entered into. Upon acceptance of this contract by
both parties, Broker shall deposit such amount in its
non-interest-bearing trust account to be disbursed, subject to
collection by Broker's depository, as follows: a) deposit shall be
applied on the Purchase Price or returned to Buyer when transaction is
closed; b) if Seller fails or refuses to perform, or any contingency
or condition is not satisfied or waived by Buyer, the deposit shall be
returned to Buyer; c) if Buyer fails or refuses to perform, this
deposit shall be paid to Seller, which payment, or the acceptance
thereof, shall not in any way prejudice the rights of Seller or Broker
in any action for damages or specific performance; d) in the event of
a dispute over the disposition of the deposit, Broker shall retain the
deposit until (i) Buyer and Seller have settled the dispute; (ii)
disposition has been ordered by a final court order; or (iii) Broker
deposits said amount with a court pursuant to applicable court
procedures.
13. ASSIGNMENT OF CONTRACT: Buyer may freely assign this contract at or
prior to closing by giving written notice to Seller of such
assignment. In the event of such assignment, Buyer shall not be
relieved of its obligations hereunder.
3
<PAGE> 4
14. MISCELLANEOUS: This contract constitutes the entire agreement and no
oral or implied agreement exists. Any amendments to this contract
shall be in writing, signed by Buyer(s) and Seller(s) and copies
provided to them. This contract shall be binding upon the parties,
their heirs, administrators, executors, successors and assigns. Time
is of the essence of all provisions of this contract. All provisions
of this contract shall survive the closing. Paragraph captions are
for identification only and are not a part of this contract.
15. BROKER'S FEE: At closing, Buyer shall pay a brokerage fee to Ruscilli
Real Estate Services, Inc. Equal to seven percent (7%) of the
Purchase Price. Seller and Buyer each warrant to the other that it
has not dealt with any other broker or agent in connection with this
transaction.
4
<PAGE> 5
16. EXPIRATION AND ACCEPTANCE: This offer shall remain open for acceptance
until 5:00 p.m. Columbus, Ohio time on January 5, 1996, and a signed
copy shall be returned to Buyer upon acceptance.
This contract is executed and effective as of January 5, 1996.
OLDE POSTE PROPERTIES, an Ohio General Partnership
<TABLE>
<S> <C>
By:/s/ L. Jack Ruscilli January 5, 1996
----------------------------------------------- -------------------------------------------
L. Jack Ruscilli, Managing General Partner Date
2041 Arlingate Lane, Columbus, Ohio (614) 876-9484
- -------------------------------------------------- -------------------------------------------
Address Phone
METATEC CORPORATION
By:/s/ William H. Largent January 5, 1996
----------------------------------------------- -------------------------------------------
William H. Largent Date
Its: Vice-President-Finance
7001 Metatec Boulevard, Dublin, Ohio 43017 (614) 761-2000
- -------------------------------------------------- ------------------------------------------
Address Phone
</TABLE>
NOTE: AGENCY DISCLOSURE STATEMENT: Buyer and Seller acknowledge having
reviewed and signed the attached Agency Disclosure Statement as
required by Ohio law. PARTIES TO THIS CONTRACT MUST BE PROVIDED WITH
A COPY.
Broker acknowledges receipt of the sum of $0.00 by cash/check, which shall be
held, deposited and disbursed pursuant to paragraph 12, above.
By:________________________________________________
Timothy D. Kelton
Ruscilli Real Estate Services, Inc.
5
<PAGE> 1
EXHIBIT 23
Consent of DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-48021, No. 33-52700, No. 33-80172, No. 33-84022, No. 33-71080 and No.
33-80170 of Metatec Corporation on Form S-8 of our reports dated February 9,
1996, included in this Annual Report on Form 10-K of Metatec Corporation for
the year ended December 31, 1995.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
March 22, 1996
Columbus, Ohio
<PAGE> 1
EXHIBIT 24(c)
Power of Attorney for James V. Pickett
Know all men by these presents that the undersigned director or
officer of Metatec Corporation, a Florida corporation (the "Company"), hereby
constitutes and appoints Jeffrey M. Wilkins and William H. Largent, and each of
them (with full power to each of them to act along), as my true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for me and in my name, place, and stead, in my capacity as director or officer
of the Company, to execute the Company's Form 10-K Annual Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Company's
fiscal year ended December 31, 1995, for each fiscal year thereafter, and any
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 attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
The undersigned director or officer of the Company has executed and
delivered this Power of Attorney on March 21, 1996.
/s/James V. Pickett Director
- ------------------------------- --------------------------------
Signature Position(s) with the Company
James V. Pickett
- -------------------------------
Print Name
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S BALANCE SHEET DATED AS OF DECEMBER 31, 1995, AND ITS CONSOLIDATED
STATEMENT OF OPERATIONS, CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY, AND
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995, WHICH
FINANCIAL STATEMENTS ARE INCLUDED IN ITEM 8 OF THIS REPORT, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,898,928
<SECURITIES> 0
<RECEIVABLES> 6,619,460
<ALLOWANCES> 338,000
<INVENTORY> 885,107
<CURRENT-ASSETS> 14,358,140
<PP&E> 41,232,965
<DEPRECIATION> 9,895,643
<TOTAL-ASSETS> 50,076,076
<CURRENT-LIABILITIES> 5,929,122
<BONDS> 845,875
<COMMON> 705,474
0
0
<OTHER-SE> 42,595,605
<TOTAL-LIABILITY-AND-EQUITY> 50,076,076
<SALES> 39,261,463
<TOTAL-REVENUES> 39,261,463
<CGS> 22,904,728
<TOTAL-COSTS> 35,025,567
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 86,694
<INTEREST-EXPENSE> 322,959
<INCOME-PRETAX> 4,140,980
<INCOME-TAX> 1,332,000
<INCOME-CONTINUING> 2,808,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,808,980
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
