<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 0-8254
- -------------------------------------- --------------------------------------
December 31, 1998 Commission File Number
WESTFORD GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0854431
- -------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 East Broad Street, Columbus, Ohio 43215
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (614) 228-2800
--------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
NONE NONE
- -------------------------------------- --------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
COMMON SHARES, WITHOUT PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 ]
Due to the absence of a significant trading market in the Registrant's Common
Shares, the Registrant does not have reliable information on the aggregate
market value of its voting stock held by non-affiliates.
As of February 11, 1999, the Registrant had 1,351,206 Common Shares, without par
value, outstanding.
<PAGE> 2
<TABLE>
WESTFORD GROUP, INC. AND SUBSIDIARY
1998 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C> <C>
PART I
Item 1. Business ..................................................... 3
Item 2. Properties ................................................... 4
Item 3. Legal Proceedings ............................................ 4
Item 4. Submission of Matters to a Vote of Security Holders .......... 4
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters .................................. 5
Item 6. Selected Financial Data ...................................... 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation ....................... 7
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk ..................................................... 9
Item 8. Financial Statements and Supplementary Data .................. 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ...................... 22
PART III
Item 10. Directors and Executive Officers of the Registrant ........... 22
Item 11. Executive Compensation ....................................... 23
Item 12. Security Ownership of Certain Beneficial Owners and
Management ............................................... 24
Item 13. Certain Relationships and Related Transactions ............... 25
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K ................................................. 25
</TABLE>
<PAGE> 3
PART I
Item 1. Business
--------
The Registrant (which term unless otherwise indicated, includes Westford Group,
Inc. and its subsidiary) was incorporated in Ohio in 1972 and was a bank holding
company prior to August 15, 1978. Effective as of that date, the Registrant sold
all of its controlling interest in the Community National Bank of Mt. Gilead,
Ohio ("Mt. Gilead Bank").
Following the disposition of the Mt. Gilead Bank, the intention of the
Registrant was to utilize a portion of the sale proceeds to commence operations
as a reinsurer in the credit life and disability reinsurance business. These
operations, however, were frustrated as a result of shareholder litigation which
was eventually settled and dismissed.
On January 12, 1988, American Legal Publishing Corporation ("ALP Corporation"),
a newly formed, wholly-owned subsidiary of Westford Group, Inc., purchased
substantially all of the assets of AM Comp, Inc., formerly American Legal
Publishing Company. The acquired assets consisted generally of inventory,
equipment, supplies, computer software, contracts, leasehold interest and
various other intangibles. See note 1(f) to the consolidated financial
statements.
ALP Corporation's primary business consists of the codification of municipal and
county Codes of Ordinances and the supplementing thereof. The services provided
by ALP Corporation to a customer in providing codification services include:
(1) A review of the municipal ordinances of the customer to detect
possible conflicts with state and federal law, state and federal
constitutions, and state and federal court decisions. This review
is done at the specific direction of the customer's attorney.
(2) A review of the ordinances of the customer to make sure that they
do not conflict with other ordinances or the charter, if one
exists.
(3) Suggestions to the customer for changes, additions and deletions
to their ordinances. After editorial and indexing work is
concluded, the code is enacted into law and published in a
loose-leaf or electronic form to facilitate regular supplementing
to reflect changes in state and local law.
ALP Corporation believes that the additional services it provides in codifying a
customer's ordinances distinguish it from competitors.
Most of ALP Corporation's codification contracts include a provision to
supplement the customer's code for an additional fee, not less than annually,
for a period of five (5) years. Although the agreement may usually be terminated
by the customer by written notice prior to ninety (90) days before the
anticipated delivery date of the supplement, ALP Corporation has generally been
successful in retaining municipalities on supplemental contracts, and in having
these contracts renewed prior to expiration.
Some states now require that municipalities and/or counties each have a Code of
Ordinances. For this reason, ALP Corporation has prepared and marketed a "Basic
Code of Ordinances" to smaller municipalities in these states who do not need or
cannot afford a custom Code of Ordinances but who, by adoption of a basic code,
can meet state law requirements or receive the economic benefits of having a
local code. ALP Corporation has developed this basic or model Code of Ordinances
for the states of Ohio, Illinois, Indiana, Kentucky and North Carolina. It has
also developed, and is marketing with a Texas firm, a model Code of Ordinances
for Texas. In North Carolina, Kentucky, Oregon, Minnesota and Nebraska, ALP
Corporation serves as the official code consultant to the state municipal
leagues. Furthermore, in 1985, the State of Kentucky enacted legislation
providing grants to municipalities to fund a Code of Ordinances as mandated by
state law.
ALP Corporation presently has twenty-five full-time employees. The staff
consists of marketing, production, general administrative and editorial
personnel, eight of whom have law degrees.
3
<PAGE> 4
There are approximately twenty-five (25) companies involved in the codification
of local government ordinances. Five (5) companies operate on either a national
or regional basis, with the rest serving clients only within a relatively small
geographic area. ALP Corporation currently represents approximately 1,000 local
governmental units in thirty-two (32) states.
Rapid growth in the codification industry is most easily attainable through
acquisition of competitors. In recent years, ALP Corporation held serious
discussions with competitors regarding the purchase of such operations by ALP
Corporation. However, no agreements have been reached to date.
A logical opportunity for diversification lies in the school textbook market.
Nearly all states require the teaching of the rudiments of civics and government
in elementary and secondary schools. ALP Corporation, by the nature of its
business, enjoys a unique position through which it can provide educational
institutions with pertinent social studies topics and other textbook update
materials. Presently, the company publishes an educational newsletter which aids
teachers in presenting current state and local government issues to students.
The publication of local government material in electronic formats has become a
growing market segment. Local governments are looking for ways to manage
information electronically rather than to rely on growing stacks of paper
documents. ALP Corporation has developed programs for maintaining codes of
ordinances, meeting minutes, attorney opinions and other public documents in an
electronic format. In Ohio, California, Texas, Michigan and Wisconsin, ALP
Corporation contracts with the state municipal leagues to provide various
electronic records management services.
Item 2. Properties
----------
The executive offices of the Registrant are located in an office building at 20
East Broad Street, Columbus, Ohio. The office facilities are shared with other
affiliated entities and rental and bookkeeping expenses are allocated among
them. The Registrant does not own any materially important property used in its
operations.
ALP Corporation occupies 5,558 square feet of rentable area on the 12th floor of
the building located at 432 Walnut Street, Cincinnati, Ohio under an operating
lease which will expire July 31, 2003. The lease provides for a monthly rental
of $5,442, net of reimbursements payable to the lessor for cost of maintenance
and operation of the building.
Item 3. Legal Proceedings
-----------------
The Company is routinely a party to litigation incidental to its business, as
well as to other nonmaterial litigation. Management believes that no individual
item of litigation, or group of similar items of litigation, is likely to result
in judgments that will have a material adverse effect on the financial condition
or results of operations of the Company.
Item 4. Submission of Matters To a Vote of Security Holders
---------------------------------------------------
None.
4
<PAGE> 5
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holders
---------------------------------------------------------------------
Matters
-------
(a) Market information
There is no established public trading market for the Registrant's
shares.
The Registrant does not have reliable information with respect to high
and low bid prices for each quarter.
(b) Holders
The number of holders of record of the Registrant's Common Stock as of
February 11, 1999 was 2,072.
(c) Dividends
There has been no cash dividend declared or paid on the Registrant's
outstanding common stock for the two most recent fiscal years. The
Registrant's intent is to reinvest earnings to finance its growth for the
purpose of improving and increasing both earnings per share and net
worth, and therefore it is not anticipated that the Registrant will pay
dividends in the foreseeable future.
(THIS SPACE INTENTIONALLY LEFT BLANK)
5
<PAGE> 6
Item 6. Selected Financial Data
-----------------------
Selected Income Statement Data:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sales $1,702,862 $1,440,738 $1,505,952 $1,389,459 $1,234,981
Cost of sales 832,748 773,756 817,434 815,399 731,089
Selling, general and
administrative
expenses 695,716 665,764 582,131 424,917 416,149
Income taxes 32,482 10,107 27,876 31,579 33,451
Net income (loss) 138,177 (15,159) 68,800 99,923 35,246
Net income (loss)
per common share,
diluted $ .08 $ (.01) $ .04 $ .06 $ .02
Average number of
shares of common
stock outstanding 1,696,042 1,681,165 1,666,219 1,664,842 1,661,226
Selected Balance Sheet Data:
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Current assets $815,871 $576,734 $532,313 $552,267 $406,434
Notes payable
to bank -- 3,575 3,575 83,594 10,009
Current liabilities 273,091 214,060 144,969 266,150 276,422
Working capital 542,780 362,674 387,344 286,117 130,012
Total assets 978,542 782,586 733,543 791,060 669,359
Shareholders' equity 655,451 516,524 530,933 462,139 361,966
</TABLE>
6
<PAGE> 7
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
Summary
The following table sets forth changes in certain items reflected in the
financial data as compared to the indicated prior period.
<TABLE>
<CAPTION>
Period to Period
Increase(Decrease)
Year Ended December 31,
1997-98 1996-97
-------- ---------
<S> <C> <C>
Sales $262,124 $(65,214)
Cost of sales 58,992 (43,678)
Selling, general and
administrative expenses 29,952 83,633
</TABLE>
Results of Operations
- ---------------------
The Company's business is principally carried on through its wholly-owned
subsidiary, ALP Corporation. ALP Corporation's sales increased 18.2% from
$1,440,738 during 1997 to $1,702,862 during 1998 principally due to increases in
subscription and supplementation sales offset by a decrease in codification
sales. Codification revenue decreased 7.8% from $404,352 to $372,866 during 1997
as compared to 1998, respectively, principally due to a leveling of sales in the
Company's key growth areas coming into 1998. Immediately prior to 1998, the
Company had focused heavily on California and Texas as "key growth areas." Two
new sales representatives responsible for those areas in 1997 performed below
expectations. Each left the Company by the fall of 1997. As a result, less
codification work was available to be produced in 1998.
In 1998, sales responsibilities were shifted among existing personnel and the
Company was successful in contracting for substantial new work in Texas and
California (Austin Technical Manuals, California Municipal Law Handbook and San
Francisco Municipal Code.) In addition, the Company contracted for state league
programs in Minnesota, Oregon and Nebraska, thereby opening new growth areas.
Supplementation services on existing codes of ordinance increased 26.2% from
$787,434 to $994,119, due to maximizing revenue from existing clients and
accelerated job completions. The frequency with which clients supplement
their codes is heavily dependent upon regular contact from the Company to obtain
the necessary ordinances and establish regular production schedules. By
increasing customer service efforts and the frequency with which clients are
contacted, the Company is able to maximize the number of clients that supplement
by scheduled deadlines.
Creation of the original code for a client is a multi-step process often lasting
more than one year. During this process, the client has a period when they
review the draft publication. At this stage the process can stagnate as the
client fails to complete their review on a timely basis. Aggressive customer
service contact by the Company can encourage prompt return of the draft
manuscript by the client and accelerate completion of the original code. The
sooner a code is completed, the sooner that supplementation of the code will
begin. As a result, accelerated job completions (such as in 1998) increase the
potential level of supplement revenue for future years.
Subscription services provided both to governmental and emerging private
industry markets increased 45.2% from $248,686 during 1997 to $361,164 during
1998 due to subscription sales of expended search and retrieval software
products, including city league law handbooks, city production manuals, state
statutes in addition to sales of several significant customers manuals on CD.
Gross margin increased 30.5% in 1998 as compared to 1997 as sales increased at a
higher percentage rate than the percentage rate increase in cost of sales,
mainly reflecting lower costs resulting from production efficiencies. Increased
in gross margin resulted from several factors: daily operations meetings
increased project management efficiencies, revised incentive systems helped
limit production salary increases, and increased supplemental work and
subscription services work boosted gross margin as those products require less
direct labor. Costs of sales increased 7.7% from $773,356 to $832,748 during
1997 as compared to 1998, respectively, primarily due to increases in production
salaries, insurance, copier supplies and postage.
The executive offices of the Company are shared with consolidated
subsidiaries and other affiliated entities. Rental, equipment and bookkeeping
expense are allocated among them pursuant to management fee agreements. The
pre-existing management fee agreement with an affiliate was amended January 1,
1999, which will result in a $17,060 annual increase in selling, general and
administrative expenses as compared with fiscal 1998.
ALP Corporation's sales decreased 4.3% during 1997 as compared to 1996,
primarily due to a decline in new contract sales in 1995 and 1996 that limited
growth in 1997 and a one time republication for a significant customer in 1996.
As a result, codification revenue decreased 20.8% during 1997 as compared with
1996. Subscription services in existing codes of ordinance increased 4.1% due to
increased subscriptions sales of search and retrieval software. Gross margin
decreased in 1997 as compared to 1996 as sales decreased at a higher percentage
rate than the percentage rate decrease in cost of sales. Selling, general and
administrative expenses increased 13.3% in 1997 as compared to 1996 primarily
due to increases in salaries, legal and professional, commissions and travel.
Two discrimination charges were filed by an employee against ALP Corporation
with the Federal Equal Employment Opportunity commission ("EEOC"). In the first
charge, filed on June 21, 1996, the employee alleged discrimination in pay on
the basis of age, sex and disability. The employee also alleged denial of
accommodation for alleged disabilities and oral intimidation and harassment in
retaliation for the employee's internal complaints. In the second discrimination
charge, filed on November 21, 1996, the employee claimed the Company has
retaliated against the employee for pursuing the first charge.
On or about January 27, 1997, a tort claim was filed on behalf of the same
employee of ALP Corporation, in the Court of Common Pleas, Hamilton County,
Ohio. The complaint alleges that the employee's supervisors are guilty of
"intentional or negligent infliction of emotion distress" by their "verbal and
emotional abuse" of the employee. On October 28, 1997, the Company and claimant
reached an agreement to settle all claims for $24,000 to avoid expense and
disruption of protracted litigation. Accordingly, the Company has recorded a
charge of $24,000 for this settlement.
Liquidity and Capital Resources
- -------------------------------
Although it is impossible to estimate accurately the future cash flow from the
operations of the Registrant's codification business, management believes the
Registrant's effective capital costs may increase. All of the capital
expenditures for 1998 were funded from the Company's cash flow from operations.
Equipment additions in 1999 are expected to approximate $50,000 and are also
planned to be funded from the Company's cash flow from operations. As of
December 31, 1998, the Company had a revolving credit agreement with a bank to
provide a $250,000 note. The credit facility has a maturity date of June 30,
1999 with renewal provisions, and bears interest at the banks prime rate (7.75%
per annum at December 31, 1998). Management does not know of any trends, events
or uncertainties that will have or that are reasonably likely to have material
effect on the Registrant's liquidity, capital resources or results of
operations.
7
<PAGE> 8
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations (continued)
-------------------------
Intangible Asset
- ----------------
The excess of net assets acquired in a business combination over the purchase
price of approximately $165,000 was allocated to a database acquired. The
database is comprised of the municipal code data and related files. Provision
for amortization of the database is based on an estimated useful life of forty
years reflecting the long-lived nature of municipal codes.
Inflation
- ---------
Management does not consider the impact of changing prices to be material in the
analysis of the Company's overall operations.
Impact of the Year 2000 Issue
- -----------------------------
The Company utilizes management information systems and software technology that
may be affected by Year 2000 issues throughout its business. During fiscal 1997,
the Company began to implement plans at both of its locations to ensure those
systems continue to meet its internal and external requirements. During fiscal
1997, the Company's Corporate office completed the installation and testing of
its internal financial systems and is Year 2000 compliant. The Corporate office
utilizes the latest version of Year 2000 compliant Platinum SQL software for its
internal financial system. All of ALP Corporation's Folio products are Year 2000
compliant. During the fourth quarter of 1998 ALP Corporation purchased the
network enhancement pack which contained Year 2000 compliance patches. The
invoicing database software is not Year 2000 compliant. The Company is in the
data gathering phase with regard to applications, database software and
hardware. The Company has a MCSE (Microsoft Certified Systems Engineer) on staff
to review the impact of its Year 2000 risks. Continuing evaluation by our MCSE
in developing contingency plans and to complete remediation work on separate
portions of the project are on-going. Expected completion of all phases is
anticipated by third quarter end, 1999. If the Company is unable to achieve Year
2000 compliance for its invoice database system, the Year 2000 would not have a
material impact on the operations of the Company as billings would be produced
with alternative procedures. The Company is developing a contingency plan for
its database software. Those plans include adapting and expanding the Company's
existing database system to be Year 2000 compliant. The cost of making these
adaptations is not expected to be material and will be expensed in the period
incurred.
Trends
- ------
The Company's results of operations have varied from quarter to quarter
principally because of fluctuations in production results. The Company's
experience indicates that sales increase during second and third quarters as a
result of sales to basic code subscribers. The Company expects that such
quarterly fluctuations may lessen as the percentage of the Company's new sales
are made to clients with fiscal years other than December 31, although there can
be no assurance that this will occur.
Forward-Looking Information
- ---------------------------
Statements in the following discussion that indicate the Company's or
management's intentions, hopes, beliefs, expectations or predictions of the
future are forward-looking statements. Additional information concerning factors
that could cause actual results to differ materially from those suggested in the
forward-looking statements is continued under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 filed
with the Securities and Exchange Commission, as the same may be amended from
time to time.
Forward-looking statements are not guarantees for performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
of the Company may differ materially from those expressed in these
forward-looking statements. Many factors that will determine these results and
values are beyond the Company's ability to control or predict. Shareholders are
cautioned not to put undue reliance on forward-looking statements. In addition,
the Company does not have an intention or obligation to update forward-looking
statements after the date hereof, even if new
8
<PAGE> 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations (continued)
-------------------------
information, future events, or other circumstances have made them incorrect or
misleading. For those statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
None.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Index to Consolidated Financial Statements
- ------------------------------------------
Included in Part II of this report:
Independent Auditors' Reports
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Notes to Consolidated Financial Statements
9
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
and Stockholders
Westford Group, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
statements of income and shareholder's equity and of cash flows present fairly,
in all material respects, the financial position of Westford Group, Inc. and
subsidiary at December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
Columbus, Ohio
March 5, 1999
10
<PAGE> 11
<TABLE>
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998 and 1997
<CAPTION>
Assets 1998 1997
------ -------- --------
<S> <C> <C>
Current:
Cash $400,983 $195,371
Accounts receivable - trade 260,340 212,715
Estimated earnings in excess of billings on
uncompleted codification contracts 135,364 135,335
Costs of uncompleted code supplements 13,331 26,579
Deferred taxes -- 4,777
Other assets 5,853 1,957
-------- --------
Total current assets 815,871 576,734
Deferred taxes -- 24,414
Property and equipment, net 42,571 57,197
Intangible asset, net of accumulated amortization of
$45,555 in 1998 and $41,413 in 1997 120,100 124,241
-------- --------
$978,542 $782,586
======== ========
</TABLE>
(Continued)
11
<PAGE> 12
<TABLE>
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Balance Sheets, Continued
<CAPTION>
Liabilities and Shareholders' Equity 1998 1997
------------------------------------ --------- -----------
<S> <C> <C>
Current liabilities:
Accounts payable $ 95,557 $ 75,411
Note payable - bank -- 3,575
Accrued salaries, commissions and payroll taxes
payable 102,577 70,002
Accrued legal and professional 6,845 24,000
Billings in excess of estimated earnings on
uncompleted codification contracts 39,142 24,878
Current portion of capital lease obligations 2,002 5,639
Deferred taxes 3,293 --
Deferred revenue 15,323 10,555
Other accrued liabilities 8,352 --
--------- -----------
Total current liabilities 273,091 214,060
Capital lease obligations, less current portion -- 2,002
Debenture payable 50,000 50,000
--------- -----------
Total liabilities 323,091 266,062
--------- -----------
Commitments
Series two serial redeemable preference stock, 500 shares
authorized, none issued -- --
--------- -----------
Shareholders' Equity:
Serial preference stock, without par value: authorized
100,000 shares
Series one serial preference, authorized 100 shares;
none issued -- --
Class A preferred shares, par value $2,285; authorized
500 shares; none issued -- --
Class B preferred shares, par value $500; authorized
4,000 shares; none issued -- --
Common stock, without par value; authorized 2,000,000
shares; 1,434,202 shares issued 871,286 871,286
Additional paid-in capital 782,499 785,619
Accumulated deficit (976,925) (1,115,102)
--------- -----------
676,860 541,803
Less: Treasury stock, at cost (82,996 common shares
at December 31, 1998 and 97,996 at December
31, 1997) (21,409) (25,279)
--------- -----------
Total shareholders' equity 655,451 516,524
--------- -----------
Total liabilities and shareholders equity $ 978,542 $ 782,586
========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 13
<TABLE>
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
Years Ended December 31, 1998, 1997, and 1996
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Sales $1,702,862 $1,440,738 $1,505,952
Cost of sales 832,748 773,756 817,434
---------- ---------- ----------
870,114 666,982 688,518
---------- ---------- ----------
Selling, general and administrative expenses:
Salaries and related costs 324,773 320,814 289,782
Professional fees 149,897 102,443 79,832
Other 221,046 242,507 212,517
---------- ---------- ----------
695,716 665,764 582,131
---------- ---------- ----------
Non-operating income (expense):
Interest expense (5,838) (6,270) (9,740)
Other income 2,099 -- 29
---------- ---------- ----------
(3,739) (6,270) (9,711)
---------- ---------- ----------
Income (loss) before federal income
tax expense 170,659 (5,052) 96,676
Federal income tax expense 32,482 10,107 27,876
---------- ---------- ----------
Net income (loss) $ 138,177 $ (15,159) $ 68,800
========== ========== ==========
Net income (loss) per common share $ .10 $ (.01) $ .05
========== ========== ==========
Net income (loss) per common share,
assuming dilution $ .08 $ (.01) $ .04
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 14
<TABLE>
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1998, 1997, and 1996
<CAPTION>
Additional Total
Common paid-in Accumulated Treasury shareholders'
stock capital deficit stock equity
-------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1995 $871,286 $788,739 $(1,168,743) $(29,143) $462,139
Net income -- -- 68,800 -- 68,800
Purchase of 20 treasury shares -- -- -- (6) (6)
-------- -------- ----------- -------- --------
Balance December 31, 1996 871,286 788,739 (1,099,943) (29,149) 530,933
Net loss -- -- (15,159) -- (15,159)
Issuance of 15,000 treasury
shares as employee stock awards -- (3,120) -- 3,870 750
-------- -------- ----------- -------- --------
Balance December 31, 1997 871,286 785,619 (1,115,102) (25,279) 516,524
Net income -- -- 138,177 -- 138,177
Issuance of 15,000 treasury
shares as employee stock awards -- (3,120) -- 3,870 750
-------- -------- ----------- -------- --------
Balance December 31, 1998 $871,286 $782,499 $ (976,925) $(21,409) $655,451
======== ======== =========== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE> 15
<TABLE>
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1998, 1997 and 1996
Increase (Decrease) in Cash
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $138,177 $(15,159) $ 68,800
Adjustments to reconcile net income to cash
provided by operating activities:
Net realized gain on disposal of
equipment -- -- (29)
Depreciation and amortization 29,509 32,123 30,736
Deferred federal income tax expense 32,482 10,107 27,875
Employee stock awards 750 750 --
(Increase) decrease in accounts
receivable - trade (47,625) (5,380) 109,117
(Increase) decrease in estimated earnings
in excess of billings on uncompleted
codification contracts (29) (15,278) 34,150
(Increase) decrease in costs of uncompleted
code supplements 13,248 12,582 (11,500)
(Increase) decrease in other assets (3,896) 330 (82)
Increase (decrease) in accounts payable 20,146 21,958 (6,392)
Increase in accrued salaries, commissions
and payroll taxes payable 32,575 3,817 3,201
Increase (decrease) in accrued legal and
professional (17,155) 24,000 --
Increase (decrease) in billings in excess
of estimated earnings on uncompleted
codification contracts 14,264 8,252 (24,901)
Increase in other liabilities 13,120 10,555 --
-------- -------- --------
Net cash provided by operating activities 225,566 87,907 230,975
-------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment (10,740) (26,867) (20,953)
Sale of equipment -- -- 120
-------- -------- --------
Net cash used in investing activities (10,740) (26,867) (20,833)
-------- -------- --------
</TABLE>
(Continued)
15
<PAGE> 16
<TABLE>
WESTFORD GROUP, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
<CAPTION>
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from note payable to bank $ -- $ -- $ 68,981
Repayment of note payable to bank (3,575) -- (149,000)
Principal payments under capital lease
obligations (5,639) (5,130) (18,200)
Purchase of treasury shares -- -- (6)
-------- -------- ---------
Net cash used in financing activities (9,214) (5,130) (98,225)
-------- -------- ---------
Net increase in cash 205,612 56,660 111,917
-------- -------- ---------
Cash at beginning of year 195,371 138,711 26,794
-------- -------- ---------
Cash at end of year $400,983 $195,371 $ 138,711
======== ======== =========
Supplemental cash flow disclosure:
Interest paid $ 5,838 $ 6,720 $ 8,465
======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
16
<PAGE> 17
WESTFORD GROUP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998, 1997, and 1996
(1) Summary of Significant Accounting Policies
------------------------------------------
The accompanying consolidated financial statements include the following
significant accounting policies:
(a) Consolidation Policy
--------------------
The accompanying financial statements include the accounts of
Westford Group, Inc. (the "Company") and its wholly-owned
subsidiary, American Legal Publishing Corporation ("ALP
Corporation"). ALP Corporation is engaged in the codification of
municipal and county codes of ordinances and the supplementing
thereof. All significant intercompany transactions and balances
have been eliminated in this consolidation.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Note
1(b).
(b) Revenue and Cost Recognition
----------------------------
Revenue from municipal code contracts is recognized on the
percentage-of-completion method; completion is measured based on
the percentage of direct labor costs incurred to date to estimated
direct labor costs for each contract. While management uses
available information to estimate total direct labor costs on each
contract, actual experience may vary from estimated amounts. Under
this method, the costs incurred and the related revenues are
included in the statement of operations as work progresses.
Adjustments to contract cost estimates are made in the periods in
which the facts which require such revisions become known. If a
revised estimate indicates a loss, such loss is provided for in
its entirety. The amount by which revenues are earned in advance
of contractual collection dates is an unbilled receivable and the
amount by which contractual billings exceed earned revenues is
unrealized revenue which is carried as a liability.
Revenue from code supplements is recognized on the
completed-contract method because the typical supplement is
completed in a few months. No progress payments are billed due to
the short production time and the low average supplement contract
price. Supplement contracts in process are valued at the lower of
cost or contract price less estimated cost of completion. The
asset, "Costs of uncompleted code supplements," represents all
supplement costs incurred to date. Provisions for estimated losses
on uncompleted contracts are made in the period in which losses
are determined.
17
<PAGE> 18
WESTFORD GROUP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(c) Property and Equipment
----------------------
Property and equipment are recorded on a cost basis. Depreciation
is computed using the straight-line method in amounts adequate to
amortize costs over the estimated useful life of the applicable
asset generally ranging from three to five years. Equipment under
capital leases is stated at the present value of the net minimum
lease payments and is amortized over the lease term. When assets
are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and any
resulting gain or loss is recognized as income for the period. The
cost of maintenance and repairs is charged to income as incurred;
significant renewals and betterments are capitalized.
(d) Federal Income Taxes
--------------------
The Company files a consolidated federal income tax return with
its subsidiary. Deferred tax liabilities and assets have been
recognized for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
Deferred income taxes for temporary differences between financial
statement and income tax bases of assets and liabilities and net
operating loss carryforwards are recognized at the average
graduated tax rate for the estimated amount of taxable income in
future years.
(e) Earnings Per Share
------------------
Effective December 31, 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." The statement specified the computation, presentation and
disclosure requirements for earnings per share for entities with
publicly held common stock, and required restatement of all prior
period earnings per share data presented. The impact of the
statement on the company's earnings per share was not material.
Net income per common share is presented in two prescribed
methods. Net Income Per Common Share is calculated by dividing net
income available to common stockholders by the weighed-average
number of common shares outstanding. Net Income Per common
Share-Assuming Dilution is calculated by dividing net income
available to common stockholders by the weighted-average number of
common shares outstanding adjusted for any dilutive potential
common shares for the period.
(f) Intangible Asset
----------------
During 1988, the Company acquired substantially all the assets of
AM Comp, Inc., in an acquisition accounted for as a purchase. The
excess of AM Comp, Inc.'s net assets acquired over the purchase
price of $165,654 was allocated to the database. The database is
comprised of the municipal code data and related files. Provision
for amortization of the database is based on an estimated useful
life of forty years and is computed on the straight-line method.
(2) Uncompleted Contracts
---------------------
Revenues earned on uncompleted codification contracts were $819,710 and
$512,671 and billings to date on those contracts were $723,488 and
$402,214 at December 31, 1998 and 1997, respectively. The excess of
billings and estimated earnings over billings to date are presented in
the accompanying consolidated balance sheets.
18
<PAGE> 19
WESTFORD GROUP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(3) Property and Equipment
----------------------
Property and equipment at December 31, consists of the following:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Machinery and equipment $ 174,044 $ 164,860
Furniture and fixtures 8,455 6,897
Capital lease equipment 24,491 24,491
--------- ---------
206,990 196,248
Less: accumulated depreciation and
amortization (164,419) (139,051)
--------- ---------
$ 42,571 $ 57,197
========= =========
</TABLE>
(4) Note Payable - Bank
-------------------
The Company has a revolving credit agreement with a bank to provide a
$250,000 note with repayment on demand by the lender with a maturity of
June 30, 1999. The Company had no outstanding balance at December 31,
1998 and had an outstanding balance of $3,575 at December 31, 1997 under
this arrangement. Advances under the revolving credit line bear interest
payable quarterly at the lending bank's prime rate (7.75% at December
31, 1998).
The note is personally guaranteed by the Company's Chief Executive
Officer up to $100,000 plus accrued interest and collateralized by the
assignment of the Company's property and equipment and accounts
receivable.
(5) Leases
------
The Company's office facilities are shared with other affiliated
entities and rental and bookkeeping expenses are allocated among them.
The Company's share of these expenses were $2,940 in 1998, 1997 and
1996.
ALP Corporation occupies space under an operating lease which will
expire July 31, 2003. It is also a party to a capital lease for
equipment.
The following is a schedule of ALP Corporation's future minimum lease
payments for capital and operating leases as of December 31, 1998.
<TABLE>
<CAPTION>
Capital Operating
Year ending lease lease
----------- ------- ---------
<S> <C> <C>
1999 $2,040 $ 65,307
2000 -- 65,307
2001 -- 66,580
2002 -- 68,363
2003 -- 39,879
------ --------
Total minimum lease payments 2,040 $305,436
Less: Amount representing interest 38 ========
------
Present value of net minimum
lease payments 2,002
Less: Current installments of
obligations under capital lease 2,002
------
Long-term obligation under capital
lease $ --
======
</TABLE>
Total rental expenses under the operating lease were $62,818, $60,374,
and $61,313 in 1998, 1997 and 1996, respectively. Included in
accumulated depreciation and amortization is $23,243 and $18,350 of
accumulated amortization applicable to capital lease equipment at
December 31, 1998 and 1997, respectively.
19
<PAGE> 20
WESTFORD GROUP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(6) Debenture Payable
-----------------
On August 7, 1992, a resolution was adopted by the Company to authorize
a $50,000 convertible subordinated debenture, due December 31, 1995,
issued to Bancinsurance Corporation, an affiliate of the Company through
a common officer and principal shareholder. Each $1,000 of principal is
convertible into 6,900 shares of common stock at the holder's option.
The debenture may be prepaid, in whole or in part, by the Company upon
thirty days prior written notice without penalty. Interest accrues at
the rate of ten percent per annum and is payable quarterly on the last
day of each March, June, September, and December until the principal sum
has been paid. In the event of default, all obligations shall become
immediately due and payable at the option of the holder. On December 1,
1995, a resolution was adopted by the Company to renew the debenture.
The maturity was extended to December 31, 2000.
(7) Federal Income Taxes
--------------------
Deferred income taxes for 1998 and 1997 reflect the impact of "temporary
differences" between amounts of assets and liabilities for financial
reporting purposes and such amounts as measured on an income tax basis.
Temporary differences and carryforwards which give rise to the net
deferred tax (liability) asset at December 31, are as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Deferred tax asset:
Tax operating loss carryforwards $ 25,531 $ 68,504
Deferred tax liability:
Intangible asset (28,824) (29,818)
-------- --------
Net deferred tax (liability) asset (3,293) 38,686
Valuation allowance -- (9,495)
-------- --------
(3,293) 29,191
Less current portion -- (4,777)
-------- --------
Non-current deferred tax (liability)
asset $ (3,293) $ 24,414
======== ========
</TABLE>
As of December 31, 1998, the Company has net operating loss ("NOL")
carryforwards of approximately $101,000 which would expire after the tax
year ending December 31, 2008. The valuation allowance at December 31,
1997 represented the portion of net operating loss carryforwards at
enacted tax rates not expected to be utilized through future taxable
income.
The provision for federal income taxes at December 31, consists of the
following:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Deferred, amortization of intangible
asset $ (994) $ (994) $ (994)
Utilization of NOL 42,971 117 22,815
Reversal of valuation allowance (9,495) -- --
Expiration of unutilized NOL -- 10,984 6,055
------- ------- -------
Total deferred 32,482 10,107 27,876
------- ------- -------
Federal income tax expense $32,482 $10,107 $27,876
======= ======= =======
</TABLE>
20
<PAGE> 21
WESTFORD GROUP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
For 1998, 1997 and 1996, the federal income tax expense differs from
the amount computed by applying the normal tax rate of 34% to income
before federal income taxes as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Expected tax $ 58,024 $(1,718) $32,870
Officers life insurance 315 292 272
Business meals and entertainment 1,326 1,591 1,379
Graduated rate differential (17,688) 9,942 (6,645)
Reversal of valuation allowance (9,495) -- --
-------- ------- -------
Federal income tax expense $ 32,482 $10,107 $27,876
======== ======= =======
</TABLE>
(8) Supplemental Disclosure for Earnings Per Share
----------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net income (loss) $ 138,177 $ (15,159) $ 68,800
---------- ---------- ----------
Income (loss) available to common
stockholders, assuming dilution $ 138,177 $ (15,159) $ 68,800
---------- ---------- ----------
Weighted average common shares outstanding 1,351,042 1,336,165 1,321,219
Adjustments for dilutive securities:
Conversion of debentures 345,000 345,000 345,000
---------- ---------- ----------
Diluted common shares 1,696,042 1,681,165 1,666,219
========== ========== ==========
Net income per common share $ .10 $ (.01) $ .05
Net income per common share, assuming
dilution $ .08 $ (.01) $ .04
</TABLE>
(9) Litigation
----------
The Company is routinely a party to litigation incidental to its
business, as well as to other nonmaterial litigation. Management
believes that no individual item of litigation, or group of similar
items of litigation, is likely to result in judgments that will have a
material adverse effect on the financial condition or results of
operations of the Company.
21
<PAGE> 22
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
<TABLE>
<CAPTION>
Originally
elected to
Name Age Position office
- ---- --- -------- ----------
<S> <C> <C> <C>
Si Sokol 71 Chairman and Director 1972
President 1980
James Davis 64 Director 1981
David White 62 Director 1981
John Sokol 36 Director 1990
Daniel Harkins 69 Director 1996
Steve Wolf 47 President American Legal 1988
Publishing, Inc.
Sally Cress 43 Treasurer 1985
Secretary 1985
</TABLE>
In addition to his positions with the Registrant, Si Sokol has been Chairman of
the Board of Bancinsurance Corporation since 1970 and Chairman of the Board of
Ohio Indemnity Company since 1969. He became President and Chief Executive
Officer of Bancinsurance Corporation and President and Chief Executive Officer
of Ohio Indemnity Company in 1980. Bancinsurance Corporation, whose common stock
is registered pursuant to Section 12 of the Securities Exchange Act of 1934, and
its wholly-owned property and casualty insurance subsidiary, Ohio Indemnity
Company, are engaged in the underwriting and sales of specialized property and
casualty insurance. In addition, Mr. Sokol serves as President of BCIS Services,
Inc. and is a Director of Fifth Third Bank, Columbus, Ohio. Mr. Sokol is the
father of John Sokol.
John Sokol, son of Si Sokol, became Executive Vice President of Bancinsurance
Corporation and Ohio Indemnity Company in 1996. He was Vice President of
Bancinsurance and Ohio Indemnity from 1993 to 1996. Prior to that time, he
served as an officer for what is now The Chase Bank of New York (formally
Manufacturers Hanover and Chemical Bank) from 1989 to 1993. Mr. Sokol became a
Director of Bancinsurance Corporation and Ohio Indemnity Company in 1990. He
became Chairman of Title Research Corporation in 1997. He also serves on the
Board of Trustees of the Central Ohio Transit Authority (COTA). He holds a B.A.
degree in Economics from Denison University and a M.B.A. in Finance from
Vanderbilt University.
James Davis joined Ohio Indemnity in 1989 as the Administrator of Ohio
Indemnity's Bonded Service Program and was elected a Vice President of the Ohio
Indemnity Company in 1992. He has served as a Director of Ohio Indemnity and
Bancinsurance Corporation since 1987 and as Vice President of BCIS Services,
Inc. since 1993. From 1986 to 1989, Mr. Davis served as an independent
consultant to third party administrators of self-insured workers' compensation
programs. He acted as President and Director of James R. Davis & Associates,
Inc., a corporation providing cost management services, from 1980 to 1986, which
he sold in 1985. He was President of Gates, McDonald & Company, a corporation
providing cost management services from 1971 to 1979.
David White has been President of Oakfield Convalescent Center since 1979 to the
present date. He was also President of White Realty Company from 1972 to 1981, a
real estate company.
22
<PAGE> 23
Item 10. Directors and Executive Officers of the Registrant (continued)
--------------------------------------------------------------
Daniel Harkins is a private investor. He also serves as a Director of Ohio
Indemnity Company and Bancinsurance Corporation. Prior to 1987, Mr. Harkins was
the owner and president of Ace Beverage Distributing Company. From 1973 to 1978,
he served as General Sales Manager and International Sales Manager for several
divisions of Ashland Chemical Co., and from 1978 to 1980, he served as a
consultant for A.T. Kearney Inc., a management consulting firm.
Stephen Wolf has been the President of American Legal Publishing Corporation
since its incorporation in 1988. He was formerly President of American Legal
Publishing Company from 1984 to 1988, and served in other positions including
Staff Attorney and Vice President from 1979 to 1984. In addition, Mr. Wolf has
been an elected official of the City of Mt. Healthy, Ohio, serving as Law
Director from 1980 to 1983, as a Council person from 1984 to 1985, as Mayor from
1988 to 1995 and again as Law Director from 1996 to the present.
Sally Cress has been Secretary and Treasurer of the Registrant as well as of
Bancinsurance Corporation and Ohio Indemnity Company since March 1985. She also
serves as a Director of Ohio Indemnity Company and as Secretary and Treasurer of
BCIS Services, Inc. Mrs. Cress is a Certified Public Accountant.
There are no arrangements or understandings between any of the officers and
directors of the Registrant and other persons relating to their selections as
officers and directors.
All Directors of the Registrant serve a term of one year or until their
successors are elected and qualified. The officers serve at the discretion of
the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's
officers and directors, and greater than 10% shareholders, to file reports of
ownership and changes in ownership of the Registrant's securities with the
Securities and Exchange Commission ("SEC"). Copies of the reports are required
by SEC regulation to be furnished to the Registrant. Based on its review of such
reports and written representations from reporting persons, the Registrant
believes that, during fiscal 1998, all filing requirements were complied with.
Item 11. Executive Compensation
----------------------
The table below shows the cash compensation paid or accrued by the Registrant
during the fiscal years ended December 31, 1998, 1997 and 1996, respectively, to
the Chief Executive Officer of the Registrant. During the fiscal year ended
December 31, 1998, 1997 and 1996, respectively, no other executive officer
received cash compensation in excess of $100,000 (based on salary and bonus).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
(a) (b) (i)
Name and Principal All Other
Position Year Compensation($)(1)
- -------------------------------------------------------------------
<S> <C> <C>
SI SOKOL
Chairman, President 1998 21,250
Chief Executive
Officer 1997 10,800
1996 10,600
</TABLE>
- ------------------
(1) This amount includes $20,000 in consulting fees paid to Mr. Sokol.
Additionally, $1,250, $800 and $600 in directors fees were paid to Mr. Si
Sokol during 1998,
23
<PAGE> 24
1997 and 1996, respectively. Mr. Sokol did not receive any other
compensation from the Registrant.
Compensation Pursuant to Plans:
The Registrant has no annuity, pension, retirement stock option, stock
appreciation or similar plans for its officers or employees.
On March 1, 1996, the Company implemented the American Legal Publishing
Corporation Employee 401(k) Plan (the "401(k) Plan"). The 401(k) Plan is
available to full-time employees who meet the 401(k) Plan's eligibility
requirements. Under the 401(k) Plan, the Company matches 50% of the qualified
employee's contribution up to 6% of salary. The total cost of the matching
contribution was $15,331 for the year ended December 31, 1998.
Compensation of Directors:
The Registrant pays each director a fee of $250 per meeting for attending
meetings of the Board of Directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth: (i) the name and address of each person known by
the Registrant to be the beneficial owner of more than 5% of any class of the
Registrant's voting securities and each director and each officer named in the
Summary Compensation Table of the Registrant; and (ii) the number and percent of
the Registrant's common shares beneficially owned by each such person and by all
directors and officers of the Registrant as a group as of December 31, 1998:
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Beneficial Beneficially of
Owner Owned (1) Class
- ------------------ ---------------- -------
<S> <C> <C>
James R. Davis 2,000 0.1%
Director
20 East Broad Street
Columbus, Ohio 43215
Daniel D. Harkins 0 0.0%
Director
20 East Broad Street
Columbus, Ohio 43215
David White 25,000 1.9%
Director
20 East Broad Street
Columbus, Ohio 43215
John S. Sokol 74,250 (2) 5.5%
Director
20 East Broad Street
Columbus, Ohio 43215
Barbara Sokol 726,773 (2) 53.8%
20 East Broad Street
Columbus, Ohio 43215
Si Sokol 726,773 (2) 53.8%
Chairman and President
20 East Broad Street
Columbus, Ohio 43215
All Directors and Officers 778,023 57.6%
as a group (six persons)
</TABLE>
24
<PAGE> 25
(1) Except as otherwise noted, none of the named individuals shares with
another person either voting or investment power as to the shares
reported.
(2) Includes 300,300 shares owned by Barbara Sokol, of which 150,000 shares
are owned by her a trustee for her children, including 50,000 shares as
trustee for John Sokol, and 426,473 shares owned by Si Sokol, her
husband. The rules of the Securities and Exchange Commission require that
Mr. and Mrs. Sokol's shares be aggregated for purposes of this
disclosure; however, Mr. and Mrs. Sokol each disclaim any beneficial
ownership of the other's shares.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
See Item 2, Properties.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a) Exhibits
--------
3(a) Amended Articles of Incorporation (reference is made to Exhibit
3(a) of Form 10-K for the fiscal year ended December 31, 1986
(file number 0-8254), which is incorporated herein by reference).
3(b) Amended Articles of Incorporation (reference is made to Exhibit
3(b) of Form 10-K for the fiscal year ended December 31, 1988
(file number 0-8254), which is incorporated herein by reference).
3(c) Amended Code of Regulations (reference is made to Exhibit 3(b) of
Form 10-K for the fiscal year ended December 31, 1980 (file number
0-8254), which is incorporated herein by reference).
10 Acquisitions. Asset Purchase Agreement among American Legal
Publishing Corporation, the Registrant, American Legal Corporation
and AM Comp, Inc. dated January 12, 1988 (references made to
Exhibit 10 of Form 10-K for the fiscal year ended December 31,
1987 (file number 0-8254), which is incorporated herein by
reference).
21 Subsidiaries of the Registrant (reference is made to Exhibit 21 of
Form 10-K for the fiscal year ended December 31, 1996 (file number
0-8254), which is incorporated herein by reference).
27* Financial Data Schedule.
- ---------------------
* Filed with this Report
(b) Financial Statement Schedules
-----------------------------
Financial Statement schedules are omitted because of the absence of
conditions under which they are required or because the required
information is included in the financial statements or notes thereto.
(c) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Registrant during the quarter
ended December 31, 1998.
25
<PAGE> 26
Signatures
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
Westford Group, Inc.
(Registrant)
12/15/99 By Si Sokol
--------- -----------------------------
DATE Si Sokol
President and Chairman
of Board of Directors
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Form 10-K has been signed below by the following persons,
which include the Chief Executive Officer, the Chief Financial Officer and a
majority of the Board of Directors, on behalf of the Registrant and in the
capacities and on the dates indicated:
12/15/99 Si Sokol 12/15/99 Sally Cress
- --------- ---------------------------- --------- ------------------------
DATE Si Sokol DATE Sally Cress
President and Chairman Treasurer and Secretary
of Board of Directors (Principal Financial and
(Principal Executive Officer) Accounting Officer)
12/15/99 David J. White 12/15/99 Daniel D. Harkins
- --------- ---------------------------- --------- ------------------------
DATE David J. White DATE Daniel D. Harkins
Director Director
12/15/99 James R. Davis 12/15/99 John Sokol
- --------- ---------------------------- --------- ------------------------
DATE James R. Davis DATE John Sokol
Director Director
26
<PAGE> 27
WESTFORD GROUP, INC. AND SUBSIDIARY
SUBSIDIARY OF THE REGISTRANT
----------------------------
WESTFORD GROUP, INC.
----------------------------------
|
|
|
|
|
|
|
|
|
|
|
100%
American Legal Publishing Corporation
A Publishing Company
27
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 400,983
<SECURITIES> 0
<RECEIVABLES> 260,340
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 815,871
<PP&E> 206,990
<DEPRECIATION> 164,419
<TOTAL-ASSETS> 978,542
<CURRENT-LIABILITIES> 273,091
<BONDS> 0
0
0
<COMMON> 871,286
<OTHER-SE> (215,835)
<TOTAL-LIABILITY-AND-EQUITY> 978,542
<SALES> 1,702,862
<TOTAL-REVENUES> 1,704,961
<CGS> 832,748
<TOTAL-COSTS> 695,716
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,838
<INCOME-PRETAX> 170,659
<INCOME-TAX> 32,482
<INCOME-CONTINUING> 138,177
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,177
<EPS-BASIC> .10
<EPS-DILUTED> .08
</TABLE>
