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CUSTOMEDIX CORPORATION
ANNUAL REPORT ON FORM 10-K
YEAR ENDED JUNE 30, 1995
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For The Fiscal Year Ended June 30, 1995
OR
/ / TRANSACTION 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 No. 1-7081
CUSTOMEDIX CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 22-1844840
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
53 NORTH PLAINS INDUSTRIAL ROAD
WALLINGFORD, CONNECTICUT 06492
(Address of principal executive offices) (Zip Code)
registrant's telephone number, including area code: (203) 284-9079
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
NONE
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirement 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 / /.
The aggregate market value of voting stock held by non-affiliates* of
the Registrant on August 31, 1995 was $3,728,373, based upon the closing price
of the Registrant's common stock, as reported by the American Stock Exchange.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at August 31, 1995
----- ------------------------------
<S> <C>
Common Stock, $.01 par value 3,296,286
</TABLE>
- -----------------------------
*Holders of less than 10% of the Company's Common Stock who are not directors or
officers of the Company are not deemed by Management to be affiliates for
purposes of this calculation.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for its November 6, 1995
Annual Meeting of Stockholders are incorporated by reference into Parts I and
III of this Annual Report on Form 10-K.
1A
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PART I
ITEM 1. BUSINESS
GENERAL
Customedix Corporation (the "Company") is a Delaware corporation
incorporated in 1968 which is engaged in two principal industry segments: Dental
health care products and medical health care products. Dental products consist
of a wide variety of precious and non-precious metal casting alloys, amalgams,
impression materials, porcelains and composites and are manufactured,
distributed and marketed primarily by the Company's direct and indirect
wholly-owned subsidiaries, Jeneric/Pentron, Incorporated ("Jeneric/Pentron"),
Technical Education, Inc. ("TEI") and American Thermocraft Corporation ("ATC").
Medical disposables are produced, distributed and marketed by the
Company's wholly-owned subsidiary, Transidyne General Corporation
("Transidyne").
For information relating to sales, operating income (loss) and
identifiable assets of the Company's business segments, and foreign sales during
each of the Company's last three fiscal years, see Notes 10 and 11 of "Notes to
Consolidated Financial Statements".
DENTAL PRODUCTS
Jeneric/Pentron is engaged in the development, manufacture,
distribution, and sale of products to the dental health care market. After first
establishing itself as a supplier of casting alloys to dentists and dental
laboratories, Jeneric/Pentron extended its marketing and sales programs to
include other materials such as composites and porcelains as well as the sale of
related equipment used in applying these materials. Jeneric/Pentron now also
distributes porcelain furnaces and titanium casting equipment and related
products for dental restorations.
Jeneric/Pentron's principal product line is casting alloys for bridges,
crowns, inlays and other items used in the restoration and reconstruction of
teeth and for tooth support structures. Jeneric/Pentron currently offers
approximately 75 mixtures of precious metals made by vacuum induction melting
and pouring processes. A wide variety of alloys using non-precious metals such
as high purity nickel/chrome blends is also offered. Jeneric/Pentron also
supplies amalgams as well as composite and porcelain products which are used
extensively for cosmetic applications and for reconstruction and restoration of
teeth. Composites, in many instances, are now being substituted for amalgam
(metal blend) fillings and replacing cast alloys in inlays. Porcelains are also
being used extensively as a replacement for amalgams in fillings and caps and in
the construction of bridgework.
Jeneric/Pentron also produces a line of dental impression materials as
well as proprietary and non-proprietary composite and porcelain products used
for repair and reconstruction of teeth and for cosmetic applications, including
Synspar(R), a synthetic porcelain, and Optec(hsp)(TM), its high strength
porcelain.
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The Company's subsidiary, ATC, is the manufacturer of Synspar(R) and
Optec(TM) as well as a manufacturer of other high quality ceramic materials for
dental health care applications.
MEDICAL PRODUCTS
Transidyne is engaged in the assembly and sale of medical disposables.
The main products are custom kits and a sterile, disposable fetal blood
collection kit used to collect a blood sample from the fetus during delivery.
This sample is used for pH measurements, and the resulting diagnostic
information is used by the obstetrician in determining whether to proceed with a
Cesarean section or to allow the birth to proceed normally.
Transidyne entered into a license agreement pursuant to which it
granted an exclusive world-wide license for the technical know-how, trade
secrets and patents relating to Transidyne's fetal blood monitor device and
accessory products. The license provides for a royalty of 5% of sales through
June 28, 1997 (the date the design patent expires), at which time the license
becomes irrevocable and royalty free. Transidyne received approximately
$130,000, $159,000, and $181,000 in such royalties during fiscal 1995, 1994 and
1993, respectively.
MARKETING
The Company's dental products are sold to approximately 21,000
customers throughout the United States, Canada and foreign countries. Domestic
sales are primarily through telemarketing, direct mail and solicitations.
Foreign sales are primarily through distributors. Foreign sales for dental
products increased to approximately 18.7% of consolidated sales in fiscal 1995
from approximately 18.6% of sales in 1994. Foreign sales for dental products
decreased to approximately 18.6% of consolidated sales in fiscal 1994 from
approximately 21.0% of sales in 1993. For the three fiscal years ended June 30,
1995, 1994 and 1993, foreign sales were approximately $9,440,000, $8,689,000,
and $8,619,000, respectively. Operating income from foreign sales of dental
products, before interest, taxes, and corporate administrative fees, was
approximately $443,000, $444,000 and $539,000, respectively. Operating income
percentages on foreign sales are substantially the same as for domestic sales.
Most foreign sales are made to Europe and Asia. See Note 11 of "Notes to
Consolidated Financial Statements".
Medical products are marketed directly and through selected
representatives, telemarketing and direct mail solicitations to health care
suppliers and hospitals. Currently, there are no significant foreign sales of
medical products.
No customer accounted for more than ten percent of the Company's or any
of its segments sales on a consolidated basis in fiscal 1995.
COMPETITION
The Company faces substantial competition in the dental and medical
products markets.
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The Company's dental health care products compete with the products of
approximately 25 principal competitors. Many competitors are larger in size and
have substantially greater business and financial resources. Some of these
competitors are public companies or divisions of large public companies, such as
Dentsply International, Inc., Baker Division of Englehard Industries and 3M
Dental Products, and others, such as Williams Gold Company, Inc. and Jensen
Industries, Inc., are privately owned. Despite the greater resources of many of
these competitors, the Company believes its dental products can compete
favorably on quality, service and price.
Medical health care products are also a highly competitive business.
There are numerous competitors, many of which are large companies with
substantially greater business and financial resources. The Company believes,
however, its medical products can compete on price, quality and service.
SOURCES OF COMPONENT PARTS AND RAW MATERIAL
The Company procures its raw materials primarily from domestic sources.
The Company is generally not dependent upon any single supplier or a few
suppliers for most of its raw material or finished goods requirements and does
not anticipate any difficulties in filling its raw material or finished goods
needs.
A substantial amount of the products sold by the Company employ
precious metals. Prices of precious metals have been volatile in recent years. A
substantial change in the market price of these metals may affect the Company's
revenues and profits. The Company has alternative materials which can be
substituted during periods when precious metal costs are high.
BACKLOG
The Company has no material backlog of firm orders because
substantially all of its orders are filled within thirty days.
EMPLOYEES
At August 31, 1995, the Company employed 166 persons. On a Company-wide
basis, 43 employees were engaged in sales and marketing, 54 were engaged in
administrative or clerical capacities, and 69 employees were engaged in
manufacturing. The Company believes that its employee relations are
satisfactory.
PATENTS, COPYRIGHTS AND TRADEMARKS
The Company believes that the names of its various operating subsidiaries have
acquired commercial significance which has helped to enhance the reputation of
these companies in their respective industries and trade areas. Certain of the
Company's product names have also acquired commercial significance and are
protected by registered marks and trademarks, but no one mark is deemed material
to the Company's business.
The Company has several patents on its products, but does not deem any
one patent to be material to its business at the present time.
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SEASONALITY
The dental segment usually experiences lower revenues in the first quarter of
its fiscal year. The Company believes this decrease is primarily due to a
general slow down in dental care needs over the summer months.
RESEARCH AND DEVELOPMENT
The dental health care products segment maintains an active research and
development program relating to new products and materials as well as new
alloying, blending and application techniques. Furthermore, Jeneric/Pentron
sponsors, through the issuance of grants to various universities and graduate
schools, additional research and development programs in related product areas.
During fiscal 1995, 1994 and 1993, the dental segment expended approximately
$1,047,000, $1,058,000, and $1,029,000, respectively, on research and
development and new product programs.
The Company's medical products subsidiary has not expended significant
funds for research and development or new product programs.
REGULATION
Environmental. Certain toxic, flammable, corrosive or reactive
materials used in manufacturing the Company's products are classified by the
federal and state governments as "hazardous materials". Use of these substances
is regulated by the Environmental Protection Agency and by other state and local
agencies which require reports, monitor emissions and use and disposal of
hazardous substances, and inspect the Company's facilities to monitor
compliance. The Company's manufacturing facilities are also periodically
inspected by the Occupational Safety and Health Administration and by state and
local health and safety inspection agencies and departments.
The Company's cost of compliance with applicable federal, state and
local regulations relating to the environment is not, at this time, expected to
have a material effect upon its capital expenditures, earnings or competitive
position during the current fiscal year. However, the potential liability for
cleanup costs associated with changes in existing laws and regulations or
enforcement policies or a sale, change in ownership of the Company or certain of
its subsidiaries, or termination of operations at any of the Company's other
manufacturing facilities may engender compliance costs which could have a
material adverse effect on the Company's financial condition.
FDA Compliance. Because many of the products manufactured by
the Company are bonded to, placed in or otherwise attached to the various parts
of the body, they must be registered with the United States Food and Drug
Administration.
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ITEM 2. PROPERTIES
The Company's principal executive offices are located in the offices of
its principal subsidiary, Jeneric/Pentron, Incorporated, at 53 North Plains
Industrial Road, Wallingford, Connecticut as described below:
The following information relates to the locations occupied by the
Company's principal subsidiaries:
<TABLE>
<CAPTION>
Subsidiary Type of Approximate
Location Name Facility Square Footage
- -------- ---- -------- --------------
<S> <C> <C> <C>
Wallingford, Jeneric/Pentron Manufacturing 54,000
Connecticut and Offices
Somerset, ATC Manufacturing 17,100
New Jersey and Offices
Spartanburg, Transidyne Assembly and 19,400
South Carolina Offices
</TABLE>
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The above leases are net leases, and the lessees are obligated to pay
for taxes, utilities and certain other charges.
Management believes that these facilities are adequate and suitable for
the operation of the Company's business.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending or threatened against
the Company or its properties.
There has been no material change in the information set forth in
Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1994 and Item 1 under the caption "Legal Proceedings" in the Reports
on Form 10-Q filed for the periods ended September 30, 1994, December 31, 1994
and March 31, 1995, except as follows:
Jeneric/Pentron Incorporated has been summoned to appear in court in
Italy in response to litigation filed by Synspar & Pentron Dental Products,
s.r.l. (Synspar) in which money damages are claimed as a result of an alleged
breach by Jeneric/Pentron Incorporated of a distributorship agreement.
Previously, Jeneric/Pentron Incorporated obtained by default in the U.S.
District Court in Connecticut, a declaratory judgment against Synspar, to the
effect that it has no obligation to Synspar. The Company intends to contest
jurisdiction in Italy and intends vigorously to contest that it has any
obligation to Synspar relating to the alleged distributorship agreement.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not Applicable.
ITEM 10. EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages, positions held with the Company, periods of service as
a director, principal occupations, business experience and other directorships
of the Company's directors are set forth in the Company's Proxy Statement for
its November 6, 1995 Annual Meeting of Stockholders under the caption "Election
of Directors". The above information is incorporated herein by reference.
The following sets forth information concerning the executive officers
of the Company:
EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE POSITION
- --------------------------------------------------------------------------------
Gordon S. Cohen 58 Chairman of the Board and Chief
Executive Officer
Martin L. Schulman 58 President and Chief Operating Officer,
Director
Barry L. Kosowsky 42 Treasurer, Chief Financial Officer and
Secretary
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Dr. Gordon S. Cohen was elected to the Board in 1987 and was also
elected Chairman of the Company at that time. Dr. Cohen was elected Chief
Executive Officer in May, 1989. Dr. Cohen has been Chairman, President and
Treasurer of the Company's subsidiary, Jeneric/Pentron, since 1975. From 1968 to
1976, Dr. Cohen served in various positions at Yale University School of
Medicine, including Assistant Professor of Pathology and Assistant Clinical
Professor of Pathology.
Martin L. Schulman was elected to the Board in 1987 and was appointed
as a Vice President of the Company at that time. In May, 1989, Mr. Schulman was
elected as President and Chief Operating Officer. Mr. Schulman has been
Executive Vice President and Secretary of Jeneric/Pentron since 1977.
Barry L. Kosowsky has been Treasurer since July 1, 1993 and Secretary
since December 7, 1992. He served as Assistant Treasurer from 1989 to 1993 and
was Assistant Secretary of the Company from 1990 to 1992. Mr. Kosowsky has also
served as Assistant Treasurer of Jeneric/Pentron since 1990 and Controller since
1988.
Dr. Cohen, Mr. Schulman and Mr. Kosowsky also serve as directors and/or
officers of various Company subsidiaries.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The principal market on which the Company's Common Stock is traded is
the American Stock Exchange ("AMEX") under the symbol CUS. The following chart
sets forth the high and low sales prices for the Company's Common Stock as
reported on the AMEX Composite tape for the periods indicated.
COMMON STOCK PRICES
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- ----------- ---- ---
1994
<S> <C> <C>
First Quarter $3 $2-1/4
Second Quarter 2-15/16 2-1/4
Third Quarter 3-1/8 2-3/8
Fourth Quarter 3 2-3/8
1995
First Quarter 4-3/8 2-5/16
Second Quarter 3-9/16 2-9/16
Third Quarter 3-1/16 2-3/8
Fourth Quarter 3 2-1/4
</TABLE>
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On August 31, 1995, the last closing sale price per share of the Common
Stock was $2-9/16.
DIVIDENDS
The Company has never paid cash dividends on its Common Stock. It is
expected that the Company's policy of employing earnings to reduce outstanding
debt and to fund future growth will be continued. The Company's Loan and
Security Agreement with its bank prohibits the payment of any cash dividends by
the Company without the prior consent of the bank.
STOCKHOLDERS
At August 31, 1995, the approximate number of common stockholders of
record was 2,200.
STOCK TRANSFER AGENT
The Company's stock transfer agent is American Stock Transfer & Trust
Company.
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ITEM 6.
CUSTOMEDIX CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues(a) $51,087 $47,307 $41,823 $37,342 $36,684
======= ======= ======= ======= =======
Income from
Continuing Operations(a) $ 888 $ 1,021 $ 738 $ 652 $ 1,230
Income(Loss) from
Discontinued Operation -- -- -- (2,194) (387)
------- ------- ------- ------- -------
Net Income (Loss) $ 888 $ 1,021 $ 738 $(1,542) $ 843
======= ======= ======= ======= =======
Weighted Average Number
of Shares Outstanding(b) 3,646 3,735 3,726 3,431 3,280
======= ======= ======= ======= =======
Income(Loss) per Share:
Continuing Operations(a) $ .24 $ .27 $ .20 $ .19 $ .38
Discontinued Operation -- -- -- (.64) (.12)
------- ------- ------- ------- -------
Income (Loss) per Share $ .24 $ .27 $ .20 $ (.45) $ .26
======= ======= ======= ======= =======
Cash Dividends Declared
per Share $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
Total Assets $23,396 $24,347 $22,641 $22,120 $25,648
======= ======= ======= ======= =======
Long-term Debt and
Capital Lease
Obligations $ 6,824 $ 6,988 $ 7,908 $ 9,050 $12,012
======= ======= ======= ======= =======
</TABLE>
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(a) Does not include the operations of Automatic Injection Molding, Inc. which
was discontinued effective December 31, 1991.
(b) As adjusted for the effect of the one-for-ten reverse stock split declared
by the board of directors in May 1991 for stockholders of record on
November 4, 1991.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FISCAL YEAR ENDED JUNE 30, 1995 VS. JUNE 30, 1994
OPERATIONS
Sales for the fiscal year ended June 30, 1995 were $50,568,600 versus
$46,742,900 for the fiscal year ended June 30, 1994, an increase of $3,825,700,
or 8.2%. Approximately $2,100,000 of this increase resulted from an increase in
the average cost of certain precious metals found in a significant percentage of
the Company's products which increased the selling prices of these products. The
balance of the increase was largely attributable to higher sales, both domestic
and foreign, of most of the Company's dental products. These increases offset a
$387,000 decrease in sales of custom kits at the Company's subsidiary,
Transidyne General Corporation.
Other income for the fiscal year ended June 30, 1995 was $518,500
versus $564,100 for the fiscal year ended June 30, 1994. This decrease of
$45,600 was entirely attributable to an $86,000 settlement of a lawsuit in
fiscal year ended June 30, 1994, offset in part by a reduction in royalty
income.
Gross profit as a percentage of sales was 26.5% for fiscal year ended
June 30, 1995 versus 28.5% for fiscal year ended June 30, 1994. This decrease of
2.0% was partially attributable to the increase in the average cost of certain
precious metals compared to the prior year, which reduced gross profit as a
percentage of sales. This decrease was also caused in part by the write-off of
obsolete inventory.
Selling, general and administrative expenses as a percentage of sales
for the fiscal year ended June 30, 1995 was 23.7% compared to 25.5% for the
fiscal year ended June 30, 1994. This decrease of 1.8% was primarily
attributable to the increased sales caused by the increase in the average cost
of certain precious metals. In total, selling, general and administrative
expenses increased $49,500 in fiscal 1995 compared to fiscal 1994. The increase
was due primarily to increases in advertising expenses and royalty payments
which were partially offset by a decrease in legal fees, net of reimbursements.
Interest expense for the fiscal year ended June 30, 1995 was $903,000
versus $851,400 for the fiscal year ended June 30, 1994, an increase of $51,600.
This increase was attributable to an increase in interest rates and was
partially offset by a reduction in long-term debt.
Provision for income taxes was $165,000 for the fiscal year ended June
30, 1995 versus $90,000 for the year ended June 30, 1994. This increase of
$75,000 was primarily attributable to an increase in required alternative
minimum tax provisions, which was partially offset by a reversal of valuation
allowances related to deferred tax assets of $170,000 which was recorded in the
year ended June 30, 1995.
Net income for the fiscal year ended June 30, 1995 was $887,900 versus
$1,020,900 for the year ended June 30, 1994. This decrease of $133,000 is
primarily due to the increase in provision
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for income taxes discussed above, and the nonrecurring legal settlement of
$86,000 in the fiscal year ended June 30, 1994.
Net income per share for the fiscal year ended June 30, 1995 was $.24
versus $.27 for the fiscal year ended June 30, 1994. Per share earnings were
based upon the weighted average number of common stock and common stock
equivalent shares outstanding of 3,646,200 and 3,734,700 for the fiscal years
ended June 30, 1995 and 1994, respectively.
FISCAL YEAR ENDED JUNE 30, 1994 VS. JUNE 30, 1993
OPERATIONS
Sales from continuing operations for the fiscal year ended June 30,
1994 were $46,742,900 versus $41,084,400 for the fiscal year ended June 30,
1993, an increase of $5,658,500, or 13.8%. This increase was primarily
attributable to an increase in the average cost of certain precious metals found
in a significant percentage of the Company's products. This increased the
selling prices of such products and increased sales approximately $3,200,000 for
the fiscal year ended June 30, 1994. Approximately $1,123,700 of the increase in
sales was due to a higher level of dental sales as a result of an acquisition in
February 1993. In addition, approximately $875,200 of this increase in sales was
due to additional medical sales of the Company's subsidiary, Transidyne General
Corporation.
Other income for the fiscal year ended June 30, 1994 was $564,100
versus $738,700 for the fiscal year ended June 30, 1993. This decrease of
$174,600 was entirely attributable to a difference in litigation settlement
amounts. In the fiscal year ended June 30, 1993, the Company received
settlements of approximately $275,000, net of associated expenses, from the
favorable resolution of two lawsuits, as compared to the fiscal year ended June
30, 1994, where the Company received $86,000 in settlement of a lawsuit.
Gross profit as a percentage of sales was 28.5% for fiscal year ended
June 30, 1994 versus 30.4% for fiscal year ended June 30, 1993. This decrease of
1.9% was primarily attributable to the increase in the average cost of certain
precious metals compared to the prior year, which reduced gross profit as a
percentage of sales.
Selling, general and administrative expenses as a percentage of sales
for the fiscal year ended June 30, 1994 was 25.5% compared to 27.3% for the
fiscal year ended June 30, 1993. This decrease of 1.8% was entirely attributable
to the increased sales caused by the increase in the average cost of certain
precious metals. In total, selling, general and administrative expenses
increased $699,500 in fiscal year 1994 compared to fiscal 1993. Approximately
$143,500 of this increase was due to the inclusion of expenses associated with
the Company's new dental subsidiary for the entire year ended June 30, 1994,
versus five months for the year ended June 30, 1993. The balance of this
increase was due primarily to increases in legal fees, net of reimbursements,
payroll and rent expenses.
Interest expense for the fiscal year ended June 30, 1994 was $851,400
versus $951,400 for the fiscal year ended June 30, 1993, a decrease of $100,000.
This decrease was attributable to reductions in both long-term debt and lower
interest rates that prevailed during most of the period, a portion of which
related to the Company's retirement in fiscal
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1994 of the 15% convertible subordinated debentures which were outstanding at
June 30, 1993.
Provision for income taxes was $90,000 for the fiscal year ended June
30, 1994 versus $362,000 for the year ended June 30, 1993. This decrease of
$272,000 was primarily attributable to reduced state tax provisions upon
obtaining a favorable resolution of a State of Connecticut tax assessment.
Net income for the fiscal year ended June 30, 1994 was $1,020,900
versus $738,100 for the year ended June 30, 1993. This increase of $282,800 is
primarily due to the decrease in provision for income taxes discussed above.
Net income per share for the fiscal year ended June 30, 1994 was $.27
versus $.20 for the fiscal year ended June 30, 1993. Per share earnings were
based upon the weighted average number of common stock and common stock
equivalent shares outstanding of 3,734,700 and 3,726,000 for the fiscal years
ended June 30, 1994 and 1993, respectively.
IMPACT OF INFLATION AND CHANGING PRICES
Except for changes in precious metal costs as discussed above, the
Company experienced only minor inflation-related cost increases which were not a
material factor in the comparison of expenses with respect to the periods
presented. Inflation has not had a material impact on the Company's results of
operations since most of the increases in material costs have been passed
through to customers.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased by $914,500 to $10,640,600 at June 30, 1995
as compared to $9,726,100 at June 30, 1994. This increase was primarily due to
earnings of the Company.
For the fiscal year ended June 30, 1995, cash generated by operations
totaling $1,140,500 and cash on hand at the beginning of the year were used
primarily as follows: (i) to reduce debt by approximately $1,106,100, and (ii)
to purchase property and equipment totaling $323,400. As of June 30, 1995, the
Company was in compliance with all of the financial covenants contained in the
loan agreement, as amended, with the Company's principal lending bank (the
"Bank"). The loan is scheduled to mature on January 2, 1997. On October 29,
1993, the Company finalized a $600,000 Revolving Line of Credit with its Bank
which, as amended, matures on November 30, 1995. Prior to October 29, 1993, the
term loan had an interest rate of 1 1/4% above the Bank's index rate. From
October 29, 1993 to November 9, 1994, both of the above borrowings had interest
rates 1% above the Bank's index rate. This rate was reduced to 1/4% above the
Bank's index rate as of November 9, 1994.
Based on current plans, which are subject to change depending on
business conditions, capital expenditures in fiscal 1996 are expected to total
approximately $500,000, of which approximately $250,000 will be funded by
capital leases and the balance through cash provided by operations. The Company
also anticipates spending approximately $1,100,000 on research and development
activities. The source of funds for these expenditures is expected to be cash
generated by operations.
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The Company expects significant demands on cash during the next twelve
months as a result of anticipated advertising expenses and anticipated federal
alternative minimum taxes and state income taxes. In addition, because of the
Company's substantial debt burden, a significant portion of cash flow will
continue to be used to repay debt. This substantial use of cash limits the funds
available for general working capital purposes, product research, marketing, as
well as funds that can be expended on new facilities and capital equipment.
Furthermore, the ability of the Company to expand operations through mergers or
acquisitions is limited by the lack of available cash with which to fund such
activities.
FUTURE OUTLOOK
The Company expects to continue to incur high expenses in the areas of
new product development and research and product introduction. The Company
expects these efforts will primarily focus on dental products, and the
associated expenses could contribute to reduced earnings. In addition, the
dental products market faces increasing competition and profitability pressures,
both in domestic and foreign markets. Accordingly, the Company may experience
further reduction in its margins on certain dental products. The Company is
highly leveraged and any significant increase in interest rates could materially
and adversely affect the Company's profitability and cash flow.
The Company may incur substantial federal and state income tax expense
due to the use of its available net operating loss carryforwards in fiscal 1995.
Although the Company has substantial federal tax credit carryforwards, it will
incur this expense due to required alternative minimum tax provisions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements listed in the accompanying Index to Financial
Statements are included herein and filed as part of this Report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
13
<PAGE> 16
PART III
SEE INFORMATION UNDER THE CAPTION EXECUTIVE OFFICERS OF THE REGISTRANT IN
PART I.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning management remuneration is set forth in the
Company's Proxy Statement for its November 6, 1995 Annual Meeting of the
Stockholders under the caption "Executive Compensation". The above information
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information concerning owners of 5% or more of the Company's Common
Stock and ownership of the Company's Common Stock by its directors and officers
is set forth in the Company's Proxy Statement for its November 6, 1995 Annual
Meeting of Stockholders under the caption "Security Ownership of Certain
Beneficial Owners and Management". The above information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Information concerning certain relationships and related transactions
of directors, officers and owners of 5% or more of the Company's Common Stock is
set forth in the Company's Proxy Statement for its November 6, 1995 Annual
Meeting of Stockholders under the caption "Certain Relationships and Related
Transactions". The above information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
(1) Financial Statements.
The following audited consolidated financial statements of the Company
for the year ended June 30, 1995 are filed herewith in response to Item 8:
Report of Independent Public Accountants
Arthur Andersen LLP
Consolidated Balance Sheets as of June 30, 1995 and 1994
14
<PAGE> 17
Consolidated Financial Statements for the years ended
June 30, 1995, 1994 and 1993 -
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Report of Independent Public Accountants
Arthur Andersen LLP
Schedule submitted:
II- Valuation and Qualifying Accounts for
the Years Ended June 30, 1995, 1994 and 1993
Other schedules have not been filed because the conditions requiring the filing
do not exist or the required information is given in the consolidated financial
statements, including the notes thereto.
(b) Reports on Form 8-K: None.
(c) Exhibits
Exhibit
Number Description
- ------ -----------
3 (a) Restated Certificate of Incorporation. (Incorporated by
reference to Appendix A of Proxy Statement for November 4,
1991, Annual Meeting of Stockholders.)
3 (b) By-laws, as amended. (Incorporated by reference to Exhibit
6(a) (ii) of Report on Form 10-Q for quarter ended March 31,
1993.)
10 (a) (i) Lease Agreement between Jeneric/Pentron Incorporated
(formerly Jeneric Industries, Inc.), Pentron Corporation and
Wallingford Property Associates dated December 23, 1986 re 125
No. Plains Industrial Road. (Incorporated by reference to
Exhibit 10 (a) (i) of Report on Form 10-K for fiscal year ended
June 30, 1993.)
10 (a) (ii) Lease Agreement between Jeneric/Pentron Incorporated (formerly
Jeneric Industries, Inc.), Pentron Corporation and Wallingford
Property Associates dated December 23, 1986 re 53 No. Plains
15
<PAGE> 18
Industrial Road. (Incorporated by reference to Exhibit 10 (a)
(ii) of Report on Form 10-K for fiscal year ended June 30,
1993.)
10 (a) (iii) Agreement of Amendment and Renewal of Leases between
Jeneric/Pentron Incorporated and Wallingford Property
Associates dated October 4, 1991. (Incorporated by reference to
Exhibit 10 (a) (iii) of Report on Form 10-K for fiscal year
ended June 30, 1993.)
10 (b) (i) Employment Agreement between Jeneric/Pentron Incorporated
(formerly Jeneric Industries, Inc.) and Gordon S. Cohen, as
amended through May 8, 1989. (Incorporated by reference to
Exhibit 10 (b) (i) of Report on Form 10-K for fiscal year ended
June 30, 1993.)
10 (c) (i) Employment Agreement between Jeneric/Pentron Incorporated
(formerly Jeneric Industries, Inc.) and Martin L. Schulman, as
amended through May 8, 1989. (Incorporated by reference to
Exhibit 10 (c) (i) of Report on Form 10-K for fiscal year ended
June 30, 1993.)
10 (c) (v) Employment Agreement, dated January 1, 1995, between
Jeneric/Pentron Incorporated and Martin L. Schulman, together
with Confidentiality Agreement, Promissory Note, Subordination
Agreement, and Continuing Unconditional Guarantee Agreement.
(Incorporated by reference to Exhibit 10 (c) (v) of Report on
Form 10-Q for the quarter ended March 31, 1995.)
10 (d) (i) Debt Consolidation Facility between Customedix Corporation
(and its subsidiaries) and New Jersey National Bank dated April
10, 1989. (Incorporated by reference to Exhibit 10 (f) (i) of
Report on Form 10-K for fiscal year ended June 30, 1989.)
10 (d) (ii) Amendment to Debt Consolidation Facility dated May 1, 1989.
(Incorporated by reference to Exhibit 10 (f) (ii) of Report on
Form 10-K for fiscal year ended June 30, 1989.)
10 (d) (iii) Third Amendment to Debt Consolidation Facility dated
February 28, 1991. (Incorporated by reference to Exhibit 10
(d) <iii> of Report on Form 10-K for fiscal year ended
June 30, 1991.)
10 (d) (iv) Fourth Amendment to Debt Consolidation Facility dated June 30,
1992. (Incorporated by reference to Exhibit 10 (d) (iv) of
Report on Form 10-K for fiscal year ended June 30, 1992.)
10 (d) (v) Fifth Amendment to Debt Consolidation Facility dated
February 1, 1993. (Incorporated by reference to Exhibit 6
(a) (i) of Report on Form 10-Q for the quarter ended
December 31, 1992.)
16
<PAGE> 19
10 (d) (vi) Sixth Amendment to Debt Consolidation Facility dated October
29, 1993. (Incorporated by reference to Exhibit 10 (d) (vi) of
Report on Form 10-K for fiscal year ended June 30, 1994.)
10 (d) (vii) Amendment to Debt Consolidation Facility dated November 2,
1994. (Filed with this document.)
21 List of Operating Subsidiaries. (Filed with this document.)
Copies of the exhibits shall be furnished upon request at a cost of $5.00 per
exhibit to cover postage, duplicating and handling charges. Please address your
request to Investor Relations: Customedix Corporation, 53 North Plains
Industrial Road, Wallingford, CT 06492.
Note: Custom Energy Services, Inc. is the former name of Customedix Corporation.
17
<PAGE> 20
SIGNATURES
Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CUSTOMEDIX CORPORATION
BY:s/s GORDON S. COHEN
--------------------------
GORDON S. COHEN, CHAIRMAN
DATED: SEPTEMBER 22, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the dates indicated.
Signature Title Date
- --------- ----- ----
Principal Executive Chairman
Officer:
s/s Gordon S. Cohen
- --------------------
GORDON S. COHEN September 22, 1995
Principal Financial
Officer: Treasurer
Principal Accounting
Officer:
s/s Barry L. Kosowsky
- ----------------------
BARRY L. KOSOWSKY September 22, 1995
Directors:
----------
s/s Gordon S. Cohen
- --------------------
GORDON S. COHEN Director September 22, 1995
s/s Martin L. Schulman
- -----------------------
MARTIN L. SCHULMAN Director September 22, 1995
s/s William T. Fitch
- ---------------------
WILLIAM T. FITCH Director September 22, 1995
s/s Elry C. Bird
- ----------------
ELRY C. BIRD Director September 22, 1995
s/s Robert S. Cooper
- ---------------------
ROBERT S. COOPER Director September 22, 1995
s/s David H. Leigh
- -------------------
DAVID H. LEIGH Director September 22, 1995
18
<PAGE> 21
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Financial Statements -
Report of Independent Public Accountants F-2
Consolidated Balance Sheets as of
June 30, 1995 and 1994 F-3
Consolidated Statements of Operations for
the Years Ended June 30, 1995, 1994 and 1993 F-5
Consolidated Statements of Stockholders'
Equity for the Years Ended June 30, 1995,
1994 and 1993 F-6
Consolidated Statements of Cash Flows for
the Years Ended June 30, 1995, 1994 and 1993 F-7
Notes to Consolidated Financial Statements F-8
Schedules* -
Report of Independent Public Accountants F-22
Schedule II - Valuation and Qualifying
Accounts for the Years Ended June 30, 1995,
1994 and 1993 F-23
* All other schedules are not submitted because they are not applicable,
not required or because the required information is included in the
consolidated financial statements or notes thereto.
F-1
<PAGE> 22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Customedix Corporation:
We have audited the accompanying consolidated balance sheets of Customedix
Corporation (a Delaware corporation) and subsidiaries as of June 30, 1995 and
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for the three years ended June 30, 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Customedix
Corporation and subsidiaries as of June 30, 1995 and 1994, and the results of
their operations and their cash flows for the three years ended June 30, 1995 in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
-----------------------
Hartford, Connecticut ARTHUR ANDERSEN LLP
August 25, 1995
F-2
<PAGE> 23
CUSTOMEDIX CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 166,670 $ 477,983
Accounts receivable, less allowance for
possible losses of $283,000 and
$339,000 at June 30, 1995 and 1994,
respectively 6,862,206 6,861,308
Inventory 7,411,332 6,955,852
Other 581,698 1,094,623
----------- -----------
TOTAL CURRENT ASSETS 15,021,906 15,389,766
PROPERTY AND EQUIPMENT, less accumulated depreciation
and amortization of $3,714,656 and $3,194,465
at June 30, 1995 and 1994, respectively 3,148,573 3,298,265
EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED,
less accumulated amortization of $2,331,371 and $3,013,449
at June 30, 1995 and 1994, respectively 4,809,664 5,211,392
OTHER ASSETS 416,159 447,910
----------- -----------
TOTAL ASSETS $23,396,302 $24,347,333
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-3
<PAGE> 24
CUSTOMEDIX CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
AS OF JUNE 30, 1995 AND 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 810,398 $ 1,063,097
Current portion of obligations under
capital leases 240,202 218,286
Accounts payable and accrued expenses 3,330,687 4,382,285
------------ ------------
TOTAL CURRENT LIABILITIES 4,381,287 5,663,668
LONG-TERM DEBT, less current portion 6,407,836 6,439,369
OBLIGATIONS UNDER CAPITAL LEASES, less
current portion 416,090 548,380
LONG-TERM PENSION OBLIGATION AND OTHER 1,788,894 1,567,830
------------ ------------
TOTAL LIABILITIES 12,994,107 14,219,247
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 13
and 14)
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par, 100,000 shares
authorized; none issued - -
Common stock, $.01 par, 3,900,000 shares
authorized; 3,296,286 and 3,697,299 shares
issued and outstanding at June 30, 1995
and 1994, respectively 32,963 36,973
Additional paid-in capital 26,834,399 27,444,217
Accumulated deficit (16,465,167) (17,353,104)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 10,402,195 10,128,086
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 23,396,302 $ 24,347,333
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-4
<PAGE> 25
CUSTOMEDIX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Sales $50,568,559 $46,742,854 $41,084,422
Other income 518,479 564,051 738,740
----------- ----------- -----------
51,087,038 47,306,905 41,823,162
----------- ----------- -----------
COSTS, EXPENSES AND OTHER:
Cost of sales 37,162,589 33,430,532 28,588,590
Selling, general and administrative
expenses 11,968,819 11,919,276 11,219,765
Interest expense, net of interest
income of $330, $5,176 and
$36,725 at June 30, 1995, 1994
and 1993, respectively 902,693 846,179 914,713
----------- ----------- -----------
50,034,101 46,195,987 40,723,068
----------- ----------- -----------
Income before provision for
income taxes 1,052,937 1,110,918 1,100,094
PROVISION FOR INCOME TAXES 165,000 90,000 362,000
----------- ----------- -----------
NET INCOME $ 887,937 $ 1,020,918 $ 738,094
=========== =========== ===========
NET INCOME PER SHARE: $ .24 $ .27 $ .20
===== ===== =====
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-5
<PAGE> 26
CUSTOMEDIX CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Common Stock
$.01 par value Additional
------------------- Paid-in Accumulated
Shares Amount Capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
BALANCE, July 1, 1992 3,712,399 $ 37,124 $27,463,862 $(19,112,116)
Net income - - - 738,094
Stock repurchases (52,650) (526) (125,474) -
Stock issued as compensation 25,000 250 73,188 -
--------- --------- ----------- ------------
BALANCE, June 30, 1993 3,684,749 36,848 27,411,576 (18,374,022)
Net income - - - 1,020,918
Stock repurchases (12,450) (125) (34,296) -
Stock issued as compensation 25,000 250 66,937 -
--------- --------- ----------- ------------
BALANCE, June 30, 1994 3,697,299 36,973 27,444,217 (17,353,104)
Net income - - - 887,937
Stock repurchases (401,013) (4,010) (609,818) -
--------- --------- ----------- ------------
BALANCE, June 30, 1995 3,296,286 $ 32,963 $26,834,399 $(16,465,167)
========= ========= =========== ============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-6
<PAGE> 27
CUSTOMEDIX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 887,937 $ 1,020,918 $ 738,094
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 592,062 603,358 548,998
Amortization 433,170 446,970 455,571
Deferred tax benefit (170,000) - -
Stock issued as compensation - 67,187 73,438
Loss on disposal of property and
equipment 976 35,956 11,264
Provision for losses on accounts and
notes receivable 17,614 234,374 152,325
Change in assets and liabilities -
Accounts receivable (18,512) (1,180,930) (237,694)
Inventory (455,480) (631,299) (702,342)
Other assets 683,234 (708,965) (141,302)
Accounts payable and accrued
expenses (1,051,598) 880,772 792,894
Other liabilities 221,064 376,875 (102,042)
----------- ----------- -----------
Net cash provided by operating
activities 1,140,467 1,145,216 1,589,204
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (323,398) (434,129) (482,483)
Purchase of subsidiary, net of cash
received - - (101,736)
----------- ----------- -----------
Net cash used in investing
activities (323,398) (434,129) (584,219)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing on revolving credit facility - 450,000 -
Repayments to banks and others (1,106,054) (1,422,538) (1,200,981)
Repurchase and retirement of common
stock (22,328) (34,421) (126,000)
Proceeds from note receivable - - 350,394
----------- ----------- -----------
Net cash used in financing
activities (1,128,382) (1,006,959) (976,587)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (311,313) (295,872) 28,398
CASH AND CASH EQUIVALENTS, beginning of
year 477,983 773,855 745,457
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 166,670 $ 477,983 $ 773,855
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for -
Interest $ 946,924 $ 845,438 $ 963,327
Income taxes 345,049 179,661 47,436
Non-cash transactions -
Capital lease obligations 119,948 367,590 174,314
Note payable issued for stock repurchase 591,500 - -
Net assets acquired in purchase of
subsidiary for note payable - - 113,475
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-7
<PAGE> 28
CUSTOMEDIX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995, 1994 AND 1993
1. Business:
Customedix Corporation (the Company) and its subsidiaries manufacture,
distribute and market a variety of products for the dental and medical
health care markets. The dental segment includes precious and
nonprecious metal casting alloys, porcelains, composites, impression
materials and amalgams. The medical segment consists of a subsidiary
which sells procedure kits and disposables to the medical market.
2. Significant Accounting Policies:
Principles of consolidation -
The consolidated financial statements include the Company and its
wholly-owned subsidiaries. Significant intercompany transactions have
been eliminated in consolidation.
Revenue recognition -
Revenues from the sales of products are generally recognized when
products are shipped to customers.
Transidyne General Corporation (Transidyne), a wholly-owned subsidiary
of the Company, receives royalties through June 1997 under an agreement
with a third party based on sales of a medical segment product. Royalty
income under this agreement was approximately $130,000, $159,000 and
$181,000 for 1995, 1994 and 1993, respectively, and is included in other
income.
Inventory -
The Company purchases certain metals from consignors. Such inventory is
purchased at periodic intervals at prevailing market prices. Metals
inventory which is on consignment to the Company and has been used in
production (approximately $1,021,000 and $1,064,000 at June 30, 1995 and
1994, respectively) is recorded in inventory and accounts payable at the
estimated settlement price based on the current market price. Inventory
is valued at the lower of cost or market utilizing the first-in,
first-out method.
F-8
<PAGE> 29
Property, equipment, depreciation and amortization -
Property and equipment, including equipment under capital leases, is
stated at cost. Expenditures for additions, renewals and betterments are
capitalized and expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is computed over the estimated useful
lives of the assets using the straight-line method for financial
reporting purposes. Leasehold improvements and assets held under capital
leases are amortized using the straight-line method over the terms of
the leases or the service lives of the assets, whichever is shorter.
Depreciation and amortization is provided over the following estimated
useful lives:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Machinery and equipment 3-10
Leasehold improvements 5-20
Furniture and fixtures 5-10
Transportation equipment 5-10
</TABLE>
Income taxes -
For Federal income tax purposes, the Company and its subsidiaries file a
consolidated return. For state income tax purposes, the Company and
three subsidiaries file a combined Connecticut return. Certain other
subsidiaries file individual state and local tax returns in the
jurisdictions in which they operate. The Company follows the liability
method of accounting for income taxes as required by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes".
Earnings per share -
Income per share information was computed by dividing net income for the
period by the weighted average number of shares of common stock and
common stock equivalents outstanding during the applicable year. The
weighted average number of shares used in the calculations was
3,646,204, 3,734,747 and 3,725,972 for 1995, 1994 and 1993,
respectively.
Excess of cost over net assets of businesses acquired -
The excess of the cost of businesses acquired over the fair value of the
net assets at the dates of acquisition is amortized over varying periods
up to 25 years on a straight-line basis. The Company monitors the
profitability of these subsidiaries in order to assess whether events
and circumstances have occurred which indicate that the remaining
estimated useful life of goodwill may warrant revision or that the
remaining balance of goodwill may not be recoverable.
Research and development costs -
Expenditures for research and development are charged to operations
(primarily cost of sales) as incurred. Research and development expenses
were approximately $1,047,000, $1,058,000 and $1,035,000 for 1995, 1994
and 1993, respectively.
F-9
<PAGE> 30
Cash equivalents -
The Company considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.
Reclassifications -
Certain reclassifications have been made to the 1994 and 1993
consolidated financial statements in order for them to be presented in
conformity with the 1995 consolidated financial statements.
3. Acquisition:
On February 17, 1993, the Company purchased all the assets of a dental
products company and formed a new wholly-owned subsidiary. The purchase
price was $235,000 of which $105,000 was paid in cash and in payment of
the balance, the Company signed a noninterest-bearing promissory note
for $130,000. The note was recorded at a discounted value of $113,475.
The acquired company's results of operations are not material to the
financial statements taken as a whole.
4. Inventory:
A summary of inventory as of June 30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Finished products $4,592,441 $4,362,382
Work-in-process 694,073 669,807
Raw material and supplies 2,124,818 1,923,663
---------- ----------
$7,411,332 $6,955,852
========== ==========
</TABLE>
5. Property and Equipment:
Major classes of property and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Machinery and equipment $3,411,694 $3,231,312
Leasehold improvements 2,081,034 2,041,390
Furniture and fixtures 1,337,960 1,187,487
Transportation equipment 32,541 32,541
---------- ----------
6,863,229 6,492,730
Less: Accumulated depreciation
and amortization (3,714,656) (3,194,465)
---------- ----------
$3,148,573 $3,298,265
========== ==========
</TABLE>
F-10
<PAGE> 31
6. Long-Term Debt:
Long-term debt as of June 30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- ----------------------------
Current Long-term Current Long-term
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Term loan $ 462,666 $5,816,336 $ 567,725 $6,391,638
Revolving credit facility 300,000 - 450,000 -
Note payable to officer - 591,500 - -
Other 47,732 - 45,372 47,731
---------- ---------- ---------- ----------
$ 810,398 $6,407,836 $1,063,097 $6,439,369
========== ========== ========== ==========
</TABLE>
In October 1993, the Company amended its debt consolidation facility
agreement (the Consolidation Loan) under which it had consolidated in
April 1989 all of its outstanding loans with its bank. This amendment
established a $600,000 revolving credit facility as part of the
Consolidation Loan. The revolving credit facility expires on November
30, 1995 and may be renewed at the bank's option. As of June 30, 1995,
$300,000 was outstanding under this revolving credit facility.
Monthly term loan principal payments under the Consolidation Loan of
$33,333 began March 1, 1991 and continue through December 1996.
Additional principal payments must be made based upon excess cash flow,
as defined. Under the excess cash flow provision, approximately $60,500
is due for fiscal 1995. The Company is also required to make additional
principal payments equal to twice the cost of stock repurchases, which,
based on repurchases occurring in fiscal 1995, will require the Company
to pay an additional $2,200 in fiscal 1996. Outstanding principal is due
on January 2, 1997. Interest is payable monthly at the bank's index rate
(9% as of June 30, 1995) plus 1/4%.
The Consolidation Loan is collateralized by all of the Company's assets.
The agreement provides, among other things, for the maintenance of
various financial ratios including minimum tangible net worth
($4,200,000 at June 30, 1995) a minimum stockholder's equity
($10,300,000 at June 30, 1995) and current ratio (not less than 2.5 to
1.0) and limits the amount of borrowings, rental obligations and capital
expenditures the Company may incur. In addition, under the terms of the
Consolidation Loan, the Company may not declare or pay any dividends, in
cash or otherwise, on any shares of stock except for stock dividends,
without the bank's consent. As of June 30, 1995, the Company was in
compliance with the covenants of the Consolidation Loan.
On May 1, 1995, the Company's subsidiary, Jeneric/Pentron, Inc. entered
into an employment agreement with an officer which provides for maximum
annual payments of salary assuming all bonuses are earned, aggregating
approximately $567,000, subject to reduction in certain circumstances,
through December 31, 2002. The base salary shall be adjusted annually by
the cost of living adjustment provided generally to employees of the
Corporation. The agreement also included provisions pursuant to which
F-11
<PAGE> 32
394,328 shares of the Company's common stock held by the officer were
purchased by the Company at a price of $1.50 per share. The purchase
price of the shares has been paid by delivery of Customedix's
subordinated promissory note, which bears interest at 8% per annum and
shall accrue and not be compounded until principal and interest payments
begin January 2003. Final maturity of the note is December 31, 2014.
Scheduled maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1996 $ 810,398
1997 5,816,336
1998 -
1999 -
2000 -
Thereafter 591,500
----------
$7,218,234
==========
</TABLE>
7. Accounts Payable and Accrued Expenses:
Accounts payable and accrued expenses as of June 30, 1995 and 1994
consist of:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accounts payable $1,845,694 $2,724,464
Accrued salaries 583,942 757,510
Income taxes payable 272,427 355,465
Pension obligation 200,000 200,000
Other 428,624 344,846
---------- ----------
$3,330,687 $4,382,285
========== ==========
</TABLE>
8. Income Taxes:
The provision for income taxes in all years presented represents minimum
federal and state income taxes as well as estimates of amounts to be
paid for periods under examination by taxing authorities. During 1995,
the Company reversed certain previously provided state tax provisions
which were no longer deemed necessary. The provision for federal and
state income taxes is comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 335,000 $ - $ 47,000
State - 90,000 315,000
Deferred:
Federal (170,000) - -
--------- ------- --------
$ 165,000 $90,000 $362,000
========= ======= ========
</TABLE>
F-12
<PAGE> 33
The current provision for federal income taxes includes the benefit
associated with the utilization of net operating loss carryforwards of
approximately $328,000, $492,000 and $407,000 for 1995, 1994 and 1993,
respectively.
The effective tax rate on income before provision for income taxes was
different than the federal statutory tax rate. The following summary
reconciles taxes at the federal statutory tax rate with the effective
rates:
<TABLE>
<CAPTION>
Percent of Pretax Income
--------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income taxes at statutory rate 34% 34% 34%
Increase (decrease) in taxes resulting from:
Non-deductible amortization of goodwill 16 16 15
Change in valuation allowance related
to net deferred tax asset (27) (48) (35)
State income taxes, net of federal effect (7) 6 19
--- --- ---
Total income taxes 16% 8% 33%
=== === ===
</TABLE>
The tax effect of temporary differences giving rise to the Company's net
deferred tax asset (liability) at June 30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities:
Property and equipment $ (114,000) $ (141,000)
Litigation settlement - (170,000)
Deferred tax assets:
Allowances for possible losses on
notes and accounts receivable 182,000 176,000
Inventory reserve 81,000 77,000
Accrued pension costs 343,000 317,000
Accrued compensation 117,000 179,000
Accrued rent expense 202,000 166,000
Other accrued expenses 226,000 213,000
Tax effect of net operating loss
carryforwards 544,000 884,000
Investment and research and
development tax credits 317,000 317,000
Alternative minimum tax credits 182,000 172,000
Valuation allowance (1,910,000) (2,190,000)
----------- -----------
$ 170,000 $ -
=========== ===========
</TABLE>
F-13
<PAGE> 34
The Company has recognized a deferred tax asset to the extent existing
deductible temporary differences are expected to reverse and enable the
Company to recapture alternative minimum taxes paid in 1995. The deferred
tax asset of $170,000 is included in other current assets.
At June 30, 1995, net operating loss carryforwards of approximately
$1,600,000 and unused tax credits of approximately $317,000 are
available for federal income tax reporting purposes. These carryforwards
are available through 2009 for carryforward against future years'
taxable income. The Company has alternative minimum tax (AMT) credits of
$182,000 which carryforward indefinitely for federal income tax purposes
and AMT net operating loss carryforwards of approximately $1,600,000
which are available through 2010. These AMT tax credits and AMT net
operating loss carryforwards can be used in the future to the extent
that the Company's regular tax liability exceeds amounts calculated
under the alternative minimum tax method. Both the regular and AMT net
operating loss carryforward amounts referred to above are related to the
Transidyne operations prior to its acquisition by the Company and may
only be used against future Transidyne income. The Company has no
material net operating loss carryforwards available to reduce state
income taxes payable.
9. Common Stock Purchase Warrants and Options:
On August 23, 1988, in connection with the acquisition of Transidyne,
90,000 warrants were issued in exchange for outstanding Transidyne
warrants. The unexercised warrants (20,000) had an exercise price of
$6.00 per share and expired in August 1993. No warrants were outstanding
at June 30, 1995 or 1994.
In connection with two employment agreements entered into in fiscal
1987, the Company granted options to acquire up to an aggregate of
125,000 shares of the Company's common stock, exercisable at 25,000
shares per annum through 1992, at no cost to the individuals. The value
of the options on the date of grant was determined to be $5.00 per share
and all options granted were exercised in the year exercisable.
Subsequent to the expiration of the above employment agreements, options
to acquire 25,000 shares were granted at no cost to these individuals in
fiscal 1992 and 1993 and exercised in fiscal 1993 and 1994,
respectively. In fiscal 1994 options which are exercisable in fiscal
1995 or thereafter at no cost were granted to one individual to acquire
an additional 12,500 shares. At June 30, 1995 the Company had reserved
12,500 shares of common stock for such exercise. The Company recorded as
an expense approximately $73,000, $67,000 and $34,000 in fiscal years
1993, 1994 and 1995, respectively, representing the fair market values
of such options. Options to acquire additional shares of common stock
may be granted to an individual in connection with a certain employment
agreement (see Note 14).
F-14
<PAGE> 35
At June 30, 1995, the Company had a total of 18,750 shares of common
stock that were reserved for stock options.
In connection with a consulting agreement, in July 1989 the Company
granted options to acquire 20,000 shares of its common stock through
August 1994 at an exercise price of $5.00 per share. The options expired
in August 1994.
10. Segment Information:
The Company operates in two business segments, the dental health care
(dental) segment and the medical health care (medical) segment.
Operating income (loss) consists of sales less cost of goods sold and
selling, general and administrative expenses directly attributable to
the industry segments. Corporate expenses consist of administrative
costs not directly attributable to a specific industry segment.
Intersegment sales are insignificant. Identifiable assets are those used
in the specific industry segment. Corporate assets are principally cash
and excess of cost over net assets of businesses acquired. Capital
expenditures include purchases of property and equipment, property and
equipment financed through capital lease financing transactions and
property and equipment acquired in connection with business
acquisitions.
Summarized financial information is as follows (in thousands):
<TABLE>
<CAPTION>
Dental Medical Corporate Consolidated
------ ------- --------- ------------
<S> <C> <C> <C> <C>
1995
----
Sales $49,290 $1,279 $ - $50,569
Operating income (loss) 2,455 (233) (785) 1,437
Identifiable assets 17,728 648 5,020 23,396
Depreciation and
amortization 581 39 405 1,025
Capital expenditures 436 6 1 443
1994
----
Sales $45,077 $1,666 $ - $46,743
Operating income (loss) 2,206 98 (911) 1,393
Identifiable assets 18,303 994 5,050 24,347
Depreciation and
amortization 609 40 401 1,050
Capital expenditures 757 31 14 802
</TABLE>
F-15
<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C>
1993
----
Sales $40,293 $ 791 $ - $41,084
Operating income (loss) 2,500 (92) (1,132) 1,276
Identifiable assets 16,706 581 5,354 22,641
Depreciation and
amortization 563 38 404 1,005
Capital expenditures 651 87 - 738
</TABLE>
No one customer accounted for 10% or more of the Company's sales in
either 1995, 1994 or 1993.
11. Foreign Sales:
Foreign sales, primarily dental products, by geographic area, consisted
of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Europe $6,471 $5,697 $6,549
Asia 1,806 1,878 1,085
Canada 725 695 565
Other 438 419 420
------ ------ ------
Total $9,440 $8,689 $8,619
====== ====== ======
</TABLE>
12. Employee Benefit Plans:
Jeneric/Pentron Inc. (Jeneric/Pentron), a wholly-owned subsidiary, has a
defined benefit pension plan covering eligible employees, as defined.
The benefits are based on years of service and the employee's
compensation based on highest average earnings over five consecutive
years of employment. Jeneric/Pentron's funding policy is to contribute
annually the amount that can be deducted for federal income tax
purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned
in the future.
At June 30, 1995, 98 employees were covered under the plan, or
approximately 56% of Jeneric/Pentron's total employees. The following
table sets forth the funded status of the plan at June 30, 1995 and 1994
(in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of accumulated
benefit obligation, including vested
benefits of $3,113 and $2,941,
respectively $ 3,137 $ 2,966
======= =======
Projected benefit obligation $ 4,008 $ 3,816
Plan assets at fair value 2,834 2,775
------- -------
</TABLE>
F-16
<PAGE> 37
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Projected benefit obligation in excess
of plan assets 1,174 1,041
Unrecognized prior service cost 92 -
Unrecognized net income from past experience
different from that assumed and effects of
changes in assumptions 89 208
Unrecognized net transition obligation being
recognized over 19 years (99) (108)
------- -------
Accrued pension cost 1,256 1,141
Amount expected to be contributed in
subsequent year 200 200
------- -------
Amount reflected as long-term pension
obligation $ 1,056 $ 941
======= =======
</TABLE>
Net pension cost included the following components (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost $ 193 $ 214 $ 327
Interest cost 276 261 211
Return on plan assets (204) (204) (175)
Net amortization and deferral 2 8 (4)
----- ----- -----
Net periodic pension cost $ 267 $ 279 $ 359
===== ===== =====
</TABLE>
The assumptions used in the pension calculation for the plan were as
follows:
<TABLE>
<S> <C>
Discount rate 7.5%
Rate of increase in future
compensation levels 5.0%
Expected long-term rate
of return on assets 7.5%
</TABLE>
The Company has a deferred compensation plan as provided by Section
401(k) of the Internal Revenue Code. The plan allows substantially all
employees to defer a portion of their income through contributions to
the plan and the Company matches a portion of these contributions. The
expense for the 401(k) plan was approximately $85,000, $75,000 and
$66,000 for 1995, 1994 and 1993, respectively.
F-17
<PAGE> 38
13. Leases:
On December 23, 1986, Jeneric/Pentron entered into two operating leases
for its principal premises from a partnership of which two
officer-stockholders of the Company are general partners. The leases,
effective January 1, 1987, for an initial term of five years, were
amended effective December 4, 1991 to extend the terms of the leases for
an additional fifteen years. The leases, as amended, expire on December
31, 2006 and include options to renew for an additional five years. The
aggregate annual base rental under these lease agreements for fiscal
1995 was approximately $388,500 and increases at the greater of the
increase in the Consumer Price Index or 5% per year.
American Thermocraft Corporation, a wholly-owned subsidiary, leases its
premises under an operating lease which expires on October 30, 2000 with
an option to renew for two successive additional periods of five years
each. The annual base rental is approximately $77,000 in the first year,
increasing to approximately $90,000 by the end of the original lease
term.
Transidyne leases its premises under an operating lease which expires on
September 15, 1997 with an option to renew for an additional ten years.
The annual base rental is approximately $40,000 in the first year,
increasing to approximately $91,000 by the end of the original lease
term.
The leases require certain expenses to be paid by the lessee. The
Company is expensing the total of these base rents on a straight-line
basis over the terms of the leases. Consolidated rental expense of the
Company under operating leases was approximately $775,000, $776,000 and
$759,000 for 1995, 1994 and 1993, respectively.
The present value of capital lease obligations is calculated based on
interest rates determined to be applicable at the inception of the
leases. Interest rates on these leases range from 8.8% to 16.5% with a
weighted average of approximately 10.3%. Interest expense on the
outstanding obligations under these capital leases was $71,235, $71,561
and $63,714 for 1995, 1994 and 1993, respectively. The book value of
property and equipment under capital leases as of June 30, 1995 and 1994
was approximately $668,000 and $715,000, respectively.
As of June 30, 1995, future minimum lease payments under capital and
operating leases that have initial or remaining noncancellable terms in
excess of one year are as follows:
F-18
<PAGE> 39
<TABLE>
<CAPTION>
Operating Leases
------------------------------------
Capital Related
Leases Parties Other
------ ------- -----
<S> <C> <C> <C>
1996 $295,639 $ 407,895 $226,676
1997 231,443 428,290 209,331
1998 143,168 449,704 112,535
1999 92,625 472,190 89,875
2000 - 495,799 89,875
Thereafter - 3,889,822 29,958
-------- ---------- --------
Total minimum lease payments 762,875 $6,143,700 $758,250
========== ========
Less: amount representing
interest 106,583
--------
Present value of net
minimum lease payments 656,292
Less: current portion 240,202
--------
$416,090
========
</TABLE>
14. Commitments and Contingencies:
Jeneric/Pentron is currently involved in a dispute with Synspar &
Pentron Dental Products, s.r.l. (Synspar) in which money damages are
claimed as a result of an alleged breach by Jeneric/Pentron of a
distribution agreement. Jeneric/Pentron intends to vigorously contest
that it has any obligation to Synspar relating to the alleged
distributorship agreement.
The Company has currently undergone sales tax audits by the States of
Connecticut and California. The Company settled during fiscal 1995 and
1996 both audits for immaterial amounts.
The Company has employment agreements with various officers and key
employees which require minimum annual compensation including bonuses.
Several agreements provide for a bonus based upon a percentage of sales
of certain products sold by certain subsidiaries, as defined in the
agreement.
Certain agreements provide for the retention of certain officers as
consultants and include noncompete clauses in the event the officers are
wrongfully terminated or otherwise terminated without cause. Upon such
termination, the Company would have to pay the officers an aggregate of
$1,217,000 over a ten-year period.
Additionally, one of the agreements provide for options to acquire an
aggregate of 12,500 shares of common stock which was granted in fiscal
1995. This agreement was originally scheduled to expire on December 31,
F-19
<PAGE> 40
1991. The Company agreed to extend this agreement for an additional
five-year period (through December 31, 1996) at amounts to be
determined, but not for less than the previous amount.
The following summarizes, in the aggregate, approximate minimum annual
amounts that are due to certain officers and key employees of the
Company under the above agreements including the extensions referred to
above:
<TABLE>
<S> <C>
1996 $1,127,000
1997 900,000
1998 518,000
1999 461,000
2000 483,000
Thereafter 932,000
----------
$4,421,000
==========
</TABLE>
Pursuant to an agreement between Jeneric/Pentron and a trust of which an
officer-stockholder is a beneficiary, Jeneric/Pentron was granted a
license for its trade name and related trademark. Under this license
agreement, Jeneric/Pentron is obligated to pay annually to the trust 1%
of its sales of products sold under the trademark and .25% of sales of
all products and services. For 1995, 1994 and 1993, approximately
$145,000, $142,000 and $124,000, respectively, was paid to the trust.
The Company had invested in one derivative during fiscal year 1995. The
Company acquired an option to purchase 1,000 oz. of gold at $420 per oz.,
which expired in July 1995, from a third party for approximately $4,500.
The option was not exercised and the $4,500 was recorded as an expense.
15. Related Party Transactions:
The Company recorded expenses of approximately $202,400, $688,000 and
$343,000 for 1995, 1994 and 1993, respectively, for legal and accounting
services provided by firms associated with individuals who have served
as officers or directors of the Company.
The Company recorded approximately $7,900 of interest expense for 1995
in conjunction with the note to officer described in Note 6.
16. Selected Quarterly Financial Data (Unaudited):
<TABLE>
<CAPTION>
Year ended June 30,
Net Gross Net Earnings
Sales Profit Income Per Share
----- ------ ------ ---------
<S> <C> <C> <C> <C>
1995
----
First quarter $11,384,289 $ 3,082,954 $ 77,410 $0.02
Second quarter 12,830,389 3,504,644 197,299 0.05
Third quarter 12,909,888 3,559,004 289,448 0.08
Fourth quarter 13,443,993 3,259,368 323,780 0.09
----------- ----------- -------- -----
Total fiscal year $50,568,559 $13,405,970 $887,937 $0.24
=========== =========== ======== =====
</TABLE>
F-20
<PAGE> 41
<TABLE>
<CAPTION>
Year ended June 30,
Net Gross Net Earnings
Sales Profit Income Per Share
----- ------ ------ ---------
<S> <C> <C> <C> <C>
1994
----
First quarter $10,075,937 $ 3,056,487 $ 112,379 $0.03
Second quarter 11,885,767 3,501,018 187,128 0.05
Third quarter 11,851,882 3,597,571 261,750 0.07
Fourth quarter 12,929,268 3,157,246 459,661 0.12
----------- ---------- ---------- -----
Total fiscal year $46,742,854 $13,312,322 $1,020,918 $0.27
=========== =========== ========== =====
</TABLE>
F-21
<PAGE> 42
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Customedix Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Customedix Corporation and subsidiaries as
of June 30, 1995 and 1994 and for the three years ended June 30, 1995 and have
issued our report thereon dated August 25, 1995. Our audit was made for the
purpose of forming an opinion on the basic financial statements taken as a
whole. Schedule II appearing on page F-23 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
The information reflected in the schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/S/ ARTHUR ANDERSEN LLP
-----------------------
Hartford, Connecticut ARTHUR ANDERSEN LLP
August 25, 1995
F-22
<PAGE> 43
SCHEDULE II
CUSTOMEDIX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(In Thousands)
<TABLE>
<CAPTION>
Additions
--------------------------------
Balance at Charged to Charged to Balance at
Description Beginning of Year Cost and Expense Other Accounts Deductions (1) End of Year
----------- ----------------- ---------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
June 30, 1995:
Allowance for
possible losses -
Accounts Receivable $ 339 $ 17 $ - $ 73 $ 283
June 30, 1994:
Allowance for
possible losses -
Accounts Receivable $ 261 $ 234 $ - $ 156 $ 339
Notes Receivable 1,542 - - 1,542 -
June 30, 1993:
Allowance for
possible losses -
Accounts Receivable $ 141 $ 152 $ 16 $ 48 $ 261
Notes Receivable 1,542 - - - 1,542
</TABLE>
- -----------------------------------
(1) Represents primarily uncollectible accounts which were written off.
F-23
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10(d)(vii) Amendment to Debt Consolidation
Facility dated November 2, 1994.
21 List of Operating Subsidiaries.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT
10(d)(vii)
<PAGE> 2
EXHIBIT 10(d)(vii)
[CORESTATES LETTERHEAD]
Page 1 of 2
[LOGO]
November 2, 1994
Dr. Gordon Cohen, Chairman
Customedix Corp.
53 North Plains Industrial Road
Wallingford, CT 06492
Re: Term loan originally dated April 10, 1989 in the original amount of
$10,645,123.21 as amended by First through Sixth Amendments and Revolving
Loan dated October 29, 1993 in the amount of $600,000.
AMENDMENT
New Jersey National Bank agrees to extend the maturity of the Revolving Loan,
referenced above, to November 30, 1995 and agrees to reduce the rate on both the
Term Loan and the Revolving Loan from the rates currently in effect, to a new
floating rate of New Jersey National Bank's Prime Rate plus one quarter percent
(0.25%) per annum, effective upon receipt of this Amendment by the Bank.
All other terms and conditions specified in the Notes, Debt Consolidation
Facility Agreement and Amendments to the Debt Consolidation Facility Agreement
shall remain in full force and effect. This change is restricted to the change
in maturity date on the Revolving Loan and the change in the interest rates on
the Term Loan and Revolving Loan.
NEW JERSEY NATIONAL BANK
BY: /s/ STEPHEN F. BAYER
----------------------------------
Stephen F. Bayer, Vice President
AGREED AND ACCEPTED THIS 8TH DATE OF NOVEMBER 1994:
ATTEST CUSTOMEDIX CORPORATION
/s/ BARRY L. KOSOWSKY By: /s/ GORDON COHEN
- ------------------------- -------------------------
[SEAL] SECRETARY CHAIRMAN
<PAGE> 3
Page 2
ATTEST JENERIC/PENTRON INCORPORATED
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] SECRETARY PRESIDENT
ATTEST AUTOMATIC INJECTION MOLDING, INC.
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] SECRETARY PRESIDENT
ATTEST CUSTOM SERVICES, INC.
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] PRESIDENT
ATTEST HUNTERDON TRANSPORT, INC.
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] PRESIDENT
ATTEST SMS LIQUIDATING, INC.
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] PRESIDENT
ATTEST AMERICAN THERMOCRAFT CORPORATION
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] PRESIDENT
ATTEST TRANSIDYNE GENERAL CORPORATION
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] PRESIDENT
ATTEST DENPAC/FIVE STARS INCORPORATED
/s/ BY: /s/
- --------------------------------- --------------------------------
[SEAL] PRESIDENT
<PAGE> 1
EXHIBIT 21
<PAGE> 2
EXHIBIT 21
LIST OF OPERATING SUBSIDIARIES
<TABLE>
<CAPTION>
NAME OF COMPANY STATE OF ORGANIZATION
- --------------- ---------------------
<S> <C>
American Thermocraft Corporation New Jersey
Denpac/Five Stars Incorporated Connecticut
Jeneric/Pentron, Incorporated Connecticut
Technical Education, Inc.* South Dakota
Transidyne General Corporation Delaware
</TABLE>
- ------------------------
*Indirect wholly-owned subsidiary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 166,657
<SECURITIES> 13
<RECEIVABLES> 7,145,206
<ALLOWANCES> 283,000
<INVENTORY> 7,411,332
<CURRENT-ASSETS> 15,021,906
<PP&E> 6,863,229
<DEPRECIATION> 3,714,656
<TOTAL-ASSETS> 23,396,302
<CURRENT-LIABILITIES> 4,381,287
<BONDS> 0
<COMMON> 32,963
0
0
<OTHER-SE> 10,369,232
<TOTAL-LIABILITY-AND-EQUITY> 23,396,302
<SALES> 50,568,559
<TOTAL-REVENUES> 51,087,038
<CGS> 37,162,589
<TOTAL-COSTS> 49,131,468
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 903,023
<INCOME-PRETAX> 1,052,937
<INCOME-TAX> 165,000
<INCOME-CONTINUING> 887,937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 887,937
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
