<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the period ended March 31, 1995
or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ___________ to ___________
COMMISSION FILE NUMBER: 0-9247
AUTO-TROL TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 84-0515221
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12500 North Washington Street, Denver, Colorado 80241-2400
(Address of principal executive offices)
(303) 452-4919
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Number of shares outstanding as of May 9, 1995: 21,293,930
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
--------------------------------
REPORT TO SECURITIES AND EXCHANGE COMMISSION ON FORM 10-Q
---------------------------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 1995
---------------------------------------
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations (unaudited)
six months ended March 31, 1995 and 1994 1
Consolidated Balance Sheets (unaudited) March 31,
1995 and September 30, 1994 2-3
Consolidated Statements of Cash Flow (unaudited)
March 31, 1995 and 1994 4
Notes to Consolidated Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-10
Part II. Other Information, Item 6 Exhibits, Reports on Form 8-K 11
Signatures 12
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
1995 1994 1995 1994
-----------------------------------------
Revenues:
Sales....................... $2,591 $4,332 $6,171 $8,644
Service.....................
3,740 4,984 7,900 9,573
-----------------------------------------
6,331 9,316 14,071 18,217
Costs and expenses:
Cost of sales............... 886 1,908 2,300 3,258
Cost of service............. 1,806 2,462 3,665 4,928
Research and product
development................ 1,921 1,888 3,818 3,600
Marketing, general and
administrative............. 4,093 4,309 8,254 8,858
-----------------------------------------
8,706 10,567 18,037 20,644
Loss from operations......... (2,375) (1,251) (3,966) (2,427)
Interest income............. 31 56 93 86
Interest expense............ (118) (238) (358) (481)
------------------------------------------
Loss before income taxes..... (2,462) (1,433) (4,231) (2,822)
Income tax (benefit)......... 55 (261) 55 (447)
------------------------------------------
Net loss..................... $(2,517) $(1,172) $(4,286) $(2,375)
==========================================
Loss per share............... $(.08) $(.06) $(.17) $(.14)
Weighted average number of
shares outstanding.......... 29,432 18,134 25,267 17,031
See Notes to Consolidated Financial Statements
1
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, September 30,
1995 1994
(unaudited)
----------------------------
ASSETS
Current Assets:
Cash and cash equivalents............. $2,148 $2,120
Receivables net of allowance
of $148,000 and $134,000............ 4,747 5,198
Inventories........................... 286 291
Service parts and prepaid expenses.... 717 799
----------------------------
Total current assets................ 7,898 8,408
Property, facilities and equipment:
Land.................................. 355 355
Building and improvements............. 8,108 8,099
Machinery and equipment............... 14,176 16,575
Furniture, fixtures and leasehold
improvements........................ 1,164 1,177
-----------------------------
23,803 26,206
Less accumulated depreciation and
amortization........................ (17,376) (19,428)
----------------------------
6,427 6,778
Purchased software, net of accumulated
amortization of $1,219,000 and
$1,403,000........................ 714 912
Other assets............................ 66 63
----------------------------
Total assets............................ $15,105 $16,161
============================
See Notes to Consolidated Financial Statements
2
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, September 30,
1995 1994
(unaudited)
----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........ $ 240 $ 240
Accounts payable......................... 1,650 2,217
Interest payable, related-party portion
$174,000 and $559,000.................. 236 578
Unearned service revenue and customer
deposits............................... 1,644 1,356
Other liabilities........................ 2,187 2,122
----------------------------
Total current liabilities............ 5,957 6,513
Long-term debt, related-party portion
$1,750,000 and $5,988,000................ 3,910 8,148
----------------------------
Total liabilities.................... 9,867 14,661
----------------------------
Shareholders' equity:
Common stock, $.01 par value authorized
40,000,000 shares; issued (including
treasury shares) 32,205,669 and
21,536,192 shares...................... 322 215
Additional paid-in capital............... 65,587 57,693
Cumulative currency translation
adjustments............................ (333) (357)
Accumulated deficit...................... (59,853) (55,566)
Treasury stock, 261,400 common shares
at cost................................ (485) (485)
----------------------------
Total shareholders' equity........... 5,238 1,500
----------------------------
$15,105 $16,161
============================
See Notes to Consolidated Financial Statements
3
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
------------------
1995 1994
<S> <C> <C>
Cash flow from operating activities:
Net loss $(4,286) $(2,375)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization................. 861 1,205
Loss (gain) on disposal of property,
facilities and equipment.................... (150) (7)
Provision for inventory obsolescence
and shrinkage............................... -- 2
(Increase) decrease receivables............... 469 (438)
Decrease inventories.......................... 7 20
Decrease service parts and prepaids........... 88 175
Decrease accounts payable..................... (548) (259)
Decrease interest payable..................... (342) (253)
Increase (decrease) income tax payable........ 27 (385)
Increase (decrease) unearned service
revenue and customer deposits............... 288 (234)
Increase (decrease) other liabilities......... 256 (232)
Decrease accrued compensation and
related taxes............................... (204) (33)
Decrease current portion of long-term debt.... -- (702)
-------------------
Net cash used by operating activities........... (3,534) (3,516)
Cash flow from investing activities:
Capital expenditures.......................... (432) (225)
Proceeds from sale of property, facilities
and equipment............................... 256 46
Increase of non-current service parts and
other assets................................ (3) (8)
-------------------
Net cash used by investing activities........... (179) (187)
Cash flow from financing activities:
Proceeds from issuance of notes payable,
related-party............................... 3,750 3,200
Proceeds from issuance of common stock........ 13 3
Payments to acquire common stock.............. (1)
-------------------
Net cash provided by financing activities....... 3,763 3,202
Effect of exchange rate changes on cash......... (22) (17)
-------------------
Net increase (decrease) in cash and cash
equivalents................................. 28 (518)
Cash and cash equivalents at the beginning
of the year................................... 2,120 2,478
-------------------
Cash and cash equivalents at the end of
the period.................................... $2,148 $1,960
===================
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, related-party portion $559,000
and $572,000................................ $559 $677
Income taxes.................................. -- --
</TABLE>
4
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 1995
A. Accounting Policies
-------------------
The accounting policies utilized in the preparation of the financial
statements herein presented are the same as set forth in the Company's
annual financial statements except as modified for appropriate interim
accounting policies. The financial information herein furnished reflects all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results of the interim periods.
The following table indicates the amount of the Company's earnings (loss),
from continuing operations, before income taxes that were contributed by
domestic and foreign operations:
Six Months Ended
March 31,
1995 1994
-----------------
(in thousands)
United States $(4,205) $(2,000)
Foreign (26) (822)
-----------------
$(4,231) $(2,822)
=================
B. Shareholders' Equity
--------------------
<TABLE>
<CAPTION>
Cumulative
Common Stock Additional Currency
------------------- Paid-in Translation Accumulated Treasury
Shares Amount Capital Adjustment Deficit Stock Total
-----------------------------------------------------------------------------------
(in thousands except number of shares)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1994........... 21,536,192 $215 $57,693 $(357) $(55,566) $(485) $1,500
Issuances under stock option and
compensation plans.................. 18,810 1 912 13
Common stock issued through conversion
of related-party debt............... 10,650,667 106 7,882 7,988
Change in cumulative currency
translation adjustments............. 24 24
Net loss.............................. (4,287) (4,287)
-----------------------------------------------------------------------------------
Balance, March 31, 1995............... 32,205,669 $322 $65,587 $(333) $(59,853) $(485) $5,238
===================================================================================
</TABLE>
C. Loss Per Share
--------------
Loss per share is computed on the basis of the weighted average number of
shares outstanding and is adjusted, if applicable, for common stock
equivalents. At March 31, 1995, and 1994, the weighted average number of
shares outstanding includes no weighted common stock equivalent shares
because their effect would be antidilutive.
D. Related-Party Subsequent Event
------------------------------
On May 8, 1995, Auto-trol Technology Corporation and MetaWare, Inc., a Texas
corporation doing business as Centra 2000, Inc., announced that they have
reached an agreement in principle for the merger of Centra 2000, Inc., into
AT Development, Inc., a wholly-owned subsidiary of Auto-trol Technology
Corporation. The merger is expected to conclude in June, 1995.
The Company's President, Chairman of the Board, and majority shareholder,
Howard B. Hillman, is an affiliate with Centra 2000, Inc. through the
Venhill Limited Partnership, of which Mr. Hillman is the General Partner.
5
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three months ended March 31, 1995, compared to three months ended March 31, 1994
- --------------------------------------------------------------------------------
REVENUES - For the second quarter ended March 31, 1995, total revenue decreased
approximately $3 million or 32%, from the corresponding quarter 1994.
Approximately $100,000 or 3% of the decrease is from revenue earned in the
France and Switzerland offices which were closed in fiscal year ended September
30, 1994. Additionally, included in the $3 million decrease is a $300,000
favorable exchange rate variance. Every geographic region, except Australia and
Sweden, experienced a decline in revenue in the quarter ended March 31, 1995,
compared to the quarter ended March 31, 1994. Domestic and Canadian revenues
declined 41% and 23%, respectively, while Germany and United Kingdom's revenue
declined 25% and 20%, respectively. Australia's total revenue increased
approximately 13%, and Sweden increased approximately 17%.
For the second quarter ended March 31, 1995, sales revenue decreased 40% or $1.7
million, compared to the corresponding quarter of 1994. France and Switzerland
offices account for approximately $36,000 or 2% of the decrease in total sales
revenue for the quarter ended March 31, 1995, compared to the corresponding
quarter of 1994. All geographic regions experienced a decrease in sales revenue
except Sweden and the Australian branch. The Company's software product mix has
shifted to products which represent larger installations for its customers.
Products which encompass larger installations have a longer sales cycle which
shifts product sales to subsequent quarters. Following is the percentage
increase or (decrease) compared to the quarter ended March 31, 1994, by
geographic area.
Sales Revenue
-----------------------------------
Geographic Area Percentage
-----------------------------------
Domestic (60)%
Canada (33)%
Australia 75%
United Kingdom (9)%
Germany (32)%
Sweden 80%
Total service revenue for the quarter ended March 31, 1995, decreased 25% or
$1.2 million, compared to the quarter ended March 31, 1994. Closing offices in
France and Switzerland in fiscal year ended September 30, 1994, accounts for
approximately $63,000 or 5% of the total decrease in service revenue. Hardware
postcontract customer support revenue declined 37%, primarily because of longer
warranties offered by the Company's hardware vendors, the increase in newer,
more reliable equipment at many of the Company's customer sites, and some
customer cancellations of maintenance. Accordingly, the Company does not place
an emphasis on sales of hardware products. Software postcontract customer
support revenues declined 19% compared to the quarter ending March 31, 1994. As
expected, integration services declined in all regions which experienced a
decline in sales revenue in the quarter ended March 31, 1995, compared to the
quarter ended March 31, 1994. Following is the percentage increase or (decrease)
by geographic location compared to quarter ended March 31, 1994.
Service Revenue
----------------------------------------------------------
Postcontract Total Service
Geographic Area Customer Support Integration Services Revenue
- ------------------------------------------------------------------------------
Domestic (31)% (29)% (31)%
Canada 0 (22)% (10)%
Australia 9% 11% 10%
United Kingdom (20)% (25)% (22)%
Germany (3)% (16)% (6)%
Sweden (53)% 48% (36)%
Total (25)% (24)% (25)%
6
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
COST OF SALES AND SERVICE - For the second quarter ended March 31, 1995, gross
profit margins increased to 57%, from 53% for the corresponding quarter of 1994.
Gross profit margin on sales revenue increased to 66% for the quarter ended
March 31, 1995, compared to 56% for the quarter ended March 31, 1994.
Domestically, gross profit margin on sales revenue decreased from 70% to 68%.
This decline is due to the continued erosion of gross profit margin on hardware
products. Canada experienced a 19% increase in its gross profit margin from
sales revenue from 25% in the quarter ended March 31, 1994, to 44% in the
quarter ended March 31, 1995. This increase is the result of a decline in the
percentage of sales revenue attributable to hardware products. Canada's revenue
from hardware products declined 61%, while revenue of software products
increased 123% in the quarter ended March 31, 1995, compared to the
corresponding quarter of 1994. In general, hardware products realize
significantly lower profit margins compared to gross profit margins for software
products.
Europe experienced a 5% decline in gross profit margin from sales revenue from
49% in the quarter ended March 31, 1994, to 44% in the quarter ended March 31,
1995. Sweden's favorable increase in the percentage of revenue realized from
software products was offset by Germany's increase in revenue generated from
hardware products. Additionally, a larger percentage of software revenue was
generated from third-party products which have lower gross profit margins.
Third-party products represented 29% of software revenue in the quarter ended
March 31, 1995, while no software revenue was realized from third-party software
in the corresponding quarter of 1994.
For the second quarter ended March 31, 1995, gross profit on service revenues
remained stable at 52% compared to the quarter ended March 31, 1994.
Domestically, an increase in integration service gross profit margin and
hardware postcontract customer support margin, resulted in a net increase in
domestic services gross profit margin of approximately 20%. The gross profit
margin on Canadian service revenue decreased to 34% from 38%. This decrease is
primarily attributable to decreased hardware postcontract support revenue. Total
European gross profit margin on service revenue increased from 26% in the
quarter ended March 31, 1994, to 30% in the quarter ended March 31, 1995. In
fiscal year ended September 30, 1994, Germany's postcontract customer support
department was restructured which resulted in a 35% reduction in staff from
March 31, 1994 to 1995.
RESEARCH AND PRODUCT DEVELOPMENT - Research and product development expenses
were approximately 30% of revenues for the second quarter ended March 31, 1995,
and 20% of revenues for the second quarter ended March 31, 1994. However,
compared to the quarter ended March 31, 1994, research and product development
expenses increased approximately 2%.
MARKETING, GENERAL AND ADMINISTRATIVE - In the second quarter ended March 31,
1995, marketing, general and administrative expenses decreased approximately 5%
from the second quarter ended March 31, 1994. Domestic operations, Canada and
Sweden experienced declines in marketing, general and administrative expenses of
2%, 11%, and 31%, respectively. United Kingdom and Germany realized increases in
marketing, general and administrative expenses of approximately $93,000 and
$15,000, respectively. However, included in Germany and the United Kingdom's
marketing, general and administrative expenses are unfavorable exchange rate
fluctuations of approximately $93,000 and $18,000.
Foreign currency fluctuations had an approximate $19,000 favorable impact on net
results of operations for the quarter ended March 31, 1995, compared to the
corresponding quarter of 1994.
7
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
Six months ended March 31, 1995 compared to six months ended March 31, 1994
- ---------------------------------------------------------------------------
REVENUES - For the six months ended March 31, 1995, total revenue decreased 23%
or $4.1 million compared to the six months ended March 31, 1994. Approximately
6%, or $258,000, of the decrease is attributable to revenue earned in the
Switzerland and France offices which were closed in fiscal year ended 1994.
Domestic and Canadian operations experienced a 34%, and 20% decrease in revenue
respectively, compared to the six months ended March 31, 1994. Canada's 20%
decrease consists of an unfavorable exchange rate variance of 3%, and an
unfavorable volume variance of 17%. European operations includes a $490,000
favorable exchange rate variance and $571,000 unfavorable volume variance which
includes $258,000 of revenue earned in France and Switzerland during the six
months ended March 31, 1994.
Foreign currency fluctuations had a $77,000 unfavorable impact on net loss for
the six months ended March 31, 1995 compared to March 31, 1994. This unfavorable
effect is the result of a greater than 10% devaluation of the United States
dollar against the German Deutsche Mark.
For the six months ended March 31, 1995, sales revenue decreased approximately
29%, or $2.5 million, compared to the corresponding six months of 1994. The
Company's software product mix has shifted to products which represent larger
installations for Auto-trol Technology Corporation's customers. These products
experience a longer sales cycle resulting in revenue being recognized in
subsequent quarters. Following is the percentage increase or (decrease) by
geographic location compared to the six months ending March 31, 1994.
Sales Revenue
--------------------------------
Geographic Area Percentage
--------------------------------
Domestic (48)%
Canada (35)%
Australia 238%
United Kingdom (5)%
Germany 18%
Sweden 17%
Approximately 83% of domestic's decrease in sales revenue is attributable to a
decline in sales of software products. All of Canada's decrease in sales revenue
is attributable to a decline in hardware products. A decrease in hardware
revenue is expected as the Company is placing less emphasis on hardware
products.
Total service revenue for the six months ended March 31, 1995, decreased 18% or
approximately $1.7 million compared to the six months ended March 31, 1994.
Approximately $105,000 of the decline is attributable to revenue generated in
the France and Switzerland locations which were closed in fiscal year ended
September 30, 1994. Hardware postcontract customer support revenue declined 29%
primarily because of longer warranties offered by the Company's hardware
vendors, the increase in newer, more reliable equipment at many of the Company's
customer sites and some customer cancellations of maintenance. In addition, the
Company has been selling less hardware than in past periods. Software
postcontract customer support revenue declined approximately 15% compared to the
six months ending March 31, 1994. A decline in software postcontract customer
support revenue is expected considering software sales revenue declined 24% for
the six months ended March 31, 1995, compared to the six months ending March
31,1994. Following is the percentage increase or (decrease) by geographic area
compared to the six months ending March 31, 1994.
8
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
Service Revenue
----------------------------------------------------------
Postcontract Total Service
Geographic Area Customer Support Integration Services Revenue
- ------------------------------------------------------------------------------
Domestic (23)% (36%) (25)%
Canada (3)% 3% 0
Australia 9% 5% 7%
United Kingdom (20)% (13)% (18)%
Germany (10)% 4% (1)%
Sweden (23)% 41% (13)%
Total (19)% (12)% (18)%
COST OF SALES AND SERVICE - For the six months ended March 31, 1995, gross
profit margins increased to 58%, from 55% compared to the corresponding six
months of 1994. Gross profit margin on sales revenue remained constant at 62%
for the six months ended March 31, 1995, compared to the corresponding quarter
of 1994. Domestically, gross profit margin on sales revenue decreased from 77%
in the six months ended March 31, 1994, to 68% in the six months ended March 31,
1995. Included in total revenue for the six months ended March 31, 1994, is
$702,000 for settlement of outstanding debt owed a former joint venture partner
in exchange for the rights to sell certain technology. Excluding this revenue,
domestic gross profit margin on sales revenue in the six months ended March 31,
1994 is 59%. Domestic operations experienced improvements in gross profit
margins in hardware and software products. The Canadian subsidiary experienced a
40% gross profit margin from sales revenue for the six months ended March 31,
1995, compared to a 28% gross profit margin for the corresponding period in
1994. Canada's increase is due to a smaller percentage of total sales revenue
being attributed to hardware products which generate lower gross profit margins.
Approximately 57% of Canadian sales revenue consisted of hardware sales for the
six months ended March 31, 1995, compared to 81% in the six months ended March
31, 1994.
European gross profit margin on sales revenue declined from 50% in the six
months ended March 31, 1994, to 46% in the six months ended March 31, 1995.
Sweden realized an increase in gross profit margin due to revenue earned from
software products which realize larger gross profit margins. However, this was
offset by lower margin hardware and software products sold in Germany and the
United Kingdom.
For the six months ended March 31, 1995, gross profit on service revenues
increased to 53% from 49% for the six months ended March 31, 1994. Domestic
gross profit margins on service revenue increased to 66% compared to 58% for the
six months ending March 31, 1994. The increase in domestic gross profit margin
is due to improved margins in hardware postcontract customer support. The gross
profit margin on Canadian service revenue remained stable from the six months
ended March 31, 1995 compared to the corresponding period in fiscal year 1994.
Europe experienced an increase in service gross profit margin from 23% in the
six months ended March 31,1994, to 36% in the six months ended March 31, 1995.
Germany's gross profit margin on service revenue increased from 34% at March 31,
1994, to 38% at March 31, 1995. Restructuring Germany's postcontract customer
support department resulted in savings in employees salaries and benefits of
approximately $239,000.
RESEARCH AND PRODUCT DEVELOPMENT - Research and product development expenses
were approximately 27% of revenues for the six months ended March 31, 1995, and
20% of revenues for the six months ended March 31, 1994. Research and product
development expenses increased 6% compared to the six months ended March 31,
1994.
9
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
MARKETING, GENERAL AND ADMINISTRATIVE - In the six months ended March 31, 1995,
marketing, general and administrative expenses decreased 7% from the six months
ended March 31, 1994. Domestic marketing, general and administrative expenses
remained stable for the six months ended March 31, 1995 compared to the
corresponding six months of 1994. Canadian expenses are 11% less than the same
six month period of 1994. Approximately 3% of this variance is attributable to
exchange rate fluctuations and 8% is the result of reduced spending. European
expenses increased approximately 5% or $85,000, due to unfavorable exchange rate
fluctuations of $233,000 which were partially offset by a $148,000 favorable
spending variance. However, included in marketing, general and administrative
expenses for the six months ended March 31,1994 is approximately $172,000
related to office closure expenses in Switzerland.
FOREIGN CURRENCY - As of March 31, 1995, the Company had four wholly owned
subsidiaries and one branch operation in Australia. The four subsidiaries are
located in Germany, England, Sweden and Canada. Accordingly, the Company does
business in the local currencies of these countries, in addition to other
countries where the subsidiaries may have customers, such as Norway, Finland and
Italy. For purposes of reducing foreign currency risk, the Company does not use
foreign exchange contracts, interest rate swaps or option contracts. Foreign
currency risk for the Company is limited to outstanding debt owed to the Company
by its subsidiaries. The Company invoices its subsidiaries in their local
currencies for products that are sold to the subsidiary's end customers. Upon
receiving payment from the subsidiaries, a foreign currency gain or loss can
occur. As of March 31, 1995, the Company has realized a loss of approximately
$3,000 through payments received from its subsidiaries.
FINANCIAL CONDITION - At March 31, 1995, the Company had approximately $2
million of cash and cash equivalents. In the Company's Form 10-K for year ending
September 30, 1994, it was disclosed that the Company was economically dependent
on affiliates of the Company's President, Chairman of the Board and majority
shareholder. The Company has borrowed an additional $1,750,000 from an affiliate
of the Company's President, Chairman of the Board and majority shareholder
during the quarter ended March 31, 1995. During the six months ended March 31,
1995 the Company has borrowed $3,750,000 from the Company's President, Chairman
of the Board and majority shareholder. In December, 1994, the Company converted
$7,988,000 of the outstanding related-party debt into common stock. The Company
will continue to be economically dependent upon such financial support until it
achieves profitable operations. The shareholder has indicated his intent to
continue such financial support. Should the Company's operations continue to
sustain operating losses, it will need additional cash to continue operations.
RELATED-PARTY SUBSEQUENT EVENT- On May 8, 1995, Auto-trol Technology Corporation
and MetaWare, Inc., a Texas corporation doing business as Centra 2000, Inc.,
announced that they have reached an agreement in principle for the merger of
Centra 2000, Inc. into AT Development, Inc., a wholly-owned subsidiary of Auto-
trol Technology Corporation. The merger is expected to conclude in June, 1995.
The Company's President, Chairman of the Board, and majority shareholder, Howard
B. Hillman, is an affiliate with Centra 2000, Inc. through the Venhill Limited
Partnership, of which Mr. Hillman is the General Partner.
10
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
Part II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS- None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits.
4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS AND INDENTURES
A. Specimen Certificate
B. Copies of Industrial Development Revenue Bond documents*
C. Specimen Debentures, Warrants, Royalty Agreement, and Royalty
Certificate issued to purchase Research and Development Limited
Partnership Interests**
10. MATERIAL CONTRACTS
A. Copy of Incentive Stock Option Plan, as amended through January 28,
1992+
B. Copy of Special Purpose Stock Option Plan, as amended through January
28, 1992+
C. Agreement with Sun Microsystems, Inc. dated April 30, 1993++
D. Agreement with HP/Apollo Computer, Inc. dated July 4, 1994++
E. Agreement with Howard B. Hillman dated November 1, 1994++
F. Agreement with Centra 2000, Inc., formerly Metaware, Inc., dated April
12, 1994++
27. FINANCIAL DATA SCHEDULE
* Incorporated by reference from Registration Statement No. 2-63253, filed
January 24, 1979.
** Incorporated by reference from Form 10-K for fiscal year ended September
30, 1988, dated December 14, 1988.
+ Incorporated by reference from Form 10-K for fiscal year ended September
30, 1993, dated December 18, 1992.
++ Incorporated by reference from Form 10-K for fiscal year ended September
30, 1994, dated December 14, 1994.
B. Reports on Form 8-K. None
11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
AUTO-TROL TECHNOLOGY CORPORATION
(Registrant)
Date: May 10,1995 /s/HOWARD B. HILLMAN
--------------------------------
Howard B. Hillman,
President
Date: May 10, 1995 /s/DAVID C. O'BRIEN
-------------------------------
David C. O'Brien
Vice President, Finance
12
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