<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
(Mark One)
[x] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1933 for the fiscal year ended April 2, 1995, or
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1933 for the period from ______________________ to ______________________
Commission file number 0-12378
APERTUS TECHNOLOGIES INCORPORATED
---------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1349953
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7275 Flying Cloud Drive
Eden Prairie, Minnesota 55344
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (612) 828-0300
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.05 per share
Common Stock purchase rights
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.
Yes X No
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The aggregate market value of voting stock held by non-affiliates of the
registrant as of June 5, 1995 was approximately $128,589,150 (based on the last
sale price of such stock as reported by The NASDAQ Stock Market - National
Market System, Inc.).
As of June 5, 1995, 13,535,700 shares of the registrant's Common Stock, par
value $.05 per share, were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part II incorporates information by reference to the Annual Report to
Shareholders for the fiscal year ended April 2, 1995 (the "Annual Report to
Shareholders"). Part III incorporates information by reference to the Proxy
Statement dated June 14, 1995 for the 1995 Annual Meeting of Shareholders (the
"Proxy Statement").
[ X ] Indicate by checkmark 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.
<PAGE>
PART I
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ITEM 1. BUSINESS
Apertus Technologies Incorporated ("Apertus" or the "Company") provides
computer communications products that enable customers to successfully integrate
traditional large scale systems (referred to as "legacy systems") with open
systems computing environments. Open systems are typically characterized by
powerful processors running the UNIX operating system and industry-standard
communications topologies such as TCP/IP. Specifically, the Company provides
network gateways that facilitate interoperability between local area networks
("LANs") and legacy systems, server-based tools that integrate legacy system
data and applications into client/server applications, and system management
applications for the centralized management of distributed networks and
applications.
In December 1993, the Company acquired all of the stock of Systems
Strategies, Inc. ("SSI"), a wholly-owned subsidiary of AGS Computers, Inc., a
NYNEX company. SSI provides communications software products for linking UNIX,
IBM mainframe, AS/400, and DEC systems, as well as multi-vendor messaging/
queuing solutions. The purchase price for SSI was $14 million, with $10 million
paid in cash at closing and $4 million in the form of promissory notes payable
over a three-year period. During fiscal 1995 Apertus and NYNEX reached a
settlement whereby the purchase price of SSI was reduced by $1.68 million. The
settlement, along with a cash payment of $2.06 million made in the fourth
quarter, relieved the Company of any future obligations to NYNEX.
Since the acquisition, the Company markets three broad categories of
products for enterprise-strength communications. Its Network Integration
products provide solutions for linking the new, open networks with IBM's SNA,
legacy computing environments. Its Data Integration products enable legacy data
to be integrated and/or migrated from mainframe centric environments to open
systems computing. Its Management Integration products provide management
applications for the centralized management of distributed networks.
The Company, a Minnesota corporation, was incorporated in March 1979.
MARKET
MARKET FOCUS: The computer industry has undergone dramatic changes over the past
decade, and this revolution has centered largely on bringing more computing
power to the desktop. The problem with desktop systems, however, was that while
they were designed to provide open (non-proprietary) computing, they were
generally isolated from information on other systems. This resulted in a costly
and inefficient computing enterprise. Over the past few years, connectivity
between desktop, server, midrange, and mainframe systems has become a priority
for most large organizations. Today's desktop systems and applications are
often called upon to share information and resources with departmental, branch
and corporate data, which may be across the office or across the world.
As organizations reengineer their information systems' infrastructure from
traditional mainframe-oriented environments, where older, legacy applications
are housed, to a new distributed style of computing characterized by
client/server configurations, they need solutions to facilitate this
integration. Apertus provides products and services that address the emerging
requirements for bridging legacy and open systems environments.
TARGET MARKET: The Apertus product lines are horizontal in nature. As a
result, products provide solutions for the entire spectrum of industries,
including, but not limited to, telecommunications, retail, manufacturing,
finance/banking and healthcare. Apertus' target customer base is Fortune 1000
corporations in the commercial marketplace, major telephone and interchange
companies, original equipment manufacturers (OEMs), value added resellers
(VARs), and systems integrators. Its products are sold in the United States and
internationally.
Telecommunications Industry: Historically, the Company has been successful
in marketing its products to the Regional Bell Operating Companies
("RBOCs"), which require significant communications capabilities for
sharing data across large, complex databases contained in multiple
mainframes. Such customers include Ameritech and Bell Atlantic. Recently,
the Company also has
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been successful selling to large independent telephone companies. Over the
last fiscal year, companies within the telecommunications industry have
made significant purchases of the Company's products, with GTE, MCI and
Bell South each buying products from the Company with an aggregate purchase
price in excess of $1 million.
Worldwide, Commercial Marketplace: Apertus recently broadened its market
reach to include commercial customers outside the telecommunications
industry. Through its own domestic sales force, the Company has sold
products to customers such as Chicago Board of Trade, Northwestern Mutual
Life, Hughs Aircraft, Norwest Financial, State Of Maryland, and American
Presidents Lines. With the acquisition of SSI, the Company has moved more
broadly into the Fortune 1000 market, is expanding into the European market
with major strategic wins this year at the German and Italian Finance
Ministries, and now has a significant base of prominent international OEMs
reselling the Company's products, including Bull, ICL, and Motorolla.
PRODUCT OFFERINGS: NETWORK INTEGRATION PRODUCTS
IBM computing environments continue to dominate most large corporations. In
recent years, many of these organizations have begun migrating from IBM's
proprietary computing environments and investing in more open computing
solutions. The challenge for the information systems manager is to find a way
to integrate the IBM legacy environment with new, open networks and systems.
Apertus addresses this need for integration with its Datastar product line,
which is sold directly to end user organizations, and its EXPRESS product line,
which is marketed primarily to OEMs, systems integrators and VARs.
THE DATASTAR PRODUCT LINE: The Datastar product line, consisting of a number of
gateway products, provides high-performance communications links between diverse
network environments and IBM mainframe and midrange host computers.
Network Gateways: The Datastar Data Center Hub is a high-performance,
channel-attached gateway system that assists major corporations in solving
a variety of challenges related to the integration of IBM proprietary
technology with more open, multi-protocol LANs. Available in three sizes
to meet a range of network needs, the product features a modular
architecture and switch-based backplane. These features permit end users
to customize the Datastar to meet their unique networking requirements.
Datastar gateway configurations include: Offload TCP/IP Gateway, which
allows users on TCP/IP networks to transparently access IBM SNA and BiSync
hosts; TCP/IP Interconnect Controller, providing a high performance
connection between TCP/IP networks and IBM hosts running TCP/IP. NetWare
for SAA Gateway, which allows Novell's NetWare users to access channel-
attached IBM host resources; SNA DSPU Gateway, which allows users on
Ethernet and Token-Ring SNA-based LANs to access IBM host resources; the
Universal Access Gateway, which provides a "virtual" gateway complex across
multiple Datastars and guarantees access through its innovative load
balancing and fault tolerant features. A new higher-capacity Datastar is
planned for release in fiscal year 1996.
3270 Terminal Servers: The Company's terminal server products allow
corporations to connect their large installed base of 3270 terminals to
bridge/router internetworks. These terminal server products are marketed
under the name Datastar/3270 Access Hub. By providing access to both IBM
SNA resources and UNIX resources across LAN environments (Ethernet and
Token Ring), the 3270 Access Hub allows users to continue to use their
investment in 3270 terminals and participate in open computing
environments.
<PAGE>
Peripheral Products: The Company supplements its Datastar line with a
series of complementary products marketed under third-party agreements.
These products principally include networking software and terminal
emulation software.
EXPRESS ADVANCED SNA PRODUCT LINE: The Company markets Apertus EXPRESS products:
a broad range of software products for connecting systems on TCP/IP networks
with mainframes and AS/400s operating in an IBM SNA environments. EXPRESS
software provides enterprise-wide connectivity between multivendor UNIX systems
and IBM mainframes and AS/400s. With Apertus EXPRESS, users are provided with
advanced SNA capabilities, built on the latest technology standards, resulting
in a high speed, flexible network integration solution. EXPRESS provides:
terminal emulation (3270 and TN3270, 5250 and TN5250), file transfer (SNA/RJE
and LU6.2), and a Telnet-to-SNA gateway solution. It also provides programmers
with the tools they need to develop application programs for UNIX systems so
they can communicate with applications on IBM mainframes and AS/400s. This
enables the development of EHLLAPI, CPI-C/APPC, LUA and network management
applications. EXPRESS also offers an X.25 solution for linking UNIX systems
across a packet-switched data network.
As an extension of the EXPRESS product, the Company also markets its Data
Transfer Services product line. Data Transfer Services provides a series of
applications for data exchange, including file transfer and printer sharing
between UNIX, VAX, IBM mainframe AS/400 utilizing IBM's LU6.2 programming
interface.
PRODUCT OFFERINGS: DATA INTEGRATION PRODUCTS
Increasingly, new applications are being written in a distributed computing
environment, where systems are spread throughout corporate locations. Typically,
a database resides on a high-performance server, with user interaction driven by
a graphical user interface. These new applications often need to access and
update information contained in legacy computing environments. Apertus addresses
this need with Enterprise/Access/TM/ and Enterprise/Integrator/TM/.
ENTERPRISE/ACCESS product is a development toolkit that allows users to
transparently access data residing in legacy applications. It is being sold
in the commercial market as an enterprise-strength solution for integrating
new applications with mainframe-based legacy systems and providing a smooth
migration to open systems environments. Enterprise/Access product was
selected as a finalist in the "Best of Show" Applications Development Tool
category at Networld + Interop, one of the industry's largest trade shows.
ENTERPRISE/INTEGRATOR technology is the fundamental technology in the
Company's strategic alliance with GTE. This contract with GTE is valued at
$10 million. The Enterprise/Integrator product permits data to be
integrated from multiple source databases to a single target database.
During the integration process, the Enterprise/Integrator product performs
a data cleansing and consistency function that ensures a high level of
accuracy for the newly created databases. Enterprise/Integrator is used by
major telecommunication companies to synchronize and integrate
heterogeneous databases. In fiscal 1996, the Company will begin marketing a
new version of Enterprise/Integrator to the commercial market.
PRODUCT OFFERINGS: MANAGEMENT INTEGRATION PRODUCTS
Apertus is engaged in a strategic relationship with IBM relating to the
development of MQSeries software. MQSeries software provides a standard way of
sending messages in real-time between distributed applications, while assuring
that no messages are lost, duplicated or delivered out of order. It enables
applications to communicate with applications distributed across other multi-
platform environments. Apertus is focusing its current development efforts on
systems management products that complement MQSeries software. The first
systems management product, MQView, is expected to be generally available in
fiscal 1996 and will provide a centralized management application for the
configuration, monitoring and
<PAGE>
management of MQ networks. The Company intends to expand its effort in fiscal
1996 through the addition of other system management products.
MARKETING AND CUSTOMERS
Domestically, Apertus uses a direct sales force, located throughout the United
States, to market to its end user customers. For small orders, the Company uses
an in-house telesales group that completes sales without involvement from the
direct sales force. The Company is organized around four business units, each of
which is responsible for implementing its own strategy which is based on the
Company's mission. The primary marketing communications vehicles used to
generate leads include advertising, direct mail, press relations, vendor
relations, seminars, and trade shows.
The Company's European operations, based in an office in a suburb of London,
England, and in Stuttgart, Germany, which opened in April 1995, markets and
distributes all of the Company's products. It sells directly to end users and
indirectly through OEMs, distributors and VARs. The Company is also expanding
outside of Europe with strategic distribution partners. In fiscal 1995 the
Company added Samsung in Korea and CPM in Brazil as key new partners. In
addition, the Company uses manufacturers' representatives and distributors on a
selective basis.
BACKLOG
The Company attempts to ship orders to end-user customers within 30 days.
Because of this short delivery cycle, the Company does not believe backlog is a
meaningful indicator of future revenues.
CUSTOMER SERVICE
The Company works directly with customers on a direct service basis out of
Minneapolis, New York and London to provide prompt and reliable support for
products installed at end-user facilities. Company employees provide software
product maintenance worldwide. Generally, hardware maintenance is provided
through third-party vendors providing first-line service. Customers may chose
either self-maintenance programs where the customers' personnel provide first-
line repair, or direct service programs where the Company or third-party vendors
provide first-line repair. In either case, more advanced technical support is
provided by the Company's field specialists and technical support groups located
in Minneapolis, New York and London.
PRODUCT DEVELOPMENT
Because of rapidly changing technology in the communications software
market, the Company is committed to ongoing research and development. The
Company spent approximately $6.0 million (10.9 percent of revenues), $4.2
million (16.0 percent of revenues) and $2.9 million (10.5 percent of revenues)
during fiscal years 1995, 1994 and 1993, respectively, on research and
development, all of which was sponsored by the Company. Due to the expanding
range of products and features available in the communications software
marketplace, management recognizes that the capability to interface the
Company's products with other available or installed products has increasing
significance.
During the 1995 fiscal year, the Company continued to develop enhancements
to the Datastar architecture. Also, the Company became involved with the
development of the EXPRESS product line, including UNIX-to-IBM connectivity
software and extension of the EXPRESS Data Transfer Services software product to
the mainframe environment. Software research and development for
Enterprise/Access and Enterprise/Integrator product include enhancements to
existing products as well as new product development.
The Company believes that copyright protection is important to its
business. Accordingly, the Company copyrights software source code modules.
The Company also relies on trade secrets, proprietary know-how and continuing
product innovation to maintain its competitive position.
<PAGE>
COMPETITION
Apertus' product lines each have their own distinct significant
competitors:
NETWORK INTEGRATION SOLUTIONS
The Datastar products primarily compete with mainframe-dependant products
manufactured by IBM, Cicso and Interlink, and off-load products manufactured by
OpenConnect, Novell, Microsoft, CNT/Brixton.
The EXPRESS products' primary competition comes from OEMs, including Sun,
Hewlett Packard and IBM. While most of these manufacturers offer an IBM
communications solution, they typically are platform-specific (as opposed to
multi-platform). EXPRESS products also compete with products manufactured by
companies such as Cleo, OpenConnect and Brixton.
DATA INTEGRATION SOLUTIONS
The Enterprise/Access and Enterprise/Integrator products compete in an
emerging segment of the information systems marketplace providing enabling
technologies for development of client/server applications. Both products
compete with internal development initiatives. The Enterprise/Access product
also competes with desktop tools (as opposed to server based tools) from Wall
Data, Attachmate, DCA, and Easel Corp. and is complementary to database gateway
products from companies such as Sybase, Oracle and Information Builders. The
Enterprise/Integrator competes with an MVS mainframe-based data integrity tool
manufactured by Vality Corporation and market data extraction tools manufactured
by Prism and Evolutionary Technologies, Inc.
MANAGEMENT INTEGRATION
The MQSeries product line's competition comes primarily from development
efforts launched within organizations. In addition, companies that have products
that compete with the MQSeries include Covia, DEC and Momentum.
SERVICE AND MAINTENANCE
The Company's service and maintenance programs compete with comparable
programs offered by AT&T, Memorex-Telex, IBM, and other competitors that have
substantially more locations and personnel than the Company. The Company's
products support industry network management standards (SNMP, NetView) and have
extensive remote diagnostic capabilities. As hardware has become more reliable,
the Company has relied on third-party vendors for hardware support and its own
regional service organization for software support.
MANUFACTURING AND SUPPLY
For its communications software products, the Company has a central
production facility (at its headquarters in Minneapolis) that adheres to uniform
manufacturing policies and procedures. For the Datastar communications product,
the Company performs final assembly and final test, with the majority of
components (including the printed circuit boards) purchased from suppliers.
Emphasis is placed on ensuring a quality product through such means as
Statistical Process Control (SPC), Cellular Management, Just In Time (JIT)
concepts and a suppliers' certification program. A computerized system is used
to manage purchasing, production scheduling, order entry, and inventory
management functions.
Most of the components used in the Company's products are available from a
number of suppliers. However, a number of parts, including certain integrated
circuits and monitors, are generally available only from single sources of
supply. In some cases, if the Company were to be deprived of these single-
source items, the Company would be required to obtain an alternative supplier,
manufacture the items itself or redesign certain products, all of which could
cause delays in product shipments. The Company has never experienced
significant production delays because of the failure of a supplier to provide
component parts.
<PAGE>
EMPLOYEES
As of June 7, 1995, the Company employed 297 persons, including 126 in
product development, 41 in manufacturing, 74 in marketing, 29 in customer
service, and 27 in finance and administration. None of the employees are
covered by collective bargaining agreements, and the Company believes its
employee relations are good.
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ITEM 2. PROPERTIES
In July 1990 the Company moved its principle office and manufacturing
facility to 60,000 square feet of leased space in a building located in Eden
Prairie, Minnesota. The lease has a six-year term and requires total lease
payments of $3.3 million over the term of the lease.
Additionally, SSI's corporate headquarters is located in New York, New
York. SSI has a 10-year lease which began on November 1, 1991, on this 11,729
square foot facility. Annual rent for fiscal year 1994 was approximately
$300,000. SSI subleased approximately one-half of the space commencing
February 6, 1995.
The Company sold its previous headquarters facility to a major retail
electronics company located in Minneapolis, Minnesota. The facility is a
262,000 square foot office and manufacturing building located on a 28-acre site
in Eden Prairie, Minnesota. It was purchased in June 1986 for $12,890,000.
Under the terms of the transaction, the Company will carry a contract for deed
for three years. In return, the purchaser will make interest payments for three
years, with a final balloon payment in June 1996 for $8.7 million. The Company
has assumed liability for the purchaser's former headquarters through April
1995.
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ITEM 3. LEGAL PROCEEDINGS
The Company has no pending legal proceedings which the Company believes are
material.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the executive
officers of the Company:
Robert D. Gordon has been Chairman of the Board and Chief Executive Officer
of the Company since April 1990 and President of the Company since December
1988. He was first employed by the Company as Senior Vice President in July
1987, and subsequently he served as Chief Financial Officer from August 1987 to
May 1988, Secretary from January 1988 to September 1988, and Group Vice
President, Sales and Marketing from April 1988 to December 1988. From April
1984 to July 1987, Mr. Gordon was Executive Vice President of First Bank System,
Inc. He has been a director of the Company since August 1987.
Julie Cummins Brady has held the position of Secretary and General Counsel
since April 1990. Prior to joining the Company, Ms. Brady held legal positions
with various divisions of Control Data Corporation, most recently as Corporate
Counsel for Imprimus Technology Incorporated.
Sue A. Hogue has held the position of Chief Financial Officer of the
Company since August 1993. Prior to her current position, she served as
Corporate Controller of the Company for three years. Ms. Hogue has been
employed by the Company since August 1989.
<PAGE>
Martin G. Hahn has been General Manager, Network Integration Group of the
Company, since January 1994. Prior to his current position, he served as Vice
President of Marketing for the Internetworking Solutions Group for three years.
Mr. Hahn has been employed by the Company since July 1987.
William Fell has served as General Manager of the Company's United Kingdom
operations since March 1994. Prior to joining the Company, Mr. Fell was
employed by McData Corporation in the United Kingdom as Director of European
Operations.
Leslie Yeamans has served as General Manager, Management Integration Group
of the Company, since January 1994. Prior to joining SSI in 1985, Mr. Yeamans
held positions with Andersen Consulting in Boston and later at Powerbase
Systems.
Norman Friedman has served as General Manager, Express Group of the
Company, since January 1994. Mr. Friedman has over 14 years of experience with
SSI and is responsible for the Core Technology Group which manufactures the
EXPRESS product line. Prior to joining SSI, he was employed by Warner Computer
Systems in New York City.
Lizabeth Converse Wilson has served as General Manager, Data Integration
Group of the Company, since May 1993. Ms. Wilson has been employed by the
Company for 11 years. Prior to her current position, she served as Director of
Sales and Marketing for the Enterprise Systems Group and previously as a
Regional Account Manager.
<PAGE>
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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The information contained under the heading "Dividend Policy and Price Range of
Common Stock" on page 13 of the portions of Annual Report to Shareholders is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
The information contained under the heading "Selected Financial Data" on page 12
of the portions of Annual Report to Shareholders is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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The information contained under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 1 and 2 of
the portions of Annual Report to Shareholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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The independent auditors' report, consolidated financial statements, and notes
to consolidated financial statements on pages 3 through 10 of the portions of
Annual Report to Shareholders is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
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None.
<PAGE>
/ Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information contained under the heading "Election of Directors" on pages 2
and 3 of the Proxy Statement is incorporated herein by reference. The
information contained under the heading "Executive Officers of the Registrant"
in Part I hereof is also incorporated into this Item 10 by reference.
ITEM 11. EXECUTIVE COMPENSATION
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The information contained under the heading "Executive Compensation" on pages 4
through 11 of the Proxy Statement is incorporated herein by reference, except
that the information set forth under the captions "Report of Compensation
Committee on Annual Compensation" and the "Comparative Stock Performance" chart
are not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------------------------------------------------------------------------
The information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" on pages 12 and 13 of the Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
None.
<PAGE>
Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(A) 1. Financial Statements Page Reference in Exhibit 13 to
-------------------- this Annual Report to Shareholders
-----------------------------------
<S> <C>
Consolidated Statements of Operations for the Years
Ended April 2, 1995, April 3, 1994
and March 28, 1993................................................... 3
Consolidated Balance Sheets at April 2, 1995 and
April 3, 1994........................................................ 4
Consolidated Statements of Cash Flows for the Years
Ended April 2, 1995, April 3, 1994
and March 28, 1993................................................... 5
Consolidated Statements of Shareholders' Equity
for the Years Ended April 2, 1995, April 3, 1994
and March 28, 1993................................................... 6
Notes to Consolidated Financial Statements............................. 6 through 9
Report of Independent Auditors......................................... 10
</TABLE>
The report on the Company's previous indepedent auditors with respect to
the above financial statements appears on page 17 of this Annual Report.
The financial statements listed above are included in Exhibit 13 and are
hereby incorporated by reference.
<TABLE>
<CAPTION>
2. Financial Statement Schedules Page Number in This
----------------------------- Annual Report
--------------------
<S> <C>
Independent Auditors' Report on
Supplemental Financial Schedule...................................... 16
Schedule II Valuation and Qualifying Accounts and
Reserves for the Years Ended April 2, 1995, April 3, 1994 and
March 28, 1993....................................................... 17
</TABLE>
<PAGE>
All other schedules are omitted since the required information is not
represented or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
3. Exhibits
--------
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
3.1 Restated Articles of Incorporation, as amended./5/
3.2 Bylaws, as amended./5/
4 Shareholder Rights Plan./4/
10.1 *Amended 1990 Long Term Incentive Plan./9/
10.2 Office Warehouse Lease, dated May 10, 1990, between the Company and
Real Estate Income Partners III, A Limited Partnership./2/
10.3 (a)Purchase Agreement, dated April 23, l986, between Byte Investment
Partnership 1 and the Company./4/
(b)Promissory Note, dated June 12, l986, from the Company to The
Prudential Insurance Company of America ("Prudential")./4/
(c)Assignment of Leases and Rents, dated June 12, l986, between the
Company and Prudential./4/
(d)Combination Mortgage, Security Agreement and Fixture Financing
Statement, dated June 12, l986, between the Company and
Prudential./4/
10.4 (a)Contract for Deed, dated as of October 1, 1993, between the Company
and Best Buy Co., Inc./7/
(b)Collection and Disbursement Agreement, dated as of October 1, 1993,
among the Company, The Prudential Insurance Company of America and
First Trust National Association./7/
(c)Lease Payment Agreement, dated as of October 1, 1993, between
the Company and Best Buy Co., Inc./7/
10.5 (a)Distribution Agreement, dated March 30, 1990, between IIS Inc., as
Manufacturer, and the Company, as Distributor./1/
</TABLE>
<PAGE>
(b)Distribution Agreement, dated March 30, 1990, between the Company,
as Manufacturer, and IIS Inc., as Distributor./1/
(c)Software Support Agreement, dated March 30, 1990, between the
Company and IIS Inc./1/
(d)Manufacturing Agreement, dated March 30, 1990, between the Company
and IIS Inc./1/
(e)Amendment to the Software Support Agreement, dated as of March 30,
1990 between the Company and IIS Inc./3/
10.6(a) *1994 Management Bonus Plan description./5/
10.6(b) *1995 Management Bonus Plan description./6/
10.6(c) *1996 Management Bonus Plan description.
10.7 Stock Purchase Agreement dated December 31, 1993 between Apertus
Technologies Incorporated and NYNEX Worldwide Services Group, Inc./8/
10.8(a) *Stock Acquisition Loan Assistance Program./5/
10.8(b) *1993 Stock Acquisition Loan Assistance Program./9/
10.9 Office Lease Agreement, dated June 1991, between Mid City Associated
and Systems Strategies, Inc./6/
13 Portions of Annual Report to Shareholders for the fiscal year ended
April 2, 1995.
21 Subsidiaries of the registrant.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
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*Denotes management contracts and compensatory plans, contracts, and
arrangements.
/1/Incorporated by reference to the Company's Report on Form 8K filed April 16,
1990.
/2/Incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended April 1, 1990.
/3/Incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1991.
/4/Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 29, 1992.
<PAGE>
/5/Incorporated by reference to the Company's Annual Report on Form 10-K for
fiscal year ended March 28, 1993.
/6/Incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended April 3, 1994.
/7/Incorporated by reference to the Company's Report on Form 8-K filed November
5, 1993.
/8/Incorporated by reference to the Company's Report on Form 8-K/A filed March
15, 1994.
/9/Incorporated by reference to the Company's Registration Statement on Form S-
8 filed March 31, 1994.
/10/Incorporated by reference to the Company's Registration Statement on Form S-
8 filed January 27, 1995.
<PAGE>
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.
Date: June 23, 1995 APERTUS TECHNOLOGIES INCORPORATED
By: /s/ Robert D. Gordon
-----------------------------------
Robert D. Gordon
Chairman of the Board,
Chief Executive Officer
and President
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 and on the date indicated.
<TABLE>
<S> <C> <C>
Robert D. Gordon Chairman of the Board, )
Chief Executive Officer, )
President (principal )
executive officer) and )
Director )
)
Sue A. Hogue* Chief Financial )
Officer (principal ) By: /s/ Robert D. Gordon
financial officer ) -----------------------
and principal ) Robert D. Gordon
accounting officer) ) Pro Se and
) Attorney-in-Fact
Nicholas J. Covatta, Jr.* Director )
) Date: June 23, 1995
)
Robert W. Fischer* Director )
)
Arch J. McGill* Director )
)
Clarence W. Spangle* Director )
</TABLE>
____________
*Executed on behalf of the indicated persons by Robert D. Gordon pursuant to the
Power of Attorney included as Exhibit 24 to this annual report.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Apertus
Technologies Incorporated:
We have audited the accompanying consolidated statements of operations, changes
in shareholders' equity, and cash flows of Apertus Technologies Incorporated for
the year ended March 28, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 audit provides a reasonable basis
for our opinion.
In our opinion, such 1993 consolidated financial statements present fairly, in
all material respects, the results of operations and cash flows of the Company
for the year ended March 28, 1993 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
May 11, 1993
<PAGE>
APERTUS TECHNOLOGIES INCORPORATED
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED APRIL 2, 1995, APRIL 3, 1994 AND MARCH 28, 1993
(DOLLARS IN THOUSANDS)
ALLOWANCE FOR DOUBTFUL ACCOUNTS:/(A)/
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
<S> <C> <C> <C> <C>
Balance Charged to Balance
at Beginning Costs and at End
Description of Period Expenses/(B)/ Deductions of Period
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended:
April 2, 1995 $931 $1,288/(D)/ $1,354/(E)/ $865
April 3, 1994 $365 $1,004/(C)/ $ 438 $931
</TABLE>
__________________________
/(A)/ The allowance has been netted against accounts receivable as of the
respective balance sheet dates.
/(B)/ Write-offs net of recoveries.
/(C)/ Includes $511 of allowance for doubtful accounts acquired in the Systems
Strategies, Inc. acquisition.
/(D)/ Includes approximately $1.1 million of NYNEX settlement. This settlement
released NYNEX of any liability connected with the collection of
outstanding receivables guaranteed by NYNEX under the original contract.
/(E)/ Includes approximately $1.3 million of receivables written off against the
NYNEX settlement discussed in footnote (D) as well as the $511 noted in
footnote (C).
<PAGE>
APERTUS TECHNOLOGIES INCORPORATED
INDEX OF EXHIBITS
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED APRIL 2, 1995
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- -----------------------------------------------------------------------------
10.6(d) 1996 Management Bonus Plan Description 19
13 Portions of Annual Report to Shareholders for the fiscal
year ended April 2, 1995 20
21 Subsidiaries of the registrant 33
23.1 Consent of Ernst & Young LLP 34
23.2 Consent of Deloitte & Touche LLP 35
24 Powers of Attorney 36
27 Financial Data Schedule 37
<PAGE>
Exhibit 10.6(d)
1996 Management Bonus Plan
Under the 1996 Management Bonus Plan, key employees of the Company (including
executive officers of the Company) may be entitled to receive amounts ranging
from 17.5% to 130% of their base pay, in the form of cash bonuses. Payment of
bonuses will depend upon achievement of quarterly incentive plan and annual
incentive plan operating targets. If quarterly objectives and goals are
achieved, a portion of the bonus will be paid after the end of the quarter and
the remainder of the quarterly bonus will be paid after the end of the 1996
fiscal year.
<PAGE>
[LOGO OF APERTUS TECHNOLOGIES INCORPORATED]
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
During the fiscal year ended April 2, 1995, the Company pursued its strategy of
providing enterprise-strength solutions for helping organizations integrate
traditional, large-scale computer systems with networked computing
environments. This strategic direction is driven by the proliferation of new,
powerful computing applications that are being built by corporations throughout
the world to take advantage of the new, distributed, client/server computing
technology.
Apertus markets the following products: Datastar and EXPRESS (network
integration products), Enterprise/Access and Enterprise/Integrator (data
integration products) and MQView (middleware applications). The Datastar is a
high-capacity, channel-attached gateway that provides a wide range of LAN-to-IBM
mainframe solutions, while EXPRESS is a suite of communications software
products for linking computers running the UNIX operating system with IBM
mainframes and AS/400s. Enterprise/Access provides client/server access to
mainframe systems, while Enterprise/Integrator is a tool for transforming,
cleansing, matching, merging and synchronizing data from databases that are
stored on different types of mainframes. MQView (currently in the final stages
of development) is the Company's first product in a family of software tools for
developing, managing and maintaining enterprise-wide applications built upon
IBM's multi-platform messaging and queuing product family, MQSeries.
With these products and the now unified efforts of Apertus and Systems
Strategies, Inc. (SSI), significant progress was made in achieving the Company's
strategic business initiatives, which include: expanding its presence in the
Fortune 1000 commercial marketplace, increasing the international customer base
and generating new telecommunication company accounts. During this next year,
the Company anticipates the release of several new products: a higher-capacity
Datastar, the next release of the Enterprise/Integrator product and MQView. It
will also introduce numerous product enhancements throughout the year. By
capitalizing on the momentum generated during the current year and the
anticipated new product releases and enhancements in the coming year, the
Company is expecting improved revenue and profitability in fiscal 1996.
Fiscal 1995 Compared to Fiscal 1994
Net revenues from operations in fiscal 1995 increased approximately $28.4
million, 108% over fiscal 1994 revenues. The increase in revenues resulted
primarily from the following: a full year of SSI revenues (SSI was acquired in
January 1994) versus only a quarter of revenue activity in the prior year,
strong revenue growth in its international, commercial and telecommunication
marketplaces and increased maintenance revenue due to the expanded installation
base of products.
1
<PAGE>
The cost of revenues as a percentage of revenues decreased to 30% in fiscal
1995 from 43% in fiscal 1994. This decrease resulted principally from a
continued shift toward sales of products that contain a larger portion of
software and thus result in higher margins.
Research, development and engineering costs as a percentage of revenues
decreased to 20% in fiscal 1995 as compared to 23% in fiscal 1994. This decrease
principally reflects the increase in revenue noted above. Selling, general and
administrative costs as a percentage of revenues decreased to 34% in fiscal 1995
from 37% in fiscal 1994. This change also reflects the increased revenues noted
above.
Interest income remained relatively static as rising interest rates have
offset a lower average cash and marketable securities balance. The lower cash
and marketable securities balance principally resulted from a $10 million
payment made to NYNEX in December 1993 related to the acquisition of SSI as well
as to a $2 million settlement of notes payable with NYNEX in the fourth quarter
of fiscal 1995.
Fiscal 1994 Compared to Fiscal 1993
Net revenues from continuing operations in fiscal 1994 decreased
approximately $1.5 million (5%) over fiscal 1993 revenues. This decrease in
revenues is principally the result of a decline in the sales of the Company's
older peripheral products, which resulted in an approximate $6 million reduction
in revenue between fiscal 1993 and fiscal 1994.
Offsetting this decline were increases in the sales of the Company's
gateway products, continued revenue growth in the data integration products
resulting from further sales growth within various telecommunication companies,
as well as in other independent telephone companies, and the introduction of
revenues associated with the acquisition of SSI.
The cost of revenues as a percentage of revenues decreased to 43% in fiscal
1994 from 50% in fiscal 1993. This decrease continues the trend noted in the
prior year as product sales continue to shift toward sales of products that
contain a larger portion of software and thus result in higher margins.
Research, development and engineering costs as a percentage of revenues
increased to 23% in fiscal 1994 as compared to 17% in fiscal 1993. This increase
reflects the Company's ongoing commitment to new product generation, as well as
to the decrease in revenue noted above. Selling, general and administrative
costs as a percentage of revenues increased to 37% in fiscal 1994 from 28% in
fiscal 1993. This change reflects the added costs associated with the expansion
into the commercial and international marketplaces, as well as the decreased
sales noted above.
During fiscal 1994, the Company recorded other charges of approximately $9
million. These charges relate principally to the sale of the Company's former
headquarters and the acquisition of SSI. The company does not anticipate any
negative impact on future operations or liquidity as a result of these charges.
No interest expense was incurred in fiscal 1994 as a result of the
elimination of debt related to the non-recourse financing of installment
receivables in fiscal 1993. Interest income was lower due to a $10 million
payment made to NYNEX in December 1993 related to the acquisition of SSI, as
well as to lower interest rates earned on securities invested in general.
Impact of Inflation
The Company has not experienced any significant impact from inflation.
Liquidity and Capital Resources
The Company had working capital of $24 million and $16.3 million on April
2, 1995 and April 3, 1994, respectively. This increase was primarily due to the
net income earned in the current year. Cash, cash equivalents and marketable
securities were approximately $20.3 million and $9.2 million on April 2, 1995
and April 3, 1994, respectively. This increase was also due primarily to the net
income earned in the current year.
The Company currently anticipates making capital expenditures of
approximately $2 million during fiscal 1996. This amount includes the purchase
of research and development equipment, data processing equipment and software.
The Company believes that cash on hand will be adequate to meet its anticipated
cash needs for working capital and capital expenditures for 1996.
The Company does not have any post-retirement benefits and is not liable
for any payments to retirees.
2
<PAGE>
APERTUS TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Fiscal Years Ended
------------------------------------
April 2 April 3 March 28
1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales................................. $45,713 $20,719 $22,611
Rentals and services.................. 8,913 5,487 5,107
------- ------- -------
Total............................... 54,626 26,206 27,718
------- ------- -------
COSTS AND EXPENSES
Cost of sales......................... 12,794 7,424 10,363
Cost of rentals and services.......... 3,474 3,729 3,509
Research, development and engineering. 10,674 5,986 4,747
Selling, general and administrative... 18,407 9,801 7,852
Other charges......................... - 9,029 -
------- ------- -------
Total............................... 45,349 35,969 26,471
------- ------- -------
Income (Loss) from Operations........... 9,277 (9,763) 1,247
------- ------- -------
OTHER INCOME (EXPENSE)
Interest expense...................... - - (10)
Investment income..................... 712 747 1,248
------- ------- -------
Total............................... 712 747 1,238
------- ------- -------
Income (Loss) From Operations
Before Income Taxes.................... 9,989 (9,016) 2,485
Income Tax Expense...................... (150) - -
------- ------- -------
Net Income (Loss)....................... $ 9,839 $(9,016) $ 2,485
======= ======= =======
Income (Loss) per Common and
Common Equivalent Share................ $ .69 $ (.70) $ .19
======= ======= =======
Weighted Average Number of Common
and Common Equivalent Shares
Outstanding............................ 14,266,000 12,884,000 12,999,072
========== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE>
APERTUS TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Years Ended
-------------------
April 2 April 3
1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.............................. $ 13,140 $ 2,040
Cash in escrow - current portion....................... 106 106
Marketable securities.................................. 6,310 6,213
Accounts receivable, less allowance
for doubtful accounts of $865 in 1995
and $931 in 1994...................................... 14,067 12,159
Inventories............................................ 3,126 3,092
Installment receivables - current portion.............. 150 881
Other.................................................. 453 529
-------- --------
Total current assets................................. 37,352 25,020
Property and Equipment
Property and equipment................................. 12,606 10,821
Less accumulated depreciation.......................... 8,897 7,798
-------- --------
Net property and equipment........................... 3,709 3,023
Other Assets
Cash in escrow - net of current portion................ 757 849
Note receivable........................................ 8,700 8,700
Capitalized software................................... 3,917 4,894
Installment receivables - net of current portion....... 49 196
Other.................................................. 842 881
-------- --------
Total other assets................................... 14,265 15,520
Total................................................ $ 55,326 $ 43,563
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable....................................... $ 2,932 $ 3,300
Accrued expenses....................................... 6,437 4,086
Deferred revenue....................................... 3,863 1,216
Current portion of long-term debt...................... 151 138
-------- --------
Total current liabilities............................ 13,383 8,740
Long-term Debt - net of current portion.................. 8,976 9,142
Notes Payable............................................ - 3,740
Shareholders' Equity
Common stock - authorized 30,000,000
shares at $.05 par value, shares outstanding of
13,526,800 in 1995 and 12,941,875 in 1994............. 676 647
Additional paid-in capital............................. 53,231 52,047
Accumulated deficit.................................... (20,747) (30,586)
Unearned compensation.................................. (193) (167)
-------- --------
Total shareholders' equity........................... 32,967 21,941
-------- --------
Total................................................ $ 55,326 $ 43,563
======== ========
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
APERTUS TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Fiscal Years Ended
------------------------------
April 2 April 3 March 28
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)..................................... $ 9,839 $(9,016) $ 2,485
Adjustments to reconcile net income (loss) to net
cash from (used in) operating activities net of the
effects from the purchase of the company:
Depreciation and amortization....................... 4,187 934 291
Non-current portion of other charges................ - 7,829 -
Net assets/provision for discontinued operations.... - 208 (193)
Accounts receivable................................. (3,132) (559) (192)
Installment receivables............................. 878 76 416
Inventories......................................... (34) 116 1,591
Other assets........................................ 218 (7) (123)
Accounts payable, accrued expenses
and deferred income................................ 4,504 (920) (1,325)
------- ------- -------
Net cash flows from (used in) operating activities.. 16,460 (1,339) 2,950
INVESTING ACTIVITIES
Purchase of company (net of cash acquired).......... - (9,549) -
Purchases of marketable securities.................. (1,228) - -
Sales and maturities of marketable securities....... 1,131 - -
Net sales (purchases) of marketable securities...... - 14,775 (2,608)
Purchases of property and equipment................. (1,785) (557) (444)
Capitalized software................................ (2,484) (1,387) -
Reduction in carrying value of property
held for sale...................................... - 638 398
Change in cash held in escrow....................... 92 (955) -
------- ------- -------
Net cash flows from (used in) investing activities.. (4,274) 2,965 (2,654)
FINANCING ACTIVITIES
Debt transactions:
Repayments........................................ (2,213) (115) (522)
Capital transactions:
Stock options exercised........................... 1,213 393 316
Net change in restricted stock.................... (86) - 8
------- ------- -------
Net cash flows from (used in) financing
activities......................................... (1,086) 278 (198)
------- ------- -------
Net increase in cash and cash equivalents............. 11,100 1,904 98
Beginning cash and cash equivalents................... 2,040 136 38
------- ------- -------
Ending cash and cash equivalents...................... $13,140 $ 2,040 $ 136
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid for interest.............................. $ 828 $ 840 $ 852
Cash paid (received) for income taxes............... 0 (39) (180)
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
APERTUS TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock
------------------- Additional
Number of Paid-in Accumulated Unearned
Shares Amount Capital Deficit Compensation
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Balance, March 29, 1992.................. 12,520,041 $626 $51,237 $(24,055) $(121)
Options exercised........................ 158,359 8 308 - -
Net change in restricted stock........... (2,500) - 8 - -
Compensation earned...................... - - - - 31
Net income............................... - - - 2,485 -
---------- ---- ------- -------- -----
Balance, March 28, 1993.................. 12,675,900 634 51,553 (21,570) (90)
---------- ---- ------- -------- -----
1994
Options exercised........................ 229,475 11 382 - -
Net change in restricted stock........... 36,500 2 112 - (114)
Compensation earned...................... - - - - 37
Net loss................................. - - - (9,016) -
---------- ---- ------- -------- -----
Balance, April 3, 1994................... 12,941,875 647 52,047 (30,586) (167)
---------- ---- ------- -------- -----
1995
Options exercised........................ 577,425 29 1,098 - -
Net change in restricted stock........... 7,500 - 86 - (86)
Compensation earned...................... - - - - 60
Net income............................... - - - 9,839 -
---------- ---- ------- -------- -----
Balance, April 2, 1995................... 13,526,800 $676 $53,231 $(20,747) $(193)
========== ==== ======= ======== =====
</TABLE>
See Accompanying Notes to Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 2, 1995
(Dollars in thousands, except per share amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Apertus
Technologies Incorporated and its wholly owned subsidiary Systems Strategies,
Inc. (together "the Company"). All inter-company accounts and transactions have
been eliminated in consolidation.
Fiscal Year
The Company's fiscal year ends on the Sunday nearest March 31. Fiscal 1995
was a 52-week year. Fiscal 1994 and 1993 were 53- and 52-week years,
respectively.
Revenue Recognition
Sales include direct sales to distributors and customers, sales-type lease
contracts and commitment contracts. Sales are generally recorded when the
product is shipped, except that sales-type lease contracts are recorded as sales
when the products are accepted by the customer. Under commitment contracts, the
revenue attributable to the current fiscal year is recognized when the product
is shipped to the distributor. Any related costs are accrued at this time.
Equipment under all other lease contracts is accounted for under the
operating method, and rental income is recognized during the period the
equipment is on lease. Service revenues are recognized over the period covered
by the service contract.
Cash Equivalents
Securities which are readily convertible to cash with original maturities
of three months or less when purchased are considered cash equivalents.
Marketable Securities
As of April 4, 1994 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." Investments in marketable equity securities and debt securities are
classified as available-for-sale. Available-for-sale securities are carried at
fair value with the unrealized gains and losses, net of tax, reported as a
separate component of shareholders' equity. Realized gains and losses and
declines in value judged to be other than temporary are included in investment
income along with interest and dividends.
6
<PAGE>
Capitalized Software
The Company, in accordance with Statement of Financial Accounting Standards
(SFAS) No. 86, capitalizes software development costs by project. These
capitalized costs are amortized on a straight line basis over a period of three
to five years or the expected life of the product, whichever is less. Research
and development costs are charged to expense as incurred.
Major Customers
Sales to the following customers have accounted for a significant
percentage of sales for the three year period ended April 2, 1995. The following
table outlines these percentages:
<TABLE>
<CAPTION>
Fiscal Years Ended Ameritech Bell Atlantic GTE
- -------------------------------------------------------
<S> <C> <C> <C>
April 2, 1995 9% 3% 26%
April 3, 1994 10% 5% 15%
March 28, 1993 28% 12% 4%
</TABLE>
Inventories
Inventories are valued at the lower of cost or market with cost determined
on a first-in, first-out basis. Inventories are as follows:
<TABLE>
<CAPTION>
Years Ended
- -------------------------------------------------
1995 1994
- -------------------------------------------------
<S> <C> <C>
Raw material $ 499 $ 479
Work-in-process 1,161 1,060
Finished goods 1,466 1,553
- -------------------------------------------------
Total $3,126 $3,092
- -------------------------------------------------
</TABLE>
Property and Equipment
Property and equipment is recorded at cost and depreciated on a straight-
line basis. Property and equipment consists of the following:
<TABLE>
<CAPTION>
Years Ended
- ---------------------------------------------------------------------
Depreciable
1995 1994 Lives in Years
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Machinery and equipment $ 9,208 $ 7,554 3-6
Furniture and fixtures 3,287 3,156 4-10
Tooling 111 111 4-5
- ---------------------------------------------------------------------
Property and equipment $12,606 $10,821
- ---------------------------------------------------------------------
</TABLE>
Income (Loss) per Common and Common Equivalent Share
Income (loss) per common and common equivalent share is based on the
weighted average number of common shares outstanding plus common share
equivalents resulting from dilutive stock options. Primary and fully diluted
income per share are approximately the same.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of assets and liabilities and their respective tax
basis.
Reclassification
Certain reclassifications have been made to prior year amounts to conform
to the current year presentation.
<PAGE>
2. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash, cash equivalents and marketable securities at April 2, 1995 consist
of the following:
<TABLE>
<CAPTION>
Cash and
Cash Short Long
Type Equivalents Term Term Total
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Bonds $ - $4,816 $ $ 4,816
Commercial paper 7,196 1,494 - 8,690
Cash in escrow - 106 757 863
Other 5,944 - - 5,944
- -----------------------------------------------------------
Total $13,140 $6,416 $757 $20,313
- -----------------------------------------------------------
</TABLE>
All marketable securities mature in fiscal 1996 except for the cash held in
escrow which will be relieved in fiscal 1997. At April 2, 1995, the cost of
marketable securities approximated market value.
3. PURCHASE OF SYSTEMS STRATEGIES, INC.
Effective the close of business on December 31, 1993, the Company acquired
the stock of Systems Strategies, Inc. (SSI), a wholly owned subsidiary of AGS
Computers, Inc., a NYNEX Company. The total purchase price was $14 million which
included a $10 million payment on December 31, 1993 and promises to pay to NYNEX
the principal sum of $1 million, without interest, on June 30, 1995 and the
principal sum of $3 million, without interest, on June 30, 1996. The present
value of the payments due June 30, 1995 and 1996 of $3,740 were included on the
balance sheet as "Notes Payable" at April 3, 1994.
The acquisition was accounted for under the purchase method of accounting
and, accordingly, the operating results of SSI have been included in the
consolidated operating results since the date of acquisition.
A portion of the purchase price amounting to approximately $5.5 million was
allocated to purchased research and development. This was charged against
earnings in the third quarter of fiscal 1994 and was included in "Other
charges."
7
<PAGE>
The following table shows the pro forma consolidated results of operations
as if SSI had been acquired as of the beginning of the periods presented:
<TABLE>
<CAPTION>
Unaudited
- ------------------------------------------------
Fiscal Fiscal
1994 1993
- ------------------------------------------------
<S> <C> <C>
Revenues $37,445 $42,064
Net income (loss) $(5,591) $ 3,754
Net income (loss) per share $ (.43) $ .29
</TABLE>
The pro forma results are not necessarily indicative of what actually would
have occurred if the acquisition had been in effect for the entire periods
presented. In addition, they are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operation.
During fiscal 1995 Apertus and NYNEX reached a settlement whereby the
purchase price of SSI was reduced by $1,680. In return, the Company released
NYNEX of any liability connected with the collection of outstanding receivables
guaranteed by NYNEX under the original contract. This settlement, along with a
cash payment of $2,060 made in the fourth quarter, relieved the Company of any
future obligations to NYNEX.
4. SALE OF FORMER HEADQUARTERS
On October 26, 1993, the Company sold its former headquarters property,
consisting of land and a building, to Best Buy Co., Inc., a Minnesota
corporation, for $8,700. Payment for the building is evidenced by a note
receivable due on June 12, 1996 for the same amount. Additionally, the sales
agreement required that Best Buy make interest payments of $287 on January 31,
1994 and $430 on the business day immediately preceding each of August 1, 1994,
February 1, 1995 and August 1, 1995. On June 12, 1996 the note receivable and
$745 in additional accrued interest will be due and payable.
The property is subject to a mortgage securing a loan to the Company from
The Prudential Insurance Company of America ("Prudential.") The Company and
Prudential have contracted with First Trust National Association ("First Trust")
whereby First Trust will receive all amounts due from Best Buy under the sales
agreement and make the required payments to Prudential under the Company's
current loan obligation. The Company had deposited the sum of $999 with First
Trust to be held in escrow and used to cover the difference between the payments
due from Best Buy and the payments due to Prudential. The cash held in escrow at
First Trust on April 2, 1995 is approximately $863, of which $106 is classified
as current.
The current 9% mortgage loan with Prudential will mature as follows: $200
in fiscal 1996 and $8,900 due on maturity in fiscal 1997. The sale of the former
headquarters resulted in a one time charge of $2,250 to operations in fiscal
1994. This amount was included in "Other charges."
5. CAPITALIZED SOFTWARE
Capitalized software costs are as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
- ------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Capitalized software costs-beginning of year $ 4,894 $ 0
Capitalized software acquired through
the acquisition of SSI 0 3,833
Software capitalized 2,484 1,387
Less amortization expense (3,461) (326)
- ------------------------------------------------------------------------
Capitalized software - end of year $ 3,917 $4,894
- ------------------------------------------------------------------------
</TABLE>
6. INSTALLMENT RECEIVABLES
Installment receivables are as follows:
<TABLE>
<CAPTION>
Years Ended
- ------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Payments to be received
under sales-type leases $ 211 $1,125
Less:
Unearned income (12) (48)
Current portion (150) (881)
- ------------------------------------------------------------------------
Total $ 49 $ 196
- ------------------------------------------------------------------------
</TABLE>
<PAGE>
7. INCOME TAXES
As of April 2, 1995, the Company has operating loss carryforwards of
approximately $47,000 available to offset taxable income. These operating loss
carryforwards expire at various times through the year 2009. The provision for
federal and state income tax expense consisted of:
<TABLE>
<CAPTION>
Years Ended
- ------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ - $ - $ -
State 32 - -
Alternative Minimum Tax 118 - -
- ------------------------------------------------------------------------
Total $150 $ - $ -
- ------------------------------------------------------------------------
</TABLE>
The effective income tax expense differed from the federal statutory
rates as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
- ------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes at statutory rate 34% (34%) 34%
State income taxes 1% - -
Alternative Minimum Tax 1% - -
Impact of net operating
loss carryforward (34%) 34% 34%)
- ------------------------------------------------------------------------
Effective tax rate 2% - -
- ------------------------------------------------------------------------
</TABLE>
8
<PAGE>
The components of deferred tax assets and liabilities were as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
- -----------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Net operating loss carryforwards $ 18,740 $ 21,294
Research and development credit 1,081 1,081
Purchased research and development 2,233 2,233
Inventory reserve 731 751
Allowance for doubtful accounts 346 373
AMT credit carryforward 127 --
Other 1,621 1,846
-------- --------
Total deferred tax assets $ 24,879 $ 27,578
Deferred tax liabilities
Capitalized software $ (1,567) $ (1,958)
Depreciation and amortization (1,161) (1,246)
-------- --------
Total deferred tax liabilities $ (2,728) $ (3,204)
-------- --------
Net deferred tax assets $ 22,151 $ 24,374
Valuation allowance (22,151) (24,374)
-------- --------
Total net deferred tax assets $ 0 $ 0
======== ========
</TABLE>
8. STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK
Under the Company's stock option plans, certain officers, directors and
employees may be granted options to purchase the Company's common stock at
prices equal to the fair market value of the stock at the date of the grant.
Following is a summary of stock options under these plans:
<TABLE>
<CAPTION>
Fiscal Years Ended
- --------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------
<S> <C> <C> <C>
Granted
Number of shares 75,000 891,250 255,000
Price per share $3-$12 $2-$3 $1-$2
- --------------------------------------------------------------
Exercised and cancelled
Number of shares 602,275 372,300 391,700
Price per share $1-$5 $1-$6 $1-$3
- --------------------------------------------------------------
Outstanding at year end
Number of shares 1,451,400 1,978,675 1,459,725
Price per share $1-$12 $1-$3 $1-$6
- --------------------------------------------------------------
</TABLE>
At April 2, 1995, options to purchase approximately 623,000 shares of
common stock at exercise prices ranging from $1 to $12 were exercisable and
1,253,000 shares are reserved for future issuance. During fiscal 1995, an
amendment was proposed which would allow for an additional 1,200,000 shares to
be reserved for future issuance. This amendment was approved by the shareholders
and the 1,200,000 shares are included in the above reserved for future issuance
figure. Subsequent to the approval of the additional shares to the plan,
approximately 650,000 additional shares which were to be granted contingent upon
approval were issued. These shares have been included in the fiscal 1994 granted
amount.
The Company has entered into restricted stock agreements with various
employees. The agreements call for issuance of the Company's common stock to
these employees and provides for vesting over a 5-year employment period. As of
April 2, 1995, 242,000 shares have been granted and 58,000 shares are reserved
for future issuance. The value of the stock at the time of grant is deferred and
is amortized over the term of the agreements.
9. OTHER CHARGES
In the third quarter of fiscal 1994, the Company recorded non-recurring
charges of $9,029. These charges related primarily to the purchase of SSI (see
note 3) and the sale of the former headquarters (see note 4).
10. COMMITMENTS AND CONTINGENCIES
The Company has various operating lease agreements which expire through the
year 2014 for its facilities principally located in Minnesota, New York and the
United Kingdom. The Company is responsible for real estate taxes, maintenance
and utilities.
Future minimum lease payments as of April 2, 1995 are $1,600 in 1996, $950
in 1997, $500 in 1998, $500 in 1999 and $2,450 for the years 2000 through 2014.
Rental expense for property and equipment under operating leases for fiscal
1995, 1994, and 1993 was $1,800, $1,000 and $900, respectively.
The Company is involved in various claims and proceedings which, in the
opinion of management, based upon opinions of counsel, do not involve amounts
material to the financial position of the Company.
11. EMPLOYEE BENEFIT PLANS
Since 1984, Apertus Technologies Incorporated has maintained a 401(k)
Savings and Investment Plan for its eligible employees.
Employees are eligible to enroll quarterly provided they are in the employ
of Apertus for a minimum of six months continuous service and are scheduled to
work at least 1,000 hours in their first year.
Employees' contributions can range from 1% to 15% of their compensation.
Apertus currently matches 25% of the first 4% of employee contributions. Company
contributions were $121 toward 401(k) employer contributions in fiscal 1995.
9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Apertus Technologies Incorporated
We have audited the accompanying consolidated balance sheets of Apertus
Technologies Incorporated as of April 2, 1995 and April 3, 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years then ended. 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. The financial statements of Apertus
Technologies Incorporated for the year ended March 28, 1993 were audited by
other auditors whose report dated May 11, 1993 expressed an unqualified opinion
on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Apertus
Technologies Incorporated at April 2, 1995 and April 3, 1994, and the
consolidated results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, MN
May 5, 1995
10
<PAGE>
COMPANY REPORT ON FINANCIAL
STATEMENTS
To the Shareholders of Apertus Technologies Incorporated:
The management of Apertus Technologies Incorporated has prepared and is
responsible for all information and representations contained in the financial
statements and other sections of this Annual Report. The Company's financial
statements have been prepared in conformity with generally accepted accounting
principles.
Apertus maintains a system of internal accounting controls designed to
provide reasonable assurance that transactions are executed in accordance with
the proper authorization, that all such transactions are properly recorded and
summarized to produce reliable financial records and reports, that assets are
safeguarded, and that the accountability for assets is maintained. The Company
maintains high standards when selecting, training, and developing personnel, to
insure that management's objectives of maintaining strong, effective internal
controls and unbiased, uniform reporting standards are attained.
Ernst & Young LLP, independent auditors, have audited the Company's
financial statements in accordance with generally accepted auditing standards
and their report is included herein.
The Audit Committee of the Board of Directors, which is composed solely of
directors who are not officers or employees, meets regularly and on special
occasions, as needed, with corporate financial management and the independent
auditors to review their activities. The independent auditors have access to the
Audit Committee without management being present to discuss the results of their
audit work, the adequacy of internal financial controls, and the quality of
financial reporting.
May 5, 1995
11
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
Fiscal Years Ended
- --------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA
Revenues $54,626 $26,206 $27,718 $22,763 $26,263
- --------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 9,839 (9,016) 2,485 (375) 2,694
- --------------------------------------------------------------------------------------------------------
Net income (loss) 9,839 (9,016) 2,485 (2,361) 1,547
- --------------------------------------------------------------------------------------------------------
Income (loss) per share:
Income (loss) from continuing operations .69 (.70) .19 (.03) .21
- --------------------------------------------------------------------------------------------------------
Net income (loss) .69 (.70) .19 (.19) .12
- --------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Working capital 23,969 16,280 26,283 23,304 24,041
- --------------------------------------------------------------------------------------------------------
Total assets 55,326 43,563 43,868 42,875 47,304
- --------------------------------------------------------------------------------------------------------
Long-term debt / notes payable 8,976 12,882 9,270 9,359 9,509
- --------------------------------------------------------------------------------------------------------
Shareholders' equity 32,967 21,941 30,527 27,687 29,938
- --------------------------------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL DATA
For the Year Ended April 2, 1995
(Dollars in thousands, except per share amounts)
- --------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH FISCAL
(Unaudited) QUARTER QUARTER QUARTER QUARTER YEAR 1995
- --------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS DATA
Revenues $13,027 $13,894 $13,709 $13,996 $54,626
- --------------------------------------------------------------------------------------------------------
Net income 2,317 2,152 2,613 2,757 9,839
- --------------------------------------------------------------------------------------------------------
Net income per share .17 .15 .18 .19 .69
- --------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Working capital 18,762 20,926 23,451 23,969 23,969
- --------------------------------------------------------------------------------------------------------
Total assets 50,770 52,520 55,911 55,326 55,326
- --------------------------------------------------------------------------------------------------------
Long-term debt / notes payable 12,848 11,214 11,180 8,976 8,976
- --------------------------------------------------------------------------------------------------------
Shareholders' equity 24,271 26,793 29,783 32,967 32,967
- --------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
DIVIDEND POLICY AND PRICE RANGE OF
COMMON STOCK (UNAUDITED)
The Company has not declared any cash dividends on its common stock, and
the Board of Directors intends to retain all earnings for use in its business
for the foreseeable future. At April 2, 1995, the Company had 1,349 shareholders
of record.
The Company's common stock is traded on NASDAQ under the symbol APTS. The
following table sets forth the high and low, end-of-the-day sale prices for the
common stock reported on NASDAQ for the period indicated.
<TABLE>
<CAPTION>
High Low
- -------------------------------------------------
<S> <C> <C>
Fiscal 1995
First Quarter 4-1/8 2-13/16
Second Quarter 8-7/8 4
Third Quarter 12-3/8 7-3/4
Fourth Quarter 13-3/4 8-7/8
- -------------------------------------------------
Fiscal 1994
First Quarter 3-5/16 3-1/16
Second Quarter 2-7/8 2-7/8
Third Quarter 3-7/8 3-1/4
Fourth Quarter 3-1/8 2-7/8
</TABLE>
Board of Directors
Robert D. Gordon
Chairman of the Board,
Chief Executive Officer,
President
Apertus Technologies
Incorporated
Nicholas J. Covatta
Chairman
Atlantis Group, Inc.
Robert W. Fischer
President
Robert W. Fischer & Co., Inc.
Arch J. McGill
President
Chardonnay, Inc.
Clarence W. Spangle
Independent Consultant
Corporate Officers
Robert D. Gordon
Chairman of the Board,
Chief Executive Officer,
President
Julie Cummins Brady
Secretary and General Counsel
Sue Hogue
Chief Financial Officer
Martin Hahn
General Manager
Internetworking Solutions Group
Lizabeth Converse Wilson
General Manager
Enterprise Systems Group
Leslie Yeamans
General Manager
Messaging Group
Norman Friedman
General Manager
Express Group
William Fell
General Manager
European Operations
Auditors
Ernst & Young LLP
Transfer Agent
Norwest Bank Minnesota, N.A.
Founded in 1979, Apertus Technologies Incorporated is headquartered in suburban
Minneapolis, Minnesota, with major offices in New York, NY and London, England.
The Company has sales and service offices throughout North America and Europe.
A copy of the Company's annual report or Form 10-K (excluding exhibits) filed
with the Securities and Exchange Commission may be obtained without charge to
shareholders upon written request to:
Director, Investor Relations
Apertus Technologies Incorporated
7275 Flying Cloud Drive
Eden Prairie, MN 55344
<PAGE>
Exhibit 21
Percentage of
Voting Securities
State or Country Directly or Indirectly
of Incorporation Owned by the
or Organization Registrant
------------------ ----------------------
Registrant:
Apertus Technologies Incorporated Minnesota
Subsidiaries:
Systems Strategies, Inc. New York 100%
Datanex, Inc. Oregon 100%
Systems Strategies Limited United Kingdom 100%
Lee Data Export Limited Jamaica 100%
Lee Data Far East Pte. Ltd. Singapore 100%
Apertus Inc. GMBH Germany 100%
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Apertus Technologies Incorporated of our report dated May 5, 1995, included
in the 1995 Annual Report to Shareholders of Apertus Technologies Incorporated.
Our audit also included the financial statement schedule of Apertus Technologies
Incorporated listed in Item 14(a) related to information as of April 2, 1995 and
for the year then ended. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audit. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 2-91060) pertaining to the Lee Data Corporation Savings and
Investment Plan, in the Registration Statement (Form S-8 No. 33-50648)
pertaining to the Apertus Technologies Incorporated Stock Acquisition Loan
Assistance Program, in the Registration Statement (Form S-8 No. 33-77176)
pertaining to the Apertus Technologies Incorporated 1993 Stock Acquisition Loan
Assistance Program, and in the Registration Statement (Form S-8 No. 33-88884)
pertaining to the Apertus Technologies Incorporated 1990 Amended Long-Term
Incentive Plan, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Apertus Technologies Incorporated.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
June 23, 1995
<PAGE>
Exhibit 23.2
------------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement (File
No. 33-88884) of Apertus Technologies Incorporated on Form S-8 (File No. 33-
88884) of our report dated May 11, 1993, appearing in the Annual Report on Form
10-K of Apertus Technologies Incorporated for the year ended April 2, 1995.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
June 23, 1995
<PAGE>
EXHIBIT 24
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Robert D. Gordon, Sue A. Hogue and Julie
Cummins Brady and each of them, their true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for them and in their
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K of Apertus Technologies Incorporated for the fiscal year ended April
2, 1995 and all amendments to such Annual Report on Form 10-K, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as they might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be done
by virtue hereof.
<TABLE>
<CAPTION>
Signatures Date
---------- ----
<S> <C>
/s/ Robert D. Gordon
_____________________________________________________________ ___________, 1995
Robert D. Gordon, Chairman of the Board, Chief Executive
Officer, President (Principal Executive Officer) and
Director
/s/ Sue A. Hogue
_____________________________________________________________ ___________, 1995
Sue A. Hogue, Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
/s/ Nicholas J. Covatta
_____________________________________________________________ ___________, 1995
Nicholas J. Covatta Jr., Director
/s/ Robert W. Fischer
_____________________________________________________________ ___________, 1995
Robert W. Fischer, Director
/s/ Arch J. McGill
_____________________________________________________________ ___________, 1995
Arch J. McGill, Director
/s/ Clarence W. Spangle
_____________________________________________________________ ___________, 1995
Clarence W. Spangle, Director
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-02-1995
<PERIOD-START> APR-04-1994
<PERIOD-END> APR-02-1995
<CASH> 13,246
<SECURITIES> 6,310
<RECEIVABLES> 14,067
<ALLOWANCES> 0
<INVENTORY> 3,126
<CURRENT-ASSETS> 37,352
<PP&E> 3,709
<DEPRECIATION> 0
<TOTAL-ASSETS> 55,326
<CURRENT-LIABILITIES> 13,383
<BONDS> 8,976
<COMMON> 676
0
0
<OTHER-SE> 32,291
<TOTAL-LIABILITY-AND-EQUITY> 55,326
<SALES> 45,713
<TOTAL-REVENUES> 54,626
<CGS> 12,794
<TOTAL-COSTS> 45,349
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,989
<INCOME-TAX> 150
<INCOME-CONTINUING> 9,839
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,839
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
