<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
-----------------------------------
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year (52 weeks) ended APRIL 1, 1995
_____________
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from __________ to __________.
Commission file number: 1-5513
TRIDEX CORPORATION
- - ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0682273
- - ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
61 WILTON ROAD, WESTPORT, CT 06880
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code 203-226-1144
- - --------------------------------------------------------------------------------
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on
which registered
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COMMON STOCK, WITHOUT PAR VALUE AMERICAN STOCK EXCHANGE
Securities registered pursuant to Section 12 (g) of the Act:
NONE
- - --------------------------------------------------------------------------------
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any other amendment
to this Form 10-K. / /
As of JUNE 1, 1995 the aggregate market value of the registrant's issued and
outstanding voting stock held by non-affiliates of the registrant was
$18,800,000.
As of JUNE 1, 1995 the registrant had outstanding 3,679,746 shares of common
stock, without par value.
Exhibit Index appears on page 33
1 of 53
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PART I
GENERAL
Tridex Corporation ("Tridex" or the "Company"), through its wholly-owned
subsidiaries Magnetec Corporation ("Magnetec"), Ithaca Peripherals Incorporated
("Ithaca"), Ultimate Technology Corporation ("Ultimate") and Cash Bases GB
Limited ("Cash Bases"), is primarily engaged in the design, development,
manufacture and sale of specialty printers, terminal devices and other
peripheral products. The Company's market is the interface between the consumer
and the retailer or other service provider in a variety of transactions - at the
retail point-of-sale ("POS"), an automated teller machine ("ATM"), a kiosk, or a
lottery terminal. The Company's products include custom-designed dot matrix and
thermal printer mechanisms used to print receipts, coupons, event and lottery
tickets, bank statements and product or service information; optical mark-sense
readers and document transport systems used for automated data entry to lottery
terminals, educational test scoring and vote tally systems; and POS printers,
POS customer displays, POS terminal devices and cash drawers used in the retail
industry.
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS SINCE APRIL 2, 1994
On June 20, 1994 the Company acquired Cash Bases of Newhaven, England.
Cash Bases is the largest British manufacturer of cash drawers for POS
applications in Europe. The acquisition of Cash Bases has provided Tridex with
an entry into one of the largest markets in the world for POS equipment, as well
as the opportunity to accelerate the entry of the Company's other POS products
into the European market through joint marketing and sales efforts. The purchase
price of pounds sterling 3.5 million (approximately $5.330 million) was paid
pounds sterling 3.067 million (approximately $4.672 million) in cash and pounds
sterling 433,000 (approximately $658,000) by delivery of 96,788 shares of Tridex
common stock, of which 72,647 shares were placed in escrow to secure the
accuracy of certain representations and warranties made by the sellers. The
Company borrowed the cash portion of the purchase price. See "Management's
Discussion and Analysis of the Results of Operations and Financial Condition -
Liquidity and Capital Resources."
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Tridex presently operates in one industry segment, the design,
manufacture and sale of specialty printers, terminal devices and other
peripheral products.
(C) NARRATIVE DESCRIPTION OF BUSINESS
(i) PRINCIPAL PRODUCTS AND SERVICES
Tridex designs, manufactures and sells specialty dot matrix impact
printers, thermal printers, printer mechanisms and optical mark-sense readers
for OEM applications, and dot matrix impact printers, customer displays,
terminal devices and custom cash drawers for POS applications.
Tridex's printers and printer mechanisms are high performance,
full-featured peripherals that utilize the Company's electromechanical printing
components and subassemblies. Tridex designs and manufactures a wide variety of
printer products, including printers for automated applications such as
interactive kiosks and ATMs, printers for lottery and pari-mutuel terminals and
other gaming applications and standalone printers for POS and industrial
applications. In addition to designing its own printer products, Tridex also
provides the mechanical design services for customers of printers for integrated
use in specialty applications. The Company's optical mark-sense readers and
document transport systems may be used in, or in connection with, products that
feature the Company's printer mechanisms and printheads. The Company's cash
2
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drawers, constructed of metal, are high quality, custom products, for use with
POS terminals primarily in supermarkets, specialty stores and convenience
stores. Cash drawers are fabricated in the United Kingdom and are sold primarily
in Western Europe through a direct sales force.
Tridex manufactures and markets POS customer displays and
terminal devices for use in Twinax, Unix/Aix and PC-based POS applications.
Tridex's specialty printers, printer components, terminals and other peripheral
products are sold to systems integrators, original equipment manufacturers and
directly to end users by a direct sales force comprised of 20 people located in
Connecticut, New York, New Hampshire, Illinois, California, Georgia, the United
Kingdom, Germany, France and Spain.
Sales of printers, including POS printers, and printer components
accounted for 58%, 71%, and 82% of the Company's net sales for the three fiscal
years ended April 1, 1995, April 2, 1994 and April 3, 1993, respectively. Sales
of POS printers, accounted for 36%, 45% and 51% of such net sales in the same
periods. Sales of POS customer displays, terminals and related products, which
the Company began selling in fiscal year 1993, accounted for 23%, 27% and 6% of
the Company's net sales for the years ended April 1, 1995, April 2, 1994 and
April 3, 1993 respectively. Solenoid sales were less than 2% of total sales in
fiscal 1994 with none in fiscal 1995 as the product line was sold on October 1,
1993. Sales of custom cash drawers accounted for 19% of the Company's net sales
for the year ended April 1, 1995, the first fiscal year to include such sales.
Cash Bases had consolidated revenues of pounds sterling 6.4 million
(approximately $9.6 million) for its fiscal year ended April 30, 1994.
(ii) SOURCES AND AVAILABILITY OF RAW MATERIALS
The principal materials used by Magnetec are copper wire, magnetic
metals, injection molded plastic parts, formed metal parts and electronic
subassemblies, all of which are readily available from a number of sources.
Ithaca is dependent upon a single source of supply for printer mechanisms for
its POS printers. The loss of this supply source would have a material adverse
effect on Tridex and its subsidiaries taken as a whole. Ithaca has a contract
with this source of supply to provide sufficient quantity of printer mechanisms
until March, 1996. Ithaca enjoys good relations with this source of supply and
has received no indication that the supply agreement will not be renewed beyond
the expiration of the current contract. Ithaca cannot be certain, however, that
the supply agreement will be renewed, or if renewed, that the renewal terms will
be as favorable as those under the current contract. The principal raw materials
for cash drawers are sheet metal and molded plastic parts which are available
from several sources.
(iii) PATENTS
Tridex considers two of its patents to be material to the conduct of its
business. The Company has rights to a patent expiring in 1998 protecting unique
technology involving mark sensing and to a patent expiring in 2008 involving a
unique automated cut-off device which is an option offered in certain of its POS
printers. Tridex considers certain of its other patents, manufacturing processes
and designs to be proprietary in nature, and, therefore, valuable assets.
(iv) SEASONALITY AND PRACTICES RELATING TO WORKING CAPITAL ITEMS
Sales of the Company's products are not subject to material seasonal
variations. As a result, the Company has not historically been required to
maintain significant inventories of raw materials or finished goods in order to
fill customer orders.
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(v) CERTAIN CUSTOMERS
Sales to Indiana Cash Drawer Company, an unrelated distributor of POS
products, accounted for 8.3%, 10.5% and 6.2% of consolidated net sales during
fiscal years 1995, 1994 and 1993, respectively. Sales to another customer
accounted for 5.9%, 6.9% and 5.2% of consolidated net sales during fiscal years
1995, 1994 and 1993, respectively.
(vi) BACKLOG
The Company's backlog of firm orders was approximately $11,852,000 as of
May 27, 1995 compared to a backlog of approximately $7,800,000 as of May 28,
1994. Tridex expects to fill all of its backlog within the current fiscal year.
(vii) COMPETITION
The markets for the Company's products are highly competitive. Through
its operating subsidiaries the Company competes with approximately 2 domestic
and 5 foreign manufacturers for sales of printer mechanisms and components, with
approximately 3 domestic and 2 foreign manufacturers for sales of optical
mark-sense readers and POS printers, with approximately 3 domestic manufacturers
for sales of POS terminal devices, with approximately 3 domestic and 4 foreign
manufacturers for sales of POS customer displays, and with 4 manufacturers of
high quality cash drawers. In the market for POS printers, the Company competes
with Epson America, Inc., which holds a dominant market position.
All of the Company's products compete on the basis of price, performance,
quality and reliability. Some of the Company's lower production volume products
sold to the lottery, interactive kiosk, general gaming and automatic teller
machine industries compete based upon the Company's ability to provide highly
specialized and custom engineering and continuous technical support. In the
kiosk industry, Tridex has established itself as a major independent supplier of
printer mechanisms to a number of major interactive kiosk manufacturers. With
respect to its higher volume products, the Company competes based on its product
design, quality, and reliability, customer support and in some cases based upon
the uniqueness of its products. The Company also competes on the basis of its
design capabilities and quality control procedures.
In certain markets, the Company's competitors can sometimes offer lower
prices than the Company because of lower overhead, attributable to higher volume
production and off-shore manufacturing locations, which enjoy cheaper sources of
labor and raw materials. Many of the Company's domestic competitors,
particularly those that are divisions of substantially larger companies, have
greater financial and other resources than Tridex.
(viii) RESEARCH AND DEVELOPMENT ACTIVITIES
The Company spent approximately $2.4, $2.0 and $1.4 million in fiscal
years 1995, 1994 and 1993 respectively, on engineering, design and product
development efforts in connection with specialized engineering and design to
introduce a number of new products and to custom-tailor products for the
Company's customers.
(ix) ENVIRONMENT
Somerville, Massachusetts - Allu Realty Trust ("Allu"), a Massachusetts
business trust, with transferable shares, all of which are owned by Tridex, is
the former owner of land improved with a manufacturing-warehouse building
located at 100 Foley Street, Somerville, Massachusetts (the "Site"). Although
Allu has sold the property to 100 Foley Street Incorporated ("Foley"), an
unrelated entity, Allu and Tridex remain responsible for certain environmental
problems associated with the Site.
During July 1984, Allu and Tridex disclosed to the Massachusetts
Department of the Attorney General the existence of chromium, oil and grease at
the Site. As a result, the Environmental Protection Division of the Department
of the Attorney General and the Massachusetts Department of Environmental
Protection ("MDEP") conducted an investigation of the Site. At MDEP's request,
the Company retained an environmental engineering firm, which completed a Phase
II
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investigation study of the Site. The Company has conducted further studies to
more specifically characterize and assess the Site and to determine appropriate
long term clean-up. In January 1993, the Company entered into an agreement with
Foley pursuant to which Tridex and Foley agreed to pay 75% and 25%,
respectively, of the costs incurred after January 1, 1992 in connection with the
investigation and remediation of the Site (the "Site Participation Agreement").
The Site Participation Agreement also provides that, to the extent there are
available proceeds from the sale of the Site or, if not sold, from the operation
of the Site after January 1, 1997, Tridex shall be reimbursed for all or a
portion of the $260,000 it expended in connection with the Site prior to January
1, 1992. Under the terms of an Escrow Agreement entered into by Tridex and Foley
simultaneously with the Site Participation Agreement (the "Escrow Agreement"),
Tridex and Foley each placed $125,000 into escrow to fund the payment of their
obligations under the Site Participation Agreement. Under the terms of the
Escrow Agreement, Tridex must place an additional $100,000 in escrow at the
request of the Escrow Agent and thereafter the amount of any additional funds
required by the Escrow Agent to be placed in escrow shall be contributed 75% by
Tridex and 25% by Foley. Approximately $2,000 was being held in escrow as of
April 1, 1995, all of which was contributed by Foley.
As of April 1, 1995, the Company had spent approximately $579,000 in
connection with the Site. Of this amount, approximately $424,000 relates to
investigation or remediation costs incurred at the Site. Although it is
difficult to distinguish between amounts spent for investigation and
remediation, the Company estimates that approximately $351,000 has been spent in
connection with investigation and approximately $73,000 has been spent in
connection with remediation of the Site. The Company estimates that it will
spend approximately $100,000 to $300,000 in connection with the Site during
fiscal 1996, including expenditures from the escrow account. Based upon
preliminary estimates provided by a consulting environmental engineer and based
upon the likely future uses of the property, as of April 1, 1995, the Company
had accrued $333,000 for the estimated liability associated with the Site which
represents the currently estimated minimum cost of remediation, after
considering the cost sharing arrangement discussed above. Accordingly, although
no assurances can be given regarding the materiality of the total costs which
may be incurred, the Company does not believe at this time that the remediation
of the Site is reasonably likely to have a material effect on the Company's
financial condition, results of operations or liquidity. The Company believes
that implementation of clean-up measures will commence, and may be completed, in
fiscal 1996, in which case the entire amount of remediation costs to be borne by
the Company would be incurred and paid in fiscal 1996. The Company expects that,
as in the past, funds being held in escrow, cash from operations and the
Company's credit facilities will be sufficient to pay the costs of remediation
without a material effect on the Company's operations.
The Company has also been notified by an adjacent property owner,
Cooper Industries ("Cooper"), that certain petroleum products that may have
migrated from the Site have been detected in a monitoring well located on
Cooper's property. The Company and Foley are investigating possible oil
contamination along the border between the Site and the property owned by
Cooper.
(x) EMPLOYEES
As of May 27, 1995, Tridex and its subsidiaries employed approximately
422 persons.
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(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
Prior to fiscal 1995, the Company had no foreign operations and export
sales were minimal. Primarily as a result of the acquisition of Cash Bases, the
Company had approximately $10.9 million of sales which originated outside the
United States during fiscal 1995. For the amounts of revenue, operating profit
or loss and identifiable assets by geographic area, see Note 12 to the
Consolidated Financial Statements included in this report. In addition, during
fiscal 1995, the Company had export sales from the United States of
approximately $4.0 million, of which $2.4 million was to Canada and the majority
of the balance to Europe.
(E) DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(i) DIRECTORS OF THE REGISTRANT
<TABLE>
<CAPTION>
Principal Business
Director Name Principal Occupation Employer Name of Employer
------------- -------------------- ------------- ------------------
<S> <C> <C> <C>
Seth M. Lukash Chairman of the Board, Tridex Corporation Manufacturer of computer
President, Chief Executive peripheral equipment
Officer and Chief Operating
Officer
Richard T. Bueschel Chairman Northern Equities, Inc. Investments and commercial real
estate development
Paul J. Dunphy Management Consultant Self-employed Management consulting
Ralph I. Fine President and Chief Integral Resources, Inc. Telemarketing company
Executive
Officer
Alvin Lukash Consultant Tridex Corporation Manufacturer of computer
peripheral equipment
Richard W. Sonnenfeldt Senior Advisor NAPP Systems, Inc. Manufacturer of printing plates
Graham Y. Tanaka President Tanaka Capital Investment advising
Management, Inc.
</TABLE>
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(ii) EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Name Age Position
---- --- ---------
<S> <C> <C>
Seth M. Lukash 49 Chairman of the Board of Directors, President, Chief
Executive Officer, Chief Operating Officer and Director
Richard L. Cote 53 Senior Vice President and Chief Financial Officer
George T. Crandall 48 Vice President, Treasurer, Controller and Assistant
Secretary
S. Scott Kumpf 47 President, Ithaca Peripherals Incorporated, a wholly-
owned subsidiary of the Company
Dennis J. Lewis 40 President, Ultimate Technology Corporation, a wholly-
owned subsidiary of the Company
Bart C. Shuldman 38 President, Magnetec Corporation, a wholly-owned subsidiary
of the Company
Hugh T. Burnett 55 Managing Director, Cash Bases GB Limited, a wholly-owned
subsidiary of the Company
Ralph I. Fine 55 Secretary and Director
</TABLE>
Seth M. Lukash has been a senior Executive Officer of the Company since
1977 and has been a Director since 1979. He has served as Chairman of the Board
of Directors of the Company since November, 1988, Chief Executive Officer since
August, 1987, and President and Chief Operating Officer since June, 1989. Mr.
Lukash previously served as President of the Company from September, 1983 to
August, 1988 and as Chief Operating Officer from September, 1983 to August,
1987. Mr. Lukash is the son of Alvin Lukash, a Director of the Company.
Richard L. Cote joined the Company in March, 1993, and has been a Vice
President since June 1993 and Senior Vice President and Chief Financial Officer
since September 15, 1993. Mr. Cote was a self-employed management consultant
from October, 1991 to March, 1993; Vice President and Corporate Controller of
Wang Laboratories, Inc. from January, 1991 to September, 1991; and Executive
Vice President of Capital Resources Management, Inc. from November, 1989 to
December, 1990. Previously, Mr. Cote had been employed by Emhart Corporation,
Xerox Corporation and Price Waterhouse LLP.
George T. Crandall has been a Vice President of the Company since
September, 1992, Treasurer since November, 1990 and Corporate Controller since
March, 1989. Prior to joining Tridex in November, 1988, Mr. Crandall was a
consultant to Northeast Manufacturing Companies, Inc. and was previously
employed by Revere Copper and Brass Incorporated.
S. Scott Kumpf has been President of Ithaca since its acquisition by the
Company on May 10, 1990. Prior to the acquisition, Mr. Kumpf had served as
Ithaca's President, Chief Executive Officer and a Director since April, 1989.
From May, 1987, to April, 1989, Mr. Kumpf was President and a Director of
Ithaca.
Dennis J. Lewis has been President of Ultimate since its acquisition by
the Company on January 20, 1993. Prior to the acquisition, Mr. Lewis had served
as Ultimate's President, Chief Executive Officer and a Director since founding
Ultimate in 1988. Prior to 1988, Mr. Lewis held senior management positions
related to the sales, engineering and service of computer peripherals with
Digital Equipment Corporation, Naum Brothers, RS Engineering, Serv Tech and Add
Electronics.
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Bart C. Shuldman was appointed President of Magnetec in July 1993. Prior
to joining Magnetec he was employed by Mars Electronics International, a
division of Mars, Incorporated from 1989 to 1993 in several management
positions, most recently as Business Manager for the North American Amusement,
Gaming and Lottery operations. Mr. Shuldman previously held manufacturing and
sales management positions with General Electric Company from 1979 to 1989.
Hugh T. Burnett was appointed Managing Director of Cash Bases
simultaneously with its acquisition by Tridex Corporation on June 20, 1994.
Prior to the acquisition and since 1991, he was senior marketing executive with
Cash Bases. Mr. Burnett previously was Managing Director of Omron Systems UK
Ltd. from 1983 to 1991.
Ralph I. Fine has been Secretary of the Company since August, 1985 and a
Director since August, 1984. Mr. Fine has been President and Chief Executive
Officer of Integral Resources, Inc. since October, 1992. Integral Resources,
Inc. is a telemarketing company principally engaged in raising funds through
telephone solicitations for nonprofit organizations. From May, 1992 until he
assumed his current position, Mr. Fine consulted with various corporations and
nonprofit organizations. From May, 1991 to May, 1992, Mr. Fine was Executive
Director of International Physicians for the Prevention of Nuclear War, a
nonprofit organization committed to the elimination of nuclear weapons. From
July, 1990 to March, 1991, Mr. Fine was of counsel to the law firm of Hinckley,
Allen & Snyder, which is counsel to the Company. Prior to joining Hinckley,
Allen & Snyder, Mr. Fine was a partner in the law firm of Fine & Ambrogne,
which, until its dissolution in July, 1990, was counsel to the Company .
ITEM 2. PROPERTIES.
The Company's operations are currently conducted at the six facilities
described below:
<TABLE>
<CAPTION>
Size Owned or Lease Expiration
Location Operations Conducted (Approx. Sq. Ft.) Leased Date
- - -------- -------------------- ---------------- -------- ----------------
<S> <C> < C> <C> <C>
Westport, Connecticut Principal executive offices 5,000 Leased July 31, 2001
Wallingford, Manufacturing facility 44,000 Leased March 31, 2005
Connecticut
Ithaca, New York Manufacturing facility 36,000 Leased November 21, 2002
Victor, New York Manufacturing facility 18,000 Leased May 30, 1997
Newhaven, England Manufacturing facility 28,000 Leased March 25, 2000
Bloomfield, Non-operating 23,000 Owned N/A
Connecticut facility held for sale
</TABLE>
The Company believes that its facilities generally are in good condition,
adequately maintained and suitable for their present and currently contemplated
uses.
ITEM 3. LEGAL PROCEEDINGS.
See Item 1(C)(ix) "Environment" set forth above and Note 7(c) of the
Notes to Consolidated Financial Statements included in this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS.
The Company's common stock is traded on the American Stock Exchange
(the "Exchange"). As of May 27, 1995 there were 1,339 holders of record of the
common stock. The high and low sales prices of the common stock on the Exchange
during fiscal years 1995 and 1994, by quarter, were as follows:
<TABLE>
<CAPTION>
For the Fiscal Years Ended
------------------------------------------------------------------------------
April 1, 1995 April 2, 1994
-------------------------- ------------------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
April - June 7-3/4 5-3/8 10-1/2 7-5/8
July - September 8-1/8 5 11-3/4 9
October - December 7-1/2 5-3/8 10-3/4 6-7/8
January - March 7-1/2 5-5/8 10-1/8 7
</TABLE>
No dividends on the common stock have been declared in more than five
years. The Company does not anticipate declaring dividends in the foreseeable
future. The Company's agreement with Fleet Bank, N.A. prohibits the payment of
cash dividends for the term of the agreement. The indenture covering the
Company's 10.5% Debentures limits the payment of cash dividends to 50% of
aggregate consolidated net income earned after December 27, 1992 for so long as
any of the debentures are outstanding. The Company is permitted by the indenture
to pay dividends in common stock.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Fiscal Years Ended
=====================================================================
April 1, April 2, April 3, March 28, March 30,
1995 1994 1993 1992 1991
(52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
(A) (B) (C)
(In thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations:
Net sales from continuing operations $ 54,677 $ 33,688 $ 28,477 $ 20,345 $ 17,658
======== ======== ======== ======== ========
Income (loss) from continuing operations $ 2,686 $ 1,613 $ 1,368 $ (507) $ (3,701)
======== ======== ======== ======== ========
Income (loss) per common and common equivalent
share from continuing operations $ 0.69 $ 0.44 $ 0.46 $ (0.23) $ (1.86)
======== ======== ======== ======== ========
Cash dividends per common share None None None None None
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of
================================================================
April 1, April 2, April 3, March 28, March 30,
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets $36,362 $24,461 $23,521 $14,646 $14,272
======= ======= ======= ======= =======
Long-term obligations and redeemable preferred $ 6,185 $ 5,307 $ 8,248 $ 5,980 $ 7,450
======= ======= ======= ======= =======
stock
</TABLE>
(A) Includes the results of operations of Cash Bases GB Limited since June 20,
1994.
(B) Includes the results of operations of Ultimate Technology Corporation since
January 20, 1993.
(C) Includes the results of operations of Ithaca Peripherals Incorporated since
May 10, 1990.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
(A) RESULTS OF OPERATIONS
(i) 1995 COMPARED TO 1994
Consolidated net sales for the fiscal year (52 weeks) ended April 1, 1995
increased $20,989,000 (62%) to $54,677,000 from $33,688,000 in the prior year
(52 weeks) ended April 2, 1994. Sales of all printers and printer components
accounted for 58% and 71% of total sales in fiscal 1995 and 1994, respectively.
Terminal devices and customer displays represented 23% and 27%, respectively, of
total sales in fiscal 1995 and 1994. Cash drawers represented 19% of total sales
in fiscal 1995. The inclusion of Cash Bases' operations from the date of
acquisition on June 20, 1994 contributed $10,528,000 of the revenue increase
over the prior year. The remainder of the period-to-period increase primarily
was the result of increased unit shipments of printers into the POS market, as
well as increased shipments of printer products into the gaming and wagering and
financial services markets, and increased sales of terminal devices.
Consolidated gross profit increased $6,168,000 (51%) to $18,249,000 from
$12,081,000 in the prior year, primarily as a result of the contribution of Cash
Bases and the increased sales in the gaming and wagering market and in the POS
market. Consolidated gross profit as a percentage of net sales decreased to 33%
of sales from 36% of sales in the prior year. The decrease in gross margin
primarily reflects the sales of lower margin products into the POS and gaming
and wagering markets, and to a lesser degree, the inclusion of Cash Bases. The
gross margin is expected to remain at or near its current level during fiscal
1996.
Consolidated engineering, design and product development costs increased
$382,000 (19%) to $2,359,000 from $1,977,000 in the prior year. The increase
reflects the inclusion of such costs for Cash Bases, as well as the cost of
developing new products and enhancing existing products.
Consolidated selling, administrative and general expenses increased
$3,319,000 (41%) to $11,350,000 from $8,031,000 in the prior year. The increase
in selling expenses is the result of the inclusion of such costs for Cash Bases,
increased sales commissions and the increased staff to support a greater selling
effort in both the United States and European markets. The increase in general
and administrative expenses is the result of additional employee costs and
professional services to support business growth.
Consolidated operating profit for the current year increased $2,467,000
(119%) to $4,540,000 from $2,073,000 in the prior year, primarily as a result of
the contribution of Cash Bases and increased sales in the gaming and wagering
market and in the POS market. Consolidated operating profit as a percentage of
net sales increased to 8% from 6% in the prior year.
Net interest expense increased $151,000 (15%) to $1,171,000 from
$1,020,000 in the prior year. The increase in interest expense was due primarily
to the additional indebtedness incurred to acquire Cash Bases offset by the
effect of the conversion of debt securities to common stock in the prior year.
Other non-operating expense (net) for the current year includes
provisions for estimated loss on the disposal of non-productive property of
$170,000 and estimated clean-up costs associated with certain environmental
matters of $60,000, offset by an additional gain of $115,000 from a contingent
payment related to the October 1993 sale of the Company's solenoid product line
and net realized gains on foreign exchange of $84,000.
The provision for income taxes for fiscal 1995 reflects an effective tax
rate of 19.7%. The provision is net of a tax credit of $770,000 recorded in the
fourth quarter which reflects an adjustment to the Company's valuation allowance
to recognize federal deferred tax benefits available to be used by the Company.
The effective income tax rate in fiscal 1996 is expected to be in the mid-40%
range.
10
<PAGE> 11
Net income for the current year was $2,686,000 (or $.69 per share) as
compared to $1,613,000 (or $.44 per share) in the prior year. The average number
of common and common equivalent shares outstanding increased to 3,867,827 shares
from 3,661,278 shares in the prior year due primarily to the issuance of common
stock to acquire Cash Bases, the exercise of options and warrants, and the
effect of conversion of various debt securities to common stock at the end of
the prior year.
(ii) 1994 COMPARED TO 1993
Consolidated net sales for the fiscal year (52 weeks) ended April 2, 1994
increased $5,211,000 (18%) to $33,688,000 from $28,477,000 in the prior year (53
weeks) ended April 3, 1993. Sales of all printers and printer components
accounted for 71% ($23,939,000) and 82% ($23,391,000) of total sales in fiscal
1994 and fiscal 1993, respectively. Terminal devices and customer displays
represented 27% ($9,182,000) and 6% ($1,767,000) of total sales in fiscal 1994
(the first full year including Ultimate) and fiscal 1993 (which included less
than one fiscal quarter of Ultimate), respectively. Solenoid sales were less
than 2% of fiscal 1994 revenues versus 6% in fiscal 1993; the product line was
sold effective October 1, 1993. The year-over-year increase in net sales
resulting from the inclusion of Ultimate's operations for a full year was
approximately $7,400,000. The prior year includes the results of Ultimate only
from the date of acquisition, January 20, 1993. A substantial increase in the
shipment of POS printers and kiosk printers was offset by reduced shipments of
certain gaming and wagering printers, including sales of video lottery terminal
("VLT") printers which were significant in the prior year.
The Company's consolidated gross profit margin increased $3,214,000
(36%) to $12,081,000 from $8,867,000 in the prior year. The consolidated gross
profit margin increased to 36% of sales from 31% of sales in the prior year.
The improved gross margin reflects the contribution of Ultimate, the favorable
sales mix of products in the POS and financial services sectors, and, to a
lesser degree, the reduced sales of the low margin solenoid products.
Consolidated engineering and design and product development costs
increased $586,000 (42%) to $1,977,000 from $1,391,000 in the prior year period.
The increase reflects the inclusion of these costs for Ultimate, as well as the
cost of developing new products. In particular, the Company invested in the
development of specialty printers and paper handling systems exclusively for
GTECH Holdings Corporation ("GTECH"), a major supplier to the lottery industry.
Consolidated selling, administrative and general expenses increased
$3,027,000 (60%) to $8,031,000 from $5,004,000 in the prior year. The increase
in selling expenses is the result of the inclusion of these expenses for
Ultimate and of the increased staff to support a greater selling effort in both
the United States and European markets. The increase in general and
administrative expenses is the result of the inclusion of such expenses for
Ultimate, as well as the increase in the amortization of the excess of cost over
fair value of net assets acquired and financing costs associated with the
acquisition of Ultimate. The Company's corporate expense increased 59% from the
prior year due to higher personnel costs, outside professional service costs,
the amortization of acquisition and financing costs and a special provision for
litigation matters totaling $280,000.
Consolidated operating profit for the 1994 fiscal year decreased $399,000
(16%) to $2,073,000 from $2,472,000 in the prior year. Consolidated operating
profit as a percentage of revenue decreased to 7% from 9% in the prior year. The
additional operating profit generated by Ultimate was offset by a decrease in
operating profit from the Company's other product lines. Such decrease in
operating results was due principally to increased engineering and sales
expenses discussed above, and the increased amortization of the excess of cost
over fair value of net assets acquired.
The Company's Magnetec subsidiary operated in a "turn-around" mode during
1994. The Company believes that Magnetec has made significant progress toward
achieving acceptable levels of sales and operating profits.
11
<PAGE> 12
Net interest expenses increased $294,000 (41%) to $1,020,000 from
$726,000 in the prior year. The increase in interest expense was due to the
higher average level of long term indebtedness resulting from the issuance, in
conjunction with the acquisition of Ultimate, of the 10.5% Senior Subordinated
Convertible Debentures due December 31, 1997 (the "10.5% Debentures") and the 8%
Subordinated Convertible Term Promissory Notes due 1997 (the "8% Notes").
Other non-operating income for the 1994 fiscal year includes a gain of
$175,000 on the sale of the Company's general solenoid product line. Proceeds of
the sale were cash and common stock of the purchaser. Other non-operating
expenses for the 1993 fiscal year include a provision for the estimated loss of
$132,000 on the disposal of non-productive property and estimated clean-up costs
of $270,000 associated with certain environmental matters.
The 1994 fiscal year provision for income taxes is a net benefit of
$878,000 representing alternative minimum federal income taxes, state and local
income taxes, the reversal of an excess income tax accrual relating to a prior
year tax matter of $300,000 and a fourth quarter adjustment to the valuation
allowance of $1,287,000 to recognize the benefit of certain deferred tax assets
in accordance with FAS 109.
Net income for fiscal year 1994 was $1,613,000 (or $0.44 per share) as
compared to $1,368,000 (or $0.46 per share) in the prior year. The average
number of common and common equivalent shares outstanding increased to 3,661,278
shares from 3,005,028 shares in the prior year due primarily to the conversion
of various debt securities to common stock and the exercise of warrants and
options.
(iii) LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at April 1, 1995 was $5,963,000 compared
with $7,722,000 at April 2, 1994. The current ratio was 1.4 to 1.0 at April 1,
1995 compared with 2.3 to 1.0 at April 2, 1994. The decrease in working capital
and current ratio are due primarily to the additional debt classified as short
term, issued in connection with the acquisition of Cash Bases.
On June 17, 1994, the Company replaced a prior line of credit with an
agreement (the "Fleet Credit Agreement") with Fleet Bank N.A., which provides
the Company with a Working Capital Facility of $4,625,000 (increased on June 22,
1995 from an original amount of $4,000,000) and an acquisition facility of
$3,500,000. The Working Capital Facility bears interest payable monthly at a
rate one percentage point above Fleet's prime rate and bears a non-utilization
fee. Although the Working Capital Facility is scheduled to expire on August 31,
1995, the Company expects to renew it for a period of at least one year. The
Acquisition Facility is for a term of three years, bears interest payable
monthly at a rate 1.5 percentage points above Fleet's prime rate and requires
principal to be paid in quarterly installments.
The Working Capital Facility provides critical capital for the Company.
If for any reason this or comparable financing is not available to the Company,
it would have an adverse effect on the Company and its ability to conduct its
operations as previously conducted. The Company is required to comply with
certain financial covenants, including minimum tangible capital base, minimum
working capital, maximum leverage ratios and minimum interest coverage ratios,
otherwise the lender may withdraw its commitment. The Company was in full
compliance with these covenants for the period ended April 1, 1995 and expects
to be in full compliance with these covenants during fiscal 1996. The Company
has been in compliance with the covenants in its loan agreements for the past
three years, other than four instances when it obtained waivers under its
previous lender's loan agreement: September and December 1992 waivers of the
covenants regarding maximum inventory and February and May 1993 waivers of the
covenant regarding quick ratio.
On June 20, 1994 the Company completed the acquisition of Cash Bases. The
purchase price of pounds sterling 3,500,000 (approximately $5.330 million) was
paid pounds sterling 3,067,000 (approximately $4.672 million) in cash and pounds
sterling 433,000 (approximately
12
<PAGE> 13
$658,000) by delivery of 96,788 shares of Tridex common stock, of which 72,647
shares were placed in escrow to secure the accuracy of certain representations
and warranties made by the sellers. The escrowed shares were released as
scheduled, since the Company made no claims against the sellers for breach of
representations and warranties prior to the scheduled release date. In
addition, the Company guaranteed the sellers that the sales price of all such
shares sold by sellers would not be less than the average market price of
Tridex common stock at the time of the acquisition ($6.80 per share). The
Company's liability must be settled in U.K. pounds sterling when the shares are
sold. During fiscal 1995, the Company reimbursed the sellers an aggregate of
$91,000 on the sale of 68,846 shares of common stock including losses on
foreign exchange. Based on the current market price for the Company's common
stock and current foreign exchange rates, the Company's potential liability for
27,942 shares recently released from escrow would approximate $50,000 if the
subject shares are sold by the sellers. The Company financed the cash portion
of the purchase price through the Fleet Credit Agreement.
During the 1995 fiscal year, the Company's operating cash needs were
satisfied with cash generated from operations and borrowings under its credit
facilities. At April 1, 1995, the Company had no material commitments for
capital expenditures and had availability of $1,600,000 remaining under the
Working Capital Facility. During the first quarter of fiscal 1996, the Company
relocated Magnetec to a new facility and experienced a temporary decrease in
distributor demand for POS printers. As a result, cash flow from operations was
adversely affected. In order to meet anticipated cash requirements during the
first and second quarters of fiscal 1996, the Company and Fleet amended the
Working Capital Facility to increase its borrowing limit to $4,625,000. In
addition, to assure sufficient working capital availability, several senior
executives agreed to defer payment of incentive bonuses totaling approximately
$380,000 from June until early in the second quarter. The Company expects that
funds generated from operations, supplemented by borrowings under the Working
Capital Facility, will be sufficient to satisfy its cash needs for working
capital, scheduled debt retirements and capital expenditures, including tooling
for new products during fiscal 1996.
Over the long term, the Company believes that funds generated from
operations and borrowings under the Working Capital Facility, if necessary, will
continue to satisfy its working capital needs, support a certain level of growth
and meet scheduled debt retirements. Nevertheless, to facilitate anticipated
growth and provide additional liquidity, as well as take advantage of the
current favorable financial market, the Company is reviewing refinancing
alternatives regarding its short and long term debt.
13
<PAGE> 14
(B) IMPACT OF INFLATION
Tridex believes that its business has not been affected to a significant
degree by inflationary trends because of the low rate of inflation during its
past three fiscal years and the increased efficiencies in its manufacturing
process. Tridex believes that any increase in cost due to inflation can be
recovered by price increases or offset by productivity improvements.
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Page
Number
------
<S> <C> <C>
Report of Independent Accountants 15
Tridex Corporation and Subsidiaries consolidated financial statements:
Consolidated balance sheets as of April 1, 1995 and April 2, 1994. 16
Consolidated statements of operations for the years ended
April 1, 1995, April 2, 1994, and April 3, 1993. 18
Consolidated statements of shareholders' equity for the years ended
April 1, 1995, April 2, 1994 and April 3, 1993. 19
Consolidated statements of cash flows for the years ended
April 1, 1995, April 2, 1994 and April 3, 1993. 20
Notes to consolidated financial statements. 21
</TABLE>
Financial Statement Schedules - All schedules are omitted since the
required information is either (a) not present or not present in
amounts sufficient to require submission of the schedule or (b)
included in the financial statements or notes thereto.
14
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
May 5, 1995
To the Board of Directors and Shareholders
of Tridex Corporation
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the
financial position of Tridex Corporation and its subsidiaries at April
1, 1995 and April 2, 1994, and the results of their operations and
their cash flows for each of the three years in the period ended April
1, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
As discussed in Note 7 to the financial statements, the Company is
involved in an environmental remediation matter. The ultimate outcome
of the matter cannot presently be determined. A provision of the
estimated liability has been provided in the accompanying financial
statements.
Price Waterhouse LLP
Hartford, Connecticut
15
<PAGE> 16
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995 AND APRIL 2, 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 347,000 $ 39,000
Receivables (Note 3) 9,635,000 6,842,000
Inventories (Note 4) 8,238,000 5,515,000
Prepaid expenses 601,000 355,000
Deferred tax assets (Note 9) 742,000 1,020,000
----------- -----------
Total current assets 19,563,000 13,771,000
----------- -----------
Plant and equipment:
Machinery, furniture and equipment 10,854,000 7,187,000
Leasehold improvements 360,000 503,000
----------- -----------
11,214,000 7,690,000
Less accumulated depreciation 6,791,000 5,480,000
----------- -----------
4,423,000 2,210,000
----------- -----------
Excess of cost over fair value of net assets acquired 10,260,000 7,136,000
Other assets 1,977,000 1,205,000
Loans receivable, officers 139,000 139,000
----------- -----------
$36,362,000 $24,461,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 17
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995 AND APRIL 2, 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Current liablities:
Bank loan payable (Note 6) $ 2,400,000 $
Current portion of long term debt (Note 6) 2,346,000 689,000
Accounts payable 4,877,000 3,255,000
Accrued liabilities (Note 5) 3,343,000 2,043,000
Income taxes payable 634,000 62,000
----------- -----------
Total current liabilities 13,600,000 6,049,000
----------- -----------
Long term debt, less current portion (Note 6) 6,185,000 5,307,000
----------- -----------
Commitments and contingencies (Note 7)
Shareholders' equity (Notes 2 and 6):
Preferred stock, $1 par value;
authorized 2,000,000 shares;
issued none
Common stock, no par value, stated value $.25;
authorized 10,000,000 shares;
issued 3,789,682 and 3,643,454 shares 950,000 913,000
Additional paid-in capital 21,853,000 21,228,000
Accumulated deficit (5,612,000) (8,298,000)
Cumulative translation adjustment 124,000
Common stock held in
treasury, 109,996 shares, at cost (738,000) (738,000)
------------ -----------
16,577,000 13,105,000
------------ -----------
$36,362,000 $24,461,000
============ ===========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 18
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED
APRIL 1, 1995, APRIL 2, 1994 AND APRIL 3, 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<C> <C> <C>
Net sales $54,677,000 $33,688,000 $28,477,000
----------- ----------- -----------
Operating costs and expenses:
Cost of sales 36,428,000 21,607,000 19,610,000
Engineering, design and product
development costs 2,359,000 1,977,000 1,391,000
Selling, administrative and general expenses 11,350,000 8,031,000 5,004,000
----------- ----------- -----------
50,137,000 31,615,000 26,005,000
----------- ----------- -----------
Operating profit 4,540,000 2,073,000 2,472,000
----------- ----------- -----------
Other charges:
Interest, net (Note 6) 1,171,000 1,020,000 726,000
Other, net 24,000 318,000 177,000
----------- ----------- -----------
1,195,000 1,338,000 903,000
----------- ----------- -----------
Profit before income taxes 3,345,000 735,000 1,569,000
Income tax provision (benefit) (Note 9) 659,000 (878,000) 201,000
----------- ----------- -----------
Net income $ 2,686,000 $ 1,613,000 $ 1,368,000
=========== =========== ===========
Earnings per common and
common equivalent shares: $ 0.69 $ 0.44 $ 0.46
=========== =========== ===========
Average common and common
equivalent shares outstanding: 3,867,827 3,661,278 3,005,028
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 19
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED
APRIL 1, 1995, APRIL 2, 1994 AND APRIL 3, 1993
<TABLE>
<CAPTION>
Common stock
Common stock held in treasury Additional Cumulative
--------------------- ------------------ paid-in Accumulated translation
Shares Amount Shares Amount capital deficit adjustment
--------- -------- ------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 28, 1992 2,420,258 $608,000 109,996 $738,000 $14,811,000 $(11,279,000)
Conversion of debentures 771,417 193,000 3,721,000
Warrants issued 138,000
Issuance of Interest Shares 25,992 6,000 108,000
Exercise of stock options 52,515 13,000 37,000
Net income 1,368,000
--------- -------- ------- -------- ----------- ------------ --------
Balance, April 3, 1993 3,270,182 820,000 109,996 738,000 18,815,000 (9,911,000)
Conversion of notes and debentures 261,571 66,000 2,103,000
Issuance of Interest Shares 1,994 1,000 17,000
Exercise of warrants and stock options 109,707 26,000 293,000
Net income 1,613,000
--------- -------- ------- -------- ----------- ------------ --------
Balance, April 2, 1994 3,643,454 913,000 109,996 738,000 21,228,000 (8,298,000)
Issuance of acquisition shares 96,788 24,000 589,000
Exercise of warrants and stock options 49,440 13,000 36,000
Translation adjustments $124,000
Net Income 2,686,000
--------- -------- ------- -------- ----------- ------------ --------
Balance, April 1, 1995 3,789,682 $950,000 109,996 $738,000 $21,853,000 $ (5,612,000) $124,000
========= ======== ======= ======== =========== ============ ========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 20
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED
APRIL 1, 1995, APRIL 2, 1994 AND APRIL 3, 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,686,000 $ 1,613,000 $ 1,368,000
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization 2,264,000 1,796,000 1,086,000
Deferred income taxes (522,000) (1,020,000)
Loss (gain) on disposal of assets (5,000) (166,000) 27,000
Changes in operating assets and liabilities:
Receivables (683,000) (2,065,000) (1,209,000)
Inventory and prepaid expenses (1,728,000) 602,000 (1,810,000)
Other assets (239,000) (12,000) (463,000)
Accounts payable, accrued liabilities and
income taxes payable 1,390,000 69,000 1,036,000
Other 36,000 132,000
----------- ----------- -----------
Net cash provided by operating activities 3,199,000 949,000 35,000
----------- ----------- -----------
Cash flows from investing activities:
Purchases of plant and equipment (2,485,000) (950,000) (1,056,000)
Proceeds from sale of assets 121,000 608,000
Acquired net assets and acquisition costs, net of cash (5,576,000) (5,507,000)
Other 15,000 139,000
----------- ----------- -----------
Net cash used in investing activities (7,925,000) (203,000) (6,563,000)
----------- ----------- -----------
Cash flows from financing activities:
Net change in borrowings under line of credit 2,400,000
Net proceeds from issuance of long-term debt 3,606,000 6,358,000
Principal payments on long term borrowings (1,666,000) (1,294,000) (680,000)
Issuance of capital stock and warrants 614,000 138,000
Proceeds from exercise of stock options 48,000 319,000 50,000
Other 24,000
----------- ----------- -----------
Net cash provided by (used in) financing activities 5,026,000 (975,000) 5,866,000
----------- ----------- -----------
Effect of exchange rate changes on cash 8,000
Increase (decrease) in cash and cash equivalents 308,000 (229,000) (662,000)
Cash and cash equivalents at beginning of year 39,000 268,000 930,000
----------- ----------- -----------
Cash and cash equivalents at end of year $ 347,000 $ 39,000 $ 268,000
----------- ----------- -----------
Supplemental cash flow information:
Interest paid $ 1,018,000 $ 1,064,000 $ 760,000
Income taxes paid 1,092,000 310,000 176,000
Supplemental non-cash investing and financing activities:
Conversion of convertible debentures to common stock $ 2,169,000 $ 3,914,000
Acquisitions:
Fair market value of assets acquired,
excluding cash acquired $ 3,957,000 $ 1,045,000
Goodwill 3,985,000 4,962,000
Debt incurred (4,800,000) (6,797,000)
Liabilities assumed (2,366,000) (500,000)
Issuance of warrants (614,000) (138,000)
----------- ------------
Net cash used (received) $ 162,000 $(1,428,000)
=========== ============
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 21
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Tridex Corporation (the "Company"), through its wholly-owned subsidiaries
Magnetec Corporation ("Magnetec"), Ithaca Peripherals Incorporated ("Ithaca"),
Ultimate Technology Corporation ("Ultimate") and Cash Bases GB Limited ("Cash
Bases"), (collectively the "Company"), operates in one industry segment,
computer peripheral equipment. Operations in this segment include the design,
development, manufacture and sale of specialty dot matrix impact printers,
thermal printers, printer mechanisms, and optical mark-sense readers for OEM
applications, and dot matrix impact printers, customer displays, terminal
devices and cash drawers for POS applications.
The financial position and results of operations of the Company's foreign
subsidiaries are measured using local currency as the functional currency.
Assets and liabilities of such subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
weighted average exchange rates. The aggregate effect of translation adjustments
so calculated is included as a separate component of shareholders' equity.
Transaction gains and losses are included in other income.
In the 1995 and 1993 fiscal years, no one customer accounted for more
than 10% of consolidated net sales. In the 1994 fiscal year, one customer
accounted for 10% of consolidated net sales.
Principles of consolidation: The accompanying consolidated financial
statements include the accounts of the Company after elimination of all
material intercompany accounts and transactions. All subsidiaries are
wholly-owned.
Fiscal year: The Company's fiscal year ends on the Saturday closest to
March 31. The fiscal years ended April 1, 1995 and April 2, 1994 consisted of 52
weeks. The fiscal year ended April 3, 1993 consisted of 53 weeks.
Cash and cash equivalents: Cash equivalents consist primarily of
certificates of deposit with maturities of less than ninety days and are carried
at cost which approximates market value.
Inventories: Inventories are stated at the lower of cost (principally
first-in, first-out) or market.
Plant and equipment and depreciation: Plant and equipment and leasehold
improvements are stated at cost. Depreciation is provided for primarily by the
straight-line method over the estimated useful lives. The estimated useful life
of machinery, furniture and equipment is five to ten years. Leasehold
improvements are amortized over the shorter of the term of the lease or the
useful life of the asset.
Excess of cost over fair value of net assets acquired: The excess of cost
over fair value of net assets acquired (goodwill) resulted from the acquisitions
of Cash Bases in fiscal year 1995, Ultimate in 1993 and Ithaca in 1991. The
amount applicable to these acquisitions totaled $10,260,000 at April 1, 1995,
and is being amortized between ten and twenty years. Accumulated amortization of
the excess of cost over fair value of net assets acquired was $2,238,000 and
$1,408,000 at April 1, 1995 and April 2, 1994, respectively. The Company
periodically reviews goodwill to assess recoverability based upon expectations
of nondiscounted cash flows from operations for each subsidiary having a
material goodwill balance. The Company believes that no material impairment of
goodwill exists at April 1, 1995 or April 2, 1994.
Other assets: Included in other assets are deferred tax assets of $794,000
(See Note 9) and the net book value of real estate held for sale in the amount
of $238,000 and shares of common stock of the purchaser of the Company's general
solenoid product line. Also included in other assets are the following: bond
issue costs (see Note 6) which are being amortized on a straight line method
over the term of the bond; the cost of patents acquired and other related
acquisition costs which are being amortized on a straight line method over a
seven and five year life, respectively. Accumulated amortization of other assets
was $637,000 and $624,000 at April 1, 1995 and April 2, 1994, respectively.
Revenue recognition: Sales are recognized when the product is shipped.
Income taxes: Income tax expense is based on estimated taxes payable or
refundable on a tax return basis for the current year and changes in the amount
of deferred tax assets and liabilities during the year. Deferred income taxes
are provided for revenue and expenses which are recognized in different periods
for income tax and financial statement purposes. Effective April 4, 1993, the
Company adopted FAS 109 "Accounting for Income Taxes," which mandates the
liability method for computing deferred income taxes. The objective of the
liability method is to recognize the amount of current and deferred taxes
payable or refundable at the financial statement date resulting from all events
that have been recognized in the financial statement based upon the provisions
of enacted tax laws. See Note 9 for a further discussion.
Earnings per share: Primary earnings per common and common equivalent share
are based on the weighted average number of common shares outstanding during the
period, including stock options and warrants. Fully diluted earnings per common
share assumes conversion of dilutive securities, when the result is dilutive.
21
<PAGE> 22
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. BUSINESS COMBINATIONS:
On June 20, 1994 the Company completed the acquisition of Cash Bases, of
Newhaven, England. The purchase price of pounds sterling 3,500,000
(approximately $5.330 million) was paid pounds sterling 3,067,000 (approximately
$4.672 million) in cash and pounds sterling 433,000 (approximately $658,000) by
delivery of 96,788 shares of Tridex common stock, of which 72,647 shares were
placed in escrow to secure the accuracy of certain representations and
warranties made by the sellers. The escrowed shares were released as scheduled
since the Company made no claim against the sellers for breach of
representations and warranties prior to a scheduled release date. In addition,
the Company guaranteed the sellers that the sales price of all such shares sold
by sellers will not be less than the average market price of Tridex common
stock at the time of the acquisition ($6.80 per share). The Company's potential
liability must be settled in U.K. pounds sterling when the shares are sold.
During fiscal 1995, the Company reimbursed the sellers an aggregate of $91,000
on the sale of 68,846 shares of common stock including losses on foreign
exchange. Based upon the current market price for the Company's common stock
and current foreign exchange rates, the Company's potential liability for the
remaining 27,942 shares to be released from escrow would approximate $50,000.
The Company financed the cash portion of the purchase price through the Fleet
Credit Agreement discussed in Note 6.
On January 20, 1993, the Company purchased all of the common stock of
Ultimate, a privately held New York corporation. The total purchase price of
$7,160,000 was payable in cash and debt. The selling shareholders received
$3,000,000 principal amount (before discount of $700,000 for imputed interest)
of 8% Subordinated Convertible Term Promissory Notes (the "8% Notes"). The
balance was paid in cash from the proceeds of the sale of $4,200,000 principal
amount 10.5% Senior Subordinated Convertible Debentures due December 31, 1997
(the "10.5% Debentures") and associated Warrants to purchase 42,000 shares (the
"Warrants") of Tridex common stock. The 8% Notes, 10.5% Debentures and Warrants
are discussed further in Note 6.
The acquisitions have been accounted for using the purchase method of
accounting. The acquired company's assets and liabilities have been recorded in
the Company's financial statements at their estimated fair values at the
acquisition date. The Consolidated Statements of Operations include the results
of operations of the acquired company from the acquisition date.
The following pro forma data (unaudited) reflect the fiscal 1995
acquisition of Cash Bases as if the acquisition had occurred at the beginning of
fiscal 1995 and fiscal 1994 and the fiscal 1993 acquisition of Ultimate as if
the acquisition had occurred at the beginning of fiscal 1993; such data does not
purport to be indicative of what would have occurred had these transactions been
made on that date:
<TABLE>
<CAPTION>
For the Fiscal Years Ended
---------------------------------------------------
April 1, 1995 April 2, 1994 April 3, 1993
------------- ------------- -------------
(In thousands except per share amounts)
<S> <C> <C> <C>
Revenue $57,302 $43,321 $34,618
Operating profit $ 4,747 $ 3,274 $ 3,289
Net income $ 2,749 $ 1,922 $ 1,370
Earnings per common
and common equivalent share $ 0.70 $ 0.51 $ 0.46
</TABLE>
22
<PAGE> 23
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. RECEIVABLES:
Receivables are net of the allowance for doubtful accounts. The
reconciliation of the allowance for doubtful accounts is as follows:
<TABLE>
<CAPTION>
For the Fiscal Years Ended
-------------------------------------------------------------
April 1, 1995 April 2, 1994 April 3, 1993
------------- ------------- -------------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of year $ 85 $ 44 $ 43
Provision for doubtful accounts 74 85 16
Accounts written off, net of recoveries (117) (44) (15)
--------- -------- --------
Balance at end of year $ 42 $ 85 $ 44
========= ======== ========
</TABLE>
4. INVENTORIES:
The components of inventories are:
<TABLE>
<CAPTION>
April 1, 1995 April 2, 1994
------------- -------------
(In thousands)
<S> <C> <C>
Raw materials and component parts $6,232 $4,209
Work-in-process 869 582
Finished goods 1,137 724
------ ------
$8,238 $5,515
====== ======
</TABLE>
5. ACCRUED LIABILITIES:
The components of accrued liabilities are:
<TABLE>
<CAPTION>
April 1, 1995 April 2, 1994
------------- -------------
(In thousands)
<S> <C> <C>
Payroll, fringe benefits and commissions $1,803 $ 840
Taxes other than income taxes 73 64
Interest 25 30
Customer advances, deferred revenue and warranty 346 263
Environmental matters 333 310
Professional services and insurance 199 111
Other 564 425
------ ------
$3,343 $2,043
====== ======
</TABLE>
23
<PAGE> 24
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. BANK CREDIT AGREEMENT AND LONG TERM DEBT:
On June 17, 1994, the Company and Fleet Bank, N.A. ("Fleet"), entered
into an agreement (the "Fleet Credit Agreement") to provide the Company with
$4,000,000 working capital revolving credit facility (the "Working Capital
Facility") and a $3,500,000 acquisition term loan facility (the "Acquisition
Facility"). (See Note 13, Events Subsequent to April 1, 1995 (unaudited)). The
Working Capital Facility, included on the accompanying balance sheet as "Bank
loan payable", expires on August 31, 1995, bears interest payable monthly at a
rate one percentage point above Fleet's prime rate or 10.0% at April 1, 1995,
and bears a non-utilization fee. Availability under the Working Capital Facility
is limited to 80% of the Company's eligible accounts receivable. The Acquisition
Facility, included in the accompanying table as "Term loan payable", which was
used to fund the acquisition of Cash Bases discussed in Note 2, is for a term
of three years, bears interest payable monthly at a rate 1.5 percentage points
above Fleet's prime rate, or 10.5% on April 1, 1995, and requires principal to
be paid in quarterly installments. The Fleet Credit Agreement is secured by a
first priority security interest in certain assets, imposes certain covenants
(including minimum tangible capital base, minimum working capital, maximum
leverage ratios and minimum interest coverage ratios) and restricts the amount
available for payment in cash dividends and capital stock distributions.
The components of long term debt are:
<TABLE>
<CAPTION>
April 1, 1995 April 2, 1994
------------- -------------
(In thousands)
<S> <C> <C>
Term loan payable $ 2,625
10.5% Senior Subordinated Convertible Debentures
due 1997, net of discount of $22 and $30 3,448 $ 3,440
8% Subordinated Convertible Term Promissory
Notes due 1997, net of discount $308 and $487 1,742 1,938
Other 716 618
---------- ---------
8,531 5,996
Current portion 2,346 689
---------- ---------
$ 6,185 $ 5,307
========== =========
</TABLE>
The 10.5% Debentures were privately placed in 1993 in conjunction with the
acquisition of Ultimate. Interest is payable quarterly on March 15, June 15,
September 15 and December 15. The Company is required to make a sinking fund
payment of $740,000 on December 15, 1996. The 10.5% Debentures are convertible
into Tridex common stock at $9.00 per share. As of April 1, 1995, the Company
has reserved 385,555 shares of common stock pursuant to the conversion feature.
The indenture restricts the amount available for the payment of cash dividends
and capital stock distributions. In conjunction with the issuance of the 10.5%
Debentures, the Company issued to each debenture holder detachable warrants to
purchase common stock of Tridex Corporation (the "Warrants") at a rate of 10
shares per $1,000 principal amount of debentures. The Warrants are exercisable
for a period of five years at $9.25 per share. As of April 1, 1995, the Company
had reserved 45,500 shares of common stock for the exercise of the Warrants. The
estimated fair market value of the Warrants has been recorded as a discount to
the principal amount of the outstanding debentures and is being amortized over
the term of the debt. Costs incurred in connection with the issuance of the
10.5% Debentures of approximately $448,000 are recorded in other assets and are
being amortized over the term of the debentures.
The 8% Notes were issued in conjunction with the acquisition of Ultimate
from its former shareholders. The 8% Notes are payable in quarterly installments
over five years and are convertible into Tridex common stock at $12.00 per
share. As of April 1, 1995, the Company had reserved 170,833 shares of common
stock pursuant to this conversion feature. The discount on the 8% Notes
represents imputed interest at a rate of approximately 18%. The discount,
recorded as a reduction of the purchase price of Ultimate, is being amortized
over the life of the notes using the interest rate method.
Other long term debt consists of a mortgage note payable and an equipment
financing note payable. The mortgage note payable of $319,000 at April 1, 1995
and $361,000 at April 2, 1994 is collateralized by certain land and buildings
with a net book value of $238,000 at April 1, 1995. The note is payable at the
rate of $6,535 per month, including interest at 12.0% and has a final payment of
approximately $300,000 due in October 1995. The equipment note payable is
collateralized by the underlying equipment.
24
<PAGE> 25
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. BANK CREDIT AGREEMENT AND LONG TERM DEBT: (CONTINUED)
Maturities of long-term debt, including sinking fund requirements and
retirement of the 10.5% Debentures and 8% Notes are as follows: $2,346,000 in
1996, $3,138,000 in 1997 and $3,377,000 in 1998. Interest expense is stated net
of interest income of $33,000 in 1995, $11,000 in 1994 and $14,000 in 1993.
7. COMMITMENTS AND CONTINGENCIES:
(A) LEASE OBLIGATIONS:
At April 1, 1995, the Company was lessee on long term operating leases
for equipment and real property. The terms of certain leases provide for
payment of minimum rent and real estate taxes. Rent expense amounted to
approximately $997,000 in 1995, $676,000 in 1994 and $535,000 in 1993.
Minimum aggregate rental payments required under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year as of
April 1, 1995 are as follows: $966,000 in 1996, $983,000 in 1997; $909,000
in 1998; $874,000 in 1999; $856,000 in 2000 and $2,695,000 thereafter.
(B) ENVIRONMENTAL MATTERS:
The Company is involved in one significant environmental matter:
Allu Realty Trust ("Allu"), a Massachusetts business trust, with
transferable shares, all of which are owned by Tridex, is the former owner
of land improved with a manufacturing-warehouse building located at 100
Foley Street, Somerville, Massachusetts (the "Site"). Although Allu has
sold the property to 100 Foley Street Incorporated ("Foley"), an unrelated
entity, Allu and Tridex remain responsible for certain environmental
problems associated with the Site.
During July 1984, Allu and Tridex disclosed to the Massachusetts
Department of the Attorney General the existence of chromium, oil and
grease at the Site. As a result, the Environmental Protection Division of
the Department of the Attorney General and the Massachusetts Department of
Environmental Protection ("MDEP") conducted an investigation of the Site.
At MDEP's request, the Company retained an environmental engineering firm,
which completed a Phase II investigation study of the Site. The Company has
conducted further studies to characterize and assess the Site more
specifically and to determine appropriate long term clean-up measures. In
January 1993, the Company entered into an agreement with Foley pursuant to
which Tridex and Foley agreed to pay 75% and 25%, respectively, of the
costs incurred after January 1, 1992 in connection with the investigation
and remediation of the Site (the "Site Participation Agreement"). The Site
Participation Agreement also provides that, to the extent there are
available proceeds from the sale of the Site or, if not sold, from the
operation of the Site after January 1, 1997, Tridex shall be reimbursed for
all or a portion of the $260,000 it expended in connection with the Site
prior to January 1, 1992. Under the terms of an Escrow Agreement entered
into by Tridex and Foley simultaneously with the Site Participation
Agreement (the "Escrow Agreement"), Tridex and Foley each placed $125,000
into escrow to fund the payment of their obligations under the Site
Participation Agreement. Under the terms of the Escrow Agreement, Tridex
must place an additional $100,000 in escrow at the request of the Escrow
Agent and thereafter the amount of any additional funds required to be
placed in escrow by the Escrow Agent shall be contributed 75% by Tridex and
25% by Foley. Approximately $2,000 is being held in escrow as of April 1,
1995, all of which was contributed by Foley.
As of April 1, 1995, the Company had spent approximately $579,000 in
connection with the Site. Of this amount, approximately $424,000 relates to
investigation or remediation costs incurred at the Site. Although it is
difficult to distinguish between amounts spent for investigation and
remediation, the Company estimates that approximately $351,000 has been
spent in connection with investigation and approximately $73,000 has been
spent in connection with remediation of the Site. The Company estimates
that approximately $100,000 to $300,000 will be spent in connection with
the Site during fiscal 1996, including expenditures from the escrow
account. Based upon preliminary estimates provided by a consulting
environmental engineer and based upon the likely future uses of the
property, as of April 1, 1995, the Company had accrued $333,000 for the
estimated liability associated with the Site which represents currently
estimated minimum cost of remediation, after considering the cost sharing
arrangement discussed above. Accordingly, although no assurances can be
given regarding the materiality of the total costs which may be incurred,
the Company does not believe at this time that the remediation of the Site
is reasonably likely to have a material effect on the Company's financial
condition, results of operations or liquidity. The Company believes that
implementation of clean-up measures will commence, and may be completed, in
fiscal 1996, in which case the entire amount of remediation costs to be
borne by the Company would be incurred and paid in fiscal 1996.
25
<PAGE> 26
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
(B) ENVIRONMENTAL MATTERS: (CONTINUED)
The Company expects that, as in the past, funds being held in escrow,
cash from operations and the Company's credit facilities will be sufficient
to pay the costs of remediation without a material effect on the Company's
operations.
The Company has also been notified by an adjacent property owner,
Cooper Industries ("Cooper"), that certain petroleum products that may have
migrated from the Site have been detected in a monitoring well located on
Cooper's property. The Company and Foley are investigating possible oil
contamination along the border between the Site and the property owned by
Cooper.
(C) LEGAL PROCEEDINGS:
In November, 1990, Tridex filed suit against a former landlord, Gorham
Island Associates ("GIA") seeking monetary damages and rescission of a
lease covering 5,700 square feet of office space in Westport, Connecticut
(the "Lease"). In January, 1991, GIA filed suit against Tridex seeking
payment of all amounts due under the Lease for the balance of the Lease
term (aggregating approximately $1,021,000) and other damages. The Company,
and its legal counsel in the matter, believe GIA's suit is without merit
and the Company does not believe that the outcome is likely to have a
material effect on the Company's financial condition, operating results or
liquidity. Tridex intends to prosecute its claims against GIA vigorously
and defend the suit brought by GIA. The trial commenced in April, 1994. The
outcome is not expected before the third quarter of fiscal year 1996.
(D) CONSULTING SERVICES AGREEMENT:
The Company has a Consulting Services Agreement with one of its
corporate directors and significant shareholder. Under the terms of this
agreement, the consulting services will be provided through April 1, 1997,
for $75,000 per annum.
8. STOCK OPTIONS AND WARRANTS:
1989 LONG TERM INCENTIVE PLAN
The 1989 Long Term Incentive Plan (the "Plan") permits stock-based
incentive compensation in the form of: (a) stock options, (b) stock appreciation
rights, (c) restricted stock, (d) deferred stock, (e) stock purchase rights and
(f) other stock-based compensation. Pursuant to the Plan, up to 1,250,000 shares
of common stock may be distributed to officers and key employees of the Company.
Options granted are at prices equal to 100% of the fair market value of the
common stock at the date of grant. No charge against income was required with
respect to options. Options granted are exercisable at the discretion of the
Stock Option Committee, but in no event shall the period be for more than ten
years. Ninety days after an employee's termination, the outstanding options are
canceled. At April 1, 1995 the Company had reserved 1,140,595 shares of common
stock for issuance upon the exercise of options granted under the Plan. The
following table summarizes the activity of the Plan for the past three years.
26
<PAGE> 27
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. STOCK OPTIONS AND WARRANTS: (CONTINUED)
<TABLE>
<CAPTION>
Options
Exercisable
Shares Under Option Price Per Share at Year End
------------------- --------------- -----------
<S> <C> <C> <C>
Options outstanding 3/28/92 343,050 $0.750 - $ 4.375 99,845
Options granted 209,500 $4.000 - $ 9.075 ===========
Options exercised (52,515) $0.750 - $ 1.875
Options canceled (15,800) $0.750 - $ 5.250
-------------------
Options outstanding 4/3/93 484,235 116,515
===========
Options granted 119,000 $7.250 - $10.750
Options exercised (29,000) $0.750 - $ 5.250
Options canceled (60,380) $0.750 - $ 9.000
-------------------
Options outstanding 4/2/94 513,855 $0.750 - $10.750 173,905
===========
Options granted 127,150 $6.625 - $ 8.000
Options exercised (14,440) $0.750 - $ 5.250
Options canceled (14,100) $8.750 - $10.750
-------------------
Options outstanding 4/1/95 612,465 $0.750 - $10.750 255,295
=================== ===========
</TABLE>
WARRANTS:
As of April 1, 1995, the Company had outstanding stock purchase warrants
for an aggregate of 283,832 shares of common stock. Stock purchase warrants for
165,000 shares expiring five years from date of grant are held by directors of
the Company, for 73,332 shares expiring December 31, 1997 are held by Value
Investing Partners, Inc., placement agent for the Company for the 10.5%
Debentures, and for 45,500 shares expiring December 31, 1997 are held by
purchasers of the 10.5% Debentures. The following table summarizes the activity
of outstanding warrants for the past three years.
<TABLE>
<CAPTION>
Warrants
Exercisable
Shares Under Warrant Price Per Share at Year End
-------------------- --------------- -----------
<S> <C> <C> <C>
Outstanding 3/28/92 135,707 $0.875 - $4.250 135,707
=======
Granted to directors 75,000 $5.250 - $9.250
Issued to debenture holders 45,500 $9.250
Issued to placement agent 73,332 $9.250
-------
Outstanding 4/3/93 329,539 $0.875 - $9.250 329,539
=======
Granted to directors 70,000 $7.250
Exercised (80,707) $0.875 - $4.250
-------
Outstanding 4/2/94 318,832 $0.875 - $9.250 248,832
=======
Exercised (35,000) $0.875
-------
Outstanding 4/1/95 283,832 $0.875 - $9.250 236,932
======= =======
</TABLE>
27
<PAGE> 28
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES:
Effective April 4, 1993, the Company adopted FAS 109, "Accounting for
Income Taxes." Upon adoption of FAS 109, the Company recorded deferred tax
assets of $3,262,000, additional deferred tax liabilities of $162,000 and a
related valuation allowance of $3,100,000. The net cumulative effect upon
adoption was not material.
The components of the income tax provision (benefit) are as follows:
<TABLE>
<CAPTION>
For the Fiscal Years Ended
-------------------------------------------
April 1, 1995 April 2, 1994 April 3, 1993
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 464 $(136) $ 9
State 287 278 192
Foreign 430
------- ----- -------
1,181 142 201
------- ----- -------
Deferred:
Federal (477) (867)
State 1 (153)
Foreign (46)
------- ----- -------
(522) (1,020)
------- ----- -------
Total income tax provision (benefit) $ 659 $(878) $ 201
======= ===== =======
</TABLE>
At April 1, 1995, the Company had $6,879,000 of state net operating loss
carryforwards that expire principally in fiscal years 1996 through 1998. In
1995, the Company recognized tax expense of $30,000 which represents the tax
effect of the utilization of acquired federal net operating loss carryforwards
of $90,000 from the Company's Ithaca subsidiary; such recognition resulted in an
adjustment to the purchase cost (reducing goodwill). Federal business and
foreign tax credit carryforwards which are available to offset future federal
income taxes total $787,000 and principally expire in fiscal years 1997 through
2002. The Company has a federal minimum tax credit carryforward of approximately
$211,000 which will be available to reduce federal tax in future years.
Differences between the U.S. statutory federal income tax rate and the
company's effective income tax rate are analyzed below:
<TABLE>
<CAPTION>
For the Fiscal Years Ended
-------------------------------------------
April 1, 1995 April 2, 1994 April 3, 1993
(In thousands)
<S> <C> <C> <C>
Federal statutory tax rate 34.0% 34.0% 34.0%
Income tax benefit of net operating loss
carryforward (12.4)
Overaccrual of prior year income taxes (41.0) (9.5)
Changes attributable to temporary (6.4)
differences
State income taxes, net of federal income 5.7 4.0 7.4
tax
Non-deductible purchase accounting
adjustments 8.4 31.5 3.0
Valuation allowance (33.7) (166.0)
Federal benefit of acquired loss
carryforwards 1.0 20.0
used to reduce goodwill
Effect of foreign operations 3.8
Other .5 (2.5) (3.3)
----- ------ ----
Effective tax rate 19.7% (120.0)% 12.8%
===== ====== ====
</TABLE>
28
<PAGE> 29
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES: (CONTINUED)
The Company's gross deferred tax assets and liabilities were comprised of
the following:
<TABLE>
<CAPTION>
April 1, 1995 April 2, 1994
------------- -------------
(In thousands)
<S> <C> <C>
Gross deferred tax assets:
Currently non-deductible liabilities and reserves $ 1,048 $ 1,033
Net operating loss carryforwards 514 910
Federal business and foreign tax credit 787 835
carryforwards
Federal minimum tax credit carryforwards 211 208
---------- ----------
$ 2,560 $ 2,986
========== ==========
Gross deferred tax liabilities:
Depreciation $ 135 $ 153
========== ==========
</TABLE>
At April 1, 1995, a valuation allowance of $889,000 has been recorded which
relates primarily to state net operating loss and federal foreign tax credit
carryforwards, and certain state deferred tax deductions for which a tax benefit
will not likely be realized. The net change in the valuation allowance for
deferred tax assets was a decrease of $924,000 in the fourth quarter of fiscal
1995 related primarily to benefits relating to federal operating loss, business
and Alternative Minimum Tax credit carryforwards and certain federal deferred
deductions which will more likely than not be realized. Deferred tax assets and
liabilities are offset for presentation in the consolidated balance sheet.
10. NEW ACCOUNTING PRONOUNCEMENTS:
The Financial Accounting Standards Board (the "FASB") issued Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (FAS 121) in March 1995. FAS 121
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The entity must estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition, and recognize an impairment loss for any difference between the
fair value of the asset and the carrying amount of the asset. FAS 121 must be
adopted for the year beginning after December 15, 1995. The effect, if any, on
the Company's financial position or results of operations from adoption of FAS
121 is not expected to be material.
11. SIGNIFICANT FOURTH QUARTER TRANSACTIONS:
During the fourth quarter of 1995, the Company recorded an additional
provision for the estimated loss on disposal of unused real estate of $50,000
and an additional provision for estimated environmental clean-up costs of
$60,000. Also in the fourth quarter, the Company recorded an adjustment to fully
recognize federal deferred tax benefits as discussed in Note 9. During the
fourth quarter of the prior year, the Company recorded several non-recurring
charges, including: a provision for the estimated loss on disposal of unused
real estate of $132,000; estimated environmental clean-up costs of $270,000; and
a provision for litigation matters totaling $280,000. Also in the fourth
quarter, the Company recorded one-time tax credits, including the reversal of an
excess income tax accrual of $300,000 and the adjustment to the valuation
allowance discussed in Note 9.
29
<PAGE> 30
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. INTERNATIONAL OPERATIONS
Prior to fiscal year 1995, the Company had no foreign operations and export
sales were minimal. As a result of the acquisition of Cash Bases, the Company
acquired manufacturing facilities in the United Kingdom. Amounts included in the
accompanying consolidated financial statements associated with operations
outside the United States consist of the following:
<TABLE>
<CAPTION>
For the Fiscal Year Ended
April 1, 1995
-------------------------
<S> <C>
Sales:
Domestic $44,000
Foreign 10,883
Elimination (206)
-------
Total $54,677
-------
Operating Profit:
Domestic $ 3,635
Foreign 905
-------
Total $ 4,540
-------
Identifiable Assets:
Domestic $27,349
Foreign 9,013
-------
Total $36,362
=======
</TABLE>
Net sales are based on the location of the operation. Transfers between
geographic areas are recorded at amounts generally above cost and in accordance
with the regulations of applicable taxing jurisdictions. Operating profit
consists of total net sales less operating expenses and corporate expenses, and
does not include either interest, other income or income taxes. Identifiable
assets of geographic areas are those assets related to the Company's operations
in each area.
The Company had export sales from its United States operations of
approximately $4,073,000 in 1995. Such sales in prior years were not material.
During 1995, the Company recorded foreign exchange gains of $85,000. At April 1,
1995 the Company had no forward exchange contracts outstanding.
13. EVENTS SUBSEQUENT TO APRIL 1, 1995 (UNAUDITED)
On June 22, 1995, the Fleet Credit Agreement was amended to increase the
Working Capital Facility to $4,625,000 from $4,000,000. In addition,
availability under the Working Capital Facility was expanded to include 25% of
the Company's eligible inventories.
30
<PAGE> 31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(A) DIRECTORS.
The information contained in "Information Concerning Nominees
for Election as Directors and Executive Officers" of the Company's Proxy
Statement (the "Proxy Statement") for its Annual Meeting of Shareholders which
is scheduled to be held on September 19, 1995 is hereby incorporated herein
by reference. Also see Item 1(E)(i) above.
(B) EXECUTIVE OFFICERS.
See Item 1(E)(ii) above.
(C) COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The information contained in "Compliance with Section 16(a)" of
the Proxy Statement is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained in "Compensation of Directors and
Executive Officers" of the Proxy Statement is hereby incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained in "Security Ownership of Certain
Beneficial Owners and Management" of the Proxy Statement is hereby incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained in "Certain Relationships and Related
Transactions" of the Proxy Statement is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(A) THE FOLLOWING FINANCIAL STATEMENTS AND EXHIBITS ARE FILED AS
PART OF THIS REPORT:
(i) Financial statements
See Item 8 on page 14.
(ii) Financial statement schedules
See Item 8 on page 14.
(iii) List of Exhibits.
See Exhibit Index on page 33.
(B) REPORTS ON FORM 8-K.
The Company did not file any Current Reports on Form 8-K during
the last quarter of the period covered by this report.
31
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TRIDEX CORPORATION
By: /s/ Seth M. Lukash
--------------------------------------------------
Seth M. Lukash
Chairman of the Board, President,
Chief Executive Officer, Chief Operating Officer
and Director
Date: June 26, 1995
Pursuant to the requirements of the Securities 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 dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ Seth M. Lukash Chairman of the Board, President, Chief June 26, 1995
- - ---------------------------- Executive Officer, Chief Operating Officer
Seth M. Lukash and Director
(Principal Executive Officer)
/s/ Richard L. Cote Senior Vice President and June 26, 1995
- - ---------------------------- Chief Financial Officer
Richard L. Cote
(Principal Financial Officer)
/s/ George T. Crandall Vice President, Treasurer, June 26, 1995
- - ---------------------------- Controller and Assistant Secretary
George T. Crandall
(Principal Accounting Officer)
/s/ Ralph I. Fine Director and Secretary June 26, 1995
- - ----------------------------
Ralph I. Fine
/s/ Alvin Lukash Director June 26, 1995
- - ----------------------------
Alvin Lukash
/s/ Graham Y. Tanaka Director June 26, 1995
- - -----------------------------
Graham Y. Tanaka
/s/ Richard T. Bueschel Director June 26, 1995
- - -----------------------------
Richard T. Bueschel
/s/ Paul J. Dunphy Director June 26, 1995
- - -----------------------------
Paul J. Dunphy
/s/ Richard W. Sonnenfeldt Director June 26, 1995
- - -----------------------------
Richard W. Sonnenfeldt
</TABLE>
32
<PAGE> 33
Exhibit Index
<TABLE>
<CAPTION>
Page
Number
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<S> <C> <C>
3.1 Certificate of Incorporation of Tridex, as amended, filed on June 28,
1985 as Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended March 30, 1985, is hereby incorporated herein by
reference.
3.2 Certificate of Amendment of Incorporation of Tridex, dated October 1,
1987, filed on July 18, 1988 as Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended April 2, 1988 is hereby
incorporated herein by reference.
3.3 Certificate of Amendment of Incorporation of Tridex, dated August 15,
1988, filed on June 29, 1989 as Exhibit 3.3 to the Company's Annual
Report on Form 10-K for the fiscal year ended April 1, 1989 is hereby
incorporated herein by reference.
3.4 Certificate of Amendment of Incorporation of Tridex, dated March
31,1989 filed on June 29, 1989 as Exhibit 3.4 to the Company's Annual
Report on Form 10-K for the fiscal year ended April 1, 1989 is hereby
incorporated herein by reference.
3.5 Bylaws of Tridex, as amended and restated on May 26, 1994 filed on
June 30, 1994 as Exhibit 3.5 to the Company's Annual Report on Form
10-K for the fiscal year ended April 2, 1994 is hereby incorporated by
reference.
4.1 Description of the Company's common stock set forth in the Company's
Registration Statement on Form 8-A filed July 14, 1986, is hereby
incorporated herein by reference.
4.2 The Tridex Corporation 1989 Long Term Incentive Plan (as amended and
restated) filed as Exhibit A to the Company's Proxy Statement for
Annual Meeting of Shareholders filed July 23, 1992 is hereby
incorporated herein by reference.
4.3 Form of 8% Subordinated Convertible Term Promissory Notes dated
January 20, 1993, by and among the Company and the shareholders of
Ultimate Technology Corporation, filed as an Exhibit to Current Report
on Form 8-K filed February 10, 1993, is hereby incorporated herein by
reference.
4.4 Form of Registration Rights Agreement, dated January 20, 1993, filed
as an Exhibit to Current Report on Form 8-K filed February 10, 1993,
is hereby incorporated herein by reference.
4.5 Indenture dated as of December 31, 1992 by and among the Company and
American Stock Transfer & Trust Company, as Trustee, filed as an
Exhibit to Current Report on Form 8-K filed February 10, 1993, is
hereby incorporated herein by reference.
4.6 Form of 10.5% Senior Subordinated Convertible Debentures due December
31, 1997, filed as an Exhibit to Current Report on Form 8-K filed
February 10, 1993, is hereby incorporated herein by reference.
4.7 Form of Warrant, dated January 20, 1993, to purchase shares of Tridex
common stock, filed as an Exhibit to Current Report on Form 8-K filed
February 10, 1993, is hereby incorporated herein by reference.
4.8 Form of Registration Rights Agreement, filed as an Exhibit to Current
Report on Form 8-K filed February 10, 1993, is hereby incorporated
herein by reference.
4.9 Form of 10% Subordinated Convertible Term Promissory Note due May 10,
1994 filed as an Exhibit to the Company's Current Report on Form 8-K
filed May 25, 1990, is hereby incorporated herein by reference.
4.10 Registration Rights Agreement, dated as of May 10, 1990, by and among
the Company, Ithaca Peripherals Incorporated and Noteholders filed as
an Exhibit of the Company's Current Report on Form 8-K filed May 25,
1990 is hereby incorporated herein by reference.
4.11 Form of Warrant dated January 20, 1993, to purchase common stock of
Tridex Corporation, filed as an exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended April 3, 1993 is hereby
incorporated herein by reference.
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
Page
Number
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<S> <C> <C>
10.1 Consulting Services Agreement, dated as of April 16, 1992, between
Tridex and Alvin Lukash, filed as an exhibit to the Company's Annual
Report on form 10-K for the fiscal year ended March 28, 1992, is
hereby incorporated herein by reference.
10.2 Employment Agreement, dated as of April 16, 1995, between Tridex and 36
Seth M. Lukash.
10.3 Severance Agreement, dated as of April 16, 1990, between Tridex and
Seth M. Lukash filed as an Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1990 is hereby incorporated
by reference.
10.4 First Amendment to Severance Agreement, dated as of April 16, 1992
between Tridex and Seth M. Lukash, filed as an exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended March
28, 1992, is hereby incorporated by reference.
10.5 Second Amendment to Severance Agreement, dated as of June 1, 1995, 37
between Tridex and Seth M. Lukash
10.6 Severance Agreement, dated as of April 39, 1990, between Tridex and
George T. Crandall filed as an Exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended March 28, 1992, is hereby
incorporated by reference.
10.7 Employment and Non-competition Agreement, dated May 10, 1990, between
Ithaca Peripherals Incorporated and S. Scott Kumpf, filed as an
Exhibit to the Company's Annual Report on Form 10-K for the fiscal
year ended March 30, 1991, is incorporated herein by reference.
10.8 Employment and Non-competition Agreement, dated as of January 20,
1993, between Ultimate Technology Corporation and Dennis J. Lewis,
filed as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended April 3, 1993 is hereby incorporated herein by
reference.
10.9 Severance Agreement, dated as of June 1, 1993 between Tridex and
Richard L. Cote, filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended April 3, 1993 is hereby
incorporated herein by reference.
10.10 First Amendment to Severance Agreement, dated as of June 1, 1995, between 38
Tridex and Richard L. Cote.
10.11 Letter Agreement, dated as of June 1, 1995, between Tridex and Richard L. 39
Cote regarding severance.
10.12 The Tridex Corporation 1989 Long Term Incentive Plan (as amended and
restated) filed as Exhibit A to the Company's Proxy Statement for
Annual Meeting of Shareholders filed July 23, 1992 is hereby
incorporated herein by reference.
10.13 Employee Performance Compensation Agreement, dated January 20, 1993 by
and among Tridex and the Ultimate shareholders, filed as an exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended
April 3, 1993 is hereby incorporated herein by reference.
10.14 Credit Agreement dated as of June 17, 1994 between Tridex Corporation,
Ithaca Peripherals Incorporated, Ultimate Technology Corporation,
Magnetec Corporation and Fleet Bank, National Association filed on
June 30, 1994 as Exhibit 10.12 to the Company's Annual Report on Form
10-K for the fiscal year ended April 2, 1994 is hereby incorporated by
reference.
10.15 Amendment No. 1 to Credit Agreement dated as of June 22, 1995 between 40
Tridex Corporation, Ithaca Peripherals Incorporated, Ultimate Technology
Corporation, Magnetec Corporation, Cash Bases Incorporated and Fleet Bank,
National Association.
10.16 Service Agreement, dated June 20, 1994, between Cash Bases G.B.
Limited and Hugh T. Burnett filed on June 30, 1994 as Exhibit 10.13 to
the Company's Annual Report on Form 10-K for the fiscal year ended
April 2, 1994 is hereby incorporated by reference.
11.1 Statement re: computation of per share earnings. 51
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
Page
Number
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<S> <C> <C>
21.1 List of Subsidiaries of Tridex. 52
23.1 Consent of Independent Accountants. 53
27.1 Financial Data Schedule
</TABLE>
35
<PAGE> 1
TRIDEX CORPORATION
EXHIBIT 10.2
EMPLOYMENT AGREEMENT BETWEEN TRIDEX AND SETH M. LUKASH
June 1, 1995
Seth M. Lukash
404 Harvest Commons
Westport, CT 06880
RE: Employment Arrangement/Tridex Corporation ("Company")
Dear Seth:
Confirming our recent discussions, you will continue as the Chairman
and Chief Executive Officer of the Company to serve at the pleasure of the
Board, and will be paid therefor the following:
- Base Salary of $270,000
- Participation in the Company's Incentive Compensation Plan
- Life Insurance and Disability Insurance
- Participation in the Company's benefit plans as provided
to senior management
- Reimbursement for expenses upon presentation of vouchers
- $1,000 per year for tax advice
Additionally, the board of directors has agreed that you will receive a
severance equal to eighteen (18) month's base pay in effect at the time of the
termination of your employment other than for cause and other than as a result
of a change in control, as defined in that certain Severance Agreement between
you and the Company, dated April 18, 1990 as amended to the date hereof, payable
in equal monthly installments over the 18-month period and a continuation of
medical, dental and life insurance benefits during such time. For purposes of
this paragraph, "cause" shall mean (i) your death or mental or physical
incapacity, (ii) any action or inaction by you that constitutes larceny, fraud,
gross negligence, a willful or negligent material representation to the
directors or officers of the Company, its successors or assigns, a crime
involving moral turpitude or (iii) your intentional disregard of board
instructions or directives.
Any debt you have to the Company at the time your employment is
terminated shall be deducted from the severance payment ratably over the
eighteen (18) month period unless you elect to pay such indebtedness in full by
transfer, to the Company, Common Stock of the Company owned by you, valued at
its market value at the close of business preceding the date such stock is
tendered in payment of the debt.
During the period of your employment with the Company and for the
period that you receive the severance payments as set forth above, you shall
not, directly or indirectly, participate in any business located in, or doing
business in, North America, Western Europe, Japan, Korea, The Middle East,
Central America, or South America whose activities or products are competitive
with the activities or products of the Company or its affiliates.
Sincerely,
------------------------------
Chairman
Compensation Committee
Agreed to this ______ day
of________________, 199___
- - -----------------------------------------
Seth M. Lukash
36
<PAGE> 1
TRIDEX CORPORATION
EXHIBIT 10.5
SECOND AMENDMENT TO SEVERANCE AGREEMENT
BETWEEN TRIDEX AND SETH M. LUKASH
This Second Amendment to Severance Agreement is made in Westport,
Connecticut, as of June 1, 1995, by and between Seth M. Lukash residing at 404
Harvest Commons, Westport, Connecticut 06880 ("Employee") and Tridex
Corporation, with its principal place of business at 61 Wilton Road, Westport,
Connecticut 06880 ("Tridex").
WHEREAS, Tridex and the Employee entered into a Severance Agreement dated as of
April 16, 1990 as amended by a First Amendment to Severance Agreement dated as
of April 16, 1992 (the "Severance Agreement"); and
WHEREAS, Tridex and the Employee desire to amend further the Severance Agreement
in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, intending to be legally bound hereby, and in consideration of
the mutual agreements contained herein and other good and valuable
consideration, the parties hereto agree as follows:
1. Paragraph 2(a) (ii) of the Severance Agreement is hereby amended in its
entirety to read as follows:
"(ii) an amount equal to 3 times the sum of (A) Employee's annual base
salary immediately prior to the Severance of Employment and (B)
Employee's bonus for the fiscal year ending immediately prior to
the Severance of Employment or the Change of Control Transaction,
whichever is greater, less $1.00; plus"
2. Paragraph 2(e) of the Severance Agreement is hereby amended in its
entirety to read as follows:
"(e) Tridex further agrees that in the event the amounts payable to
Employee hereunder are reduced pursuant to Section 2(d), Tridex
shall, at its option, either (i) enter into a Consulting Agreement
with the Employee pursuant to which it shall pay the Employee
consulting fees equal to the amount by which the payment under
Section 2(a) was reduced pursuant to Section 2(d), or (ii) pay the
Employee the full amount due under Section 2(a) plus an amount
equal to any excise tax due pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended, and any regulation
promulgated by the Internal Revenue Service thereunder payable by
the Employee as a result of such 'excess parachute' payments."
3. Except as expressly set forth herein, the provisions of the Severance
Agreement have not been altered, amended or rescinded in any way, and are hereby
ratified, approved and confirmed.
IN WITNESS WHEREOF, Tridex Corporation has caused this Second Amendment
to be executed in its corporate name by its corporate officer thereunto duly
authorized and SETH M. LUKASH has hereunto set his hand and seal as of the day
and year first above written.
TRIDEX CORPORATION
By:
-----------------------------
Title: Chairman of the
Compensation Committee
--------------------------------
Seth M. Lukash
37
<PAGE> 1
TRIDEX CORPORATION
EXHIBIT 10.10
FIRST AMENDMENT TO SEVERANCE AGREEMENT BETWEEN TRIDEX AND RICHARD L. COTE
This First Amendment is made in Westport, Connecticut, as of June 1,
1995, by and between Richard L. Cote residing at 71 Wedgewood Road, Southington,
Connecticut 06489 ("Employee") and Tridex Corporation, with its principal place
of business at 61 Wilton Road, Westport, Connecticut 06880 ("Tridex").
WHEREAS, Tridex and the Employee entered into a Severance Agreement dated as of
June 1, 1993 (the "Severance Agreement"); and
WHEREAS, Tridex and the Employee desire to amend the Severance Agreement in
accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, intending to be legally bound hereby, and in consideration of
the mutual agreements contained herein and other good and valuable
consideration, the parties hereto agree as follows:
1. Paragraph 2(a) of the Severance Agreement is hereby amended to read in
its entirety as follows:
"(a) In the event of a Severance of Employment, Tridex shall, within
ten days after the Severance of Employment, pay to the Employee an
amount in cash equal to the sum of:
(1) any amounts earned by and unpaid to the Employee for periods
prior to the Severance of Employment; plus
(2) an amount equal to two (2) times the sum of A) Employee's
annual base salary immediately prior to the Severance of
Employment and B) Employee's bonus for the fiscal year
ending immediately prior to the Severance of Employment or
the Change of Control transaction, whichever is greater; plus
(3) at the option of the Employee and in lieu of his exercising
the exercisable portion of any options to purchase shares of
Tridex stock that he might hold at the time, an amount equal
to the difference between the option price or prices for the
shares representing the exercisable portion of such stock
options and the market price of the class of Tridex stock
covered by the option, at the close of business on the date
of the Severance of Employment."
2. Paragraph 2(e) of the Severance Agreement is hereby amended to read in
its entirety as follows:
"(e) Tridex further agrees that in the event the amounts payable to
Employee hereunder are reduced pursuant to Section 2(d), Tridex
shall, at its option, either (I) enter into a Consulting Agreement
with the Employee pursuant to which it shall pay the Employee
consulting fees equal to the amount by which the payment under
Section 2(a) was reduced pursuant to Section 2(d), or (ii) pay the
Employee the full amount due under Section 2(a) plus an amount
equal to any excise tax due pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended, and any regulation
promulgated by the Internal Revenue Service thereunder payable by
the Employee as a result of such 'excess parachute' payments."
3. Except as expressly set forth herein, the provisions of the Severance
Agreement have not been altered, amended or rescinded in any way, and are hereby
ratified, approved and confirmed.
IN WITNESS WHEREOF, Tridex Corporation has caused this Amendment to be executed
in its corporate name by its corporate officer thereunto duly authorized and
Richard L. Cote has hereunto set his hand and seal as of the day and year first
above written.
TRIDEX CORPORATION
By:______________________
Its:__________________
-------------------------
Richard L. Cote
38
<PAGE> 1
TRIDEX CORPORATION
EXHIBIT 10.11
LETTER AGREEMENT BETWEEN TRIDEX AND RICHARD L. COTE
June 1, 1995
Richard L. Cote
71 Wedgewood Road
Southington, CT 06489
RE: Severance Terms
Dear Dick:
We are pleased to advise you that, at the Compensation Committee
meeting of March 28, 1995, a new Severance Plan was approved for you, which
includes:
1. Providing you with an amount equal to twelve (12) month's base salary
and a continuation of medical, dental and life insurance benefits,
should your services be terminated, without cause, other than because of
a change of control. For the purposes of this paragraph, "cause" shall
mean (i) your death or mental or physical incapacity, (ii) any action or
inaction by you that constitutes larceny, fraud, gross negligence, a
willful or negligent material representation to the directors or
officers of the Company, its successors or assigns, a crime involving
oral turpitude or (iii) your intentional disregard of board instructions
or directives.
2. Increasing your severance as a result of a change in control of the
company to two times your base salary.
I have enclosed a First Amendment to the Severance Agreement adopting the change
referenced in Paragraph 2 above. Please indicate your acceptance of the new
severance term set forth in Paragraph 1 above by signing below.
Sincerely,
Seth M. Lukash
Chairman and CEO
Enclosure
SIGNED AND ACCEPTED BY:
- - -----------------------------------------
Richard L. Cote
This _____ day of __________________, 199___.
39
<PAGE> 1
Exhibit 10.15
AMENDMENT NO. 1
Dated as of June 22, 1995
This AMENDMENT among TRIDEX CORPORATION, a corporation
organized under the laws of the State of Connecticut, ITHACA PERIPHERALS
INCORPORATED, a corporation organized under the laws of the State of Delaware,
ULTIMATE TECHNOLOGY CORPORATION, a corporation organized under the laws of the
State of New York, MAGNETEC CORPORATION, a corporation organized under the laws
of the State of Connecticut, and CASH BASES INCORPORATED, a corporation
organized under the laws of the State of Delaware (collectively, all such
corporations being the "Borrowers" and each, individually, a "Borrower"), and
FLEET BANK, NATIONAL ASSOCIATION, a national banking association organized under
the laws of the United States of America (the "Bank").
PRELIMINARY STATEMENT.
A. The Borrowers (other than Cash Bases Incorporated) and
the Bank have entered into a Credit Agreement dated as of June 17, 1994. Cash
Bases Incorporated was added as a "Borrower" under said Credit Agreement as of
December 23, 1994 and said Credit Agreement was amended by a letter amendment
dated as of March 31, 1995 (as so amended, the "Credit Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein).
B. The Borrower and the Bank have agreed to amend the
Credit Agreement and the Working Capital Note as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. THE CREDIT AGREEMENT IS,
EFFECTIVE AS OF THE DATE HEREOF AND SUBJECT TO THE SATISFACTION OF THE
CONDITIONS PRECEDENT SET FORTH IN SECTION 3 HEREOF, HEREBY AMENDED AS FOLLOWS:
(a) The definition of the term "Borrowing Base"
contained in Section 1.1 is amended and restated in full to read as follows:
"Borrowing Base" means, as of any date of
determination thereof, an amount equal to the sum of (i) 80%
of Eligible Receivables, plus (ii) 25% of Eligible Inventory.
Unless the Bank shall otherwise determine, the Borrowing Base
as of any date shall be the Borrowing Base set forth on the
most current Borrowing Base Certificate certified and
delivered by a Borrower pursuant to either Section 6.8 or
Section 4.2. If, at any time, the Borrowing Base shall exceed
the Working Capital Commitment, for purposes of this Agreement
the Borrowing Base shall be deemed to be equal to the Working
Capital Commitment.
40
<PAGE> 2
(b) The definition of the term "Working Capital
Commitment" contained in Section 1.1 is amended and restated in full to read as
follows:
"Working Capital Commitment" means the obligation of
the Bank to make the Working Capital Loans under this
Agreement up to the aggregate principal amount of $4,625,000,
subject to Borrowing Base limitations, and as such amount may
be reduced or otherwise modified from time to time pursuant to
Section 2.7 or otherwise.
(c) The following new definitions are added to
Section 1.1 of the Credit Agreement in proper alphabetical order:
"Inventory" means all inventory, now or hereafter
owned and wherever located, of the Borrowers, including
(without limitation) raw materials, work-in-process, finished
goods, supplies and packaging materials.
"Eligible Inventory" means, as of any date of
determination thereof, all Inventory (valued at the lower of
the cost or fair market value on a first-in-first-out basis),
but excluding (a) those items that have no use in the current
product line of the Borrowers, (b) obsolete items and used
parts, (c) those finished goods that are not of merchantable
quality in the ordinary course of business, (d) all Inventory
in which the Bank does not have a first perfected security
interest, subject to no other Lien prior to or on a parity
with such security interest, (e) scrap, (f) work-in-process
and (g) all other Inventory which is determined by the Bank to
be ineligible for any other reason generally accepted in the
commercial finance business as a reason for ineligibility.
Notwithstanding the preceding sentence, "Eligible Inventory"
shall not include any Inventory not located at premises owned
by or leased to a Borrower unless such Inventory is in transit
(and insured) or such Borrower has made a formal financing
statement filing against the consignee of such Inventory and
has given any party claiming of record a security interest in
such consignee's inventory, or other assets that might include
such Inventory, notice of such Borrower's consignment
arrangements with such consignee or has taken equivalent
protective steps satisfactory to the Bank.
(d) Exhibit G to the Credit Agreement (Form of
Borrowing Base Certificate) is amended and restated in its entirety in the form
of Exhibit G to this Amendment.
(e) The definition of the term "Excess Cash
Flow" contained in Section 1.1 is amended and restated in full to read as
follows:
"Excess Cash Flow" means, for each fiscal year of the
Borrowers, the amount by which (i) the aggregate of the net
cash provided by operating activities, investing activities
and financing activities exceeds (ii) the sum of (A) the
aggregate of the net cash used in operating activities,
investing activities and financing activities, plus (B) the
principal amount outstanding under the Working Capital Note as
at the end of such fiscal year, all as determined in
accordance with GAAP and as set forth on the Borrowers'
consolidated statements of cash flows contained within the
annual audited financial statements furnished pursuant to
Section 6.8(a).
41
<PAGE> 3
(f) The Borrowers' address appearing on the
signature page is amended and restated in full to read as follows:
Address for Notices:
61 Wilton Road
Westport, Connecticut 06880
Attention: Richard L. Cote
Facsimile No.: (203) 226-8806
SECTION 2. AMENDMENTS TO OTHER FACILITY DOCUMENTS.
(a) Working Capital Note. The Working Capital
Note is amended and restated in its entirety in the form of Schedule 1 hereto.
(b) Security Agreement. The address of the
principal place of business of Magnetec Corporation set forth in Schedule 1 to
the Security Agreement is amended to read: "7 Laser Lane, Wallingford,
Connecticut 06492." Ithaca Peripherals Incorporated no longer maintains any
assets at 147 Main Street, Groton, New York 13073 or 5500 Main Street,
Williamsville, New York 14221, and the references to such locations set forth in
Schedule 1 to the Security Agreement are hereby deleted.
SECTION 3. CONDITIONS OF EFFECTIVENESS. THIS AMENDMENT SHALL BECOME
EFFECTIVE WHEN, AND ONLY WHEN, THE BANK SHALL HAVE RECEIVED COUNTERPARTS OF THIS
AMENDMENT EXECUTED BY THE BORROWERS AND THE BANK, AND SECTIONS 1 AND 2 HEREOF
SHALL BECOME EFFECTIVE WHEN, AND ONLY WHEN, THE BANK SHALL HAVE ADDITIONALLY
RECEIVED ALL OF THE FOLLOWING DOCUMENTS, EACH DOCUMENT (UNLESS OTHERWISE
INDICATED) BEING DATED THE DATE OF RECEIPT THEREOF BY THE BANK (WHICH DATE SHALL
BE THE SAME FOR ALL SUCH DOCUMENTS), IN FORM AND SUBSTANCE SATISFACTORY TO THE
BANK:
(a) The executed Amended and Restated Working
Capital Note in the form of Schedule 1 hereto.
(b) Certified copies of (i) the resolutions of
the Board of Directors of each Borrower approving this Amendment and the matters
contemplated hereby and thereby and (ii) all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Amendment and the matters contemplated hereby.
(c) A certificate of the Secretary or an
Assistant Secretary of each Borrower certifying the names and true signatures of
the officers of such Borrower authorized to sign this Amendment and the other
documents to be delivered hereunder.
(d) A favorable opinion of Hinckley, Allen &
Snyder, counsel for the Borrowers, to the effect that this Amendment, and the
Amended and Restated Working Capital Note have been duly authorized, executed
and delivered by the Borrowers, and such instruments constitute the legal, valid
and binding obligations of the Borrowers, enforceable against the Borrowers, in
accordance with their respective terms, and confirming the opinion of such
counsel furnished on June 17, 1994, pursuant to Section 4.1(m) of the Credit
Agreement, with references therein to the Credit Agreement to mean the Credit
Agreement as amended by this Amendment.
(e) A certificate signed by a duly authorized
officer of each Borrower stating that:
(i) The representations and warranties
contained in Section 4 hereof are correct on and as of the
date of such certificate as though made on and as of such
date, and
(ii) No event has occurred and is continuing
which constitutes a Default or Event of Default.
42
<PAGE> 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
EACH BORROWER REPRESENTS AND WARRANTS AS FOLLOWS:
(a) Such Borrower is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged, and
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required.
(b) The execution, delivery and performance by
such Borrower of this Amendment, the Amended and Restated Working Capital Note
and the Facility Documents, as amended hereby, to which it is a party have been
duly authorized by all necessary corporate action and do not and will not: (a)
require any consent or approval of its stockholders; (b) contravene its charter
or by-laws; (c) violate any provision of, or require any filing, registration,
consent or approval under, any law, rule, regulation (including, without
limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to such Borrower
or any of its Subsidiaries or Affiliates; (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which such
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien , upon or with
respect to any of the properties now owned or hereafter acquired by such
Borrower; or (f) cause such Borrower (or any Subsidiary or Affiliate, as the
case may be) to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
(c) This Amendment, the Amended and Restated
Working Capital Note and each other Facility Document, as amended hereby, to
which such Borrower is a party is, or when delivered under this Amendment will
be, a legal, valid and binding obligation of such Borrower enforceable against
such Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
(d) There are no actions, suits or proceedings
pending or, to the knowledge of such Borrower, threatened, against or affecting
such Borrower or any of its Subsidiaries before any court, governmental agency
or arbitrator, which may, in any one case or in the aggregate, materially
adversely affect the financial condition, operations, properties or business of
such Borrower or any such Subsidiary or of or the ability of such Borrower to
perform its obligation under this Amendment, the Amended and Restated Working
Capital Note or any of the other Facility Documents, as amended hereby.
(e) The Security Agreement constitutes valid and
perfected first priority Liens in and to the Collateral covered thereby
enforceable against all third parties in all jurisdictions and secure the
payment of all obligations of the Borrowers under the Facility Documents, as
amended hereby, including all obligations of the Borrower under the Amended and
Restated Working Capital Note, and the execution, delivery and performance of
this Amendment do not adversely affect the aforesaid Liens of such Security
Agreement.
SECTION 5. REFERENCE TO AND EFFECT ON THE FACILITY DOCUMENTS.
(a) Upon the effectiveness of Sections 1 and 2
hereof, on and after the date hereof each reference in the Credit Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of like import, and
each reference in the other Facility Documents to the Credit Agreement and
Notes, shall mean and be a reference to the Credit Agreement and Notes as
amended hereby.
(b) Except as specifically amended above, the
Credit Agreement and the Notes, and all other Facility Documents, shall remain
in full force and effect and are hereby ratified and confirmed. Without limiting
the generality of the foregoing, the Pledge Agreement and all of the Pledged
Collateral described therein, the Security Agreement and all of the Collateral
described therein, and the Cash Bases Pledge Agreement and all of the Charged
Property described therein do and shall continue to secure the payment of all
Obligations, in each case as amended hereby.
(c) The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Bank under any of the Facility
Documents, nor constitute a waiver of any provision of any of the Facility
Documents.
43
<PAGE> 5
SECTION 6. COSTS, EXPENSES AND TAXES. THE BORROWERS JOINTLY AND SEVERALLY
AGREE TO PAY ON DEMAND ALL COSTS AND EXPENSES OF THE BANK IN CONNECTION WITH THE
PREPARATION, EXECUTION AND DELIVERY OF THIS AMENDMENT, THE AMENDED AND RESTATED
WORKING CAPITAL NOTE AND THE OTHER INSTRUMENTS AND DOCUMENTS TO BE DELIVERED
HEREUNDER, INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND OUT-OF-POCKET
EXPENSES OF COUNSEL FOR THE BANK WITH RESPECT THERETO AND WITH RESPECT TO
ADVISING THE BANK AS TO ITS RIGHTS AND RESPONSIBILITIES HEREUNDER AND
THEREUNDER. THE BORROWERS FURTHER JOINTLY AND SEVERALLY AGREE TO PAY ON DEMAND
ALL COSTS AND EXPENSES, IF ANY (INCLUDING, WITHOUT LIMITATION, REASONABLE
COUNSEL FEES AND EXPENSES), IN CONNECTION WITH THE ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF THIS AMENDMENT, THE AMENDED AND
RESTATED WORKING CAPITAL NOTE AND THE OTHER INSTRUMENTS AND DOCUMENTS TO BE
DELIVERED HEREUNDER, INCLUDING, WITHOUT LIMITATION, REASONABLE COUNSEL FEES AND
EXPENSES IN CONNECTION WITH THE ENFORCEMENT OF RIGHTS UNDER THIS SECTION 6. IN
ADDITION, THE BORROWERS SHALL PAY ANY AND ALL STAMP AND OTHER TAXES PAYABLE OR
DETERMINED TO BE PAYABLE IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS
AMENDMENT, THE AMENDED AND RESTATED WORKING CAPITAL NOTE AND THE OTHER
INSTRUMENTS AND DOCUMENTS TO BE DELIVERED HEREUNDER, AND AGREES TO SAVE THE BANK
HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES WITH RESPECT TO OR RESULTING
FROM ANY DELAY IN PAYING OR OMISSION TO PAY SUCH TAXES.
SECTION 7. EXECUTION IN COUNTERPARTS. THIS AMENDMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES HERETO IN SEPARATE
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO BE
AN ORIGINAL AND ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE BUT ONE AND THE
SAME INSTRUMENT.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT.
44
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
TRIDEX CORPORATION
By___________________________________________________
Richard L. Cote, Senior Vice President and
Chief Financial Officer
ITHACA PERIPHERALS INCORPORATED,
ULTIMATE TECHNOLOGY CORPORATION,
MAGNETEC CORPORATION
By___________________________________________________
George T. Crandall
Secretary as to each of the above corporations
CASH BASES INCORPORATED
By___________________________________________________
George T. Crandall
Treasurer
FLEET BANK, NATIONAL ASSOCIATION
By___________________________________________________
Frederick A. Meagher
Vice President
45
<PAGE> 7
EXHIBIT G
BORROWING BASE CERTIFICATE
[DATE]
Fleet Bank, N.A.
263 Tresser Boulevard
Stamford, CT 06901
ATTN: Frederick A. Meagher
Ladies and Gentlemen:
The undersigned hereby certifies that the following
computations of the Borrowing Base, as defined in the Credit Agreement, dated as
of June 17, 1994, among the undersigned, and Fleet Bank, N.A. are true and
correct as of [ ].
<TABLE>
<S> <C>
TOTAL RECEIVABLES $_________
LESS:
Customary Reserves ($_________)
Unearned Customer Deposits ($_________)
Taxes ($_________)
Trade or Other Documents ($_________)
Discounts ($_________)
Claims, Credits or Returns ($_________)
Rebates, Allowances or Setoffs ($_________)
Unpaid more than 90 days ($_________)
Not Absolute Sale, Consignment, etc. ($_________)
Evidenced by Chattel Paper or Instrument ($_________)
Ineligible Account Debtor ($_________)
Uncollectable ($_________)
Incomplete Performance ($_________)
Subject to Defenses ($_________)
Not Evidenced by an Invoice ($_________)
From a Borrower or Affiliate ($_________)
Not Assignable ($_________)
Foreign ($_________)
Advance Billings ($_________)
Nonconformance with Reps and Warranties ($_________)
Not a First Perfected Security Interest ($_________)
Not Denominated in Dollars ($_________)
Account Debtor Past Due on Too Many Receivables ($_________)
Account Debtor Exceeds Concentration Allowance ($_________)
Account Debtor Has Disputed Liability ($_________)
Other Ineligible ($_________)
TOTAL Ineligible Receivables ($_________)
TOTAL Eligible Receivables US $_________ A
TOTAL INVENTORY $_________
LESS: ($_________)
</TABLE>
46
<PAGE> 8
<TABLE>
<S> <C>
Not in current product line ($_________)
Obsolete or used ($_________)
Not merchantable ($_________)
Not First Perfected ($_________)
Scrap ($_________)
Work-in-Process ($_________)
Other Ineligible
TOTAL Ineligible Inventory ($_________)
TOTAL Eligible Inventory US $_________ B
Borrowing Base [A x 80% + B x 25%] US $_________ C
TOTAL Working Capital Commitment US $_________ D
Lesser of Borrowing Base (C) and Commitment (D) US $_________ E
Less:
Working Capital Loans Outstanding under Credit Agreement ($_________) F
F/E Credits ($_________) G
TOTAL Unused portion of Borrowing Base as of _____________ (E minus US $_________
(F plus G))
</TABLE>
The undersigned further certifies and warrants that no Default
or Event of Default is existing as of the date of this Certificate.
[TRIDEX CORPORATION,]
[ITHACA PERIPHERALS INCORPORATED,]
[ULTIMATE TECHNOLOGY CORPORATION,]
[MAGNETEC CORPORATION]
[CASH BASES INCORPORATED]
By_____________________________________
Name:
Title:
47
<PAGE> 9
SCHEDULE 1
WORKING CAPITAL NOTE
AMENDED AND RESTATED PROMISSORY NOTE
$4,625,000 Stamford, Connecticut
June ___, 1995
For value received, TRIDEX CORPORATION, ITHACA PERIPHERALS
INCORPORATED, ULTIMATE TECHNOLOGY CORPORATION, CASH BASES INCORPORATED and
MAGNETEC CORPORATION (each, a "Borrower" and collectively, the "Borrowers"),
hereby promise, jointly and severally, to pay to the order of FLEET BANK,
NATIONAL ASSOCIATION (the "Bank") at the principal office of the Bank, at One
Constitution Plaza, Hartford, Connecticut 06115, for the account of the
appropriate Lending Office of the Bank, the principal sum of FOUR MILLION SIX
HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($4,625,000) or, if less, the amount of
Working Capital Loans made by the Bank to the Borrowers pursuant to the Credit
Agreement referred to below, in lawful money of the United States of America and
in immediately available funds, on the date(s) and in the manner provided in
said Credit Agreement. The Borrowers also promise to pay interest on the unpaid
principal balance hereof, for the period such balance is outstanding, at said
principal office for the account of said Lending Office, in like money, at the
rates of interest as provided in the Credit Agreement referred to below, on the
date(s) and in the manner provided in said Credit Agreement.
The date and amount of each Working Capital Loan made by the
Bank to the Borrowers under the Credit Agreement referred to below, and each
payment of principal thereof, shall be recorded by the Bank on its books and,
prior to any transfer of this Note (or, at the discretion of the Bank, at any
other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof.
This is the Working Capital Note referred to in that certain
Credit Agreement (as amended from time to time the "Credit Agreement") dated of
even date herewith among the Borrowers and the Bank and evidences the Working
Capital Loans made by the Bank thereunder. All terms not defined herein shall
have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain Events of Default and for
prepayments on the terms and conditions specified therein.
Each Borrower waives presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note.
48
<PAGE> 10
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of Connecticut.
This Note amends and restates in its entirety a certain
Promissory Note, dated June 17, 1994, from the Borrowers to the Bank, in the
original principal amount of Four Million Dollars ($4,000,000) (the "Existing
Note"). Upon the execution and delivery of this Note, this Note shall replace
the Existing Note and shall immediately evidence all outstanding indebtedness
under the Existing Note. The Borrowers and the Bank hereby agree that the
indebtedness embodied in and evidenced by this Note is the same indebtedness
embodied in and evidenced by the Existing Note, as increased as provided herein,
and that such indebtedness is a continuing obligation of the Borrowers to the
Bank, and has been and continues to be fully enforceable, absolute and in
existence.
TRIDEX CORPORATION
By______________________________________________
Richard L. Cote, Senior Vice President and
Chief Financial Officer
ITHACA PERIPHERALS INCORPORATED,
ULTIMATE TECHNOLOGY CORPORATION,
MAGNETEC CORPORATION
By______________________________________________
George T. Crandall
Secretary as to each of the above corporations
CASH BASES INCORPORATED
By______________________________________________
George T. Crandall
Treasurer
49
<PAGE> 11
<TABLE>
<CAPTION>
Amount Amount of Balance Notation
Date of Loan Payment Outstanding By
---- ------- --------- ----------- --------
<S> <C> <C> <C> <C>
</TABLE>
50
<PAGE> 1
TRIDEX CORPORATION AND SUBSIDIARIES
EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
-----------------------------------------
APRIL 1, 1995 APRIL 2, 1994
------------- -------------
<S> <C> <C>
Net income $ 2,686 $ 1,613
========== ==========
Shares:
Average common shares outstanding 3,638,340 3,326,561
Dilutive effect of outstanding options and warrants
as determined by the treasury stock method 229,487 334,717
---------- ----------
3,867,827 3,661,278
========== ==========
Earnings per common
and common equivalent share: $ 0.69 $ 0.44
========== ==========
</TABLE>
51
<PAGE> 1
TRIDEX CORPORATION
EXHIBIT 21.1 SUBSIDIARIES OF TRIDEX CORPORATION
<TABLE>
<CAPTION>
Jurisdiction of Percentage
Name Incorporation Owner Owned
- - ---------------------------------- -------------- ----- ----------
<S> <C> <C> <C>
Allu Realty Trust * Massachusetts Tridex 100%
Cash Bases Incorporated Delaware Tridex 100%
Cash Bases GB, Ltd. United Kingdom Tridex 100%
Cash Bases (Deutschland) GmbH Germany Cash Bases 100%
Cash Bases Iberica, S.A. Spain Cash Bases 80%
Digital Matrix Corporation* Connecticut Tridex 100%
Hi-G Canada, Ltd.* Canada Tridex 100%
Hi-G Relais Vertriebs GmbH* West Germany Tridex 100%
Hi-G S.A.R.L.* France Tridex 100%
Ithaca Peripherals Incorporated Delaware Tridex 100%
Ithaca Peripherals Limited United Kingdom Ithaca 100%
Magnetec Corporation Connecticut Tridex 100%
RIL Corporation* Connecticut Tridex 100%
TDX Corp.* Connecticut Tridex 100%
Transcom Incorporated* Maryland Tridex 100%
Tritel Corporation* California Tridex 100%
Ultimate Technology Corporation New York Tridex 100%
</TABLE>
*Inactive
52
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of the Tridex Corporation 1989 Long-Term Incentive Plan
of our report dated May 5, 1995 appearing on page 15 of this Form 10-K.
PRICE WATERHOUSE LLP
June 28, 1995
Hartford, Connecticut
53
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIDEX
CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED APRIL 1, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-01-1995
<PERIOD-START> APR-03-1994
<PERIOD-END> APR-01-1995
<CASH> 347
<SECURITIES> 0
<RECEIVABLES> 9,971
<ALLOWANCES> 42
<INVENTORY> 8,238
<CURRENT-ASSETS> 19,563
<PP&E> 11,214
<DEPRECIATION> 6,791
<TOTAL-ASSETS> 36,362
<CURRENT-LIABILITIES> 13,600
<BONDS> 6,185
<COMMON> 950
0
0
<OTHER-SE> 15,627
<TOTAL-LIABILITY-AND-EQUITY> 36,362
<SALES> 54,677
<TOTAL-REVENUES> 54,677
<CGS> 36,428
<TOTAL-COSTS> 36,428
<OTHER-EXPENSES> 13,659
<LOSS-PROVISION> 74
<INTEREST-EXPENSE> 1,171
<INCOME-PRETAX> 3,345
<INCOME-TAX> 659
<INCOME-CONTINUING> 2,686
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,686
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
