UNITED STATES
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 ended: December 31, 1997
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
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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)
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
- ---------------------------------- -----------------------------------------
Common Stock, Without Par Value NASDAQ
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 March 13, 1998 the aggregate market value of the registrant's issued and
outstanding voting stock held by non-affiliates of the registrant was
$33,533,000.
As of March 13, 1998 the registrant had outstanding 5,351,410 shares of common
stock, without par value.
Exhibit Index appears on page 29
Page 1 of 37
<PAGE>
PART I
ITEM 1. BUSINESS
General Tridex Corporation ("Tridex" or the "Company"), through its wholly-owned
subsidiary Ultimate Technology Corporation ("Ultimate") and its Tridex Ribbons
Division, is primarily engaged in the design, development, manufacture,
integration and sale of custom-designed terminal devices, customer displays,
keyboards, and other peripheral devices used in a variety of transactions at the
retail point-of-sale ("POS") and ribbon cartridges for specialty dot matrix
printers. See Note 2 to the Company's 1997 Consolidated Financial Statements for
a discussion of discontinued operations. All dollar amounts within this report,
unless otherwise indicated, exclude results of discontinued operations.
(A) General Development of Business since December 31, 1996
On March 31, 1997 the Company effected the previously announced pro rata
distribution of 5,400,000 shares of common stock of its former subsidiary,
TransAct Technologies Incorporated ("TransAct") to Tridex stockholders on
the basis of 1.005 shares of TransAct common stock for each share of
Tridex common stock owned. Since the distribution, Tridex and TransAct
have been separate publicly traded companies.
On May 29, 1997 Tridex completed the sale of its wholly-owned subsidiary
Cash Bases GB Limited ("Cash Bases") to a group comprised of the executive
directors of Cash Bases and Lloyds Development Capital Limited for up to
$6,200,000, consisting of $5,200,000 in cash, a $250,000 unsecured
promissory note bearing interest at the rate of 10% per annum payable in
full on April 30, 2000, contingent payments of up to $750,000 depending
upon Cash Bases' earnings before interest and taxes for the fiscal years
ending December 31, 1998 and December 31, 1999, and a 10% equity stake in
the newly organized buyer, Cash Bases Group Limited ("Cash Bases Group").
On February 25, 1998 the Company entered into an agreement with Cash Bases
Group whereby the Company sold to Cash Bases Group its remaining equity
interest in Cash Bases Group, the $250,000 note and the future contingency
payments for an aggregate amount of $855,000 in cash. Proceeds of the
transaction were received in March 1998. The Consolidated Financial
Statements have been restated to present the results of operations of
TransAct and Cash Bases as discontinued operations.
On February 25, 1998, the Company announced that it entered an agreement
to purchase all of the issued and outstanding shares of privately-held
Progressive Software, Inc. ("Progressive"), a leading POS software and
systems provider for the restaurant and specialty retail industries.
Progressive's 1997 sales were approximately $34 million. The acquisition
is subject, among other things, to obtaining acquisition financing. The
acquisition is scheduled to close in April 1998.
(B) Financial Information about Industry Segments
As of the date hereof, Tridex operates in one industry segment, the
design, development, manufacture, integration and sale of terminal
devices, customer displays, keyboards and other peripheral devices, and
ribbon cartridges for specialty dot matrix printers.
(C) Narrative Description of Business
(i) Principal Products and Services
Tridex designs, manufactures and sells customer displays, keyboards
and terminal devices for POS applications. Tridex manufactures and
markets POS customer displays, keyboards and terminal devices for
use in Twinax, Unix/Aix and PC-based POS applications. Tridex's
terminals and other peripheral products are sold to system
integrators, original equipment manufacturers and directly to end
users by a direct sales force located in New York, New Hampshire,
Illinois, California and Texas.
2
<PAGE>
(ii) Sources and Availability of Raw Materials
The principal raw materials used in the manufacture of custom
keyboards and customer displays are injection molded plastic parts,
formed metal parts and electronic subassemblies, all of which are
readily available from a number of sources. The assembly of POS
terminals combines the keyboard and customer display manufactured by
the Company with a printer, monitor, cash drawer and other
peripheral devices purchased from various suppliers, all of which
are readily available from a number of sources.
(iii) Intellectual Property
The Company regards certain hardware designs and software
incorporated into its products as proprietary and attempts to
protect them with a combination of copyright, trademark and trade
secret laws, employee and third party nondisclosure agreements and
similar means. It may be possible for unauthorized third parties to
copy certain portions of the Company's products or to reverse
engineer or otherwise obtain and use, to the Company's detriment,
information that the Company regards as proprietary. Moreover, the
laws of some foreign countries do not afford the same protection to
the Company's proprietary rights as do United States laws. There can
be no assurance that legal protections relied upon by the Company to
protect its proprietary rights will be adequate or that the
Company's competitors will not independently develop products that
are substantially equivalent or superior to the Company's. In
addition, some of the intellectual property used by Ultimate is not
proprietary. No assurance can be given that such intellectual
property will not be used by Ultimate's competitors.
(iv) Seasonality and Practices Relating to Working Capital Items
Sales of the Company's products are not subject to material seasonal
variations. The Company has not historically been required to
maintain significant inventories of raw materials or finished goods
in order to fill customer orders.
(v) Certain Customers
Sales to Lowe's Companies, Inc. accounted for approximately 10%
and 22% of net sales for the years ended December 31, 1997 and
December 31, 1996, respectively. Sales to Advance Stores Company
Inc. ("Advance Auto") accounted for approximately 19% of net sales
for the nine months ended December 31, 1995.
(vi) Backlogs
The Company's backlog of firm orders was approximately $2,750,000 as
of March 13, 1998 and $2,600,000 as of March 14, 1997. Tridex
expects to fill all of its' backlog within the current fiscal year.
(vii) Competition
Competition is intense in all of the Company's markets. Many of the
Company's current and potential competitors are large multi-national
enterprises with greater financial resources, extensive experience
and resources in designing, manufacturing and marketing a wide range
of peripheral devices and systems. Ultimate competes with other POS
manufacturers and system integrators, including NCR and IBM, as well
as distributors of terminals, keyboards and customer pole displays.
In certain markets, the Company's competitors sometimes offer prices
lower than the Company's 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 $734,000 in 1997, $481,000 in 1996,
and $352,000 during the nine months ended December 31, 1995, on
engineering, design and product development efforts in connection
with specialized engineering and design to introduce a number of new
products and to customize products for the Company's customers.
3
<PAGE>
(ix) Environment
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 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.
In 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 conducted further studies to more specifically
characterize and assess the Site and to determine appropriate long
term clean up.
In 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 approximately $200,000 of the
$250,000 it expended in connection with the Site prior to January 1,
1992. As of December 31, 1997, the Company had spent approximately
$724,000 in connection with the Site.
In 1997, Foley sold the Site to Stop & Shop, Inc. ("Stop & Shop")
and Stop & Shop has taken control of all remediation of the Site.
However, Foley asserts that Allu and Tridex remain liable for
payment of certain costs associated with the remediation of the
Site. Also in 1997, Foley brought suit against the Company claiming
that the Company failed to contribute its share of the remediation
costs pursuant to the Site Participation Agreement. The Company has
filed a counterclaim. This litigation has been stayed pending
completion of the remediation. The implementation of clean-up
measures has commenced, and may be completed in 1998, in which case
the entire amount of remediation costs to be borne by the Company
would be incurred and paid in 1998. As of December 31, 1997, the
Company had accrued $262,000 for the Site, which represents the
currently estimated minimum cost of remediation, after considering
the Site Participation Agreement. The Company estimates that it will
spend up to $275,000 in connection with the Site. Accordingly,
although no assurances can be given regarding 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 expects that, as in the past, cash from
operations will be sufficient to pay the costs of remediation.
(x) Employees
As of March 13, 1998, Tridex and its subsidiaries employed
approximately 94 persons, of which 79 were full time and 15 were
temporary employees.
(D) Financial Information About Foreign and Domestic Operations and Export
Sales
At the present time, the Company has no foreign operations. From June 1994
through May 1997, the Company owned Cash Bases GB Limited, a manufacturer
of custom cash drawers located in the United Kingdom. The results of
operations of Cash Bases are classified as discontinued operations. Export
sales from the United States were approximately $879,000 in 1997, $130,000
in 1996 and $100,000 for the nine months ended December 31, 1995.
4
<PAGE>
(E) Directors and Executive Officers of the Registrant
(i) Directors of the Registrant
Principal
Principal Business of
Director Name Age Occupation Employer Name Employer
---------------- ----- ---------------- ----------------- ----------------
Seth M. Lukash 51 Chairman of Tridex Manufacturer
the Board, Corporation of computer
President, peripheral
Chief equipment for
Executive POS
Officer and applications.
Chief
Operating
Officer
Paul J. Dunphy 79 Management Self-employed Management
Consultant consulting.
Dennis J. Lewis 43 President Ultimate Manufacturer
Technology of computer
Corporation (a peripheral
wholly-owned equipment for
subsidiary of POS
the Company) applications.
Thomas R. Schwarz 61 Retired None Personal
investments.
Graham Y. Tanaka 50 President Tanaka Capital Investment
Management, advising.
Inc.
(ii) Executive Officers of the Registrant
Name Age Position
---------------- --- ---------------------------------------------------
Seth M. Lukash 51 Chairman of the Board of Directors, President,
Chief Executive Officer, Chief Operating Officer
and Director
Daniel A. 38 Vice President
Bergeron
George T. 51 Vice President, Treasurer, Controller and
Crandall Secretary
Thomas F. 40 Vice President, Human Resources
Curtin, Jr.
Dennis J. Lewis 43 President, Ultimate Technology Corporation, a
wholly-owned subsidiary of the Company
Gary H. German 43 Vice President - Sales, Ultimate Technology
Corporation, a wholly-owned subsidiary of the
Company
Paul C. Wolf 36 Vice President - Engineering, Ultimate Technology
Corporation, a wholly-owned subsidiary of the
Company
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 Emeritus of the Company.
Daniel A. Bergeron has been a Vice President of the Company since March
19, 1998. Effective April 1, 1998, Mr. Bergeron will be appointed Chief
Financial Officer of the Company. Prior to joining Tridex, Mr. Bergeron
served as Vice President and Chief Financial Officer of the international
manufacturing and engineering company Dorr-Oliver Incorporated. Prior to
1987, Mr. Bergeron held various financial management positions with Akzo
Chemical and United Brands Company.
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.
Thomas F. Curtin, Jr. has been a Vice President of Human Resources of the
Company since April 1995. In May 1997 the Board of Directors appointed him
an executive officer. Prior to joining Tridex as Director of Human
Resources in 1994, Mr. Curtin held human resource management positions
with Lone Star Industries, Berol Corporation, and Brockway Glass Company.
Dennis J. Lewis has been President of Ultimate since its acquisition by
the Company in 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, RG
Engineering, Serv Tech and Add Electronics.
Gary H. German has been Vice President of Sales and Marketing with
Ultimate Technology since 1992. Prior to joining the Company in 1991 as
Director of Sales and Marketing, Mr. German held senior sales positions
with Apollo Computer, Prime Computer and MIPS Computer Systems.
Paul C. Wolf has been Vice President of Engineering with Ultimate
Technology since 1993. Prior to joining the Company in 1990 as Director of
Engineering, Mr. Wolf completed quality designs for companies such as
Hughes Network Systems, Federal Express and Tokheim Security Pacific.
ITEM 2. PROPERTIES
The Company's operations are currently conducted at the three facilities
described below:
<TABLE>
<CAPTION>
Size - Owned
Approx. Sq. or Lease
Location Operations Conducted Ft. Leased Expiration Date
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Westport, Principal executive 5,000 Leased July 31, 2001
Connecticut offices
Victor, New York Manufacturing 80,000 Leased January 31, 2002
facility
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 9(b) 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 last quarter
of the year covered by this report.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's common stock trades on the Nasdaq National Market tier of The
Nasdaq Stock Market ("NASDAQ") under the symbol "TRDX." As of March 13, 1998
there were 1,190 holders of record of the common stock. The following table
lists the high and low sales prices of the common stock reported during the
years ended December 31, 1997, and December 31, 1996.
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------
December 31, 1997 December 31, 1996
--------------------------------------------------------------------
High Low High Low
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
January - March 18 1/4 12 1/2 7 15/16 6 1/4
April - June 3 1/16 2 1/2 12 3/16 7 1/8
July - September 7 3 1/4 12 1/4 8 1/2
October - December 6 7/8 4 14 1/8 10 3/4
</TABLE>
The following table lists adjusted sales prices provided to the Company by
NASDAQ to reflect a pro rata allocation of the market prices for the Company's
common stock as if the distribution of TransAct had occurred prior to January 1,
1996.
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------
December 31, 1997 December 31, 1996
--------------------------------------------------------------------
High Low High Low
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
January - March 3 3/4 2 1/2 1 5/8 1 1/4
April - June 2 1/2 1 1/2
July - September 2 1/2 1 3/4
October - December 2 7/8 2 1/8
</TABLE>
No dividends or other distributions on the common stock (other than the
distribution of TransAct stock to Tridex shareholders in 1997) has been declared
in more than ten years. The Company does not anticipate declaring dividends in
the foreseeable future. The Company's credit agreement with Fleet National Bank
("Fleet") prohibits the payment of cash dividends for the term of the agreement.
6
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended Nine Months Ended Fiscal Year Ended
-------------------------------------------------------------------------------------------------
December December December December December April April
31, 1997 31, 1996 31, 1995 31, 1995 31, 1994 1, 1995 2, 1994
-------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales from
continuing operations $ 25,833 $ 22,325 $ 18,854 $ 14,393 $ 9,010 $ 13,471 $ 12,516
-------------------------------------------------------------------------------------------------
Income (loss) from
continuing operations $ (568) $ 5,646 $ (670) $ (1,407) $ (786) $ (159) $ 520
-------------------------------------------------------------------------------------------------
Income (loss) from
continuing operations
per common- basic $ (0.11) $ 1.44 $ (0.18) $ (0.38) $ (0.22) $ (0.04) $ 0.16
-------------------------------------------------------------------------------------------------
Cash dividends per
common share None None None None None None None
-------------------------------------------------------------------------------------------------
<CAPTION>
As of
----------------------------------------------------------------------------------
December December December December April 1, April 2,
31, 1997 31, 1996 31, 1995 31, 1994 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets $ 28,003 $ 33,972 $ 29,006 $ 26,949 $ 29,658 $ 21,384
----------------------------------------------------------------------------------
Long term debt None None $ 8,171 $ 6,443 $ 5,998 $ 5,307
----------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements included in this report, including, but not limited to,
statements in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, which are not historical facts may be deemed to
contain forward looking statements with respect to events the occurrence which
involves risks and uncertainties, including, but not limited to, the Company's
expectations regarding net sales, gross profit, operating income and financial
condition.
(A) Results of Operations
As described in Note 2 of the Notes to Consolidated Financial Statements
included in Item 8 of this report, and in "Business - General Development
of Business Since December 31, 1996" in Item 1(A), in 1997 the Company
completed the spin-off of TransAct and the sale of Cash Bases. The
Selected Financial Data are derived from the Company's Consolidated
Financial Statements, which have been restated from historical financial
statements to present the results of operations of TransAct and Cash Bases
as discontinued operations for all periods presented. The Consolidated
Financial Statements may not necessarily reflect what the results of
operations or the financial position of the Company would have been if
TransAct and Cash Bases had been separate entities during the periods
presented. The discussion and analysis set forth below is based upon
continuing operations only.
(i) Year ended December 31, 1997 compared to year ended December 31, 1996
Consolidated net sales for the year ended December 31, 1997
increased $3,508,000 (15.7%) to $25,833,000 from $22,325,000 for the
prior year. The increase reflects greater volume of shipments of
certain POS terminals, custom manufactured keyboards and customer
displays.
Consolidated gross profit increased $227,000 (3.9%) to $6,087,000
from $5,860,000 in the prior year, primarily due to the increase in
the volume of shipments of POS terminal systems. The gross margin
declined to 23.6% from 26.2% in the prior year as a result of a
change in sales mix to a higher
7
<PAGE>
proportion of distributed products and a lower proportion of
manufactured products, particularly custom keyboards and pole
displays.
Consolidated engineering, design and product development costs
increased $253,000 (52.6%) to $734,000 from $481,000 in the prior
year. The increase reflects the ongoing cost of enhancing existing
products and developing new products, such as Ultimate's Series 600
POS Keyboard and Series 7000 and 8000 Compact PC's / Network
Computers.
Consolidated selling, administrative and general expenses increased
$1,294,000 (25.5%) to $6,367,000 from $5,073,000 in the prior year.
Administrative and general expense in 1997 include a non-cash
expense of $1,225,000 related to a stock incentive compensation
agreement with the principal executive officers of Ultimate. General
expenses in 1996 included a charge of $320,000 to amend an unfunded
pension arrangement established in 1995. Selling expenses increased
$265,000 in 1997 primarily as the result of more intensive efforts
in the selling of POS terminal systems including increased
advertising and sales support personnel.
The operating loss for 1997 was $1,014,000 compared to an operating
income of $306,000 in the prior year. The operating loss as a
percent of revenue was 3.9% in 1997 compared to operating income of
1.4% of revenue in the prior year. The loss in the current period
was primarily the result of the increase in selling, administrative
and general expenses, particularly the expense of the stock
incentive compensation agreement discussed above.
Net interest income was $603,000 compared to net interest expense of
$827,000 in the prior year. Interest income for the year primarily
consists of interest earned on temporary cash investments. The
Company had no debt outstanding at the end of 1997.
Other non-operating expense, (net) for the current period includes a
provision of $196,000 to write-down the value of real estate held
for sale, based upon the declining market value of the property. The
prior year includes an additional provision of $163,000 for loss on
the anticipated disposal of real estate held for sale. Non-operating
income for the prior year includes the non-taxable gain of
$6,200,000 from the initial public offering of TransAct (the
"TransAct Offering").
The income tax benefit for 1997 is $44,000 compared to $112,000 in
1996. The effective tax rate is related to state income taxes and
non-deductible amortization of goodwill. The 1996 provision was
benefited by the $6,200,000 non-taxable gain recognized from the
TransAct Offering.
The loss from continuing operations for 1997 was $568,000 (or $0.11
per share - basic) compared to income of $5,646,000 (or $1.44 per
share basic) in the prior year. Exclusive of the one-time gain from
the TransAct Offering, the loss from continuing operations was
$554,000 (or $0.14 per share - basic) in the prior year.
Discontinued operations reflect the equity in the income of
TransAct. Spin-off related expenses consist of professional services
and other costs related to the spin-off of TransAct.
Net loss for 1997 was $35,000 (or $0.01 per share - basic and
diluted) as compared to net income of $8,848,000 (or $2.26 per share
- basic, $2.00 per share - diluted) for the prior year. The average
number of common shares - basic outstanding was 5,157,000 during
1997 compared to 3,913,000 during 1996.
(ii) Year ended December 31, 1996 compared to year ended December 31, 1995
Consolidated net sales for the year ended December 31, 1996
increased $3,471,000 (18.4%) to $22,325,000 from $18,854,000 for the
prior year. Sales of POS terminal systems and related products into
the POS market accounted for this increase.
Consolidated gross profit for 1996 increased $603,000 (11.5%) to
$5,860,000 from $5,257,000 in the prior year, primarily due to the
increase in the volume of shipments of both POS terminal systems.
The gross margin declined slightly to 26.2% from 27.9% in the prior
year due to the sales mix of POS terminal systems.
8
<PAGE>
Consolidated engineering, design and product development costs
increased $20,000 (5%) to $481,000 in 1996 from $461,000 in the
prior year. The increase reflects the ongoing cost of developing new
products and enhancing existing products.
Consolidated selling, administrative and general expenses decreased
$236,000 (4.4%) to $5,073,000 from $5,309,000 in the prior year.
Such expenses in 1995 included $680,000 for the settlement of
certain litigation, $339,000 for establishing an unfunded pension
arrangement and other non-recurring charges totaling approximately
$246,000. Expenses in 1996 include a provision of $320,000 to amend
the unfunded pension arrangement established in the prior year.
Operating income in 1996 was $306,000 compared to an operating loss
of $513,000 in the prior year. The increase in operating profit
reflects increased volume of shipments of POS terminal systems.
Operating profit as a percentage of revenue was 1.4% in 1996
compared to an operating loss of 2.7% of revenue in the prior year.
Net interest expense decreased $488,000 (37.1%) to $827,000 from
$1,315,000 in the prior year. The decrease in interest expense was
due primarily to lower levels of indebtedness under the working
capital facility, repayment of bank debt and the conversion of
debentures to common stock.
Non-operating income in 1996 includes the non-taxable gain of
$6,200,000 from the TransAct Offering. Other non-operating expense,
(net) includes a provision of $163,000 for loss on the anticipated
disposal of unused real estate held for sale. The prior year
includes a provision of $135,000 for environmental matters and an
additional provision of $92,000 for loss on the anticipated disposal
of real estate held for sale.
The income tax benefit for 1996 was $112,000 compared to a benefit
of $1,450,000 in 1995. The 1996 provision was benefited by a
$6,200,000 non-taxable gain recognized from the TransAct Offering.
The remaining provision is related to state income taxes and
non-deductible amortization of goodwill.
Income from continuing operations for 1996 was $5,646,000 (or $1.44
per share - basic and diluted). Exclusive of the one-time gain from
the TransAct Offering, the loss from continuing operations was
$554,000 (or $.14 per share - basic) in 1996 compared to a loss of
$2,120,000 (or $.18 per share - basic) in the prior year.
Discontinued operations reflect the equity in the income of TransAct
and Cash Bases. Spin-off related expenses consist of professional
services and other costs related to the spin-off of TransAct.
Net income for 1996 was $8,848,000 (or $2.26 per share - basic,
$2.00 per share - diluted) as compared to net income of $214,000 (or
$.05 per share - basic) in the prior year. The average number of
common shares - basic outstanding was 3,913,000 during 1996 compared
to 3,722,000 shares during 1995.
(iii) Liquidity and Capital Resources
The Company's working capital at December 31, 1997 was $19,490,000
compared with $2,026,000 at December 31, 1996. The current ratio was
6.2:1.0 at December 31, 1997 compared with 1.3:1.0 at December 31,
1996. The increase in working capital and current ratio reflects (a)
the receipt of $5,580,000 from the exercise of options and warrants
for the purchase of common stock (b) the receipt of $1,000,000
principal payment from TransAct, (c) the receipt of the $5,200,000
cash portion of the sales price of Cash Bases and (d) the decrease
of $3,628,000 in the current portion of long term debt resulting
from the conversation of notes and debentures into common stock.
During 1997, the Company's cash requirements were satisfied by cash
flow from operations.
The Company has a $2,000,000 Working Capital Facility (the "Working
Capital Facility") with Fleet National Bank ("Fleet"). Under this
facility, the Company is required to comply with certain financial
covenants, including a minimum tangible net worth, a maximum
leverage ratio, a minimum interest coverage ratio, and a minimum
current ratio, or Fleet may withdraw its commitment. At December 31,
1997, the Company was in compliance with these covenants, except for
the covenant prohibiting an
9
<PAGE>
annual net loss. The Company and Fleet amended the Working Capital
Facility to allow the annual net loss to be incurred in 1997. The
Company expects to be in compliance with these covenants for the
foreseeable future. At December 31, 1997, the Company had
availability of $2,000,000 under the Working Capital Facility and no
material commitment for capital expenditures.
In February 1997, in anticipation of the distribution of the
TransAct shares, the Board of Directors accelerated the vesting of
outstanding options, including options under the Tridex Corporation
1989 Long Term Incentive Plan (the "1989 Plan"), and issued notices
of redemption of convertible debentures. During the period January
1, 1997 through March 14, 1997, the Company issued common stock as
follows: (a) 599,300 shares to optionees under the 1989 Plan. upon
payment of a total of $4,185,000 exercise price, (b) 260,632 shares
to holders of warrants upon payment of a total of $2,211,000
exercise price, (c) 273,318 shares to holders of 10.5% Debentures
upon conversion of a total of $2,460,000 principal amount of
debentures, (d) 104,127 shares to holders of 8% Notes upon
conversion of a total of $1,250,000 aggregate principal amount, and
(e) 100,000 shares to certain officers of Ultimate in accordance
with the Stock Incentive Compensation Agreement.
In connection with the exercise of options under the Plan, the
Company offered loans to all employees whose total exercise price of
options under the Plan exceeded $50,000. The loans, which totaled
$893,000, are full recourse loans due in May 1998, bear interest at
the rate of 6.08% and are secured by pledges of the shares acquired
by the employees through the exercise of Plan options. At December
31, 1997, $816,000 was outstanding under such loans.
As part of its business strategy, the Company intends (i) to focus
on internal growth through the development of products that broaden
and extend the business of providing integrated systems and
peripheral devices to the POS, financial services and other
transaction based markets and (ii) to pursue acquisitions, joint
ventures, strategic alliances or other transactions, including
transactions to complement its existing products and markets,
acquire new product lines or enter new markets. Implementation of
this strategy may require substantial capital expenditures. There
can be no assurance that the Company will be able to successfully
implement its strategy, or that the Company can successfully manage
any new operations.
On February 25, 1998, the Company announced that it entered into an
agreement to purchase all of the issued and outstanding shares of
Progressive, a leading POS software and systems provider for the
restaurant and specialty retail industries. The acquisition is
scheduled to close in April 1998 and is subject, among other things,
to the completion of acquisition financing.
The purchase price of the proposed acquisition is estimated to be
approximately $44,000,000 plus the assumption of approximately
$8,000,000 of indebtedness. The proposed purchase price is payable
in a combination of shares of the Company's common stock valued at
up to $5,000,000, with the balance in cash and assumed debt. The
Company expects to pay the cash portion of the purchase price by
using approximately $15,000,000 of its existing cash balances and to
fund the remainder through new borrowings. The Company has received
a commitment from Fleet to provide the Company with senior secured
credit facilities consisting of a revolving line of credit of up to
$11,000,000 and a term loan of up to $12,000,000. In addition, the
Company intends to obtain unsecured subordinated debt financing of
$11,000,000 to $16,000,000 from one or more institutional investors.
The Company believes that such new borrowings can be obtained at
interest rates comparable to current rates in similar transactions.
The Company anticipates that subordinated debt will require the
issuance of stock purchase warrants.
The Company believes that funds generated from the operations of the
combined companies and borrowings under the revolving line of
credit, as necessary, will satisfy the working capital needs,
support the anticipated level of growth and meet scheduled debt
retirements.
(iv) The Year 2000
To identify risks related to the year 2000 issue and address the
potential impact on its operations and financial condition, the
Company has surveyed its products, information systems, suppliers,
customers and other third parties with significant relationships
with the Company. Based upon its survey and the advice of technical
consultants, the Company believes that the year 2000 issue will not
10
<PAGE>
have a material impact on its products and that the cost of
addressing the year 2000 issue is not likely to have a material
impact on its operations or financial condition. The Company will
continue to review the year 2000 issue for potential impact on its
products, operations and financial condition.
(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
the past three years and cost reduction programs at each of its
operations. Tridex believes that any increase in cost due to inflation can
be recovered by price increases or offset by cost reductions and
productivity improvements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Report of Independent Accountants 13
Tridex Corporation and Subsidiaries consolidated financial statements:
Consolidated balance sheets as of December 31, 1997 and December 31, 1996. 14
Consolidated statements of operations for the years ended December 31, 1997,
December 31, 1996 and the nine months ended December 31, 1995. 15
Consolidated statements of shareholders' equity for the years ended December
31, 1997 and December 31, 1996. 16
Consolidated statements of cash flows for the years ended December 31, 1997,
December 31, 1996 and the nine months ended December 31, 1995. 17
Notes to consolidated financial statements. 18
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.
</TABLE>
12
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders
of Tridex Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, shareholders' equity and of
cash flows present fairly, in all material respects, the financial
position of Tridex Corporation and its subsidiaries at December 31, 1997
and 1996, and the results of their operations and their cash flows for the
years ended December 31, 1997 and December 31, 1996 and the nine months
ended December 31, 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 the opinion expressed
above.
Price Waterhouse LLP
Hartford, Connecticut
February 13, 1998
13
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 11,839 $ 2,787
Short term investments 4,403
Receivables (Note 3) 3,043 2,783
Inventories (Note 4) 2,987 4,258
Deferred tax assets (Note 10) 659 324
Other current assets 343 146
----------------------------
Total current assets 23,274 10,298
----------------------------
Plant and equipment:
Machinery, furniture and equipment 2,138 1,624
Leasehold improvements 298 278
----------------------------
2,436 1,902
Less accumulated depreciation (1,195) (858)
----------------------------
1,241 1,044
----------------------------
Excess of cost over fair value of net assets
acquired 2,517 3,014
Other assets 366 1,890
Investment in net assets of discontinued operations:
Cash Bases GB Limited (Note 2) 605 6,153
TransAct Technologies Corporation (Note 2) 11,573
----------------------------
$ 28,003 $ 33,972
============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt (Note 6) $ 0 $ 3,628
Accounts payable 1,820 2,189
Accrued liabilities (Note 5) 1,806 2,299
Income taxes payable 158 86
----------------------------
Total current liabilities 3,784 8,202
----------------------------
Commitments and contingencies (Note 8)
Shareholders' equity (Notes 1 and 9):
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 5,497,808 and
4,160,431 shares 1,377 1,043
Additional paid-in capital 25,273 23,361
Retained earnings (accumulated deficit) (673) 2,239
Receivable from sale of stock (816)
Common stock held in treasury, at cost,
146,398 and 124,498 shares (942) (873)
----------------------------
24,219 25,770
----------------------------
$ 28,003 $ 33,972
============================
</TABLE>
See notes to consolidated financial statements.
14
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
-----------------------------------------------
December 31, December 31, December 31,
1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C>
Net sales $ 25,833 $ 22,325 $ 14,393
-----------------------------------------------
Operating costs and expenses:
Cost of sales 19,746 16,465 10,550
Engineering, design and product
development costs 734 481 352
Selling, administrative and general
expenses 6,367 5,073 4,232
-----------------------------------------------
26,847 22,019 15,134
-----------------------------------------------
Operating income (loss) (1,014) 306 (741)
Other charges (income):
Gain on sale of subsidiary stock
(Note 2) (6,200)
Interest (income) expense, net (603) 827 1,001
Other, net 201 145 163
-----------------------------------------------
(402) (5,228) 1,164
-----------------------------------------------
Income (loss) from continuing
operations before income taxes (612) 5,534 (1,905)
Benefit for income taxes (44) (112) (498)
-----------------------------------------------
Income (loss) from continuing
operations (568) 5,646 (1,407)
Discontinued operations (Note 2):
Equity in subsidiary's income from
discontinued operations 533 3,454 410
Spin-off related expenses, net of
taxes of $68 252
-----------------------------------------------
Net income (loss) $ (35) $ 8,848 $ (997)
===============================================
Earnings (loss) per share - basic:
Income (loss) from continuing
operations $ (.11) $ 1.44 $ (0.38)
Income from discontinued operations .10 0.82 0.11
-----------------------------------------------
Net income (loss) $ (.01) $ 2.26 $ (0.27)
===============================================
Earnings (loss) per share - diluted:
Income (loss) from continuing
operations $ (.11) $ 1.30 $ (0.38)
Income from discontinued operations .10 0.70 0.11
-----------------------------------------------
Net income (loss) $ (.01) $ 2.00 $ (0.27)
===============================================
Weighted average shares outstanding:
Basic 5,157,000 3,913,000 3,722,000
===============================================
Diluted 5,331,000 4,599,000 3,722,000
===============================================
</TABLE>
See notes to consolidated financial statements.
15
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Receivable
Common Stock Held Additional From
Common Stock In Treasury Paid-In Accumulated Sale
Shares Amount Shares Amount Capital Deficit Of Stock
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 3,900,807 $ 978 119,996 $ (828) $ 21,939 $ (6,609)
Exercise of warrants and
stock options 147,414 37 482
Purchase of treasury stock 4,502 (45)
Conversion of debentures 112,210 28 940
Net income 8,848
---------------------------------------------------------------------------------------------------
Balance, December 31, 1996 4,160,431 1,043 124,498 (873) 23,361 2,239
Exercise of warrants and
stock options 859,932 215 6,181 $ (816)
Conversion of notes and
debentures 377,445 94 3,492
Distribution of TransAct
shares (9,584) (2,877)
Issuance of stock incentive
compensation shares 100,000 25 1,618
Purchase of
treasury shares 21,900 (69)
Tax benefit related to
employee stock sales 205
Net loss (35)
---------------------------------------------------------------------------------------------------
Balance, December 31, 1997 5,497,808 $ 1,377 146,398 $ (942) $ 25,273 $ (673) $ (816)
===================================================================================================
</TABLE>
16
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
----------------------------------------
December 31, December 31, December 31,
1997 1996 1995
----------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (35) $ 8,848 $ (997)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity in subsidiary's income from
discontinued operations (533) (3,454) (410)
Gain on sale of subsidiary stock (6,200)
Stock incentive compensation expense 1,225
Depreciation and amortization 864 1,056 901
Deferred income taxes (114) 537 (106)
Loss on disposal of assets 194 27 7
Changes in operating assets and liabilities:
Receivables (260) (656) 1,156
Inventory 1,271 (2,377) (373)
Other current assets 53 36 27
Other assets 46 (131) (105)
Accounts payable, accrued liabilities and
income taxes payable (526) 788 625
----------------------------------------
Net cash provided by (used in) operating activities 2,185 (1,526) 725
----------------------------------------
Cash flows from investing activities:
Purchases of plant and equipment (546) (250) (152)
Proceeds from sale of subsidiary 5,200
Receipt of principal of note receivable from TransAct 1,000
Other 31
----------------------------------------
Net cash provided by (used in) investing
activities 5,654 (250) (121)
----------------------------------------
Cash flows from financing activities:
Net change in borrowings under line of credit (2,400)
Net proceeds from issuance of long term debt 5,500
Principal payments on long term borrowings (5,850) (3,398)
Net increase in short term investments (4,403)
Proceeds from exercise of stock options and warrants 5,580 474 24
Net transactions with discontinued operations 105 1,617 394
Proceeds from repayment of TransAct intercompany debt 7,500
Purchase of treasury shares (69)
Other (134)
----------------------------------------
Net cash provided by (used in) financing activities 1,213 3,741 (14)
----------------------------------------
Increase in cash and cash equivalents 9,052 1,965 590
Cash and cash equivalents at beginning of period 2,787 822 232
----------------------------------------
Cash and cash equivalents at end of period $ 11,839 $ 2,787 $ 822
========================================
Supplemental cash flow information:
Interest paid $ 96 $ 843 $ 835
Income taxes paid $ 197 $ 972 $ 552
Supplemental non-cash investing and financing activities:
Conversion of convertible debt to common stock $ 3,710 $ 1,010
</TABLE>
See notes to consolidated financial statements.
17
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business and summary of significant accounting policies:
Business: Tridex Corporation (the "Company"), through its wholly-owned
subsidiary Ultimate Technology Corporation ("Ultimate"), and its Tridex
Ribbons Division, operates in one industry segment, computer peripheral
equipment. Operations in this segment include the design, development,
manufacture and sale of terminal devices, customer displays and keyboards
for point-of-sale ("POS") applications and ribbon cartridges for specialty
dot matrix printers.
Principles of consolidation: The accompanying consolidated financial
statements include the accounts of the Company after elimination of all
material intercompany accounts and transactions. See Note 2 for treatment
of discontinued operations. Prior years have been restated for the effect
of discontinued operations.
Change in fiscal year end: In December 1995, the Company changed its
fiscal year to end on December 31, effective December 31, 1995.
Previously, the Company's fiscal year ended on the Saturday closest to
March 31.
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.
Short-term investments: Short-term investments consist primarily of
commercial paper with original maturities at date of purchase beyond three
months and less than 12 months. Such short-term investments are carried at
cost, which approximates fair value, due to the short period of time to
maturity.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Foreign Currency: 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.
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) was $2,517,000 and
$3,014,000 at December 31, 1997 and December 31, 1996, respectively. The
amount is the result of the acquisition of Ultimate in 1993, and is being
amortized on the straight-line method over ten years. Accumulated
amortization of the excess of cost over fair value of net assets acquired
was $2,469,000 and $1,963,000 at December 31, 1997 and December 31, 1996,
respectively. The Company periodically reviews goodwill to assess
recoverability based upon expectations of non-discounted cash flows from
operations. The Company believes that no material impairment of goodwill
exists at December 31, 1997 or December 31, 1996.
Other assets: Included in other assets at December 31, 1997 are deferred
tax assets of $206,000 (see Note 10) and a note receivable from a
corporate officer of $125,000, which bears interest at 8.5%. At December
31, 1996, such amounts were $427,000 and $135,000, respectively. Also
included in other assets at December 31, 1996 was a note receivable from
TransAct of $1,000,000 and real estate held for sale in the amount of
$196,000.
18
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business and summary of significant accounting policies: (continued)
Receivable from sale of stock: In connection with the exercise of options,
the Company offered loans to all employees whose total exercise price of
options under the Tridex Corporation 1989 Long Term Incentive Plan (the
"1989 Plan") exceeded $50,000. The loans, which totaled $893,000, are full
recourse loans due in May 1998, bear interest at the rate of 6.08% and are
secured by pledges of the shares acquired by the employees through the
exercise of 1989 Plan options. At December 31, 1997, $816,000 was
outstanding under such loans.
Revenue recognition: Sales are recognized when the product is shipped.
Sales to Lowe's Companies, Inc. accounted for approximately 10% and 22% of
net sales for the years ended December 31, 1997 and December 31, 1996,
respectively. Sales to Advance Stores Company Inc. ("Advance Auto")
accounted for approximately 19% of net sales for the nine months ended
December 31, 1995.
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 that are recognized in
different periods for income tax and financial statement purposes. The
Company accounts for income taxes in accordance with 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 10 for a further discussion.
Earnings (loss) per common share: Basic earnings (loss) per common share
is based on the weighted average number of common shares outstanding
during the period. Diluted earnings per common share assumes the exercise
of options and warrants and the conversion of dilutive securities, when
the result is dilutive.
For the twelve month period ending December 31, 1997 and for the nine
month period ending December 31, 1995 the basic and diluted per share
amounts were the same. The following is a reconciliation of the earnings
per share for the twelve month period ending December 31, 1996:
<TABLE>
<CAPTION>
Income Average Shares Per Share Amount
-----------------------------------------------
<S> <C> <C> <C>
Net income $8,848
-----------------------------------------------
Basic earnings per share 8,848 3,913 $ 2.26
Stock awards 686
Interest income adjustment 341
-----------------------------------------------
Diluted earnings per share $9,189 4,599 $ 2.00
===============================================
</TABLE>
2. Discontinued Operations:
On March 31, 1997 the Company effected the previously announced
distribution of it's remaining 5,400,000 shares of common stock of its
former subsidiary, TransAct Technologies Incorporated ("TransAct"), to
Tridex stockholders on the basis of 1.005 shares of TransAct common stock
for each share of Tridex common stock owned.
On May 29, 1997 Tridex sold its wholly-owned subsidiary Cash Bases GB
Limited ("Cash Bases") to a group comprised of the executive directors of
Cash Bases and Lloyds Development Capital Limited for up to $6,200,000,
consisting of $5,200,000 in cash, a $250,000 unsecured promissory note
bearing interest at the rate of 10% per annum payable in full on April 30,
2000, contingent payments of up to $750,000 depending upon Cash Bases'
earnings before interest and taxes for the fiscal years ending December
31, 1998 and December 31, 1999, and a 10% equity stake in the newly
organized buyer Cash Bases Group Limited ("Cash Bases Group"). See Note 12
for further discussion of the Cash Bases settlement. The Consolidated
Financial Statements have been restated to present the results of
operations of TransAct and Cash Bases as discontinued operations. Such
results are summarized below.
19
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Discontinued Operations: (continued)
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
-----------------------------------------------------------
December 31, 1997 December 31, 1996 December 31, 1995
-----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Net sales $20,317 $56,862 $33,976
Operating income 2,029 6,295 1,055
Net income 533 3,202 410
Basic earnings per share $ 0.10 $ 0.82 $ 0.11
</TABLE>
3. Receivables:
Receivables are net of the allowance for doubtful accounts. The
reconciliation of the allowance for doubtful accounts is as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
-----------------------------------------------------------
December 31, 1997 December 31, 1996 December 31, 1995
-----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Balance at beginning of year $ 70 $ 31 $ 24
Provision for doubtful accounts 80 44 9
Accounts written off, net of recoveries (130) (5) (2)
------------------------------------------------------------
Balance at end of year $ 20 $ 70 $ 31
============================================================
</TABLE>
4. Inventories:
The components of inventories are:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------------
(Dollars in thousands)
<S> <C> <C>
Raw materials and component parts $2,097 $1,144
Work-in-process 75 46
Finished goods 815 3,068
--------------------------------------
$2,987 $4,258
======================================
</TABLE>
5. Accrued liabilities:
The components of accrued liabilities are:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------------
(Dollars in thousands)
<S> <C> <C>
Payroll, fringe benefits and commissions $ 402 $ 698
Unfunded pension obligation 555 577
Environmental matters 262 322
Other 587 702
--------------------------------------
$1,806 $2,299
======================================
</TABLE>
6. Bank credit agreement and long term debt:
Fleet National Bank ("Fleet") provides the Company with a $2,000,000
working capital revolving credit facility (the "Fleet Credit Agreement").
The working capital facility expires on June 30, 1998, bears interest
payable monthly at a rate equal to Fleet's prime rate (8.50% at December
31, 1997), and bears an annual non-utilization fee of .25% of the unused
facility. The Fleet Credit Agreement is secured by a first priority
security interest in certain assets, imposes certain covenants (including
a minimum tangible net worth, a maximum leverage ratio, a minimum interest
coverage ratio and a minimum current ratio) and restricts the amount
available for payment in cash dividends and capital stock distributions.
At December 31, 1997, the Company was in compliance with these covenants,
except for the covenant prohibiting an annual net loss. The Company and
Fleet amended the Working Capital Facility to allow the annual net loss to
be incurred in 1997. The Company expects to be in compliance with all
covenants during 1998.
20
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Bank credit agreement and long term debt: (continued)
During 1997, the holders of $2,460,000 principal amount of the Company's
10.5% Senior Subordinated Convertible Debentures due 1997 (the "10.5%
Debentures") converted their holdings into 273,318 shares of the Company's
common stock at a rate of $9.00 per share. Also during 1997, the holders
of detachable warrants (the "Warrants") to purchase 39,750 shares of
common stock of Tridex, (issued in 1993 to the original purchasers of the
10.5% Debentures at a rate of 10 shares per $1,000 principal amount of
debentures), exercised their warrants at $9.25 per share. The amount of
the unamortized discount at the time of conversion aggregating $52,000 was
charged to additional paid in capital.
During 1997, the holders of $1,250,000 principal amount of the Company's
8% Subordinated Convertible Term Promissory Notes (the "8% Notes")
converted their holdings into 104,127 shares of Tridex common stock at
$12.00 per share.
Interest income in 1997 is stated net of interest expense of $95,000.
Interest expense is stated net of interest income of $77,000 in 1996 and
$10,000 in the nine months ended December 31, 1995.
7. Pension plan:
Effective December 31, 1995, the Company established a non-qualified
unfunded pension arrangement for Alvin Lukash, a shareholder and former
corporate officer and director. The pension arrangement, as amended on
December 31, 1996, requires the Company to pay an annual benefit of
$100,000, payable monthly, through the death of Mr. Lukash. The unfunded
accumulated benefit obligation at December 31, 1997 of $555,000 is
included in Accrued Liabilities in the accompanying balance sheet. The
Company recorded the actuarial present value of the benefits calculated at
a 7.2% discount rate. The Company recorded pension expense of $78,000 in
1997.
8. Commitments and contingencies:
(a) Lease obligations:
At December 31, 1997, the Company was lessee on long term operating
leases for equipment and real property. The terms of certain leases
provide for escalating rent payments in later years of the lease as
well as payment of minimum rent and real estate taxes. Rent expense
amounted to approximately $300,000 in 1997, $315,000 in 1996, and
$182,000 in the nine months ended December 31, 1995. Minimum
aggregate rental payments required under operating leases that have
initial or remaining non-cancelable lease terms in excess of one
year as of December 31, 1997 are as follows: $323,000 in 1998,
$322,000 in 1999; $323,000 in 2000; $270,000 in 2001; and $16,000 in
2002.
(b) Environmental matters:
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.
In 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 more
specifically characterize and assess the Site and to determine
appropriate long term clean up.
In 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
21
<PAGE>
CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Commitments and contingencies:
(b) Environmental matters: (continued)
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 approximately $200,000 of the $250,000 it expended in
connection with the Site prior to January 1, 1992. As of December
31, 1997, the Company had spent approximately $724,000 in connection
with the Site.
In 1997, Foley sold the Site to Stop & Shop, Inc. ("Stop & Shop")
and Stop & Shop has taken control of all remediation of the Site.
However, Foley asserts that Allu and Tridex remain liable for
payment of certain costs associated with the remediation of the
Site. Also in 1997, Foley brought suit against the Company claiming
that the Company failed to contribute its share of the remediation
costs pursuant to the Site Participation Agreement. The Company has
filed a counterclaim. This litigation has been stayed pending
completion of the remediation. The implementation of clean-up
measures has commenced, and may be completed in 1998, in which case
the entire amount of remediation costs to be borne by the Company
would be incurred and paid in 1998. As of December 31, 1997, the
Company had accrued $262,000 for the Site, which represents the
currently estimated minimum cost of remediation, after considering
the Site Participation Agreement. The Company estimates that it will
spend up to $275,000 in connection with the Site. 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 expects that, as in the
past, cash from operations will be sufficient to pay the costs of
remediation.
9. Stock options and warrants:
1997 Long Term Incentive Plan
The 1997 Long Term Incentive Plan (the "1997 Plan") was approved by the
Shareholders of the Company at the Annual Meeting held on May 14, 1997.
The 1997 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 1997 Plan, up to 600,000 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. Under APB 25 when the exercise
price of employee stock options equals the fair market value of the
underlying stock on the date of grant, no compensation expense is
recognized. 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 December 31, 1997 the Company had reserved
600,000 shares of common stock for issuance upon the exercise of options
granted under the 1997 Plan. At December 31, 1997, options for 420,000
shares were outstanding under the 1997 Plan at exercise prices ranging
from $2.81 to $5.50 per share. These options, none of which were
exercisable, had a weighted average exercise price of $2.98 per share and
a weighted average remaining contractual life of 8.44 years.
Non-Employee Directors Plan
The Non-Employee Directors' Stock Plan (the "Directors' Plan") was
approved by the Shareholders of the Company at the Annual Meeting held on
May 14, 1997. The Directors' Plan authorized the issuance of up to a total
of 100,000 shares of the Company's common stock to be available for the
granting of options only to non-employee directors of the Company. Options
issued under the Directors' Plan do not qualify as incentive options under
Section 422 of the Internal Revenue Code. Options to purchase 10,000
shares of the Company's common stock were granted to each non-employee
director upon the effective date of the Directors' Plan. Persons
subsequently elected as non-employee directors will be granted options to
purchase 10,000 shares on the date of their election. Thereafter, on the
date of the Company's Annual Meeting of Shareholders, each non-employee
director will be granted an option to purchase 3,000 shares of common
stock. Options become exercisable in three equal annual installments and
may be exercised within 10 years of the date of the grant. At December 31,
1997 the Company had reserved 100,000 shares of common stock for issuance
upon the exercise of options granted under the Directors' Plan.
22
<PAGE>
CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Stock options and warrants: (continued)
The following table summarizes the activity of the 1997 Plan and the
Directors' Plan for the year ended December 31, 1997.
<TABLE>
<CAPTION>
Year Ended December 31, 1997
------------------------------------------------------------
1997 Long Term Incentive Plan Non-Employee Directors Plan
--------------------------- ----------------------------
Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price
--------------------------- ----------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of period 0 0
Granted 441,000 $ 2.97 30,000 $ 2.81
Canceled (21,000) $ 2.81
-------- --------
Outstanding at end of period 420,000 $ 2.98 30,000 $ 2.81
======== ========
Options exercisable at end of period 0 0
======== ========
Weighted average grant date fair value of
options granted during the period: $ 0.95 $ 0.94
======== ========
</TABLE>
1989 Long Term Incentive Plan
The 1989 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 1989 Plan, up to 1,250,000 shares of common
stock may be distributed to officers, key employees and non-employee
directors 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. During 1997,
the Company accelerated the vesting of all outstanding options. The
following table summarizes the activity of the 1989 Plan for the year
ended December 31, 1997, December 31, 1996, and for the nine months ended
December 31, 1995.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
----------------------------------------------------------------------------
December 31, 1997 December 31, 1996 December 31, 1995
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of period 629,360 $ 7.13 669,530 $ 6.33 612,465 $ 5.44
Granted 0 99,000 8.08 211,800 6.40
Exercised (629,300) 7.13 (96,964) 2.99 (111,125) 1.12
Canceled (60) 5.25 (42,206) 6.24 (43,610) 7.44
--------- -------- ---------
Outstanding at end of period 0 629,360 $ 7.13 669,530 $ 6.33
========= ======== =========
Options exercisable at end of period 236,412 $ 6.68 213,870 $ 5.02
======== =========
Weighted average grant date fair value of
options granted during the period: $ 5.71 $ 3.91
======== =========
</TABLE>
23
<PAGE>
CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Stock options and warrants: (continued)
Warrants:
As of December 31, 1996, the Company had outstanding stock purchase
warrants for an aggregate of 233,382 shares of common stock, consisting of
warrants for 117,550 shares held by directors of the Company and 115,832
shares issued to the purchasers of the 10.5% Debentures and the placement
agent for the 10.5% Debentures. The following table summarizes the
activity of outstanding warrants for the year ended December 31, 1997,
December 31, 1996, and for the nine months ended December 31, 1995.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
---------------------------------------------------------------------------------
December 31, 1997 December 31, 1996 December 31, 1995
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of period 233,382 $ 8.31 283,832 $ 7.64 283,832 $ 7.64
Exercised (230,632) 8.30 (50,450) 4.54 0
Expired (2,750) 9.25 0
------- ------- -------
Outstanding at end of period 0 233,382 $ 8.31 283,832 $ 7.64
======= ======= =======
Warrants exercisable at end of period 209,582 $ 8.43 236,932 $ 7.72
======= =======
</TABLE>
Had compensation expense been recognized based on the fair value of the
options at their grant dates, as prescribed in Financial Accounting
Standard No. 123, the Company's net income (loss) and earnings per share
would have been:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
-----------------------------------------------------------
December 31, 1997 December 31, 1996 December 31, 1996
-----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Net income (loss):
As reported $ (35) $ 8,848 $ (997)
Pro forma under FAS 123 $ (301) $ 8,673 $ (1,103)
Pro forma earnings per share (basic
and diluted:
As reported $ (0.01) $ 2.26 $ (0.27)
Pro forma under FAS 123 $ (0.06) $ 2.22 $ (0.30)
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C>
Dividend yield 0% 0% 0%
Risk-free interest rates 5.72% - 6.22% 5.04% - 5.07% 5.24% - 5.91%
Expected volatility 37.6% - 38.6% 57.0% - 57.6% 42.9% - 45.0%
Expected option term 3 years 5 - 10 years 5 - 10 years
</TABLE>
24
<PAGE>
CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income taxes:
The components of the income tax benefit are as follows:
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
-------------------------------------------
December 31, December 31, December 31,
1997 1996 1995
-------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Current:
Federal $ 88 $ (743) $ (446)
State (18) 94 54
-------------------------------------------
$ 70 $ (649) $ (392)
-------------------------------------------
Deferred:
Federal $ (107) $ 553 $ (97)
State (7) (16) (9)
-------------------------------------------
$ (114) $ 537 $ (106)
-------------------------------------------
Benefit for income taxes $ (44) $ (112) $ (498)
===========================================
</TABLE>
Deferred income taxes arise from temporary differences between the tax
basis of assets and liabilities and their reported amounts in the
financial statements. The Company's gross deferred tax assets and
liabilities were comprised of the following:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------------------------------
(Dollars in thousands)
<S> <C> <C>
Gross deferred tax assets:
Current non-deductible liabilities and reserves $1,342 $ 869
Net operating loss carryforwards 463 609
Federal business and foreign tax credit
carryforwards 415
Federal minimum tax credit carryforwards 46 88
----------------------------------------
$1,851 $1,981
----------------------------------------
Gross deferred tax liabilities:
----------------------------------------
Depreciation $ 69 $ 103
----------------------------------------
</TABLE>
At December 31, 1997 and December 31, 1996, valuation allowances of
$917,000 and $1,127,000, respectively, have been recorded which relate
primarily to state net operating loss carryforwards 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 since
December 31, 1996 in the valuation allowance for deferred tax assets was a
decrease of $210,000 related primarily to a decrease in deferred state tax
benefits.
25
<PAGE>
CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income taxes: (continued)
At December 31, 1997, the Company had $6,346,000 of state net operating
loss carryforwards that expire principally in 1998 through 2001. The
Company has a federal minimum tax credit carryforward of approximately
$46,000 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>
Nine
Year Ended Months Ended
-------------------------------------------
December 31, December 31, December 31,
1997 1996 1995
-------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate (34.0%) 34.0% (34.0%)
Nondeductible purchase
accounting 27.7% 3.1% 6.9%
State income taxes, net of
federal income taxes (3.1%) 0.8% 1.3%
Gain on sale of subsidiary stock (38.1%)
Valuation allowance (0.8%)
Other 2.2% (1.0%) (0.3%)
-------------------------------------------
Effective tax rate (7.2%) (2.0%) (26.1%)
-------------------------------------------
</TABLE>
11. Disclosure Regarding Fair Value of Financial Instruments:
The carrying amount of cash, trade accounts receivable, other current
assets, trade accounts payable, and accrued expenses approximate fair
value because of the short maturity of those instruments.
12. Other Significant Transactions:
See Note 2 for discussion regarding the spin-off of TransAct Technologies
Incorporated and the sale of Cash Bases GB Limited. During the quarter
ended December 31, 1997, the Company recorded additional compensation
expense of $237,000 related to the acceleration of the distribution of
shares under the Stock Incentive Compensation Agreement with certain
officers of Ultimate and a provision of $196,000 to write-down the
carrying value of real estate held for sale. During the quarter ended
December 31, 1996, the Company recorded a $320,000 provision to amend the
unfunded pension arrangement established in the prior year.
During the quarter ended December 31, 1995, the Company recorded
provisions for the following non-recurring operating expenses: litigation
settlement of $680,000, pension of $339,000 and other non-recurring items
totaling $246,000. In addition, the Company recorded other charges of
$42,000 for estimated loss on disposal of unused real estate and $75,000
for environmental investigation and remediation.
13. Subsequent Events:
On February 25, 1998 the Company entered into an agreement with Cash Bases
Group whereby the Company sold its remaining equity interest in Cash Bases
Group, the $250,000 principal amount of the note receivable and the future
contingency payments for an aggregate settlement amount of $855,000 in
cash. Proceeds of the settlement were received in March 1998.
On February 25, 1998, the Company entered into an agreement to purchase
all of the issued and outstanding shares of privately-held Progressive
Software, Inc. ("Progressive"), a leading POS software and systems
provider for the restaurant and specialty retail industries. Progressive's
1997 sales were approximately $34 million. The acquisition is subject,
among other things, to obtaining acquisition financing. The acquisition is
scheduled to close in April 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
26
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 May 27, 1998 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 TRANSACTION
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 12.
(ii) Financial statement schedules
See Item 8 on page 12.
(iii) List of Exhibits.
See Exhibit Index on page 29.
(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.
27
<PAGE>
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: March 27, 1998
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 March 27, 1998
- ------------------------------ Executive Officer, Chief Operating Officer
Seth M. Lukash and Director
(Principal Executive Officer)
/s/ George T. Crandall Vice President, Treasurer, March 27, 1998
- ------------------------------ Controller and Secretary
George T. Crandall
(Principal Accounting Officer)
/s/ Graham Y. Tanaka Director March 27, 1998
- ------------------------------
Graham Y. Tanaka
/s/ Paul J. Dunphy Director March 27, 1998
- ------------------------------
Paul J. Dunphy
/s/ Thomas R. Schwarz Director March 27, 1998
- ------------------------------
Thomas R. Schwarz
/s/ Dennis J. Lewis Director March 27, 1998
- ------------------------------
Dennis J. Lewis
</TABLE>
28
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Page
Number
------
<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 as of January 22, 1996, filed on
March 26, 1996 as Exhibit 3.5 to the Company's Transition Report on Form
10-K for the transition year ended December 31, 1995 is hereby
incorporated herein 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 September 14, 1994 is hereby incorporated
herein by reference.
10.1 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 September 14, 1994 is hereby incorporated
herein by reference.
10.2 Amended and Restated Credit Agreement dated as of December 15, 1995 among
Tridex Corporation, Ithaca Peripherals Incorporated, Ultimate Technology
Corporation, Magnetec Corporation, Cash Bases Incorporated and Fleet Bank,
National Association. Filed on March 29, 1996 as Exhibit 10.12 to the
Company's Transition Report on Form 10-K for the transition period ended
December 31, 1995 is hereby incorporated herein by reference.
10.3 Amendment No. 1, dated as of March 15, 1996 to Amended and Restated Credit
Agreement, dated as of December 14, 1995, among Tridex Corporation, Ithaca
Peripherals Incorporated, Ultimate Technology Corporation, Magnetec
Corporation, Cash Bases Incorporated and Fleet Bank, National Association.
Filed on March 29, 1996 as Exhibit 10.13 to the Company's Transition
Report on Form 10-K for the transition period ended December 31, 1995 is
hereby incorporated herein by reference.
10.4 Amendment No. 2, dated as of August 30, 1996 to Amended and Restated
Credit Agreement, dated as of December 14, 1995, among Tridex Corporation,
Ithaca Peripherals Incorporated, Ultimate Technology Corporation, Magnetec
Corporation, Cash Bases Incorporated and Fleet National Bank, filed on
November 12, 1996 as Exhibit 10.9 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 28, 1996 is hereby incorporated
herein by reference.
10.5 Retirement Agreement, dated as of December 31, 1995, between Tridex
Corporation and Alvin Lukash, Filed on March 29, 1996 as Exhibit 10.15 to
the Company's Transition Report on Form 10-K for the transition year ended
December 31, 1995 is hereby incorporated herein by reference.
10.6 First Amendment to Retirement Agreement dated December 31, 1996 between
Tridex Corporation and with Alvin Lukash, filed on March 31, 1997 as
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, is hereby incorporated herein by reference.
10.7 Employment Agreement dated December 2, 1996 between Tridex Corporation and
Seth M. Lukash filed on March 31, 1997 as Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, is hereby
incorporated herein by reference.
10.8 Employment Agreement dated August 7, 1996 between Tridex Corporation and
George T. Crandall filed on March 31, 1997 as Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
is hereby incorporated herein by reference.
10.9 Asset Transfer Agreement dated as of July 31, 1996 between Magnetec and
Tridex, filed on November 12, 1996 as Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 28, 1996, is
hereby incorporated herein by reference.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
10.10 Manufacturing Support Services Agreement dated as of September 28, 1996
between Magnetec and Tridex, filed on November 12, 1996 as Exhibit 10.5 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996, is hereby incorporated herein by reference.
10.11 Printer Supply Agreement dated as of July 30, 1996 between Magnetec and
Ultimate Technology Corporation, filed on November 12, 1996 as Exhibit
10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996 is hereby incorporated herein by reference.
10.12 Tax Sharing Agreement dated as of July 31, 1996 between Tridex and
TransAct, filed on November 12, 1996 as Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 28, 1996 is
hereby incorporated herein by reference.
10.13 Stock Incentive Compensation Agreement among Tridex Corporation, Ultimate
Technology Corporation, Dennis Lewis, Gary German and Paul Wolf dated
March 10, 1997 filed on March 31, 1997 as Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, is hereby
incorporated herein by reference.
10.14 Employment Agreement dated February 21, 1997 between Ultimate Technology
Corporation and Dennis Lewis filed on March 31, 1997 as Exhibit 10.21 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1996, is hereby incorporated herein by reference.
10.15 Employment Agreement dated February 21, 1997 between Ultimate Technology
Corporation and Gary German filed on March 31, 1997 as Exhibit 10.22 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1996, is hereby incorporated herein by reference.
10.17 Employment Agreement dated February 21, 1997 between Ultimate Technology
Corporation and Paul Wolf filed on March 31, 1997 as Exhibit 10.23 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
is hereby incorporated herein by reference.
10.18 The Tridex Corporation 1997 Long Term Incentive Plan filed as Exhibit A to
the Company's Proxy Statement for Annual Meeting of Shareholders filed
April 18, 1997, is hereby incorporated herein by reference.
10.19 The Tridex Corporation Non-Employee Directors' Plan filed as Exhibit B to
the Company's Proxy Statement for Annual Meeting of Shareholders filed
April 18, 1997 is hereby incorporated herein by reference.
10.20 Employment Agreement dated August 7, 1996 between Tridex Corporation and
Thomas F. Curtin Jr. 31
11.1 Statement re: computation of per share earnings. 36
21.1 List of Subsidiaries of Tridex. 37
27.1 Financial Data Schedule.
</TABLE>
30
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 7th day of
August, 1996, by and between Tridex Corporation, a Connecticut corporation with
a mailing address of 61 Wilton Road, Westport, Connecticut 06880 (the
"Company"), and Thomas F. Curtin, Jr., an individual with a residence address of
267 Putting Green Road, Trumbull, Connecticut 06611, (the "Executive").
INTRODUCTION
1. The Company is in the business of designing, developing, manufacturing and
marketing Point of Sale printers and related products (the "Business").
2. The Company desires to employ Executive and Executive desires to accept
such employment on the terms and conditions set forth herein.
AGREEMENT
In consideration of the premises and mutual promises herein below set forth, the
parties hereby agree as follows:
1. Employment Period. The term of this Agreement (the "Employment Period")
shall commence on the date hereof and, subject to earlier termination as
hereinafter provided, shall terminate one (1) year from the date hereof
provided that the term of this Agreement shall automatically extend by
thirty (30) days for each thirty (30) day period which shall expire
without either the Company or Executive giving written notice of an intent
to terminate.
2. Employment Duties. Subject to the terms and conditions set forth herein,
the Company hereby employs Executive to act as Vice President of Human
Resources of the Company during the Employment Period, and Executive
hereby accepts such employment. The duties assigned and authority granted
to Executive shall be as set forth in the By-laws of the Company and as
determined by its Board of Directors from time to time. Executive agrees
to perform his duties for the Company diligently, competently, and in a
good faith manner. The Executive may also engage in civic and charitable
activities to the extent they are not inconsistent with Executive's duties
hereunder.
3. Salary and Bonus.
(a) Base Salary. The Company agrees to pay Executive $89,000 per year,
payable bi-monthly in arrears. Executive's base salary shall not be
decreased. In addition, no later than March 31, 1997 the Board of
Directors of the Company (or any appropriate committee thereof)
shall review and may increase the Executive's annual base salary in
its discretion, based upon the Company's performance and the
Executive's particular contributions.
(b) Bonus. Executive shall have an opportunity to earn an annual cash
bonus under the Company's Executive Incentive Compensation Plan,
subject to the discretion of the Company's Board of Directors (or
any appropriate committee thereof).
4. Other Benefits.
(a) Insurance and Other Benefits. The Executive shall be entitled to
participate in, and shall receive the maximum benefits available
under the Company's insurance programs (including health, disability
and life insurance) and any ERISA benefit plans, as the same may be
adopted and/or amended from time to time, and shall receive all
other fringe benefits that are provided by the Company to other
senior executives. The Company shall contribute the maximum amount
permitted under current law to the Executive's 401(k) Plan, and any
other Company pension or retirement plan during the Employment
Period.
(b) Vacation. Executive shall be entitled to an annual vacation of such
duration as may be determined by the Board of Directors, but not
less than that generally established for other executives of Company
and in no event less than three (3) weeks, without interruption of
salary.
31
<PAGE>
(c) Automobile Allowance. Subject to approval by the Compensation
Committee of the Tridex Board of Directors, the Company shall
provide Executive with an automobile allowance.
(d) Reimbursement of Expenses. The Company shall reimburse Executive for
all reasonable travel, entertainment and other expenses incurred or
paid by the Executive in connection with, or related to, the
performance of his duties or responsibilities under this Agreement,
provided that Executive submits to the Company substantiation of
such expenses sufficient to satisfy the record keeping guidelines
promulgated from time to time by the Internal Revenue Service.
5. Termination by the Company With Cause. The Company may terminate this
Agreement if any of the following events shall occur:
(a) the death or disability of the Executive (For purposes of this
Agreement, "disability" shall mean the Executive's incapacity due to
physical or mental illness which has caused the Executive to be
absent from the full-time performance of his duties with the Company
for a period of six (6) consecutive months.).
(b) any action or inaction by the Executive that constitutes larceny,
fraud, gross negligence, a willful or negligent misrepresentation to
the directors or officers of the Company, its successors or assigns,
a crime involving moral turpitude; or
(c) the refusal of the Executive to follow the reasonable and lawful
written instructions of the Board of Directors of the Company with
respect to the services to be rendered and the manner of rendering
such services by Executive, provided such refusal is material and
repetitive and is not justified or excused either by the terms of
this Agreement or by actions taken by the Company in violation of
this Agreement, and with respect to the first two refusals Executive
has been given reasonable written notice and explanation thereof and
reasonable opportunity to cure and no cure has been effected within
a reasonable time after such notice.
The Company may terminate this Agreement pursuant to this Section 5 upon
written notice to the Executive, except for termination due to the death of
the Executive, which shall require no notice.
6. Termination and Severance.
6.1 Notice/Events/Defined Terms.
(a) Termination of the Executive. Executive may terminate this Agreement
at any time by providing written notice to the Company.
(b) Termination by the Company Without Cause. The Company may terminate
this Agreement at any time, without cause by providing written
notice to Executive. As used in this Agreement, the term "without
cause" shall mean termination for any reason not specified in
Section 5 hereof, except for retirement.
(c) Change in Control. A "Change in Control" will be deemed to have
occurred if: (1) the Company effectuates a Takeover Transaction; or
(2) any election of directors of the Company (whether by the
directors then in office or by the stockholders at a meeting or by
written consent) where a majority of the directors in office
following such election are individuals who were not nominated by a
vote of two-thirds of the members of the Board of Directors
immediately preceding such election; or (3) the Company effectuates
a complete liquidation of the Company or a sale or disposition of
all or substantially all of its assets. A "Change in Control" shall
not be deemed to include, however, a merger or sale of stock, assets
or business of the Company if the Executive immediately after such
event owns, or in connection with such event immediately acquires
(other than in the Executive's capacity as an equity holder of the
Employer or as a beneficiary of its employee stock ownership plan or
profit sharing plan), any stock of the buyer or any affiliate
thereof.
(d) Takeover Transaction. A "Takeover Transaction" shall mean (i) a
merger or consolidation of the Company with, or an acquisition of
the Company or all or substantially all of its assets by, any other
corporation, other than a merger, consolidation or acquisition in
which the individuals who were members of the Board of Directors of
the Company immediately prior to such transaction continue to
constitute a majority of the Board of Directors of the surviving
corporation (or, in the case of an acquisition involving a holding
company, constitute a majority of the Board of Directors of the
holding company) for a period
32
<PAGE>
of not less than twelve (12) months following the closing of such
transaction, or (ii) when any person or entity or group of persons
or entities (other than any trustee or other fiduciary holding
securities under an employee benefit plan of the Company either
related or acting in concert becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities of the Company representing more than fifty
percent (50%) of the total number of votes that may be cast for the
election of directors of the Company.
(e) Terminating Event. A "Terminating Event" shall mean: (i) termination
by the Company of the employment of the Executive without Cause
occurring within twelve (12) months of a Change of Control; or (ii)
resignation of the Executive from the employ of the Company, while
the Executive is not receiving payments or benefits from the Company
by reason of the Executive's disability, subsequent to any of the
following events occurring within twelve (12) months of a Change of
Control: (A) a significant reduction in the nature or scope of the
Executive's responsibilities, authorities, powers, functions or
duties from the responsibilities, authorities, power functions or
duties exercised by the Executive immediately prior to the Change in
Control; (B) a decrease in the salary payable by the Company to the
Executive from the salary payable to the Executive immediately prior
to the Change in Control except for across-the-board salary
reductions similarly affecting all management personnel of the
Company; or (C) the relocation of the Company's executive offices
(or, if the Executive is primarily located at the Company's
manufacturing facilities, such facilities) by more than 50 miles
from their current location in Westport, Connecticut (unless such
new location is closer than Westport, Connecticut to the Executive's
then residence) provided, however, that a Terminating Event shall
not be deemed to have occurred solely as a result of the Executive
being an employee of any direct or indirect successor to the
business or assets of the Company, rather than continuing as an
employee of the Company, following a Change in Control; or (D)
elimination or reduction of the Executive's participation in the
Company's Executive Incentive Compensation Plan.
6.2 Severance
(a) Without Cause. If the Company terminates this Agreement without
Cause, other than as a result of a Terminating Event and for a
period equal to one (1) year thereafter, the Company shall provide
Executive with a severance package which shall consist of the
following: (i) payment on the first business day of each month of an
amount equal to one-twelfth of the Executive's then current annual
base salary under Section 3(a) hereof; (ii) payment on the first
business day of each month of an amount equal to one-twelfth of the
Executive's annual target bonus amount under the Company's Executive
Incentive Compensation Plan for the year of termination, pro rated
for the portion of the fiscal year occurring prior to termination;
and (iii) continuation of all benefits under Section 4(a), (b) and
(d).
(b) With A Terminating Event. If the Company terminates this Agreement
as a result of a Terminating Event, then commencing on the date of
such termination and for a period equal to two (2) years thereafter,
the Company shall provide Executive with a severance package which
shall consist of the following: (i) payment on the first business
day of each month an amount equal to one-twelfth of the Executive's
then current annual base salary under Section 3(a) hereof; (ii)
payment on the first business day of each month of an amount equal
to one-twelfth of the Executive's annual target bonus amount under
the Company's Executive Incentive Compensation Plan; and (iii)
continuation of all benefits under Section 4(a), (b), and (d). In
addition, if the Company terminates this Agreement as a result of a
Terminating Event, then the Company shall cause the immediate
vesting of all options granted to the Executive under the Company's
stock plans. At any time when the Company is obligated to make
monthly payments under Section 6.2(b), the Company shall, ten (10)
days after receipt of a written request from the Executive, pay the
Executive an amount equal to the balance of the amounts payable
under Section 6.2(b)(i)-(ii), provided that the obligation of the
Company to continue to provide benefits pursuant to Section 6.2(b)
(iii) or to make monthly payments under 6.2(b) (i)-(ii) shall cease
upon the payment of such amount.
(c) General Release. As a condition precedent to receiving any severance
payment, the Executive shall execute a general release of any and
all claims which Executive or his heirs, executors, agents or
assigns might have against the Company, its subsidiaries,
affiliates, successors, assigns and its past, present and future
employees, officers, directors, agents and attorneys.
7. Non-Competition. During the term of this Agreement and (a) in the case of
termination other than as a result of a Terminating Event, for one (1)
year following the termination of this Agreement or (b) in the case of
termination as a result of a Terminating Event, for two (2) years
following the termination of this Agreement,
33
<PAGE>
Executive will not directly or indirectly whether as a partner,
consultant, agent, employee, co-venturer, greater than two percent owner
or otherwise or through any other person (as hereafter defined): (a) be
engaged in any business or activity which is competitive with the business
of the Company in any part of the world in which the Company is at the
time of the Executive's termination engaged in selling its products
directly or indirectly; or (b) attempt to recruit any employee of the
Company, assist in their hiring by any other person, or encourage any
employee to terminate his or her employment with the Company; or (c)
encourage any customer of the Company to conduct with any other person any
business or activity which such customer conducts or could conduct with
the Company. For purpose of this Section 7, the term "Company" shall
include any person controlling under common control with or controlled by,
the Company, provided, however, that with respect to Tridex Corporation or
any subsidiary of Tridex Corporation, the provisions of this Section 7
shall cease and be of no force and effect one (1) year after the Company
is no longer a subsidiary of Tridex.
For purpose of this Section 7, the term "Person" shall mean an individual
or corporation, association or partnership in estate or trust or any other
entity or organization.
The Executive recognizes and agrees that because a violation by him of
this Section 7 will cause irreparable harm to the Company that would be
difficult to quantify and for which money damages would be inadequate, the
Company shall have the right to injunctive relief to prevent or restrain
any such violation, without the necessity of posting a bond.
Executive expressly agrees that the character, duration and scope of this
covenant not to compete are reasonable in light of the circumstances as
they exist at the date upon which this Agreement has been executed.
However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or
geographical scope of this covenant not to compete is unreasonable in
light of the circumstances as they then exist, then it is the intention of
both Executive and the Company that this covenant not to compete shall be
construed by the court in such a manner as to impose only those
restrictions on the conduct of Executive which are reasonable in light of
the circumstances as they then exist and necessary to provide the Company
the intended benefit of this covenant to compete.
8. Confidentiality Covenants. Executive understands that Company may impart
to him confidential business information including, without limitations,
designs, financial information, personnel information, strategic plans,
product development information and the like (collectively "Confidential
Information"). Executive hereby acknowledges Company's exclusive ownership
of such Confidential Information.
Executive agrees as follows: (1) only to use the Confidential Information
to provide services to the Company; (2) only to communicate Confidential
Information to fellow employees, agents and representatives of the Company
on a need-to-know basis; and (3) not to otherwise disclose or use any
Confidential Information. Upon demand by the Company or upon termination
of Executive's employment, Executive will deliver to the Company all
manuals, photographs, recordings, and any other instrument or device by
which, through which, or on which Confidential Information has been
recorded and/or preserved, which are in my Executive's possession, custody
or control. Executive acknowledges that for purposes of this Section 8
that term "Company" means any person or entity now or hereafter during the
term of this Agreement which controls, is under common control with, or is
controlled by, the Company.
The Executive recognizes and agrees that because a violation by him of
this Section 8 will cause irreparable harm to the Company that would be
difficult to quantify and for which money damages would inadequate, the
Company shall have the right to injunctive relief to prevent or restrain
any such violation, without the necessity of posting a bond.
9. Governing Law/Jurisdiction. This Agreement shall be governed by and
interpreted and governed in accordance with the laws of the State of
Connecticut. The parties agree that this Agreement was made and entered
into in Connecticut and each party hereby consents to the jurisdiction of
a competent court in Connecticut to hear any dispute arising out of this
Agreement.
10. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and thereof
and supersedes any and all previous agreements, written and oral,
regarding the subject matter hereof between the parties hereto. This
Agreement shall not be changed, altered, modified or amended, except by a
written agreement signed by both parties hereto.
34
<PAGE>
11. Notices. All notices, requests, demands and other communications required
or permitted to be given or made under this Agreement shall be in writing
and shall be deemed to have been given if delivered by hand, sent by
generally recognized overnight courier service, telex or telecopy, or
certified mail, return receipt requested.
(a) to the Company at:
61 Wilton Road
Westport, Connecticut 06880
Attn: Chairman and CEO
(b) to the Executive at:
267 Putting Green Road
Trumbull, Connecticut 06611
Any such notice or other communication will be considered to have been
given (i) on the date of delivery in person, (ii) on the third day after
mailing by certified mail, provided that receipt of delivery is confirmed
in writing, (iii) on the first business day following delivery to a
commercial overnight courier, or (iv) on the date of facsimile
transmission (telecopy) provided that the giver of the notice obtains
telephone confirmation of receipt.
Either party may, by notice given to the other party in accordance with
this Section, designate another address or person for receipt of notices
hereunder.
12. Severability. If any term or provision of this Agreement, or the
application thereof to any person or under any circumstance, shall to any
extent by invalid or unenforceable, the remainder of this Agreement, or
the application of such terms to the persons or under circumstances other
than those as to which it is invalid of unenforceable, shall be considered
severable and shall not be affected thereby, and each term of this
Agreement shall be valid and enforceable to the fullest extent permitted
by law. The invalid or unenforceable provisions shall, to the extent
permitted by law, be deemed amended and given such interpretation as to
achieve the economic intent of this Agreement.
13. Waiver. The failure of any party to insist in any one instance or more
upon strict performance of any of the terms and conditions hereof, or to
exercise any right of privilege herein conferred, shall not be construed
as a waiver of such terms, conditions, rights or privileges, but same
shall continue to remain in full force and effect. Any waiver by any party
of any violation of, breach of or default under any provision of this
Agreement by the other party shall not be construed as, or constitute, a
continuing waiver of such provision, or waiver of any other violation of,
breach of or default under any other provision of this Agreement.
14. Successors and Assigns. This Agreement shall be binding upon the Company
and any successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Tridex Corporation
by: /s/ Seth M. Lukash
-----------------------------------
Title: Chairman and CEO
EXECUTIVE:
/s/ Thomas F. Curtin, Jr.
----------------------------------------
Thomas F. Curtin, Jr.
35
TRIDEX CORPORATION AND SUBSIDIARIES
EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months
Years Ended Ended
----------------------------------------------
December 31, December 31, December 31,
1997 1996 1995
----------------------------------------------
<S> <C> <C> <C>
BASIC
EARNINGS:
Income (loss) from continuing operations $ (568) $ 5,646 $ (1,407)
Income from discontinued operations 533 3,202 410
----------------------------------------------
Net income (loss) available to common stockholders $ (35) $ 8,848 $ (997)
==============================================
SHARES:
Average common shares outstanding 5,157,000 3,913,000 3,722,000
==============================================
EARNINGS PER COMMON SHARE - BASIC:
Income (loss) from continuing operations $ (0.11) $ 1.44 $ (0.38)
Income from discontinued operations 0.10 0.82 0.11
----------------------------------------------
Net income (loss) $ (0.01) $ 2.26 $ (0.27)
==============================================
DILUTED:
EARNINGS:
Income (loss) from continuing operations $ (568) $ 5,646 $ (1,407)
Income impact from assumed conversions 0 341 0
----------------------------------------------
Income (loss) available to common stockholders plus
assumed conversions (568) 5,987 (1,407)
Income from discontinued operations 533 3,202 410
----------------------------------------------
Net income (loss) available to common shareholders $ (35) $ 9,189 $ (997)
==============================================
SHARES:
Average common shares outstanding 5,157,000 3,913,000 3,722,000
Dilutive effect of outstanding options and warrants
as determined by the treasury stock method 174,000 241,000 0
Dilutive effect of convertible debt assumed
converted at the beginning of the year 0 445,000 0
----------------------------------------------
5,331,000 4,599,000 3,722,000
==============================================
EARNINGS PER COMMON SHARE - DILUTED:
Income (loss) from continuing operations $ (0.11) $ 1.30 $ (0.38)
Income from discontinued operations 0.10 0.70 0.11
----------------------------------------------
Net income (loss) $ (0.01) $ 2.00 $ (0.27)
==============================================
</TABLE>
36
TRIDEX CORPORATION
EXHIBIT 21.1 SUBSIDIARIES OF TRIDEX CORPORATION
Jurisdiction of Percentage
Name Incorporation Owner Owned
- ------------------------------- --------------- ------ ----------
Allu Realty Trust* Massachusetts Tridex 100%
RIL Corporation* Connecticut Tridex 100%
Ultimate Technology Corporation New York Tridex 100%
*Inactive
37
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIDEX
CORPORATION ANNUAL REPORT AND ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,839
<SECURITIES> 4,403
<RECEIVABLES> 3,063
<ALLOWANCES> 20
<INVENTORY> 2,987
<CURRENT-ASSETS> 23,274
<PP&E> 2,436
<DEPRECIATION> 1,195
<TOTAL-ASSETS> 28,003
<CURRENT-LIABILITIES> 3,784
<BONDS> 0
0
0
<COMMON> 1,377
<OTHER-SE> 22,842
<TOTAL-LIABILITY-AND-EQUITY> 28,003
<SALES> 25,833
<TOTAL-REVENUES> 25,833
<CGS> 19,746
<TOTAL-COSTS> 26,847
<OTHER-EXPENSES> 201
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> (603)
<INCOME-PRETAX> (612)
<INCOME-TAX> (44)
<INCOME-CONTINUING> (568)
<DISCONTINUED> 533
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
