<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 8, 1995
Air Express International Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-8306 36-2074327
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
120 Tokeneke Road, Darien, Connecticut 06820
(Address of Principal Executive Offices)
(203) 655-7900
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 4 pages
Exhibit Index on page 4
<PAGE>
Item 2. Acquisition or Disposition of Assets.
a)On June 8, 1995, Air Express International Corporation ("AEI"), a Delaware
corporation, acquired all of the outstanding shares of capital stock of
Radix Ventures, Inc. ("Radix"), a Delaware corporation, pursuant to an
Agreement and Plan of Reorganization dated May 3, 1995 between AEI and
Radix. In exchange for 771,500 of Radix common shares, AEI issued
approximately 980,000 of its $.01 par value common shares and
approximately $.5 million in cash. AEI shares were issued from its
existing authorized capital stock, and the cash was paid out of working
capital. The purchase price payable to Radix stockholders was
approximately $24.4 million, and was determined based upon negotiations
between the parties. The acquisition will be accounted for as a purchase.
Item 7. Financial Statements and Exhibits.
a)Financial statements of business acquired.
1) Consolidated financial statements of Radix for the fiscal year ended
July 31, 1994 (Audited).
2) Consolidated financial statements of Radix for the nine months ended
April 30, 1995 (Unaudited).
The above financial statements have been previously filed by Radix with
the Securities and Exchange Commission under Commission number 2-94692.
Therefore, the information required by (a) is incorporated by reference to
the financial statements contained in these filings; which financial
statements are also included as exhibits to this report. The related 10-K
and 10-Q filings of Radix in which such financial statements are contained
are expressly not incorporated by reference.
b)Pro forma financial information.
Because of the impracticability of filing herewith, AEI will file as an
amendment, no later than August 22, 1995, the following pro forma
financial information:
1) AEI pro forma consolidated balance sheet as of March 31, 1995
(Unaudited).
2) AEI pro forma consolidated statement of income for the year ended
December 31, 1994 (Unaudited).
3) AEI pro forma consolidated statement of income for the three month
period ended March 31, 1995 (Unaudited).
c)Exhibits.
1) Consolidated financial statements of Radix for the fiscal year ended
July 31, 1994 (Audited).
2) Report of Independent Auditors.
3) Consolidated financial statements of Radix for the nine months ended
April 30, 1995 (Unaudited).
(2)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Air Express International Corporation
(Registrant)
Date: June 22, 1995 /s/ Dennis M. Dolan
Dennis M. Dolan
Vice President and
Chief Financial Officer
(Principal Financial Officer)
(3)
<PAGE>
Exhibit Index
EX99-A Consolidated financial statements of Radix for the
fiscal year ended July 31, 1994 (Audited)
EX99-B Report of Independent Auditors
EX99-C Consolidated financial statements of Radix for the
nine months ended April 30, 1995 (Unaudited)
(4)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended July 31, 1994 Commission file number 2-94692
RADIX VENTURES, INC.
(Exact Name of Registrant as specified in its Charter)
DELAWARE 13-2673894
(State or other Jurisdiction of (I.R.S. Employer Identifcation No.)
Incorporation or Organization)
230 Park Avenue, New York, New York 10169
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 697-9141
Securities registered pursuant to Section 12 (b) of the Act:
Name of each Exchange on
Title of each class which Registered
NONE NONE
Securities registered pursuant to Section 12 (g) of the Act.
NONE
(Title of Class)
Indicate by checkmark 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 checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K (x).
The aggregate market value of the voting stock held by non-affiliates of the
registrant as at September 30, 1994 was:
148,645 4 $594,580
Number of Shares Average Bid and Asked Price Aggregate Market Value
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1994.
Common Stock, Par Value $.01 771,500 Shares
EX99-A.01
<PAGE>
PART I
Item 1 - Business General
Radix Ventures, Inc. (the "Company"), through its wholly owned operating
subsidiary, Radix Group International, Inc., and other entities, is engaged in
the business of customs brokerage, international air freight forwarding,
international ocean freight forwarding, consulting, packing, crating and other
ancillary transportation and related information and logistical services for the
international transport of goods. The Company plans and implements the shipment
of freight by commercial air and ocean carriers from point of origin to
destination, primarily between the United States and overseas locations. The
Company identifies shipping alternatives for customers based on timeliness and
cost, negotiates rates with carriers, tracks shipments until delivery, advises
with respect to new or updated import/export regulations or restrictions and
arranges passage of goods through U.S. Customs. The Company currently has 22
offices in the United States and arrangements with joint-venture partners and
agents in approximately 60 foreign countries.
In addition to seeking increased market share in areas served by existing
offices, the Company has followed a strategy of expanding its operations by
opening new offices and acquiring existing freight forwarding or customs
brokerage businesses throughout the United States and entering into
joint-ventures and strategic agreements with partners and agents in countries
throughout the world. The most important foreign relationships are with partners
and agents in Western Europe and the Far East.
The Company provides fully integrated services and generally does not separately
record revenues of any such service. Profitability of a particular service may
vary from time to time depending upon, among other factors, the rates currently
charged by air and ocean carriers. In all capacities, the Company handled
approximately 295,000 shipments for over 10,000 customers, including
approximately 160,000 customs entries during its fiscal year ended July 31,
1994.
The Company has computerized its various operations and accounting with all of
its offices connected by a data communications network to its central computer
system located in Chicago, IL. It has also developed Radix-Link, an information
management and tracking system which supplies customers with real time
comprehensive shipment information on the customer's own personal computer or
mainframe. In addition to enabling customers to track their import and export
EX99-A.02
<PAGE>
shipments on their own computer system, Radix-Link also provides customers the
ability to maintain a database which can be used to create a variety of standard
or individually customized reports to facilitate the management of international
freight, purchasing and inventory programs.
The Company has implemented a comprehensive quality program designed to improve
service quality. Commencing in early 1990, it adopted a formal Quality Policy
and developed the PEAK Performance Process, an acronym for Professionalism,
Effectiveness, Accuracy and Knowledge. Over the past four and a half years, the
Company has made a significant investment in training its employees in its
quality processes. Management believes that its quality program has enhanced
customer retention, resulted in productivity gains and, on an ongoing basis,
provides a competitive advantage in attracting new business.
The Company does not own, lease, or operate any aircraft or ships and does not
plan to do so.
Financial information with respect to the Company's business, representing one
integrated industry segment, is presented in the financial statements contained
in Item 8 for the year ended July 31, 1994.
Customs Brokerage
As a customs broker, the Company prepares the documents necessary to clear
United States Customs and makes provision for payment of duties and collect
freight charges on behalf of importers. The Company's national computer system
in Chicago, Illinois is connected to the U.S. Customs computer in Washington,
D.C. for the transmission of Customs entry data direct to U.S. Customs under the
Automated Broker Interface (ABI) and Automated Commercial Systems (ACS)
programs.
In addition to customs clearance and in conjunction with its overseas agents,
the Company also operates competitive air and ocean transportation services from
international points of origin to U.S. destinations and provides other ancillary
services to importers including cargo insurance and the issuance of Customs
bonds.
In addition to general cargo, such as electronic components, apparel and home
products, the Company specializes in Fine Art and Aerospace shipments, Duty
Drawback (recovery of duties paid when imported merchandise is re-exported) and
Export Licensing, thereby providing specialized services to its import and
export customers.
On behalf of its overseas agents, the Company also performs breakbulk
distribution services, which involve receiving international consolidations of
freight shipments and deconsolidating and distributing individual shipments.
The Company's fees for customs brokerage services are not regulated and the
Company does not have a fixed fee schedule for such services. Instead, customs
brokerage fees are based upon the complexity of the transaction and the type of
services required and are generally not related to the value of the customers'
goods. In addition to its fees, the Company bills the importer for certain
expenses which the Company pays on the importer's behalf, including duties,
collect freight charges and similar payments.
EX99-A.03
<PAGE>
Air Freight Forwarding
As an air freight forwarder, the Company receives shipments from its customers,
determines the routing and selects the carrier, books the cargo space, prepares
the documentation and arranges for the delivery of the cargo to the airline.
The Company also operates air freight consolidation services whereby, on certain
routes, it consolidates shipments bound to the same destination and tenders the
consolidated freight to the carrier as a single shipment. At the destination,
the Company or its agent arranges for the consolidated lot to be broken down
into its component shipments and for delivery of the individual shipments to
their final destinations.
The rates per kilo charged by airlines to forwarders and others generally
decrease as the weight or volume of the shipment increases. As a result, by
aggregating the shipments of its customers and presenting them to an airline as
a single shipment, the Company is able to obtain a lower rate per kilo or cubic
meter than that which it charges to its customers for the individual shipment,
while generally offering the customer a lower rate than it could obtain from the
airline for an unconsolidated shipment.
The Company's net air freight forwarding revenues in connection with a
consolidated shipment include the differential between the net rate charged to
the Company by an airline and the rate which the Company charges to its
customers, and fees for ancillary services.
Ancillary services provided by the Company include preparation of shipping and
customs documentation, arrangement for packing and crating services, arranging
insurance, negotiation of letters of credit, assistance and advice in connection
with export licensing requirements, and preparation of documentation to comply
with export regulations. When the Company acts as an agent for an airline in
connection with an unconsolidated shipment, its net revenues are derived
primarily from commissions paid by the airline.
Ocean Freight Forwarding
As an ocean freight forwarder, the Company arranges for the shipment of freight
by ocean carrier. The services performed by the Company include rendering
quotations and advice to shippers, booking cargo space, coor- dinating delivery
of merchandise to shipside, preparing necessary shipping documents, and
arranging for incidental services such as insurance, trucking and warehousing.
The Company also consolidates ocean freight in a manner similar to its air
freight consolidation operations.
EX99-A.04
<PAGE>
The Company's compensation for its ocean freight forwarding services is derived
principally from commissions paid by ocean carriers and from forwarding fees
paid by its customers, which are either shippers or consignees. On ocean freight
consolidations, the Company derives its revenue from the spread between the rate
specified in its NVOCC (non- vessel operating common carrier) tariff and the
ocean carrier's charge to the Company for carrying the shipment.
Marketing
The Company's services are marketed by its senior executives who are actively
involved in the Company's sales efforts, by 20 full-time sales persons and by
approximately 50 department and branch managers who are involved significantly
in sales, as well as operations and administration. To encourage sales efforts,
the Company has established an incentive program for its sales employees which
provides additional compensation for obtaining new customers and expanding the
business with existing customers. Contacts with customers and potential
customers are generally made directly with the traffic, purchasing and/or
financial departments as well as senior executives of such customers. The
Company's sales efforts are supplemented by the Company's foreign partners and
agents selling to shippers and consignees overseas. Potential customers are
identified through a variety of means, including marketing efforts, attendance
at industry trade shows and sales leads received from foreign agents.
Competition and Business Conditions
There are many customs brokers and international freight forwarders in the
United States ranging in size from sole proprietorships operating in only one
location to publicly quoted multi-national corporations, both domestic and
foreign. Of these, the vast majority are smaller operations. Management believes
that the Company is among the larger of the medium sized customs brokers and
international freight forwarders. No industry statistics are available; however,
the Company's market share is nevertheless small. The Company encounters strong
competition from established firms in every geographic and service area in which
it does business and some competitors have greater financial resources and a
larger network of offices and/or agents than the Company.
The business activity of the Company is not dependent upon any limited number of
customers or industries, and no customer accounted for a significant share of
the Company's revenue.
The Company experiences some seasonal variations in the level of its business
activity. Generally, volume is lower in the months of December, January and
February. As a result, the revenues of the Company's second quarter ended
January 31 and third quarter ended April 30 tend to be lower than for the first
quarter ended October 31, which, in turn, tends to be somewhat lower than for
the fourth quarter ended July 31.
The Company's business is directly related to the volume of international trade
between the United States and foreign nations. The extent of such trade is
influenced by many factors, including economic and political conditions in the
United States and abroad, currency fluctuations, United States and foreign laws
relating to tariffs, trade restrictions, foreign investments and taxation, and
may also be affected by major work stoppages involving the transportation of
cargo.
EX99-A.05
<PAGE>
Regulation
The Company is licensed as a customs broker by the United States Customs Service
of the Department of the Treasury. All customs brokers are subject to various
regulations, are required to maintain prescribed records and are subject to
periodic audits by the United States Customs Service.
The Company is licensed as an ocean freight forwarder by the Federal Maritime
Commission, which prescribes qualifications for acting as a shipping agent,
including certain surety bonding requirements, and is required to file tariffs
with the Federal Maritime Commission as a non-vessel operating common carrier.
The Company is licensed as an air freight forwarder by the International Air
Transport Association (IATA), a voluntary association of airlines, which
prescribes certain operating procedures for air freight forwarding companies
when acting as an agent for members of IATA. As an air freight forwarder, the
Company is not subject to specific government regulation other than being
subject to safety requirements relating to the packaging and transportation of
hazardous materials.
The Company is also licensed as a property broker by the Interstate Commerce
Commission, which permits the Company to receive commissions on domestic
transportation, and has obtained various other federal, state and commercial
licenses, including, among others, licenses required for the importation of
liquor, and the importation of gaming equipment.
The Company is not subject to rate regulations in any jurisdiction in which it
currently does business. The Company does not believe that current government
regulation of its business activities imposes significant economic restraint
upon its existing operations.
Cargo Liability
When acting as an air freight consolidator, the Company assumes cargo liability
to its customers for lost or damaged shipments. This liability is typically
limited by contract to a maximum of $9.07 per pound for air transportation and
$500 per package for ocean transportation. The carrier which the Company
utilizes to make the actual shipment is liable to the Company in the same manner
and to the same extent. When acting as a customs broker or an air or ocean
freight forwarder as opposed to a consolidator, the Company does not assume
contractual liability for lost or damaged shipments. The Company maintains
insurance coverage to protect itself against losses attributable to lost or
damaged shipments.
EX99-A.06
<PAGE>
Employees
The Company has approximately 500 employees, of whom 60 are licensed customs
brokers. Almost all of the employees are full time. The Company is not a party
to any collective bargaining agreements and considers its relations with its
employees to be good.
Acquisitions
The Company commenced and has expanded its business throughout the United States
through the acquisition of a number of companies, including companies which have
been in the customs brokerage business for over one hundred years. Generally,
the Company will consider an acquisition only if it is compatible with current
business and adds volume to existing locations or is in furtherance of the
Company's strategy of expansion into new geographical areas with local
management retained.
In 1979, the Company, through subsidiaries, entered the customs brokerage and
international freight forwarding business by acquiring the businesses and
operating assets of Freedman & Slater, Inc. and Freedman & Slater Air Cargo
Corp., which operated in the New York City and Albany areas.
In 1980, the Company acquired all the outstanding shares of Trans-Air Forwarding
& Brokerage, Inc., which was engaged in the business of customs brokerage and
international freight forwarding in Los Angeles, California; San Francisco,
California; Phoenix, Arizona; and Miami, Florida; and Wolf & Gerber, Inc. which
was engaged in the business of customs brokerage and international freight
forwarding in the New York City area.
In 1981, the Company acquired all the outstanding shares of J. E. Bernard & Co.,
Inc. which was engaged in the business of customs brokerage and international
freight forwarding in Chicago, Illinois and New York.
In 1986, Radix Group International, Inc. purchased the business and certain
assets of Enterprise Shipping Corp., a customs broker and international freight
forwarder headquartered in San Francisco.
In 1989, Radix Group International, Inc. acquired all the outstanding shares of
Ryder International Freight and Customs Services, Inc., a customs broker and
international freight forwarder headquartered in Long Beach, California, with
offices in 14 cities across the United States.
In 1991, Radix Group International, Inc. purchased the business and certain
assets of T.D. Downing Co., Inc., a customs broker and international freight
forwarder located in Boston, Massachusetts.
In July 1992, Radix Group International, Inc. purchased the business and certain
assets of William F. Joffroy Customs Brokers, Inc., a customs broker and
international freight forwarder, relating to Joffroy's offices in Phoenix and
Tucson, Arizona.
EX99-A.07
<PAGE>
In June 1994, Radix Group International, Inc. acquired the business and certain
assets of the Boston office of J.V. Carr & Son, Inc. which was engaged in the
business of providing customs brokerage and other ancillary services in Boston.
In July 1994, Radix Group International, Inc. purchased the business and net
assets of Flagship Forwarding Corporation, Flagship Trade Services, Inc., and
Caribe Basin Services, Inc., affiliated companies located in Miami, Florida,
engaged in the international freight forwarding and customs brokerage business.
Since its inception, the Company, through Radix Group International, Inc., has
acquired the assets and businesses of several other companies engaged in the
customs brokerage and/or international freight forwarding businesses and has
opened new offices, without acquisition, in Atlanta, Georgia; Baltimore,
Maryland; Charleston, South Carolina; Charlotte, North Carolina; Columbus, Ohio;
and Oklahoma City, Oklahoma. The Company does not currently have any commitments
for acquisitions of existing concerns.
Unlike several of its competitors in the United States which have opened their
own offices overseas, the Company has decided that the best way to expand its
international operations is to enter into joint-ventures and strategic
agreements with partners and agents in foreign countries so as to create a
global network for the benefit of both the Company and the foreign partners and
agents. The Company has sought out and continues to seek well-established,
respected firms in targeted countries throughout the world and to promote its
business to and from such countries jointly with such partners and agents. By
following this procedure, the Company obtains the benefit of many years
experience including knowledge of local business, customs and procedures and
avoids the necessity of incurring the large capital costs of setting up a
network of offices throughout the world and the difficulties inherent in
attempting to do business in unfamiliar territory. The Company continues to seek
out additional relationships in other countries in order to expand its business.
The Company has entered into several new operations through companies formed
together with third parties. In 1990, Radix Group International, Inc. entered
into a joint venture (Jardine-Radix International, Limited) with a member
company of the Jardine Matheson Group to jointly expand business to and from the
Far East. In 1992, a subsidiary, United Star Line Inc., together with three
other parties involved in the fine arts transportation business, formed James
Bourlet, Inc. to provide packaging, storage and local delivery services for
personal property, primarily for artwork and other collectibles. James Bourlet,
Inc., in which the Company owns a 25% interest, is based in New York City. In
April 1993, the Company's 50% owned Australian subsidiaries, Radix Group
International Pty. Ltd. and United Star Line Pty. Ltd., which had been formed in
1991, sold the assets and business to a major Australian freight forwarder and
customs broker with which the Company has established an agency relationship.
EX99-A.08
<PAGE>
Item 2 - Properties
The Company leases 22 offices, including its Corporate headquarters in New York,
its operating subsidiary headquarters in Los Angeles, California, and facilities
in Atlanta, Georgia; Baltimore, Maryland; Boston, Massachusetts; Charleston,
South Carolina; Charlotte, North Carolina; Wood Dale (Chicago), Illinois;
Columbus, Ohio; Grapevine (Dallas/Ft. Worth), Texas; Houston, Texas;
Indianapolis, Indiana; Miami, Florida; Minneapolis, Minnesota; Newark, New
Jersey; J.F.K. International Airport, Jamaica, New York; Norfolk, Virginia;
Oklahoma City, Oklahoma; Phoenix, Arizona; Richmond, Virginia; South San
Francisco, California; Seattle, Washington; Tulsa, Oklahoma; and Tucson,
Arizona. Its four largest offices are located in Los Angeles, California; J.F.K.
International Airport, Jamaica, New York; Wood Dale (Chicago), Illinois; and
South San Francisco, California. Management believes that the offices generally
are adequate for their current use but that, in the event it becomes desirable,
relocation of any offices can be arranged without material adverse effect on the
financial condition of the Company.
Item 3 - Legal Proceedings
The Company is involved in certain litigation in the ordinary course of business
which management believes, based upon discussion with counsel, will not have a
material effect on the financial condition of the Company.
Item 4 - Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth quarter
of the Company's fiscal year.
EX99-A.09
<PAGE>
PART II
Item 5 - Market for the Registrant's Common Stock and Related Security Holder
Matters
The Company's common stock is traded in the over-the-counter market. Trading is
limited and between August 1, 1991 and July 31, 1994, the bid and asked prices
have ranged between 3 1/2 and 4 1/2, respectively. At July 31, 1994, the
reported bid quotation was 4. The approximate number of record holders of the
Company's common stock at July 31, 1994 was 49.
The Company has not paid any cash dividends in the past and does not presently
intend to pay any cash dividends for the foreseeable future. Moreover, the
payment of dividends is subject to the restrictions described in a note to the
financial statements.
Item 6 - Selected Financial Data
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
1994(a) 1993 1992(b) 1991 1990
<S> <C> <C> <C> <C> <C>
Gross billings . $440,077,745 $394,750,359 $374,112,011 $341,301,556 $380,402,839
Net fees and
commissions .. 29,662,230 30,073,718 29,245,802 28,948,285 27,042,648
Operating income 611,139 662,153 916,990 1,065,260 837,543
Net income ..... 170,663 40,078 484,436 332,935 210,582
Net income
per share .... $ 0.22 $ 0.05 $ 0.63 $ 0.43 $ 0.27
JULY 31
1994 1993 1992(b) 1991 1990
Total assets .. $40,909,220 $35,691,479 $31,295,511 $28,082,301 $34,640,035
Working capital 212,390 3,430,714 2,679,883 2,034,418 1,751,132
Long-term debt -- 2,375,100 2,394,100 2,413,000 2,430,000
Stockholders'
equity ...... 3,495,099 3,324,436 3,284,358 2,799,922 2,446,987
<FN>
(a) Effective November 1, 1993, the Company changed the estimated useful lives
used to compute depreciation for its computer equipment and automobiles from
three to five years. This change conforms to the useful lives used for tax
purposes and better coincides with the estimated useful life expectancies of
these assets. The effect of this change, which was accounted for prospectively,
increased 1994 operating income by $202,776 and net income by $131,804.
(b) In 1992, the Company adopted the provisions of Financial Accounting
Standards Board Opinion No. 109, Accounting for Income Taxes. Accordingly, 1992
net income has been increased by $236,212 to reflect the cumulative effect of
adopting this pronouncement.
</FN>
</TABLE>
EX99-A.10
<PAGE>
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Net fees and commissions were $29,662,230 for the fiscal year ended July 31,
1994 representing a decrease of $411,488 or 1% from the 1993 fiscal year. Net
fees and commissions for fiscal 1993 increased by $827,916 or 3% over 1992. The
decrease in net fees and commissions in the 1994 fiscal year is attributable
primarily to a reduction in the volume of transactions derived from aerospace
industry customers as a result of the recessionary economic conditions affecting
that industry, and a reduction in margins realized on inbound transportation
transactions. This decrease was partially offset by increases in the Company's
customs brokerage business. The increase in net fees and commissions in the 1993
fiscal year is attributable primarily to the net revenues derived from an
acquisition made in fiscal 1992 and from a $185,000 remittance received from an
offshore insurance entity in which the Company has a minority interest. Gross
billings, which include net fees and commissions plus duties, freight and other
direct costs billed to customers and paid on their behalf, were $440 million in
1994, $395 million in 1993 and $374 million in 1992, representing increases of
11% and 6%, respectively. The increase in gross billings in 1994 over 1993
resulted from an increase in customs duties and freight costs billed to
customers and paid on their behalf which does not necessarily result in a
proportionate increase in net fees and commissions. The increase in gross
billings in 1993 over 1992 resulted primarily from the additional volume derived
from the fiscal 1992 acquisition noted above.
Operating expenses were $29,051,091 in fiscal 1994 compared to $29,411,565 in
1993 and $28,328,812 in 1992, representing a decrease of 1% and an increase of
4%, respectively. The decrease in operating expenses in fiscal 1994 resulted
primarily from a reduction in salary expense of approximately $556,000 for the
year arising from an increase in the utilization of employee vacation earned and
accrued in previous years following a change in the Company's vacation policy.
In addition, the decrease in operating expenses further resulted from the change
in estimated useful lives used to compute depreciation for computer equipment
and automobiles and from the Company's continuing efforts to increase the
efficiency of its operations. These decreases were offset in part by increases
in other expenses. The increase in operating expenses in 1993 over 1992 is
attributable to operating expenses associated with an acquisition made in July
1992, and to increases in salary and salary related expenses. In addition, 1993
operating expenses included a $131,000 charge relating to the costs of a
proposed debt offering which was not completed.
As a result, the Company reported operating income before interest expense of
$611,139 in 1994 compared to $662,153 in 1993 and $916,990 in 1992.
EX99-A.11
<PAGE>
Net interest expense for the year was $370,545 compared to $331,984 in 1993 and
$286,556 in 1992. The increase in net interest expense in 1994 over 1993 was due
to an increase in average borrowings under a bank line of credit agreement. The
increase in net interest expense in 1993 over 1992 resulted primarily from a
charge for interest on additional tax assessments and a reduction in interest
income derived from cash investments due to lower interest rates.
Equity in income of unconsolidated subsidiaries of $22,651 in 1994 compared to
equity in loss of $95,383 in 1993 and $118,246 in 1992, primarily represents the
Company's share in the income or loss of its 50% owned Australian subsidiaries,
Radix Group International, Pty., Ltd. and United Star Line Pty., Ltd. and of its
25% equity interest in James Bourlet, Inc., which commenced operations in July,
1992.
Income tax expense for fiscal year 1994 represents 35% of income before taxes
compared to 83% of income before taxes in 1993 and 52% of income before taxes in
1992. Included in 1993 income tax expense is an additional state tax provision
related to prior years which represents 20% of income before taxes. Equity in
income or loss of unconsolidated subsidiaries, which is not taxable or allowable
for U.S. federal income tax purposes, represents 9% of income before taxes for
1994, 41% of income before taxes for 1993 and 23% of income before income taxes
for 1992.
Effective the beginning of the 1992 fiscal year, the Company adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes",
resulting in a credit to 1992 net income of approximately $236,000 relating to
cumulative temporary differences existing at August 1, 1991 and the alternative
minimum tax carryforward. As a result of the above, 1994 net income was $170,663
or 22 cents per share compared to 1993, net income of $40,078 or 5 cents per
share and 1992 net income of $484,436 or 63 cents per share ($248,224 or 32
cents per share prior to the accounting change).
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial working capital at July 31, 1994 was $212,390 compared
to $3,430,714 at July 31, 1993 with the majority of current assets comprising
cash and accounts receivable. The decrease in working capital resulted primarily
from repurchases of the Company's subordinated debentures, classification of the
balance of the debentures due February 1, 1995 as current liabilities, and
increases in fixed assets and other assets. The Company plans to finance the
redemption of its remaining subordinated debentures through an increase in
short-term borrowings.
The Company supplements its working capital by short-term borrowing to finance
any excess of its accounts receivable over its accounts payable. These
borrowings are made under a $4,000,000 line of credit from a bank and fluctuate
on a daily basis according to the Company's requirements. There were no
outstanding borrowings under the line at July 31, 1994 and 1993.
The Company's accounts receivable and accounts payable fluctuate significantly
on a daily basis in line with the billing and disbursement of customs duty and
freight costs. This fluctuation in accounts receivable and accounts payable
tends to offset itself with any difference resulting in an increase or decrease
in the Company's cash balances and/or short-term borrowing.
The Company's capital requirements as of July 31, 1994 consisted of purchases of
computer equipment and software under a continuing program to expand and upgrade
its computer systems, normal replacement of furniture, vehicles, and other
equipment and lease obligations for office space and computer equipment. The
Company's capital expenditure requirements should be met adequately by
cash-on-hand and by leasing arrangements.
EX99-A.12
<PAGE>
IMPACT OF INFLATION
Inflation has tended to increase the Company's operating expenses, particularly
salary and salary-related expenses. However, in recent years the Company has
been unable, in some instances, to pass such cost increases on to its customers
by means of price increases due to competitive factors. Consequently, management
has sought to mitigate the effect of inflation on the Company's business by
increasing the efficiency of its operations.
In as much as the Company is not required to purchase or maintain extensive
fixed assets other than its computer systems and is not primarily reliant on
substantial interest rate sensitive indebtedness, the Company's direct exposure
to increased costs resulting from increases in interest rates is not severe.
EX99-A.13
<PAGE>
RADIX VENTURES, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Auditors 15
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of
July 31, 1994 and 1993. 16
Condensed Consolidated Statements of Income and
Retained Earnings for the periods ended July 31,
1994, 1993 and 1992. 17
Condensed Consolidated Statements of Cash Flows
for the twelve month periods ended July 31, 1994,
1993 and 1992. 18
Notes to Condensed Consolidated Financial
Statements. 19
EX99-A.14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Radix Ventures, Inc.
New York, New York
We have audited the accompanying balance sheets of Radix Ventures, Inc. as of
July 31, 1994 and 1993 and the related statements of income and retained
earnings and cash flows for each of the three years in the period ended July 31,
1994. Our audits also included the financial statement schedules listed in the
Index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Radix Ventures, Inc. at July
31, 1994 and 1993, and the results of its operations and its cash flows for each
of the three years in the period ended July 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As discussed in Note 5 to the financial statements, in 1992 the Company changed
its method of accounting for income taxes.
ERNST & YOUNG LLP
New York, New York
September 30, 1994
EX99-A.15
<PAGE>
Item 8 - Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
RADIX VENTURES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31 JULY 31
1994 1993
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash ............................................. $ 3,420,969 $ 4,222,105
Accounts receivable, less allowance for
doubtful accounts of $201,988 and $144,289 ...... 32,632,192 27,496,127
Other current assets ............................. 1,214,406 1,432,264
----------- -----------
TOTAL CURRENT ASSETS ............. 37,267,567 33,150,496
Furniture, Equipment and Vehicles, less allow-
ance for depreciation of $3,928,868
and $4,095,623 .................................. 2,227,208 1,558,262
OTHER ASSETS:
Intangibles ...................................... 465,952 554,561
Deferred debt expense ............................ 20,198 54,824
Other ............................................ 928,295 373,336
----------- -----------
TOTAL ASSETS ....................................... $40,909,220 $35,691,479
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Duty, freight and other accounts payable ......... $33,873,720 $28,134,290
Accrued expenses and sundry liabilities .......... 1,206,557 1,585,492
Current maturities of long-term debt ............. 1,974,900 --
----------- -----------
TOTAL CURRENT LIABILITIES ....... 37,055,177 29,719,782
----------- -----------
Long-Term Debt ..................................... -- 2,375,100
Other .............................................. 358,944 272,161
----------- -----------
358,944 2,647,261
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, authorized 1,000,000; issued and
outstanding 771,500 shares of $0.01 par value ... 7,715 7,715
Additional paid-in capital ....................... 941,622 941,622
Retained earnings ................................ 2,545,762 2,375,099
----------- -----------
3,495,099 3,324,436
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $40,909,220 $35,691,479
=========== ===========
</TABLE>
See notes to consolidated financial statements.
EX99-A.16
<PAGE>
<TABLE>
<CAPTION>
RADIX VENTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
YEAR ENDED JULY 31
1994 1993 1992
<S> <C> <C> <C>
Gross billings ................. $ 440,077,745 $ 394,750,359 $ 374,112,011
Less duty, freight and
other direct costs ......... 410,415,515 364,676,641 344,866,209
------------- ------------- -------------
Net fees and commissions ....... 29,662,230 30,073,718 29,245,802
Operating expenses ............. 29,051,091 29,411,565 28,328,812
------------- ------------- -------------
Operating income ............... 611,139 662,153 916,990
Interest expense, net .......... (370,545) (331,984) (286,556)
Equity in income (loss) of
unconsolidated subsidiaries .. 22,651 (95,383) (118,246)
------------- ------------- -------------
Income before income taxes
and cumulative effect
of accounting change ......... 263,245 234,786 512,188
Income taxes ................... 92,582 194,708 263,964
------------- ------------- -------------
Income before cumulative effect
of accounting change ......... 170,663 40,078 248,224
Cumulative effect of change
in method of accounting
for income taxes ............. -- -- 236,212
------------- ------------- -------------
Net income ..................... 170,663 40,078 484,436
Retained earnings
beginning of year ............ 2,375,099 2,335,021 1,850,585
------------- ------------- -------------
Retained earnings end of year .. $ 2,545,762 $ 2,375,099 $ 2,335,021
============= ============= =============
Income per share (based on 771,500 shares outstanding):
Income before cumulative effect
of accounting change ......... $ 0.22 $ 0.05 $ 0.32
Cumulative effect of change
in method of accounting
for income taxes ............. -- -- 0.31
------------- ------------- -------------
Net income ..................... $ 0.22 $ 0.05 $ 0.63
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
EX99-A.17
<PAGE>
<TABLE>
<CAPTION>
RADIX VENTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED JULY 31
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................. $ 170,663 $ 40,078 $ 484,436
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization ............. 615,637 752,032 734,139
Provision for losses on accounts receivable 57,699 (20,919) (45,229)
Provision for deferred income taxes ....... 365,081 24,289 6,608
Cumulative effect of change in method
of accounting for income taxes .......... -- -- (236,212)
Gain on sale of furniture,
equipment and vehicles .................. (2,571) (1,228) (3,092)
Changes in operating assets and liabilities:
Increase in accounts receivable ........... (5,193,764) (5,532,336) (1,181,608)
Decrease (increase) in other current assets (48,644) (634,088) 19,174
Decrease (increase) in other
non-current assets ...................... (554,959) 332,960 267,103
Increase in duty, freight, other
accounts payable, accrued expenses
and sundry liabilities .................. 5,420,995 4,442,987 2,629,208
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES ...................... 830,137 (596,495) 2,674,527
----------- ----------- -----------
INVESTING ACTIVITIES
Purchase of furniture, equipment
and vehicles ............................ (1,238,898) (800,919) (717,410)
Proceeds from sales of furniture,
equipment, and vehicles ................. 7,825 3,096 5,973
Investment in unconsolidated subsidiaries . -- -- (213,710)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES ....... (1,231,073) (797,823) (925,147)
----------- ----------- -----------
FINANCING ACTIVITIES
Principal payments on
long term debt .......................... (400,200) (19,000) (18,900)
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES ....... (400,200) (19,000) (18,900)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ......................... (801,136) (1,413,318) 1,730,480
Cash and cash equivalents at
beginning of year ....................... 4,222,105 5,635,423 3,904,943
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR .... $ 3,420,969 $ 4,222,105 $ 5,635,423
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
EX99-A.18
<PAGE>
RADIX VENTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. Investments in other partially owned companies in
which ownership ranges from 20% to 50% are accounted for using the equity method
including the Company's 50% interest in Radix Group International, Pty. Ltd. and
United Star Line Pty. Ltd. All material intercompany balances and transactions
have been eliminated.
Furniture, Equipment and Vehicles
Furniture, equipment and vehicles are stated at cost. Depreciation is provided
using principally the straight line method over the estimated useful lives of
the assets.
Effective November 1, 1993, the Company changed the estimated useful lives used
to compute depreciation for its computer equipment and automobiles from three to
five years. This change conforms to the useful lives used for tax purposes and
better coincides with the estimated life expectancies of these assets. The
effect of this change on income before income taxes for fiscal 1994 was an
increase of $202,776 or 26 cents per share. The after tax effect of this change
was an increase in income of $131,804 or 17 cents per share.
Intangibles
Goodwill is amortized over 40 years.
Cash Equivalents
All highly liquid debt instruments purchased with a maturity of three months or
less are classified as cash equivalents.
Income Taxes
Income taxes were calculated in accordance with Financial Accounting Standards
Board Statement No. 109, which was adopted effective August 1, 1991.
2. ACQUISITIONS
On July 8, 1994, the Company's operating subsidiary, Radix Group International,
Inc., purchased the business and net assets of Flagship Forwarding Corporation,
Flagship Trade Services, Inc., and Caribe BasinServices, Inc., affiliated
companies located in Miami, Florida, engaged in the international freight
forwarding and customs brokerage business. This acquisition was accounted for as
a purchase and the net assets were purchased at their market value of
approximately $965,700.
On June 1, 1994, Radix Group International, Inc., acquired the business and
certain assets of the Boston operation of J.V. Carr & Son, Inc., a customs
broker and freight forwarder with offices across the United States. The
acquisition was accounted for as a purchase and the assetswere purchased at
their market value of $100,000.
EX99-A.19
<PAGE>
On July 1, 1992, Radix Group International, Inc., acquired the business and
certain assets of the Phoenix, Arizona and Tucson, Arizona operations of William
F. Joffroy Custom Brokers, Inc., a customs broker with five offices in Arizona.
This acquisition was accounted for as a purchaseand the assets were purchased at
their market value of approximately $17,000.
The consolidated statements of income include the results of the acquired
businesses from the date they were acquired. Had they been acquired August 1,
1991, the consolidated operating results on a proforma basis would not have
differed materially from the actual results reported.
3. INTANGIBLE ASSETS
Intangible assets are comprised of the following:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Goodwill .................... $ 577,851 $ 650,147
Less accumulated amortization 111,899 95,586
$ 465,952 $ 554,561
</TABLE>
4. DEBT
The Company has available a short-term revolving line of credit of $4,000,000,
plus an additional revolving line of credit of $1,000,000 for standby letters of
credit. Borrowings under the line are secured by the accounts receivable of the
Company and carry interest, payable monthly, at the bank's prime rate.
Current maturities of long-term debt at July 31, 1994 represents the Com-pany's
13% Subordinated Debentures which are due on February 1, 1995. The Company's
debentures include a right of early redemption upon the death of any original
debenture holder up to a maximum of $25,000 per holder.
Under the debenture agreement, the payment of dividends is restricted to 50% of
accumulated consolidated net income subsequent to October 31, 1984 plus the
proceeds of any sales of equity securities subsequent to January 1, 1985 and to
an amount that would not reduce the tangible consolidated net worth to less than
the aggregate principal amount of notes outstanding. Based on the above,
retained earnings of $693,159 would be available for the payment of dividends at
July 31, 1994. Total interest expensed and paid was $370,547, $349,009 and
$314,109 in 1994, 1993 and 1992, respectively.
5. INCOME TAXES
Details of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
Current:
<S> <C> <C> <C>
Federal ..... $(229,483) $ 89,859 $ 199,288
State ....... (43,016) 80,560 58,068
Deferred .... 365,081 24,289 6,608
$ 92,582 $ 194,708 $ 263,964
</TABLE>
The Company has a tax basis net operating loss carryforward of approximately
$420,000 available to offset future regular taxable income which expires in
2004.
State income tax expense in 1993 includes an additional provision of
approximately $46,000 related to prior years.
EX99-A.20
<PAGE>
Deferred income taxes are provided with respect to temporary differences between
the basis of assets and liabilities as determined for income tax and financial
reporting purposes. These differences relate principally to provisions for
depreciation, the allowance for doubtful accounts, rent paid in advance,
alternative minimum tax carryforwards, and net operating loss carryforwards.
Income tax expense differs from that which would be computed by applying the
U.S. Federal income tax rate to income before income taxes. The major items
affecting income tax expense are as follows:
<TABLE>
<CAPTION>
1994 % 1993 % 1992 %
<S> <C> <C> <C> <C> <C> <C>
Federal income tax
at statutory rate ........... $ 89,503 34 $ 79,827 34 $ 174,144 34
Travel and entertainment
expenses not deductible ..... 14,379 5 13,261 6 15,388 3
State and local income
taxes net of federal
income tax benefit .......... 17,772 7 53,170 8 38,325 8
Equity in (income) loss of
unconsolidated
subsidiaries ................ ( 7,698) (3) 32,430 8 40,204 8
Adjustment of prior
years' income taxes ......... (22,232) (8) 8,275 3 (13,853) (3)
Other ......................... 858 - 7,745 3 9,756 2
$ 92,582 35 $ 194,708 83 $ 263,964 52
</TABLE>
Effective August 1, 1991, the Company adopted the provisions of Financial
Accounting Standards Board Opinion No. 109, "Accounting for Income Taxes" in its
financial statements for the year ended July 31, 1992. As permitted by the
Statement, prior years' financial statements were not restated to reflect the
change in accounting method. The cumulative effect of adopting this Statement
was to increase net income by $236,212 for the year ended July 31, 1992,
representing the application of FAS No. 109 to the cumulative temporary
differences existing at August 1, 1991 and the alternative minimum tax credit
carryforward.
Net income taxes paid/(refunds received) were $(105,261), $354,497 and $289,248
during 1994, 1993 and 1992, respectively.
The Company provides a pension plan which covers all employees of the Company.
Benefits are based on compensation multiplied by a percentage of years of
service. The Company funds the pension plan on a current basis.
EX99-A.21
<PAGE>
The net pension expense for the years ended July 31, 1994, 1993 and 1992,
respectively includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Service cost-benefits earned
during the year ............... $ 191,465 $ 198,040 $ 224,861
Interest cost on projected
benefit obligation ............ 158,201 142,753 135,714
Less actual return on plan assets (163,593) (329,509) (224,146)
Net amortization and deferral ... (125,573) 63,564 (23,314)
Net pension expense ............. $ 60,500 $ 74,848 $ 113,115
</TABLE>
The weighted average discount rate and rate of increase in future compensation
used in determining the actuarial present value of the projected benefit
obligation are 7% and 4% respectively for 1994, 8% and 4% respectively for 1993,
and 8% and 6% respectively for 1992; the expected long term rate of return on
the assets is 9% for the years ended July 31, 1994, 1993 and 1992.
The following table sets forth the funded status and amount recognized for the
Company's pension plan in the consolidated balance sheets.
<TABLE>
<CAPTION>
July 31
1994 1993
<S> <C> <C>
Actuarial present value of accumulated plan
benefits, including vested benefits of
$2,055,731 and $1,604,351, respectively ...... $ 2,288,313 $ 1,776,603
Plan assets at fair market value,
principally equities ......................... $ 2,814,356 $ 2,761,189
Projected benefit obligations for
service rendered to date ..................... 2,709,301 2,037,321
Plan assets in excess of projected
benefit obligation ........................... 105,055 723,868
Unrecognized net gain .......................... (30,570) (557,158)
Unrecognized prior service cost ................ (3,130) (3,298)
Unrecognized net asset
being recognized over
approximately 21 years ........................ (370,478) (402,035)
Accrued pension liability included
in other liabilities ......................... $ 299,123 $ 238,623
</TABLE>
The Company also provides a Defined Contribution Benefit Plan under Section
401(k) of the Internal Revenue Code covering all employees who meet the plan's
eligibility requirements. Company contributions to this plan representing
matches of certain portions of employee directed contributions totaled $99,569,
$105,771 and $95,076 for 1994, 1993 and 1992, respectively.
EX99-A.22
<PAGE>
7. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The quarterly results for the years ended July 31, 1994 and 1993 were as
follows:
<TABLE>
<CAPTION>
First Second Third Fourth Total
1994 Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
Gross billings .. $ 114,073,281 $ 103,371,358 $ 99,362,297 $ 123,270,809 $ 440,077,745
Net fees and
commissions ... 7,404,733 7,171,119 7,205,379 7,880,999 29,662,230
Net income (loss) 27,391 (132,399) 45,108 230,563 170,663
Net income (loss)
per share ..... 0.04 (0.17) 0.06 0.29 0.22
First Second Third Fourth Total
1993 Quarter Quarter Quarter Quarter Year
Gross billings .. $ 105,207,437 $ 93,441,450 $ 91,441,349 $ 104,660,123 $ 394,750,359
Net fees and
commissions ... 7,603,026 7,242,604 7,410,626 7,817,462 30,073,718
Net income (loss) 99,591 (85,055) 33,931 (8,389) 40,078
Net income (loss)
per share ..... 0.13 (0.11) 0.04 (0.01) 0.05
</TABLE>
EX-A.23
<PAGE>
8. COMMITMENTS AND CONTINGENCIES
The Company leases office space and equipment. Future minimum rental commitments
under non-cancelable leases are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ending July 31, 1995 .............. $ 1,893,880
1996 .............. 1,594,984
1997 .............. 1,097,421
1998 .............. 922,763
1999 .............. 566,290
2000 and subsequent 93,892
Total minimum payments required ........ $ 6,169,230
</TABLE>
Rental expense was $2,650,973, $2,467,976 and $2,199,514 for 1994, 1993 and
1992, respectively.
The Company is involved in certain litigation arising in the ordinary course of
business which management believes, based upon discussion with counsel, will not
have a material effect on the financial position of the Company.
EX99-A.24
<PAGE>
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10 - Directors and Executive Officers of the Registrant
MANAGEMENT
Officers and directors are elected to hold office for a term of one year from
the date of the election and until their successors are elected. The following
names, ages, present positions and business experience of all executive officers
and directors of the Company as of July 31, 1994 are listed below:
Position with the Company and
Director Principal Occupation During
Name Age Since Past Five Years
John Radziwill......... 46 1979 President and Chief Executive
Officer since 1979; President
of Radix Group International,
Inc.; officer and director
of Radix Organization Incor-
porated; and director of
Laser Photonics, Inc.
Pierre L. Schoenheimer. 61 1971 Chairman since 1979; Managing
Director of Radix Organiza-
tion Incorporated; and Chair-
man of LDJ Resources, Inc.
(investments).
Don S. Friedkin........ 73 1971 A licensed Customs broker and
Vice President and Secretary
since 1971; Vice President of
Radix Group International, Inc.;
officer and director of Radix
Organization Incorported;
President of Louis Latour (USA) Inc.
(wine importer); Director of Laser
Photonics, Inc.; and Director of
American Association of Exporters
and Importers.
Matthew P. Sheppard.... 43 1985 Vice President and Treasurer
since 1980; Executive Direc-
tor and Chief Executive
Officer of Radix Group
International, Inc. since
1986.
EX99-A.25
<PAGE>
Position with the Company and
Director Principal Occupation During
Name Age Since Past Five Years
Tristan E. Beplat...... 82 1979 Director; retired in 1974 as
Senior Vice President and
Deputy General Manager of
Manufacturers Hanover Trust
Company, New York and Mana-
ging Director, Manufacturers
Hanover Ltd., London, England
where he was employed since
1948. Currently an honorary
director of Japan Fund, Inc.;
Director of Daiwa Bank Trust
Co., Yosuda Fire and Marine
Insurance Co. of America,
Fairfield Maxwell Ltd., Pacific
Forum CSIS, and Radix Organiza-
tion Incorporated. Director of
Princeton in Asia; Princeton
University Councilor in Asian
Studies.
Robert C. Lapin........ 63 1981 Director; President of Man-
hattan Securities Corpora-
tion; and Director of Radix
Organization Incorporated.
Irving F. Levitt....... 79 1981 Director; Chairman, RRE
Enterprises, Inc. and officer
and director of Investment
Capital Corp. (real estate
and other investments).
Leonard Lichter........ 66 1985 Director; principal in the
New York law firm of Spitzer
& Feldman P.C. since 1971;
Director of Nord Resources
Corporation, Chronar Corpora-
tion and Laser Photonics, Inc.
Carol Boyd Hallett...... 57 1993 Director; consultant to
Collier, Shannon, Rill &
Scott, Washington, D.C. and
to Clark Co., Pasa Robles,
CA; also currently director
of Litton Industries and
Fleming Companies, Inc.;
Director of American Association
of Exporters and Importers;
1989-1993 U.S. Commissioner
of Customs; and 1986-1989 U.S.
Ambassador to The Bahamas.
EX99-A.26
<PAGE>
Item 11 - Executive Compensation
The cash compensation paid to or accrued for all of the executive offi cers of
the Company whose compensation exceeded $100,000 for the year ended July 31,
1994 was as follows:
<TABLE>
<CAPTION>
Name and Principal Cash
Position Year Compensation
<S> <C> <C>
John Radziwill 1994 $164,583
President & Chief Exec. Officer 1993 164,583
1992 164,583
Pierre L. Schoenheimer 1994 164,583
Chairman 1993 164,583
1992 164,583
Matthew P. Sheppard 1994 189,583
Vice President & Treasurer 1993 189,583
1992 189,583
</TABLE>
While Mr. Radziwill and Mr. Schoenheimer devote a majority of their time to the
Company's business, they do not work full time for the Company. Contributions to
the Company's pension plan are not reflected in the above table. Under the plan,
which covers all employees of the Company and its subsidiaries, a normal annual
retirement benefit is payable at age 65 equal to 3/4 of 1 per cent of aggregate
remuneration during the period of employment with the Company. If each of the
above officers were to continue his employment with the Company to age 65, the
estimated annual pension benefits payable upon retirement at age 65 would be as
follows: Mr. Radziwill - $34,547; Mr. Schoenheimer - $15,934; Mr. Sheppard -
$38,945.
No executive officer listed in the above table received non-cash personal
benefits in excess of 10% of his compensation. Directors who are not otherwise
compensated by the Company or its subsidiaries and are not significant
shareholders of the Company receive compensation of $3,000 per year for serving
as directors.
Section 401(k) Plan
The Radix Group International Inc., Employees 401(k) Savings Plan (the "Plan")
is a defined contribution plan that provides retirement benefits to
participating employees of the Company who have at least one year of service
with the Company, are at least 21 years of age, and are active employees of the
Company or any affiliated company that has adopted the Plan. Participants in the
Plan may elect to defer up to 15% of their compensation on a pretax basis,
subject to certain statutory limitations. Participants direct the investment of
their contributions to any combination of four managed investment funds. The
Company may make matching contributions at management's discretion, subject to
certain limitations. The matching percentage is determined by management and is
27 applied to eligible pretax contributions for the calendar year.
EX99-A.27
<PAGE>
Matching contributions were $99,569 and $105,771 in the years ended July 31,
1994 and 1993, respectively. Participant contributions are 100% vested at all
times. Matching contributions vest 20% per year after the first year and become
fully vested after five years. Matching contributions automatically become fully
vested upon a participant's reaching normal retirement age, death or disability.
Upon termination, non-vested portions are considered forfeited and used to
reduce the Company's future obligations for matching contributions.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information at September 30, 1994 as to the
ownership of the Company's common shares by each person who held of record, or
to the knowledge of the Company owned beneficially, more than 5% of the
Company's common shares, and by each of its directors and by all directors and
officers as a group:
<TABLE>
<CAPTION>
Number of Shares Percent
Name Beneficially Owned of Class
<S> <C> <C>
John Radziwill......................... 214,503 27.8%
230 Park Avenue
New York, New York 10169
Pierre L. Schoenheimer................. 214,502 (1) 27.8%
230 Park Avenue
New York, New York 10169
Irving F. Levitt ...................... 63,950 8.3%
1800 Second Street
Sarasota, Florida 34236
Don S. Friedkin........................ 5,000 0.6%
Matthew P. Sheppard.................... 77,000 10.0%
Leonard Lichter........................ 15,000 1.9%
Robert C. Lapin........................ 32,900 4.3%
Karen Ginsburg, Joyce Lapin et al...... 54,750 7.1%
ttees u/a R.C. Lapin
10 yr. trust
166 Millbrook Circle
Norwood, NJ 07648
All officers and directors as
a group (7).......................... 622,855 80.7%
<FN>
(1) Does not include 7,375 shares owned by Mr. Schoenheimer's adult
children, as to which beneficial interest is disclaimed.
</FN>
</TABLE>
EX99-A.28
<PAGE>
Item 13 - Certain Relationships and Related Transactions
Radix Organization, Inc. (ROI) provides sales, management and administrative
services to the Company and the use of its 230 Park Avenue, New York, New York
offices, together with its staff. Included are the services of Don S. Friedkin,
who is Vice President and Secretary, Director, licensed Customs broker and a
principal salesman for the Company, and who receives no compensation from the
Company. The agreement, which is not in writing, has been in effect since 1981
and is renewable annually. The Company paid ROI fees for such services of
$96,000, in each of the fiscal years ended July 31, 1994, 1993 and 1992. ROI is
wholly owned by certain officers and directors of the Company.
The firm of Spitzer & Feldman, P.C., in which Leonard Lichter, a Director, is a
principal, rendered legal services to the Company during the fiscal years ended
July 31, 1994, 1993 and 1992.
EX99-A.29
<PAGE>
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements
1. The following consolidated financial statements for
Radix Ventures, Inc. and subsidiaries, are included
in Item 8:
Consolidated balance sheets at July 31, 1994 and 1993.
Consolidated statements of income and retained earnings for the years
ended July 31, 1994, 1993 and 1992.
Consolidated statements of cash flows for the years ended July 31,
1994, 1993 and 1992.
Notes to consolidated financial statements.
2. The following consolidated financial statement sched-
ules of Radix Ventures, Inc. and subsidiaries are
included in Item 14 (d):
Schedule VIII - Valuation and qualifying accounts
Schedule IX - Short-term borrowings
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and,
therefore, have been omitted.
3. The following exhibits required to be filed by Item 601 of Regulation
S-K are filed with this report:
None
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the fourth
quarter of its fiscal year ended July 31, 1994.
(c) Exhibits - See Item 14 (a) (3).
(d) Financial statement schedules required by regulations S-X
- see Items 14 (a) (1) and (2)
EX99-A.30
<PAGE>
Supplemental Information to be Furnished
With Reports Filed Pursuant to
Section 15(d) of the Act
by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act
The Registrant has not sent proxy material to its security holders.
EX99-A.31
<PAGE>
SIGNATURES:
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RADIX VENTURES, INC.
(Registrant)
Date: October 28, 1994 By: /s/ John Radziwill
John Radziwill, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: October 28, 1994 /s/ John Radziwill
John Radziwill, President and
Director (Principal Executive
Officer)
Date: October 28, 1994 /s/M.P. Sheppard
Matthew Sheppard, Vice Presi-
dent, Treasurer and Director
(Principal Financial Officer)
Date: October 28, 1994 /s/ Pierre L. Schoenheimer
Pierre L. Schoenheimer, Chairman
Date: October 28, 1994 /s/ D.S. Friedkin
Don S. Friedkin, Vice Presi-
dent, Secretary & Director
Date: October 28, 1994 /s/ Robert C. Lapin
Robert C. Lapin, Director
Date: October 28, 1994 /s/ I.F. Levitt
Irving F. Levitt, Director
Date: October 28, 1994 /s/ Tristan E. Beplat
Tristan E. Beplat, Director
Date: October 28, 1994 /s/ Leonard Lichter
Leonard Lichter, Director
Date: October 28, 1994 /s/ Carol Boyd Hallett
Carol Boyd Hallett, Director
EX99-A.32
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
RADIX VENTURES, INC. AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Balance at Additions Balance
beginning charged to at end
Description of period expenses Deductions (1) of period
<S> <C> <C> <C> <C>
Year ended July 31, 1994:
Allowance for doubtful accounts ..... $ 144,289 $ 134,727 $ 77,028 $ 201,988
Year ended July 31, 1993:
Allowance for doubtful accounts ..... $ 247,969 $ (20,918) $ 82,762 $ 144,289
Year ended July 31, 1992:
Allowance for doubtful accounts ..... $ 222,661 $ (45,227) $ (70,535) $ 247,969
<FN>
(1) Uncollectible accounts written off, net of rec veries
</FN>
</TABLE>
EX99-A.33
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VIII - SHORT-TERM BORROWINGS
RADIX VENTURES, INC. AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Weighted
Weighted Average
Category of aggregate Balance at Average Maximum amount Average amount interest
Short-term borrowings end of interest outstanding outstanding rate during
period rate during period during period period (2)
<S> <C> <C> <C> <C> <C>
Year ended July 31, 1994:
Notes payable to bank (1) . $ 0 $ - $ 2,050,000 $ 1,387,500 6.52%
Year ended July 31, 1993:
Notes payable to bank (1) . $ 0 $ - $ 1,600,000 $ 276,277 6.07%
Year ended July 31, 1992:
Notes payable to bank (1) . $ 0 $ - $ 312,926 $ 26,077 6.56%
<FN>
(1) Notes payable to bank represent borrowings under a line of credit borrowing
arrangement which has no termination date but which is reviewed annually for
renewal.
(2) The weighted average interest rate during the period was computed by
dividing the actual interest expense by average short-term debt outstanding.
</FN>
</TABLE>
EX99-A.34
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Radix Ventures, Inc.
New York, New York
We have audited the accompanying balance sheets of Radix Ventures, Inc. as of
July 31, 1994 and 1993 and the related statements of income and retained
earnings and cash flows for each of the three years in the period ended July 31,
1994. Our audits also included the financial statement schedules listed in the
Index at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Radix Ventures, Inc. at July
31, 1994 and 1993, and the results of its operations and its cash flows for each
of the three years in the period ended July 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As discussed in Note 5 to the financial statements, in 1992 the Company changed
its method of accounting for income taxes.
ERNST & YOUNG LLP
New York, New York
September 30, 1994
EX99-B.01
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the period ended April 30, 1995 Commission file number 2-94692
--------------
RADIX VENTURES, INC.
--------------------
(Exact name of registrant as specified in its charter)
New York 13-2673894
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation of organization)
230 Park Avenue, New York, New York 10169
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(212) 697-9141
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed from last report)
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 the number of shares outstanding of the issuer's classes of Common
Stock as of April 30, 1995.
---------------
Class Number outstanding
----- ------------------
Common Stock, par value $.01 771,500
EX99-C.01
<PAGE>
FORM 10-Q
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
- - -----------------------------
Item I. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets -
April 30, 1995, (unaudited) and July 31, 1994 3
Condensed Consolidated Statements of Income -
Three months and nine months ended April 30, 1995
and 1994 (unaudited) 4
Condensed Consolidated Statements of Cash Flows
Nine months ended April 30, 1995 and 1994 (unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item II. Management's Discussion and Analysis of Results of Operations
and Financial Condition 7
PART II. OTHER INFORMATION
- - --------------------------
Item VI. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
EX99-C.02
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
------------------------------
ITEM I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
ASSETS 1995 1994
------ ------------ -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,685,704 $ 3,420,969
Accounts receivable, less allowance for
doubtful accounts of $349,524 and
$201,988 31,223,320 32,632,192
Other current assets 813,950 1,214,406
----------- -----------
Total Current Assets 33,722,974 37,267,567
Furniture, Equipment and Vehicles, less
allowance for depreciation of $4,389,634
and $3,928,868 2,357,797 2,227,208
OTHER ASSETS:
Intangibles 581,367 465,952
Other 1,347,258 948,493
----------- -----------
TOTAL ASSETS $38,009,396 $40,909,220
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 1,343,293 $ -
Duty, freight and other accounts
payable 31,449,914 33,873,720
Accrued expenses and sundry
liabilities 994,130 1,206,557
Current maturities of long-term
debt - 1,974,900
----------- -----------
Total Current Liabilities 33,787,337 37,055,177
----------- -----------
Other 410,250 358,944
----------- -----------
410,250 358,944
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, authorized 1,000,000;
issued and outstanding 771,500 shares of
$.01 par value 7,715 7,715
Additional paid-in capital 941,622 941,622
Retained earnings 2,862,472 2,545,762
----------- -----------
3,811,809 3,495,099
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $38,009,396 $40,909,220
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
EX99-C.03
<PAGE>
FORM 10-Q
---------
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
April 30 April 30
--------------------------- ----------------------------
1995 1994 1995 1994
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Gross billings $111,823,522 $99,362,297 $378,491,517 $316,806,936
Less duty, freight and
other direct costs 103,548,383 92,156,918 353,604,426 295,025,705
--------------------------- ----------------------------
Net fees and commissions 8,275,139 7,205,379 24,887,091 21,781,231
Operating expenses 8,214,984 7,061,802 24,324,356 21,610,632
--------------------------- ----------------------------
Operating income 60,155 143,577 562,735 170,599
Interest expense, net (38,090) (96,032) (187,973) (270,270)
Equity in income
of unconsolidated
subsidiaries 10,156 16,238 89,155 620
--------------------------- ----------------------------
Income (loss) before
income taxes 32,221 63,783 463,917 (99,051)
Income tax charge (benefit) 8,667 18,675 147,207 (39,151)
--------------------------- ----------------------------
Net income (loss) $ 23,554 $ 45,108 $ 316,710 $ (59,900)
=========================== ============================
Net income (loss) per share
(based on 771,500 shares
outstanding) $0.03 $0.06 $0.41 $(0.08)
=========================== ============================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
EX99-C.04
<PAGE>
FORM 10-Q
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended April 30
--------------------------
1995 1994
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 316,710 $ (59,900)
Adjustments to reconcile net income to
cash used in operating activities:
Depreciation and amortization 505,062 446,572
Provision for losses in accounts
receivable 293,632 47,944
Loss (gain) on sale of furniture,
equipment and vehicles 20,430 (2,697)
Changes in operating assets and liabilities:
Decrease in accounts receivable 1,115,240 422,247
Decrease in other current assets 400,456 306,141
Increase in other non-current assets (418,963) (16,580)
Decrease in duty, freight, and other
accounts payable, accrued expenses
and sundry liabilities (2,584,927) (4,175,075)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (352,360) (3,031,348)
----------- -----------
INVESTING ACTIVITIES
Purchases of furniture, equipment and
vehicles (635,311) (864,703)
Proceeds from sales of furniture,
equipment and vehicles 10,102 7,825
Net purchases of marketable securities - (49,250)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (625,209) (906,128)
----------- -----------
FINANCING ACTIVITIES
Net proceeds from revolving line of
credit 1,343,293 1,550,000
Revolving line of credit origination
expenses (126,089) -
Principal payments of debt (1,974,900) (259,100)
----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (757,696) 1,290,900
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (1,735,265) (2,646,576)
Cash and cash equivalents at
beginning of year 3,420,969 4,222,105
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 1,685,704 $ 1,575,529
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
EX99-C.05
<PAGE>
FORM 10-Q
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the Company's
consolidated financial statements and footnotes thereto for the year ended July
31, 1994 included on Form 10-K filed with the Securities and Exchange Commission
on October 28, 1994.
The accompanying unaudited condensed consolidated financial statements include
all adjustments (consisting only of normal recurring accruals) which, in the
opinion of management, are necessary to present fairly the Company's financial
position at April 30, 1995, the results of operations for the three and nine
month periods ended April 30, 1995 and 1994 and statement of cash flows for the
nine months ended April 30, 1995 and 1994. The unaudited results of operations
for the nine months ended April 30, 1995 are not necessarily indicative of the
results that may be expected for the year ending July 31, 1995.
Effective November 1, 1993, the Company changed the estimated useful lives used
to compute depreciation for its computer equipment and automobiles from three
years to five years. This change conforms to the useful lives used for tax
purposes and better coincides with the estimated life expectancies of these
assets. The effect of this change favorably impacted depreciation expense by
$60,892 during the Company's nine months year-to-date of the current fiscal year
compared to the nine months year-to-date of the prior fiscal year.
2. FINANCING ARRANGEMENTS
----------------------
Effective February 1, 1995, the Company entered into a new, three year, $8
million short-term revolving line of credit agreement with its principal bank.
The new line of credit, which replaced a previous $4 million short-term
revolving line of credit, was used to redeem the outstanding balance of the
Company's subordinated debentures on February 1, 1995. Borrowings under this new
line of credit will bear interest at the annual rate of 1.25% over the higher of
the bank's prime rate or the Federal Funds Rate plus .5%, and are secured by the
assets of the Company.
3. SUBSEQUENT EVENT
----------------
On May 3, 1995, the Company entered into an agreement with Air Express
International Corporation (AEI) whereby AEI would acquire 100% of the
outstanding stock of the Company in exchange for a maximum of one million shares
of AEI common stock. The closing of this transaction became effective June 8,
1995. Accordingly, this will be the final report which will be filed with the
Securities and Exchange Commission by the Company.
EX99-C.06
<PAGE>
FORM 10-Q
ITEM II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
------------------------------------------------------------
OPERATIONS AND FINANCIAL CONDITION
----------------------------------
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Net fees and commissions were $8,275,139 for the quarter and $24,887,091 for the
nine months year-to-date ended April 30, 1995, compared to $7,205,379 and
$21,781,231 for the same periods the prior fiscal year, representing increases
of 14.8% and 14.3%, respectively. Of this increase, 5.0% for both the quarter
and the nine months year-to-date resulted from two acquisitions made by the
Company in the last quarter of fiscal year 1994, with the balance of the
increase derived from additional business from new customer accounts and from an
increase in the volume of transactions processed for existing accounts.
Gross billings, which include net fees and commissions plus duty, freight and
other direct costs billed to customers and paid on their behalf, increased 12.5%
for the quarter and 19.5% for the nine months year-to-date. The increase in
gross billings resulted from the acquisitions and the increased volume of
transactions derived from new and existing customer accounts noted above and
from an increase in customs duty and freight costs billed to customers and paid
on their behalf, which does not necessarily result in a proportionate increase
in net fees and commissions.
Operating expenses were $8,214,984 for the quarter and $24,324,356 for the nine
months year-to-date, compared to $7,061,802 and $21,610,632 for the same periods
the prior fiscal year, representing increases of 16.3% and 12.6% respectively.
The increase in operating expenses is attributable primarily to incremental
operating expenses associated with the businesses acquired in fiscal year 1994
noted above, to increases in salary and salary related expenses of $316,444 for
the quarter and $892,984 for the nine months year-to-date and to an increase in
the provision for doubtful accounts of $236,452 for the quarter and $245,688 for
the nine months year-to-date.
Net interest expense decreased $57,942 for the quarter and $82,297 for the nine
months year-to-date, from the corresponding prior fiscal year periods. The
decrease in net interest expense resulted primarily from the replacement on
February 1, 1995, of the Company's 13% subordinated debentures by borrowings
under a short-term bank line of credit with a lower interest rate and from an
overall reduction in average borrowings.
Equity in income of unconsolidated subsidiaries of $10,156 for the quarter and
$89,155 for the nine months year-to-date, compared to $16,238 and $620 for the
prior fiscal year periods, represents the Company's share in the income or loss
of its 50% owned Australian subsidiaries, Radix Group International Pty., Ltd.
and United Star Line Pty., Ltd., and of its 25% equity interest in James
Bourlet, Inc.
The Company reported income before income taxes of $32,221 for the quarter and
$463,917 for the nine months year-to-date, compared to income before income
taxes of $63,783 and loss before income taxes of $99,051, respectively, for the
same periods the prior fiscal year.
Income tax charges of $8,667 for the quarter and $147,207 for the nine months
year-to-date represented an effective income tax rate of 39.3% on income before
equity in income of unconsolidated subsidiaries. The effective income tax rate
for the same prior fiscal year periods was also 39.3%.
EX99-C.07
<PAGE>
FORM 10-Q
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
RESULTS OF OPERATIONS (cont.)
- -----------------------------
As a result, the Company recorded net income of $23,554 or 3 cents per share for
the quarter and $316,710 or 41 cents per share for the nine months year-to-date
ended April 30, 1995, compared to net income of $45,108 or 6 cents per share and
net loss of $59,900 or 8 cents per share, respectively, for the same prior
fiscal year periods.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company had a negative working capital position of $64,363 at April 30, 1995
compared to working capital of $212,390 at July 31, 1994 with the majority of
current assets comprising cash and accounts receivable.
The Company supplements its working capital by short-term borrowing to finance
any excess of its accounts receivable over its accounts payable. These
borrowings are made under a line of credit from a bank and fluctuate on a daily
basis according to the Company's requirements. On February 1, 1995, the Company
redeemed its $1,974,900 remaining outstanding subordinated debentures and
replaced its previous $4 million revolving line of credit with a new three-year
$8 million revolving line of credit. $1,343,293 was outstanding under the line
of credit at April 30, 1995 and there were no outstanding borrowings at July 31,
1994.
While working capital remains fairly constant, accounts receivable and accounts
payable fluctuate significantly on a daily basis in line with the billing and
disbursement of customs duty and freight costs. This fluctuation in accounts
receivable and accounts payable tends to offset with any differences resulting
in an increase or decrease in the Company's cash balances and/or short-term
borrowing.
The Company's capital requirements as of April 30, 1995 consist of purchases of
computer equipment and software under a continuing program to expand and upgrade
its computer systems, normal replacement of furniture, vehicles and other
equipment and lease obligations for office space and telephone equipment. The
Company's capital expenditure requirements should be met adequately by cash-on-
hand and by leasing arrangements.
IMPACT OF INFLATION
- -------------------
Inflation has tended to increase the Company's operating expenses, particularly
salary and salary related expenses. However, in recent years, the Company has
been unable, in some instances, to pass such cost increases on to its customers
by means of price increases due to competitive factors. Consequently, management
has sought to mitigate the effect of inflation on the Company's business by
increasing the efficiency of its operations.
In as much as the Company is not required to purchase or maintain extensive
fixed assets other than its computer systems and is not primarily reliant on
substantial interest rate sensitive indebtedness, the Company's direct exposure
to increased costs resulting from increases in interest rates is not severe.
EX99-C.08
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
----------------------------
RADIX VENTURES, INC. AND SUBSIDIARIES
-------------------------------------
ITEM VI. EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
No reports on form 8-K were filed for the period being reported.
EX99-C.09
<PAGE>
FORM 10-Q
RADIX VENTURES, INC. AND SUBSIDIARIES
--------------------------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RADIX VENTURES, INC.
----------------------------
Registrant
Dated: June 15, 1995
/s/ Pierre L. Schoenheimer
----------------------------
Pierre L. Schoenheimer,
Chairman
/s/ Matthew P. Sheppard
---------------------------
Matthew P. Sheppard,
EX99-C.10
