SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
___________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994
Commission File Number 0-10745
DATA SWITCH CORPORATION
______________________________________________________
(Exact name of Registrant as specified in its Charter)
DELAWARE 06-0962862
_______________________________ ____________________________
(State or other jurisdiction of (IRS Employer Identification
incorporation) Number)
One Enterprise Drive, Shelton, Connecticut 06484
__________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (203) 926-1801
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 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 amendment to this Form 10-K. [X]
Aggregate market value of voting stock held by non-affiliates of
the registrant at February 28, 1995: Approximately $35,218,000.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock and common stock purchase warrants at
December 31, 1994.
Securities registered pursuant to Section 12(b) of the Act.
NASDAQ Number of
Title of Each Class Symbol Shares Outstanding
____________________ ______ ___________________
Common Stock, $.01 par value,
with Purchase Rights attached DASW 12,376,891
Common Stock Purchase Warrants
(expiring December 31, 1995) DASWZ 10,112
Liquidity and Capital Resources
The Company generated $12,454,000 of cash before financing
activities in 1994, as opposed to using $7,258,000 in 1993. As of
December 31, 1994 the Company had working capital of $28,578,000
reflecting a decrease of $5,772,000 from the prior year. This
decrease primarily resulted from substantial reductions in
inventory and receivable levels in 1994 which led to repayment of
the Company's long-term revolving debt. Both inventory and
receivable levels decreased 25.9% from December 31, 1993 to
December 31, 1994 disproportionally to a 4.7% decrease in revenues
for the periods ending December 31, 1994 and 1993. The decrease in
inventories was the result of a concerted effort to reduce
inventory levels by management, including the appointment of a new
Vice President of operations who instituted new inventory control
methods to reduce inventory levels in 1994. The receivable
decrease is primarily due to a December 31, 1993 past due balance
of approximately $5,000,000 with a single customer subsequently
collected in early 1994. In addition to selling its
products, the Company also leases its products under sales type
lease agreements. These lease receivables are available for sale
as a source of financing. The Company received approximately
$151,000 in 1994 from the sale of leases compared to $3,043,000 in
1993.
The ratio of current assets to current liabilities was 2.9:1 at
year-end 1994, compared with 3.6:1 at year-end 1992.
Long-term debt consisted of $19,515,000 of convertible subordinated
debentures and $76,000 of indebtedness to the State of Connecticut
for a loan granted under a State financial assistance package.
The loan is subject to certain terms and conditions, one of which
is a promise to maintain operations in Connecticut for a minimum of
10 years from the date of receipt of the last State financial
assistance package payment. In addition, at December 31, 1994, the
Company, based on a formula of eligible receivables (as defined),
has available up to $8,000,000 of revolving credit with People's
Bank. This line of credit is collateralized by a first lien on
substantially all of the Company's assets, and is available subject
to maintenance of certain covenants and financial ratios through
March 1, 1996. At December 31, 1994 the Company used $1,578,000
of available credit to finance European operations in the short
term. The Company was in compliance with all financial covenants
contained in its credit agreement.
Capital expenditures in 1995 are expected to exceed depreciation
expense by approximately $750,000 due to the construction of
additional warehouse space needed to maintain operations at a new
83,000 square foot facility in Shelton, Connecticut. The facility
was purchased late in 1994, and will consolidate all the Company's
operations in one location, except for its foreign and regional
sales and service offices.
In the opinion of management, existing financial resources,
including cash anticipated to be generated by operations and
available under existing credit facilities, will be adequate to
meet current and expected operating and capital requirements.
Impact of Inflation
Inflation did not have a significant impact on the Company during
1992, 1993 and 1994, and is not expected to do so in 1995.
13. Supplemental Profit and Loss and Balance Sheet
Information
The Company operates in one industry segment, which
includes the design, development, manufacture, marketing and
maintenance of products for large scale data center networks. Net
revenue and income before income taxes for the three years ended
December 31, 1994, 1993 and 1992 and identifiable assets at the end
of each of those years, classified by geographic area, were as
follows:
<TABLE>
<CAPTION>
United States Foreign Consol-
(000's) Operations Operations lidated
<S> <C> <C> <C>
1994
Revenues, net $ 73,744 $ 16,827 $ 90,571
Income before
income taxes 3,693 250 3,943
Identifiable assets 51,691 5,997 57,688
1993
Revenues, net $ 81,487 $ 13,591 $ 95,078
Loss before income
taxes (1,536) (532) (2,068)
Identifiable assets 54,426 5,858 60,284
1992
Revenues, net $ 69,295 $ 14,725 $ 84,020
Loss before income taxes (509) (732) (1,241)
Identifiable assets 50,191 6,623 56,814
</TABLE>
Research and development expenses were $10,093,000,
$12,491,000 and $12,380,000 in 1994, 1993 and 1992, respectively.
The Company sells its products primarily to airlines,
banks, securities firms, telecommunication companies, manufacturing
firms, power utilities and insurance companies. The Company
performs ongoing credit evaluations of its customers' financial
condition and requires no collateral from its customers. There
were no sales to major customers in excess of 10% of consolidated
revenues for 1994, 1993 or 1992. The Company believes it did not
have a significant concentration of credit risk at December 31,
1994. At December 31, 1993, one customer accounted for
approximately 19% of the Company's consolidated accounts receivable
balance.
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors of
Data Switch Corporation
We have audited the consolidated financial statements and the
financial statement schedule of Data Switch Corporation listed in
the index of consolidated financial statements and schedules in
Item 8 of this Form 10-K. These financial statements and the
financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statement and the financial statement schedule
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 consolidated financial
position of Data Switch Corporation at December 31, 1994 and 1993,
and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles.
In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
____________________________
Stamford, Connecticut
January 31, 1995
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.
DATA SWITCH CORPORATION
By: W. James Whittle
_________________________
W. James Whittle
Senior Vice President and
Chief Financial Officer
Date: August 29, 1995
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.
William J. Lifka August 29, 1995
________________________________
William J. Lifka
Chairman of the Board, President
and Chief Executive Officer
W. James Whittle August 29, 1995
________________________________
W. James Whittle
Senior Vice President and
Chief Financial Officer
Michael D. Stashower August 29, 1995
________________________________
Michael D. Stashower
Director
Irwin J. Sitkin August 29, 1995
________________________________
Irwin J. Sitkin
Director
D. David Cohen August 29, 1995
________________________________
D. David Cohen
Director
Brandt R. Allen August 29, 1995
________________________________
Brandt R. Allen
Director
Norman L. Rasmussen August 29, 1995
________________________________
Norman L. Rasmussen
Director
