SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended December 31, 1998 Commission file number 0-12829
GRADCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Nevada 95-3342977
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3753 Howard Hughes Pkwy, Ste 200,
Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 892-3714
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
------- -------
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Number of Shares Outstanding
Class at December 31, 1998
------------- ----------------------------
Common Stock, without
par value 7,910,848
GRADCO SYSTEMS, INC.
INDEX
Page Number
Part I. Financial Information:
Consolidated Balance Sheets
at December 31, 1998 and March 31, 1998 3
Consolidated Statements of Income
for the Three and Nine Months Ended
December 31, 1998 and December 31, 1997 4
Consolidated Statements of Cash Flows
for the Nine Months Ended
December 31, 1998 and December 31, 1997 5-6
Notes to Unaudited Consolidated Financial Statements 7-10
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
Part II. Other Information 15
-2-
GRADCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, March 31,
1998 1998
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $12,494 $ 8,691
Short-term investments 1,000 -
Accounts receivable, net 16,817 29,930
Inventories 821 1,608
Deferred income taxes 3,471 552
Other current assets 2,423 166
------- -------
Total current assets 37,026 40,947
Long-term investments 1,000 -
Furniture, fixtures and equipment, net 980 1,290
Excess of cost over acquired net assets 1,202 1,234
Deferred income taxes 2,620 1,571
Other assets 3,527 3,429
------- -------
$46,355 $48,471
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,443 $10,241
Notes payable to suppliers 10,667 9,849
Accrued expenses 2,373 1,077
Income taxes payable 163 2,527
Current installments of long-term debt 6 13
------- -------
Total current liabilities 20,652 23,707
Long-term debt, excluding current installments - 2
Non-current liabilities 2,309 1,024
Excess of fair value of net assets acquired
over cost 1,300 1,600
Minority interest 666 665
Shareholders' equity:
Common stock, no par value; authorized
30,000,000 shares, 7,910,848 and
7,854,598 shares outstanding
December 31, 1998 and
March 31, 1998, respectively 45,711 45,325
Accumulated deficit (26,919) (23,972)
Currency translation adjustment 2,636 120
------- -------
21,428 21,473
------- -------
$46,355 $48,471
======= =======
See accompanying notes to consolidated financial statements.
-3-
GRADCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------- --------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998 1997
--------- --------- --------- ---------
Revenues:
Net sales $19,909 $23,548 $62,407 $92,135
Development engineering services 106 666 612 1,259
Licenses and royalties 484 715 1,754 2,222
------- ------- ------- -------
20,499 24,929 64,773 95,616
------- ------- ------- -------
Costs and expenses:
Cost of sales 15,934 19,186 49,919 75,046
Research and development 585 1,085 2,118 2,779
Selling, general and administrative 3,771 2,542 8,313 8,387
Provision for doubtful Mita
receivable - - 5,619 -
Hamma litigation settlement 5,000 - 5,000 -
------- ------- ------- -------
25,290 22,813 70,969 86,212
------- ------- ------- -------
Income (loss) from operations (4,791) 2,116 (6,196) 9,404
Interest expense (1) (10) (2) (12)
Interest income 56 37 166 127
------- ------- ------- -------
Earnings (loss) before income taxes
and minority interest (4,736) 2,143 (6,032) 9,519
Income tax expense (1,775) 766 (3,014) 3,903
Minority interest (8) 11 (71) 1,097
------- ------- ------- -------
Net earnings (loss) $(2,953) $ 1,366 $(2,947) $ 4,519
======= ======= ======= =======
Basic earnings (loss)
per common share $ (0.37) $ 0.18 $ (0.37) $ 0.58
======= ======= ======= =======
Average shares outstanding,
basic EPS 7,911 7,801 7,893 7,800
======= ======= ======= =======
Diluted earnings (loss)
per common share $ (0.37) $ 0.17 $ (0.37) $ 0.56
======= ======= ======= =======
Average shares outstanding,
diluted EPS 7,911 8,206 7,893 8,016
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
-4-
GRADCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
-----------------------
Ded. 31, Dec. 31,
1998 1997
--------- ---------
Cash flows from operating activities:
Net income (loss) $(2,947) $ 4,519
------- -------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 580 767
Amortization 68 586
Deferred income taxes (3,317) (328)
Provision for losses on accounts receivable 5,955 -
Stock-based compensation 228 328
Installment portion of Hamma
litigation settlement 5,000 -
Minority interest (71) 1,097
Decrease (increase) in accounts receivable 7,793 (3,642)
Decrease (increase) in inventories 823 (181)
(Increase) decrease in prepaid assets (2,095) 155
Decrease in other assets 891 263
Decrease in accounts payable (3,367) (3,380)
(Decrease) increase in notes payable
to suppliers (555) 187
Increase in accrued expenses 67 388
(Decrease) increase in income taxes payable (2,340) 297
Increase in other liabilities 122 142
------- -------
Total adjustments 6,782 (3,321)
------- -------
Net cash provided by operations 3,835 1,198
------- -------
Cash flows from investing activities:
Purchase of investments (2,000) -
Acquisition of property and equipment (191) (273)
Purchase of minority interest - (12,704)
------- -------
Net cash used in investing activities (2,191) (12,977)
------- -------
-5-
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Nine Months Ended
-----------------------
Dec. 31, Dec. 31,
1998 1997
--------- ---------
Cash flows from financing activities:
Repayment of notes in excess of three months (9) (9)
Proceeds from exercise of stock options 158 30
------- -------
Net cash provided by financing activities 149 21
------- -------
Effect of exchange rate changes on cash 2,010 (213)
------- -------
Net increase (decrease) in cash and cash equivalents 3,803 (11,971)
Cash and cash equivalents at beginning of period 8,691 18,335
------- -------
Cash and cash equivalents at end of period $12,494 $ 6,364
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 2 $ 12
Income taxes 2,666 4,131
See accompanying notes to consolidated financial statements.
-6-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INTERIM ACCOUNTING POLICY
The accompanying consolidated financial statements include the accounts of
Gradco Systems, Inc. and its wholly and majority-owned subsidiaries (the
"Company"). All significant intercompany balances and transactions have been
eliminated in consolidation.
In the opinion of the Company's management, the accompanying unaudited
statements include all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial position of the
Company at December 31, 1998 and the results of operations and cash flows for
the three and nine months ended December 31, 1998 and 1997. Although the
Company believes that the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for interim periods are not necessarily
indicative of results of operations to be expected for the full year.
A foreign currency translation loss of $1,102,000 is included in selling,
general and administrative expenses for the three months ended December 31,
1998 compared to a gain of $346,000 in the corresponding quarter of the prior
year. In the nine months ended December 31, 1998 and 1997, there were foreign
currency translation losses of $742,000 and $128,000, respectively.
The financial information included in this quarterly report should be read in
conjunction with the consolidated financial statements and related notes
thereto in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1998.
NOTE 2: INVENTORIES
Inventories are summarized as follows:
(Dollars in Thousands)
Dec. 31, March 31,
1998 1998
--------- ---------
Raw materials $ 159 $ 128
Work-in-process 365 992
Finished goods 297 488
------ ------
$ 821 $1,608
====== ======
NOTE 3: INCOME TAXES
The effective consolidated income tax rate used by the Company is based on the
estimated annual effective tax rates for the fiscal years in the countries
where the Company operates applied to results of the quarter.
-7-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: NET EARNINGS PER SHARE
Basic EPS is computed by dividing net income by the weighted average number of
common shares outstanding during the period. Diluted EPS reflects the
potential dilution that could occur if stock options and other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity.
For the three and nine months ended December 31, 1998, there is no difference
in the average shares outstanding between diluted and basic because there were
net losses in both periods. For all periods presented, the net earnings
available to common shareholders is the same for both basic and diluted EPS and
is equal to the net earnings stated in the Consolidated Statements of Income.
Basic and diluted EPS do not differ materially from earnings per share
previously presented. A reconciliation of the average number of outstanding
shares used in the computation of basic EPS to that used in the computation of
diluted EPS is shown in the following table (in thousands):
Three Months Ended Nine Months Ended
-------------------- --------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998 1997
--------- --------- --------- ---------
Average shares outstanding,
basic EPS 7,911 7,801 7,893 7,800
Effect of dilutive securities:
Stock options - 405 - 216
------ ------ ------ ------
Average shares outstanding,
diluted EPS 7,911 8,206 7,893 8,016
====== ====== ====== ======
NOTE 5: COMPREHENSIVE INCOME
Effective in the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), REPORTING COMPREHENSIVE
INCOME. SFAS 130 establishes standards for reporting and displaying of
comprehensive income and its components in the Company's consolidated financial
statements. Comprehensive income is defined in SFAS 130 as the change in
equity (net assets) of a business enterprise during a period from transactions
and other events and circumstances from nonowner sources. Total comprehensive
income (loss) was $(1,325,000 and $(1,639,000) for the three and nine months
ended December 31, 1998, respectively and $721,000 and $4,558,000 for the three
and mine months ended December 31, 1997, respectively. The difference from net
income or loss as reported is the tax affected change in the cumulative
currency translation adjustment.
NOTE 6: NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. This statement, which will become
effective in fiscal 1999, expands or modifies disclosures and will have no
impact on the Company's consolidated financial position, results of operations
or cash flows.
-8-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: COMMITMENTS AND CONTINGENCIES
In the following litigation, material claims have been asserted against the
Company:
DUBOIS V. GRADCO SYSTEMS, INC. ET AL. In 1989, the Company and its (now
former) president, Keith Stewart, were sued in the U.S. District Court in
Connecticut by R. Clark DuBois, a former employee of the Company. The
complaint primarily alleges misrepresentation and fraudulent concealment by
Gradco and Mr. Stewart in connection with an agreement entered into in 1983
with Mr. DuBois terminating and releasing the Company from royalty obligations
under a prior royalty agreement. The complaint, which has been amended a
number of times, seeks unspecified damages and other relief.
In March 1992, Mr. DuBois and John C. Hamma (whose related case has been
settled) filed an Application for Prejudgment Remedy ("PJR") against the
Company and Gradco (Japan) Ltd. ("GJ") seeking to attach $10,000,000 of assets
of each of the two companies. This Application was dismissed as respects GJ.
In November 1992, the Company and DuBois and Hamma (together the "Plaintiffs")
agreed in principle to a Consent Order instead of proceeding with a hearing on
the PJR. If during the pendency of the lawsuits the Company desires to sell,
transfer or take any other action which would affect its ownership of stock in
GJ, it has agreed to give 30 days prior notice to the Plaintiffs, who will then
be permitted, if they so request, to renew the PJR within the notice period.
Should Plaintiffs do so, the Company has agreed to forbear from proceeding with
any such transaction for a limited period.
On December 17, 1998, following a federal District Court decision finding that
Gradco was liable to Mr. Hamma and Tenex, his transferee, for undetermined
damages in connection with their release in 1982 of obligations of Gradco under
an agreement providing royalties based on Gradco income from Hamma inventions,
the parties settled the matter before completion of the damages trial and any
appeals. Pursuant to such settlement, Gradco agreed to pay $5 million and
issued 250,000 five-year warrants exercisable at $4.00 per share. At the date
of closing Gradco paid $3 million in cash and provided an irrevocable letter of
credit securing its obligation to pay the remaining $2 million in two equal
installments on November 15, 1999 and November 15, 2000. On an after-tax basis,
this charge amounted to $3,300,000 or $.42 per share in the three and nine
months ended December 31, 1998.
The DuBois suit will be tried as to liability and damages together. There are
substantial differences between the Hamma and DuBois cases. The Company is
presently unable to determine the amount of damages which is likely to be
awarded if DuBois is successful in his lawsuit. Although the DuBois case will
also be tried before a jury so that there are substantial elements of
uncertainty, the Company believes that the DuBois case will not have a material
adverse effect on its consolidated financial position, or on its results of
operations or liquidity.
-9-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: MITA BANKRUPTCY
On August 10, 1998, the Company learned that Mita Industrial Co. Ltd. ("Mita"),
one of GJ's largest customers, had filed a petition in Japan along with five of
its affiliates for the Japanese equivalent of a Chapter XI Reorganization. The
Company has established an allowance of $5.7 million, representing all of
Mita's remaining indebtedness to Gradco as of the bankruptcy date. On an
after-tax and minority interest basis, this charge amounted to $2,842,000, or
$.36 per share, in the nine months ended December 31, 1998.
-10-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to historical information, management's discussion and analysis
includes certain forward-looking statements, including those related to the
Company's growth and strategies, regarding events and financial trends that may
affect the Company's future results of operations and financial position. The
Company's actual results and financial position could differ materially from
those anticipated in the forward-looking statements as a result of competition,
general economic and business conditions, changes in technology, fluctuations
in the rates of exchange of foreign currency and other risks and uncertainties
over which the Company has little or no control.
The Company's operations are conducted principally through its wholly-owned
subsidiaries Venture Engineering, Inc. ("Venture") and Gradco (USA) Inc. ("GU")
and its majority-owned subsidiary Gradco (Japan) Ltd. ("GJ"). Venture performs
contract engineering and manufacturing services for OEMs and other customers,
primarily for the U.S. market. GJ and GU design, develop, produce (by
contract) and market on a worldwide basis, intelligent paper handling devices
for office copiers, computer controlled printers and facsimile machines.
GJ and GU operate jointly in the development and marketing of products to their
customer base, primarily OEMs. Both companies sell into the U.S. domestic and
foreign marketplace at similar profit margins, after elimination of
intercompany profits. Sales are denominated for the most part in Japanese yen
and U.S. dollars, corresponding to the currency charged for the product by the
contract manufacturer. Although the gross profit margin percentage is thus
protected from foreign currency fluctuations, translation gains and losses can
still occur when receivables and payables are denominated in other than the
local currency of each company.
RESULTS OF OPERATIONS
Revenues for the three and nine months ended December 31, 1998 decreased
$4,430,000 and $30,843,000, respectively, from the comparable prior year
periods principally as a result of decreases in net sales. Unit sales in the
copier market decreased 17% in the quarter from the comparable quarter in the
prior year and 5% from the previous quarter of the current year. The yen
strengthened considerably during the quarter and was up 4% against the dollar
when compared to the same period in the previous year. Sales denominated in
yen were $0.5 million higher than they would have been at last year's rate. In
the nine-month period, unit sales in the copier market decreased 31% and the
yen decreased by 9% against the dollar. Sales denominated in yen were $3.1
million lower than they would have been had the yen not decreased when compared
to the same period in the previous year.
The decrease in unit sales is primarily attributable to the shift from analog
to digital copiers by the Company's OEM customers as was discussed in previous
reports. The Company is attempting to provide new products to the digital
market and is reviewing cost savings which could be made to lessen the effect
of the change in the market. It is not currently possible to gauge with any
accuracy the adverse effect of the market change or the degree to which such
effect will be softened by the steps being taken by the Company to meet such
change.
-11-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross margin on net sales increased to 20.0% from 18.5% for both the three and
nine-month periods ended December 31, 1998 and 1997, respectively, primarily
from a change in product mix toward higher margin units.
Research and development expenses ("R&D") in the current quarter totaled
$585,000, 2.9% of revenues, compared to $1,085,000, 4.4% of revenues, in the
prior year's comparable period. For the nine months ended December 31, 1998
and 1997, R&D totaled $2,118,000, 3.3% of revenues, and $2,779,000, 2.9% of
revenues, respectively.
Selling, general and administrative expenses ("SG&A") in the current quarter
totaled $3,771,000, 18.4% of revenues, compared to $2,542,000, 10.2% of
revenues, in the prior year's comparable period, an increase of $1,229,000.
This increase was principally attributable to an increase of $1,448,000 in
foreign currency translation losses. For the nine months ended December 31,
1998 and 1997, SG&A totaled $8,313,000, 12.8% of revenues and $8,387,000, 8.8%
of revenues, respectively, a decrease of $74,000. The favorable translation of
SG&A at GJ associated with the weaker yen during this period accounted for a
decrease of approximately $471,000 in SG&A and the increase in amortization of
negative goodwill arising from the sale of GU from GJ to Gradco Systems, Inc
accounted for another $200,000. These decreases were offset by an increase of
$614,000 in foreign currency translation losses. In addition to the normal SG&A
expenses, the Company has taken a $5,000,000 charge in the current quarter and
year-to-date period for the settlement of the Hamma litigation and a $5,619,000
charge in the year-to-date period due to the bankruptcy petition filed by one
of GJ's largest customers. On an after-tax basis, these charges amounted to
$3,300,000, or $.42 per share, in the current quarter and $6,142,000, or $.78
per share, in the nine months ended December 31, 1998. For further information
regarding these situations, see Notes 7 and 8 of Notes to Unaudited
Consolidated Financial Statements.
As a result of the above factors, earnings before income taxes and minority
interest decreased from a gain of $2,143,000 in the quarter ended December 31,
1997 to a loss of $4,736,000 in the current quarter and from a gain of
$9,519,000 in the nine months ended December 31, 1997 to a loss of $6,032,000
in the current nine-month period.
Minority interest decreased more than proportionally in the nine-month period
due to the buyback of GJ shares in the second and third quarters of the prior
year which increased the Company's ownership in GJ from 58.6% to 97.3%.
-12-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Working capital decreased to $16,374,000 at December 31, 1998 from $17,240,000
at March 31, 1998. At December 31, 1998, the Company had $12,494,000 in cash,
an increase of $3,803,000 from March 31, 1998, and no long-term debt. $3.8
million of cash was provided by operations. $2.6 million of cash was provided
by net earnings before non-cash provisions for depreciation, amortization,
deferred taxes, provision for losses on accounts receivable, stock-based
compensation and the installment portion of the litigation settlement, $7.8
million was provided by a decrease in accounts receivable, $0.8 million from a
decrease in inventories, $0.9 from a decrease in other assets and $0.2 million
from an increase in accrued expenses and other liabilities. $2.1 million of
cash was used to fund the increase in prepaid expenses and $6.3 million was
used to pay down accounts payable, notes payable to suppliers and income taxes
payable. $2.0 million was invested in short and long-term certificates of
deposits with maturities matching the scheduled installment payments on the
litigation settlement. Cash increased $2.0 million as a result of exchange
rate changes. GJ has informal credit facilities with a Japanese bank . There
were no borrowings under this facility at December 31, 1998. The Company
believes that its cash and credit facilities are adequate for its short and
long-term operational needs. At December 31, 1998, there were no material
commitments for capital expenditures.
On December 17, 1998, following a federal District Court decision finding that
Gradco was liable to John C. Hamma, a former employee, and Tenex, his
transferee, for undetermined damages in connection with their release in 1982
of obligations of Gradco under a 1979 agreement providing royalties based on
Gradco income from Hamma inventions, the parties settled the matter before
completion of the damages trial and any appeals. Pursuant to such settlement,
Gradco agreed to pay $5 million and issued 250,000 five-year warrants
exercisable at $4.00 per share. At the date of closing Gradco paid $3 million
in cash and provided an irrevocable letter of credit securing its obligation to
pay the remaining $2 million in two equal installments on November 15, 1999 and
November 15, 2000.
A lawsuit remains pending by R. Clark DuBois, also a former employee, in which
fraud is claimed in connection with the acquisition by Gradco of a release from
Mr. DuBois of his royalty agreement. In this case, with Gradco's consent, the
liability and damages phases have been consolidated. The facts in the DuBois
case differ from those in the Hamma case in many significant respects.
Although the case will be tried before a jury, so that there are substantial
elements of uncertainty, the Company continues to believe that the case will
not have a material adverse effect on its consolidated financial position, or
on its results of operations or liquidity.
-13-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IMPACT OF THE YEAR 2000
The Registrant and its subsidiaries have addressed the impact of the Year 2000
on their internal accounting and operating systems and have determined that
these systems are Year 2000 compliant as a result of the recent purchases of
computer software upgrades. The Registrant is completing an assessment of how
its interface with customers and suppliers, in connection with sales and
purchase orders, might be impacted. This assessment is expected to be
completed before the end of the current fiscal year. To date, there do not
appear to be any issues which would have a material impact on the Registrant's
results of operations, liquidity or capital resources.
-14-
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information regarding the current status of the Hamma and DuBois
lawsuits, contained in Note 7 of Notes to Unaudited Consolidated
Financial Statements set forth in Part I of this Report, is hereby
incorporated by reference in response to this Item 1.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
-15-
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.
GRADCO SYSTEMS, INC.
Registrant
By:
Date: February 8, 1998 HARLAND L. MISCHLER
Harland L. Mischler
Executive Vice President, Chief Financial Officer
(Principal Financial and Chief Accounting Officer)
-16-
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This schedule contains summary financial information extracted from the 12/31/98
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