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 September 30, 1999 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 September 30, 1999
------------- ----------------------------
Common Stock, without
par value 7,638,459
GRADCO SYSTEMS, INC.
INDEX
Page Number
Part I. Financial Information:
Consolidated Balance Sheets
at September 30, 1999 and March 31, 1999 3
Consolidated Statements of Income
for the Three and Six Months Ended
September 30, 1999 and September 30, 1998 4
Consolidated Statements of Cash Flows
for the Six Months Ended
September 30, 1999 and September 30, 1998 5-6
Notes to Unaudited Consolidated Financial Statements 7-10
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
Part II. Other Information 14
-2-
GRADCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, March 31,
1999 1999
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $13,576 $12,423
Short-term investments 1,000 1,000
Accounts receivable, net 11,723 17,389
Inventories 579 1,368
Deferred income taxes 1,733 1,310
Other current assets 265 612
------- -------
Total current assets 28,876 34,102
Furniture, fixtures and equipment, net 756 855
Excess of cost over acquired net assets 1,170 1,191
Deferred income taxes 3,587 3,766
Other assets 4,242 3,988
------- -------
$38,631 $43,902
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,374 $ 6,543
Notes payable to suppliers 5,067 9,281
Accrued expenses 2,087 2,754
Income taxes payable 134 133
Current installments of long-term debt - 3
------- -------
Total current liabilities 11,662 18,714
Non-current liabilities 2,283 2,330
Excess of fair value of net assets acquired
over cost 1,000 1,200
Minority interest 684 628
Shareholders' equity:
Common stock, no par value; authorized
30,000,000 shares, 7,913,434 and
7,910,934 shares outstanding
September 30, 1999 and
March 31, 1999, respectively 45,999 45,829
Accumulated deficit (25,625) (26,162)
Currency translation adjustment 3,237 1,363
Less cost of common stock in treasury,
274,975 shares (609) -
------- -------
Total shareholders' equity 23,002 21,030
------- -------
$38,631 $43,902
======= =======
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 Six Months Ended
-------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
--------- --------- --------- ---------
Revenues:
Net sales $12,465 $19,366 $23,868 $42,498
Development engineering services 230 255 560 506
Licenses and royalties 158 701 612 1,270
------- ------- ------- -------
12,853 20,322 25,040 44,274
------- ------- ------- -------
Costs and expenses:
Cost of sales 9,163 15,600 18,072 33,985
Research and development 722 697 1,534 1,533
Selling, general and administrative 2,557 2,588 4,778 4,542
Provision for doubtful Mita
receivable - 619 - 5,619
------- ------- ------- -------
12,442 19,504 24,384 45,679
------- ------- ------- -------
Income (loss) from operations 411 818 656 (1,405)
Interest expense - - (1) (1)
Interest income 91 61 175 110
------- ------- ------- -------
Earnings (loss) before income taxes
and minority interest 502 879 830 (1,296)
Income tax expense (benefit) 125 235 290 (1,239)
Minority interest (1) (3) 3 (63)
------- ------- ------- -------
Net earnings $ 378 $ 647 $ 537 $ 6
======= ======= ======= =======
Basic earnings per common share $ 0.05 $ 0.08 $ 0.07 $ 0.00
======= ======= ======= =======
Average shares outstanding,
basic EPS 7,692 7,911 7,764 7,884
======= ======= ======= =======
Diluted earnings per common share $ 0.05 $ 0.08 $ 0.07 $ 0.00
======= ======= ======= =======
Average shares outstanding,
diluted EPS 7,692 8,052 7,777 8,097
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
-4-
GRADCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended
-----------------------
Sept. 30, Sept. 30,
1999 1998
--------- ---------
Cash flows from operating activities:
Net income $ 537 $ 6
------- -------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 184 400
Amortization (170) (25)
Deferred income taxes 176 (1,584)
Provision for losses on accounts receivable 2 5,948
Stock-based compensation 164 167
Minority interest 3 (63)
Decrease in accounts receivable 6,302 7,205
Decrease (increase) in inventories 802 (203)
Decrease (increase) in prepaid assets 364 (208)
Decrease (increase) in other assets 529 (233)
Decrease in accounts payable (2,439) (1,573)
Decrease in notes payable to suppliers (4,802) (1,376)
(Decrease) increase in accrued expenses (749) 602
Increase (decrease) in income taxes payable 2 (2,144)
(Decrease) increase in other liabilities (178) 31
------- -------
Total adjustments 190 6,944
------- -------
Net cash provided by operations 727 6,950
------- -------
Cash flows from investing activities:
Acquisition of property and equipment (38) (180)
------- -------
Net cash used in investing activities (38) (180)
------- -------
-5-
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Six Months Ended
-----------------------
Sept. 30, Sept. 30,
1999 1998
--------- ---------
Cash flows from financing activities:
Repayment of notes in excess of three months (3) (6)
Proceeds from exercise of stock options 5 158
Acquisition of treasury stock (609) -
------- -------
Net cash (used in) provided by financing activities (607) 152
------- -------
Effect of exchange rate changes on cash 1,071 (120)
------- -------
Net increase in cash and cash equivalents 1,153 6,802
Cash and cash equivalents at beginning of period 12,423 8,691
------- -------
Cash and cash equivalents at end of period $13,576 $15,493
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 1 $ 1
Income taxes 112 2,532
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 September 30, 1999 and the results of operations and cash flows for
the three and six months ended September 30, 1999 and 1998. 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 loss of $483,000 is included in selling, general and
administrative expenses for the six months ended September 30, 1999 versus a
gain of $360,000 in the prior year period. In the three months ended September
30, 1999 and 1998, there were foreign currency losses of $505,000 and $66,000,
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, 1999.
NOTE 2: INVENTORIES
Inventories are summarized as follows:
(Dollars in Thousands)
Sept. 30, March 31,
1999 1999
--------- ---------
Raw materials $ 182 $ 142
Work-in-process 201 372
Finished goods 196 854
------ ------
$ 579 $1,368
====== ======
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 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 Six Months Ended
-------------------- --------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
--------- --------- --------- ---------
Average shares outstanding,
basic EPS 7,692 7,911 7,764 7,884
Effect of dilutive securities:
Stock options - 141 13 213
------ ------ ------ ------
Average shares outstanding,
diluted EPS 7,692 8,052 7,777 8,097
====== ====== ====== ======
NOTE 5: COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), REPORTING
COMPREHENSIVE INCOME 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 $2,323,000 and $2,411,000 for the three and six months ended
September 30, 1999, respectively and $832,000 and $(608,000) for the three and
six months ended September 30, 1998, respectively. The difference from net
income as reported is the change in the cumulative currency translation
adjustment.
NOTE 6: NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES ("SFAS 133"), which will become effective for the
Company in fiscal 2002. The Company does not anticipate that the adoption of
SFAS 133 will have a material impact on its 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 ("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 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, DuBois and John C. Hamma (whose related case was 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.
The DuBois suit will be tried as to liability and damages together. There are
substantial differences between the DuBois and Hamma 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. Motions for summary judgment
filed in the DuBois case were denied on October 28, 1999. The Court entered a
scheduling order calling for an early January 2000 trial, subject to
availability of counsel and the parties. The DuBois case will be tried before
a jury so that there are substantial elements of uncertainty. Nevertheless,
the Company believes that the DuBois case will not have a material adverse
effect on its consolidated financial position or liquidity.
NOTE 8: TREASURY STOCK
In the first quarter of fiscal 2000, the Company began acquiring shares of its
common stock in connection with a stock repurchase program announced in March
1999. That program authorizes the Company to purchase up to 2 million common
shares from time to time on the open market. The Company purchased 139,300
shares during the current quarter at an aggregate cost of $307,000 and 274,975
shares in the year-to-date period at an aggregate cost of $609,000. The
purpose of the stock repurchase program is to help the Company achieve its
long-term goal of enhancing shareholder value.
-9-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: SEGMENT INFORMATION
The majority of the Company's operations are in one industry segment, the
design, development, production and marketing of intelligent paper handling
devices for the office automation market. Three of the Company's subsidiaries,
GJ, Gradco (USA) Inc. and Gradco Belgium, S.C. (a wholly-owned subsidiary of
GJ) operate in this segment. A second industry segment involved in high
technology engineering and manufacturing services, whose operations are
conducted by Venture Engineering, Inc., accounts for the remainder. The
following table reflects information by reportable segments for the three and
six month periods ended September 30, 1999 and 1998 (in thousands):
Paper Engineering/ Intersegment
Handling Manufacturing & Corporate
Devices Services Corporate Eliminations Consolidated
-------- ------------- --------- ------------ ------------
Three Months Ended 9/30/99
- --------------------------
Revenues $11,188 $1,665 $ - $ - $12,853
Net earnings (loss) 797 (200) (219) - 378
Three Months Ended 9/30/98
- --------------------------
Revenues $17,926 $2,396 $ - $ - $20,322
Net earnings (loss) 886 (416) (602) 779 647
Six Months Ended 9/30/99
- ------------------------
Revenues $21,601 $3,439 $ - $ - $25,040
Net earnings (loss) 1,351 (416) (398) - 537
Assets 42,009 2,726 10,445 (16,549) 38,631
Six Months Ended 9/30/98
- ------------------------
Revenues $39,799 $4,475 $ - $ - $44,274
Net earnings (loss) (63) (385) (1,108) 1,562 6
Assets 43,435 4,343 7,539 (12,411) 42,906
-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, exchange 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 six months ended September 30, 1999 decreased
$7,469,000 and $19,234,000, respectively, from the comparable prior year
periods principally as a result of decreases in net sales. Unit sales in the
office automation market decreased 52% in the quarter from the comparable
quarter in the prior year and Venture's sales decreased 31%. When compared to
the preceding quarter, unit sales were down 7%. A stronger yen, which
increased by 19% against the dollar when compared to the same period in the
previous year, caused an increase of $1.2 million in revenue when yen
denominated sales were translated into dollars. In the six-month period, unit
sales in the office automation market decreased 55% and Venture's sales
decreased 24%. Yen denominated sales translated into $1.9 million more in
revenue due to the stronger yen which gained 15% against the dollar during
this period.
Gross margin on net sales increased to 26.5% from 19.5% for the three months
ended September 30, 1999 and 1998, respectively, and increased to 24.3% from
20.0% for the six-month periods then ended. In addition to an improvement in
product mix toward higher margin units, there were some contractual price
increases, retroactive to the beginning of the year, resulting from the lower
volume of units sold.
-11-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Research and development expenses ("R&D") in the current quarter totaled
$722,000, 5.6% of revenues, compared to $697,000, 3.4% of revenues, in the
prior year's comparable period. For the six months ended September 30, 1999
and 1998, R&D totaled $1,534,000, 6.1% of revenues, and $1,533,000, 3.5% of
revenues, respectively.
Selling, general and administrative expenses ("SG&A") in the current quarter
totaled $2,557,000, 19.9% of revenues, compared to $2,588,000, 12.7% of
revenues, in the prior year's comparable period, a decrease of $31,000. This
decrease was principally attributable to a reduction in bad debt expense of
$281,000 and lower patent amortization costs and legal fees, but was offset by
an increase of $439,000 in foreign currency losses. For the six months ended
September 30, 1999 and 1998, SG&A totaled $4,778,000, 19.1% of revenues and
$4,542,000, 10.3% of revenues, respectively, an increase of $236,000. This
increase was principally attributable to a foreign currency loss of $483,000 in
the current year as opposed to a gain in the prior year period of $360,000.
This unfavorable change of $843,000 was partially offset by a decrease of
$327,000 in bad debt expense and lower patent amortization costs. In addition
to the normal SG&A expenses, the Company took charges of $619,000 and
$5,619,000 in the three and six-month periods of the prior year due to the
bankruptcy petition filed by Mita Industrial Co. Ltd. ("Mita"), one of GJ's
largest customers. Mita's current reorganization plan, to be presented for a
vote at a creditors meeting in January 2000, provides for the partial repayment
of the amount owed at the date of bankruptcy. Only one-fourth of the repayment
would be paid currently and the balance would be paid over a nine-year period
with no interest. Because the plan has not yet been approved by the creditors,
the Company has not recognized any income on this transaction. Assuming the
plan is approved, the Company will still have to assess the probability of
collecting the balance owed.
As a result of the above factors, earnings before income taxes and minority
interest decreased from $879,000 in the quarter ended September 30, 1998 to
$502,000 in the current quarter and increased from a loss of $1,296,000 in the
six months ended September 30, 1998 to a gain of $830,000 in the current six-
month period. The effective tax rate decreased to 34.9% from 95.6% in the six-
month period because in the prior year there was pre-tax income generated
domestically which was partially sheltered by a net operating loss carryforward
and a pre-tax loss in Japan on which deferred tax benefits were fully provided.
FINANCIAL CONDITION
Working capital increased to $17,214,000 at September 30, 1999 from $15,388,000
at March 31, 1999. At September 30, 1999, the Company had $13,576,000 in cash,
an increase of $1,153,000 from March 31, 1999, and no long-term debt. $0.7
million of cash was provided by operations. $0.9 million of cash was provided
by net earnings before non-cash provisions for depreciation, amortization,
deferred taxes, provision for losses on accounts receivable and stock-based
compensation, $8.0 million was provided by decreases in accounts receivable,
inventories, prepaid expenses and other assets. $8.2 million of cash was used
to pay down accounts payable, notes payable to suppliers, accrued expenses and
other liabilities. $0.6 million was used to purchase treasury stock. Exchange
rate changes caused an increase of $1.1 million in cash. GJ has informal
-12-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
credit facilities with a Japanese bank . There were no borrowings under this
facility at September 30, 1999. The Company believes that its cash and credit
facilities are adequate for its short and long-term operational needs. At
September 30, 1999, there were no material commitments for capital
expenditures.
A lawsuit remains pending by R. Clark DuBois, 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 (a related case that was settled in
December 1998) in many significant respects. Motions for summary judgment
filed in the DuBois case were denied on October 28, 1999. The Court entered a
scheduling order calling for an early January 2000 trial, subject to
availability of counsel and the parties. The DuBois case will be tried before
a jury so that there are substantial elements of uncertainty. Nevertheless,
the Company believes that the DuBois case will not have a material adverse
effect on its consolidated financial position or liquidity.
IMPACT OF THE YEAR 2000
The Company 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 ("Y2K") compliant as a result of recent purchases of
computer software upgrades. The Company's products will not be affected by Y2K
because they do not use dates to calculate actions nor do they maintain any
date fields within their internal logic. The Company has completed an
assessment of how its interface with customers and suppliers, through sales and
purchase orders might be impacted and has determined that there do not appear
to be any issues which would have a material impact on the Company's results of
operations, liquidity or capital resources.
-13-
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information regarding the current status of the DuBois lawsuit,
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
(a) The Company's Annual Meeting of Stockholders was held on
October 1, 1999.
(b) The sole purpose of the meeting was the election of six
directors of the Company, to serve for a term of one year (i.e.,
until the Annual Meeting to be held in 2000). Proxies were solicited
by management for its nominees, pursuant to Regulation 14 under the
Securities Exchange Act of 1934, and there was no opposing
solicitation. All of such nominees were elected as directors by the
required plurality of the votes cast. The directors so elected (all
of whom were incumbent directors) are Bernard Bressler, Thomas J.
Burger, Harland L. Mischler, Robert J. Stillwell, Mazakazu (Mark)
Takeuchi and Martin E. Tash.
(c) The votes cast for, against and withheld from each of the
nominees (out of the 7,679,959 shares of Common Stock outstanding
and entitled to vote as of the record date of August 17, 1999) are
set forth below. There were no broker non-votes.
Nominees FOR AGAINST WITHHELD
-------- --------- ------- --------
Bernard Bressler 6,592,177 97,667 159,271
Thomas J. Burger 6,654,394 35,450 159,271
Harland L. Mischler 6,654,394 35,450 159,271
Robert J. Stillwell 6,652,344 37,500 159,271
Mazakazu (Mark) Takeuchi 6,639,394 50,450 159,271
Martin E. Tash 6,652,344 37,500 159,271
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.
-14-
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: November 12, 1999 HARLAND L. MISCHLER
Harland L. Mischler
Executive Vice President, Chief Financial Officer
(Principal Financial and Chief Accounting Officer)
-15-
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This schedule contains summary financial information extracted from th 9/30/99
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