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, 2000 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, 2000
------------- ----------------------------
Common Stock, without
par value 7,102,948
GRADCO SYSTEMS, INC.
INDEX
Page Number
Part I. Financial Information:
Consolidated Balance Sheets
at September 30, 2000 and March 31, 2000 3
Consolidated Statements of Income
for the Three and Six Months Ended
September 30, 2000 and September 30, 1999 4
Consolidated Statements of Cash Flows
for the Six Months Ended
September 30, 2000 and September 30, 1999 5-6
Notes to Unaudited Consolidated Financial Statements 7-10
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
Quantitative and Qualitative Disclosures
About Market Risk 14
Part II. Other Information 15
-2-
GRADCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, March 31,
2000 2000
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 8,885 $12,208
Short-term investments 1,000 1,000
Accounts receivable, net 14,371 12,353
Inventories 2,470 1,739
Deferred income taxes 1,382 1,436
Other current assets 964 369
------- -------
Total current assets 29,072 29,105
Furniture, fixtures and equipment, net 766 723
Cash surrender value of life insurance 1,046 1,066
Excess of cost over acquired net assets 1,126 1,148
Deferred income taxes 3,654 3,104
Other assets 2,536 3,012
------- -------
$38,200 $38,158
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,351 $ 5,672
Notes payable to suppliers 4,838 4,426
Accrued expenses 3,262 1,928
Income taxes payable 419 448
------- -------
Total current liabilities 14,870 12,474
Non-current liabilities 665 744
Excess of fair value of net assets acquired
over cost 600 800
Minority interest 615 673
Shareholders' equity:
Common stock, no par value; authorized
30,000,000 shares, 7,913,434 shares 46,454 46,164
Accumulated deficit (28,187) (24,682)
Accumulated other comprehensive income 4,652 3,240
Less cost of common stock in treasury,
810,486 and 687,075 shares, respectively (1,469) (1,255)
------- -------
Total shareholders' equity 21,450 23,467
------- -------
$38,200 $38,158
======= =======
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,
2000 1999 2000 1999
--------- --------- --------- ---------
Revenues:
Net sales $12,403 $12,465 $25,303 $23,868
Development engineering services 296 230 669 560
Licenses and royalties 288 158 575 612
------- ------- ------- -------
12,987 12,853 26,547 25,040
------- ------- ------- -------
Costs and expenses:
Cost of sales 9,241 9,163 18,862 18,072
Research and development 1,358 722 2,233 1,534
Selling, general and administrative 2,385 2,052 4,812 4,295
Foreign currency loss 1,596 505 1,723 483
DuBois litigation settlement 3,200 - 3,200 -
------- ------- ------- -------
17,780 12,442 30,830 24,384
------- ------- ------- -------
Income (loss) from operations (4,793) 411 (4,283) 656
Interest expense (1) - (1) (1)
Interest income 122 91 243 175
------- ------- ------- -------
Earnings (loss) before income taxes
and minority interest (4,672) 502 (4,041) 830
Income tax expense (benefit) (750) 125 (439) 290
Minority interest (57) (1) (97) 3
------- ------- ------- -------
Net earnings $(3,865) $ 378 $(3,505) $ 537
======= ======= ======= =======
Basic earnings per common share $ (0.54) $ 0.05 $ (0.49) $ 0.07
======= ======= ======= =======
Average shares outstanding,
basic EPS 7,127 7,692 7,166 7,764
======= ======= ======= =======
Diluted earnings per common share $ (0.54) $ 0.05 $ (0.49) $ 0.07
======= ======= ======= =======
Average shares outstanding,
diluted EPS 7,127 7,692 7,166 7,777
======= ======= ======= =======
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,
2000 1999
--------- ---------
Cash flows from operating activities:
Net income (loss) $(3,505) $ 537
------- -------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 134 184
Amortization (173) (170)
Unrealized foreign currency losses 1,713 533
Deferred income taxes (555) 176
Provision for losses on accounts receivable 2 2
Stock-based compensation 290 164
Minority interest (97) 3
(Increase) decrease in accounts receivable (2,104) 6,302
(Increase) decrease in inventories (742) 802
(Increase) decrease in prepaid assets (609) 364
Decrease (increase) in other assets 399 (4)
Increase (decrease) in accounts payable 737 (2,439)
Increase (decrease) in notes payable
to suppliers 503 (4,802)
Increase (decrease) in accrued expenses 1,359 (749)
(Decrease) increase in income taxes payable (28) 2
Decrease in other liabilities (95) (178)
------- -------
Total adjustments 734 190
------- -------
Net cash (used in) provided by operations (2,771) 727
------- -------
Cash flows from investing activities:
Acquisition of property and equipment (184) (38)
------- -------
Net cash used in investing activities (184) (38)
------- -------
-5-
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Six Months Ended
-----------------------
Sept. 30, Sept. 30,
2000 1999
--------- ---------
Cash flows from financing activities:
Repayment of notes in excess of three months - (3)
Proceeds from exercise of stock options - 5
Acquisition of treasury stock (215) (609)
------- -------
Net cash used in financing activities (215) (607)
------- -------
Effect of exchange rate changes on cash (153) 1,071
------- -------
Net (decrease) increase in cash and cash equivalents (3,323) 1,153
Cash and cash equivalents at beginning of period 12,208 12,423
------- -------
Cash and cash equivalents at end of period $ 8,885 $13,576
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 1 $ 1
Income taxes 144 112
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, 2000 and the results of operations and cash flows for
the three and six months ended September 30, 2000 and 1999. 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.
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, 2000.
NOTE 2: INVENTORIES
Inventories are summarized as follows:
(Dollars in Thousands)
Sept. 30, March 31,
2000 2000
--------- ---------
Raw materials $ 811 $ 874
Work-in-process 1,153 343
Finished goods 506 522
------ ------
$2,470 $1,739
====== ======
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. 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,
2000 1999 2000 1999
--------- --------- --------- ---------
Average shares outstanding,
basic EPS 7,127 7,692 7,166 7,764
Effect of dilutive securities:
Stock options - - - 13
------ ------ ------ ------
Average shares outstanding,
diluted EPS 7,127 7,692 7,166 7,777
====== ====== ====== ======
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 $(2,592,000) and $(2,093,000) for the three and six months
ended September 30, 2000, respectively and $2,323,000 and $2,411,000 for the
three and six months ended September 30, 1999, respectively. The difference
from net income as reported is the change in the cumulative currency
translation adjustment.
NOTE 6: TREASURY STOCK
In fiscal 2000, the Company began acquiring shares of its common stock in
connection with a stock repurchase program announced in March 1999 which
authorizes the Company to purchase up to 2 million common shares from time to
time on the open market. The Company purchased 57,163 shares during the
current quarter at an aggregate cost of $90,000 and 123,411 shares in the year-
to-date period at an aggregate cost of $215,000. The purpose of the stock
repurchase program is to help the Company achieve its long-term goal of
enhancing shareholder value.
-8-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: COMMITMENTS AND CONTINGENCIES
There is no litigation pending against the Company. The federal case brought
in the District Court in Hartford, Connecticut by R. Clark DuBois against the
Company and its former president, Keith Stewart, was settled before trial in
September 2000 with a payment of $3.2 million being made to Mr. Dubois.
The $3.2 million was charged to expense in the second quarter. Because the
Company has net operating loss carryforwards in excess of $20 million for
federal tax purposes, no tax benefits were provided on this charge.
The Company's litigation with John C. Hamma was settled in December 1998; the
last payment of $1 million will be made by November 2000.
NOTE 8: 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. Venture Engineering, Inc. operates in an
industry segment involved in high technology engineering and manufacturing
services. Gradco Technology Ltd. (a majority-owned subsidiary of GJ) was
formed in fiscal 2000 to develop other technical and non-technical business
opportunities. The following table reflects information by reportable segments
for the three and six month periods ended September 30, 2000 and 1999 (in
thousands):
Net Earnings
Revenues (Loss) Assets
-------- ------ ------
Three Months Ended 9/30/00
--------------------------
Paper handling devices $ 9,231 $ (160) $43,976
Engineering/manufacturing services 2,876 23 4,283
New technology/products 880 (265) 1,382
Corporate - (3,463) 9,035
Inter-segment & corporate eliminations - - (20,476)
------- ------- -------
Consolidated $12,987 $(3,865) $38,200
Three Months Ended 9/30/99
--------------------------
Paper handling devices $11,188 $ 797 $42,009
Engineering/manufacturing services 1,665 (200) 2,726
New technology/products - - -
Corporate - (219) 10,445
Inter-segment & corporate eliminations - - (16,549)
------- ------- -------
Consolidated $12,853 $ 378 $38,631
-9-
GRADCO SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: SEGMENT INFORMATION - (Continued)
Net Earnings
Revenues (Loss) Assets
-------- ------ ------
Six Months Ended 9/30/00
------------------------
Paper handling devices $19,284 $ 719 $43,976
Engineering/manufacturing services 5,696 124 4,283
New technology/products 1,567 (603) 1,382
Corporate - (3,745) 9,035
Inter-segment & corporate eliminations - - (20,476)
------- ------- -------
Consolidated $26,547 $(3,505) $38,200
Six Months Ended 9/30/99
------------------------
Paper handling devices $21,601 $ 1,351 $42,009
Engineering/manufacturing services 3,439 (416) 2,726
New technology/products - - -
Corporate - (398) 10,445
Inter-segment & corporate eliminations - - (16,549)
------- ------- -------
Consolidated $25,040 $ 537 $38,631
-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 subsidiaries Gradco (Japan) Ltd. ("GJ") and Gradco
Technology Ltd. ("GTL"). 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. GTL develops other
technical and non-technical business opportunities.
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, 2000 increased
$134,000 and $1,507,000, respectively, from the comparable prior year periods.
The increase in the three-month period was from an increase in royalties while
the increase in the six-month period was principally as a result of an increase
in net sales. Unit sales in the office automation market decreased 13% in the
quarter from the comparable quarter in the prior year, Venture's sales
increased 67% and GTL contributed $880,000 in sales. A stronger yen, which
increased by 5% against the dollar when compared to the same period in the
previous year, caused an increase of $0.4 million in revenue when yen
denominated sales were translated into dollars. In the six-month period, unit
sales in the office automation market decreased 14%, Venture's sales increased
68% and GTL contributed $1,567,000 in sales. Yen denominated sales translated
into $1.1 million more in revenue due to the stronger, yen which gained 8%
against the dollar during this period.
Gross margin on net sales decreased to 25.5% from 26.5% for the three months
ended September 30, 2000 and 1999, respectively, and increased to 25.5% from
24.3% for the six-month periods then ended.
-11-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Research and development expenses ("R&D") in the current quarter totaled
$1,358,000, 10.5% of revenues, compared to $722,000, 5.6% of revenues, in the
prior year's comparable period. For the six months ended September 30, 2000
and 1999, R&D totaled $2,233,000, 8.4% of revenues, and $1,534,000, 6.1% of
revenues, respectively. The increases are principally attributable to
development expenses for new products by GJ.
Selling, general and administrative expenses ("SG&A") in the current quarter
totaled $2,385,000, 18.4% of revenues, compared to $2,052,000, 15.9% of
revenues, in the prior year's comparable period, an increase of $333,000. This
increase was principally attributable to higher stock-based compensation
expense and legal fees at corporate amounting to $166,000 and an unfavorable
translation of SG&A at GJ and GTL in the amount of $75,000 caused by the
stronger yen. For the six months ended September 30, 2000 and 1999, SG&A
totaled $4,812,000, 18.1% of revenues and $4,295,000, 17.2% of revenues,
respectively, an increase of $517,000. This increase was principally
attributable to $126,000 more in stock-based compensation expense, $158,000
additional SG&A at Venture (consistent with its increased sales) and $263,000
caused by the unfavorable translation of SG&A in Japan. $124,000 of the
increase in stock-based compensation expense in the quarter and year-to-date
periods was attributable to the Company's decision to convert the nonqualified
stock options issued under the 1997 Stock Option Plan into incentive stock
options under the 2000 Stock Option Plan and recognize the remaining expense
immediately.
Foreign currency losses were $1,596,000 in the current quarter and $505,000 in
the prior year's comparable period, an increase of $1,091,000. For the six
months ended September 30, 2000 and 1999, foreign currency losses were
$1,723,000 and $483,000, respectively, an increase of $1,240,000. The losses
are primarily attributable to receivables held by GJ in Japan but denominated
in U.S. dollars. As the dollar weakens, the yen equivalent is reduced and a
loss recognized. During the quarter, long-term GJ intercompany notes
receivable from Gradco Systems, Inc. were restructured, resulting in a loss of
$1,764,000.
The Company has taken a $3,200,000 charge in the current quarter and year-to-
date period for the settlement of the DuBois litigation. For further
information regarding this situation, see Note 7 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 $502,000 in the quarter ended September 30,
1999 to a loss of $4,672,000 in the current quarter and from a gain of $830,000
in the six months ended September 30, 1999 to a loss of $4,041,000 in the
current six-month period. The effective tax rate decreased to 10.9% from 34.9%
in the six-month period because no deferred tax benefit was provided on the
domestic loss resulting from the $3.2 million litigation settlement. This is
due to the fact that there are substantial net operating loss carryforwards
which may not be fully utilizable.
-12-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Working capital decreased to $14,202,000 at September 30, 2000 from $16,631,000
at March 31, 2000, principally as a result of the litigation settlement in the
amount of $3,200,000 referred to above. At September 30, 2000, the Company had
$8,885,000 in cash, a decrease of $3,323,000 from March 31, 2000, and no long-
term debt.
For the six months ended September 30, 2000, cash flow from operations was a
negative $2.8 million. The Company's $3.5 million net loss was reduced by $1.3
million in non-cash provisions for depreciation, amortization, unrealized
foreign currency losses, deferred taxes and stock-based compensation. $3.6
million was used to fund increases in accounts receivable, inventories, prepaid
assets and decreases in other liabilities. $3.0 million was provided by
increases in accounts payable, notes payable to suppliers, accrued expenses and
decreases in other assets.
$0.2 million was used in the acquisition of property and equipment and another
$0.2 million was used to acquire treasury stock. Cash was negatively affected
by exchange rate changes in the amount of $0.2 million.
GJ has informal credit facilities with a Japanese bank. There were no
borrowings under this facility at September 30, 2000. The Company believes
that its cash and credit facilities are adequate for its short and long-term
operational needs. At September 30, 2000, there were no material commitments
for capital expenditures.
-13-
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Market risk is the potential loss arising from adverse changes in market rates
and prices, such as foreign currency exchange and interest rates. The Company
is exposed to certain levels of market risks, especially changes in foreign
currency exchange rates. Interest rates currently have little effect on the
Company since it has no debt.
The Company conducts a significant portion of its business in Japanese yen.
There have been substantial fluctuations between the yen and the U.S. dollar
over the past several years and it is possible that such fluctuations will
continue. These fluctuations could have a material adverse effect on the
Company's revenues and results of operations.
The Company does not enter into derivatives or other financial instruments for
trading or speculative purposes.
-14-
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
September 22, 2000.
(b) The purposes of the meeting were 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 2001)and to vote upon the year 2000
Stock Option Plan adopted by the Board of Directors. 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 7,112,308 shares of Common Stock outstanding
and entitled to vote as of the record date of August 18, 2000) are
set forth below. There were no broker non-votes.
Nominees FOR AGAINST WITHHELD
-------- --------- ------- --------
Bernard Bressler 6,693,286 54,651 169,992
Thomas J. Burger 6,747,537 400 115,741
Harland L. Mischler 6,739,162 8,775 124,116
Robert J. Stillwell 6,742,287 5,650 120,991
Mazakazu (Mark) Takeuchi 6,688,087 59,850 175,191
Martin E. Tash 6,703,083 44,854 160,195
(d) The year 2000 Stock Option Plan was approved by the requisite
majority of stockholder votes.
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: November 9, 2000 HARLAND L. MISCHLER
Harland L. Mischler
Executive Vice President, Chief Financial Officer
(Principal Financial and Chief Accounting Officer)
-16-
