<PAGE>
- - -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from ______________to______________
COMMISSION FILE NUMBER 0-20191
--------------------------------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
ODS 401(k) SAVINGS PLAN
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
OPTICAL DATA SYSTEMS, INC.
1101 E. Arapaho Road
Richardson, Texas 75081
- - -----------------------------------------------------------------------------
<PAGE>
ODS 401(k) SAVINGS PLAN
Effective as of April 1, 1993, Optical Data Systems, Inc. (the
"Company") adopted the ODS 401(k) Savings Plan (the "Savings Plan") in
compliance with Sections 401(a) and 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"), and the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Amounts
contributed to the Savings Plan are held pursuant to a trust exempt from
income tax pursuant to Section 501(a) of the Code. All employees of the
Company (except non-resident aliens who receive no earned income from the
Company within the United States) who have completed three months of service
are eligible to participate in the Savings Plan.
The fiscal year of the Savings Plan is January 1 through the following
December 31. The name of the issuer of the securities held pursuant to the
Savings Plan and the address of its principal executive office is Optical
Data Systems, Inc., 1101 East Arapaho Road, Richardson, Texas 75081.
CHANGES IN THE SAVINGS PLAN. There were no changes in the Savings Plan
during fiscal year 1995.
CHANGES IN INVESTMENT POLICY. There were no changes in the investment
policy of the Savings Plan during fiscal year 1995.
CONTRIBUTIONS UNDER THE SAVINGS PLAN. Participating employees may make
pre-tax contributions to their account under the Savings Plan of not less 1%
nor more than 15 % of their compensation each year, subject to certain
maximum limits imposed by law ($9,240 in 1995 and 1994). In its discretion,
the Company may make (i) annual employer matching contributions to the
Savings Plan for the account of each participating employee in an amount
equal to $.25 for each $1.00 of salary reduction contributed by such
employee, up to a maximum Company contribution equal to 4% of the employee's
compensation and (ii) annual employer contributions. The accounts of
participating employees are 100% vested immediately as to salary reduction
amounts contributed to the Savings Plan and vest at the rate of 20% per year
of service as to all other benefits, with all rights being 100% vested under
the Savings Plan after five years of service or upon death, disability or
normal retirement.
PARTICIPATING EMPLOYEES. There were 354 and 253 employees participating
in the Savings Plan at December 31, 1995 and 1994, respectively.
-1-
<PAGE>
ADMINISTRATION OF THE SAVINGS PLAN. The Savings Plan is administered by
an Administrative Committee consisting of two persons, both of whom are
employees of the Company. The members of the Administrative Committee, who
serve without compensation from the Savings Plan for their services, are as
follows:
Michael L. Paxton........Vice-President and Secretary,
Optical Data Systems, Inc.
Kandis L.Tate............Controller - Finance and Accounting,
Optical Data Systems, Inc.
The address of each of the members of the Administrative Committee
listed above is Optical Data Systems, Inc., 1101 East Arapaho Road,
Richardson, Texas 75081.
The Administrative Committee directs the operations of the Savings Plan
and may make administrative and procedural regulations. Certain
administrative functions relative to the Savings Plan have been delegated to
Cecil & Co., an independent, unaffiliated company whose address is 14881
Quorum Drive, Suite 555, Dallas, Texas 75240. All fees and expenses of Cecil
& Co. have been paid by the Company. Expenses of maintaining and investing
participants' accounts pursuant to the Savings Plan, including withdrawal and
transfer charges, are borne by the Savings Plan.
CUSTODIAN OF INVESTMENTS. The assets of the Savings Plan are held by a
trust and managed by a trustee (the "Trustee") who is not an employee of the
Company. The Company furnishes the Savings Plan with a fidelity bond
covering the Trustee. The Trustee is entitled to receive reasonable
compensation from the Savings Plan for services rendered in connection
therewith. However, to date, the Company has borne this expense.
INVESTMENT OPTIONS. Subject to the approval of the Administrator of the
Savings Plan, each participating employee may direct the Trustee as to the
investment of his or her voluntary account balance under the Savings Plan.
Investment options for participants' salary reduction contributions under the
Savings Plan include Fidelity Magellan Fund, Fidelity Puritan Fund, Bond Fund
of America, Nationwide Guaranteed Fund, Nationwide Money Market Fund, and
Employer (Company) Stock Fund.
REPORTS TO PARTICIPATING EMPLOYEES. Each participant and retired
participant having an interest in the Savings Plan receives quarterly
statements and an annual report of his or her account under the Savings Plan
each plan year.
-2-
<PAGE>
FINANCIAL STATEMENTS.
INDEX TO FINANCIAL STATEMENTS
Page
----
REPORT OF INDEPENDENT AUDITORS ....................................... F-1
FINANCIAL STATEMENTS:
Statement of Net Assets Available for Benefits,
with Fund Information .......................................... F-2
Statement of Changes in Net Assets Available for
Benefits, with Fund Information ................................ F-3
SUPPLEMENTAL SCHEDULES: SCHEDULE
Assets Held for Investment Purposes 1 .................. F-9
Reportable Transactions 2 .................. F-10
A schedule of party-in-interest transactions has not been presented
because there were no party-in-interest transactions which are prohibited by
Section 406 of ERISA and for which there is no statutory or administrative
exemption.
EXHIBITS.
The following Exhibits are filed herewith pursuant to Item 601 of
Regulation S-K or are incorporated herein by reference to previous filings as
noted:
Exhibit
Number Description of Exhibit
------- ----------------------
10.1* ...... ODS 401(k) Savings Plan, dated May 19, 1993, effective
April 1, 1993.
10.2**...... Amendment Number One to the ODS 401(k) Savings Plan, dated
December 30, 1994, effective April 1, 1993.
23.***...... Consent of Independent Auditors
_______________
* Previously filed as Exhibit number 10.27 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993
(File No. 0-20191), which Exhibit is hereby incorporated herein by
reference.
** Previously filed as Exhibit number 10.30 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994
(File No. 0-20191), which Exhibit is hereby incorporated herein
by reference.
*** Filed herewith.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustee has duly caused this annual report to be signed on its behalf by
the undersigned thereunto duly authorized.
ODS 401(k) SAVINGS PLAN
Date: June 27, 1996 By: /s/ JAMES P. WHEELER
-----------------------------
James P. Wheeler
Trustee
-4-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Trustees,
ODS 401(k) Savings Plan
We have audited the accompanying statements of net assets available for
benefits of the ODS 401(k) Savings Plan as of December 31, 1995 and 1994, and
the related statements of changes in net assets available for benefits for
the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1995 and 1994, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment purposes as of December 31, 1995, and
reportable transactions for the year then ended, are presented for purposes
of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, and are not a required part of the basic financial statements. The
information presented in the accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1995, and reportable
transactions for the year then ended do not disclose the historical cost of
investments. Disclosure of this information is required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the
statement of net assets available for benefits and the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
------------------------------
Ernst & Young LLP
Dallas, Texas
June 20, 1996
F-1
<PAGE>
ODS 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
<TABLE>
December 31, 1995
Fund Information
--------------------------------------------------------------------------------
Fidelity Fidelity Employer
Bond Fund Magellan Puritan Nationwide Nationwide Stock Participant
of America Fund Fund Money Mkt Guaranteed Fund Loans Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
At fair value $120,780 $748,603 $342,497 $43,498 $210,463 $396,299 - $1,862,140
Cash - - - - - 4,029 - 4,029
Participant notes receivable - - - - - - $12,993 12,993
-------------------------------------------------------------------------------------------
Total investments 120,780 748,603 342,497 43,498 210,463 400,328 12,993 1,879,162
-------------------------------------------------------------------------------------------
Receivables:
Employer's contribution 1,048 2,648 860 - 797 3,682 - 9,035
Participants' contribution 869 7,876 3,405 590 1,467 3,523 (142) 17,588
-------------------------------------------------------------------------------------------
Total receivables 1,917 10,524 4,265 590 2,264 7,205 (142) 26,623
-------------------------------------------------------------------------------------------
Total assets 122,697 759,127 346,762 44,088 212,727 407,533 12,851 1,905,785
-------------------------------------------------------------------------------------------
LIABILITIES
Refunds payable (364) (6,825) (5,709) - (172) - - (13,070)
Other - - - - (9,710) (4,029) - (13,739)
-------------------------------------------------------------------------------------------
Total liabilities (364) (6,825) (5,709) - (9,882) (4,029) - (26,809)
-------------------------------------------------------------------------------------------
Net assets available for benefits $122,333 $752,302 $341,053 $44,088 $202,845 $403,504 $12,851 $1,878,976
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1994
Fund Information
-------------------------------------------------------------------------------
Fidelity Fidelity Employer
Bond Fund Magellan Puritan Nationwide Stock Participant
of America Fund Fund Guaranteed Fund Loans Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
At fair value $76,388 $372,594 $198,841 $164,233 $127,072 - $939,128
Cash - - - - 41 - 41
Participant notes receivable - - - - - $7,674 7,674
------------------------------------------------------------------------------
Total investments 76,388 372,594 198,841 164,233 127,113 7,674 946,843
------------------------------------------------------------------------------
Receivables:
Employer's contribution 1,392 7,295 4,401 2,225 1,151 - 16,464
Participants' contribution 1,317 9,659 4,593 2,153 1,480 (157) 19,045
------------------------------------------------------------------------------
Total receivables 2,709 16,954 8,994 4,378 2,631 (157) 35,509
------------------------------------------------------------------------------
Total assets 79,097 389,548 207,835 168,611 129,744 7,517 982,352
------------------------------------------------------------------------------
LIABILITIES
Refunds payable (2,856) (24,460) (14,452) (1,947) - - (43,715)
Other - (311) - (2,227) (4,103) - (6,641)
------------------------------------------------------------------------------
Total liabilities (2,856) (24,771) (14,452) (4,174) (4,103) - (50,356)
------------------------------------------------------------------------------
Net assets available for benefits $76,241 $364,777 $193,383 $164,437 $125,641 $7,517 $931,996
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
F-2
<PAGE>
ODS 401(K) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
Fund Information
--------------------------------------------------------------------------------
Fidelity Fidelity Employer
Bond Fund Magellan Puritan Nationwide Nationwide Stock Participant
of America Fund Fund Money Mkt Guaranteed Fund Loans Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation) in
fair value of investments (Note 3) $ 15,763 $159,294 $ 50,771 $ 98,787 - $ 324,615
Interest - - - 1,639 10,120 - $ 770 12,529
--------------------------------------------------------------------------------------------
15,763 159,294 50,771 1,639 10,120 98,787 770 337,144
Less investment expenses - - - - (3,026) - (3,026)
--------------------------------------------------------------------------------------------
15,763 159,294 50,771 1,639 10,120 95,761 770 334,118
--------------------------------------------------------------------------------------------
Contributions
Participants 40,221 290,769 130,862 590 76,007 114,803 - 653,252
Employer 5,956 35,107 16,411 - 9,916 16,535 - 83,925
Loan payments 1,082 1,785 1,474 - 1,295 - (5,636) -
Rollovers from qualified plans 2,971 8,721 3,723 412 28,070 3,651 - 47,548
--------------------------------------------------------------------------------------------
50,230 336,382 152,470 1,002 115,288 134,989 (5,636) 784,725
--------------------------------------------------------------------------------------------
Total additions 65,993 495,676 203,241 2,641 125,408 230,750 (4,866) 1,118,843
--------------------------------------------------------------------------------------------
Deductions from net assets
attributed to:
Benefits paid to participants (17,666) (83,688) (29,360) (3,195) (32,703) (521) - (167,133)
Administrative expenses (308) (1,065) (405) (6) (413) - - (2,197)
Forfeitures (181) (4,964) (845) 9,601 (7,566) 1,422 - (2,533)
--------------------------------------------------------------------------------------------
Total deductions (18,155) (89,717) (30,610) 6,400 (40,682) 901 - (171,863)
--------------------------------------------------------------------------------------------
Net increase (decrease) prior to
interfund transfers 47,838 405,959 172,631 9,041 84,726 231,651 (4,866) 946,980
Interfund transfers (net) (1,746) (18,434) (24,961) - (11,271) 46,212 10,200 -
--------------------------------------------------------------------------------------------
Net increase 46,092 387,525 147,670 9,041 73,455 277,863 5,334 946,980
Net assets available for benefits
Beginning of year 76,241 364,777 193,383 35,047 129,390 125,641 7,517 931,996
--------------------------------------------------------------------------------------------
End of year $122,333 $752,302 $341,053 $44,088 $202,845 $403,504 $12,851 $1,878,976
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
ODS 401(K) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
Fund Information
-----------------------------------------------------------------------
Fidelity Fidelity Employer
Bond Fund Magellan Puritan Nationwide Stock Participant
of America Fund Fund Guaranteed Fund Loans Total
---------- -------- -------- ---------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation) in fair
value of investments (Note 3) $ (3,343) $ (6,694) $ (895) $ 238 $ 59,265 - $ 48,571
Interest - - - 4,201 - $ 463 4,664
-------- -------- -------- -------- -------- ------ --------
(3,343) (6,694) (895) 4,439 59,265 463 53,235
Less investment expenses - - - - (1,041) - (1,041)
-------- -------- -------- -------- -------- ------ --------
(3,343) (6,694) (895) 4,439 58,224 463 52,194
-------- -------- -------- -------- -------- ------ --------
Contributions
Participants 37,063 203,540 98,266 51,056 38,975 - 428,900
Employer 5,852 30,846 16,339 7,776 4,933 - 65,746
Loan payments 624 792 592 513 - (2,521) -
Rollovers from qualified plans 832 - 416 73,086 - - 74,334
-------- -------- -------- -------- -------- ------ --------
44,371 235,178 115,613 132,431 43,908 (2,521) 568,980
-------- -------- -------- -------- -------- ------ --------
Total additions 41,028 228,484 114,718 136,870 102,132 (2,058) 621,174
-------- -------- -------- -------- -------- ------ --------
Deductions from net assets attributed to:
Benefits paid to participants (6,277) (12,901) (5,606) (20,136) (8,810) - (53,730)
Administrative expenses (112) (219) (98) (107) - - (536)
Forfeitures (268) (618) (497) (633) - - (2,016)
-------- -------- -------- -------- -------- ------ --------
Total deductions (6,657) (13,738) (6,201) (20,876) (8,810) - (56,282)
-------- -------- -------- -------- -------- ------ --------
Net increase (decrease) prior to
interfund transfers 34,371 214,746 108,517 115,994 93,322 (2,058) 564,892
Interfund transfers (net) (48) 2,806 (3,090) (4,343) (325) 5,000 -
-------- -------- -------- -------- -------- ------ --------
Net increase 34,323 217,552 105,427 111,651 92,997 2,942 564,892
Net assets available for benefits
Beginning of year 41,918 147,225 87,956 52,786 32,644 4,575 367,104
-------- -------- -------- -------- -------- ------ --------
End of year $ 76,241 $364,777 $193,383 $164,437 $125,641 $7,517 $931,996
-------- -------- -------- -------- -------- ------ --------
-------- -------- -------- -------- -------- ------ --------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
ODS 401(K) SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1. DESCRIPTION OF THE PLAN
THE PLAN
The ODS 401(k) Savings Plan (the Plan) was adopted by Optical Data Systems,
Inc. (the Company) on April 1, 1993 to provide retirement benefits for its
employees. The Plan is a defined contribution plan covering all full-time
employees of the Company who have at least three months of service.
Employees who were employed on February 15, 1993 were eligible to participate
in the Plan as of April 1, 1993. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). A representative
from the general counsel for the Company, Wheeler and Wheeler, is the trustee
of the Plan. Cecil and Company is the Plan's record keeper. The following
description of the Plan provides only general information. Participants
should refer to the Summary Plan Description for more complete description of
the Plan's provisions.
CONTRIBUTIONS
The Plan is funded primarily by participant contributions. Participants may
contribute from 1% to 15% of their annual compensation on a tax-deferred
basis, limited to a maximum set by the Internal Revenue Service of $9,240 for
both 1995 and 1994. Rollover contributions are permitted only from qualified
retirement plans if such rollover will not jeopardize the tax exempt status
of the Plan or Trust. The Plan provides for a discretionary match on
contributions up to 4%. In 1994 and 1995, the Company matches employee
contributions at the rate of $.25 per each $1.00 of contribution up to a
maximum of 4% of the participant's compensation.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions
and allocations of (a) the Company's contributions and (b) Plan earnings, and
is charged with an allocation of administrative expenses which includes
withdrawal and transfer charges. Expenses incurred in the daily
administration of the Plan are paid by the Company.
Allocations are based on account balances, as defined. Forfeited balances of
terminated participants' nonvested accounts are used to reduce future
Company contributions. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's account.
F-5
<PAGE>
ODS 401(K) SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company contribution portion of their
accounts plus actual earnings thereon is based on years of service. A
participant vests at a rate of 20% per year of service.
INVESTMENT OPTIONS
The Plan's investments are maintained through two investment contracts
through Nationwide Life Insurance Company (Nationwide) and in the Company's
common stock. The pooled separate variable annuity contract (variable
contract) allows participants to direct their contributions into four
investment options within the variable contract consisting of the Bond Fund
of America (which invests in a diversified portfolio consisting of marketable
corporate debt securities, government obligations and money market
securities), the Fidelity Magellan Fund (which invests in common stocks,
preferred stock and bonds), the Fidelity Puritan Fund (which invests in
common stocks, preferred stocks and bonds), and the Nationwide Money Market
Fund (which invests in a portfolio of short-term investments and bank
certificates of deposit).
Each investment option within the variable contract is credited with
participant's contributions, earnings on the underlying investments and
charged for Plan withdrawals and administrative expenses based on the unit
value of the investment option (as defined in the contract) on the
transaction date. Participants can change their investment fund options at
any time from any investment option offered within the variable contract to
any investment option offered by the plan within and outside of the variable
contract.
The guaranteed investment annuity contract (fixed contract) allows
participants to direct their contributions into the Nationwide Guaranteed
Fund. The Nationwide Guaranteed Fund provides for an annual interest
guarantee based on the investment yield realized on the Nationwide General
Account. The fixed contract is included in the financial statements at
contract value as reported by Nationwide. Contract value represents
contributions made under the fixed contract, plus earnings at the specified
guaranteed rate less Plan withdrawals and administrative expenses.
Participants' changes in investment elections from the fixed contract
investment options are limited at any exchange date to 20 percent of the
respective fund balances less any amount exchanged during the one-year period
ending on the exchange date.
The Company's common stock is also an investment option for participants and
is maintained through a brokerage account with First Dallas Securities.
F-6
<PAGE>
ODS 401(K) SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT NOTES RECEIVABLE
Participants are eligible to obtain a loan against their account balance.
Participant loans are limited to a minimum of $1,000 up to a maximum of
$50,000 or 50% of their account balance. Loan transactions are treated as a
transfer from (to) the investment fund to (from) the loan fund. Loan terms
range from one to five years or may exceed five years for the purchase of a
primary residence. A participant may have no more than one loan outstanding
at one time. The loans are secured by the balance in the participant's
account and bear interest at the prime rate of interest plus one percent.
Principal and interest is paid ratably over the term of the loan with
payments made each pay period.
PAYMENT OF BENEFITS
On termination of service, a participant may receive a lump-sum amount equal
to the vested value of his or her account, or upon death, disability or
retirement, elect to receive annual installments over a period certain in
monthly, quarterly, semiannual, or annual cash installments.
Additional information regarding vesting, benefit and allocation provisions
and disposition of forfeitures are fully described in the Summary Plan
Description.
RECLASSIFICATION
Certain amounts in prior year financial statements have been reclassified to
conform with current year presentation.
2. SIGNIFICANT ACCOUNTING POLICIES
The Plan's financial statements are presented on the accrual basis of
accounting. The carrying amounts for the variable contract investment options
are based on the underlying estimated market values of the investment fund
units as determined by Nationwide based on published market rates. Changes
in the carrying amounts of these investments arise from increases and
decreases in the market values of the underlying investments. The carrying
amount for the fixed contract is contract value which approximates fair
value. The crediting interest rate of 5.8% and 4.6% for 1995 and 1994,
respectively, for the fixed contract is determined annually by Nationwide and
approximates the average yield for each period. Participant notes receivable
are valued at cost which approximates fair value.
F-7
<PAGE>
ODS 401(K) SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
3. INVESTMENTS
During 1995 and 1994, the Plan's investments (including investments bought
and held during the year) appreciated (depreciated) in value by $324,615 and
$47,673 as follows:
1995 1994
-------- -------
Investments at fair value as
Determined by quoted market price:
Bond Fund of America $ 15,763 $(3,343)
Fidelity Magellan Fund 159,294 (6,694)
Fidelity Puritan Fund 50,771 (895)
Nationwide Guaranteed Fund - 238
Employer Stock Fund 98,787 58,367
-------- -------
Net change in fair value $324,615 $47,673
-------- -------
-------- -------
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
5. INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated April 28, 1995 that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The
Plan administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
F-8
<PAGE>
ODS 401(K) SAVINGS PLAN
SCHEDULE 1
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1995
<TABLE>
Description of
Investment, including
maturity date,
Identity of Issue, Borrower, Lessor, rate of interest Current
or Similar Party or maturity value Cost Value
- - ------------------------------------ ------------------ ---- --------
<S> <C> <C> <C>
Nationwide Life Insurance Company
Pooled Separate Accounts:
Bond Fund of America 61577.5595 units * $120,780
Fidelity Magellan Fund 433024.3894 units * $748,603
Fidelity Puritan Fund 211500.6949 units * $342,497
Nationwide Money Market Fund 25984.3394 units * $ 43,498
Nationwide Life Insurance Company
Guaranteed Investment Annuity Contract:
Nationwide Guaranteed Fund 195050.5972 units * $210,463
Employer Stock Fund
Optical Data Systems, Inc. (1) 15695.0000 shares $258,304 $396,299
Participant Notes Receivable (1) 7% - 10% interest rates ---- $ 12,851
</TABLE>
_________________
(1) Designates Party-in-Interest
* This information is not available from Nationwide Life Insurance Company.
F-9
<PAGE>
ODS 401(K) SAVINGS PLAN
SCHEDULE 2
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDING DECEMBER 31, 1995
<TABLE>
Current
Expenses Value of
Incurred Asset on
Purchase Selling Lease with Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price Price Rental Transaction Asset Date or (Loss)
- - -------------------------- -------------------------- -------- ------- ------ ----------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CATEGORY (i) - INDIVIDUAL TRANSACTIONS IN EXCESS OF 5 % OF PLAN ASSETS
Nationwide Life Insurance Fidelity Magellan Fund $48,709 * $48,709 *
Company
CATEGORY (iii) - SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS (1)
Nationwide Life Insurance Bond Fund of America $52,682 ($24,635) * $77,317 *
Company
Fidelity Magellan Fund $373,267 ($157,589) * $530,856 *
Fidelity Puritan Fund $157,076 ($64,677) * $221,753 *
Nationwide Money Market $10,057 ($3,252) * $13,309 *
Nationwide Life Insurance Nationwide Guaranteed Fund $119,152 ($48,438) * $167,590 *
Company
First Dallas Securities Employer Stock Fund(1) $206,771 ($38,400) $3,026 $221,770 $245,171 $23,401
8,534 shares
</TABLE>
________________
(1) Designates party-in-interest
There were no Category (ii), or (iv) reportable transactions during 1995.
* This information is not available from Nationwide Life Insurance Company.
F-10
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-80898) pertaining to the ODS 401(k) Savings Plan of Optical
Data Systems, Inc. of our report dated June 20, 1996, with respect to the
financial statements and schedules of the ODS 401(k) Savings Plan included in
this Annual Report (Form 11-K) for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
-------------------------------------
Ernst & Young LLP
Dallas, Texas
June 27, 1996
