FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 2, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51-0271821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14800 Conference Center Drive
Suite 400, Westfields,
Chantilly, Virginia 22021-3806
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (703)
802-9200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value
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
and (2) has been subject to such filing requirements for the past
90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained, to the
best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K. ___
As of February 4, 1994, there were 10,621,699 shares of
Common Stock of the Registrant outstanding. The aggregate market
value of the shares of Common Stock held by non-affiliates
(without admitting that any person whose shares are not included
in determining such value is an affiliate) was approximately
$4,596,286 based upon the closing price of the shares in the
NASDAQ over-the-counter market on February 4, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders
for Fiscal Year Ended January 2, 1994: Parts I and II. Portions
of the Registrant's definitive proxy statement with respect to
the Annual Meeting of Stockholders to be held on April 27, 1994:
Part III
GENICOM Corporation and Subsidiaries
Form 10-K Index
PART I
<TABLE>
<S> <C> <C>
Item 1. Business 3
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security 11
Holders
Executive Officers of the Registrant. 12
PART II
Item 5. Market for the Registrant's Common Stock and
Related
Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 13
PART III
Item 10. Directors and Executive Officers of the 14
Registrant
Item 11. Executive Compensation 14
Item 12. Security Ownership of Certain Beneficial Owners 14
and Management
Item 13. Certain Relationships and Related Transactions 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports
on Form 8-K 14
Signatur 18
es
Index to Financial Statements and Schedules F-1
Index to Exhibits E-1
</TABLE>
GENICOM Corporation and Subsidiaries
PART I
Item 1. BUSINESS
GENICOM Corporation ("GENICOM" or the "Company")
designs, manufactures, and markets a wide range of
computer printer technologies for general purpose
applications. In addition, the Company derives revenue
from customer service related activities, including
maintenance, leasing and the sale of accessories, spare
parts, ribbons and supplies. GENICOM is also a leading
manufacturer of a line of hermetically sealed relays,
which are electromechanical devices used primarily as
remote switches.
Printer Products
The Company offers a wide range of serial (one
character at a time), line (one or more lines at a
time) and page (one page at a time) printers, with
performance features and prices suitable for a varied
range of printing applications. Besides offering a
wide range of technologies and print speeds, GENICOM's
printers offer multiple combinations of features that
make them suitable for varied applications. Such
features include multiple copy and extensive paper
handling capabilities, multiple type styles (fonts),
color printing and bar codes. GENICOM's printers are
used with desktop workstations and with various
networks and stand alone configurations in conjunction
with micro, mini, super-mini and mainframe computers.
GENICOM also manufactures and sells spare parts and
supplies. In 1993, sales of printers and related
products accounted for 72.3% of GENICOM's revenues as
compared to 72.0% for 1992 and 74.2% for 1991. Printer
revenues, as a percentage of total revenues, were
46.3%, 45.1% and 49.0% in 1993, 1992 and 1991,
respectively. Spares revenues, as a percentage of
total revenues, were 7.1%, 9.6% and 10.3% in 1993, 1992
and 1991, respectively. Supplies revenues, as a
percentage of total revenues, were 19.4%, 17.4% and
15.0% in 1993, 1992 and 1991, respectively.
Prior to 1993, the Company's printer business had
experienced revenue declines due to the maturing of the
Company's product line along with the adverse impact of
the worldwide recessionary economy. In 1993, the
Company's printer revenues increased over 1992, as a
result of the growth in the Company's Applications
Solutions business using nonimpact (laser) technology.
This was offset by declines in mature impact printer
products and reduced sales to Original Equipment
Manufacturer ("OEM") customers as businesses curtailed
capital spending in a recessionary economic
environment. The Company expects revenues from its
Applications Solutions business using nonimpact
technology to continue to grow in 1994 and offset
declines in other printer product lines.
The Company's spares business has experienced revenue
declines due to new product designs that have increased
reliability and resulted in fewer replaceable parts and
to declines in sales of mature serial matrix and band
line printers requiring such spare parts. The Company
expects that spares revenues will continue to decline.
The Company's supplies business has experienced revenue
growth as a result of increased market share achieved
by increasing the number of product offerings,
including laser printing supplies, and aggressive
marketing in established markets. The Company expects
supplies revenue will continue to grow.
The Company experiences lower sales each year in its
third quarter due to European holidays and the two week
vacation shutdown of the Company's manufacturing
facilities. See "Management's Discussion and Analysis
of Results of Operations and Financial Condition", for
further analysis of product revenue trends.
The following table sets forth a summary of certain
performance features of GENICOM's principal printer
products. Manufacturer's List Price Range is as of
January 1994. Sales price may vary depending on
features installed, customization, discounts and other
factors.
<TABLE>
The following table sets forth a summary of certain performance
features of GENICOM's principal printer products. Manufacturer's
List Price Range is as of January 1994. Sales price may vary depending on
features installed, customer specialization and other factors.
<CAPTION>
Year
Volume Manufacture
r's
Printer Shipment Draft Suggested
s
Product Began (1) Technology Print Features Options List Price
Family Type Speed Range
<S> <<C> < <C> < <C> < <C> < <C> <<C>
C C C C C C
> > > > > >
Geniprint 1990 9 or 24 240 to speed and RS-232C 25-pin $ 540 - $
Series wire 300 cps versatile paper serial 716
serial handling for PC- interface
matrix based
environments,
wide and narrow
carriage
1000 1986 24 wire 100 to speed and color printing, $ 1,495 - $
Series serial 360 cps versatile paper additional 1,984
matrix handling for fonts, buffer
office expansion and
environments paper handling,
auto sheet
feeder
2000 1980 9 wire 60 to 150 teleprinters for paper handling $ 2,906 - $
Series serial cps desktop options, 3,008
matrix applications current
interface and
pedestal
3000 1983 9 or 18 240 to wide range of additional $ 2,079 - $
Series wire 400 cps models for fonts, graphic 3,130
parallel different buffer
or environments, expansion,
staggered color and bar paper handling
serial codes options
matrix
3800 1989 18 wire 600 cps high-speed, additional $ 2,325 - $
Series parallel network printer, fonts, oversize 2,595
serial advanced paper characters and
matrix handling and DEC LA210
single/dual pedestal and
path, postnet paper handling
and bar codes options
3900 1990 18 wire 600 cps designed for additional $ 3,995
Series parallel attachment to fonts, pedestal
serial IBM 3270 and paper
matrix controllers handling
(coax) and IBM options
Systems 3X or
AS/400 (twinax),
high-speed,
advanced paper
handling and bar
codes
4000 1986 shuttle 400 to heavy-duty cycle, additional $ 6,195 - $
Series matrix 1400 lpm maintenance free fonts and paper 15,725
line features, motion detector
printer advanced paper
handling,
graphics and bar
band line 800 to fully-formed special $ 8,685 - $
printers 1200 lpm letter quality character bands 11,990
print, rugged
band printer
features and
postnet
4500 1986 shuttle 1200 to designed for additional $ 7,790 - $
Series matrix 1400 lpm attachment to IBM fonts 16,620
line 3270 controllers
printer (coax), IBM
Systems 3X or
AS/400 (twinax)
and bar codes
7000 1992 page 4 to 17 desktop, network interconnection $ 995 - $
Series printers ppm and and multiuser with 3,997
(laser) thermal environments, Geniscript,(Pos
and transfer high resolution, tscript
thermal printer multiple resident language
transfer at 2.5 fonts, PCL5 compatible
printer min per compatible, interpreter),
page supports various multipurpose
paper sizes feeder,
including large versatile
format printing input/output
up to 11" x 17" paper handlings
devices and
duplexing
<FN>
The following are trademarks or registered trademarks of their
respective companies: DEC of Digital Equipment Corporation;
Geniscript of GENICOM Corporation; IBM of International Business
Machines Corporation; PCL 5 of Hewlett-Packard Company; Postscript of
Adobe Systems, Inc
Definitions: cps-characters per second, lpm-lines per minute, ppm-
pages per minute
(1) Represents the first year that the Printer Product Family had
volume shipments. GENICOM continues to introduce new models within
most Printer Product Families
, , , , , , , , , , , ,
</TABLE>
Page 18
Sales, Marketing and Service
Sales and Marketing
GENICOM markets its products and services through several
domestic and international channels. GENICOM's distribution
channels consist of (1) national and regional distributors who
sell to value added resellers ("VAR's") and dealers and end
users, and (2) a direct sales force which sells to OEM's, end
users and value added resellers and dealers. In 1993, GENICOM
incurred restructuring charges, in part, to reorganize sales and
marketing operations. The new sales and marketing organization
places more emphasis on large end users, distribution channels
and the newly created Applications Solutions business unit. The
Applications Solutions business unit focuses on delivering value
add applications to all channels.
Most printers are available in several standard models, enabling
distributors to serve a wide range of customer requirements. A
combination of accessories satisfies various printing
applications. In addition, standard models are customized for
OEM's using GENICOM's manufacturing and engineering design
capabilities. No customer accounted for more than 10% of
GENICOM's total sales in 1993.
GENICOM maintains international sales and marketing subsidiaries
in Australia, Canada, France, Germany, Italy and the United
Kingdom. These subsidiaries offer GENICOM products and services
to distributors, small OEM's, system houses, VAR's and retail
dealers in over 66 countries in primarily local currencies. See
"Business Segment and Geographic Information."
Service
GENICOM performs a wide range of service solutions related
activities through its Enterprising Solutions Service business
unit ("ESSD"). These service solutions activities include field
service support, depot equipment repair, express parts and
professional services and are provided to customers of GENICOM
manufactured and distributed products as well as products
manufactured by others--multivendor services. In addition to the
growing third-party service business, ESSD revenues are generated
from on-site maintenance, depot equipment repair, warranty
administration, printed circuit board exchange, technical support
and service training.
The Company's strategy is to continue to increase its share in
this growing third-party service business -- multivendor
services. In 1993, GENICOM announced the formation of ESSD.
This new business unit will provide service solutions to address
customer needs and applications through GENICOM's worldwide
service operations. Concurrently, the Waynesboro, Virginia
facility shifted its principal mission from a traditional
manufacturing site to a center of competency for service
operations.
GENICOM also provides its Canadian and European customers parts
and services through the Company's international subsidiaries.
GENICOM services its Latin American, Middle East, African and
Pacific Rim customers through authorized distributors of GENICOM
products. ESSD revenues, as a percentage of total revenues, were
20.5%, 20.2% and 18.2% in 1993, 1992 and 1991, respectively.
Competition
GENICOM's printer products compete in markets characterized by
rapid technological change and strong competition. The Company
competes primarily in the medium and high-performance segments of
the printer market where users require reliable printers
principally for word processing, shared network printing,
graphics, bar codes and other business applications. The Company
competes against many well-established companies, some with
financial, technical and operating resources greater than
GENICOM. Such competitors include large computer system
manufacturers that produce printers for their own product lines
and, in certain cases, for sale to other suppliers or end users.
In addition, there are a number of independent printer
manufacturers producing printers that compete with those offered
by GENICOM.
Competitive factors within the printer market include price,
performance, reliability, cost of ownership, versatility, ease of
maintenance, applications solutions support, after-sales service
and support and marketing channels. As the computer industry
continues to move toward product standardization and relies less
on proprietary designs, GENICOM's challenge is to continue to
provide product differentiation based on these competitive
factors. The Company believes that its ability to maintain a
competitive market position depends on the following:
development of applications solutions to customer needs,
continued growth of nonimpact printer technologies, sustained
migration to shared printing environments, effective channels to
market, continued enhancement of the Company's product line and
improvements in the Company's productivity. In order to enhance
its competitive position in the nonimpact market, the Company
formed the Application Solutions business unit in the third
quarter of 1993. The Company expects this action to generate
high quality customer support and value add applications
technology in all of its channels to market. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition."
The Company believes the printer market as a whole will continue
unit shipment growth and to a lesser extent revenue growth
through 1997. This growth is attributable to the growth in the
nonimpact printer market segment partially offset by the
contraction of the impact printer market segment. This market
trend should result in nonimpact printer technologies' dominance
by 1996, when it is expected to constitute 75.0% of the printer
units shipped. Nevertheless, impact printers currently play a
significant role in the printer industry. The serial dot matrix
market reached record sales in 1992. Although shipments of these
printers are expected to decline an average of 15.0% per year
through 1996, they accounted for 54.0% of all printers shipped in
1992. Line printer shipments overall are predicted to decline an
average of 9.0% per year through 1996. However, the high speed
segments of the serial dot matrix and line printers markets are
expected to remain steady. The Company is a leader and earns a
significant portion of its printer revenues in these high
performance impact printer markets, offering high-speed, high
performance serial matrix and shuttle matrix line printers. Such
printers continue to meet customer application needs not yet
satisfied by nonimpact technologies, in such areas as multipart
forms, high-volume reliability and low cost of ownership.
The Company's nonimpact printer strategy is to compete in the
shared or network printer market segment which is anticipated to
experience compounded annual growth rate of over 36.0% for unit
shipments through 1996. Functionality, paper handling
capabilities, applications solutions support and after sales
service and support enhance the competitiveness of the Company's
product introductions.
The Company improved its competitive position in 1993 by
continuing to realign its product mix with the growing nonimpact
printer market. This shift in product mix included the
introduction of an affordable, high quality color wax thermal
printer and a feature rich laser printer for small workgroups or
desktop printing solutions. The Company has been able to
increase its nonimpact offerings by sourcing products from OEM's,
however, this has resulted in lower margins than those realized
from selling sourced print engines combined with the Company's
own controller units.
Rastek Corporation provides GENICOM's Applications Solutions
business with engineering and product development services
including expertise in raster imaging, a widely employed
technology used in translation and creation of images for
nonimpact printing and other applications. The Company believes
that Rastek's product development expertise will continue to be a
factor in the Company's efforts to introduce successful nonimpact
printer products.
Relay Products
GENICOM offers a line of relays that are used primarily in signal
switching applications requiring high functional reliability and
product quality. Relay revenues, as a percentage of total
revenues, were 6.8%, 7.8% and 7.6% in 1993, 1992 and 1991,
respectively.
GENICOM sells relay products primarily for aerospace and defense
applications, automatic test equipment applications and, to a
lesser extent, communication, industrial control and
transportation control applications. GENICOM believes that its
certified and proprietary designs should enable it to continue to
participate in future major space and weapons programs, however,
relay revenues have declined since 1990 due to decreased spending
by defense contractors. There are relatively few competitors in
the relay market that GENICOM serves. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition."
Manufacturing and Depot Repair
GENICOM conducts its manufacturing and assembly operations at its
facilities in Waynesboro, Virginia and Reynosa, Mexico. The
Waynesboro facility produces relays, assembles shuttle matrix
printers and is the Company's primary depot repair center. The
Reynosa facility assembles certain mature printer product lines
and produces printed circuit boards, high-speed matrix
printheads, ribbon cartridges and a variety of conventional
electromechanical assemblies. The Company utilizes third party
manufacturers located in the Repulic of India and Freemont,
California to produce company designed products.
As a result of manufacturing processes, the Company generates and
manages hazardous wastes at its facilities. The Company does not
believe that compliance with Federal, State and local regulations
will have a material effect on its capital expenditures,
financial condition or results of operations. See "Legal
Proceedings."
Customer Arrangements
The major portion of GENICOM's sales of printers and relays is
made pursuant to purchase agreements, blanket purchase orders and
similar arrangements whereby products are deliverable only after
the customer issues a purchase order, release or schedule
covering specific numbers of units and specifying firm delivery
dates. These arrangements are generally from one to three years
in duration. GENICOM's agreements with larger OEM's for printer
sales generally require the customer to provide GENICOM with
continuously updated forecasts of its requirements and to issue
firm orders for deliveries for up to a six-month period.
GENICOM's agreements with its distributors provide that if
GENICOM decreases its prices, the distributor will receive the
benefit of such price decrease for products then held in
inventory by the distributor.
The Company's order backlog at January 2, 1994, was approximately
$34.1 million, compared with approximately $40.0 million at
January 3, 1993. GENICOM's reportable backlog includes all orders
associated with relays, service and those orders for printers,
spare parts and supplies for which a delivery date within
approximately six months has been specified by the customer. The
Company expects to ship substantially all orders in reported
backlog within fiscal year 1994. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition."
GENICOM's working capital practices are consistent with the
working capital practices of the printer industry. GENICOM's
customer payment terms generally require invoices to be paid
within thirty days of the date of issue. To support its ESSD
business and spare parts business, the Company is required to
carry significant inventories of spare parts, which were
approximately $14.4 million and $15.7 million at January 2, 1994
and January 3, 1993, respectively.
Engineering, Research and Product Development
GENICOM incurs engineering, research and product development
costs for the following purposes: development of new products;
applications solutions development; modification, enhancement and
achievement of cost reductions for existing product lines;
customization of products for OEM's; market research; and
development of process inspection criteria to ensure new products
are built to specification. GENICOM's expenditures for
engineering, research and product development were $9.3 million,
$10.6 million and $8.2 million in 1993, 1992 and 1991,
respectively. In 1993, 1992 and 1991 the Company expended 4.2%,
4.7% and 3.8% of consolidated revenues, respectively, in
engineering research and product development.
GENICOM maintains extensive in-house capabilities and facilities
available to support its engineering and design activities. The
Company also engages a number of highly specialized independent
firms to supplement its own engineering capabilities and to
design certain software and components for its products.
Proprietary Rights
GENICOM relies on patent, copyright and trade secret laws to
protect its proprietary technology and rights. GENICOM obtained
certain patents, licenses and cross-licenses when it acquired the
Data Communication Products Business Departmen
t from General Electric Company (collectively "G.E.") in 1983
and when
it acquired the Printer related assets of Ekco Group, Inc.
(formerly Centronics Data Computer Corporation, "Centronics") in
1987. GENICOM continues to patent certain developments, holds
certain patents pending and retains numerous patents expiring at
various times between 1993 and 2009. In addition, the Company
has a cross-licensing agreement with IBM that expires 17 years
after the date of issue of certain patents pending prior to
January 1, 1991.
"GENICOM" and certain other marks used in connection with the
sale of the Company's products are registered trademarks of
GENICOM in the United States and, in some cases, certain foreign
countries. Under United States law, a registered trademark
remains valid for 20 years if affirmed at the end of the sixth
year. There is no limit to the number of times the registration
may be renewed for additional 20-year periods.
GENICOM's wholly owned subsidiary, Rastek Corporation,
specializes in raster imaging technology and has numerous related
patents and trademarks such as "Rastek," "MIRROR_5," and
"RASTOS." The combined technologies of MIRROR_5, an HP Laserjetr
III emulation software package; RASTOS, a printer operating
system; and GENICOM's GeniScriptr, a PostScriptr compatible
interpreter, will assist in GENICOM's continued penetration into
the nonimpact market in 1994.
In connection with the acquisition of the printer-related assets
of Centronics, GENICOM acquired a license to use the name
"Centronics" as a trademark, tradename and service name.
______________
HP Laserjet is a registered trademark of Hewlett-Packard Company.
Suppliers
GENICOM currently purchases raw materials, components and
printers from various domestic as well as foreign suppliers.
GENICOM utilizes supply agreements and other arrangements whereby
volume discounts can be obtained.
GENICOM purchases certain products -- printers, options, supplies
and component parts, including print engines, from sole suppliers
who have developed proprietary processes that the Company
incorporates into its products. The Company purchases all of its
print engines for laser printers from third-party foreign
manufacturers. In the event that those suppliers were unable or
unwilling to supply these products, the Company believes it could
establish alternate sources for these products or similar
products. The time required to establish an alternate source
could disrupt the manufacture or distribution of these products,
thus causing delays that could adversely affect revenues.
Currently, the Company considers its relationships with these
vendors to be good and does not anticipate any disruption in the
supply of these products.
For other purchases the Company utilizes multiple suppliers, thus
it is unlikely that the loss of any one supplier would have a
material impact upon the manufacture or assembly of certain
printer or relay products.
No supplier accounted for a significant portion of GENICOM's
total 1993 purchases. In 1992, GENICOM procured 16% of its total
purchases from Toshiba Corporation ("Toshiba") which supplies the
Company with certain nonimpact printer products. No other
supplier accounted for a significant portion of GENICOM's total
1992 purchases.
Employees
As of January 2, 1994, the Company and its subsidiaries employed
2,147 employees. The Company believes its relations with its
employees are satisfactory.
The Company's production and maintenance employees at its
Waynesboro facility are represented by the United Electrical,
Radio and Machine Workers of America Local 124 (the "Union"),
under a collective bargaining agreement which expires in July
1994. The Company beleives it will obtain a satisfactory
agreement with the Union.
Business Segment and Geographic Information
Operation of the Company's subsidiaries in Australia, Canada,
Europe and Mexico is subject to risks associated with political
and economic developments in such countries, such as tariffs
imposed to discourage imports, varying product standards and
specifications, and value added and excise taxes. In addition,
GENICOM is exposed to currency fluctuation risks as a result of
its international sales and sourcing of products from foreign
vendors. The Company usually hedges these risks through the
purchase of forward exchange contracts and expects to continue
this practice in the future.
Reference is hereby made to Note 1 and 10 of the Notes to
Consolidated Financial Statements incorporated by reference in
Item 8 of this report for further financial information by
business segment and geographic location.
Item 2. Properties
<TABLE>
The following table sets forth certain information with respect
to the Company's owned or leased property:
<CAPTION>
Square Owned Year
Location Principal Uses Feet or Lease
Leased Expires
<S> <<C> < <C> < <C> < <C>
C C C C
> > > >
Chantilly, Corporate 23,000 Leased 1998
Virginia Headquarters
Waynesboro, Service, 377,00 Owned --
Virginia Manufacturing, 0
Office
Waynesboro, Service and 50,000 Leased 1994
Virginia Manufacturing
Reynosa, Manufacturing 120,00 Owned --
Mexico 0
Reynosa, Manufacturing 48,000 Leased 1994
Mexico
McAllen, Distribution 37,500 Leased 1997
Texas
</TABLE>
GENICOM's leased property is occupied under standard industrial
leases. Each lease generally contains an optional renewal
provision.
The combined capacity of GENICOM's service and manufacturing
facilities is 23,000 labor hours per day, of which approximately
30% is utilized. Productive capacity is based on the operation
of two shifts at Reynosa, Mexico and three shifts at Waynesboro,
Virginia.
The Company's domestic owned properties are subject to a lien in
favor of the Company's lender under its revolving loan agreement.
Item 3. Legal Proceedings
The Company and the former owner of its Waynesboro facility,
G.E., have generated and managed hazardous wastes at the facility
for many years as a result of their use of materials such as
industrial solvents and heavy metals, like chromium, in
manufacturing processes. As a result of permit applications
filed by the Company in connection with these activities, the
United States Environmental Protection Agency ("EPA") conducted a
Resource Conservation and Recovery Act ("RCRA") facility
assessment at the site. The EPA determined that releases and
potential releases of hazardous wastes into the environment had
or potentially could have occurred at the facility and, as a
result, a corrective action order process was initiated. The
Company and the EPA have agreed to a corrective action consent
order (the "Order") issued under section 3008(h) of the RCRA,
which became effective on September 14, 1990. The Order requires
the Company to undertake an investigation of solid waste
management units at its Waynesboro, Virginia facility and to
conduct a study of any necessary corrective measures that may be
required. Those investigations and studies are still in progress
and will likely take approximately two more years to complete.
If, as a result of the investigation and study, corrective
measures are required, the Company expects that it will then
enter into discussions with the EPA concerning a further order
for that purpose. Presently, it is not possible for the Company
to reliably estimate the cost of any corrective measures that may
be required.
On December 9, 1993, the Company entered into a Cooperation
Agreement ("Agreement") with G.E. covering certain environmental
matters at the Company's Waynesboro, Virginia site. One of the
matters covered is the cost of responding to the Order. The
Agreement provides that G.E. will bear 70.0% of the allocable
costs relating to the Order.
As a result of the continuing financial obligation which G.E. has
with respect to releases at the facility and the protracted
nature of the investigation, the Company believes that the costs
of the investigation and study and any corrective action that may
be required are not likely to have a material effect upon the
financial condition or results of operations of the Company.
On May 1, 1990, the Company received a draft enforcement order
(the "Enforcement Order") from the Virginia Department of Waste
Management (the "Department"). The Enforcement Order addressed
alleged noncompliance with RCRA requirements in the Company's
operation of facilities and storage of hazardous waste at the
Waynesboro facility. The draft Enforcement Order includes a
proposed civil penalty of $152,700. After meeting with the
Company, the Department offered to reduce the proposed penalty to
$135,800. The Company's position is that the proposed civil
penalty, both as originally stated and as revised, is excessive
and inappropriate, and the Company has so informed the
Department. The Company has been informed of the Department's
intention to refer this matter to the Attorney General of
Virginia for possible action, but as of March 30, 1993, no
further action has been taken against the Company. The areas of
noncompliance referred to in the Enforcement Order involved
various technical requirements with which the Company believes it
is currently in compliance. The Enforcement Order would also
have required the closure of a hazardous waste storage tank which
closure the Company believes is unnecessary. If the Company were
required to close the storage tank, the cost of such action would
not have a material effect upon the financial condition or
results of operations of the Company.
On January 9, 1992, the Company was notified by the EPA that it
is one of 700 potentially responsible parties under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, for necessary corrective action at a hazardous waste
disposal site in Greer, South Carolina. In prior years, the
Company arranged for the transportation of wastes to the site for
treatment or disposal. Based on information currently available,
the Company believes its share of the costs of the investigation
and necessary corrective action is not likely to have a material
effect on its financial condition or results of operations.
In the ordinary course of business, the Company is a party to
various environmental, administrative and legal proceedings. In
the opinion of management, the Company's liability, if any, in
all pending litigation or other legal proceedings, other than
those discussed above, will not have a material effect upon the
financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
<TABLE>
Executive Officers of the Registrant
<CAPTION>
Name Ag Title
e
<S> < <C < <C>
C > C
> >
Paul T. Winn 49 Director, President and Chief Executive
Officer
W. Allen 53 Senior Vice President Printer Solutions
Surber Business
James C. Gale 52 Senior Vice President Finance and Chief
Financial Officer
Raymond D. 54 Senior Vice President and General Manager
Stapleton Enterprising Service Solutions Division
Charles L. 58 Vice President and General Manager Relay
Dumas Products Division
James A. Jones 36 Vice President, Corporate Controller and
Treasurer
C. Bruce Meyer 44 Vice President Human Resources and
Corporate Communications
B. Garrett 45 Vice President and General Manager Supplies
Buttner Business
</TABLE>
Mr. Winn joined the Company in April 1990 as President and Chief
Executive Officer and became a director in May 1990. Previously,
Mr. Winn was employed by IBM Corporation, where he served for 22
years in various capacities, most recently as Vice President of
Graphics Systems in the Advanced Work Station Division. Prior to
that position, Mr. Winn served as Vice President of Worldwide
System Printers, responsible for technology, software, product
development and manufacturing.
Mr. Surber became Senior Vice President, Printer Solutions
Business in August 1993 after having served as Senior Vice
President Development since joining the Company in July 1991.
From December 1983 until he joined the Company, Mr. Surber served
Dataproducts Corporation in various engineering and development
capacities, most recently as Senior Vice President of Engineering
and Research.
Mr. Gale joined the Company as Senior Vice President Finance and
Chief Financial Officer in August 1991. Previously, Mr. Gale was
employed by General Foods Corporation, where he served for 25
years in various capacities, most recently as Vice President of
Finance for General Foods Corporation and in that role acted as
Chief Financial Officer of General Foods, USA.
Mr. Stapleton became Senior Vice President and General Manager of
Enterprising Service Solutions Division in November 1993 after
serving the Company and its predecessor, General Electric, in
various capacities for 30 years, most recently as General Manager
Field Service and Multivendor Enterprising Services.
Mr. Dumas became Vice President, General Manger Relay Products
Division in January 1994, after serving as General Manager
Waynesboro Operations since September 1992. Previously, Mr.
Dumas had served the Company as Vice President, Printer
Manufacturing upon his employment in August 1990. From April
1988 until he joined the Company, Mr. Dumas was Vice President of
Operations for Quotron Systems, Inc.
Mr. Jones has served the Company as Corporate Controller since
November 1988, and Treasurer since March 1990.
Mr. Meyer was appointed Vice President of Human Resources in
September 1991 after serving the Company, and its predecessor,
General Electric, in various human resources capacities since
1973.
Mr. Buttner was appointed Vice President and General Manager
Supplies Business Unit in April 1993, after serving in sales,
marketing and business management positions with GENICOM since
1988. Previously, Mr. Buttner was employed by General Electric
for 15 years.
Page 6
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The information set forth under the caption "Stock Trading" on
page 38 of the registrant's 1993 Annual Report to Stockholders is
incorporated herein by reference. Additionally, GENICOM has not
paid a cash dividend on its common stock. The Company intends to
retain earnings from operations for use in its business, and
therefore does not anticipate paying any cash dividends in the
foreseeable future. Certain of the Company's debt arrangements
restrict the payment of dividends unless certain tests are met.
Reference is hereby made to Note 3 of the Notes to Consolidated
Financial Statements incorporated by reference in Item 8 of this
report for further financial information regarding the Company's
debt arrangements.
Item 6. Selected Financial Data
The information set forth under the caption "Ten Year History" on
page 18 of the registrant's 1993 Annual Report to Stockholders is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information set forth under the caption "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" on pages 21 through 23 and 25 of the registrant's 1993
Annual Report to Stockholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The information set forth under the captions "Consolidated
Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Consolidated Statements
of Changes in Stockholders' Equity," and "Notes to Consolidated
Financial Statements" on pages 20, 24, and 26 through 36 of the
registrant's 1993 Annual Report to Stockholders is incorporated
herein by reference.
The supplementary data regarding quarterly results of operations
set forth in Note 11 of the "Notes to Consolidated Financial
Statements" on page 36 of the registrant's 1993 Annual Report to
Stockholders is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item is set forth under the
caption "Election of Directors" in the registrant's Proxy
Statement for its 1994 annual meeting of stockholders, to be
mailed to each stockholder on or about April 4, 1994, which
information is incorporated herein by reference and under the
heading "Executive Officers of the Registrant" appearing on page
12 of this report.
Item 11. Executive Compensation
The information required by this item is set forth under the
caption "Executive Compensation" in the registrant's Proxy
Statement for its 1994 annual meeting of stockholders, to be
mailed to each stockholder on or about April 4, 1994, which
information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this item is set forth under the
caption "Principal Stockholders of the Company" in the
registrant's Proxy Statement for its 1994 annual meeting of
stockholders, to be mailed to each stockholder on or about April
4, 1994, which information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by this item is set forth under the
caption "Certain Transactions" in the registrant's Proxy
Statement for its 1994 annual meeting of stockholders, to be
mailed to each stockholder on or about April 4, 1994, which
information is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Financial Statements and Schedules
The financial statements incorporated by reference into this
report and the financial statement schedules filed as part
of this report are listed in the Index to Financial
Statements and Schedules on page F-1 immediately following
the signatures to this report.
<TABLE>
Exhibits Included in Response to Item 601 of Regulation S-K
<CAPTIONS>
Numbe Description
r
<S> < <C>
C
>
3.1 Restated Certificate of Incorporation effective as of June
15, 1992, incorporated by reference to Exhibit 4.1 to Form
S-8 Registration Statement (No. 33-49472) filed with the
Commission on July 10, 1992.
3.2 By-laws, dated June 1, 1983, as amended January 23, 1989 -
incorporated by reference to Exhibit 3.2 to Form 10-K filed
with the Commission on March 29, 1989.
4.1 Indenture, between GENICOM Corporation and Bankers Trust
Company (the "Trustee"), dated February 13, 1987 - filed
herewith. First Supplemental Indenture dated as of March
22, 1991 - incorporated by reference to Exhibit 4.1 to
Form S-1 Registration Statement (No. 33-23007) filed with
the Commission on May 14, 1991.
10.1 Loan and Security Agreement, dated September 25, 1990
between GENICOM Corporation and The CIT Group/Credit
Finance, Inc. (as successor by assignment to Fidelcor
Business Credit Corporation) - incorporated by reference to
Exhibit 4.1 to Form 10-Q filed with the Commission on
November 13, 1990. First Amendment dated May 1, 1991 and
Second Amendment dated March 3, 1992 - incorporated by
reference to Exhibit 10.1 to Form 10-K filed with the
Commission on March 24, 1992. Extension of and Amendment
to Financing Agreements dated September 23, 1992 in
reference to the Loan and Security Agreement, dated
September 25, 1990 between GENICOM Corporation and The CIT
Group/Credit Finance, Inc. - incorporated by reference to
Exhibit 10.1 to Form 8-K filed with the Commission on
October 6, 1992.
10.2 Registration Rights Agreement, dated October 21, 1983,
among the Company and the several Purchasers named therein
- incorporated by reference to Exhibit 10.2 to the June 25,
1986 Registration Statement.
10.3 Registration Rights Agreement, dated December 20, 1984,
among the Company and the several Purchasers named therein
- incorporated by reference to Exhibit 10.3 to the June 25,
1986 Registration Statement.
10.4 Registration Rights Agreement, dated December 20, 1984,
among the Company and the several Purchasers named therein
- incorporated by reference to Exhibit 10.4 to the June 25,
1986 Registration Statement.
10.5 Registration Rights Agreement, dated January 3, 1985, among
the Company and the several Purchasers named therein -
incorporated by reference to Exhibit 10.5 to the June 25,
1986 Registration Statement.
10.6 Restricted Stock Purchase Plan, as amended - incorporated
by reference to Exhibit 10.8 to the June 25, 1986
Registration Statement.
10.7 Stock Option Plan, as amended and restated, effective as of
February 7, 1991 - incorporated by reference to Exhibit 10
to the Registrant's Quarterly Report on Form 10Q (File No.
0-14685) for the quarter ended March 31, 1991 filed with
the Commission on May 15, 1991. First Amendment to the
Registrant's Stock Option Plan, dated February 3, 1992 -
incorporated by reference to Exhibit 4.2 to Form S-8
Registration Statement (No. 33-49472) filed with the
Commission on July 10, 1992.
10.8 Deferred Compensation and Savings Plan, as amended and
restated, effective as of January 2, 1989 - incorporated by
reference to Exhibit 10.8 to Form 10-K filed with the
Commission on March 29, 1991.
10.9 Defined Benefit Pension Plan for Hourly Employees, as
amended and restated, effective as of January 1, 1989 -
incorporated by reference to Exhibit 10.9 to Form 10-K
filed with the Commission on March 29, 1991.
10.10 Incentive Compensation Plan, as amended - incorporated by
reference to Exhibit 10.13 to the June 25, 1986
Registration Statement.
10.11 Lease agreement with respect to the Company's customer
service facilities in Waynesboro dated August 1, 1988 -
incorporated by reference to Exhibit 10.10 to Form 10-K
filed with the Commission on March 29, 1989. Lease
agreement with respect to the Company's manufacturing
facilities in Waynesboro - incorporated by reference to
Exhibit 10.11 to Form 10-K filed with the Commission on
March 24, 1992.
10.12 Lease of McAllen, Texas facility, dated January 20, 1992 -
incorporated by reference to Exhibit 10.12 to Form 10-K
filed with the Commission on March 24, 1992.
10.13 Agreement concerning the resignation of, and continuation
of benefits for, John V. Harker, dated January 10, 1992 -
incorporated by reference to Exhibit 10.13 to Form 10-K
filed with the Commission on March 24, 1992.
10.14 Promissory note dated December 16, 1991 between GENICOM
Corporation and W. Allen Surber - incorporated by reference
to Exhibit 10.14 to Form 10-K filed with the Commission on
March 24, 1992.
10.15 Consulting agreement between GENICOM Corporation and Don E.
Ackerman, dated January 26, 1992 - incorporated by
reference to Exhibit 10.15 to Form 10-K filed with the
Commission on March 24, 1992.
10.16 Terms of employment of Paul T. Winn dated March 26, 1990 -
incorporated by reference to Exhibit 10.15 to Form S-1
Registration Statement (No. 33-23007) filed with the
Commission on May 17, 1990.
10.17 Agreement Between GENICOM Corporation and TOSHIBA
* Corporation Relating to Laser Printer G751, Laser Printer
G750 and Related Options, Supplies and Service Parts, dated
March 31, 1992 - incorporated by reference to Exhibit 10.17
to Form 10-K filed with the Commission on March 31, 1993.
10.18 Agreement with the General Electric Company regarding
environmental matters at the Registrants Waynesboro,
Virginia facility, dated December 9, 1993 - incorporated by
reference to Exhibit 10.1 to Form 8-K filed with the
Commission on February 23, 1994.
13 Annual Report to Stockholders of GENICOM Corporation for
the Fiscal Year Ended January 2, 1994 - filed herewith.
22 Subsidiaries of the Registrant - filed herewith.
24 Consent of Independent Accountants - filed herewith.
(b) Reports on Form 8-K
<FN>
The Company filed the following reports on Form 8-K:
On December 1, 1993, the Company reported that it had published a
press release that announced that it had signed a non binding letter
of intent to sell its Relay business unit, located in Waynesboro,
Virginia, subject to execution of a definitive purchase agreement,
purchaser financing, and governmental and third party consents. A
copy of the press release was included as Exhibit 28.1 to the Form.
On February 23, 1994, the Company reported that it had signed an
agreement, dated December 9, 1993, with the General Electric Company
regarding environmental matters at the Registrants Waynesboro,
Virginia facility. A copy of the agreement was included as Exhibit
10.1 to the Form.
* Confidential treatment granted with respect to certain provisions
pursuant to 17 C.F.R. 200.80 (b) (4).
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the
Securities exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto, duly authorized.
GENICOM Corporation
BY: Paul T. Winn
Paul T. Winn
President and Chief Executive Officer
</TABLE>
<TABLE>
Pursuant to the requirement of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
<CAPTION>
Signature Title Date
<S> < <C> < <C>
C C
> >
Don E. Ackerman Chairman of the Board and March 31,
Director 1994
Don E. Ackerman
Paul T. Winn President and Chief Executive March 31,
Officer 1994
Paul T. Winn and Director (Principal Executive
Officer)
James C. Gale Senior Vice President Finance and March 31,
Chief Financial Officer 1994
(Principal
James C. Gale Financial Officer)
Bruce K. Anderson Director March 31,
1994
Bruce K. Anderson
Edward E. Lucente Director March 31,
1994
Edward E. Lucente
James A. Jones Vice President, Corporate March 31,
Controller 1994
James A. Jones and Treasurer
</TABLE>
GENICOM Corporation and Subsidiaries
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The consolidated balance sheets of GENICOM Corporation and
subsidiaries as of January 2, 1994 and January 3, 1993, and the
related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years
in the period ended January 2, 1994, including the notes thereto,
are included on pages 20, 24 and 26 through 36 of the
Registrant's 1993 Annual Report to Stockholders and are
incorporated herein by reference. With the exception of the
aforementioned information, and the information incorporated by
reference in numbered Items 5, 6, 7 and 8, no other data
appearing in the Annual Report to Stockholders is deemed to be
"filed" as part of this Form 10-K. The following additional
financial data should be read in conjunction with these
consolidated financial statements.
<TABLE>
<CAPTION>
<S> <C> <C>
Page
Independents F2
Accountants' Report
Financial Statement
Schedules:
Schedule II Amounts Receivable from Related Parties
and Underwriters,
Promoters, and Employees Other than F3
Related Parties
Schedule VIII Valuation and Qualifying Accounts and F4
Reserves
Schedule X Supplementary Income Statement F5
Information
<FN>
1. All other schedules have been omitted
since the required information is not present in amounts
sufficient to require submission of the schedules.
</TABLE>
F 1
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors and Stockholders of GENICOM Corporation:
We have audited the accompanying consolidated balance sheets of
GENICOM Corporation and subsidiaries as of January 2, 1994 and
January 3, 1993, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for each
of the three fiscal years in the period ended January 2, 1994,
which financial statements are included on pages 20, 24 and 26
through 36 of the Company's 1993 Annual Report to Stockholders
and incorporated by reference herein. We have also audited the
financial statement schedules listed in the index on page F-1 of
this Form 10-K. These financial statements and financial
statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of GENICOM Corporation and subsidiaries as of
January 2, 1994 and January 3, 1993, and the consolidated results
of their operations and their cash flows for each of the three
fiscal years in the period ended January 2, 1994 in conformity
with generally accepted accounting principles. In addition, in
our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the
information required to be included therein.
As discussed in Note 4 to the financial statements, effective
January 4, 1993, the Company changed its method of accounting for
postretirement benefits other than pensions.
Coopers & Lybrand
Washington, D.C.
February 1, 1994
F 2
<TABLE>
GENICOM Corporation and Subsidiaries
Schedule II - Amounts Receivable from Related Parties and
Underwriters,
Promoters, and Employees Other Than Related Parties
(In thousands)
<CAPTION>
Balance at
Beginning Balance at
Name of Debtor of Addition Deductions End of Period
Period s
Amounts Amounts Not
Collecte Written- Curren Current
d off t
<S> <<C> <<C> < <C> <C> < <C> <C>
C C C C
> > > >
Year Ended:
December 29,
1991
W. Allen Surber $ 200 $ 200
January 3, 1993
W. Allen Surber $ 200 $ 200
January 2, 1994
W. Allen Surber $ 200 $ 200
<FN>
1.The principal amount and interest was collected on July 4,
1993.
</TABLE>
F 3
<TABLE>
GENICOM Corporation and Subsidiaries
Schedule VIII - Valuation and Qualifying Accounts and Reserves
(In thousands)
<CAPTION>
Additions
Balance Charged to Deductio Balance
Description at Costs ns From at End
Beginning and Reserves Of
of Period Expenses Period
<S> < <C> <<C> < <C> < <C>
C C C C
> > > >
Year ended:
December 29, 1991
Allowance for $ 1,852 $ 586 $ 911 $ 1,527
doubtful accounts
January 3, 1993
Allowance for $ 1,527 $ 494 $ 773 $ 1,248
doubtful accounts
January 2, 1994
Allowance for $ 1,248 $ 812 $ 580 $ 1,480
doubtful accounts
<FN>
1."Additions" to the allowance for doubtful accounts include a
foreign currency translation adjustment of $(47,654),
$(100,000) and $9,000 in 1993, 1992 and 1991, respectively.
Net bad debt expense for 1993, 1992 and 1991 was $858,654,
$594,000 and $577,000, respectively.
</TABLE>
F 4
<TABLE>
GENICOM Corporation and Subsidiaries
Schedule X - Supplementary Income Statement Information
(In thousands)
<CAPTION>
Year Ended
Description January 2, January 3, December 29,
1994 1993 1991
<S> <<C> < <C> < <C>
C C C
> > >
Advertising and Sales $ 3,646 $ 4,915 $ 3,162
Promotion Costs
</TABLE>
F 5
<PAGE>
<TABLE>
GENICOM Corporation and Subsidiaries
INDEX TO EXHIBITS TO FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 2, 1994
<CAPTION
>
Exhibit
Number Description Page
<S> <C> <C>
13 Annual Report to Stockholders of GENICOM Corporation for E 2 - 22
fiscal year ended January 2, 1994
Appendix- List of Graphic Material Omitted from
Management's Discussion and Analysis of Results of
Operations and Financial Position
22 Subsidiaries of the Registrant E 23
24 Consent of Independent Accountants E 24
</TABLE>
E 1
<PAGE>
<TABLE>
GENICOM CORPORATION AND SUBSIDIARIES
TEN YEAR FINANCIAL HISTORY
<CAPTION>
Fiscal year, 1993 1992 1991 1990 1989
(52 (53 (52 (52 (52
weeks) weeks) weeks) weeks) weeks)
(In thousands, except per share and
other data)
Income Statement Data:
<S> <<C> < <<C> < < <C> < < <C> < < <C>
C C C C C C C C C
> > > > > > > > >
_______ _______ _______ _______ _______
Revenues $ 221,865 $ 222,692 $ 217,021 $ 255,298 $ 256,873
Operating costs and expenses (1) 219,220 214,176 224,363 240,844 271,438
_______ _______ _______ _______ _______
Operating income (loss) 2,645 8,516 (7,342) 14,454 (14,565)
Interest expense, net 7,559 7,742 9,122 12,497 13,814
Other income (2) 1,741
_______ _______ _______ _______ _______
Income (loss) before income taxes,
extraordinary gain and cumulative
effect
of accounting change (3,173) 774 (16,464) 1,957 (28,379)
Income tax expense (benefit) 56 450 275 857 (4,119)
_______ _______ _______ _______ _______
Income (loss) before extraordinary gain
and
cumulative effect of accounting (3,229) 324 (16,739) 1,100 (24,260)
change
Extraordinary gain (3) 1,273 3,691 5,528
Cumulative effect on prior years of
change
in accounting principles (4) _______ _______ _______ _______ _______
Net income (loss) $ (3,229) $ 1,597 $(13,048) $ 6,628 $(24,260)
_______ _______ _______ _______ _______
Earnings (loss) per share:
Income (loss) before extraordinary
gain and
cumulative effect of accounting $ (0.30) $ 0.03 $ (1.58) $ 0.11 $ (2.27)
change
Extraordinary gain 0.12 0.35 0.52
Cumulative effect on prior years of
change
in accounting principles
_______ _______ _______ _______ _______
Net income (loss) $ (0.30) $ 0.15 $ (1.23) $ 0.63 $ (2.27)
_______ _______ _______ _______ _______
Weighted average shares 10,621 10,605 10,592 10,580 10,710
_______ _______ _______ _______ _______
Balance Sheet Data:
Working capital $ 33,642 $ 54,915 $ 47,193 $ 77,965 $ 78,284
Total assets 141,159 146,806 137,299 167,142 190,395
Total long-term debt 69,020 69,311 64,027 85,723 112,004
Stockholders' equity 24,575 28,524 27,804 41,528 34,487
Other Data:
Employees 2,147 2,488 2,512 2,896 3,259
Price range per common share: (5)
Low $ 1 1/8 $ 7/8 $ 7/8 $ 7/8 $ 7/8
High 3 1/2 2 2 3/4 3 5
<FN>
(1) Includes restructuring costs of $1.0 million, $15.0 million,
$14.1 million and $6.0 million in 1993, 1991, 1989 and 1988,
respecively.
(2) The Company recognized a gain of $1.7 million from the sale of
approximately 65.0% of its investment in a Belgian printer
development and manufacturing company.
(3) The Company recognized an extraordinary gain of $1.3 million,
$3.7 million and $5.5 million, net of taxes of $0.1 million, $0.5
million and $0.6 million, on the early extinguishment of $4.0
million, $13.3 million and $13.0 million principal amount of its
Senior Subordinated Notes in 1992, 1991 and 1990, respectively.
(4) Effective as of the beginning of 1988, the Company adopted
Statement of Financial Accounting Standards No. 96 "Accounting for
Income Taxes". Effective as of the beginning of 1987, the Company
changed its method of capitalizing certain costs in the valuation of
substantially all inventories.
</TABLE>
<PAGE>
<TABLE>
GENICOM CORPORATION AND SUBSIDIARIES
TEN YEAR FINANCIAL HISTORY
<CAPTION>
Fiscal year, 1988 1987 1986 1985 1984
(52 (53 (52 (52 (52
weeks) weeks) weeks) weeks) weeks)
(In thousands, except per share and
other data)
Income Statement Data:
<S> <<C> < <<C> < < <C> < < <C> < < <C>
C C C C C C C C C
> > > > > > > > >
_______ _______ _______ _______ _______
Revenues $ 291,429 $ 302,151 $ 157,463 $ 126,456 $ 136,661
Operating costs and expenses (1) 279,455 271,108 138,455 119,042 117,884
_______ _______ _______ _______ _______
Operating income (loss) 11,974 31,043 19,008 7,414 18,777
Interest expense, net 12,930 11,866 2,997 4,245 6,900
Other income (2)
_______ _______ _______ _______ _______
Income (loss) before income taxes,
extraordinary gain and cumulative
effect
of accounting change (956) 19,177 16,011 3,169 11,877
Income tax expense (benefit) (1,960) 8,640 7,403 1,364 5,787
_______ _______ _______ _______ _______
Income (loss) before extraordinary gain
and
cumulative effect of accounting 1,004 10,537 8,608 1,805 6,090
change
Extraordinary gain (3)
Cumulative effect on prior years of
change
in accounting principles (4) 4,300 2,018
_______ _______ _______ _______ _______
Net income (loss) $ 5,304 $ 12,555 $ 8,608 $ 1,805 $ 6,090
_______ _______ _______ _______ _______
Earnings (loss) per share:
Income (loss) before extraordinary
gain and
cumulative effect of accounting $ 0.09 $ 0.92 $ 0.83 $ 0.20 $ 0.89
change
Extraordinary gain
Cumulative effect on prior years of
change
in accounting principles 0.37 0.17
_______ _______ _______ _______ _______
Net income (loss) $ 0.46 $ 1.09 $ 0.83 $ 0.20 $ 0.89
_______ _______ _______ _______ _______
Weighted average shares 11,582 11,555 10,414 9,246 6,862
_______ _______ _______ _______ _______
Balance Sheet Data:
Working capital $ 104,880 $ 105,861 $ 39,801 $ 29,981 $ 25,158
Total assets 223,909 228,528 97,790 79,974 77,927
Total long-term debt 108,115 108,998 21,021 41,034 38,000
Stockholders' equity 61,565 58,510 45,664 18,735 15,135
Other Data:
Employees 3,692 3,587 2,507 2,135 2,194
Price range per common share: (5)
Low $ 4 1/4 $ 5 3/4 $ 6 1/8
High 10 7/8 16 1/4 13
<FN>
(1) Includes restructuring costs of $1.0 million, $15.0 million,
$14.1 million and $6.0 million in 1993, 1991, 1989 and 1988,
respecively.
(2) The Company recognized a gain of $1.7 million from the sale of
approximately 65.0% of its investment in a Belgian printer
development and manufacturing company.
(3) The Company recognized an extraordinary gain of $1.3 million,
$3.7 million and $5.5 million, net of taxes of $0.1 million, $0.5
million and $0.6 million, on the early extinguishment of $4.0
million, $13.3 million and $13.0 million principal amount of its
Senior Subordinated Notes in 1992, 1991 and 1990, respectively.
(4) Effective as of the beginning of 1988, the Company adopted
Statement of Financial Accounting Standards No. 96 "Accounting for
Income Taxes". Effective as of the beginning of 1987, the Company
changed its method of capitalizing certain costs in the valuation of
substantially all inventories.
</TABLE>
<PAGE>
<TABLE>
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
January January 3, December
2, 29,
Year Ended, 1994 1993 1991
(In thousands, except per share data) _______ _______ _______
<S> <<C> < < <C> <<<C>
C C C CC
> > > >>
Revenues, net:
Products $ 176,432 $ 177,690 $ 177,512
Services 45,433 45,002 39,509
_______ _______ _______
221,865 222,692 217,021
_______ _______ _______
Operating costs and expenses:
Cost of revenues:
Products 129,274 125,150 130,778
Services 36,537 34,381 27,987
Selling, general and administration 43,070 44,085 42,349
Engineering, research and product 9,311 10,560 8,249
development
Restructuring costs 1,028 15,000
_______ _______ _______
219,220 214,176 224,363
_______ _______ _______
Operating income (loss) 2,645 8,516 (7,342)
Interest expense, net 7,559 7,742 9,122
Other income 1,741
_______ _______ _______
Income (loss) before income taxes
and extraordinary gain (3,173) 774 (16,464)
Income tax expense 56 450 275
_______ _______ _______
Income (loss) before extraordinary gain (3,229) 324 (16,739)
Extraordinary gain on early
extinguishment of debt
(net of taxes of $141 and $470) 1,273 3,691
_______ _______ _______
Net income (loss) $ (3,229) $ 1,597 $ (13,048)
_______ _______ _______
Earnings (loss) per common share and
common share equivalent:
Income (loss) before extraordinary $ (0.30) $ 0.03 $ (1.58)
gain
Extraordinary gain 0.12 0.35
_______ _______ _______
Net income (loss) $ (0.30) $ 0.15 $ (1.23)
_______ _______ _______
Weighted average number of common shares
and
common share equivalents outstanding 10,621 10,605 10,592
_______ _______ _______
</TABLE>
<PAGE>
Results of Operations
Net Revenue
In 1993, GENICOM Corporation ("GENICOM" or the "Company") experienced
year over year revenue growth in its strategic businesses of
Enterprising Service Solutions, Laser Printing Solutions and supplies
which were offset by declines in mature impact printer, spares and
relay products.
Printer revenues increased $2.4 million or 2.3% in 1993 as compared
with 1992 and declined $6.0 million or 5.7% in 1992 as compared with
1991. The increase in printer revenue from 1992 to 1993 is
attributable to growth in the Company's Laser Printing Solutions
business partially offset by declines in mature impact printer
products and reduced sales to OEM customers as businesses curtail
capital spending in a recessionary economic environment. The printer
revenue decline in 1992 was attributable to the maturing of the
impact printer market and the recessionary economic environment.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed printer revenues
(in millions) for the following years: 1989 - $171, 1990 - $165,
1991 - $129, 1992 - $122 and 1993 - $119.]
In 1993, revenues from the Company's laser printer products and high-
speed serial matrix printers increased $10.5 million and $5.6
million, respectively, as compared with 1992. Partially offsetting
the 1993 revenue increases were revenue declines in shuttle matrix
line printers and mature serial matrix and band line printers of $7.5
million and $4.7 million, respectively. Management expects revenues
from its family of laser printer products to continue to grow in 1994
and offset declines in other printer product lines.
In 1992, revenues from mature serial matrix and band line printers
and low-end desktop printers declined $12.1 million and $2.9 million,
respectively, as compared with 1991. Partially offsetting the 1992
revenue declines were revenue increases in laser printer products of
$5.4 million, high-speed serial matrix printers of $2.3 million and
shuttle matrix printers of $1.5 million reflecting improved demand
for these products in European markets.
Spares revenues decreased $5.7 million or 36.6% in 1993 as compared
with 1992 and declined $0.9 million or 4.1% in 1992 compared with
1991. Spares revenues continue to decrease due to new product
designs that have increased reliability and resulted in fewer
replaceable parts, and declines in sales of mature serial matrix and
band line printers requiring such spare parts. Management expects
that spares revenues will continue to decline.
Supplies revenues increased $4.4 million or 10.2% in 1993 as compared
with 1992 and increased $6.3 million or 19.4% in 1992 as compared
with 1991. The revenue growth in the supplies business is
attributable to increased market share achieved by increasing the
number of product offerings, including laser printer supplies, and
aggressive marketing in established markets. Management anticipates
that supplies revenue will continue to increase.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed supplies revenues
(in millions) for the following years: 1989 - $28, 1990 - $32, 1991
- - $33, 1992 - $39 and 1993 - $43.]
Enterprising Service Solutions ("ESSD") revenues increased $0.4
million in 1993 as compared with 1992 and increased $5.5 million or
13.9% in 1992 as compared with 1991 due to the expansion of
multivendor service activities. Management anticipates that 1994
ESSD revenue will be above fiscal 1993 levels due to increased
multivendor service activities.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed service revenues
(in millions) for the following years: 1989 - $38, 1990 - $40, 1991
- - $40, 1992 - $45 and 1993 - $45.]
Relay revenues decreased $2.3 million or 15.2% in 1993 as compared
with 1992 and increased by $0.8 million or 5.0% in 1992 as compared
with 1991. The 1993 revenue decline is a result of soft market
conditions in the aerospace and defense industries. The 1992 revenue
growth was attributable to a reduction in the relay order backlog.
Management believes that 1994 relay revenues will approximate those
of fiscal 1993.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed relays revenues
(in millions) for the following years: 1989 - $20, 1990 - $19, 1991
- - $17, 1992 - $17 and 1993 - $15.]
Order Backlog
Order backlog decreased $5.9 million or 14.7% in 1993 as compared
with 1992 and increased $1.0 million or 2.6% in 1992 as compared with
1991. The 1993 decline in order backlog is due to a decline in the
backlog from the Company's largest laser printer customer and lower
orders from the Company's original equipment manufacturer customers
who generally place longer lead time orders. The 1992 growth in
order backlog was attributable to the Company's new laser printer
products. The Company's backlog as of any particular date should not
be the sole measurement used in determining sales for any future
period.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed order backlog (in
millions) for the following years: 1989 - $67, 1990 - $48, 1991 -
$39, 1992 - $40 and 1993 - $34.]
Gross Profit Margin
Gross margin, as a percentage of revenue, decreased in 1993 as
compared with 1992 due to price competition and higher costs in the
Laser Printing Solutions business and lower revenues in the Company's
higher margin spares and relay products. Two other events caused
lower gross margins in 1993: the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" in the first quarter of
1993; and unfavorable foreign currency movements. Meanwhile, revenue
growth achieved in the Company's higher margin supplies business
favorably impacted the Company's 1993 gross margin.
Gross margin, as a percentage of revenue, had increased from 1991 to
1992 due to increased sales of higher-margin supplies and service,
and less revenue from lower-margin printers as well as improvements
in supplies and printer margins. The Company also achieved lower
product costs through changes in product designs and reductions in
fixed manufacturing costs.
The Company continues its efforts to lower its fixed cost structure
and improve its gross profit margin. These efforts include the
Company's transfer of impact printer assembly operations from the
Company's Waynesboro, Virginia facility to its Reynosa, Mexico
facility and the outsourcing of component manufacturing processes.
Operating Expense
Operating expenses in 1993 as compared with 1992 decreased, both in
amount and as a percentage of revenue. This decrease occurred
despite the increase in operating expenses due to the adoption of
SFAS No. 106 and incurring restructuring costs associated with the
reorganization of sales and marketing, development and administrative
operations including the formation of an application solutions'
function. Favorably impacting operating expenses was recognition of
an amount due from the General Electric Company ("G.E.") relating to
prior costs for environmental matters at the Company's Waynesboro,
Virginia facility.
Operating expenses before restructuring charges increased in 1992,
both in amount and as a percentage of revenue, over the prior year.
The increase in operating expenses was attributable to the Company's
ongoing commitment to expand engineering, research and development
and sales and marketing activities. In 1992, the Company increased
its expenditures related to engineering programs to support new laser
and impact printers. In addition, the Company's increased sales and
marketing expenditures for new product introductions and market
channel penetration programs.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed research and
development expenses (in millions) and the same expenses as a
percentage of total revenues for the following years: 1989 -$11 and
4.4%, 1990 - $9 and 3.4%, 1991 - $8 and 3.8%, 1992 - $11 and 4.7%,
and 1993 - $9 and 4.2%.]
On January 25, 1994, the Company announced programs to improve
financial performance by reducing its cost structure. The programs
included personnel reductions, a 10.0% salary reduction for domestic
employees and salary or benefit reductions for employees of the
Company's international operations. In addition, the Company amended
its deferred compensation and savings plan to make Company
contributions discretionary.
Interest Expense
The Company's interest expense increased $0.4 million or 4.5% in 1993
as compared with 1992, however, the 1993 expense was favorably
impacted by a first quarter interest payment from the Internal
Revenue Service of $0.6 million related to the settlement of prior
year tax matters. The increase in interest expense relates primarily
to the Company's working capital investment requirements.
The decreases in interest expense from 1991 to 1992 was the result of
lower quoted prime rates, reduced working capital investments and the
Company's purchases of its 12.5% Senior Subordinated Notes (the
"Notes") during 1990, 1991 and 1992 which have enabled overall debt
reduction. In addition, the Company amended its revolving credit
facility during 1992 enabling the Company to borrow capital at lower
rates of interest.
[Graphic material near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed interest expense
(in millions) for the following years: 1989 - $14, 1990 - $13, 1991
- - $9, 1992 - $8 and 1993 - $8.]
Other Income
In the fourth quarter of 1993, the Company recorded a gain from the
sale of approximately 65.0% of its investment in Xeikon N.V., a
Belgian printer development and manufacturing company. Management is
pursuing the sale of its remaining investment in Xeikon N.V.
Income Tax
On January 4, 1993, the Company adopted SFAS No. 109 "Accounting for
Income Taxes". The Company previously accounted for income taxes
under the liability method in accordance with SFAS No. 96. The
adoption of SFAS No. 109 did not have a material effect on the
Company's financial condition or results of operations.
The Company's effective income tax rate for fiscal year 1993 was
(1.8)% compared with 58.1% and (1.7)% in fiscal years 1992 and 1991,
respectively. These rates are significantly affected by foreign
income taxes and the utilization of net operating losses.
Extraordinary Gain
The extraordinary gains resulted from the financial effect of the
Company's open market purchases of $4.0 million and $13.3 million in
1992 and 1991, respectively, principal amounts of its Notes at a
discount from par value. The extraordinary gains were net of income
taxes of $0.1 million and $0.5 million and the write-off of
unamortized debt issuance costs.
<PAGE>
<TABLE>
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
January January
2, 3,
1994 1993
_______ _______
<S> < <C> <C> < <C>
C C
> >
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents $ 1,797 $ 3,001
Accounts receivable, less allowance for
doubtful accounts of $1,480 and 35,932 38,214
$1,248
Other receivables 7,202 2,899
Inventories 53,831 55,894
Prepaid expenses and other assets 1,594 2,418
_______ _______
Total current assets 100,356 102,426
Property, plant and equipment 24,869 26,430
Goodwill 10,180 10,908
Other assets, principally intangibles 5,754 7,042
_______ _______
$ 141,159 $ 146,806
_______ _______
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 23,263 $ 693
Accounts payable and accrued expenses 36,504 39,690
Deferred income 6,947 7,128
_______ _______
Total current liabilities 66,714 47,511
Long-term debt, less current portion 45,757 68,618
Other non-current liabilities 4,113 2,153
_______ _______
Total liabilities 116,584 118,282
Stockholders' equity:
Common stock, $0.01 par value;
15,000,000
shares authorized, 10,621,699 and 106 106
10,604,699 shares issued
Additional paid-in capital 25,744 25,730
Retained earnings 1,781 5,010
Foreign currency translation adjustment (1,957) (1,795)
Pension liability adjustment (1,099) (527)
_______ _______
Total stockholders' equity 24,575 28,524
_______ _______
$ 141,159 $ 146,806
_______ _______
</TABLE>
<PAGE>
Liquidity and Capital Resources
The Company's working capital changed from $54.9 million to $33.6
million in fiscal year 1992 to 1993, respectively, a decrease of
$21.3 million or 38.8%. This decrease is attributable to an increase
in debt classified as current. Cash and cash equivalents decreased
$1.2 million since January 3, 1993.
[A graphic image near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed working capital
(in millions) for the following years: 1989 - $78, 1990 - $78, 1991
- - $47, 1992 - $55 and 1993 - $34.]
Net cash generated by operations during 1993 totaled $5.2 million.
Depreciation and amortization charges of $9.1 million offset the cash
outflows for restructuring accrual utilization of $3.4 million and
the loss of $3.2 million. Inventory levels declined slightly
generating $1.7 million in cash flow.
[A graphic image near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed inventories (in
millions) for the following years: 1989 - $78, 1990 - $67, 1991 -
$47, 1992 - $56 and 1993 - $54.]
Net cash used in investing activities during 1993 totaled $7.2
million. The Company's investing activities were almost entirely
comprised of expenditures for property, plant and equipment and
software development. The Company does not have any material
commitments of funds for capital expenditures other than to support
the current level of operations.
In the first quarter of 1993, the Company retired $9.0 million
principal amount of its previously purchased Notes in fulfillment of
its annual sinking fund requirement. The Company intends to apply
the remaining $12.3 million of the Notes held in treasury toward the
1994 and a portion of the 1995 sinking fund requirement. Pursuant to
the terms of the Notes, the Company is required to maintain a minimum
net worth of $22.8 million, without regard to foreign currency
translation adjustments, at the end of any two consecutive quarters.
Should the Company not be able to maintain the required net worth or
to make additional sinking fund payments which would then be due, the
Company would be subject to the default provisions of the Notes which
could result in acceleration of amounts due under the Notes. In such
circumstance, the Company would seek negotiation with the holders of
the Notes to waive or reduce the net worth requirements. While the
Company is currently in compliance with this covenant and expects to
remain in compliance, there is no assurance that the Company will be
able to maintain the required net worth, make any additional sinking
fund payments, or be successful in negotiations with the holders of
the Notes to waive or reduce the net worth requirement.
As of January 2, 1994, the Company had $22.5 million outstanding and
$4.0 million available for borrowing under its senior credit
facility. The senior credit facility's initial term expires on
September 23, 1994, but renews annually unless certain notice
provisions are exercised. The Lender has not informed the Company
that it intends to terminate the credit facility and is currently
negotiating a two-year fixed extension with the Company. Since a
final agreement has not been reached on such extension, the Company
has classified amounts due under the credit facility as current. The
Company is considering other financing transactions to provide
additional liquidity, including credit lines collateralized by
accounts receivable and inventory of certain of its foreign
subsidiaries. While management believes it will be successful in
negotiating an extension to its current credit facility and obtaining
other credit lines, it cannot make any assurances that they will be
successful in such efforts.
[A graphic image near the above paragraph has been omitted from this
electronic filing. This bar chart image displayed total long-term
debt (in millions) for the following years: 1989 - $112, 1990 - $86,
1991 - $64, 1992 - $69 and 1993 - $69.]
The Company has maintained cash flow through strict controls over
working capital and discretionary spending. As discussed previously,
management initiated a number of programs to improve the financial
performance of the Company. Management has also continued to strive
for continued revenue growth by investing in its strategic growth
areas of Enterprising Service Solutions, Laser Printer Solutions and
supplies. Nevertheless, there is no assurance that the Company's
initiatives will continue to be successful or that sales volume will
not materially decline. Management believes that a material decline
in sales volume could have a material adverse impact on its
operations.
As described in further detail in the Company's 1993 Annual Report,
Notes to Consolidated Financial Statements, the Company is required
to adopt SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments" on or before fiscal year 1996, SFAS No. 112 "Employers'
Accounting for Postemployment Benefits" in 1994, SFAS No. 114
"Accounting by Creditors for Impairment of a Loan" on or before
fiscal year 1995, and SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" in 1994. Management
believes such standards will not have a material effect on the
Company's financial condition or results of operations.
<PAGE>
<TABLE>
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year ended, January January December
2, 3, 29,
(In thousands) 1994 1993 1991
_______ _______ _______
<S> <<C> < < <C> < < <C>
C C C C C
> > > > >
Cash flows from operating activities:
Net income (loss) $ (3,229) $ 1,597 $ (13,048)
Adjustments to reconcile net income
(loss) to cash provided
by operating activities:
Depreciation 6,703 6,380 10,301
Amortization 2,400 2,100 1,684
Extraordinary gain (1,414) (4,161)
Effect of restructuring accrual (3,380) (3,767) 14,547
Effect of investment gain (1,741)
Effect of environmental recovery (862) (673)
from G.E.
Changes in assets and liabilities:
Accounts receivable 2,099 (5,892) 7,415
Recoverable income taxes 864 1,921 208
Inventories 1,710 (9,401) 12,369
Accounts payable and accrued 1,733 8,503 (2,975)
expenses
Other (1,054) 1,827 336
_______ _______ _______
Net cash provided by operating activities 5,243 1,854 26,003
_______ _______ _______
Cash flows from investing activities:
Additions to property, plant and (5,724) (5,241) (7,029)
equipment
Other investing activities (1,456) (2,124) (1,816)
_______ _______ _______
Net cash used in investing activities (7,180) (7,365) (8,845)
_______ _______ _______
Cash flows from financing activities:
Borrowings from long-term debt 26,818 30,534 30,796
Payments on long-term debt (26,697) (21,218) (39,569)
Purchases of senior subordinated notes (2,565) (9,000)
_______ _______ _______
Net cash provided by (used in) financing 121 6,751 (17,773)
activities
_______ _______ _______
Effect of exchange rate changes on cash and 612 811 (76)
cash equivalents
Net (decrease) increase in cash and cash (1,204) 2,051 (691)
equivalents
Cash and cash equivalents at beginning of 3,001 950 1,641
year
_______ _______ _______
Cash and cash equivalents at end of year $ 1,797 $ 3,001 $ 950
_______ _______ _______
Supplemental data:
Cash paid (received) during the year for:
Income taxes $ (501) $ (1,181) $ 862
Interest 7,953 7,758 9,907
</TABLE>
<PAGE>
<TABLE>
GENICOM CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS'
EQUITY
<CAPTION>
For the years ended January 2,
1994, January 3, 1993 and
December 29, 1991
(In thousands)
Addition Currency Pension
al
Common Paid-in Retained Translation Liability
Stock
Shares Amount Capital Earnings Adjustment Adjustment
______ ______ _______ _______ _______ _______
<S> <C> < < <C> < < <C> < <<C> < < <C> < < <C>
C C C C C C C C C C
> > > > > > > > > >
Balance as of December 30, 10,583 $ 106 $ 25,708 $ 16,461 $ (591) $ (156)
1990
Exercise of stock options 22 22
Cumulative translation (40)
adjustment
Pension liability adjustment (658)
Net loss (13,048)
______ ______ _______ _______ _______ _______
Balance as of December 29, 10,605 106 25,730 3,413 (631) (814)
1991
Cumulative translation (1,164)
adjustment
Pension liability adjustment 287
Net income 1,597
______ ______ _______ _______ _______ _______
Balance as of January 3, 1993 10,605 106 25,730 5,010 (1,795) (527)
Exercise of stock options 17 14
Cumulative translation (162)
adjustment
Pension liability adjustment (572)
Net loss (3,229)
______ ______ _______ _______ _______ _______
Balance as of January 2, 1994 10,622 $ 106 $ 25,744 $ 1,781 $ (1,957) $ (1,099)
______ ______ _______ _______ _______ _______
</TABLE>
<PAGE>
GENICOM Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of GENICOM
Corporation (the "Company") and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated. Certain reclassifications have been made to the 1992 and
1991 financial statements in order to conform to the 1993
presentation.
Fiscal Year
The Company's fiscal year ends on the Sunday nearest December 31.
Accordingly, the Company is reporting for the 52-week period ended
January 2, 1994, the 53-week period ended January 3, 1993, and the 52-
week period ended December 29, 1991.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less at the time of purchase to be cash
equivalents.
Inventories
Inventories are stated at the lower of cost, determined on the first-
in first-out method, or market.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
calculated using the straight-line method for financial reporting
purposes based on estimated lives at acquisition date (generally 15
to 25 years for buildings and 3 to 10 years for machinery and
equipment) and accelerated methods for income tax purposes.
Significant improvements and the cost of tooling are capitalized,
while repairs and maintenance costs are charged to operations.
Goodwill and Intangibles
Goodwill includes the excess of acquisition costs over the fair
market value of net assets of acquired businesses and is being
amortized on a straight-line basis over 5 to 20 years. Other
intangible assets, including patents, copyrights, trademarks,
licenses and organization and financing costs, are amortized on a
straight-line basis over periods ranging from 3 to 15 years.
Accumulated amortization for goodwill and intangibles was $10.7
million and $8.6 million at January 2, 1994, and January 3, 1993,
respectively.
Research and Development Costs and Capitalized Software
Costs incurred in basic research and development are expensed as
incurred. Certain costs relating to software development are
capitalized and amortized on a product-by-product basis. Certain
costs incurred after establishment of technological feasibility until
release of the product to customers are capitalized and then
amortized using the straight-line method to cost of goods sold over
the estimated economic life of the product.
The Company capitalized software costs of $1.5 million and $0.9
million in 1993 and 1992, respectively. The related amortization
expenses were $0.4 million and $0.1 million in 1993 and 1992,
respectively. As of January 2, 1994, and January 3, 1993,
capitalized software, net of amortization, was $1.9 million and $0.8
million, respectively.
Income Taxes
The Company accounts for income taxes under the liability method in
accordance with SFAS No. 109 "Accounting for Income Taxes". Certain
expenses are recognized in different periods for financial reporting
and federal income tax purposes. Research and development credits are
recognized as a reduction of income tax expense in the year they are
recognized for federal tax purposes. The Company does not provide
deferred taxes on the undistributed earnings of its foreign
subsidiaries as such earnings are intended to be permanently
reinvested in those operations.
Foreign Operations
The consolidated balance sheets include foreign assets and
liabilities of $54.8 million and $15.3 million at January 2, 1994,
respectively, and $56.3 million and $14.7 million at January 3, 1993,
respectively. The net effects of foreign currency transactions
reflected in income were immaterial in fiscal years 1993, 1992 and
1991.
Assets and liabilities of most of the Company's foreign operations
are translated into U.S. dollars using exchange rates in effect at
the balance sheet date and results of operations items are translated
using the average exchange rates prevailing throughout the period.
The resulting translation adjustments are recorded as a separate
component of stockholders' equity. The Company's Mexican subsidiary
remeasures its financial statements in U.S. dollars, as this is the
currency of the primary economic environment in which the entity
operates. Prior to 1993, the Mexican subsidiary was considered to
operate in a highly inflationary economy. Accordingly, its
translation adjustments, which are not material, are included in
results of operations.
The Company periodically hedges against foreign currency fluctuations
through the use of forward exchange contracts. Gains and losses on
contracts to hedge foreign currency commitments are deferred and
accounted for as part of the commitment transaction except for losses
expected to be incurred in future periods which are recorded when
identified.
The forward exchange contracts which the Company uses as hedges are
subject to off-balance sheet market risk. The Company believes that
its risk due to non-performance by the other parties to these
contracts is remote. The Company had $4.3 million and $4.6 million
of forward exchange contracts outstanding at January 2, 1994, and
January 3, 1993, respectively.
Off-Balance Sheet Risk and Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist primarily of cash and cash
equivalents and receivables. The Company has deposited its cash and
cash equivalent funds with reputable financial institutions and the
Company believes the risk of loss associated with these institutions
is very low. The Company extends credit to various customers that
are primarily in the computer and computer peripherals industries.
These specific industries may be similarly affected by economic
factors and, therefore, result in concentration of the Company's
credit risk. However, the Company performs ongoing credit
evaluations of its customers and establishes an allowance for
doubtful accounts for specific customers that it determines to have
significant credit risk. Generally, the Company does not require
collateral from its customers and has, historically, not experienced
significant credit related losses.
Revenue Recognition and Warranty Costs
Revenues from the sales of products, which include printers and
relays, are recorded when products are shipped to customers.
Revenues from services, which include service and rentals, are
recognized monthly as earned. Advance billings for customer
maintenance contracts are deferred and amortized over the contract
life on a straight-line basis. Estimated warranty costs for
equipment sales are provided for in the year of sale.
Net Income (Loss) Per Share
Net income (loss) per common share and common share equivalent is
computed by dividing net income (loss) by the weighted average number
of common shares and dilutive common share equivalents outstanding
during each year. Common share equivalents include the weighted
average number of shares issuable upon the assumed exercise of
outstanding stock options, assuming the applicable proceeds from such
exercise are used to acquire treasury shares.
Recent Accounting Pronouncements
The Financial Accounting Standards Board issued SFAS No. 107
"Disclosures about Fair Value of Financial Instruments", SFAS No. 114
"Accounting by Creditors for Impairment of a Loan" and No. 115
"Accounting for Certain Investments in Debt and Equity Securities".
Management believes such standards will not have a material effect on
the Company's financial condition or results of operations.
<PAGE>
Note 2: SUPPLEMENTAL BALANCE SHEET INFORMATION
Inventories consist of:
<TABLE>
<CAPTION>
Jan. 2, Jan. 3,
(in thousands) 1994 1993
_______ _______
<S> < <C> < < <C>
C C C
> > >
Raw materials $ 13,768 $ 15,136
Work in process 8,524 7,023
Finished goods 31,539 33,735
_______ _______
$ 53,831 $ 55,894
_______ _______
</TABLE>
Property, plant and equipment consists of:
<TABLE>
<CAPTION>
Jan. 2, Jan. 3,
(in thousands) 1994 1993
_______ _______
<S> < <C> < < <C>
C C C
> > >
Land $ 713 $ 713
Buildings 10,361 9,786
Machinery and equipment 76,954 77,404
Construction in progress 305 703
_______ _______
88,333 88,606
Less: accumulated depreciation 63,464 62,176
_______ _______
$ 24,869 $ 26,430
_______ _______
</TABLE>
<TABLE>
<CAPTION>
Jan. 2, Jan. 3,
(in thousands) 1994 1993
<S> < <C> < < <C>
C C C
> > >
Trade accounts payable $ 19,554 $ 17,492
Accrued liabilities:
Accrued compensation and benefits 9,045 10,304
Interest 2,383 2,358
Restructuring liabilities 3,380
Other 5,522 6,156
$ 36,504 $ 39,690
</TABLE>
<PAGE>
Note 3: DEBT
OBLIGATIONS
Long-term debt consists of:
<TABLE>
<CAPTION>
Jan. 2, Jan. 3,
(in thousands) 1994 1993
_______ _______
<S> < <C> < < <C>
C C C
> > >
Revolving credit notes and term loans $ 22,511 $ 23,585
Senior subordinated notes 45,627 45,617
Other subordinated notes 882 109
_______ _______
69,020 69,311
Less: current portion 23,263 693
_______ _______
$ 45,757 $ 68,618
_______ _______
</TABLE>
The Company has an agreement (the "Loan Agreement") with a lender to
provide credit facilities to a maximum borrowing of $35.0 million.
The Company has pledged as collateral generally all assets of the
Company. The Loan Agreement provides for financing based on formulas
applied to certain adjusted asset balances, an annual fee of 4.0% of
the amount by which average daily borrowings are below $10.0 million
and interest at the prime rate plus 2.25% (8.25% at January 2, 1994,
and January 3, 1993). The lender has sole discretion in determining
the adjusted asset balances. The Loan Agreement's initial term
expires September 23, 1994, but renews annually unless certain notice
provisions are exercised. The Company and its lender are currently
negotiating a two-year fixed extension to the Loan Agreement. The
Company has classified the outstanding loan balance as current in the
January 2, 1994, balance sheet.
The Company maintains a term loan agreement ("Term Loan") with the
same lender which amortizes monthly and bears the same interest rate.
The Term Loan matures on the earlier of the maturity date of the Loan
Agreement or September 1, 1997.
The Company's international subsidiaries maintain various credit
facilities for their local operations. Borrowings under such credit
facilities bear interest at prevailing or negotiated rates.
The Company issued senior subordinated notes (the "Notes") on
February 13, 1987, with an aggregate principal amount of $76.0
million. The Notes, which bear interest at 12.5% payable
semiannually, are redeemable at the option of the Company, in whole
or in part, at any time on or after February 15, 1992. Sinking fund
payments to retire $9.0 million annually began in 1992, with the
Notes maturing on February 15, 1997. The Notes are subordinated to
all senior indebtedness.
In 1992 and 1991, the Company used cash flow from operations and
proceeds from the Loan Agreement to purchase $4.0 million and $13.3
million, respectively, principal amount of its Notes prior to their
scheduled maturity. Such purchases were at market prices below face
value and, as a result, the Company recognized an extraordinary gain
of $1.3 million and $3.7 million, net of income taxes of $0.1 million
and $0.5 million, in 1992 and 1991, respectively, and the write-off
of related unamortized discount and debt issuance costs. Notes
purchased by the Company have been applied to the Notes' sinking fund
requirements. $12.3 million of the Notes which remain in treasury,
will be applied toward sinking fund requirements of the Notes for
1994 and a portion of the 1995 requirement.
The Loan Agreement and the Notes contain certain restrictive
covenants which include, among other things, required minimum net
worth of $22.8 million, restrictions on additional borrowing and the
sale or disposition of certain assets and limitations on the payment
of dividends. Under the most restrictive covenants, retained earnings
are not available for payment of dividends in 1994.
Aggregate maturities and sinking fund requirements for long-term
debt, after giving consideration to the Notes held in treasury, for
the four years following January 2, 1994, are: $23.3 million in 1994,
$5.8 million in 1995, $9.0 million in 1996 and $31.0 million in 1997.
<PAGE>
Note 4:
EMPLOYEE BENEFIT PLANS
The Company provides postretirement medical and life insurance
benefits to hourly and salaried employees hired before March 22,
1993, who retire after attaining age 60 with at least 5 years of
service. Under certain conditions, benefits may be extended to the
retirees' spouse and dependents. Salaried employees hired after
March 22, 1993, are eligible for postretirement medical and life
insurance benefits only upon attainment of Social Security retirement
age and completion of 10 years of service and no spouse or dependent
coverage is provided.
The postretirement medical coverage is contributory, while the life
insurance coverage is noncontributory.
Effective January 4, 1993, the Company adopted the provisions of SFAS
No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions", which requires the accrual of the cost of providing
postretirement benefits during an employee's active service.
The components of net periodic postretirement benefit costs were:
<TABLE>
<CAPTION>
Jan. 2,
(in thousands) 1994
_______
<S> <C> < < <C>
C C
> >
Service cost - benefits attributed to service during the $ 493
period
Interest cost on accumulated postretirement benefit 1,291
obligation
Amortization of unrecognized transition obligation over 20 878
years
_______
Net periodic postretirement benefit cost $ 2,662
_______
</TABLE>
<PAGE>
The following table sets forth the combined funded status for the
Company's postretirement benefit obligation:
<TABLE>
<CAPTION>
Jan. 2,
(in thousands) 1994
_______
<S> < <C>
C
>
Accumulated postretirement benefit obligation:
Retirees $ 10,515
Active plan participants 9,128
_______
19,643
Unrecognized transition obligation 16,683
Unrecognized net loss 1,130
_______
Accrued postretirement benefit cost $ 1,830
_______
</TABLE>
<PAGE>
The Company funds postretirement benefit costs as incurred.
For measurement purposes, a 12.0% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1994; the
rate was assumed to decrease gradually to 6.0% for 2001 and remain at
that level thereafter. If the health care cost trend rate were to
increase 1.0%, the accumulated postretirement benefit obligation as
of January 2, 1994, would have increased by 5.0%. The effect of this
change on the aggregate service and interest cost for 1993 would be
an increase of 4.7%. The weighted-average discount rate used in
determining the accumulated postretirement benefit obligation was
7.0%.
Substantially all domestic non-collective bargaining employees are
eligible to participate in the Company's deferred compensation and
savings plan (the "Savings Plan"), which qualifies under section
401(k) of the Internal Revenue Code. The Company makes certain
matching contributions which are allocated to the participants and
vest based on the employee's years of service. The Company's expense
under the Savings Plan was $1.2 million in 1993 and $1.1 million in
each year for 1992 and 1991. Effective February 7, 1994, the Savings
Plan was amended to make Company contributions discretionary.
The Company's domestic collective bargaining employees are covered by
a contributory defined benefit pension plan (the "Pension Plan"). The
Pension Plan benefits are based on years of credited service and the
participant's compensation. Eligible employees must elect to
participate and contribute 3.0% of compensation between $12,000 and
$25,650 per calendar year. The Company makes contributions to the
Pension Plan sufficient to meet federal funding requirements.
<PAGE>
Components of periodic pension costs were:
<TABLE>
<CAPTION>
Jan. 2, Jan. 3, Dec. 29,
(in thousands) 1994 1993 1991
_______ _______ _______
<S> < <C> < < <C> < < <C>
C C C C C
> > > > >
Service cost $ 442 $ 426 $ 376
Interest cost on projected benefit obligation 660 608 500
Actual return on plan assets (753) (528) (849)
Net amortization and deferral 243 92 516
_______ _______ _______
Net periodic pension expense $ 592 $ 598 $ 543
_______ _______ _______
</TABLE>
The following table sets forth the Pension Plan's funded status as of
the indicated actuarial valuation dates:
<TABLE>
<CAPTION>
Jan. 2, Jan. 3,
(in thousands) 1994 1993
_______ _______
<S> < <C> < < <C>
C C C
> > >
Actuarial present value of benefit obligations:
Vested benefits $ 8,550 $ 6,945
Non-vested benefits 672 613
_______ _______
Total accumulated benefit obligations 9,222 7,558
Effect of projected future compensation levels 936 856
_______ _______
Projected benefit obligation 10,158 8,414
Fair value of plan assets 7,603 6,617
_______ _______
Fair value of plan assets less than projected benefit (2,555) (1,797)
obligations
Unrecognized net liability existing at January 1, 1987 363 408
Unrecognized net loss from actuarial experience 2,116 1,419
Adjustment to recognize minimum liability (1,544) (971)
_______ _______
Accrued pension cost $ (1,620) $ (941)
_______ _______
</TABLE>
The Company's assumptions used in determining the pension cost and
pension liability shown above were as follows:
<TABLE>
<CAPTION>
Jan. 2, Jan. 3, Dec. 29,
1994 1993 1991
_______ _______ _______
<S> < <C> < < <C> < < <C>
C C C C C
> > > > >
Discount rate 7.25 7.75 7.75
Rate of compensation progression 5.00 5.00 5.00
Rate of return on plan assets 9.00 9.00 9.00
</TABLE>
Pension Plan assets consist primarily of treasury notes, government
and corporate bonds, corporate equities and cash equivalent funds.
The Company makes contributions to various benefit plans for its
foreign subsidiaries that it funds in accordance with local
requirements. The total expense for the plans for the years ended
January 2, 1994, January 3, 1993, and December 29, 1991 was $1.1
million, $1.0 million and $1.1 million, respectively.
In the first quarter of 1994, the Company is required to adopt SFAS
No. 112 "Employers' Accounting for Postemployment Benefits" which
requires employers to accrue costs of providing postemployment
benefits other than pensions. Management believes the implementation
of SFAS No. 112 will not have a material effect on the Company's
financial condition or results of operations.
<PAGE>
Note 5: STOCK OPTIONS
Under the Company's stock option plan, 1,529,968 shares of unissued
common stock are reserved for issuance pursuant to options
outstanding and to be granted. Stock option activity for the
respective fiscal periods is as follows:
<TABLE>
<CAPTION>
Number of Option Amount
Shares Per Share Total
_______ _______ _______
<S> <C> < < <C> < < <C>
C C C C
> > > >
Outstanding,
December 30, 1990 892,567 $ 0.15-7.50 $ 1,084,577
_______ _______ _______
Granted 178,000 1.375-2.125 321,000
Exercised (21,900) 1.00 (21,900)
Cancelled (131,100) 1.00 (131,100)
_______ _______ _______
Outstanding,
December 29, 1991 917,567 0.15-7.50 1,252,577
_______ _______ _______
Granted 270,000 1.00-1.438 332,188
Exercised
Cancelled (52,500) 1.00-1.625 (55,625)
_______ _______ _______
Outstanding,
January 3, 1993 1,135,067 0.15-7.50 1,529,140
_______ _______ _______
Granted 406,500 1.00-1.50 412,500
Exercised (17,000) 0.15-1.75 (17,975)
Cancelled (42,000) 0.15-1.50 (51,500)
_______ _______ _______
Outstanding,
January 2, 1994 1,482,567 $ 1.00-7.50 $ 1,872,165
_______ _______ _______
Options exercisable,
January 2, 1994 628,787 $ 1.00-7.50 $ 883,860
_______ _______ _______
Options available
for future grants 47,401
_______
</TABLE>
Options granted under the stock option plan are granted at prices not
less than 85.0% of the fair market value of the common stock and
become exercisable in installments at dates ranging from one to ten
years from the date of grant, as determined by the Board of Directors
or the Compensation Committee thereof.
In 1992 and 1993, the stockholders approved nonstatutory stock option
grants of 100,000 and 10,000 shares of common stock, respectively, to
certain members of the Company's Board of Directors. The stock
options become exercisable at a rate of 33.3% per year beginning one
year from grant date. However, the stock options become fully
exercisable upon the merger of the Company into another entity or the
acquisition of the Company by another entity or the sale or transfer
of substantially all assets of the Company to another entity. As of
January 2, 1994, none of these stock options had been exercised.
<PAGE>
Note 6: INCOME TAXES
On January 4, 1993, the Company adopted SFAS No. 109 "Accounting for
Income Taxes". The Company previously accounted for income taxes
under the liability method in accordance with SFAS No. 96. The
adoption of SFAS No. 109 did not have a material effect on the
Company's financial condition or results of operations.
The components of income (loss) before income taxes and extraordinary
gain were as follows:
<TABLE>
<CAPTION>
(in thousands) Jan. 2, Jan. 3, Dec. 29,
1994 1993 1991
_______ _______ _______
<S> < <C> < < <C> < < <C>
C C C C C
> > > > >
Domestic $ 1,767 $ 4,943 $ (15,595)
Foreign (4,940) (4,169) (869)
_______ _______ _______
$ (3,173) $ 774 $ (16,464)
_______ _______ _______
</TABLE>
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
(in thousands) Jan. 2, Jan. 3, Dec. 29,
1994 1993 1991
_______ _______ _______
<S> < <C> << <C> < < <C>
C CC C C
> >> > >
Current:
Federal $ (27)
State 23 $ 70 $ 63
Foreign 60 283 295
_______ _______ _______
56 353 358
_______ _______ _______
Deferred:
Federal 82 (109)
Foreign 15 26
_______ _______ _______
97 (83)
_______ _______ _______
$ 56 $ 450 $ 275
_______ _______ _______
</TABLE>
<PAGE>
A reconciliation of the U.S. statutory Federal tax rate of 34.0% to
the Company's effective tax rate is as follows:
<TABLE>
<CAPTION>
(in thousands) Jan. 2, Jan. 3, Dec. 29,
1994 1993 1991
_______ _______ _______
<S> < <C> < < <C> < < <C>
C C C C C
> > > > >
Tax expense (benefit) at statutory rate $ (1,079) $ 263 $ (5,598)
Increase (decrease) related to:
State income taxes, net of
Federal tax benefit 23 70 63
Foreign income tax 60 298 321
Foreign operating losses
generating no current tax benefit 1,642 1,462 296
Domestic operating losses
generating no current tax benefit 5,213
Domestic operating profit not taxed
due to carryfoward losses (563) (1,725)
Other, net (27) 82 (20)
_______ _______ _______
$ 56 $ 450 $ 275
_______ _______ _______
-1.8% 58.1% -1.7%
_______ _______ _______
</TABLE>
At January 2, 1994, the Company's U.S. operations had a deferred tax
asset of $8.9 million which has been fully provided for with a
valuation allowance. The deferred tax asset resulted from temporary
differences between earnings as reported in the financial statements
and earnings for income tax purposes. The major temporary
differences that give rise to the deferred tax asset are: net
operating loss carryforwards, depreciation, inventory valuation,
acquisition adjustments, restructuring accruals and employee
benefits.
The Company had U.S. Federal net operating loss carryforwards of $8.9
million, of which $8.4 million expires in 2005 and $0.5 million
expires in 2008. The Company also has available research and
development tax credit carryforwards in the amount of $0.5 million
which expire during the years of 2003 through 2008.
The cumulative amount of undistributed earnings of foreign
subsidiaries which the Company intends to permanently invest and upon
which no deferred U.S. income taxes have been provided is $2.0
million. The Company cannot practically determine the amount of
deferred income tax liability that would result had such earnings
actually been remitted. The amount of foreign withholding taxes, at
current rates, that would have been due on the earnings had they
actually been remitted was $0.1 million.
<PAGE>
Note 7: RESTRUCTURING COSTS AND OTHER INCOME
During fiscal 1993, the Company incurred costs totaling $1.0 million
associated with the reorganization and restructuring of the Company's
sales and marketing, development and administrative operations
including the formation of an application solutions function.
The Company recorded a restructuring charge of $15.0 million in the
fourth quarter of 1991 related to implementation of its strategies to
reduce costs, improve inventory utilization and restore profitability
and growth. The 1991 charge included inventory provisions totaling
$7.4 million for implementation of end-of-life programs for certain
mature printer products and for write-down of spare parts inventories
and provisions totaling $7.6 million for rationalization of
manufacturing operations. The provision for manufacturing operations
was composed of asset write-offs and estimated costs associated with
reduction and realignment of manufacturing capacity and for severance
arrangements for work force reductions to be implemented across all
divisions of the Company.
During the fourth quarter of 1993, the Company sold 65.0% of its
investment in Xeikon N.V., a Belgian printer development and
manufacturing company. This transaction added approximately $1.7
million of pre-tax income to 1993 results.
<PAGE>
Note 8: COMMITMENTS AND CONTINGENT LIABILITIES
Leasing arrangements:
As lessee:
The Company leases certain manufacturing and warehousing properties.
Rent expense amounted to $6.3 million, $6.8 million and $6.2 million
in 1993, 1992 and 1991, respectively.
Minimum future lease commitments for operating leases as of January
2, 1994, are as follows: 1994 - $3.5 million, 1995 - $2.4 million,
1996 - $1.6 million, 1997 - $1.1 million, 1998 - $0.6 million and
$1.9 million thereafter.
As lessor:
The Company has rental plans for the leasing of printers. Operating
lease terms vary, generally from one to sixty months. Rental revenue
was $1.1 million, $1.4 million and $1.6 million for 1993, 1992 and
1991, respectively.
On January 2, 1994, and January 3, 1993, the cost of equipment leased
was $1.0 million and $1.1 million, respectively, which is included in
property, plant and equipment, net of accumulated depreciation of
$0.9 million and $0.9 million, respectively.
Environmental matters:
The Company and the former owner of its Waynesboro, Virginia
facility, G.E., have generated and managed hazardous wastes at the
facility for many years as a result of their use of certain materials
in manufacturing processes. The Company and the United States
Environmental Protection Agency ("EPA") have agreed to a corrective
action consent order ( the "Order"), which became effective on
September 14, 1990. The Order requires the Company to undertake an
investigation of solid waste management units at its Waynesboro,
Virginia facility and to conduct a study of any necessary corrective
measures that may be required. Those investigations and studies are
still in progress and will likely take approximately two more years
to complete. If, as a result of the investigation and study,
corrective measures are required, the Company expects that it will
then enter into discussions with the EPA concerning a further order
for that purpose.
On December 9, 1993, the Company entered into a Cooperation Agreement
("Agreement") with G.E. covering certain environmental matters at the
Company's Waynesboro, Virginia site. One of the matters covered is
the cost of responding to the Order. The Agreement provides that
G.E. will bear 70.0% of the allocable costs relating to the Order.
In the 1993 second quarter, the Company recorded a $1.2 million
recovery from G.E. of previously incurred allocable costs relating to
the Order.
As a result of the continuing financial obligation which G.E. has
with respect to releases at the facility and the protracted nature of
the investigation, the Company believes that the costs of the
investigation and study and any corrective action that may be
required are not likely to have a material effect upon the financial
condition or results of operations of the Company.
The Company has been notified by the EPA that it is one of 700
potentially responsible parties under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, for necessary
corrective action at a hazardous waste disposal site in Greer, South
Carolina. In prior years, the Company arranged for the
transportation of wastes to the site for treatment or disposal.
Based on information currently available, the Company believes its
share of the costs of the investigation and necessary corrective
action is not likely to have a material effect on its financial
condition or results of operations.
Other matters:
In the ordinary course of business, the Company is party to various
environmental, administrative and legal proceedings. In the opinion
of management, the Company's liability, if any, in all pending
litigation or other legal proceedings, other than those discussed
above, will not have a material effect on its financial condition or
results of operations.
<PAGE>
Note 9: RELATED PARTY TRANSACTIONS
G.E. is one of the principal stockholders of the Company. Sales by
the Company to G.E. and its affiliates amounted to $4.6 million, $6.5
million and $4.9 million in 1993, 1992 and 1991, respectively.
Amounts receivable from G.E. were $1.7 million and $0.4 million at
January 2, 1994, and January 3, 1993, respectively. The receivable
from G.E. at January 2, 1994, includes amounts due for certain
environmental costs incurred at the Company's Waynesboro, VA
facility.
Decision Data Computer Corporation, ("Decision Data"), one of the
Company's customers, is a related party due to common ownership.
Sales to Decision Data were $1.8 million, $12.8 million and $12.1
million in 1993, 1992 and 1991, respectively. Amounts receivable from
Decision Data were $0.2 million and $2.5 million at January 2, 1994,
and January 3, 1993, respectively.
<PAGE>
Note 10: CERTAIN GEOGRAPHIC DATA AND SEGMENT INFORMATION
The Company's relay business is not considered a reportable segment
and is not expected to be reportable in the future. Accordingly, the
Company operates primarily in one business segment, the printer
business. Printer products are distributed internationally through a
network of subsidiaries located in Canada, Western Europe and the
Pacific Rim. In addition, the Company has a manufacturing facility in
Mexico which is operated as a maquiladora company.
Transfers (sales) between geographic areas are accounted for at
prices approximating market. Information regarding the Company's
operations in the Pacific Rim, which are not material, has been
combined with its European operations. Additionally, information
regarding the Company's Mexican subsidiary has been combined with its
U.S. operations because of the vertical integration and its close
proximity to the United States.
Financial information by geographic area:
<TABLE>
<CAPTION>
(in thousands)
<S> < <C> < < <C> < < <C> < <<C>
C C C C C C C
> > > > > > >
United States
Fiscal Year 1993 and Canada Europe Eliminations Consolidated
__________ __________ __________ __________
Sales to unaffiliated customers $ 159,504 $ 62,361 $ 221,865
Transfers between
geographic areas 43,519 $ (43,519)
__________ __________ __________ __________
Total sales $ 203,023 $ 62,361 $ (43,519) $ 221,865
__________ __________ __________ __________
Operating income (loss) $ 6,134 $ (3,489) $ 2,645
__________ __________ __________ __________
Identifiable assets $ 104,461 $ 36,698 $ 141,159
__________ __________ __________ __________
United States
Fiscal Year 1992 and Canada Europe Eliminations Consolidated
__________ __________ __________ __________
Sales to unaffiliated customers $ 158,646 $ 64,046 $ 222,692
Transfers between
geographic areas 41,756 $ (41,756)
__________ __________ __________ __________
Total sales $ 200,402 $ 64,046 $ (41,756) $ 222,692
__________ __________ __________ __________
Operating income (loss) $ 11,552 $ (3,036) $ 8,516
__________ __________ __________ __________
Identifiable assets $ 110,554 $ 36,252 $ 146,806
__________ __________ __________ __________
United States
Fiscal Year 1991 and Canada Europe Eliminations Consolidated
__________ __________ __________ __________
Sales to unaffiliated customers $ 154,100 $ 62,921 $ 217,021
Transfers between
geographic areas 37,382 $ (37,382)
__________ __________ __________ __________
Total sales $ 191,482 $ 62,921 $ (37,382) $ 217,021
__________ __________ __________ __________
Operating income (loss) $ (6,804) $ (538) $ (7,342)
__________ __________ __________ __________
Identifiable assets $ 100,949 $ 36,350 $ 137,299
__________ __________ __________ __________
</TABLE>
Total sales to customers outside the United States amounted to $73.5
million, $77.0 million and $78.3 million for 1993, 1992 and 1991,
respectively; these amounts include export sales from the United
States of $1.5 million, $3.0 million and $4.2 million in 1993, 1992
and 1991, respectively.
<PAGE>
Note 11: SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands, except per
share data)
<S> < <C> < < <C> < < <C> < < <C>
C C C C C C C
> > > > > > >
Quarter
1993 First Second Third Fourth
_______ _______ _______ _______
Revenues $ 56,677 $ 55,043 $ 53,973 $ 56,172
Operating income (loss) 1,569 2,191 451 (1,566)
Net income (loss) 83 39 (1,669) (1,682)
Earnings (loss) per share 0.01 0.00 (0.16) (0.16)
1992
Revenues $ 54,983 $ 55,230 $ 53,157 $ 59,322
Operating income 2,172 2,065 2,265 2,014
Income before
extraordinary gain 74 104 123 23
Extraordinary gain 1,273
Net income 74 1,377 123 23
Earnings per share:
Income per share before
extraordinary gain 0.01 0.01 0.01 0.00
Extraordinary gain 0.12
Net income 0.01 0.13 0.01 0.00
</TABLE>
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of GENICOM Corporation is responsible for the
preparation and integrity of the financial statements and related
information appearing in this Annual Report. The consolidated
financial statements were prepared by management in conformity with
generally accepted accounting principles, applied on a consistent
basis, and include amounts which are based on estimates and
management's judgement of current conditions and circumstances, and
giving due consideration to materiality.
To fulfill its responsibilities, management has developed and
continues to maintain a system of internal accounting controls. These
controls are designed to provide reasonable assurance that the
financial statements reflect the transactions of the Company and that
assets are safeguarded from loss or unauthorized use.
The consolidated financial statements have been audited by the
Company's independent accountants, Coopers & Lybrand, whose report
thereon appears at right. The independent accountants are appointed
by the stockholders each year based on the recommendation of the
Audit Committee of the Board of Directors. The Audit Committee,
composed of outside directors, meets periodically with management and
the independent accountants to discuss internal accounting controls
and financial reporting matters. The independent accountants have
full and free access to the Audit Committee.
Paul T. Winn
President and Chief Executive Officer
James C. Gale
Senior Vice President Finance and Chief Financial Officer
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors and Stockholders of GENICOM Corporation:
We have audited the accompanying consolidated balance sheets of
GENICOM Corporation and subsidiaries as of January 2, 1994 and
January 3, 1993, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the three
fiscal years in the period ended January 2, 1994. These financial
statements are the responsibility of the Company'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 consolidated financial position
of GENICOM Corporation and subsidiaries as of January 2, 1994 and
January 3, 1993, and the consolidated results of their operations and
their cash flows for each of the three fiscal years in the period
ended January 2, 1994 in conformity with generally accepted
accounting principles.
As discussed in Note 4 to the financial statements, effective January
4, 1993, the Company changed its method of accounting for
postretirement benefits other than pensions.
Washington, D.C.
February 1, 1994
<PAGE>
Board of Directors:
Don E. Ackerman
Chairman of the Board
President
Chandelle Ventures, Inc.
Bruce K. Anderson
General Partner
Welsh, Carson, Anderson & Stowe
Edward E. Lucente
Vice President of Sales and Marketing
Digital Equipment Corporation
Paul T. Winn
President and Chief Executive Officer
GENICOM Corporation
Executive Officers:
B. Garrett Buttner
Vice President and General Manager
Supplies Business
Charles L. Dumas
Vice President and General Manager
Relay Products Division
James C. Gale
Senior Vice President Finance and
Chief Financial Officer
James A. Jones
Vice President, Corporate Controller
and Treasurer
C. Bruce Meyer
Vice President Human Resources and
Corporate Communications
Raymond D. Stapleton
Senior Vice President and
General Manager Enterprising Service
Solutions Division
W. Allen Surber
Senior Vice President Printer Solutions Business
Paul T. Winn
President and Chief Executive Officer
<PAGE>
Corporate Directory
Operations Management:
Donald J. Einecker
Vice President and General Manager
Datacom de Mexico, S.A. de C.V.
C. Edward Feaster
Assistant General Manager -
International Operations
Klaus Fuchs
General Manager
GENICOM GmbH Germany
Michel Fargier
Acting General Manager
GENICOM S.A. France
Stuart Fathers
General Manager
GENICOM Pty. Ltd. Australia
Tony Hammell
General Manager
GENICOM Limited United Kingdom
Steve Mosek
General Manager
GENICOM Canada, Inc.
Michael J. Shelor
Vice President Quality and
Customer Satisfaction
Remigio Uttini
General Manager
GENICOM SpA Italy
Company Facilities:
Headquarters:
GENICOM Corporation
14800 Conference Center Drive
Suite 400, Westfields
Chantilly, Virginia, USA 22021-3806
Telephone: (703) 802-9200
Service and Manufacturing Facilities:
GENICOM Corporation
One Genicom Drive
Waynesboro, Virginia, USA 22980-1999
Telephone: (703) 949-1000
Datacom de Mexico, S.A. de C.V.
Carretera a Matamoros con Brecha E-99
Apartado Postal 775
Parque Industrial Reynosa
Reynosa, Tamaulipas, Mexico 88780
Telephone: (210) 682-9211 - U.S. Number
(89) 227035 - Mexican Number
Research and Development Subsidiary:
Rastek Corporation
7618 Memorial Parkway, SW
Huntsville, Alabama 35802-2200
Telephone: (205) 882-0882
Sales and Service Subsidiaries:
GENICOM Pty. Ltd.
175 Gibbes Street, Unit 12
Chatswood, N.S.W. 2067
Australia
Telephone: 61-2-417-6411
GENICOM Canada, Inc.
5170-A Timberlea Boulevard
Mississauga, Ontario
Canada L4W 2S5
Telephone: (905) 625-0770
GENICOM S.A.
17 Rue Ampere
91300 Massy
France
Telephone: 33-1-69-308484
GENICOM GmbH
Oberliederbacher Weg 42
65843 Sulzbach/Ts.
Germany
Telephone: 49-6196-70320
GENICOM SpA
Via Achille Grandi 12
20093 Cologno Monzese
Milan, Italy
Telephone: 39-2-27304510
GENICOM Limited
Unit B13 Armstrong Mall
Southwood, Farnborough,
Hampshire, GU14 ONR
United Kingdom
Telephone: 44-252-522500
Independent Accountants:
Coopers & Lybrand
1800 M Street, N.W.
Washington, D.C. 20036
Registrar & Transfer Agent:
First Union National Bank of North Carolina
Shareholder Services Group
Two First Union Center
Charlotte, North Carolina 28288-1154
Legal Counsel:
McGuire Woods Battle & Boothe
One James Center
901 East Cary Street
Richmond, Virginia 23219-4030
Stock Trading:
GENICOM's common stock is traded in the over-the-counter market and
quoted on the NASDAQ National Market list (Symbol: GECM). As of
February 4, 1994, there were approximately 558 shareholders of
record. The following table sets forth, for the periods indicated,
the high and low closing prices per share of GENICOM common stock as
reported by NASDAQ:
<TABLE>
<CAPTION>
1993 1992
High Low High Low
<S> <<C> <<C> << <C> < <C>
C C CC C
> > >> >
First Quarter $2 $1 1/8 $ 1 7/8 $ 7/8
Second Quarter 3 1/2 1 5/8 2 1 1/4
Third Quarter 3 1/2 1 1/2 2 1 1/8
Fourth Quarter 1 5/8 1 3/16 1 5/8 1
</TABLE>
SEC Form 10-K:
If you would like a copy of our Annual Report on SEC Form 10-K for
the fiscal year ended January 2, 1994, you may obtain it without
charge. Direct your request to GENICOM Corporation, Investor
Relations Department, 14800 Conference Center Drive, Suite 400,
Westfields, Chantilly, Virginia, USA 22021-3806 or call the GENICOM
Corporation Investor Relations Department at (703) 802-9200.
Corporate and Investor Information:
Please direct inquiries to GENICOM Corporation, Investor Relations
Department, 14800 Conference Center Drive, Suite 400, Westfields,
Chantilly, Virginia, USA 22021-3806 or call the GENICOM Corporation
Investor Relations Department at (703) 802-9200.
Annual Stockholders' Meeting:
The Annual Stockholders' Meeting of GENICOM Corporation will be held
on Wednesday, April 27, 1994, at the Company's Headquarters, 14800
Conference Center Drive, Suite 400, Westfields, Chantilly, Virginia,
USA 22021-3806. A Form of Proxy and Proxy Statement is being mailed
to stockholders of record with this report.
Equal Employment Opportunity Policy:
GENICOM Corporation is an equal opportunity employer. It is the
policy of the Company to recruit, hire and promote without regard to
race, color, religion, sex, age, national origin or disability status
as a disabled veteran or veteran of the Vietnam Era.
Environmental Policy:
GENICOM has a long-standing commitment to high standards of employee
health and safety and environmental protection. It is the policy of
GENICOM to manage its plants and activities so that employees' health
and safety on the job are protected from unreasonable risks, so that
employee expectations concerning the work environment are met, and so
that the environment is properly protected from adverse effects of
facility operation or from use of the Company's products and
services. The Company is committed to offering products and using
processes that will help solve environmental problems.
<PAGE>
APPENDIX
List of Graphic Material Omitted from Management's Discussion and
Analysis of Results of Operations and Financial Position
1. Bar Chart Representing Printer Revenues from 1989 through 1993.
2. Bar Chart Representing Supplies Revenues from 1989 through 1993.
3. Bar Chart Representing Service Revenues from 1989 through 1993.
4. Bar Chart Representing Relays Revenues from 1989 through 1993.
5. Bar Chart Representing Order Backlog from 1989 through 1993.
6. Bar Chart Representing Research and Development Expenses
and the Same Expenses as a Percentage of Revenues.
7. Bar Chart Representing Interest Expense from 1989 through 1993.
Exhibit 22
<TABLE>
SUBSIDIARIES OF REGISTRANT
<CAPTION> Jurisdiction
Subsidiary of Incorporation
<S> <C> <C>
GENICOM International Holdings Delaware
Corporation
GENICOM International Sales Corporation Delaware
Enterprising Service Solutions Delaware
Corporation
Delmarva Technologies Corporation Delaware
Rastek Corporation Delaware
GENICOM Relay Products Corporation Delaware
GENICOM Canada, Inc. Canada
GENICOM Foreign Sales Corporation U.S. Virgin
Islands
Datacom de Mexico, S.A. de C.V. Mexico
GENICOM International Limited England
GENICOM (No. 1) Limited England
GENICOM Ltd. England
GENICOM S.A.R.L. France
GENICOM S.A. France
GENICOM GmbH Germany
GENICOM S.p.A. Italy
GENICOM (Australia) PTY LTD. Australia
GENICOM Pty Limited Australia
</TABLE>
E - 23
<PAGE>
Exhibit 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement on Form S-8 (FILE No. 33-49472) of our report dated
February 1, 1994, on audits of the consolidated financial
statements and schedules of GENICOM Corporation and subsidiaries,
which report appears on page F-2 of this Form 10-K.
Coopers & Lybrand
Washington, D.C.
March 31, 1994
E - 24
