ITEM 2. PROPERTIES
The Company's executive offices are located in approximately 8,000 square feet of leased space in downtown Cleveland. The Company's principal leasing and corporate operations occupy approximately 75,000 square feet of space in an office building located in Westlake, Ohio, a Cleveland suburb. This property, which was acquired by the Company in August 1989, is held by the LDI Realty Trust, a trust formed for the benefit of the Company of which LDI Realty Corp., an Ohio corporation and a wholly owned subsidiary of the Company, is Trustee. The Company's maintenance and technical support operations are located in approximately 150,000 square feet of space at the Company's Technology Center in Cleveland. The Company leases approximately 72,000 square feet of office and warehouse space in Solon, Ohio, a Cleveland suburb, from NCP, Ltd., a limited partnership of which the Founders, Jay J. Ross, a Senior Vice President of the Company and Jerry E. Kish, Executive Vice President of the Company, are the general partners. This space houses the Company's PC sales and distribution operations and houses one of the business recovery centers operated by SunGard Recovery Services Inc. The Company's three "LDI Computer Superstores" occupy approximately 100,000 square feet of space in their two suburban Cleveland, Ohio locations and one suburban Pittsburgh location. The Company also leases or owns other sales offices and maintenance centers in various locations throughout the United States.
As part of its strategic plan the Company's executive offices and leasing and corporate operations will be transferred to its Technology Center. The Company plans to sell its Westlake facility and vacate its leased downtown Cleveland offices in 1994. All of the Company's operations housed in its Solon facility, along with the three computer superstores, have been identified as discontinued or non- strategic businesses. The Company intends to transfer its lease of the Solon facility to buyers of these operations and either vacate or sell its computer superstore facilities.
The Company believes that its remaining offices and facilities are adequately insured and sufficient to service their present purposes.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings which require disclosure pursuant to Item 103 of Regulation S-K.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF REGISTRANT
There is hereby incorporated by reference the information with respect to executive officers of LDI Corporation and its subsidiaries set forth in Item 10 of this Annual Report on Form 10-K.
As of April 25, 1994, the Company's common stock was held by 544 stockholders of record.
During the year ended January 31, 1994, the Company paid quarterly cash dividends on its common stock of $.04 per share.
The Company is subject to restrictions on the payment of cash dividends under the covenants of certain of its financing agreements. Under these covenants, there were no retained earnings available at January 31, 1994 for the future payment of cash dividends. ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA (Continued)
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED): (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Results of operations for all quarters prior to the quarter ended January 31, 1994 have been restated to segregate the results of discontinued operations. Accordingly, amounts for revenues and gross profit pertain only to continuing operations.
Earnings (loss) from continuing operations for the three months ended January 31, 1994 includes restructuring charges of $6.6 million ($.62 per share, net of tax).
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Accounting Practices Refer to Note 1 of the Notes to Consolidated Financial Statements for a discussion of the Company's significant accounting practices.
Results of Operations The following schedule presents the amounts and relative percentage of total revenues represented by major revenue and expense items for each of the three years in the period ended January 31, 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LEASING: A summary of the operating results from leasing for the three years ended January 31, 1992-1994 is as follows:
For the year ended January 31, 1993, leasing revenues decreased 24% from the prior year and for the year ended January 31, 1994, such revenues declined 21%. The principal factor underlying the decline in both years was the ongoing market dynamics which has resulted in a decrease in the demand for large mainframe computer systems, resulting in the Company's strategy to concentrate its marketing activities on mid-range computers and peripherals, communication technologies, RISC-based computer systems, personal computer networks, and related capital equipment. As a result, the average lease transaction size decreased for both years, even though the number of lease transactions increased in the current year.
For the year ended January 31, 1993, gross leasing margin decreased by 22% from the prior year due primarily to the lower lease volume. However, the margin as a percent of revenue improved slightly, primarily as a result of increased finance income on both sales-type and direct financing leases. Repeat business from the installed lease base also improved the margin percent.
For the year ended January 31, 1994, gross leasing margin decreased by 50% from the prior year. This was due primarily to the lower lease volume (in dollars) and to an increase in asset valuation adjustments for additional off-lease equipment items being returned rather than leases being renewed. A few large transactions with below average margins and a decrease of 21% in finance income, resulting from a decline of 17% in the lease base and the lower interest rate environment, also contributed to the margin decrease.
Asset valuation writedowns of off-lease equipment can occur when the lessee elects not to renew, extend, or reconfigure the lease, while lease renewals tend to maintain the in-place value of leased equipment. Leased equipment is recorded at the lower of cost or fair market value when equipment is received from lessees at the end of the lease. During the quarter ended January 31, 1994, several major customers decided not to renew their leases but to negotiate to purchase or return the equipment. The relatively low interest rates added to some customers' incentive to purchase equipment rather than renew their leases. These sales or returns resulted in a $7 million charge. In addition, equipment that was returned as a result of credit and collection- related situations with other customers, resulted in $15 million of off-lease writedowns in the fourth quarter. The majority of these valuation adjustments were caused by credit deterioration of selected lessees. Lease renewal was often not an option to the Company and contested repossession of the equipment resulted in decreased values due to that delayed return of the equipment.
The Company's management believes that the extent of the off-lease writedowns which occurred in the fourth quarter to be unusual and relating to specific situations with certain customers. The Company's 1994 business plan, developed in connection with the overall strategic restructuring plan, estimates that the leasing margin percent will return to its historical range of 30% to 35% of revenues.
DIRECT SALES: A summary of the operating results from direct sales for the three years ended January 31, 1992-1994 is as follows:
For the year ended January 31, 1993, direct sales increased 40% from the prior year, and, for the year ended January 31, 1994, direct sales increased 16%. The principal factors underlying the increases in both years were sales of microcomputers and related accessories sold to commercial accounts and sales of new and used computer equipment to retail users and dealers, resulting from higher volumes of equipment coming off-lease. Sales of off-lease mainframe computers were a significant factor in the increased sales of used computer equipment.
For the years ended January 31, 1993 and 1994, gross sales margin (in dollars) increased 43% and 11%, respectively, due primarily to the larger direct sales volume for both years.
TECHNICAL SERVICES: A summary of the operating results from technical services for the three years ended January 31, 1992-1994 is as follows:
For the year ended January 31, 1993, technical services revenues decreased 3% from the prior year. This was due principally to a decline in the customer base of disaster recovery operations and the sale of Wang maintenance operations as of August 31, 1992, partially offset by increased depot maintenance activity.
For the year ended January 31, 1994, technical services revenues decreased 12% from the prior year. This was primarily due to a decline of $3.1 million in disaster recovery services as a result of an agreement, effective May 1, 1993, to form a strategic marketing relationship with SunGard Recovery Services Inc. The Company's base of business recovery customers and two "hot site" recovery centers were merged into SunGard's operations and are operated by SunGard as part of the agreement. Increased consulting revenues partially offset the decline in services revenues.
For the year ended January 31, 1993, gross margin decreased by 17%. The margin decline resulted principally from the lower revenues, additional salary and personnel costs relating to consulting activity, and higher fixed costs of disaster recovery operations. For the year ended January 31, 1994, the gross margin declined due to lower revenues, while the margin percentage improvement was due primarily to lower parts costs and increased labor efficiency in maintenance operations, and the absence, beginning in the second quarter of 1993, of disaster recovery operations, which bore higher direct costs per revenue dollar.
INTEREST EXPENSE: For the years ended January 31, 1993 and 1994, interest expense decreased 16% and 20%, respectively. This resulted primarily from lower interest rates and reductions in the average amount of debt outstanding during both years.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES: For the year ended January 31, 1993, selling, general, and administrative expenses decreased by 2%. As a percent of total revenues, such costs increased from 11.2% to 12.3%. Additional marketing, marketing support and administrative expenses incurred in connection with the expansion of the personal computer rental business totaled over $1.8 million. This increase was offset by a decrease in selling, general and administrative expense attributable to other consolidated operations of $2.6 million, or 7%.
For the year ended January 31, 1994, selling, general, and administrative expenses increased by 13%, and, as a percent of total revenues, from 12.3% to 15.5%. The increase was attributable primarily to additional bad debt charges ($4.7 million) resulting from losses for credit and collection-related situations with several customers. Additional marketing, marketing support and administrative expenses incurred in connection with continued expansion of personal computer rental operations also contributed to the increase.
The Company's management believes the facility closing and other cost reduction measures included in the Company's strategic business plan will reduce selling, general and administrative expense for the year ending January 31, 1995.
STRATEGIC BUSINESS PLAN: During the year ended January 31, 1994, the Company initiated a strategic business plan that includes the sale or other divestiture of certain product lines and non-core businesses, the closing of facilities, and other cost reduction measures to improve the Company's profitability.
The Board of Directors approved the retention of corporate advisors to assist management in the divestiture of non-strategic businesses. The Company expects to complete these divestitures by the end of the third quarter of 1994.
Prior to implementing the plan, the Company engaged in the distribution of personal computers and related peripherals through direct sales to corporate customers and retail sales through its computer superstores and computer outlet stores.
During 1992 and 1993, the two dominant factors in the PC marketplace were intense price competition among manufacturers and the rapid move to Intel 486 and similar processor technology. Overall price levels in the PC market declined, while gross margin percentages remained relatively constant. The decrease in margins in absolute dollars put intense pressure on regional-based distributors such as LDI to maintain sales volume and profitability levels. The continued price erosion coupled with new entrants in the retail PC business led the Company to decide that the financial returns in these marketplaces would not be acceptable.
As a complement to its end user marketing, the Company also engaged in the direct catalog marketing of telecommunications equipment, components and accessories related to data communications. It also offered to small and medium-size specialty retailers turnkey PC-based point-of-sale installations with complete engineering, software system design and technical support services.
The direct catalog marketing and PC-based point-of-sale businesses have also been affected by the changes in the PC marketplace during the past two years. In addition, the limited size and market share of these operations influenced management's decision to exit these businesses.
The businesses the Company has identified as discontinued or non-strategic can generally be characterized as transactional in nature, commodity oriented and not conducive to building long-term customer relationships. These attributes have translated into low-margin, low-return businesses which do not match the Company's new strategy of focusing on a core business, emphasizing exceptional customer service, building long-term relationships with customers and providing value-added services. These core business attributes, in conjunction with the proposed facilities closing and other cost saving measures, are expected to result in higher margins and financial returns after the strategic plan is completely implemented.
RESTRUCTURING CHARGES: Under the strategic plan, businesses subject to sale or other divestiture (other than those included in Discontinued Operations) include (1) LDI Retail Services, which provides hardware, software, and system integration for retail chain stores; (2) LDI Computer Systems, which sells microcomputers and related equipment to commercial accounts; (3) SeaTech Communications, a ship-to-shore satellite telecommunications venture; and (4) LDI Canada, Ltd., a leasing subsidiary based in Toronto, Canada.
The estimated cost of implementing the plan is $6.6 million, recorded in the Company's fourth quarter ($4.1 million after-tax, or $.62 per share). The estimated cost includes $4.3 million attributable to disposing of the above businesses, $1.7 million for employee severance and terminations and $0.6 million for closing facilities.
INCOME TAXES: The effective income tax expense rate for continuing operations increased to 38.5% for the year ended January 31, 1993 compared to 37.0% for the prior year. The lower rate in the prior year resulted principally from the utilization of net operating losses of a pooled subsidiary which benefited that year and previous years.
The Company's effective income tax benefit rate for continuing operations decreased to 37.3% for the year ended January 31, 1994 from a tax expense rate of 38.5% for the prior year, giving effect to the tax rate change. DISCONTINUED OPERATIONS: Under the restructuring plan, discontinued segments include (1) LDI Computer Superstores, the retail PC superstores; (2) LDI Computer Outlets, the retail PC outlet stores; (3) LDI Distribution Supply, a catalog distribution business selling PC peripheral equipment and modems; and (4) LDI Open Software, a software distributor company selling UNIX-based systems.
As a result of discontinuing these businesses the Company recorded for its fourth quarter a charge of $11.7 million ($7.1 million after-tax), consisting of $10.8 million for estimated losses during the phase-out period and $0.9 million for employee severance and termination costs.
LIQUIDITY AND CAPITAL RESOURCES:
FINANCIAL POLICIES. Through April, 1994, the Company used a combination of unsecured revolving bank credit, unsecured lines of credit and internally generated cash flow to finance, on an interim basis, the acquisition of equipment for lease or sale. As a result of the strategic actions of the Company, the unsecured revolving bank credit and unsecured lines of credit have been changed to secured facilities expiring at April 30, 1995.
The Company generally finances the present value of the future lease rentals by the assignment of such rentals to banks, insurance companies, or other lenders on a discounted, nonrecourse basis. In this manner, a substantial portion of the equipment cost is financed on a long-term basis and the Company limits its risk, if any, to its equity investment in the equipment.
The Company enters into interest rate swap and cap agreements to manage exposure to changes in interest rates. The swap agreements generally involve the exchange of fixed or floating rate interest payments without the exchange of the underlying principal amounts. The notional amount of interest rate swaps outstanding at January 31, 1994 was $142 million with a weighted average interest rate of 5.5%. The agreements have maturities from one to four years.
LIQUIDITY. Liquidity is provided primarily by cash generated from operating activities, which amounted to $227 million and $190 million for the years ended January 31, 1993 and 1994, respectively. Cash flow from operating activities for the year ended January 31, 1994 decreased by $37 million from the prior year due primarily to the reduction in accounts payable balances compared with an increase in the prior year. Cash flow used in investing activities increased by $11 million due primarily to additional purchases of equipment for lease. Cash flow used in financing activities decreased by $54 million due primarily to an increase in revolving and line of credit facilities in the current year ($20 million) compared with a substantial decrease in the prior year ($72 million). This was partially offset by increased cash provided by nonrecourse lease financings ($27 million). The net results were decreases in financing requirements of $12 million, $88 million and $35 million for the years ended January 31, 1992, 1993 and 1994, respectively.
CAPITAL RESOURCES. At January 31, 1994, the Company's revolving and line of credit facilities consisted of a $130 million revolving credit facility with a group of banks and $35 million of additional revolving credit facilities maturing during the year ending January 31, 1995. At January 31, 1994, $130 million was outstanding on these facilities. The revolving credit agreements provided several borrowing options with varying interest rates depending on the mix of borrowing options used.
The Company has established nonrecourse securitized lease financing facilities, consisting of commercial paper and notes, with $135 million of available funding capacity. As of January 31, 1994, $114 million of this amount was utilized. Effective May 1, 1994, one of the financial institutions which issued a $50 million letter of credit for one of the asset-backed financing programs has not extended its letter of credit for new leases financed under this program. Leases already funded will continue to amortize under the existing terms of the agreement. The Company is actively seeking replacement letters of credit as well as discussing the extension of the letter of credit with the existing provider. The Company has multiple sources of nonrecourse financing and does not expect this action to have a material adverse effect on its ability to finance new lease activity.
As of January 31, 1994, the Company had unsecured installment notes of $12.4 million with a group of insurance companies which mature in 1997 and $38.7 million with banks which mature in 1996.
On May 2, 1994, the $130 million unsecured revolving bank credit facility and the unsecured amortizing term loan agreement were combined into one $116 million secured reducing revolving credit facility expiring on April 30, 1995. The Company will reduce the principal outstanding under the prior facilities by $17 million in May, 1994. The total commitment under the new facility reduces periodically to $104 million during the term of the facility. The Company's ability to borrow additional amounts under the revolving facility are based on a ratio of defined assets to defined recourse debt of the Company.
An additional revolving credit facility with an outstanding balance of $8.3 million at May 2, 1994 was also changed to a secured, amortizing term loan maturing at April 30, 1995. Unsecured installment notes of $8.5 million were changed to secured notes with modifications made to the principal repayment schedule to proportionately match the principal amortization of the new secured, reducing revolving credit facility. These notes also mature on April 30, 1995. The remaining $2.6 million of unsecured installment notes have been changed to secured notes and mature on August 31, 1994.
At January 31, 1994, the Company had $455 million of total interest-bearing obligations, including $254 million of floating rate financings. Of the total floating rate financings, only $84 million was subject to interest rate fluctuations, with $142 million of floating-rate financing being converted to fixed-rate financing through interest rate swap agreements and $28 million of floating-rate financings subject to interest rate ceilings through interest rate cap agreements.
EFFECT ON LIQUIDITY OF STRATEGIC PLAN: Under the strategic restructuring plan, liquidity will be provided by (1) cash generated from operating activities; (2) cash realized from the sale or liquidation of discontinued and non-strategic businesses; (3) cash proceeds from the financing of the present value of future lease rentals and availability under the new revolving credit facility.
LDI's management believes that it will have sufficient liquidity to meet principal amortization, and the operating requirements of the core business.
OTHER: Receivable balances have grown primarily due to additional notes receivable obtained in connection with tax-oriented lease transactions with investors. The Company does not have any material commitments for capital expenditures. The Company believes that inflation has not been a significant factor in its business.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LDI CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants . . . . . . . . . . . .
Consolidated Balance Sheets as of January 31, 1993 and 1994
Statements of Consolidated Earnings for the years ended January 31, 1992, 1993, and 1994 . . . . . . . . . . . . . .
Statements of Consolidated Cash Flows for the years ended January 31, 1992, 1993, and 1994 . . . . . . . . . . . . . .
Statements of Consolidated Shareholders' Equity for the years ended January 31, 1992, 1993, and 1994 . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . .
Financial Statement Schedules:
Schedule II - Amounts Receivable from Related Parties . . . .
Schedule VIII - Valuation and Qualifying Accounts . . . . . .
Schedule IX - Short-Term Borrowings . . . . . . . . . . . . .
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
LDI CORPORATION:
We have audited the accompanying consolidated balance sheets of LDI Corporation and its subsidiaries as of January 31, 1993 and 1994, and the related statements of consolidated earnings, cash flows, and shareholders' equity for each of the three years in the period ended January 31, 1994. Our audits also included the financial statement schedules listed in the Index at Item 8. These financial statements and financial statement schedules are the responsibility of the Corporation's management. Our responsibility is to express an opinion on the 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of LDI Corporation and its subsidiaries at January 31, 1993 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 1994 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
Deloitte & Touche
Cleveland, Ohio May 2, 1994
LDI CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
LDI CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS
LDI CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
LDI CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Dollars in Thousands Except Where Indicated)
For the Years Ended January 31, 1992, 1993, and 1994 - ---------------------------------------------------- NOTE 1 Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. An investment in a 50 percent owned affiliate is accounted for using the equity method.
LEASE ACCOUNTING - The Company's lease transactions are classified as either sales-type, direct financing, or operating leases at the inception of the lease in accordance with Statement of Financial Accounting Standards No. 13. Sales-type and direct financing leases are those leases which transfer substantially all of the costs and risks of ownership of the equipment to the lessee. Generally, the Company classifies a lease as a sales-type or direct financing lease if either (a) the lease term is at least 75 percent of the estimated economic life of the leased equipment at lease inception or (b) the present value of the rental payments is at least 90 percent of the fair market value of the leased equipment at lease inception. Operating leases are those leases in which substantially all the benefits and risks of ownership of the equipment are retained by the Company. Generally, the leases that do not meet conditions (a) or (b) described above are classified as operating leases.
The lease accounting methods used by the Company are:
SALES-TYPE LEASES: At lease inception, the present value of rentals over the lease term is recorded as leasing revenues. The cost of the equipment less the present value of the estimated residual value is recorded as leasing costs and a dealer profit is recognized at the inception. The present values of future rentals and of the residual are recorded as leased assets. Unearned interest income, consisting of the excess of the gross rentals and of the residual over their present values, is amortized to leasing revenues over the lease term to produce a constant percentage return on the investment. DIRECT FINANCING LEASES: At lease inception, the present values of future rentals and of the residual are recorded as leased assets. Unearned interest income is amortized to leasing revenues over the lease term to produce a constant percentage return on the investment. OPERATING LEASES: The monthly rental is recorded as leasing revenue. The cost of equipment is recorded as leased assets and is depreciated over the lease term to an estimated residual value. RESIDUAL VALUES: The estimated residual values used in leases are reviewed annually and reduced if necessary. INITIAL DIRECT COSTS: Sales commissions and other direct costs incurred in producing direct financing and operating leases are deferred and amortized over the lease term. NONRECOURSE FINANCING - The Company assigns the rentals under most of its leases to financial institutions and other lenders on a nonrecourse basis, for which the Company receives a cash amount equal to a discounted value of the lease rentals. In the event of a default by a lessee, the lender has a security interest in the underlying leased equipment but has no recourse against the Company. Proceeds from refinancing are recorded on the balance sheet as nonrecourse lease financing. Under sales-type and direct financing leases, nonrecourse lease financing and leased assets are reduced as lessees make rental payments under the leases. Under operating leases, leasing revenue is recorded monthly as lessees are billed. Receivables and nonrecourse lease financing are reduced as lessees make rental payments.
DIRECT SALES - Revenues and costs of direct sales of equipment are recorded at the time title to the equipment transfers to the customer.
OTHER REVENUES - Other revenues include fees earned for arranging leases between unrelated parties and for selling equity interests in lease transactions. The fees are recognized at the closing of such transactions. In addition to these fees, the Company also may be entitled at lease termination to fees equal to a portion of the net proceeds from the subsequent lease or sale of the equipment. The Company's portion of such net proceeds, if any, is reported as income at the time of the subsequent lease or sale of the equipment.
INVENTORY - Inventory is valued at the lower of cost or market, using primarily a first-in, first-out method.
BUILDINGS, EQUIPMENT, AND FURNITURE - Buildings, equipment, and furniture are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
INCOME TAXES - Deferred income taxes are provided to give effect to temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as determined by tax laws and regulations. Principal differences are leases, which are accounted for as sales-type and direct financing leases for financial reporting purposes and as operating leases for tax purposes, and certain reserves and liabilities recorded for financial reporting purposes that are not deductible for tax purposes until paid.
STATEMENT OF CONSOLIDATED CASH FLOWS - For the purposes of this statement, the Company considers all highly liquid short term investments that have a maturity of ninety days or less to be cash equivalents.
INTEREST RATE SWAP AGREEMENTS - The Company enters into interest rate swap agreements to manage exposure to changes in interest rates. The agreements involve the exchange of fixed or floating rate interest payments without the exchange of the underlying principal amounts. The differential to be paid or received is accrued as interest rates change and is recognized over the life of the agreements as an adjustment to interest expense. EARNINGS PER SHARE - Primary earnings per share are computed on the basis of the weighted average number of common shares outstanding during each year. For the years ended January 31, 1992 and 1993, fully diluted earnings per share were computed on the basis of the weighted average number of common shares outstanding and the dilutive effect of the assumed conversion of the convertible notes from the date of issuance, with related interest expense reduced accordingly, and the assumed exercise of stock options and warrants. For the year ended January 31, 1994, fully diluted earnings per share are not shown since the effect would be anti-dilutive. The number of common shares used for computing earnings per share are as follows:
NOTE 2 Restructuring Charges
During the year ended January 31, 1994, the Board of Directors determined the need to commence a strategic realignment of operations of the Company and to discontinue certain business segments (See Note 3). The strategic plan includes the sale or other divestiture of certain product lines and non-strategic businesses, the closing of facilities, and other measures to improve the Company's overall profitability. The estimated cost of implementing the plan is $6.6 million, recorded in the Company's fourth quarter (after-tax $4.1 million, or $.62 per share).
The estimated costs include $4.3 million attributable to disposing of certain product lines and businesses, $1.7 million to employee severance and terminations and $0.6 million to close facilities. In addition to asset writedowns, reserves and liabilities of $3.6 million were recorded at January 31, 1994 relating to these items.
Summary financial results for the year ended January 31, 1994 and assets and liabilities as of January 31, 1994 for operations subject to sale or other divestiture (exclusive of discontinued business segments) were as follows:
NOTE 3 Discontinued Operations
During the year ended January 31, 1994, management of the Company initiated a comprehensive plan to exit the retail computer superstores, retail PC outlet stores, catalog distribution, and software distribution business segments. Also, the Board of Directors approved the retention of corporate advisors to assist management in the planning and divestiture process that is expected to be completed during the first and second quarters of 1994. The software distribution segment was sold in March 1994 and all retail outlet stores were closed in April 1994. The Company has an agreement in principle for the sale of the catalog distribution segment and expects to complete the liquidation of the retail computer superstores in May 1994.
As a result of these actions and subsequent implementation of the plan, the Company recorded for its fourth quarter a charge of $11.7 million(after-tax, $7.1 million), consisting of $10.8 million for estimated losses during the phase-out period and $0.9 million for employee severance and termination costs. In addition to asset writedowns, reserves and liabilities of $3.9 million were recorded at January 31, 1994 relating to these items.
Combined revenues of the four discontinued segments were $21 million, $40 million, and $65 million for the years ended January 31, 1992, 1993, and 1994, respectively. Assets of the discontinued operations, consisting primarily of inventory and accounts receivable at January 31, 1994, are reported on the balance sheets as net assets of discontinued operations. The consolidated financial statements disclose the operating results of discontinued operations separately from continuing operations. Prior year financial statements have been restated.
NOTE 4 Acquisitions
During the year ended January 31, 1994, the Company acquired the assets of companies engaged in sales of microcomputers and related equipment to commercial accounts, short-term rentals of computer equipment, and the distribution of communications products. The aggregate consideration for these acquisitions was $3.3 million.
During the year ended January 31, 1992, the Company acquired the assets of companies engaged in sales of point-of-sale equipment and systems, short-term rentals of personal computer equipment and computer maintenance. The aggregate consideration for these acquisitions was $2.3 million. There were no acquisitions during the year ended January 31, 1993.
These acquisitions have been accounted for using the purchase method and, accordingly, the results of operations of these companies have been included in the consolidated results of operations from the dates of acquisition. The operations of the acquired companies prior to acquisition were not material in relation to the consolidated amounts.
NOTE 5 Receivables
NOTE 6 Leasing Activities
Assets leased under operating leases consist of:
Future minimum lease rentals are:
NOTE 7 Income Taxes
The provision (benefit) for income taxes consists of:
A reconciliation between the federal statutory tax rate and the Company's effective tax rate for continuing operations is:
Income taxes for the years ended January 31, 1993 and 1994 were determined under Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", which was adopted effective February 1, 1992. Deferred taxes for prior years were determined under SFAS No. 96. Adoption of SFAS No. 109 did not have a material effect on the Company's financial statements.
Principal components of the deferred income tax assets and liabilities are as follows:
At January 31, 1994, the Company has an investment tax credit carryforward for income tax purposes of $2.9 million that expires in various amounts beginning in 1999 and has a tax loss carryforward for income tax purposes of $84.0 million that expires in various amounts beginning in 2003. For financial reporting purposes, the tax benefit of these carryforwards has been used to reduce deferred income taxes at January 31, 1994.
The Omnibus Budget Revenue Reconciliation Act of 1993, enacted in August 1993, included a one percent increase in the Federal tax rate for corporations, which is effective retroactive to January 1, 1993. Under the provisions of Statement of Financial Accounting Standards No. 109, the effect on taxes currently payable and deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Accordingly, deferred tax liabilities as of February 1, 1993 increased by $541,000 as a result of the new law.
NOTE 8 Accrued and Other Liabilities
Accrued liabilities consist of:
Other liabilities consist of:
NOTE 9 Notes Payable
Notes payable, all of which are unsecured, consist of:
At January 31, 1994, the Company's revolving credit facilities consisted of a $130 million revolving credit facility with a group of banks and $35 million of additional revolving credit facilities maturing during the year ending January 31, 1995. At January 31, 1994, $130 million was outstanding on these facilities. The agreements provided several borrowing options with varying interest rates depending on the mix of borrowing options used. There are no compensating balances required by the agreements. The Company pays fees ranging from 1/8 percent to 1/4 percent annually to maintain the committed facilities. The average interest rate on revolving and line of credit facilities was 4.3 percent as of January 31, 1993 and 1994, and the average interest rate for the years then ended was 4.7 percent and 4.3 percent, respectively.
Subsequent to January 31, 1994, $33 million of the borrowings under the line of credit facilities was refinanced on a nonrecourse basis. Accordingly, the refinanced amounts have been included in nonrecourse lease financing at January 31, 1994.
In August 1992, the Company borrowed $50 million from a group of banks pursuant to a four year unsecured amortizing term loan agreement. The agreement provides for a floating interest rate based on LIBOR plus 1.125 percent. The proceeds were used to repay debt under the Company's revolving and line of credit facilities. At January 31, 1994, $39 million was outstanding.
Installment notes other than the term loan consist of fixed rate, fixed term notes with an average interest rate of 10.0 percent and a balance of $12 million outstanding at January 31, 1994.
Pursuant to agreements with the lenders dated May 2, 1994, the $130 million unsecured revolving bank credit facility and the unsecured amortizing term loan have been combined into one secured reducing revolving credit facility of $116.3 million, expiring on April 30, 1995. The company will reduce the principal outstanding under the prior facilities by $17 million in May, 1994. The total commitment under the new facility reduces periodically to $104 million during the term of the facility. Borrowings under the revolving facility are based on a ratio of defined assets to defined recourse debt of the Company.r
An additional revolving credit facility with an outstanding balance of $8.3 million at May 2, 1994 was also changed to a secured, amortizing term loan maturing at April 30, 1995. Unsecured installment notes of $8.5 million were changed to secured notes with modifications made to the principal repayment schedule to proportionately match the principal amortization of the new secured, reducing revolving credit facility. These notes also mature on April 30, 1995. The remaining $2.6 million of unsecured installment notes have been changed to secured notes and mature on August 31, 1994.
Prior to entering into these new agreements,the Company had obtained waivers from the lenders for any potential loan covenant violations, such as asset sales or financial ratio requirements, that may have resulted from implementation of the Company's strategic plan.
Under the terms of the new loan agreements, the Company is required to maintain certain liquidity, leverage, and net worth ratios. The convenants also prohibit the payment of cash dividends and place restrictions on the amount of borrowing under the facility.
The Company has entered into interest rate swap and cap agreements to convert the variable interest rate of certain borrowings to fixed interest rates. The notional amount of the interest rate swaps outstanding at January 31, 1994 applicable to revolving and line of credit facilities and installment notes was $71 million with an interest rate of 5.4 percent. These agreements, which mature in 1996, are designed to reduce the risk to the Company of rising interest rates. The Company is exposed to credit loss in the event of nonperformance by the other parties to interest rate protection agreements. However, the Company does not anticipate nonperformance by these parties.
The effective rate of interest on notes payable outstanding, including the impact of swap agreements, was 5.8 percent and 5.3 percent as of January 31, 1993 and 1994, respectively.
The Company assesses the creditworthiness of counterparties to interest rate hedging contracts and enters into agreements only with counterparties whose long term debt is rated at least "A" by Standard & Poor's and Moody's. The Company continually monitors the ongoing creditworthiness of these counterparties.
NOTE 10 Nonrecourse Lease Financing
Nonrecourse discounted lease rentals includes fixed rate capital obtained from financial institutions on a nonrecourse basis. The lender has a security interest in the lease rental stream and the underlying asset, but has no recourse to the Company in the case of default by the lessee. At January 31, 1994, interest rates on nonrecourse discounted lease rentals ranged from 5.2 percent to 13.0 percent.
The Company has also established two asset-backed financing programs to fund lease transactions on a nonrecourse basis through the use of commercial paper securitized by lease rental receivables. Both programs are rated A-1 by Standard & Poor's or P-1 by Moody's.
In October 1989, the Company developed a program through which it sells lease receivables to a wholly-owned subsidiary that issues commercial paper backed by an annually renewing five year $60 million letters of credit. At January 31, 1994, $44 million of commercial paper was outstanding at an average rate of 3.4 percent.
A second securitized program was established in October 1990, providing for the financing of up to $75 million of lease receivables to an unaffiliated special purpose corporation which issues nonrecourse commercial paper. This program is backed by a $75 million surety bond. At January 31, 1994, $70 million of commercial paper was outstanding at an average rate of 3.3 percent.
The Company has entered into interest rate swap and cap agreements to convert the variable interest rates of its nonrecourse commercial paper programs to fixed interest rates. The notional amount of interest rate swaps outstanding at January 31, 1994 applicable to these programs was $71 million with an average interest rate of 5.7 percent. Interest rate cap agreements totaled $28 million at January 31, 1994. The agreements have maturities from one to four years.
Contractual payments of principal and interest required on nonrecourse lease financings are:
The average interest rate on all nonrecourse lease financing was 8.1 percent and 7.2 percent for the years ended January 31, 1993 and 1994, respectively.
Effective May 1, 1994, one of the financial institutions which issued a $50 million letter of credit for one of the asset-backed financing programs has not extended its letter of credit for new leases financed under this program. Leases already funded will continue to amortize under the existing terms of the agreement.
NOTE 11 Subordinated Notes
In July 1991, the Company issued $10 million of 9.375 percent convertible subordinated notes, with interest payable semiannually, maturing in August 2000. Prior to May, 1994, the notes were convertible into shares of the Company's common stock. The notes require annual repayments of $2.5 million beginning in August 1997. The notes are callable by the Company at a premium of 109 3/8 beginning August 1994, with the premium declining ratably to par in August 1999.
In conjunction with the transaction, the Company issued 45,496 warrants. Each warrant is exercisable by the holder for five years into one share of the Company's common stock. The exercise price is subject to adjustment for stock dividends, splits and certain other issuances of common stock.
On May 2, 1994, the notes were amended to eliminate the conversion feature, to adjust the exercise price of the outstanding warrants to $6.35 per share, and to issue 1,529,307 additional warrants with the same exercise price, terms, and expiration date as the previously-issued warrants.
In exchange, the holder of the notes agreed to permit the Company to grant security interests to its recourse lenders as described in Note 9. Additionally, the Company and the holder agreed to modify certain other terms and conditions of the notes. NOTE 12 Shareholders' Equity
STOCK OPTION PLAN - The Company has a stock option plan for officers and key employees and has reserved 1,000,000 shares of common stock for distribution under the plan. Options are exercisable beginning not less than one year after the date of grant and expire ten years after the date of grant. Options are granted at market value and become exercisable at the rate of 20 percent per year. Options granted under the plan may qualify as incentive stock options under the Internal Revenue Code or may be non-qualified stock options. Options issued to date have qualified as incentive stock options.
Stock option transactions during the three years ended January 31, 1994 are:
At January 31, 1994, there were 227,294 options available for grant and 280,122 options were exercisable.
The Company also has a restricted stock plan for officers and key employees and has reserved 30,000 shares of common stock for distribution under the plan in amounts and at times as subsequently determined by the Board of Directors. Common stock awarded shall become vested at such time as specified by the Board. On March 21, 1994, the Board of Directors approved an acceleration of vesting with respect to the 10,000 shares granted in 1990, which were originally scheduled to vest at the rate of 5,000 shares each on February 1, 1995 and 1996. The plan shall continue until terminated by the Board. However, no awards may be granted after January 31, 1999 and all awards shall vest no later than January 31, 2004.
In June 1991, the shareholders approved grants of stock options to two non-employee directors totaling 21,000 shares with an option price of $13.81 per share. The options are currently exercisable and expire nine years after the date of grant.
On February 26, 1994, the Board of Directors approved a grant of stock options for 20,000 shares to a non-employee director.
RETIREMENT SAVINGS PLAN - The Company has a Section 401 (k) retirement savings plan for eligible employees and has reserved 275,000 shares of common stock for distribution under the plan.
STOCK AWARD PLAN - The Company has a stock award plan for employees and has reserved 45,000 shares of common stock for distribution. Stock awards to employees are made by the Board of Directors at the Board's discretion.
PREFERRED STOCK - The Board of Directors is authorized to issue 2,000,000 shares of preferred stock, $.01 par value, with terms as may be subsequently determined by the Board of Directors without further action by the shareholders of the Company. At January 31, 1994, none of the shares were outstanding.
NOTE 13 Employee Retirement Benefit Plans
The Company has two defined contribution employee retirement benefit plans: LDI Corporation Pension Plan and Trust and the LDI Corporation Retirement Savings Plan. These plans provide retirement benefits for eligible employees who meet certain service requirements. The Company's annual contributions under the pension plan are determined each year by the Board of Directors. The Company's contributions under the retirement savings plan are based on various percentages of the voluntary pretax contributions of the participants, up to a maximum contribution of 2.75 percent of the participant's annual compensation.
Costs for the plans maintained by the Company for the years ended January 31, 1992, 1993, and 1994 were $1.4 million, $1.4 million, and $1.0 million, respectively.
NOTE 14 Related Party Transactions
The Company has engaged in certain transactions with two partnerships owned or controlled by its principal shareholders. (a) The Company leases office, technical and warehouse facilities from one of the partnerships under leases expiring in 2000. Rental payments of $585, $587 and $343 for the years ended January 31, 1992, 1993, and 1994, respectively, were made to this partnership. The Company's commitment under these leases is approximately $405 per year through the year ending January 31, 2000. (b) The Company paid $316, $325, and $156 for the years ended January 31, 1992, 1993, and 1994, respectively, to one of the partnerships for building maintenance, consulting services, and building management fees. (c) The Company leased data processing equipment, which was being subleased to customers, from one of the partnerships under an operating lease. Rental payments made during the years ended January 31, 1993 and 1992 were $594 for both years. In January 1993, the Company paid $385 to the partnership to buy out the remaining term of the lease. (d) The Company is reimbursed for certain expenses paid on behalf of its 50 percent owned affiliate. At January 31, 1994, accounts receivable includes $72 due from the affiliate.
NOTE 15 Lease Obligations
In addition to the lease obligations described in Note 14, the Company leases office, technical, and warehouse facilities from unrelated third parties. Rent expense for these leases was $915, $941, and $969 for the years ended January 31, 1992, 1993, and 1994, respectively. Annual rentals are subject to increases for escalation in operating costs.
Additionally, the Company leases data processing equipment under agreements classified as capital leases (as a lessee) and subleases this equipment to third parties (as a lessor) under agreements classified as capital or operating leases. Rent payments for these leases were $914, $156, and $45 for the years ended January 31, 1992, 1993, and 1994, respectively.
A summary of the Company's commitments with respect to capital and operating leases is:
NOTE 16 Estimated Fair Value of Financial Instruments
The estimated fair value amounts have been determined by the Company, using current available market information as of each balance sheet date and appropriate valuation methods. Considerable judgment is necessary in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or methods of estimation may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange or the value that ultimately will be realized by the Company upon maturity or disposition.
Generally accepted accounting principles excludes certain items from its disclosure requirements such as the Company's investment in leased assets. Accordingly, the aggregate fair value amounts presented are not intended to represent the underlying value of the net assets of the Company.
The carrying amounts for cash, receivables, accounts payable, accrued liabilities, and revolving and line of credit notes payable approximate fair value because of the short maturity of these instruments or, as to trade notes receivable, bear interest rates that approximate current market rates. The estimated fair values of the Company's other financial instruments are:
The fair values of nonrecourse lease financing, installment notes and subordinated notes are estimated based on market rates of comparable debt for similar remaining maturities at year end. The fair values of interest rate hedging contracts including swaps, and the letter of credit are estimated based on pricing models or formulas using current assumptions.
NOTE 17 Supplemental Disclosures of Cash Flow Information:
LDI CORPORATION AND SUBSIDIARIES SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES For the three years ended January 31, 1994 (Amounts in thousands)
LDI CORPORATION AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS For the three years ended January 31, 1994
(1) The allowance for doubtful accounts is included in the caption "Receivables" in the accompanying consolidated balance sheet.
(2) The allowance for uncollectible future lease rentals is included in the caption "Leased Assets - Sales-Type and Direct Financing Leases" in the accompanying consolidated balance sheet.
(3) The reserve for inventory valuation is included in the caption "Inventory held for lease or sale" in the accompanying consolidated balance sheet.
(4) Reserves and liabilities related to discontinued operations and restructuring programs is included in the "Liabilities" section in the accompanying consolidated balance sheet.
(5) The reserve for residual valuation is included in the caption "Leased Assets - Sales-Type and Direct Financing Leases" in the accompanying consolidated balance sheet. LDI CORPORATION AND SUBSIDIARIES SCHEDULE IX - SHORT TERM BORROWINGS For the three years ended January 31, 1994 (Dollars in thousands)
(1) Notes payable to banks represent borrowings under revolving credit and lines of credit agreements with domestic banks, including $12,000, $13,750 and $32,770 of amounts subsequently refinanced on a nonrecourse basis as of January 31, 1992, 1993, and 1994, respectively.
(2) Nonrecourse commercial paper shown above consists of the Company's program through which it sells lease receivables to a wholly-owned subsidiary that issues commercial paper backed by an annually renewing five year $60 million letter of credit. See Note 10 of the Notes to Consolidated Financial Statements.
(3) The average amount outstanding during the period was computed by dividing the total of month-end outstanding principal balances by the number of months.
(4) The weighted average interest rate during the period was computed by dividing the actual interest expense by the average short-term debt balance outstanding.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The description of the directors of the Registrant is incorporated hereby by reference from the section of the Proxy Statement for the Annual Meeting of Stockholders to be held on a date yet to be determined (the "Proxy Statement"), entitled "Election of Directors," which Proxy Statement will be available in May 1994.
A description of the executive officers of the Registrant follows:
ITEM 405 DISCLOSURE
None.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by referenced from the section of the Proxy Statement entitled "Executive Compensation," which Proxy Statement will be available in May 1994.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the section of the Proxy Statement entitled "Security Ownership of Certain Beneficial Owners and Management, which Proxy Statement will be available in May 1994.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the section of the Proxy Statement entitled "Executive Compensation--Certain Transactions," which Proxy Statement will be available in May 1994.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following consolidated financial statements and related notes of the Registrant and its subsidiaries are included herein:
Report of Independent Public Accountants
Consolidated Balance Sheets, as of January 31, 1993 and 1994
Statements of Consolidated Earnings for the Years Ended January 31, 1992, 1993 and 1994
Statements of Consolidated Cash Flows for the Years Ended January 31, 1992, 1993 and 1994
Statements of Consolidated Shareholders' Equity for the Years Ended January 31, 1992, 1993 and 1994
Notes to Consolidated Financial Statements for the Years Ended January 31, 1992, 1993 and 1994
(a)(2) Financial Statement Schedules:
The following financial statement schedules are included herein:
Schedule II - Amounts Receivable from Related Parties
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings
SIGNATURES
Pursuant to the requirements 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.
LDI CORPORATION
Date: May 2 , 1994 By:/s/ Robert S. Kendall --- ----------------------------------------- Robert s. Kendall, Chairman, Chief Executive Officer and Director
Pursuant to the requirements of the Securities and 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 date indicated.
- ----------
*Page references are to the one sequentially paginated Annual Report on Form 10-K filed with the Securities and Exchange Commission pursuant to SEC Rule 0-3(b) and (c). No other Annual Reports on Form 10-K are paginated.
(1) Included as an exhibit to the Registrant's Registration Statement on Form S-1 (No. 33-14486) and incorporated herein by reference.
(2) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended October 31, 1988, and incorporated herein by reference.
(3) Included as an exhibit to the Registrant's Annual Report on Form 10-K (No. 0-15994) for the year ended January 31, 1989, and incorporated herein by reference.
(4) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended July 31, 1989, and incorporated herein by reference.
(5) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended October 31, 1989, and incorporated herein by reference.
(6) Included as an exhibit to the Registrant's Annual Report on Form 10-K (No. 0-15994) for the year ended January 31, 1990, and incorporated herein by reference.
(7) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended October 31, 1990, and incorporated herein by reference.
(8) Included as an exhibit to the Registrant's Annual Report on Form 10-K (No. 0-15994) for the year ended January 31, 1991, and incorporated herein by reference.
(9) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1991, and incorporated herein by reference.
(10) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31, 1991, and incorporated herein by reference.
(11) Included as an exhibit to the Registrant's Annual Report on Form 10-K (No. 0-15994) for the year ended January 31, 1992, and incorporated herein by reference.
(12) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended April 30, 1992, and incorporated herein by reference.
(13) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended July 31, 1992, and incorporated herein by reference.
(14) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended October 31, 1992, and incorporated herein by reference.
(15) Included as an exhibit to the Registrant's Annual Report on Form 10-K (No. 0-15994) for the year ended January 31, 1993, and incorporated herein by reference.
(16) Included as an exhibit to the Registrant's Annual Report on Form 10-Q (No. 0-15994) for the year ended April 30, 1993, and incorporated herein by reference.
(17) Included as an exhibit to the Registrant's Quarterly Report on Form 10-Q (No. 0-15994) for the quarter ended October 31, 1993, and incorporated herein by reference.