-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MLKOWhO5TT4hs4AqZgfxMR5F73W+jiQ0ORqDr5d/9WytLikJiRq4o/0O5Vcrt+bH 48h19wor0UxoIY9QeZW8HQ== 0000950152-98-002808.txt : 19980401 0000950152-98-002808.hdr.sgml : 19980401 ACCESSION NUMBER: 0000950152-98-002808 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: METATEC CORP CENTRAL INDEX KEY: 0000203200 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 591698890 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-09220 FILM NUMBER: 98580754 BUSINESS ADDRESS: STREET 1: 7001 METATEC BLVD CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147612000 MAIL ADDRESS: STREET 1: 7001 METATEC BLVD CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: SILCO INVESTORS CORP DATE OF NAME CHANGE: 19900801 10-K405 1 METATEC CORPORATION FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended: December 31, 1997 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 Number: 0-9220 METATEC CORPORATION (Exact name of Registrant as specified in its charter) FLORIDA 59-1698890 (State of Incorporation) (I.R.S. Employer Identification No.) 7001 Metatec Boulevard Dublin, Ohio 43017 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (614) 761-2000 Securities registered pursuant to Section 12(b) of the Act: None (Title of Class) Securities registered pursuant to Section 12(g) of the Act: Common Shares, $.10 par value (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the Common Shares held by nonaffiliates of the Registrant as of March 24, 1998, was $24,181,043. On March 24, 1998, the Registrant had 6,033,224 Common Shares outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's proxy statement for its annual meeting of shareholders to be held on April 23, 1998, which proxy statement was filed with the Securities and Exchange Commission on March 20, 1998, are incorporated by reference into Part III, Items 10, 11, 12, and 13 of this Report. 2 METATEC CORPORATION FORM 10-K PART I ITEM 1. BUSINESS - ------- -------- GENERAL Metatec Corporation is a Florida corporation which was incorporated on September 9, 1976. Metatec Corporation and its subsidiaries are hereinafter collectively referred to as the "Company." The Company is a leading information industry services company offering optical disc manufacturing and distribution. Metatec Manufacturing Services provides CD-ROM (compact disc-read only memory) and DVD (digital versatile disc) mastering, replication, and distribution services in addition to providing similar services to radio syndication customers for audio compact discs ("Audio CDs"). CD ROM technology combines audio, video, text, and graphics in one medium with the capability to store, search, and retrieve vast quantities of information. One CD ROM can contain up to 650 megabytes of data. The Company believes that businesses and individuals are increasingly turning to CD-ROM technology as a cost-effective means of organizing, storing, and disseminating large quantities of information quickly to widely diversified groups of users. DVD technology represents a new type of optical disc which can hold up to 4.7 gigabytes of information, or seven times the amount of the current CD-ROM. It is projected that DVD will replace CD-ROM and expand the utilization of optical disc with greater graphic and video applications. This expansion will first require new DVD-ROM drives to be installed in order to have significant market penetration. DVD drives began to be introduced during 1997. During 1997, the Company exited its business segment known as the Access Services Group. This group provided a broad range of software development and media preparation services for customers creating custom CD-ROM products and frequently published periodicals on optical media and offered network services for information publishers desiring integrated worldwide web access to support their CD-ROM publications. The Company exited this business segment because the market for providing custom multimedia products was significantly reduced with the increasingly availability of low-cost software and publishing tools. INDUSTRY OVERVIEW The principal methods for the distribution of business information currently include print, CD-ROM, and on-line services. CD-ROM technology was initially used primarily by institutions, such as libraries, for storing and searching vast quantities of data. Although print remains the dominant vehicle for business information distribution, publishers and other companies are increasingly using CD-ROM as a cost-effective and portable format for distributing and providing access to large amounts of information, including multimedia applications and interactive software, to widely dispersed groups of users. A major factor contributing to the successful establishment of CD-ROM is the degree of standardization achieved in the early stages of market development. Adherence to these standards has created a climate of acceptance among both publishers and device users. Domestic manufacturers of personal computers now offer CD-ROM drives as standard options on virtually all of their desktop models. As a method of distributing business information, on-line services lend themselves to information which requires frequent or continuous updating. CD-ROM is a more cost-effective 3 distribution method for large amounts of information which require less frequent updating and provides audio, video, text, and graphics capabilities in one medium. PRINCIPAL PRODUCTS AND SERVICES The Company serves as a one-stop source of CD-ROM and DVD solutions. The Company focuses on increasing revenues from its CD-ROM and DVD manufacturing services while maintaining its current market position within the mature radio syndication market. The Company's strategy targets customers which require turnkey CD-ROM publication services. Such customers generally have time-sensitive and recurring information distribution requirements and evolving technical and creative needs, demand high quality disc manufacturing, and may require fulfillment and distribution services directed to the ultimate user base. As an established independent manufacturer with the ability to produce efficiently the smaller production runs generally required by CD-ROM orders, the Company believes that it is strategically positioned to satisfy the needs of CD-ROM producers which require responsive turnaround on smaller orders and a high degree of personalized support and design services. The following table sets forth the revenues from each of the foregoing activities and their approximate percentage contribution to revenues during the periods indicated:
YEAR ENDED DECEMBER 31, 1997 1996 1995 Sales Percent Sales Percent Sales Percent ----- ------- ----- ------- ----- ------- Manufacturing Services Group: CD-ROM ............ $42,025,000 86% $36,096,000 78% $26,945,000 69% Radio ............. 5,648,000 12 5,325,000 12 5,578,000 14 Access Services Group(1) ........... 1,261,000 2 4,729,000 10 6,738,000 17 ----------- --- ----------- --- ----------- --- Total Revenues ....... $48,934,000 100% $46,150,000 100% $39,261,000 100% =========== === =========== === =========== ===
- --------------------------- (1) This business segment was exited in 1997. Manufacturing Services Group. The Company manufactures CD-ROMs and provides technical and creative services to design and assist in the marketing of new CD-ROM applications by its customers. The Company began offering DVD-ROM production in late 1997 with the addition of DVD mastering, reproduction, and related production equipment. The Company's services performed through the manufacturing process include conversion of data provided by customers to a digital format, encoding of the data on a master disc, replication from the master disc, data verification, quality control testing, and design and printing of the disc label. The Company provides full-service disc packaging and either ships the finished product back to its customers or distributes the product to the ultimate end user on behalf of its customers. The Company also manufactures Audio CDs for the radio syndication programming services market. Radio syndication customers utilize the Company's quick turn automated production lines, strict quality control, and end user distribution services to provide them a competitive advantage. The Company provides a full range of services to radio syndication customers from digital format conversion to fulfillment. 4 The Company operates from an approximately 205,000 square foot facility in Dublin, Ohio, of which approximately 100,000 square feet are used for manufacturing and distribution activities. The Company operates its production facility seven days a week, 24 hours per day, permitting it to offer one-day turnaround of a master CD and high quality CD replicas for distribution for its CD-ROM, DVD, and radio syndication customers. The Company's manufacturing services include premastering and mastering of the discs, from which duplicate CD-ROMs, DVDs, and Audio CDs can be made, disc label design and printing, packaging, and fulfillment services. During the last five years, the Company increased its mastering capacity and converted its disc manufacturing process from batch processing to monoline, or in-line, manufacturing. The Company believes that its increased mastering capacity is a competitive advantage, allowing the Company to react more responsively to customer timing requirements. The monoline process, which moves each disc through the various operations separately, reduces production time, permits the production of automated inspection equipment to detect flaws at an early stage, and improves quality. Each replicating machine is self-contained, eliminating the need for establishing and maintaining a separate production area clean room. In 1995, the Manufacturing Services Group received ISO 9002 quality system certification. This certification means that the Company's manufacturing facilities meet worldwide standards for quality practices. During 1996, the Company continued a capacity expansion program which doubled the Company's disc production capacities over 1995 levels. Additional capacity expansion activities will continue as market demand requires. During 1997, the Company added DVD mastering and disc production capacity. The Company utilizes certain patents and technology in its manufacturing activities which it licenses from third parties and which the Company believes to be generally available to other manufacturers. Although only one vendor currently produces a key raw material used by the Company in its manufacturing process, the Company generally maintains a six month supply of this material and has obtained the rights to manufacture the material itself or through other third parties. The Company has multiple sources for all other raw materials and supplies used in its manufacturing operations. The Company does not believe that compliance with federal, state, and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had or will have a material effect upon the capital expenditures, earnings, or competitive position of the Company. The Company does not anticipate any material capital expenditures for environmental control facilities for 1998 or 1999. Marketing. The Company markets it products and services through its own sales force of approximately 30 employed associates based in San Francisco, Chicago, Washington, D.C., New York, Denver, Dallas, Boston, Atlanta, and Seattle, in addition to Dublin, Ohio, where its principal offices are located. These associates are responsible for maintaining relationships with existing customers and developing new business relationships. The associates are supported by a customer service staff that is responsible for ensuring that each other is processed in a timely manner and all required support materials are in place. Competition. The Company has a number of competitors in each of its lines of business. Many of the Company's competitors are larger and have greater financial resources than the Company. The Company believes that the principal competitive factors in the CD-ROM marketplace consist of service, quality, and reliability for the timely delivery of products. These factors, in addition to price, also affect the Audio CD marketplace. The Company believes it competes favorably with respect to these factors in the CD-ROM market and the radio syndication segment of the Audio CD market. In its Manufacturing Services Group the Company differentiates itself from its competitors by providing short-run manufacturing flexibility (including quick turnaround times), personalized customer service, and complete CD-ROM and DVD solutions. Many firms demand a manufacturer like the 5 Company which can provide additional services such as label design and printing, packaging, and distribution. EMPLOYEES The Company employed approximately 390 persons as of March 13, 1998. Approximately 275 employees are directly involved in the manufacturing and distribution process, and the remainder are involved in sales, administration, and support. The Company believes that its relation with its employees is good. ITEM 2. PROPERTIES - ------- ---------- The Company owns an approximately 205,000 square foot office and manufacturing facility situated on approximately 20 acres located at 7001 Metatec Boulevard, Dublin, Ohio. The facility houses manufacturing, distribution, a computer and data services center, and office space. The manufacturing and distribution space was occupied in January 1997, and the computer center and office space were occupied mid-1997. The Company's principal executive offices are located in this facility. The Company also leases office space in San Francisco, Chicago, Washington, D.C., New York, Denver, Dallas, Boston, Atlanta, and Seattle. ITEM 3. LEGAL PROCEEDINGS - ------- ----------------- The Company is not a party to any material pending legal proceeding, nor, to the Company's knowledge, is any material legal proceeding threatened against it. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------- --------------------------------------------------- No matters were submitted to a vote of security holders during the fourth quarter of the Company's fiscal year. EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------ The executive officers of the Company and their respective ages and present positions with the Company are as follows:
Officers Age Present Position(s) with the Company -------- --- ------------------------------------ Jeffrey M. Wilkins 53 Chairman of the Board and Chief Executive Officer Gregory T. Tillar 45 President and Chief Operating Officer Julia A. Pollner 35 Vice President-Finance, Secretary and Treasurer Alexander P. Deak 37 Vice President and Chief Information Officer Christopher L. Winslow 36 Vice President, Manufacturing Services
Mr. Wilkins has been Chairman of the Board and Chief Executive Officer of the Company since August 1989. 6 Mr. Tillar has been President of the Company since February 1995, and Chief Operating Officer of the Company since April 1993, and was Vice President, responsible for various operating and sales functions, with the Company since May 1990. Ms. Pollner has been Vice President, Finance, Treasurer and Secretary since May 1997, and has held accounting and finance positions with the Company since 1987. Mr. Deak has been Vice President and Chief Information Officer of the Company since December 1994, and has held information services and product management positions with the Company since 1990. Mr. Winslow has been Vice President, Manufacturing Services, of the Company since 1992. From 1984 to 1992, Mr. Winslow was in sales and product management with CompuServe Incorporated. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER - ------- ------------------------------------------------------------- MATTERS ------- The Company's Common Shares are traded on the Nasdaq National Market system under the symbol META. The following table reflects the range of reported high and low last sales prices for the Common Shares for the periods indicated. High Low ---- --- For the quarter ended 1996 March 31......................... $11.00 $8.50 June 30.......................... 13.25 9.50 September 30..................... 10.75 7.00 December 31...................... 7.88 5.50 For the quarter ended 1997 March 31......................... $7.00 $3.88 June 30.......................... 6.00 2.63 September 30..................... 6.38 5.25 December 31...................... 6.00 4.38 As of March 3, 1998, there were 4,124 holders of record of the Common Shares, and the last sales price per share on that date, as reported by the Nasdaq National Market system, was $4.81. The Company has never paid cash dividends on the Common Shares. The payment of dividends is within the discretion of the Company's board of directors and depends upon the earnings, the capital requirements, and the operating and financial condition of the Company, among other factors. The Company currently expects to retain its earnings to finance the growth and development of its business and does not expect to pay cash dividends in the foreseeable future. See Note 4 of the Notes to Consolidated Financial Statements regarding restrictions on dividends, which Notes are contained in Item 8 of this Form 10-K. 7 ITEM 6. SELECTED FINANCIAL DATA - ------- -----------------------
YEARS ENDED DECEMBER 31, 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- OPERATING RESULTS: Sales ........................ $48,933,634 $46,150,105 $39,261,463 $28,942,748 $21,318,416 Earnings before income taxes.. $ 1,040,534 $ 3,398,728 $ 4,140,980 $ 2,424,653 $ 1,061,984 Net earnings ................. $ 491,534 $ 2,040,728 $ 2,808,980 $ 1,692,653 $ 1,061,984 Earnings per common share: Basic .................... $ .07 $ .29 $ 0.44 $ 0.34 $ .26 Diluted .................. $ .07 $ .29 $ 0.44 $ 0.33 $ .25 Weighted average number of common shares outstanding: Basic .................... 6,791,836 7,064,194 6,333,706 4,983,879 4,083,153 Diluted .................. 7,189,266 7,159,775 6,441,105 5,066,447 4,211,507 FINANCIAL CONDITION: Total assets ................. $52,871,893 $52,517,477 $50,076,076 $32,556,004 $19,347,362 Long-term liabilities ........ $ 5,893,410 $ 1,335,105 $ 845,875 $ 7,959,634 $ 151,316 Shareholders' equity ......... $41,194,053 $45,265,791 $43,301,079 $18,276,129 $16,206,703
8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - ------- ----------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS - ------------------------------------ RESULTS OF OPERATIONS - 1997 COMPARED TO 1996 Net sales in 1997 were at a record level of $48,934,000, an increase of $2,784,000, or 6% over 1996. This increase resulted primarily from the Manufacturing Services Group, which includes CD-ROM and Radio Syndication manufacturing, increasing $6,252,000 to $47,673,000 for 1997, or 15%. The Access Services Group (formerly known as the New Media Solutions Group), decreased $3,468,000 to $1,261,000 for 1997, or 73%. This combined net sales increase of $2,784,000 was primarily as a result of solid CD-ROM replication growth in our Manufacturing Services Group. During 1997 the decision was made to exit the business segment known as the Access Services Group. Gross profit was 31% of net sales for 1997 as compared to 36% of net sales for 1996. This decrease is primarily attributed to an under utilization of manufacturing capacity during 1997. In addition, sales price erosion continued during 1997. Selling, general and administrative expenses ("SG&A") increased to $13,974,000, or 29% of net sales, for 1997 as compared to $13,459,000, or 29% of net sales, for 1996. A restructuring charge of $206,000 occurred during 1997. This charge related to a reorganization and downsizing of the Access Services Group. Investment income was $49,000 for 1997 as compared to $303,000 for 1996. The decrease in investment income was a result of lower cash and cash equivalent balances. Interest expense for 1997 was $74,000 as compared to $19,000 for 1996. During 1997 the Company borrowed against its revolving line of credit as more fully discussed in the Financial Condition section. Income tax expense was $549,000 in 1997, or an effective tax rate of 53%, as compared to $1,358,000 in 1996, or an effective tax rate of 40%. The 1997 effective tax rate increased due to the non deductibility for income tax purposes of the additional goodwill which began being charged to earnings in 1996. This goodwill charge was $410,000 and is related to shares earned by an officer/shareholder which vested in late 1995. Net earnings for 1997 were $492,000, or basic and diluted earnings per common share of $.07, as compared to 1996 net earnings of $2,041,000, or basic and diluted earnings per common share of $.29. This decrease was primarily a result of lower gross profit, costs associated with exiting the Access Services business, and a higher effective tax rate as noted above. RESULTS OF OPERATIONS - 1996 COMPARED TO 1995 Net sales in 1996 were at a record level of $46,150,000, an increase of $6,889,000, or 18% over 1995. This increase resulted primarily from the Manufacturing Services Group, which includes CD-ROM and Radio Syndication manufacturing, increasing $8,898,000 to $41,421,000 for 1996, 9 or 27%. The Access Services Group (formerly known as the New Media Solutions Group), decreased $2,009,000 to $4,729,000 for 1996, or 30%. This combined net sales increase of $6,889,000 was primarily as a result of solid CD-ROM replication growth in our Manufacturing Services Group. Within the Access Services Group, development of the Metatec Access product offering was initiated in midyear 1996. This development activity significantly slowed the selling process resulting in a sales decrease for 1996. In addition the NautilusCD product offering was terminated in early 1996. Gross profit was 36% of net sales for 1996 as compared to 42% of net sales for 1995. This decrease is primarily attributed to an under utilization of manufacturing capacity during 1996. The Company increased capacity in 1996 in anticipation of increased volume which did not occur as rapidly as anticipated. In addition, sales price erosion occurred in 1996 at a rate that was greater than that experienced in prior years. SG&A increased to $13,459,000, or 29% of net sales, for 1996 as compared to $12,121,000, or 31% of net sales, for 1995. This decrease in SG&A expenses as a percent of net sales was anticipated based upon the goal of management to take advantage of the existing SG&A support structure put in place in late 1995. Investment income remained the same for 1996 and 1995 at $303,000. Interest expense for 1996 was $19,000 as compared to $323,000 for 1995. During 1995 the Company paid off all of its long-term bank debt utilizing a part of the proceeds from the 1995 sale of common shares. Income tax expense was $1,358,000 in 1996, or an effective tax rate of 40%, as compared to $1,332,000 in 1995, or an effective tax rate of 32%. The 1996 effective tax rate increased due to the non deductibility for income tax purposes of the additional goodwill which began being charged to earnings in 1996. This goodwill charge was $410,000 and is related to shares earned by an officer/shareholder which vested in late 1995. The 1995 effective tax rate reflects a benefit from state investment tax credits. Net earnings for 1996 were $2,041,000, or basic and diluted earnings per common share of $.29, as compared to 1995 net earnings of $2,809,000, or basic and diluted earnings per common share of $.44. This decrease was primarily a result of lower gross profit, an increase in goodwill expense and a higher effective tax rate as noted above. IMPACT OF INFLATION The Company's operations are not significantly affected by inflationary pressures. Although inflation does affect salaries, employee benefits and other operating expenses, after considering general inflationary trends, total sales of the Company produced growth in real terms in 1997 and 1996. Net sales increased primarily due to increased sales of CD-ROM and related products, rather than increases in inflation. 10 FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES The Company financed its business in 1997 through cash generated from operations, the use of debt, and the use of available cash balances. Historically, the Company also financed business needs through the issuance of common stock. Cash flow from operating activities was $8,200,000, $8,992,000, and $5,119,000 for 1997, 1996 and 1995, respectively. During 1997, the Company installed production mastering equipment that will produce Digital Versatile Disc ("DVD") masters. An 80,000 square foot building was completed during 1997. The addition houses the DVD production area, additional distribution space, a new computer and data services room and additional office space for anticipated future growth. These additions, along with recurring capital needs, resulted in the purchase of $8,933,000 in property, plant and equipment during 1997 as compared to $13,011,000 in 1996 and $12,235,000 in 1995. The Company will continue to expand its operations in 1998 through the addition of DVD production and related equipment. In 1996, the Company put in place a new financing facility which provides for a $15,000,000 revolving loan that will convert in 1998 to a term loan, which will be due in 2003. At December 31, 1997 $4,500,000 was outstanding on the revolving loan. The Company has cash and cash equivalents of $1,381,000 as of December 31, 1997 and additionally, as previously noted, has available $10,500,000 under its revolving loan agreement. Management believes that these funding sources, plus cash to be generated from future operations and funds which may be obtained from future financing activities will provide sufficient capital to meet the current business needs of the Company which include expanding DVD production capabilities. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Except for the historical information contained herein, the matters discussed in this annual report are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, services and related products, prices, and other factors discussed in the Company's filings with the Securities and Exchange Commission. STATEMENT OF MANAGEMENT RESPONSIBILITY The consolidated financial statements of Metatec Corporation are the responsibility of management, and those statements have been prepared in accordance with generally accepted accounting principles. All available information and management's judgment of current conditions and circumstances have been reflected. Management accepts full responsibility for the accuracy, integrity and objectivity of the financial information included in this report. To provide reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition and that accounting records are reliable for preparing financial statements, management maintains systems of accounting and internal controls, including written policies and procedures, which are communicated to all appropriate levels of the Company. Management believes that the 11 Company's accounting and internal control systems provide reasonable assurance that assets are safeguarded and financial information is reliable. Maintenance of sound internal control by division of responsibilities is augmented by internal review programs and an Audit Committee of the Board of Directors comprised solely of directors independent of management. The Audit Committee reviews the scope of the audits performed by the independent public accountants, Deloitte & Touche LLP, together with their audit report and any recommendations made by them. The independent accountants have free access to meet with the Audit Committee and Board of Directors with or without management representatives present. Jeffrey M. Wilkins Chairman of the Board and Chief Executive Officer Julia A. Pollner Vice President, Finance 12 FORWARD LOOKING STATEMENTS; CERTAIN FACTORS AFFECTING FUTURE RESULTS Any forward looking statements contained in this Form 10-K or any other reports or documents prepared by the Company or made by management of the Company involve risks and uncertainties, and are subject to change based on various important factors. The following factors, among others, in some cases have affected and in the future could affect the Company's actual financial performance. Product Concentration. Revenues from the sale of CD-ROM products and services constituted substantially all of the Company's revenues for 1997, and such products and services are expected to continue to account for substantially all of the Company's revenues for the foreseeable future. A decline in the demand for CD-ROM products and services, whether as a result of competition, technological change or otherwise, would have a material adverse effect on the Company's operating results. Included in the Company's CD-ROM products and services are Audio CDs for the radio syndication programming services market. The Company does not anticipate revenue growth in its radio syndication services because of the maturity of the market, the Company's existing market share, and increased price competition. Competition. The Company faces competition in the information distribution industry from a number of sources, such as traditional print publishers, on-line distributors of information, CD-ROM manufacturers, and others. The Company's competitors vary by market segment and include many companies which are larger, more established, and have substantially more resources than the Company. The Company does not benefit from patents or proprietary technology, and competition may increase in the future. Pricing. The CD-ROM and Audio CD industries have been characterized by new manufacturers continually entering the market and by declining prices for CDs. CD-ROM prices declined industry-wide in recent years and are expected to decline in the future. To date, continuing market growth has offset increased manufacturing capacity in the CD-ROM industry. However, the addition of manufacturing capacity to the industry has continued, and there can be no assurance that market growth will continue at the same rate or that prices paid to CD-ROM manufacturers will not continue to decline. In addition, the Company's pricing of its new products and services may not in all cases be competitive with the other providers in the marketplace, and some new products and services may not be profitable. Technological Change. The market for information distribution services incorporating optical disc technology is based upon a sophisticated technology and is subject to rapid technological change. Current or new competitors may introduce new products, features or services that could adversely affect the Company's competitive position. Additionally, there can be no assurance that over time optical disc technology will not be replaced by another form of information storage and retrieval technology, such as on-line information services. To date, the Company has developed product and service enhancements to address customer requirements and to respond to competitive conditions. However, the Company must continue to improve its products and related services and develop and successfully market new products and services in order to remain competitive. There can be no assurance that it will be able to do so. Dependence on Key Personnel. The Company is highly dependent upon the efforts of certain key personnel, particularly Jeffrey M. Wilkins, its Chairman of the Board and Chief Executive Officer. The loss of Mr. Wilkins' services to the Company could have an adverse effect on the Company. Single-Site Manufacturing Facility. All of the Company's manufacturing services are performed at its manufacturing facility in Dublin, Ohio, which operates seven days a week, 24 hours per day. In the event this facility is damaged by fire or other casualty, which damage could not be repaired within a short period of time, the Company's manufacturing services would be substantially interrupted and such casualty would be detrimental to the Company's operations. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - -------- ---------------------------------------------------------- Not applicable at this time. 13 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ------- ------------------------------------------- METATEC CORPORATION - ---------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS At December 31, ---------------------------- 1997 1996 - --------------------------------------------------------------------------------------- ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 1,381,057 $ 2,214,755 Accounts receivable, net of allowance for doubtful accounts of $301,000 and $321,000 7,215,178 6,710,596 Inventory 1,155,519 948,738 Prepaid expenses 362,801 435,451 Prepaid income taxes -- 25,279 Current portion of long-term note receivable 364,087 13,202 Deferred income taxes 327,000 484,000 ----------- ----------- Total current assets 10,805,642 10,832,021 Long-term note receivable, less current portion 186,562 200,648 Property, plant and equipment - net 38,629,006 37,776,085 Goodwill - net 3,250,683 3,708,723 ----------- ----------- TOTAL ASSETS $52,871,893 $52,517,477 =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,058,587 $ 2,942,565 Accrued royalties 1,109,257 1,080,400 Accrued personal property taxes 809,399 659,879 Other accrued expenses 814,569 567,675 Accrued payroll 567,315 398,160 Accrued income taxes 249,747 Unearned income 73,778 205,143 Current maturities of long-term debt and capital lease obligations 101,778 62,759 ----------- ----------- Total current liabilities 5,784,430 5,916,581 Long-term debt and capital lease obligations, less current maturities 4,578,410 55,105 Deferred income taxes 1,315,000 1,280,000 ----------- ----------- Total liabilities 11,677,840 7,251,686 ----------- ----------- Shareholders' equity: Common stock, $.10 par value; authorized 10,083,500 shares; issued 1997 - 7,108,479 shares; 1996 - 7,073,353 shares 710,848 707,336 Additional paid-in capital 34,102,325 33,935,853 Retained earnings 11,382,777 10,891,243 Treasury stock, at cost; 1997 - 912,755 shares; 1996 - 38,655 shares (5,001,897) (268,641) ----------- ----------- Total shareholders' equity 41,194,053 45,265,791 ----------- ----------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $52,871,893 $52,517,477 =========== ===========
See notes to consolidated financial statements. 14 METATEC CORPORATION - -------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, ----------------------------------------------- 1997 1996 1995 - ------------------------------------------------------------- ----------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 491,534 $ 2,040,728 $ 2,808,980 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 7,914,342 6,963,466 4,533,907 Deferred income taxes 192,000 742,000 261,000 Stock awards for employees 31,480 20,775 Gain on sale of marketable securities (25,900) Net loss on sales of property, plant and equipment 54,962 59,738 144,711 Changes in assets and liabilities: Accounts receivable (504,582) (429,136) (2,189,422) Inventory (206,781) (63,631) (282,334) Prepaid expenses and other assets 97,929 145,541 (146,013) Accounts payable and accrued expenses 257,285 (321,814) 532,644 Unearned income (131,365) (165,278) (518,519) ----------- ------------ ------------ Net cash provided by operating activities 8,196,804 8,992,389 5,119,054 ----------- ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in long-term note receivable (336,799) 12,375 11,597 Purchase of property, plant and equipment (8,566,133) (12,523,821) (11,740,876) Proceeds from the sale of property, plant and equipment 83,434 7,545 348,300 Decrease in goodwill Proceeds from the sale of marketable securities 103,600 ----------- ------------ ------------ Net cash used in investing activities (8,819,498) (12,503,901) (11,277,379) ----------- ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of stock, net of offering expenses 17,914,782 Increase in long-term debt and capital lease obligations 4,500,000 Payment of long-term debt and capital lease obligations (116,252) (75,870) (8,426,235) Stock options exercised, including tax benefit 138,504 135,309 401,188 Treasury stock acquired (4,733,256) (232,100) ----------- ------------ ------------ Net cash provided (used) by financing activities (211,004) (172,661) 9,889,735 ----------- ------------ ------------ Increase (decrease) in cash and cash equivalents (833,698) (3,684,173) 3,731,410 Cash and cash equivalents at beginning of year 2,214,755 5,898,928 2,167,518 ----------- ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,381,057 $ 2,214,755 $ 5,898,928 =========== ============ ============ SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 65,197 $ 18,676 $ 322,959 =========== ============ ============ Income taxes paid $ 64,785 $ 1,042,081 $ 730,271 =========== ============ ============ Increase in goodwill related to 600,000 restricted common shares earned $ 3,900,000 ============ Assets purchased for the assumption of a liability $ 367,137 $ 487,651 $ 494,232 =========== ============ ============
See notes to consolidated financial statements. 15 METATEC CORPORATION - -------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Additional Common Paid-in Retained Treasury Unamortized Stock Capital Earnings Stock Restricted Stock Total - ------------------------------------------------ -------- ----------- ----------- ----------- ---------------- ----------- BALANCE AT DECEMBER 31, 1994 $527,222 $15,643,913 $ 6,041,535 $ (36,541) $(3,900,000) $18,276,129 Net earnings 2,808,980 2,808,980 Share issued pursuant to a public offering, net of costs of $283,968 172,500 17,742,282 17,914,782 Restricted shares earned 3,900,000 3,900,000 Stock options exercised 5,752 225,436 231,188 Tax benefit relating to stock options 170,000 170,000 -------- ----------- ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1995 705,474 33,781,631 8,850,515 (36,541) 0 43,301,079 Net earnings 2,040,728 2,040,728 Treasury shares acquired (232,100) (232,100) Stock awards for employees 266 20,509 20,775 Stock options exercised 1,596 111,713 113,309 Tax benefit relating to stock options 22,000 22,000 -------- ----------- ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1996 707,336 33,935,853 10,891,243 (268,641) 0 45,265,791 Net earnings 491,534 491,534 Treasury shares acquired (4,733,256) (4,733,256) Stock awards for employees 641 30,839 31,480 Stock options exercised 2,871 127,633 130,504 Tax benefit relating to stock options 8,000 8,000 -------- ----------- ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1997 $710,848 $34,102,325 $11,382,777 $(5,001,897) $ 0 $41,194,053 ======== =========== =========== =========== =========== ===========
See notes to consolidated financial statements. 16 METATEC CORPORATION - ---------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS Years Ended December 31, --------------------------------------------- 1997 1996 1995 - --------------------------------------------------- ----------- ----------- ----------- NET SALES $48,933,634 $46,150,105 $39,261,463 Cost of sales 33,815,791 29,543,583 22,904,728 ----------- ----------- ----------- Gross profit 15,117,843 16,606,522 16,356,735 Selling, general and administrative expenses 13,974,357 13,459,012 12,120,839 Restructuring expenses 206,000 0 0 ----------- ----------- ----------- OPERATING EARNINGS 937,486 3,147,510 4,235,896 Other income and (expense): Investment income 49,459 302,705 302,642 Other - net 127,329 (32,811) (74,599) Interest expense (73,740) (18,676) (322,959) ----------- ----------- ----------- EARNINGS BEFORE INCOME TAXES 1,040,534 3,398,728 4,140,980 Income taxes 549,000 1,358,000 1,332,000 ----------- ----------- ----------- NET EARNINGS $ 491,534 $ 2,040,728 $ 2,808,980 =========== =========== =========== NET EARNINGS PER COMMON SHARE: Basic $ 0.07 $ 0.29 $ 0.44 =========== =========== =========== Diluted $ 0.07 $ 0.29 $ 0.44 =========== =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic 6,791,836 7,064,194 6,333,706 =========== =========== =========== Diluted 7,189,266 7,159,775 6,441,105 =========== =========== ===========
See notes to consolidated financial statements. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation - The consolidated financial statements include the accounts of Metatec Corporation and its subsidiaries (the "Company"). All significant intercompany accounts and transactions have been eliminated. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Management believes those estimates and assumptions utilized in preparing the financial statements are reasonable. Actual results could differ from these estimates. Nature of Operations - The operations of the Company are in the information industry primarily providing optical disc manufacturing and distribution in addition to software development and related network services, for specific customers primarily in North America, with a majority of the customers under contract. The Company maintains one manufacturing, sales, distribution and development facility with sales offices located in ten different locations around the United States. The revenues from product sales are recognized at the time the products are shipped. Subscription revenues are recognized ratably over the subscription period. For software development services, the Company recognizes profit using the percentage of completion method, measured by the percentage of the cost of services completed to date compared to total planned cost of services. Earned revenue is determined on the basis of the profit recognized plus the contract costs incurred during the period. Major Customer - The Company had one customer that accounted for approximately 11.5% of net sales in 1996; no other customer accounted for greater than 10% of net sales for any of the three years in the period ended December 31, 1997. Cash and Cash Equivalents - Cash and cash equivalents consist of highly liquid instruments such as certificates of deposit, time deposits, treasury notes and other money market instruments which generally have maturities of less than three months. The carrying amounts reported in the balance sheet approximate fair value. The Company holds cash primarily in one financial institution. Inventory - Inventory consists primarily of raw materials and spare parts and are valued at the lower of cost or market with cost determined by the first-in, first-out method. Property, Plant and Equipment - Property, plant and equipment are recorded at cost. The cost of maintenance and repairs is charged against results of operations as incurred. Property, plant and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets which range from three to thirty years. For income tax purposes, accelerated methods are used for all eligible assets. Goodwill - Goodwill represents the excess of cost over net assets acquired and is being amortized using the straight-line method over 15 years. At December 31, 1995 goodwill and shareholders'equity were increased $3,900,000 to reflect the vesting of the restricted shares earned by an officer/shareholder. The additional $3,900,000 in goodwill, beginning in 1996, is being amortized using the straight-line method through 2005. Accumulated amortization was $1,106,226 and $648,186 on December 31, 1997 and 1996, respectively. At each balance sheet date, a determination is made by management to ascertain whether goodwill has been impaired based on several criteria, including, but not limited to, revenue trends, undiscounted operating cash flows and other operating factors. For the years presented there has been no impairment of goodwill. Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which uses the 18 liability method to calculate deferred income taxes. This standard requires, among other things recognition of future tax benefits, measured by enacted tax rates, attributable to deductible temporary differences between the financial statement basis and income tax basis of assets and liabilities and net operating loss carry forwards to the extent realization is more likely than not. Advertising - The Company expenses advertising costs as incurred. Advertising expense was $26,963, $197,440 and $370,157 for 1997, 1996 and 1995, respectively. Net Earnings Per Common Share - Effective December 31, 1997, the Company adopted SFAS No. 128, "Earnings per Share", which requires retroactive adoption for all periods presented. Under SFAS 128, basic net earnings per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted net earnings per common share is computed similarly but including the effect of stock options. 2. RESTRUCTURING CHARGES During 1997 the Company made a decision to exit its business of providing publishing tools and software development services. As a result of this action the company incurred restructuring charges of $206,000 primarily for severance and termination benefits. 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following at December 31: 1997 1996 Land $ 1,779,573 $ 1,779,573 Buildings and improvements 18,085,187 11,256,453 Machinery and equipment 29,802,219 26,325,653 Furniture and fixtures 2,930,663 2,486,517 Computer equipment and related software 5,784,275 6,129,627 Transportation equipment 28,665 35,898 Equipment installation and building in progress 880,291 5,346,382 ------------ ------------ Total 59,290,873 53,360,103 Less accumulated depreciation (20,661,867) (15,584,018) ------------ ------------ Net property, plant and equipment $ 38,629,006 $ 37,776,085 ============ ============ 4. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS Long-term debt and capital lease obligations consists of the following at December 31: 1997 1996 Revolving line of credit $ 4,500,000 Capital lease obligations 180,188 $ 117,864 Less current maturities (101,778) (62,759) ----------- --------- Long-term debt and capital lease obligations $ 4,578,410 $ 55,105 =========== ========= 19 The Company has an agreement with a bank that provides for advances of $15,000,000 on an unsecured revolving loan. The revolving loan bears interest at 1.5% in excess of the London Interbank Offered Rate ("LIBOR") (at December 31, 1997 the 90 day LIBOR was at 5.8125 %) and is due December 31, 1998. $4,500,000 was outstanding on the revolving loan at December 31, 1997. On December 31, 1998 the Company has the option of paying off the revolving loan outstanding balance, if any, or rolling the balance into a term loan due December 31, 2003 with interest at 1.5 % in excess of LIBOR and monthly principal payments of $250,000, plus accrued interest. The loan agreement contains restrictive covenants which, among others, require the Company to maintain a certain level of tangible net worth, maintain certain financial ratios and limit capital expenditures. At December 31, 1997 approximately $1,900,000 of retained earnings was available for distribution. The estimated fair value of the Company's long-term obligations approximated their carrying amount at December 31, 1997, based on current market prices for the same or similar issues. 5. LEASES The Company leases office equipment under non-cancelable capital lease agreements expiring at various dates through 2001. Maintenance, insurance, and tax expenses are the responsibility of the Company under the agreements. Operating lease expense was $370,597, $342,635 and $293,897 for 1997, 1996 and 1995, respectively. The future annual minimum lease payments under all capital leases, together with the present value of the minimum lease payments, and the future minimum rental payments required under all operating leases that have initial or remaining lease terms in excess of one year are as follows: Year ending December 31: CAPITAL LEASES OPERATING LEASES 1998 106,748 301,096 1999 74,465 66,851 2000 5,115 67,743 2001 45,592 -------- -------- Total minimum lease payments 186,328 $481,282 ======== Less amount representing interest (6,140) -------- Present value of net minimum payments $180,188 ======== The Company is also the lessor of certain of its main office facilities to an unrelated third party, under an operating lease which expires December 31, 1998. Minimum future rentals under this lease to be received are approximately $438,000. 6. COMMITMENTS AND CONTINGENCIES Self-Insurance - The Company is self insured with respect to medical and dental claims. The Company has obtained stop-loss insurance for claims in excess of $50,000 per individual per year and $1,000,000 lifetime maximum per individual. The Company has recorded an estimated liability for self-insured claims incurred but not reported at December 31, 1997 and 1996 of $202,000 and $214,000, respectively. The Company is also self insured with respect to short term disability claims. 20 Property, plant and equipment - The Company has commitments under contracts for the purchase of property, plant and equipment. Portions of such contracts at December 31, 1997 are not reflected in the consolidated financial statements. These unrecorded commitments amounted to approximately $2,428,000. 7. INCOME TAXES The components of income tax expense (benefit) were as follows: 1997 1996 1995 Federal: Current $279,000 $ 511,000 $ 793,000 Deferred 101,000 554,000 549,000 -------- ---------- ---------- Total Federal 380,000 1,065,000 1,342,000 -------- ---------- ---------- State and Local: Current 78,000 105,000 278,000 Deferred 91,000 188,000 (288,000) -------- ---------- ---------- Total State and Local 169,000 293,000 (10,000) -------- ---------- ---------- Total $549,000 $1,358,000 $1,332,000 ======== ========== ========== In 1995 the state and local income tax expense was reduced by a state investment tax credit which resulted in a net benefit for the year of $500,000 of which $288,000 will reduce future years state tax payable. Significant differences between income taxes recorded for financial reporting purposes and income taxes calculated using the Federal statutory rate of 34% are as follows:
1997 1996 1995 Tax expense at statutory rate $354,000 $1,155,000 $1,408,000 State and local tax expense (benefit), net of federal benefit 111,000 194,000 (7,000) Non deductible goodwill 156,000 156,000 18,000 Other (72,000) (147,000) (87,000) -------- ---------- ---------- Total $549,000 $1,358,000 $1,332,000 ======== ========== ==========
Deferred income taxes recorded in the consolidated balance sheets at December 31, 1997 and 1996 consist of the following: 1997 1996 Deferred tax assets: State tax credit (expires 1998) $ 222,000 $ 288,000 AMT carryforwards (no expiration date) 36,000 193,000 Allowance for doubtful accounts 134,000 132,000 Net operating loss carryforwards 112,000 118,000 Inventory 90,000 Other 131,000 88,000 ---------- ---------- Total deferred tax assets 725,000 819,000 ---------- ---------- 21 Deferred tax liabilities: Depreciation 1,684,000 1,546,000 Other 29,000 69,000 ---------- ---------- Total deferred tax liabilities 1,713,000 1,615,000 ---------- ---------- Net deferred tax (liability) $ (988,000) $ (796,000) ========== ========== The Company has available net operating loss carry forwards for tax purposes of approximately $252,000 which expire in 2005 which may only be used to offset future taxable income of Metatec/Discovery Systems, Inc. (a wholly-owned subsidiary of the Company). Based on management's projection of income the Company will more likely than not realize such benefits of such state tax credits. 8. EMPLOYMENT AGREEMENT AND BENEFIT PLAN The Company has an employment agreement with an executive officer/shareholder of the Company. The agreement continues until terminated by the executive or the Company and provides for a lump sum payment of one year's compensation upon the occurrence of certain events. The executive is entitled to an annual cash bonus in addition to base salary. The same executive officer/shareholder was issued 600,000 common shares under a Restricted Share Agreement (the "Agreement") dated March 23, 1993. These shares were earned in accordance with the agreement as of December 31, 1995. The shares issued under this agreement were treated as an adjustment to goodwill at December 31, 1995 in the amount of $3,900,000. The goodwill is being amortized beginning in 1996, using the straight-line method, over a ten year period ending in 2005. Substantially all associates are enrolled in a Company-sponsored defined contribution plan established under Section 401(k) of the Internal Revenue Code. The plan was established in 1993 and the Company contribution was approximately $170,300, $170,700 and $68,900 for 1997, 1996 and 1995, respectively. The Company contribution is 40% of the associate's contribution up to maximum of 2% of the associate's annual compensation. The funds are invested in mutual funds. The company initiated a discretionary common stock award program for employees during 1996. The value of the 1997 and 1996 stock awards was $31,480 and $20,775, respectively. 9. STOCK OPTION PLANS In 1992, the Company established a Directors' Stock Option Plan under which a maximum of 210,000 Common Shares may be issued. This Plan, as amended, automatically grants 2,500 options to each non-employee director on the day after the Company's annual meeting of shareholders. These options are fully vested on the grant date. In addition, for each non-employee director, when they first become a director, the Plan automatically grants 10,000 one time options. This one time option vests in equal installments over a four year period. As of December 31, 1997, there have been 152,425 options granted of which 7,500 were forfeited, 22,345 were exercised and 97,580 are exercisable. The option price of shares subject to an option for the Directors' Stock Option Plans is the fair market value of the shares at the time the option is granted. No options issued are exercisable after five years from the date of grant. The Company established the 1990 Stock Option Plan under which a maximum of 1,010,000 Common Shares may be issued. This Plan, as amended, is available to officers and key 22 employees of the Company or its subsidiary corporations and, in the case of non-qualified options, directors of subsidiaries of the Company (other than directors of such subsidiaries who are also directors of the Company). As of December 31, 1997, there have been 1,587,850 options granted of which 584,700 were forfeited, 222,575 were exercised and 88,875 are exercisable. In February 1997, the Compensation Committee, which administers the plan, approved a stock option exchange program for employees holding options previously granted under the 1990 Stock Option Plan. Under this program, employees were given the opportunity to exchange their options having exercise prices above the then-current fair market value for the Company's common shares (which was $4.38 at that time) for new options having an exercise price equal to such current fair market value. However, all new options would be subject to a four-year vesting schedule in which an equal number of options would vest each year. The stock option exchange was contingent upon the grantee of the new option terminating, effective as of the grant date, existing options for the same number of common shares. Under this stock option exchange program, a total of 350,000 new options were granted at an exercise price of $4.38 (subject to the above-described vesting schedule), and the same number of existing options were terminated. The Company's Compensation Committee has the authority to grant incentive options and non-qualified options. Only officers and other key employees of the Company or its subsidiary corporations are eligible for grants of incentive options. At December 31, 1997, no incentive options had been granted. Both incentive and non-qualified options vest over a period of from one to four years from the date of grant, and are not exercisable after 10 years from the date of grant. The option price of an incentive option is equal to the fair market value of the shares at the time the incentive option is granted. The following summarizes all stock option transactions from January 1, 1995 through December 31, 1997:
Per Share Weighted Average Shares Option Price Exercise Price Outstanding at December 31, 1994 425,592 $1.50 to $11.50 $7.56 Granted 51,825 $9.37 to $11.25 $10.43 Exercised (57,515) $1.50 to $11.50 $4.02 Terminated (14,425) $11.50 $11.50 -------- Outstanding at December 31, 1995 405,477 $1.50 to $11.50 $8.29 Granted 268,100 $6.63 to $12.88 $9.96 Exercised (15,961) $1.50 to $11.50 $7.10 Terminated (11,750) $9.37 to $11.50 $10.58 -------- Outstanding at December 31, 1996 645,866 $1.50 to $12.88 $8.97 Granted 806,000 $4.13 to $6.00 $5.19 Exercised (28,711) $1.75 to $5.50 $4.55 Terminated (520,000) $4.38 to $11.50 $9.03 -------- Outstanding at December 31, 1997 903,155 $1.50 to $12.88 $5.70 ======== 1997 1996 1995 Weighted Average Exercise Price $ 5.70 $ 8.97 $ 8.29 ======== ======== ======== Common Shares Exercisable 186,455 546,216 338,652 ======== ======== ========
23 The weighted average fair value of options granted during 1997, 1996 and 1995 were $4.03, $5.42 and $5.83, respectively. At December 31, 1997, 186,455 common shares under option were exercisable and 65,075 and 6,850 common shares (total of 71,925) were reserved for future grant under the 1992 Directors' Stock Option Plan and the 1990 Stock Option Plan, respectively. The Company applies APB Opinion No. 25 and related Interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock option plans. Had compensation costs for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of FASB Statement No. 123, the Company's net earnings and net earnings per common share, net of related income tax benefits, would have resulted in the amounts as reported below. In determining the estimated fair value of each option granted on the date of grant, the Company uses the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in the years ended December 31, 1997, 1996 and 1995, respectively: dividend yield of 0%; expected volatility of 56%, 49% and 50%; risk-free interest rates of 6.4%, 6.4% and 5.3%; and expected life of 6 years. 1997 1996 1995 Net earnings - As reported $ 491,534 $2,040,728 $2,808,980 Pro forma $(661,075) $1,186,304 $2,607,636 Earnings per share - As reported Basic $ 0.07 $ 0.29 $ 0.44 Diluted $ 0.07 $ 0.29 $ 0.44 Pro forma Basic $ (0.10) $ 0.17 $ 0.41 Diluted $ (0.09) $ 0.17 $ 0.40 The pro forma amounts are not representative of the effects on reported net earnings or earnings per common share for future years. The following table summarizes information about options outstanding at December 31, 1997:
Options Outstanding Options Exercisable Weighted-Average Range of Remaining Weighted-Average Weighted-Average Exercise Prices Number Contractual Life Exercise Price Number Exercise Price $1.50 - $1.75 67,500 2.2 $ 1.57 67,500 $ 1.57 $3.50 - $4.38 321,700 8.9 $ 4.34 17,500 $ 4.04 $5.88 - $6.00 412,500 9.2 $ 6.00 15,000 $ 6.00 $7.75 - $11.00 25,355 2.2 $10.65 22,855 $10.61 $11.25 - $12.88 76,100 1.7 $11.52 63,600 $11.57 ------- ------- 903,155 $ 5.70 186,455 ======= =======
24 10. RELATED PARTY TRANSACTIONS In 1996, the Company purchased, for cash, real estate from a partnership in which an officer/shareholder of the Company is a partner. The tract of land acquired included approximately five acres and the purchase price totaled approximately $485,000. The land which is adjacent to the existing manufacturing facility, will be used for future expansion. 11. SUBSEQUENT EVENTS During January 1998 the Company repurchased 162,500 common shares for approximately $791,000 under a repurchase plan authorized by the board of directors. 12. CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter Ended March 31 June 30 September 30 December 31 1997 Net Sales $11,678,574 $12,007,932 $11,890,865 $13,356,263 Gross Profit 3,625,987 3,991,610 3,402,072 4,098,174 Net Earnings (204,011) 367,528 51,735 276,282 Net Earnings per common share: Basic $ (0.03) $ 0.05 $ 0.01 $ 0.04 Diluted $ (0.03) $ 0.05 $ 0.01 $ 0.04 1996 Net Sales $12,204,455 $10,975,017 $10,804,766 $12,165,867 Gross Profit 5,177,959 4,007,079 3,491,640 3,929,844 Net Earnings 1,043,731 549,467 131,480 316,050 Net Earnings per common share: Basic $ 0.15 $ 0.08 $ 0.02 $ 0.04 Diluted $ 0.15 $ 0.08 $ 0.02 $ 0.04
13. RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standard Board issued Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about Segments of an Enterprise and Related Information," which will require adoption in 1998. SFAS 131 requires companies to define and report financial and descriptive information about its operating segments. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. The company is presently evaluating the applicability of SFAS 131 to its operations. 25 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Metatec Corporation: We have audited the accompanying consolidated balance sheets of Metatec Corporation and its subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1997. 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, such consolidated financial statements present fairly, in all material respects, the financial position of Metatec Corporation and its subsidiaries at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. /s/ DELOITTE & TOUCHE LLP February 11, 1998 Columbus, Ohio ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - ------- ----------------------------------------------------------- AND FINANCIAL DISCLOSURE. ------------------------- None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT - -------- ---------------------------------------------- Information required under this Item with respect to directors is contained in the Company's proxy statement which was filed with the Securities and Exchange Commission on March 20, 1998, and is hereby incorporated herein by reference. Information regarding the executive officers of the Company may be found under the caption "Executive Officers of the Company" in Part I and is also incorporated by reference into this Item 10. ITEM 11. EXECUTIVE COMPENSATION - -------- ---------------------- Information required under this Item is contained in the Company's proxy statement which was filed with the Securities and Exchange Commission on March 20, 1998, and is hereby incorporated herein by reference. 26 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - -------- -------------------------------------------------------------- Information required under this Item is contained in the Company's proxy statement which was filed with the Securities and Exchange Commission on March 20, 1998, and is hereby incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------- ---------------------------------------------- Information required under this Item is contained in the Company's proxy statement which was filed with the Securities and Exchange Commission on March 20, 1998, and is hereby incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM - -------- ------------------------------------------------------------ 8-K --- (a)(1) Financial Statements -------------------- The following financial statements of the Company are included in Item 8: Consolidated Balance Sheets as of December 31, 1997 and 1996 Consolidated Statements of Earnings for the Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Independent Auditors' Report (a)(2) Financial Statement Schedules ----------------------------- The following independent auditors' report and financial statement schedule for the years ended December 31, 1997, 1996 and 1995 are included in this report following the signatures and should be read in conjunction with the Consolidated Financial Statements included in Item 8: Independent Auditors' Report on Financial Statement Schedule Schedule II - Consolidated Valuation and Qualifying Accounts All other financial statement schedules have been omitted because they are not applicable or the required information is included in the Company's consolidated financial statements or notes thereto. 27 (a)(3) Listing of Exhibits -------------------
If Incorporated by Reference, Exhibit Document with which Exhibit was No. Description of Exhibit Previously Filed with SEC - ------- ---------------------- ------------------------- 3(a) Amended and Restated Amendment No. 2 to Registration Articles of Incorporation Statement on Form S-1, File No. 33- of Metatec Corporation 60878 (see Exhibit 3(a) therein). 3(b) Amended and Restated By-laws Registration Statement on Form S-1, of Metatec Corporation File No. 33-60878 (see Exhibit 3(d) therein). 4 Form of Share Certificate Amendment No. 2 to Registration Statement on Form S-1, File No. 33-60878 (see Exhibit 4 therein). 10(a)* Metatec Corporation 1990 Registration Statement on Form S-8, Directors' Stock Option Plan File No. 33-48021 (see Exhibit 4(d) and Amendment No. 1 thereto therein). 10(b)* Amended and Restated Employment Annual Report on Form 10-K for the Agreement dated March 23, 1993, fiscal year ended December 31, 1992 between Metatec Corporation and (See Exhibit 10(h) therein). Jeffrey M. Wilkins 10(c)* First Amendment to Amended Annual Report on Form 10-K for the and Restated Employment fiscal year ended December 31, 1995 Agreement dated March 21, (See Exhibit 10(c) therein). 1996, between Metatec Corporation and Jeffrey M. Wilkins 10(d)* Metatec Corporation 1990 Annual Report on Form 10-K for the Stock Option Plan fiscal year ended December 31, 1991 (see Exhibit 10(k) therein). 10(e)* Amendment No. 1 to Metatec Registration Statement on Form S-8, Corporation 1990 Stock Option File No. 33-48022 (see Exhibit 4(d) Plan therein). 10(f)* Amendment No. 2 to Metatec Annual Report on Form 10-K for the Corporation 1990 Stock Option fiscal year ended December 31, 1992 Plan (see Exhibit 10(k) therein). 10(g)* Amendment No. 3 to Metatec Annual Report on Form 10-K for the Corporation 1990 Stock Option fiscal year ended December 31, 1993 Plan (see Exhibit 10(g) therein). 10(h)* Amendment No. 4 to Metatec Annual Report on Form 10-K for the Corporation 1990 Stock Option fiscal year ended December 31, 1995 Plan (See Exhibit 10(h) therein). 10(i)* Amendment No. 5 to Metatec Contain herein. Corporation 1990 Stock Option Plan
28
If Incorporated by Reference, Exhibit Document with which Exhibit was No. Description of Exhibit Previously Filed with SEC - ------- ---------------------- ------------------------- 10(j)* Metatec Corporation 1992 Registration Statement on Form S-8, Directors' Stock Option Plan File No. 33-5200 (see Exhibit 4(c) therein). 10(k)* Amendment No. 1 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1993 Stock Option Plan (see Exhibit 10(i) therein). 10(l)* Amendment No. 2 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1995 Stock Option Plan (see Exhibit 10(k) therein). 10(m)* Amendment No. 3 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1995 Stock Option Plan (see Exhibit 10(i) therein). 10(n)* Amendment No. 4 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1996 Stock Option Plan (see Exhibit 10(m) therein). 10(o)* Metatec Corporation 1992 Annual Report on Form 10-K for the Incentive Compensation Plan fiscal year ended December 31, 1992 (see Exhibit 10(p) therein). 10(p)* Metatec Corporation Directors Contained herein. Deferred Compensation Plan 10(q) Form of Indemnification Agreement Annual Report on Form 10-K for the between Metatec Corporation and fiscal year ended December 31, 1992 each of its officers and directors (see Exhibit 10(q) therein). 10(r) Patent License Agreement for Amendment No. 1 to Registration Disc Products dated July 1, Statement on Form S-1, File No. 33- 1986, between Metatec/ 60878 (see Exhibit 10(t) therein). Discovery Systems, Inc. and Discovision Associates 10(s) CD Disc License Agreement Amendment No. 1 to Registration dated January 1, 1986, Statement on Form S-1, File No. 33- between U.S. Philips 60878 (see Exhibit 10(u) therein). Corporation and Metatec/ Discovery Systems, Inc. 10(t) Optical Disc Corporation NPR Amendment No. 1 to Registration Technology License Agreement Statement on Form S-1, File No. 33- between Optical Disc Corp- 60878 (see Exhibit 10(v) therein). oration and Metatec/Discovery Systems effective March 2, 1992
29
If Incorporated by Reference, Exhibit Document with which Exhibit was No. Description of Exhibit Previously Filed with SEC - ------- ---------------------- ------------------------- 10(u) Loan Agreement dated Quarterly Report on Form 10-Q for the December 31, 1996, between fiscal quarter ended June 30, 1997 Metatec Corporation and The (see Exhibit 10(a) therein). Huntington National Bank 21 Subsidiaries of Metatec Annual Report on Form 10-K for the Corporation fiscal year ended December 31, 1993 (see Exhibit 21 therein). 23 Consent of Deloitte & Touche Contained herein. LLP 24(a) Powers of Attorney for Peter J. Annual Report on Form 10-K for the Kight, E. David Crockett, and fiscal year ended December 31, 1994 A. Grant Bowen (see Exhibit 24 therein). 24(b) Powers of Attorney for Jerry D. Annual Report on Form 10-K for the Miller fiscal year ended December 31, 1993 (see Exhibit 24 therein). 24(c) Power of Attorney for James Annual Report on Form 10-K for the V. Pickett fiscal year ended December 31, 1995 (see Exhibit 24(c) therein). 24(d) Power of Attorney for Joseph Contained herein. F. Keeler, Jr. 27 Financial Data Schedule Contained herein.
*Executive compensation plans and arrangements required to be filed pursuant to Item 601(b)(10) of Regulation S-K. (b) Reports on Form 8-K ------------------- The Company did not file any Form 8-K current reports during the fourth quarter of the Company's year ended December 31, 1997. (c) Exhibits -------- The exhibits in response to this portion of Item 14 are submitted following the signatures. (d) Financial Statement Schedules ----------------------------- The financial statement schedule and the independent auditors' report thereon are submitted following the signatures. 30 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. METATEC CORPORATION Date: March 30, 1998 By /s/Jeffrey M. Wilkins --------------------- Jeffrey M. Wilkins, Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/Jeffrey M. Wilkins Chairman of the Board, March 30, 1998 - ---------------------------- Chief Executive Officer Jeffrey M. Wilkins (principal executive officer) and Director /s/Gregory T. Tillar President, Chief Operating March 30, 1998 - ---------------------------- Officer and Director Gregory T. Tillar /s/Julia A. Pollner Executive Vice President, Secretary, March 30, 1998 - ---------------------------- Treasurer, Chief Financial Julia A. Pollner Officer (principal financial officer and principal accounting officer) and Director Director March 30, 1998 - ---------------------------- E. David Crockett Peter J. Kight* Director March 30, 1998 - ---------------------------- Peter J. Kight Jerry D. Miller* Director March 30, 1998 - ---------------------------- Jerry D. Miller A. Grant Bowen* Director March 30, 1998 - ---------------------------- A. Grant Bowen James V. Pickett* Director March 30, 1998 - ---------------------------- James V. Pickett Joseph F. Keeler, Jr.* Director - ---------------------------- Joseph F. Keeler, Jr.
*Jeffrey M. Wilkins, by signing his name hereto, does sign this document on behalf of the person indicated above pursuant to a Power of Attorney duly executed by such person. By /s/ Jeffrey M. Wilkins March 30, 1998 ------------------------------------ Jeffrey M. Wilkins, Attorney In Fact 31 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Metatec Corporation: We have audited the consolidated financial statements of Metatec Corporation and subsidiaries as of December 31, 1997 and 1996, and for each of the three years in the period ended December 31, 1997, and have issued our report thereon dated February 11, 1998; such report is included elsewhere in this Form 10-K. Our audits also included the consolidated financial statement schedule of Metatec Corporation and subsidiaries, listed in Item 14. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP March 30, 1998 Columbus, Ohio 32 METATEC CORPORATION AND SUBSIDIARIES SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E ------------------------- CHARGED BALANCE AT TO COSTS CHARGED TO BALANCE AT BEGINNING OF AND OTHER END OF DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD 1997 ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE $321,000 $ 7,000 $ 27,000 $301,000 ======== ======== ======== ======== 1996 ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE $338,000 $124,382 $141,382 $321,000 ======== ======== ======== ======== 1995 ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE $269,000 $ 86,694 $ 17,694 $338,000 ======== ======== ======== ========
33 EXHIBIT INDEX -------------
If Incorporated by Reference, Exhibit Document with which Exhibit was No. Description of Exhibit Previously Filed with SEC - ------- ---------------------- ------------------------- 3(a) Amended and Restated Amendment No. 2 to Registration Articles of Incorporation Statement on Form S-1, File No. 33- of Metatec Corporation 60878 (see Exhibit 3(a) therein). 3(b) Amended and Restated By-laws Registration Statement on Form S-1, of Metatec Corporation File No. 33-60878 (see Exhibit 3(d) therein). 4 Form of Share Certificate Amendment No. 2 to Registration Statement on Form S-1, File No. 33-60878 (see Exhibit 4 therein). 10(a)* Metatec Corporation 1990 Registration Statement on Form S-8, Directors' Stock Option Plan File No. 33-48021 (see Exhibit 4(d) and Amendment No. 1 thereto therein). 10(b)* Amended and Restated Employment Annual Report on Form 10-K for the Agreement dated March 23, 1993, fiscal year ended December 31, 1992 between Metatec Corporation and (See Exhibit 10(h) therein). Jeffrey M. Wilkins 10(c)* First Amendment to Amended Annual Report on Form 10-K for the and Restated Employment fiscal year ended December 31, 1995 Agreement dated March 21, (See Exhibit 10(c) therein). 1996, between Metatec Corporation and Jeffrey M. Wilkins 10(d)* Metatec Corporation 1990 Annual Report on Form 10-K for the Stock Option Plan fiscal year ended December 31, 1991 (see Exhibit 10(k) therein). 10(e)* Amendment No. 1 to Metatec Registration Statement on Form S-8, Corporation 1990 Stock Option File No. 33-48022 (see Exhibit 4(d) Plan therein). 10(f)* Amendment No. 2 to Metatec Annual Report on Form 10-K for the Corporation 1990 Stock Option fiscal year ended December 31, 1992 Plan (see Exhibit 10(k) therein). 10(g)* Amendment No. 3 to Metatec Annual Report on Form 10-K for the Corporation 1990 Stock Option fiscal year ended December 31, 1993 Plan (see Exhibit 10(g) therein). 10(h)* Amendment No. 4 to Metatec Annual Report on Form 10-K for the Corporation 1990 Stock Option fiscal year ended December 31, 1995 Plan (See Exhibit 10(h) therein).
34
If Incorporated by Reference, Exhibit Document with which Exhibit was No. Description of Exhibit Previously Filed with SEC - ------- ---------------------- ------------------------- 10(i)* Amendment No. 5 to Metatec Contain herein. Corporation 1990 Stock Option Plan 10(j)* Metatec Corporation 1992 Registration Statement on Form S-8, Directors' Stock Option Plan File No. 33-5200 (see Exhibit 4(c) therein). 10(k)* Amendment No. 1 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1993 Stock Option Plan (see Exhibit 10(i) therein). 10(l)* Amendment No. 2 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1995 Stock Option Plan (see Exhibit 10(k) therein). 10(m)* Amendment No. 3 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1995 Stock Option Plan (see Exhibit 10(i) therein). 10(n)* Amendment No. 4 to Metatec Annual Report on Form 10-K for the Corporation 1992 Directors' fiscal year ended December 31, 1996 Stock Option Plan (see Exhibit 10(m) therein). 10(o)* Metatec Corporation 1992 Annual Report on Form 10-K for the Incentive Compensation Plan fiscal year ended December 31, 1992 (see Exhibit 10(p) therein). 10(p)* Metatec Corporation Directors Contained herein. Deferred Compensation Plan 10(q) Form of Indemnification Agreement Annual Report on Form 10-K for the between Metatec Corporation and fiscal year ended December 31, 1992 each of its officers and directors (see Exhibit 10(q) therein). 10(r) Patent License Agreement for Amendment No. 1 to Registration Disc Products dated July 1, Statement on Form S-1, File No. 33- 1986, between Metatec/ 60878 (see Exhibit 10(t) therein). Discovery Systems, Inc. and Discovision Associates 10(s) CD Disc License Agreement Amendment No. 1 to Registration dated January 1, 1986, Statement on Form S-1, File No. 33- between U.S. Philips 60878 (see Exhibit 10(u) therein). Corporation and Metatec/ Discovery Systems, Inc.
35
If Incorporated by Reference, Exhibit Document with which Exhibit was No. Description of Exhibit Previously Filed with SEC - ------- ---------------------- ------------------------- 10(t) Optical Disc Corporation NPR Amendment No. 1 to Registration Technology License Agreement Statement on Form S-1, File No. 33- between Optical Disc Corp- 60878 (see Exhibit 10(v) therein). oration and Metatec/Discovery Systems effective March 2, 1992 10(u) Loan Agreement dated Quarterly Report on Form 10-Q for the December 31, 1996, between fiscal quarter ended June 30, 1997 Metatec Corporation and The (see Exhibit 10(a) therein). Huntington National Bank 21 Subsidiaries of Metatec Annual Report on Form 10-K for the Corporation fiscal year ended December 31, 1993 (see Exhibit 21 therein). 23 Consent of Deloitte & Touche Contained herein. LLP 24(a) Powers of Attorney for Peter J. Annual Report on Form 10-K for the Kight, E. David Crockett, and fiscal year ended December 31, 1994 A. Grant Bowen (see Exhibit 24 therein). 24(b) Powers of Attorney for Jerry D. Annual Report on Form 10-K for the Miller fiscal year ended December 31, 1993 (see Exhibit 24 therein). 24(c) Power of Attorney for James Annual Report on Form 10-K for the V. Pickett fiscal year ended December 31, 1995 (see Exhibit 24(c) therein). 24(d) Power of Attorney for Joseph Contained herein. F. Keeler, Jr. 27 Financial Data Schedule Contained herein.
EX-10.I 2 EXHIBIT 10.I 1 EXHIBIT 10(i) AMENDMENT NO. 5 TO METATEC CORPORATION 1990 STOCK OPTION PLAN The Metatec Corporation 1990 Stock Option Plan, as previously amended by Amendment No. 1 dated May 1, 1992, Amendment No. 2 dated February 22, 1993, Amendment No. 3 dated March 21, 1994, and Amendment No. 4 dated October 26, 1995 (collectively, the "Plan"), is hereby amended pursuant to the following provisions: Section 1. Definitions. All capitalized terms used in this amendment which are not otherwise defined herein shall have the respective meanings given such terms in the Plan. Section 2. Nonqualified Options - Termination of Relationship. Section 5(c)(v) of the Plan is hereby amended to read in its entirety as follows: Except as provided in Section 9, below, if the Grantee ceases to be an officer or employee of the Company or any of its subsidiary corporations or a director of a subsidiary corporation of the Company by reason of his death, disability, retirement, resignation, replacement, or any other reason, then the Nonqualified Option or any unexercised portion of the Nonqualified Option which otherwise is exercisable shall terminate unless it is exercised within three months after the date the Grantee ceases to be such an officer, employee or director (but in no event after expiration of the original term of the Nonqualified Option); provided that: (A) if the Grantee ceases to be such an officer, employee or director by reason of the Grantee's death, the three-month period shall instead be a one-year period; and (B) the Committee may at any time, in its discretion, extend the termination date of any Nonqualified Option for any length of time up to one year after the date the Grantee ceases to be such an officer, employee or director (but in no event after the expiration of the original term of the Nonqualified Option). Section 3. Effective Date; Construction. The effective date of this amendment is July 16, 1997, and this amendment shall be deemed to be a part of the Plan as of such date. In the event of any inconsistencies between the provisions of the Plan and this amendment, the provisions of this amendment shall control. Except as modified by this amendment, the Plan shall continue in full force and effect without change. EX-10.P 3 EXHIBIT 10.P 1 EXHIBIT 10(p) METATEC CORPORATION DIRECTORS DEFERRED COMPENSATION PLAN Section 1. Purpose. The purposes of the Metatec Corporation Directors Deferred Compensation Plan (the "Plan") are to encourage directors of Metatec Corporation (the "Company") who are not employees of the Company to continue their service to the Company and to assist the Company in attracting and retaining highly qualified directors. Section 2. Definitions. For purposes of the Plan, the following terms shall have the following meanings, respectively: "Additions" means the credits applied to Deferred Compensation Accounts as provided in Section 4 of the Plan. "Adjustment Date" means December 31 of each Plan Year, beginning with the second Plan Year. "Beneficiary" means the person or persons designated in writing as such and filed with the Company by a Participant at any time pursuant to the Plan. Any such designation may be withdrawn or changed in writing (without the consent of the Beneficiary), but only the last designation on file with the Company shall be effective. "Board" means the Board of Directors of the Company. "Deferral Notice" has the meaning set forth in Section 4(b) of the Plan. "Deferred Compensation Account" means the separate Deferred Compensation Account established for each Participant pursuant to Section 4 of the Plan. "Effective Date" means February 12, 1998. "Eligible Compensation" means, to the extent applicable to any Participant, all Quarterly Fees and all Meeting Fees. The extent to which a Participant may defer a component of Eligible Compensation shall be based upon such Participant's eligibility to receive such Eligible Compensation (as determined under applicable agreements or compensation policies of the Company from time to time) and the provisions and limitations applicable under the Plan. Notwithstanding the foregoing, Eligible Compensation shall not include any compensation for services performed prior to the delivery of an appropriate Deferral Notice. "Eligible Director" means any director of the Company who is not an employee or officer of the Company or any subsidiary of the Company. "Meeting Fees" means, with respect to any period, the fees for attendance at meetings of the Board or committees of the Board (exclusive of payments for reimbursement of expenses) which, absent a deferral election under the Plan, would be payable to a Participant during such period. "Participant" has the meaning set forth in Section 3 of the Plan. "Plan Year" means the calendar year; provided that the initial Plan Year shall be the period beginning on the Effective Date and ending on December 31, 1998, both dates inclusive, and if the 2 Plan is terminated on a date other than the last day of a calendar year, the final Plan Year shall be that portion of such calendar year which ends on the termination date. "Quarterly Fees" means, with respect to any period, the fixed fees which, absent a deferral election under the Plan, would be payable to a Participant by the Company on a quarterly basis during such period. Other capitalized terms used in the Plan are defined in other sections of the Plan and shall have the respective meanings given those terms in such other sections. Section 3. Participants. Each Eligible Director shall be eligible for participation in the Plan. An Eligible Director who elects to make deferrals pursuant to Section 4 shall be deemed to be a "Participant" under the Plan. A Participant shall continue to participate in the Plan until his status as a Participant is terminated by either a complete distribution of his Deferred Compensation Account pursuant to the terms of the Plan or by written directive of the Company. Section 4. Deferred Compensation Accounts. (a) Establishment of Deferred Compensation Accounts. The Company shall establish a Deferred Compensation Account for each Participant. Each such Deferred Compensation Account shall be a bookkeeping account only, maintained as part of the books and records of the Company. (b) Election of Participant. With respect to each Plan Year, a Participant may elect to have a percentage or fixed dollar amount of his Eligible Compensation for that Plan Year allocated to his Deferred Compensation Account and paid on a deferred basis pursuant to the terms of the Plan. Any Eligible Director who desires to be a Participant under the Plan for a Plan Year must submit to the Company before the beginning of such Plan Year a written election substantially in the form attached to the Plan as Exhibit A or such other form as may hereafter be prescribed by the Board from time to time (each, a "Deferral Notice"). Notwithstanding the preceding sentence: (i) any Eligible Director may make such an election for the first Plan Year by completing and delivering to the Company a Deferral Notice at any time during the 30-day period beginning on the Effective Date; and (ii) an Eligible Director who first becomes eligible to participate in the Plan after the Effective Date may make such an election for the then-current Plan Year by completing and delivering to the Company a Deferral Notice at any time during the 30-day period beginning on the date on which he first becomes eligible to participate in the Plan; provided that each Deferral Notice shall apply only to Eligible Compensation payable to the Participant for services performed after the date on which the Deferral Notice is received by the Company. To the extent that a Participant completes a Deferral Notice in accordance with the provisions of this subsection for any Plan Year, such Deferral Notice shall irrevocably remain in effect for that Plan Year and shall remain in effect for all subsequent Plan Years until revoked by the Participant or a new effective Deferral Notice is delivered to the Company by the Participant. (c) Allocations. If a Deferral Notice is submitted to the Company in accordance with Section 4(b), above, then during the applicable Plan Year, the Company shall allocate to the applicable Participant's Deferred Compensation Account the percentage or dollar amount of Eligible Compensation specified in the Deferral Notice. (d) Adjustment of Account Balances. As of each Adjustment Date, for each Participant who has a balance in his Deferred Compensation Account, the Company shall credit such Participant's Deferred Compensation Account with Additions calculated at an assumed interest rate (the "Assumed Rate") equal to the average interest rate at which the Company borrowed funds, or had the right to borrow funds, from a commercial lender during the Plan Year containing that Adjustment Date (the "Borrowing Rate"), determined by calculating the average of the respective Borrowing Rates in effect on the first day of each calendar month during the Plan year; provided that if on the first day of any such calendar month the Company has no arrangement in place for borrowing funds from a commercial 3 lender, then the Borrowing Rate as of that date shall be deemed to be the lesser of the Prime Rate or the LIBOR Rate (each as defined below) as of that date. The amount of Additions to be credited to a Participant's Deferred Compensation Account as of each Adjustment Date shall be determined by multiplying the Participant's Deferred Compensation Account balance as of the previous Adjustment Date (i.e., the sum of the amounts previously allocated to the Deferred Compensation Account under the preceding subsections of this Section 4 and all prior Additions) by the applicable Assumed Rate. The crediting of Additions shall occur so long as there is a balance in the Participant's Deferred Compensation Account as of the applicable Adjustment Date regardless of whether the Participant's service as a director of the Company has terminated. The Board may prescribe any reasonable method or procedure to account for Additions. For purposes of the Plan: (i) the term "Prime Rate" shall mean, as of any date, the prime commercial rate of interest of The Huntington National Bank, Columbus, Ohio, as announced by such bank from time to time, which is in effect as of that date; and (ii) the term "LIBOR Rate" shall mean, as of any date, a rate of interest which is 1.25% in excess of the rate of interest which is being offered as of that date by one or more prime banks in the London interbank market for 30-day deposits of U.S. dollars; provided that if any such determination date is not a business day, then the Prime Rate and the LIBOR Rate as of that date shall be deemed to be the Prime Rate and the LIBOR Rate as of the immediately preceding business day. The Prime Rate and the LIBOR Rate shall be determined by the Company, in its discretion, and such determinations shall be binding upon all Participants. (e) Participant's Rights in Accounts. A Participant's only right with respect to his Deferred Compensation Account (and amounts allocated thereto) shall be to receive payments in accordance with the provisions of Section 5 of the Plan. Section 5. Payment of Deferred Benefits. (a) Time of Payment. Distribution of a Participant's Deferred Compensation Account shall commence within 30 days of the date of the Participant's termination of service as a Director, whether due to resignation, retirement, death, or otherwise. (b) Method of Distribution. A Participant must elect in the applicable Deferral Notice to have his Deferred Compensation Account distributed to the Participant either in a single lump sum payment or, if the Deferred Compensation Account exceeds $25,000 at the time distribution commences, in substantially equal annual installments over a period of not more than 10 years. Each such election shall be irrevocable. To the extent that a Deferred Compensation Account is distributed in installment payments, the undisbursed portions of such account shall continue to be credited with Additions in accordance with the applicable provisions of Section 4(d), which Additions shall be paid with the annual installment payments. In addition, if, as of any Adjustment Date, the amount allocated to a Participant's Deferred Compensation Account is less than $1,000, the Company may elect to pay such amount to the Participant and reduce the balance of his Deferred Compensation Account to zero. A Participant may elect different methods of distribution for the separate portions of his Deferred Compensation Account relating to each separate Deferral Notice, if applicable; provided that (i) a Participant shall not be able to modify the method of distribution for any portion of his Deferred Compensation Account after the related Deferral Notice is submitted to the Company; and (ii) the $25,000 threshold described above with respect to installment payments shall apply to each such separate election made by a Participant, if applicable. All distributions of a Participant's Deferred Compensation Account shall be made in cash. (c) Hardship Distributions. Prior to the time a Participant's Deferred Compensation Account becomes payable, the Company, in its sole discretion, may elect to distribute all or a portion of such account in the event such Participant requests a distribution due to severe financial hardship. For purposes of this Plan, severe financial hardship shall be deemed to exist in the event the Board determines, in its sole discretion, that a Participant needs a distribution to meet immediate and serious 4 financial needs resulting form a sudden or unexpected illness or accident of the Participant or a member of the Participant's family, loss of the Participant's property due to casualty, or other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. A distribution based on financial hardship shall not exceed the amount required to meet the financial need created by the hardship and shall be made in cash. (d) Designation of Beneficiary. After the death of a Participant, his Deferred Compensation Account shall be paid to the Beneficiary designated by the Participant. If there is no designated Beneficiary or no designated Beneficiary surviving at a Participant's death, payment of the Participant's Deferred Compensation Account shall be made to the Participant's estate. The Company may elect, in its sole discretion, to make such payment in a lump sum or in substantially equal annual installments over a period of not more than the shorter of (i) 10 years, or (ii) if the Company had previously commenced annual installment payments to the Participant, the number of years remaining in that payment schedule. (e) Taxes. In the event any taxes are required by law to be withheld or paid from any payments made pursuant to the Plan, the Company shall have the right to withhold such amounts from such payments. (f) Risk of Forfeiture. Notwithstanding any provision of the Plan to the contrary, a Participant's right to receive payment of his entire Deferred Compensation Account (or the right to receive any future payments, if payment of such Account has commenced) shall be forfeited automatically if he: (a) resigns his position as a director of the Company and at any time during the one-year period following such resignation becomes a director of any of the Company's competitors; (b) is nominated and elected to serve as a director of the Company, but, for reasons other than family or personal health considerations, declines to serve in such capacity; or (c) he is removed as a director of the Company. Section 6. Assignment or Alienation. The right of a Participant, Beneficiary or any other person to any payments under this Plan may not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. Section 7. Plan Administration. The Plan shall be administered by the Board, which shall have the right to interpret and construe the Plan and to determine all questions of eligibility and status, rights and benefits of Participants and all other persons claiming benefits under the Plan, and all provisions of the Plan and all Deferral Notices. In all cases, the Board's determination shall be final and binding upon all parties. The Board shall have absolute discretion in administering the Plan. Notwithstanding the preceding paragraph of this section: (a) no Participant shall have the right to participate in any decision of the Board (or any committee thereof) affecting or relating to any then-existing interest of that Participant under the Plan, other than a decision to terminate the Plan or to amend the Plan; and (b) the Board may delegate to any committee of the Board, or to the Chairman of the Board or any other officer of the Company, any or all of the Board's authority under the Plan, including without limitation the Board's authority under this section, and in the event of any such delegation, the committee or officer, as the case may be, shall have all rights, powers, and authority of the Board with respect to the matters so delegated. Section 8. Unsecured and Unfunded Obligation. Notwithstanding any provisions of the Plan to the contrary, the Company's obligations under the Plan shall constitute unfunded, unsecured promises by the Company to make the payments provided for in the Plan. No provision shall at any time be made with respect to segregating any assets of the Company for payment of any amounts under the Plan. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Company by reason of the right to receive a payment under the Plan and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Company 5 with respect to any rights under the Plan. Nothing contained in the Plan shall constitute a guaranty by the Company or any other entity or person that the assets of the Company shall be sufficient to pay any benefit hereunder. Section 9. No Enlargement of Rights. Neither the Plan nor any participation in the Plan shall confer on any Eligible Director any right to continue as a director of the Company, nor restrict or interfere with any rights of the shareholders of the Company to terminate such directorship. Section 10. Amendment and Termination of the Plan. The Plan may be amended at any time and from time to time, by a resolution of the Board, in any manner which it deems desirable, provided that no amendment shall adversely affect the accrued benefits of any Participant under the Plan. In addition, the Plan may be terminated at any time, by a resolution of the Board, without providing any advance notice to any Participant, and in the event of termination of the Plan, the Company shall have the right to distribute all amounts then allocated to the Participants' Deferred Compensation Accounts. Section 11. Genders and Numbers. When permitted or required by the context, each pronoun used in the Plan includes the same pronoun in other genders and numbers, and each noun used in the Plan includes the same noun in other numbers. Section 12. Incapacity of Recipient. If a Participant or Beneficiary is declared incompetent and a guardian, conservator or other person legally charged with the care of his person or of his estate is appointed, any benefits under the Plan to which such Participant or Beneficiary is entitled shall be paid to such guardian, conservator or other person legally charged with the care of his person or his estate. Except as provided above, when the Company, in its sole discretion, determines that a Participant or Beneficiary is unable to manage his financial affairs, the Company may, but shall not be required to, make distributions to any one or more of the spouse, lineal ancestors or descendants or other closest living relatives of such Participant or Beneficiary who demonstrates to the satisfaction of the Company the propriety of making such distributions. Any payment made under this section shall be in complete discharge of any liability under the Plan for such payment. The Company shall not be required to see to the application of any such distribution made to any person. Section 13. Effective Date; Governing Law. The Plan, which is effective as of the Effective Date, shall be construed in accordance with and governed by the laws of the State of Ohio. 6 Exhibit A METATEC CORPORATION DIRECTORS DEFERRED COMPENSATION PLAN DEFERRAL NOTICE 1. Election. In accordance with the provisions of the Metatec Corporation Directors Deferred Compensation Plan (the "Plan"), I hereby elect to defer _______ percent or $___________ of the Eligible Compensation (as defined in the Plan) payable to me for services as a Director of Metatec Corporation (the "Company") for the Plan Year ____ (as defined in the Plan). This election supersedes any prior deferral election made by me under the Plan and shall remain in effect for subsequent Plan Years until terminated or a new deferral election is made pursuant to the Plan. 2. Method of Payment. Subject to the provisions of the Plan and the following paragraph of this section 2, I hereby elect to receive the distribution of my Deferred Compensation Account (as defined in the Plan) in the following form of payment: ______ A single lump sum payment, or ______ Substantially equal annual installments over a period of _____ years (not to exceed 10). I understand that, in the event that my Deferred Compensation Account balance at the time that I am eligible for a distribution under the Plan is $25,000 or less, I shall automatically receive distribution of my entire Deferred Compensation Account in a single lump sum payment. Further, I acknowledge that my Deferred Compensation Account is subject to complete forfeiture pursuant to Section 5(f) of the Plan. 3. Designation of Beneficiary. I hereby designate ____________________ as my primary Beneficiary (as defined in the Plan) and ___________________ as my contingent Beneficiary(ies) to receive any amounts payable under the Plan in the event of my death. 4. Acknowledgement. I hereby acknowledge receipt of a copy of the Plan and that my election to defer Eligible Compensation under the Plan is irrevocable with respect to amounts which are deferred under the Plan. 5. Successor. The Plan and this deferral notice shall be binding upon me, the Beneficiaries designated above, and my heirs, personal representatives, successors and assigns. Date: , 199 --------------- - ------------------------------ Signature ------------------------------ Printed Name EX-23 4 EXHIBIT 23 1 EXHIBIT 23 Consent of DELOITTE & TOUCHE LLP INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33-48021, No. 33-52700, No. 33-80172, No. 33-84022, No. 33-71080, No. 33-80170, No. 333-3125 and No. 333-31027 on Form S-8 and Registration Statement No. 333-3123 on Form S-3 of Metatec Corporation of our reports dated February 11, 1998, included and incorporated by reference in this Annual Report on Form 10-K of Metatec Corporation for the year ended December 31, 1997. /s/DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP March 30, 1998 Columbus, Ohio EX-24.D 5 EXHIBIT 24.D 1 EXHIBIT 24(d) Power of Attorney for Joseph F. Keeler, Jr. Know all men by these presents that the undersigned director of Metatec Corporation, a Florida corporation (the "Company"), hereby constitutes and appoints Jeffrey M. Wilkins and Julia A. Pollner, and each of them (with full power to each of them to act along), as my true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for me and in my name, place, and stead, in my capacity as director of the Company, to execute the Company's Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Company's fiscal year ended December 31, 1997, and for each fiscal year thereafter, and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ J.F. Keeler, Jr. Director - ------------------------------ ------------------------------ Signature Position(s) with the Company J.F. Keeler, Jr. - ------------------------------ Print Name February 4, 1998 - ------------------------------ Date of Execution EX-27 6 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S BALANCE SHEET DATED AS OF DECEMBER 31, 1997, AND ITS CONSOLIDATED STATEMENT OF OPERATIONS, CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY, AND CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997, WHICH FINANCIAL STATEMENTS ARE INCLUDED IN ITEM 8 OF THIS REPORT, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1997 DEC-31-1997 1,381,057 0 7,516,178 301,000 1,155,519 10,805,642 59,290,873 20,661,867 52,871,893 5,784,430 5,893,410 0 0 710,848 40,483,205 52,871,893 48,933,634 48,933,634 33,815,791 47,996,148 0 7,000 73,740 1,040,534 549,000 491,534 0 0 0 491,534 .07 .07
EX-27.1 7 EXHIBIT 27.1
5 9-MOS 6-MOS 3-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 JAN-01-1997 JAN-01-1997 JAN-01-1997 SEP-30-1997 JUN-30-1997 MAR-31-1997 185,027 574,282 480,398 0 0 0 6,310,358 5,649,147 5,333,508 297,000 291,000 291,000 928,272 850,620 962,450 8,335,808 7,671,727 7,745,775 59,959,027 59,685,140 56,809,477 (20,166,748) (18,958,206) (17,208,232) 51,685,222 52,072,518 51,139,741 5,977,136 6,251,526 5,153,477 3,157,287 1,426,592 1,450,896 0 0 0 0 0 0 710,369 708,026 707,630 41,840,430 43,686,374 43,827,738 51,685,222 52,072,518 51,139,741 35,577,371 23,686,507 11,678,574 35,577,371 23,686,507 11,678,574 24,557,702 16,068,909 8,052,587 35,135,230 23,354,544 11,972,122 0 0 0 (8,000) 2,000 2,000 29,852 11,639 2,184 472,251 300,017 (324,011) 257,000 136,500 (120,000) 215,251 163,517 (204,011) 0 0 0 0 0 0 0 0 0 215,251 163,157 (204,011) 0.03 0.02 (0.03) 0.03 0.02 (0.03)
EX-27.2 8 EXHIBIT 27.2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S BALANCE SHEET DATED AS OF DECEMBER 31, 1996, AND ITS CONSOLIDATED STATEMENT OF OPERATIONS, CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY, AND CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1996, WHICH FINANCIAL STATEMENTS ARE INCLUDED IN ITEM 8 OF THIS REPORT, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR 9-MOS 6-MOS 3-MOS DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996 DEC-31-1996 SEP-30-1996 JUN-30-1996 MAR-31-1996 2,214,755 4,505,284 5,930,492 6,954,138 0 0 0 0 7,031,596 5,563,219 5,903,030 5,782,977 321,000 312,000 335,000 311,000 948,738 991,796 802,773 951,219 10,832,021 11,498,574 13,109,014 14,221,908 53,360,103 49,833,174 45,553,796 43,151,665 15,584,018 (14,571,572) (12,949,551) (11,344,966) 52,517,477 50,788,055 49,859,792 50,291,693 5,916,581 4,431,957 3,767,075 4,975,703 1,335,105 1,215,270 1,095,135 960,999 0 0 0 0 0 0 0 0 707,336 706,927 706,799 705,924 44,558,455 44,433,901 44,290,783 43,649,067 52,517,477 50,788,055 49,859,792 50,291,693 46,150,105 33,984,238 23,179,472 12,204,455 46,150,105 33,984,238 23,179,472 12,204,455 29,543,583 21,307,560 13,994,434 7,026,496 43,002,595 31,305,508 20,638,796 10,498,501 0 0 0 0 124,382 114,000 134,000 95,000 18,676 16,193 5,473 2,789 3,398,728 2,903,678 2,683,198 1,749,731 1,358,000 1,179,000 1,090,000 706,000 2,040,728 1,724,678 1,593,198 1,043,731 0 0 0 0 0 0 0 0 0 0 0 0 2,040,728 1,724,678 1,593,198 1,043,731 .29 .25 .23 0.15 .29 .25 .23 0.15
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