-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sJ23ainPBtMPB8HVNh/OLPRH+zcdUsXHKkxy01uLQUsSHuussTyn5wKH74D1xs/h mL7R6v8gOv7YsT/CunJc9Q== 0000710983-94-000005.txt : 19940519 0000710983-94-000005.hdr.sgml : 19940519 ACCESSION NUMBER: 0000710983-94-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940401 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QMS INC CENTRAL INDEX KEY: 0000710983 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 630737870 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09348 FILM NUMBER: 94528170 BUSINESS ADDRESS: STREET 1: ONE MAGNUM PASS CITY: MOBILE STATE: AL ZIP: 36618 BUSINESS PHONE: 2056334300 FORMER COMPANY: FORMER CONFORMED NAME: QUALITY MICRO SYSTEMS INC DATE OF NAME CHANGE: 19840816 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q (MARK ONE) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended APRIL 1, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ------------------ to ------------------ Commission file number 1-9348 QMS, INC. (Exact name of registrant as specified in its charter) DELAWARE 63-0737870 (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification Number) ONE MAGNUM PASS, MOBILE, AL 36618 (Address of principal executive offices) (Zip Code) (205) 633-4300 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date 10,707,755 AT APRIL 29, 1994. QMS, INC. AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION PAGE NUMBER Item 1. Financial Statements Condensed Consolidated Balance Sheets (unaudited) as of April 1, 1994 and October 1, 1993 3 - 4 Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended April 1, 1994 and April 2, 1993 5 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended April 1, 1994 and April 2, 1993 6 Notes to Condensed Consolidated Financial Statements (unaudited) for the six months ended April 1, 1994 and April 2, 1993 7 Computation of Earnings Per Common Share 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 10 PART II - OTHER INFORMATION 11 - 12 Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. (a) Exhibits (b) Reports on Form 8 - K SIGNATURES 13 QMS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS as of April 1, 1994 and October 1, 1993 (Unaudited) April 1, October 1, in thousands 1994 1993 ASSETS CURRENT ASSETS Cash and Cash Equivalents $4,642 $3,582 Trade Receivables (less allowance for doubtful accounts of $500 at April 1994 and $580 at October 1993) 45,192 39,471 Inventories, Net (Note 3) 64,840 70,461 Other, Net 5,830 7,806 Total Current Assets 120,504 121,320 PROPERTY, PLANT AND EQUIPMENT 69,176 66,440 Less Accumulated Depreciation 38,065 33,774 Property, Plant and Equipment, Net 31,111 32,666 OTHER ASSETS, NET 16,491 16,231 TOTAL ASSETS $168,106 $170,217 See Notes to Condensed Consolidated Financial Statements QMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS as of April 1, 1994 and October 1, 1993 (Unaudited) April 1, October 1, in thousands 1994 1993 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts and Notes Payable $15,263 $11,060 Other 31,093 31,901 Total Current Liabilities 46,356 42,961 LONG-TERM DEBT AND CAPITAL LEASE 35,852 41,527 OBLIGATIONS COMMITMENTS AND CONTINGENCIES (Note 4) ---- ---- STOCKHOLDERS' EQUITY 85,898 85,729 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $168,106 $170,217 See Notes to Condensed Consolidated Financial Statements QMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED APRIL 1, 1994 AND APRIL 2, 1993 (Unaudited) Three Months Ended Six Months Ended April 1, April 2, April 1, April 2, in thousands, except per share 1994 1993 1994 1993 amounts NET SALES $71,283 $82,491 $141,937 $159,764 COST OF GOODS SOLD 48,013 54,608 94,835 105,914 GROSS PROFIT 23,270 27,883 47,102 53,850 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 21,735 24,053 44,408 47,335 OPERATING INCOME 1,535 3,830 2,694 6,515 OTHER INCOME (EXPENSE) Interest Income 16 204 33 323 Interest Expense (837) (808) (1,709) (1,627) Miscellaneous 84 (433) (750) (390) Total Other Expense (737) (1,037) (2,426) (1,694) INCOME BEFORE INCOME TAXES 798 2,793 268 4,821 PROVISION FOR INCOME TAXES 247 825 83 1,494 NET INCOME $551 $1,968 $185 $3,327 EARNINGS PER COMMON SHARE (Note 2) Primary $0.05 $0.18 $0.02 $0.31 Fully Diluted $0.05 $0.18 $0.02 $0.31 SHARES USED IN PER SHARE COMPUTATION (Note 2) Primary 10,735 10,879 10,748 10,797 Fully Diluted 10,735 10,879 10,748 10,849 See Notes to Condensed Consolidated Financial Statements QMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED APRIL 1, 1994 AND APRIL 2, 1993 (Unaudited) April 1, April 2, in thousands 1994 1993 Cash Flows from Operating Activities: Net Income $185 $3,327 Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: Depreciation of Property, Plant and Equipment 4,683 4,451 Amortization of Capitalized and Deferred Software 3,901 3,921 Provision for Losses on Inventory 2,887 (591) Other 180 179 Changes in Assets and Liabilities that provided (used) cash: Trade Receivables (5,804) (4,921) Inventories 2,737 (1,210) Accounts Payable 4,203 4,086 Income Tax Payable 571 (184) Other 292 (1,466) Net Cash Provided by Operating Activities 13,835 7,592 Cash Flows from Investing Activities: Purchase of Property, Plant and Equipment (3,331) (3,900) Additions to Capitalized and Deferred Software Costs (3,977) (4,625) Other 102 (219) Net Cash Used in Investing Activities (7,206) (8,744) Cash Flows from Financing Activities: Payments of Long-Term Debt, including Current Maturities (5,442) (2,185) Purchase of Treasury Stock 0 (151) Proceeds from Stock Options Exercised 19 315 Other (112) (527) Net Cash Used in Financing Activities (5,535) (2,548) Effect of Exchange Rate Changes on Cash (34) (315) Net Change in Cash and Cash Equivalents 1,060 (4,015) Cash and Cash Equivalents at Beginning of Period 3,582 8,086 Cash and Cash Equivalents at End of Period $4,642 $4,071 See Notes to Condensed Consolidated Financial Statements QMS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED APRIL 1, 1994 AND APRIL 2, 1993 (Unaudited) 1. MANAGEMENT OPINION In the opinion of management, the condensed consolidated financial statements reflect all adjustments necessary to present fairly the financial position of the Company as of April 1, 1994 and October 1, 1993 and the results of operations and changes in cash flows for the six months ended April 1, 1994 and April 2, 1993. The results of operations for the six months ended April 1, 1994 are not necessarily indicative of the results to be expected for the fiscal year ending September 30, 1994. 2. EARNINGS PER COMMON SHARE The computation of earnings per common share is based on the weighted average number of common shares outstanding during the period. Shares issuable upon exercise of stock options have been included in the per share computation because the effect is dilutive. 3. INVENTORIES Inventories at April 1, 1994 and October 1, 1993 are summarized as follows (in thousands): APRIL 1, October 1, 1994 1993 Raw materials $21,849 $26,104 Work in process 4,257 4,052 Finished goods 44,999 46,609 Inventory reserve (6,265) (6,304) ------ ------ TOTAL $64,840 $70,461 ====== ====== 4. COMMITMENTS AND CONTINGENCIES At October 1, 1993, the Company had a commitment of approximately $31,000,000 under contracts to purchase print engines. As of April 1, 1994 the Company had a commitment of approximately $18,000,000 to purchase print engines under purchase contracts. The Company was contingently liable for approximately $2,611,000 as of April 1, 1994. This was principally the result of letters of credit issued in the normal course of business for the purchase of inventory. QMS, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE (Unaudited) Three Months Six Months Ended Ended April April April April 1, 2, 1, 2, in thousands, except per share amounts 1994 1993 1994 1993 Net Income $551 $1,968 $185 $3,327 Shares used in this computation: Weighted average common shares outstanding 10,707 10,685 10,706 10,677 Shares applicable to stock options, net of shares assumed to be purchased from proceeds at average 28 194 42 120 market Total shares for earnings per common share computation (primary) 10,735 10,879 10,748 10,797 Shares applicable to stock options in addition to those used in primary computation due to the use of period- end market price when higher than average 0 0 0 52 Total fully diluted shares 10,735 10,879 10,748 10,849 Earnings per common share - primary $0.05 $0.18 $0.02 $0.31 Earnings per common share - fully $0.05 $0.18 $0.02 $0.31 diluted QMS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Table 1: Net Sales Comparisons for Key Channels of Distribution Quarter Ended April 1, 1994 Six Months Ended April 1, 1994 (000) 1994 1993 difference 1994 1993 difference U.S. Direct $10,404 $7,950 $2,454 $20,976 $17,736 $3,240 U.S. Reseller 7,413 17,559 (10,146) 19,557 35,806 (16,249) QMS Europe 19,675 26,279 (6,604) 38,830 49,321 (10,491) QMS Japan 7,465 4,190 3,275 12,722 6,052 6,670 All Other 26,326 26,513 (187) 49,852 50,849 (997) Total $71,283 $82,491 ($11,208) $141,937 $159,764 ($17,827) Net sales for the second fiscal quarter of 1994 declined 13.6% from the record net sales of the corresponding fiscal quarter of 1993. The significant sales differences by key distribution channels in the second quarter of fiscal 1994 (the three months ended April 1, 1994) compared to the second quarter of fiscal 1993 (the three months ended April 2, 1993) and the six-month periods ending on the same dates, respectively, are shown in Table 1 above. In both comparisons, fiscal 1994 sales through the United States reseller channel and in Europe are well below the fiscal 1993 net sales achievement. The United States reseller channel is the Company's primary method of distribution for 4-page per minute and 8-page per minute monochrome laser printers and also color thermal transfer printers; new competition in this product class is the primary cause of the lower net sales. In Europe, net sales are primarily generated from the low end of the Company's product offering which is sold through distributors. Competitive pressures and poor economic conditions were the principal causes of the net sales decline in Europe. The United States direct channel is the Company's primary method of distribution for the higher end of the Company's product offerings to major corporate accounts. The net sales improvements in the United States direct channel can be attributed to sales of two new products introduced for the channel, the QMS4525 and the ColorScript Laser 1000, and also to increases in the sales of the QMS3225, QMS2025 and QMS1725; all of these are higher end products sold through the channel. The QMS Japan increased revenue came from significant improvements in the sales of the QMS860, an 8-page per minute printer with large sheet printing capability, which supports Japanese language requirements. QMS Japan has also realized notable sales gains in the ColorScript Laser 1000, the QMS1725, the QMS3225, and in the after-market supplies business. Gross profit as a percentage of sales declined from 33.8% to 32.6% in the three- month comparison and from 33.7% to 33.2% in the six-month comparison. In both comparisons, the decline is primarily attributable to lower overall volume, which results in an inability to absorb fixed manufacturing costs. The Company has reduced the total costs associated with product procurement and conversion to finished goods but such expense reduction has not been enough to offset the lower volume. If increases in volume and additional cost reductions are achieved as planned, then improvements in the gross profit percentage could occur. Operating expenses were managed down in both the second quarter comparison and in the six-month comparison; the expenses were 9.6% less in the three-month comparison and they were 6.2% less in the six-month comparison. The Company implemented cost reduction measures in the fourth quarter of fiscal 1993 that included a reduction in the labor force of about 200 people. The Company intends to continue to place significant emphasis on operating expense containment. In the other income (expense) category, a net expense decrease of $300,000 was experienced in the three-month comparison and a net expense increase of $732,000 was experienced in the six-month comparison. In both comparisons, the differences come primarily from changes in translation of balance sheet elements that were denominated in foreign currencies. The Company's effective tax rate was 31% in the second quarter of fiscal 1994 compared to 29.5% in the second quarter of fiscal 1993. The effective tax rate for the full fiscal year 1993 was 31%. LIQUIDITY AND CAPITAL RESOURCES During the second quarter of fiscal 1994, the Company's financing came principally from operations and borrowings under its secured revolving credit agreement. During the second quarter, the Company reached agreement with its banking partners on an extension of the secured revolving credit agreement to January 1996. The agreement provides for up to $30,000,000 in borrowing capacity determined by a borrowing base calculated from certain levels of working capital. At April 1, 1994, borrowing capacity totaled $29.9 million and the Company had borrowings of $21.9 million compared to borrowings of $25.5 million at October 1,1993. Additionally, $7.5 million in borrowing capacity is available, also based on a borrowing base calculated from certain levels of working capital. The additional line will be reviewed for renewal in June 1994, on a one-year basis. The Company was not in compliance with certain of its revolving credit agreement covenants at the end of the second quarter of fiscal 1994, but has received a waiver of the non-compliance. During the first six months of fiscal 1994, the Company has reduced inventory levels by nearly 8% from $70.5 million to $64.8 million and has reduced total long-term debt by $5.7 million or about 14%. The long-term debt to equity ratio has improved from 48% at October 1, 1993 to 42% at April 1, 1994. Management believes that the Company's continuing working capital and capital expenditure needs will be met by cash flow from operations and by the secured revolving credit agreement. Although management believes the Company's relationship with its lenders is good, future waivers from the lenders, if necessary, will depend on the Company's performance. QMS, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS - None. ITEM 2 - CHANGES IN SECURITIES - None. ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - None. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting of Stockholders was held on January 25, 1994. The results of the voting on the election of directors were as follows: Nominee For Against Withheld Donald L. Parker, Ph.D. 9,091,496 0 556,521 Jack R. Altherr 9,087,642 0 560,375 G. William Speer, Esq. 9,082,946 0 565,071 The results of the voting to approve an amendment to increase the aggregate number of shares of the Company's Common Stock that may be issued pursuant to the Company's 1987 Stock Option Plan from 1,400,000 to 1,900,000 were as follows: Broker For Against Abstain Non-Votes 4,260,119 2,002,971 126,422 3,258,505 The results of the voting to adopt the QMS, Inc. Stock Option Plan for Directors were as follows: Broker For Against Abstain Non-Votes 4,911,788 1,314,285 126,264 3,295,680 Accordingly, all nominees for the Board of Directors were elected, the amendment to the Company's Stock Option Plan was approved and the QMS, Inc. Stock Option Plan for Directors was adopted. ITEM 5 - OTHER INFORMATION - None. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit Number Description 10(f)(xi) Waiver Agreement dated as of February 25, 1994 waiving certain provisions of the Note Agreement dated March 15, 1988.(1) 10(g)(xv) Fourth Amendment to Amended and Restated Secured Revolving Credit Agreement dated April 22, 1994.(2) 10(l)(v) Waiver Agreement dated as of February 25, 1994 waiving certain provisions of the Note Agreement dated June 30, 1993.(3) b) Reports - None. QMS, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QMS, INC. (Registrant) Date: May 12, 1994 /s/Charles D. Daley CHARLES D. DALEY Executive Vice President - Finance and Administration, Chief Financial Officer (Mr. Daley is the Principal Financial Officer and has been duly authorized to sign on behalf of the registrant.) _______________________________ (1)Incorporated herein by reference to exhibit of same number in Registrant's quarterly report on Form 10-Q for the quarter ended April 1, 1988 (Commission File No. 1-9348). (2)Incorporated herein by reference to exhibit of same number in Registrant's annual report on Form 10-K for the fiscal year ended October 2, 1992 (Commission File No. 1-9348). (3)Incorporated herein by reference to exhibit of same number in Registrant's quarterly report on Form 10-Q for the quarter ended July 1, 1993 (Commission File No. 1-9348). EX-10.F 2 Exhibit No. 10(f)(xi) WAIVER AGREEMENT Waiver Agreement dated as of February 25, 1994 (the "Waiver Agreement") between QMS, Inc. (the "Company") and Connecticut General Life Insurance Company (the "Holder"). 1. Reference is hereby made to the Note Agreement dated as of March 15, 1988 as amended by Amendment to Note Agreement dated August 22, 1989, Second Amendments to Note Agreement dated as of April 2, 1990 and January 30, 1991, Third Amendment to Note Agreement dated as of October 2, 1992 and the Consolidating Amendment to Note Agreement dated as of June 30, 1993 (as so amended, the "Note Agreement") between the Company and the Holder or the nominee of the Holder. All terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Note Agreement. 2. Subject to the provisions herein contained, the Holder has agreed to waive certain provisions of the Note Agreement with respect to the Company's first fiscal quarter ending December 31, 1993. 3. The Holder hereby waives any Default or Event of Default which existed as of the end of the fiscal quarter ending December 31, 1993 resulting from the Company's non-compliance with Section 7.17 and Section 7.23 of the Note Agreement as of such date. 4. If at any time during the 1994 fiscal year of the Company, the Company shall request of the Holder a waiver of any breach or default of the Company under the Note Agreement, the Holder shall receive a fee in the amount of $5,500 with respect to such waiver. The right of the Holder to receive such fee shall in no way obligate the Holder to grant any waiver and the Company acknowledges that the granting of any waiver by the Holder is in the sole and absolute discretion of the Holder. 5. Except as specifically modified hereby, the Note Agreement shall remain in full force and effect in accordance with the terms hereof. 6. The company hereby represents and warrants that this Waiver Agreement has been duly authorized by all necessary corporate action on the part of the Company, has been duly executed and delivered on behalf of the Company, and constitutes the legal, valid and binding obligation of the Company. 7. This Waiver Agreement shall not be effective as to any party hereto until each party hereto shall have executed at least one counterpart hereof. IN WITNESS WHEREOF, the parties hereto have executed this Waiver Agreement as of the day and year first above written. QMS, Inc. By:/s/Charles D. Daley Name: CHARLES D. DALEY Title: EVP FINANCE & ADMINISTRATION CONNECTICUT GENERAL LIFE INSURANCE COMPANY By: CIGNA Investments, Inc. By:/s/Edward Lewis Name: EDWARD LEWIS Title: MANAGING DIRECTOR EX-10.G 3 Exhibit No. 10(g)(xv) FOURTH AMENDMENT TO AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT BY AND AMONG QMS, INC. and QMS CIRCUITS, INC., as Borrowers, and AMSOUTH BANK N.A., as AGENT, and AMSOUTH BANK N.A., NATIONAL CITY BANK, KENTUCKY (formerly known as FIRST NATIONAL BANK OF LOUISVILLE), and NATIONSBANK OF GEORGIA, N.A., as LENDERS * * * $30,000,000.00 * * * As of April 22, 1994 FOURTH AMENDMENT TO AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT ------------------------------------------------------------------- This Fourth Amendment to Amended and Restated secured Revolving Credit Agreement (this "Fourth Amendment") is entered into as of the 22 day of April, 1994 by and among QMS, Inc. and QMS Circuits, Inc., as Borrowers (each a "Borrower" and collectively "Borrowers"), AmSouth Bank N.A. as Agent for Lenders ("Agent") to the extent and in the manner provided in Article XI of that certain Amended and Restated Secured Revolving Credit Agreement entered into by the parties hereto or their predecessors in interest as of October 2, 1992 (as amended by that certain First Amendment to Amended and Restated Secured Revolving Credit Agreement entered into by the parties hereto as of April 2, 1993, by that certain Second Amendment to Amended and Restated Secured Revolving Credit Agreement entered into by the parties hereto as of June 30, 1993 (the "Second Amendment"), and by that certain Third Amendment to Amended and Restated Secured Revolving Credit Agreement entered into by the parties hereto as of November 19, 1993, the "Secured Revolving Credit Agreement"), and AmSouth Bank N.A., National City Bank, Kentucky (formerly known as First National Bank of Louisville) and NationsBank of Georgia, N.A., as Lenders (each a Lender and collectively "Lenders"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Secured Revolving Credit Agreement. W I T N E S S E T H WHEREAS, the Borrowers have requested that the Lenders extend the Commitment Termination Date to January 30, 1996, and Lenders have agreed to do so upon the terms and conditions set forth herein, including amendment of the Secured Revolving Credit Agreement as hereinafter set forth to, among other things, include certain additional covenants. NOW, THEREFORE, in consideration of the mutual promises herein contained and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Pursuant to Section 2.25(i) of the Secured Revolving Credit Agreement and without prejudice to the provisions of Section 2.25(ii) thereof, Lenders and Borrowers hereby agree to the extension of the date of payment of the indebtedness evidenced by the Notes to January 30, 1996. 2. ARTICLE IX of the Secured Revolving Credit Agreement is hereby amended by adding new Sections 9.21 and 9.22 thereto, which shall immediately follow Section 9.20 (which was added by the Second Amendment) and shall read as follows: 9.21 QUARTERLY INTEREST COVERAGE RATIO. Borrowers shall not permit the ration of Earnings Before Interest and Taxes to Interest Expense to be less than: 2.00 to 1 for the third quarter of Borrowers' 1994 fiscal year; 2.00 to 1 for the fourth quarter of Borrowers' 1994 fiscal year; 2.25 to 1 for the first quarter of Borrowers' 1995 fiscal year; and 2.50 to 1 for the second quarter of Borrowers' 1995 fiscal year and for each fiscal quarter thereafter. 9.22 PROFITABILITY. Borrowers shall not permit net income (after taxes and all other charges against income) of QMS and its Consolidated Subsidiaries to be less than: $500,000 for the third quarter of Borrowers' 1994 fiscal year; $750,000 for the fourth quarter of Borrowers' 1994 fiscal year and $1,000,000 for the first quarter of Borrowers' 1995 fiscal year; and for each fiscal quarter thereafter. 3. The provisions of this Fourth Amendment shall not be deemed a waiver by Lenders of, or consent by Lenders to noncompliance by Borrowers with, any provisions of the Loan Documents, including without limitation the cross-default provisions of Section 10.01(d) of the Secured Revolving Credit Agreement. 4. Lenders hereby consent to amendment of the QMS/CGLIC $20,000,000 Note Agreement to correspond to the amendments set fourth in Section 2 above. 5. This Fourth Amendment to Amended and Restated Secured Revolving Credit Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any of the parties hereto may execute this agreement by signing any such counterpart. IN WITNESS WHEREOF, the undersigned have executed this agreement as of the day and year first above written. BORROWERS QMS, Inc. QMS CIRCUITS, INC. By:/s/Charles D. Daley By:/s/Charles D. Daley Name: CHARLES D. DALEY Name: CHARLES D. DALEY Title: EVP FINANCE & Title: VP FINANCE ADMINISTRATION AGENT AMSOUTH BANK N.A., as agent for Lenders pursuant to the terms of the Secured Revolving Credit Agreement By:/s/Debra L. Harrison Name: DEBRA L. HARRISON Title: VICE PRESIDENT LENDERS AMSOUTH BANK N.A. By:/s/Debra L. Harrison Name: DEBRA L. HARRISON Title: VICE PRESIDENT NATIONAL CITY BANK, KENTUCKY (formerly known as First National Bank of Louisville) By:/s/John Simms Name: JOHN SIMMS Title: VICE PRESIDENT NATIONSBANK OF GEORGIA, N.A. By:/s/Shawn B. Welch Name: SHAWN B. WELCH Title: ACTING VICE PRESIDENT EX-10.L 4 Exhibit No. 10(l)(v) WAIVER AGREEMENT Waiver Agreement dated as of February 25, 1994 (the "Waiver Agreement") between QMS, Inc. (the "Company") and each of Connecticut General Life Insurance Company, Connecticut General Life Insurance Company, on behalf of one or more separate accounts, and Life Insurance Company of North America (collectively, the "Holders"). 1. Reference is hereby made to the Note Agreement dated as of June 30, 1993 (the "Note Agreement") between the Company and the Holder. All terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Note Agreement. 2. Subject to the provisions herein contained, the Holder has agreed to waive certain provisions of the Note Agreement with respect to the Company's first fiscal quarter ending December 31, 1993. 3. The Holder hereby waives any Default or Event of Default which existed as of the end of the fiscal quarter ending December 31, 1993 resulting from the Company's non-compliance with Section 7.17 and Section 7.23 of the Note Agreement as of such date. 4. If at any time during the 1994 fiscal year of the Company, the Company shall request of the Holder a waiver of any breach or default of the Company under the Note Agreement, the Holders shall receive, in the aggregate, a fee in the amount of $4,500 with respect to such waiver. The right of the Holders to receive such fee shall in no way obligate the Holders to grant any waiver and the Company acknowledges that the granting of any waiver by the Holders is in the sole and absolute discretion of each of the Holders. 5. Except as specifically modified hereby, the Note Agreement shall remain in full force and effect in accordance with the terms hereof. 6. The company hereby represents and warrants that this Waiver Agreement has been duly authorized by all necessary corporate action on the part of the company, has been duly executed and delivered on behalf of the Company, and constitutes the legal, valid and binding obligation of the Company. 7. This Waiver Agreement shall not be effective as to any party hereto until each party hereto shall have executed at least one counterpart hereof. IN WITNESS WHEREOF, the parties hereto have executed this Waiver Agreement as of the day and year first above written. QMS, Inc. By:/s/Charles D. Daley Name: CHARLES D. DALEY Title: EVP FINANCE & ADMINISTRATION CONNECTICUT GENERAL LIFE INSURANCE COMPANY By: CIGNA Investments, Inc. By:/s/Edward Lewis Name: EDWARD LEWIS Title: MANAGING DIRECTOR CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of one or more separate accounts By: CIGNA Investments, Inc. By:/s/Edward Lewis Name: EDWARD LEWIS Title: MANAGING DIRECTOR LIFE INSURANCE COMPANY OF NORTH AMERICA By: CIGNA Investments, Inc. By:/s/Edward Lewis Name: EDWARD LEWIS Title: MANAGING DIRECTOR -----END PRIVACY-ENHANCED MESSAGE-----