-----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, M4XGIahLOahV2HSLbbSmB4QCV8MVIr/W/CEOM3J3D/4SDG/59XPmC7hDjH2JzqvA yqI+H4BbLMhuiAVbDdDyQg== 0000912057-97-008542.txt : 19970312 0000912057-97-008542.hdr.sgml : 19970312 ACCESSION NUMBER: 0000912057-97-008542 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970311 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INNOSERV TECHNOLOGIES INC CENTRAL INDEX KEY: 0000746072 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS REPAIR SERVICES [7600] IRS NUMBER: 963619990 STATE OF INCORPORATION: CA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13608 FILM NUMBER: 97554722 BUSINESS ADDRESS: STREET 1: 320 WESTWAY STREET 2: STE 520 CITY: ARLINGTON STATE: TX ZIP: 76018 BUSINESS PHONE: 8008485385 MAIL ADDRESS: STREET 1: 320 WESTWAY STREET 2: STE 250 CITY: ARLINGTON STATE: TX ZIP: 76018 FORMER COMPANY: FORMER CONFORMED NAME: MMI MEDICAL INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q UNITED STATES 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 QUARTER ENDED JANUARY 31, 1997 [ ] 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 0-13608 INNOSERV TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) CALIFORNIA 95-3619990 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 320 WESTWAY, SUITE 530, ARLINGTON, TEXAS 76018 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (817) 468-3377 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 twelve 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 ___ At March 10, 1997, the Registrant had outstanding 5,035,833 shares of its common stock, $.01 par value. INNOSERV TECHNOLOGIES, INC. FORM 10-Q JANUARY 31, 1997 TABLE OF CONTENTS Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of January 31, 1997 and April 30, 1996 3 Consolidated Statements of Operations for the three months ended January 31, 1997 and 1996 4 Consolidated Statements of Operations for the nine months ended January 31, 1997 and 1996 5 Consolidated Statements of Cash Flows for the nine months ended January 31, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURE 14 INDEX TO EXHIBITS 15 2 INNOSERV TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) January 31, 1997 April 30, (Unaudited) 1996 ----------- --------- ASSETS Current assets Cash and cash equivalents $ 1,551 $ 941 Receivables 4,445 5,238 Inventory: Spare parts and supplies, net 4,966 5,580 Inventory held for sale 983 1,878 Prepaid expenses 268 350 ------- ------- Total current assets 12,213 13,987 Equipment, net 4,945 6,186 Goodwill, net 3,430 3,544 Other assets 55 123 ------- ------- $20,643 $23,840 ------- ------- ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term debt $ 1,046 $ 862 Accounts payable 4,045 4,613 Accrued liabilities 2,804 3,090 Deferred revenues 3,329 4,399 ------- ------- Total current liabilities 11,224 12,964 Long-term debt 500 910 Shareholders' equity Preferred stock, $.01 par value: 5,000,000 shares authorized; no shares issued -- -- Common stock, $.01 par value: 10,000,000 shares authorized; 5,035,833 issued 51 51 Paid-in capital 17,303 17,303 Accumulated deficit (8,435) (7,388) ------- ------- Total shareholders' equity 8,919 9,966 ------- ------- $20,643 $23,840 ------- ------- ------- ------- The accompanying notes are an integral part of these financial statements. 3 INNOSERV TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended January 31, --------------------- 1997 1996 ------- ------- Revenues $10,231 $11,062 Costs and expenses: Cost of operations 8,129 9,263 Depreciation and amortization 499 493 Selling and administrative 1,524 2,222 Interest expense (income), net 43 (14) ------- ------- Total costs and expenses 10,195 11,964 ------- ------- Income (loss) before income taxes 36 (902) Benefit for income taxes -- (362) ------- ------- Net income (loss) $ 36 $ (540) ------- ------- ------- ------- Per share information: Net income (loss) $ .01 $ (.11) ------- ------- ------- ------- Weighted average shares outstanding 5,036 5,037 ------- ------- ------- ------- The accompanying notes are an integral part of these financial statements. 4 INNOSERV TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Nine Months Ended January 31, -------------------- 1997 1996 ------- ------- Revenues $32,703 $34,928 Costs and expenses: Cost of operations 27,273 27,976 Depreciation and amortization 1,515 1,479 Selling and administrative 4,823 6,185 Interest expense, net 139 70 ------- ------- Total costs and expenses 33,750 35,710 ------- ------- Loss before income taxes (1,047) (782) Benefit for income taxes -- (313) ------- ------- Net loss $(1,047) $ (469) ------- ------- ------- ------- Per share information: Net loss $ (.21) $ (.09) ------- ------- ------- ------- Weighted average shares outstanding 5,036 5,037 ------- ------- ------- ------- The accompanying notes are an integral part of these financial statements. 5 INNOSERV TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended January 31, ------------------- 1997 1996 -------- ------- Cash flows from: Operations - Net loss $ (1,047) $ (469) Adjustments to reconcile net loss to net cash flows from operations: Depreciation and amortization 1,515 1,479 Gain on disposal of equipment -- (68) Deferred income taxes -- (57) Changes in assets and liabilities: Receivables 793 1,019 Inventory 1,509 (896) Prepaid expenses 82 (92) Other assets 68 (342) Accounts payable (568) 1,006 Accrued liabilities (286) (1,101) Deferred revenues (1,070) 876 -------- ------- Net cash provided by operations 996 1,355 Investments and acquisitions - Sale of equipment -- 180 Purchase of equipment (160) (1,085) -------- ------- Net cash used for investments and acquisitions (160) (905) Financing activities - Borrowings from line of credit 242 800 Proceeds from long-term debt -- 1,500 Principal payments of long-term debt (468) (3,965) -------- ------- Net cash used for financing activities (226) (1,665) -------- ------- Net increase (decrease) in cash and cash equivalents 610 (1,215) Cash and cash equivalents at beginning of period 941 1,827 -------- ------- Cash and cash equivalents at end of period $ 1,551 $ 612 -------- ------- -------- ------- The accompanying notes are an integral part of these financial statements. 6 INNOSERV TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 1997 (UNAUDITED) 1. GENERAL The consolidated financial statements included herein have been prepared by InnoServ Technologies, Inc. ("InnoServ") without audit, include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three months and nine months ended January 31, 1997 and 1996, pursuant to the rules and regulations of the Securities and Exchange Commission, and include the accounts of InnoServ and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. Any and all adjustments made are of a normal and recurring nature in accordance with Rule 10-01(b)(8) of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulation, however, InnoServ believes that the disclosures in such financial statements are adequate to make the information presented not misleading. These financial statements should be read in conjunction with InnoServ's annual report on Form 10-K for the fiscal year ended April 30, 1996, filed with the Securities and Exchange Commission. The results of operations for the nine months ended January 31, 1997, are not necessarily indicative of the results that may be expected for the year ending April 30, 1997. 2. INTEREST EXPENSE, NET Interest expense is net of interest income of $5,000 and $4,000 for the three months ended January 31, 1997 and 1996, respectively. Interest expense is net of interest income of $28,000 and $20,000 for the nine months ended January 31, 1997 and 1996, respectively. 3. SUPPLEMENTAL CASH FLOW DISCLOSURE Interest and income taxes paid in the nine months ended January 31, 1997 and 1996 were as follows: Nine Months Ended January 31, ---------------------- 1997 1996 -------- -------- Interest $174,000 $111,000 Income taxes $ 53,000 $ 17,000 7 INNOSERV TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 1997 (UNAUDITED) 4. LONG-TERM DEBT InnoServ has a loan agreement which contains a $1,000,000 term loan expiring January 30, 1999, and a $500,000 revolving line of credit for working capital, against which InnoServ had outstanding borrowings of $498,000 at January 31, 1997. Obligations under the loan agreement are secured by a security interest in InnoServ's accounts receivable, inventory and equipment. The principal of the term loan is payable in equal quarterly installments of $125,000. Interest on the term loan is payable quarterly and is payable monthly under the revolving line of credit. The interest rate on both the term loan and the revolving line of credit is 1.0 percent above the prime rate and was 9.25 percent at January 31, 1997. The loan agreement contains financial covenants including maintenance of certain financial ratios, net worth requirements and restrictions on future borrowings and payment of dividends. InnoServ was in compliance with such financial covenants at January 31, 1997. The revolving line of credit expires on March 12, 1997, at which time InnoServ expects to restructure the loan agreement with its bank to provide for a new $1,500,000 term loan and to eliminate the revolving line of credit. The new term loan is expected to expire on January 30, 1999, and will require monthly principal and interest payments. The interest rate is expected to be 1.0 percent above the prime rate. 5. RESTRUCTURING In the fourth quarter of fiscal 1996, InnoServ adopted a plan to reorganize its operations in order to strategically focus on its comprehensive asset management services business ("Asset Management"). As a result of this reorganization, InnoServ recorded restructuring charges in the fourth quarter of fiscal 1996 of $154,000 for employee termination benefits for 25 employees. As of January 31, 1997, $149,000 of this amount had been paid to 29 employees and this reorganization was substantially complete. An additional $6,000 in employee termination benefits are expected to be paid in the fourth quarter of fiscal 1997. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THIRD QUARTER FISCAL 1997 COMPARED TO THIRD QUARTER FISCAL 1996 Consolidated revenues for the third quarter of fiscal 1997 were $10,231,000 as compared to $11,062,000 in the same period of fiscal 1996, a decline of $831,000, or 8 percent. Revenues from computed tomography ("CT") maintenance service agreements decreased approximately $850,000 primarily as a result of the continued decline in the number and average contract amount of CT maintenance service agreements in effect as older equipment is being upgraded or removed from service by customers and InnoServ's decision to not renew certain CT maintenance agreements in unprofitable locations. Revenues from equipment sales decreased approximately $490,000 primarily as a result of the sale of refurbished equipment in the third quarter of fiscal 1996. Revenues at Advanced Imaging Technologies, Inc. ("AIT") were approximately $210,000 lower than the revenues in the same period in fiscal 1996 as a result of a decline in revenues from maintenance service agreements and lower sales of x-ray film, chemistry and related accessories. Offsetting these declines, revenues from Asset Management and multi-vendor services increased approximately $740,000 as InnoServ continues to focus on the growing market for these type services. Cost of operations decreased $1,134,000 from the same period in fiscal 1996 and as a percent of revenues declined from 84 percent to 79 percent. The fiscal 1996 cost of operations included a $701,000 charge for physical inventory adjustments and unfavorable production variances associated with the reloading and rework of CT tube inventory and $98,000 of restructuring expenses as a result of the relocation of InnoServ's headquarters operations. These costs were offset in the quarter by $359,000 for a payment received against an insurance claim. The decrease in cost of operations in fiscal 1997 also included approximately $410,000 as a result of the lower equipment sales and approximately $220,000 as a result of cost reductions associated with InnoServ's maintenance business. Selling and administrative expenses decreased $698,000, or 31 percent, from the prior year primarily as a result of savings from the consolidation of InnoServ's administrative functions, lower selling expenses and restructuring expenses of $313,000 recorded in fiscal 1996 for the relocation of InnoServ's headquarters operations. Depreciation and amortization expenses did not change significantly quarter to quarter. Income before income taxes for the third quarter of fiscal 1997 was $36,000 as compared to a loss of $902,000 in the third quarter of fiscal 1996. The results for the third quarter of fiscal 1997 represent InnoServ's first profitable quarter since the second quarter of fiscal 1996. The improved performance was primarily the result of cost savings from the consolidation of InnoServ's administrative functions and actions taken over the past year in InnoServ's maintenance service operations to provide services required by customers on a more cost effective basis. This included selective personnel reductions, changes in employee benefit and incentive compensation programs, and lower utilization of outside labor, services and materials. InnoServ is continuing to implement cost containment actions in response to the declining revenues from CT maintenance agreements. 9 InnoServ did not recognize a tax provision in the third quarter of fiscal 1997 as net operating losses were available from previous periods to offset the operating income for the current quarter. At January 31, 1996, the effective tax rate for fiscal 1996 was estimated to be 40 percent and a corresponding benefit for income taxes was recorded for the three months ended January 31, 1996. NINE MONTHS FISCAL 1997 COMPARED TO NINE MONTHS FISCAL 1996 Consolidated revenues for the first nine months of fiscal 1997 were $32,703,000 as compared to $34,928,000 in the same period of fiscal 1996, a decline of $2,225,000, or 6 percent. Revenues from CT maintenance service agreements decreased approximately $4,740,000 primarily as a result of the continued decline in the number and average contract amount of CT maintenance service agreements in effect as older equipment is being upgraded or removed from service by customers and InnoServ's decision to not renew certain CT maintenance agreements in unprofitable locations. Revenues from equipment sales decreased approximately $610,000 primarily as a result of lower customer demand for refurbished equipment. Revenues at AIT were approximately $560,000 lower as a result of lower sales of x-ray film, chemistry and related accessories. Additionally, revenues from InnoServ's diagnostic mobile imaging operations were approximately $440,000 lower than the revenues in the same period in fiscal 1996 as InnoServ discontinued its shared services program at the end of the first quarter of fiscal 1996. Offsetting these declines, revenues from Asset Management and multi-vendor services increased approximately $3,950,000 as InnoServ continues to focus on the growing market for these type services. Cost of operations decreased $703,000 from the same period in the prior fiscal year primarily due to the decline in revenues; however, as a percent of revenues, cost of operations increased from 80 percent to 83 percent. This increase as a percent of revenues was primarily the result of costs required to provide services for Asset Management agreements, while InnoServ was not able to reduce its costs to service CT maintenance agreements proportionately throughout the nine months due to certain fixed support costs and the need to retain field service technicians in certain locations despite a declining revenue base in those locations. Selling and administrative expenses decreased $1,362,000, or 22 percent, from the prior year primarily as a result of savings from the consolidation of InnoServ's administrative functions, lower selling expenses and restructuring expenses of $313,000 recorded in fiscal 1996 for the relocation of InnoServ's headquarters operations. Depreciation and amortization expenses did not change significantly between the two periods. The loss before income taxes for the first nine months of fiscal 1997 was $1,047,000 as compared to a loss of $782,000 in the first nine months of fiscal 1996. The loss in fiscal 1997 was primarily the result of unfavorable operating margins associated with InnoServ's maintenance business during the first half of fiscal 1997. Because InnoServ employs field service engineers over a wide geographic area, the revenues were not sufficient in certain locations to cover the direct and indirect costs of providing maintenance and repair services. InnoServ is continuing to implement plans to reorganize its service operations to more cost effectively provide the services required by its customers and to discontinue service in selected locations upon the expiration of the existing maintenance agreements in those locations. InnoServ believes these actions, coupled with strategic changes it is making in the operations of the CT and Asset Management businesses and efforts to expand the revenue base, will improve InnoServ's operations. 10 InnoServ did not recognize a tax benefit from the operating loss for the first nine months of fiscal 1997. Under Statement of Financial Accounting Standard No. 109 ("SFAS 109"), "Accounting for Income Taxes," net operating losses enter into the calculation of deferred tax assets and liabilities. At January 31, 1997, InnoServ had an estimated net deferred tax asset of $5,450,000, primarily as a result of net operating losses. In accordance with SFAS 109, InnoServ recorded a valuation allowance for the full amount of the net deferred tax asset. The ultimate realization of the deferred tax asset depends on the ability of InnoServ to generate sufficient taxable income in the future. While InnoServ believes the deferred tax asset will be substantially realized by future operating results, due to the cumulative losses incurred in recent years the deferred tax assets do not currently meet the criteria for recognition under SFAS 109. At January 31, 1996, the effective tax rate for fiscal 1996 was estimated to be 40 percent and a corresponding benefit for income taxes was recorded for the nine months ended January 31, 1996. LIQUIDITY AND CAPITAL RESOURCES At January 31, 1997, InnoServ had working capital of $989,000, of which $1,551,000 was in cash and cash equivalents. Operations provided $996,000 of cash for the nine months ended January 31, 1997, primarily as a result of the non-cash effect of depreciation and amortization of $1,515,000 on the net loss of $1,047,000 and a $1,509,000 reduction in inventory due to a decline in CT tube inventory as a result of lower requirements for inventory because of the declining number of CT maintenance service agreements in effect and management controls on purchases, the sale of refurbished CT and magnetic resonance imaging scanners, and the amortization of spare parts inventory. Additionally, receivables declined $793,000 due to successful collection activities and lower revenues. These funds were used to reduce accounts payable by $568,000 and accrued liabilities by $286,000. Deferred revenues also declined $1,070,000 as a result of the timing of cash receipts from customers, a lower base of maintenance agreements in effect and the shipment of refurbished scanners in the nine months for which payment had been received as of April 30, 1996. InnoServ's allowance for doubtful accounts at January 31, 1997, was $890,000, or 17 percent of gross accounts receivable. InnoServ's customers include hospitals, physician practices, outpatient clinics and imaging centers. Some of these customers are thinly capitalized, operate on small margins and experience cash flow difficulties due to the lengthy time required to receive reimbursements from Medicare and insurance companies. The changes occurring in the healthcare industry, primarily the move to managed care, has weakened healthcare providers' ability to honor their debts and have forced some of the providers out of business. As a result of these and other factors, InnoServ has experienced difficulty in collecting on certain of its accounts receivable. InnoServ has a loan agreement which contains a $1,000,000 term loan expiring January 30, 1999, and a $500,000 revolving line of credit for working capital, against which InnoServ had outstanding borrowings of $498,000 at January 31, 1997. Obligations under the loan agreement are secured by a security interest in InnoServ's accounts receivable, inventory and equipment. The principal of the term loan is payable in equal quarterly installments of $125,000. Interest on the term loan is payable quarterly and is payable monthly under the revolving line of credit. The interest rate on both the term loan and the revolving line of credit is 1.0 percent above the prime rate and was 9.25 percent at January 31, 1997. The loan agreement contains financial covenants including maintenance of certain financial ratios, net worth requirements and restrictions on future borrowings 11 and payment of dividends. InnoServ was in compliance with such financial covenants at January 31, 1997. The revolving line of credit expires on March 12, 1997, at which time InnoServ expects to restructure the loan agreement with its bank to provide for a new $1,500,000 term loan and to eliminate the revolving line of credit. The new term loan is expected to expire on January 30, 1999, and will require monthly principal and interest payments. The interest rate is expected to be 1.0 percent above the prime rate. InnoServ does not foresee the need to make any significant capital purchases in the next twelve months and believes sufficient funds will be available from its operations to meet its working capital requirements. CAUTIONARY STATEMENT The statements in this Management's Discussion and Analysis and elsewhere in this report that are forward looking are based on current expectations which involve numerous risks and uncertainties. InnoServ's future results of operations and financial condition may differ materially due to many factors including InnoServ's ability to attract and retain Asset Management contracts, InnoServ's ability to implement its operating plan, particularly as it relates to the CT maintenance business, competitive and regulatory conditions in the healthcare industry generally, the availability of financing, and other factors, many of which are beyond the control of InnoServ. 12 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: The information required by this portion of Item 6 is set forth in the Index to Exhibits beginning on page 15. (b) Reports on Form 8-K: During the three months ended January 31, 1997, no reports were filed by the Registrant on Form 8-K. 13 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. DATED: March 10, 1997 INNOSERV TECHNOLOGIES, INC. By: /s/ Thomas Hoefert --------------------------------- Thomas Hoefert Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) 14 INDEX TO EXHIBITS Exhibit No. Description of Exhibit - ------- ---------------------- 10.1 Indemnity Agreement dated as of September 17, 1996 by and between Registrant and Thomas E. Carroll as director. 10.2 Stock Option Agreement dated as of December 11, 1996 by and between Registrant and Michael G. Puls. 10.3 Bonus Agreement dated December 20, 1996, between Registrant and Michael G. Puls. 10.4 Bonus Agreement dated December 20, 1996, between Registrant and Thomas Hoefert. 11.1 Computation of Per Share Earnings. 27.1 Financial Data Schedule. 15 EX-10.1 2 EXHIBIT 10.1 Exhibit 10.1 INDEMNITY AGREEMENT This Indemnity Agreement ("Agreement") is made and entered into as of the 17th day of September, 1996, by and between INNOSERV Technologies, Inc. - -Registered Trademark-, a California corporation (the "Corporation"), and Thomas E. Carroll (the "Agent"). WHEREAS, the Agent is currently serving as a Director of the Corporation and the Corporation wishes the Agent to continue in such capacity; NOW, THEREFORE, in consideration of the foregoing recital and the mutual agreements set forth herein, and in order to induce the Agent to continue to serve as a Director of the Corporation and in consideration of his continued service, the parties hereto hereby agree as follows: 1. The corporation will pay on behalf of the Agent, and his executors, administrators or assigns, any amount which the Agent is or becomes legally obligated to pay in connection with any claim or claims made against the Agent because of any act or omission or neglect or breach of duty, including any actual or alleged error or misstatement or misleading statement, which the Agent commits or suffers while acting in his capacity as a Director of the Corporation and solely because of being a Director. The payments which the Corporation will be obligated to make hereunder shall include, INTER ALIA, damages, judgments, settlements and costs, cost of investigation (excluding salaries of officers or employees of the Corporation) and costs of defense of legal actions, claims or proceedings and appeals therefrom, and costs of attachment or similar bonds; provided however, that the Corporation shall not be obligated to pay fines or other obligations or fees imposed by law or otherwise make any payments hereunder which it is prohibited by applicable law from paying as indemnity or for any other reason. 2. If a claim under this Agreement is not paid by the Corporation, or on its behalf, within 90 days after a written claim has been received by the Corporation, the claimant may at anytime thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, the claimant also shall be entitled to be paid the expense of prosecuting such claim. 3. In the event of payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Agent, who shall execute all papers required and shall do everything that may be necessary or appropriate to secure such rights, including the execution of such documents necessary or appropriate to enable the Corporation effectively to bring suit to enforce such rights. 4. The Corporation shall not be liable under this Agreement to make any payment in connection with any claim made against the Agent: (a) for which payment is actually made to the Agent under a valid and collectible insurance policy, except in respect of any excess beyond the amount of payment under such insurance; (b) for which the Agent is entitled to indemnity and/or payment by reason of having given notice of any circumstance which might give rise to a claim under any policy of insurance, the terms of which have expired prior to the effective date of this Agreement; (c) for which the Agent is indemnified by the Corporation otherwise than pursuant to this Agreement; (d) based upon or attributed to the Agent gaining in fact any personal profit or advantage to which the Agent was not legally entitled; (e) for an accounting of profits made from the purchase or sale by the Agent of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any state statutory law or common law; or (f) brought about or contributed to by the dishonesty of the Agent seeking payment hereunder; however, notwithstanding the foregoing, the Agent shall be protected under this Agreement to the fullest extent permitted under law as to any claims upon which suit may be brought against the Agent by reason of any alleged dishonesty on his part, unless a judgment or other final adjudication thereof adverse to the Agent shall establish that the Agent committed acts of active and deliberate dishonesty with actual dishonest purpose and intent, which acts were material to the cause of action so adjudicated. 5. No costs, charges or expenses for which indemnity shall be sought hereunder shall be incurred without the Corporation's consent, which shall not be unreasonably withheld. 6. The Agent, as a condition precedent to indemnification under this Agreement, shall give to the Corporation notice in writing as soon as practicable of any claim made against the Agent for which indemnity will or could be sought under this Agreement. Notice to the Corporation shall be directed to INNOSERV Technologies, Inc., 320 Westway, Suite 520, Arlington, Texas 76018, Attention: President and Chief Executive Officer (or such other address as the Corporation shall designate in writing to the Agent); notice shall be deemed received if sent by prepaid mail properly addressed, the date of such notice being the date postmarked. In addition, the Agent shall give the Corporation such information and cooperation as it may reasonably require and as shall be within the Agent's power. 7. Costs and expenses (including attorneys' fees) incurred by the Agent in defending or investigating any action, suit, proceeding or investigation shall be paid by the Corporation in advance of the final disposition of such matter, if the Agent shall undertake in writing to repay any such advances in the event that it is ultimately determined that the Agent is not entitled to indemnification under the terms of this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, no advance shall be made by the Corporation if a determination is reasonable and promptly made by the Board of Directors by a majority vote of a quorum of disinterested directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs) by independent legal counsel, that, based upon the facts known to the Board of Directors or counsel at the time such determination is made, (a) the Agent acted in bad faith or deliberately breached his duty to the Corporation or its stockholders, and (b) as a result of such actions by the Agent, it is more likely than not that it will ultimately be determined that the Agent is not entitled to indemnification under the terms of this Agreement. 8. Nothing herein shall be deemed to diminish or otherwise restrict the Agent's right to indemnification under any provision of the articles of incorporation or bylaws of the Corporation or under California law. 9. This Agreement shall be governed by and construed in accordance with internal laws of the State of California. 10. This Agreement shall be binding upon all successors and assigns of the Corporation (including any transferee of all or substantially all of its assets and any successor by merger or operation of law) and shall inure to the benefit of the heirs, personal representatives and estate of the Agent. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and signed as of the day and year first written. INNOSERV TECHNOLOGIES, INC. By: /s/ MICHAEL G. PULS ----------------------------------- Michael G. Puls Title: President and Chief Executive Officer AGENT: /s/ THOMAS CARROLL ---------------------------------- Thomas E. Carroll, Director EX-10.2 3 EXHIBIT 10.2 Exhibit 10.2 INNOSERV TECHNOLOGIES, INC.-Registered Trademark- STOCK OPTION AGREEMENT This Agreement is made as of the 11th day of December, 1996, by and between INNOSERV Technologies, Inc., a California corporation (the "Company"), and Michael G. Puls, the ("Optionee"). WHEREAS, Optionee's employment agreement letter (the "Employment Agreement") with the Company provides for a grant of options to purchase 150,000 shares of common stock of the Company pursuant to the "Company's Stock Incentive Plan" at fair market value on the date of his employment; WHEREAS, there are insufficient shares of common stock of the Company available for grant under the Company's 1992 Incentive Stock Option Plan to grant options to purchase 150,000 shares, notwithstanding the Stock Option Agreement between Optionee and the Company dated as of 27 December, 1995 ("Initial Grant") purporting to evidence the grant of options in such amount, and therefore 150,000 shares of the previously purported grants have been rescinded; WHEREAS, the Optionee and the Company desire to enter into the agreements set forth herein to evidence the grant of the same number of options as the number of such rescinded option share grant, at the same exercise price and the same vesting terms, on the terms and conditions set forth herein and the board of directors of the Company (the "Board of Directors") has authorized the grant to Optionee pursuant to Optionee's Employment Agreement and as a matter of separate inducement in connection with Optionee's engagement with the Company and not in lieu of any salary or other compensation for his or her services, of an option (the "Option") to purchase shares of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and conditions set forth herein. NOW, THEREFORE, IT IS AGREED: Section 1. SHARES OPTIONED. Optionee may purchase all or any part of an aggregate of 150,000 shares of Common Stock, subject to the terms and conditions hereinafter set forth. The Company and the Optionee hereby agree that the Stock Option Agreement between Optionee and the Company dated as of 27 December, 1995, to the extent it granted an option to purchase 150,000 shares of common stock, is hereby terminated and of no force and effect. This Option is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code of 1986 (the "Code"). Section 2. OPTION PRICE. The shares subject to this Option may be purchased at the price of $3.625 per share (which is the fair market value of the Common Stock on the date of the Initial Grant), on the terms and conditions set forth herein. "Fair market value" shall be equal to the closing price per share of Common Stock on the business day immediately preceding the date of grant as reported in the Wall Street Journal, Southwest Edition, or, if no closing price was so reported for such immediately preceding business day, the closing price for the next preceding day for which a closing price was reported, provided however, that the Board of Directors may utilize such other listing or reporting service or valuation method as, in its judgment, provides an accurate index of the fair market value of the Common Stock. Section 3. WHEN OPTION MAY BE EXERCISED. This option, shall become exercisable in installments on the anniversaries of the date of Optionee's Initial Grant of 27 December, 1995 indicated in the following table as to the number of shares set forth opposite said anniversaries, and each installment shall remain exercisable as to all of the shares indicated until and including the tenth anniversary of the date thereof, subject to the provisions of Section 5 and 6 hereof. Shares as to which this Option becomes exercisable pursuant to the foregoing provision may be purchased at any time thereafter prior to the expiration or termination of this Option. Anniversary of the Date of the Initial Grant Number of Shares ----------------------- ---------------- First 50,000 Second 50,000 Third 50,000 Section 4. NON-TRANSFERRABILITY OF OPTION. This Option may be exercised during the life of the Optionee only by the Optionee and may not be assigned, transferred, pledged, hypothecated, sold or otherwise disposed of in whole or in part, either voluntarily or involuntarily whether by operation of law or otherwise. In the event of the Optionee's death prior to the full exercise of this Option, this Option may be transferred by will or the laws of descent and distribution and may be exercised by the Optionee's transferees by will or by the laws of descent and distribution. Upon any attempt to transfer this Option otherwise than by will or the laws of descent and distribution, or to assign, pledge, hypothecate or otherwise dispose of this Option, or upon the levy of any execution, attachment or similar process upon this Option, this Option shall immediately terminate and become null and void. Section 5. TERMINATION OF EMPLOYMENT. If the Optionee ceases to be employed by the Company, except in the case of termination of employment resulting from death or disability (as defined in Section 105(d)(4) of the Code), this Option shall expire three months after such cessation of employment and during such period this Option shall be exercisable only as to those shares, if any, with respect to which the Optionee could have exercised this Option as of the last date of his or her employment, provided however, that all rights under this Option shall expire in any event on the date specified in Section 3 hereof. Section 6. DEATH OR DISABILITY OF THE OPTIONEE. If the Optionee should die or become disabled (within the meaning of Section 105(d)(4) of the Code) while employed by the Company or within any three month period after termination of his or her employment, Optionee, or in the case of death, the person or persons to whom Optionee's rights under the Option shall pass by will or the laws of descent and distribution, shall have the right, at any time within 12 months after the date of Optionee's termination of employment, to exercise this Option as to those shares, if any, with respect to which Optionee could have exercised this Option as of the date of Optionee's termination of employment; provided, however, that all rights under this Option shall expire in any event on the date specified in Section 3 hereof. Section 7. LEAVE OF ABSENCE. Military or sick leave shall not be considered a termination of employment for any purpose under this Agreement unless such a period exceeds 90 days and the Optionee's right to re-employment is not guaranteed either by statute or by contract, in which case the employment relationship shall be deemed to have terminated on the 91st day of such leave. Section 8. EXERCISE OF OPTION. This Option or any portion thereof may be exercised by written notice delivered to the Company at its principal offices 30 days prior to exercise, setting forth the number of shares with respect to which the Option is being exercised and the total purchase price, accompanied by full payment of the purchase price, in the form of a personal check (or certified or cashier's check, if required by the Company) or cash; provided, however, that the Board of Directors, in their absolute discretion, may allow Optionee to surrender shares of stock of the Company of the class subject to this Option in payment of such price. Any such shares shall be valued at the fair market value of such stock on the date of such exercise. If the Company is required to withhold on account of any present or future federal or state tax imposed as a result of such exercise, the notice of exercise shall be accompanied by personal check (or certified or cashier's check, if required by the Company) made payable to the order of the Company or cash in payment of the amount of such withholding. Upon receipt of notice and payment as aforesaid, the Company shall promptly make arrangement for the issuance to Optionee of the number of shares as to which this Option is exercised. Section 9. PARENT, SUBSIDIARY OR SUCCESSOR OF THE COMPANY. All references herein to the Company shall be deemed to include any parent or subsidiary of the Company (as defined in Section 425 of the Code) unless the context shall otherwise require or indicate. Section 10. FRACTIONAL SHARES. Notwithstanding any other provisions herein to the contrary, the Optionee shall in no event be entitled to exercise this Option for any fractional shares and any such fractional interests shall be disregarded. Section 11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. If the number of shares of Common Stock outstanding are increased, decreased or exchanged for or converted into cash, property or a different number or kind of securities, or if cash, property or securities are distributed in respect of such outstanding securities, in either case as a result of a reorganization, merger, consolidation, recapitalization, restructuring, reclassification dividend (other than a regular, quarterly cash dividend) or other distribution, stock split, reverse stock split or the like, or if substantially all of the property and assets of the Company are sold, then unless the terms of such transaction shall provide otherwise, the Board of Directors shall make appropriate and proportionate adjustments in the number and type of shares or other securities or cash or other property that may be acquired pursuant to this Option. Section 12. SUBSTITUTION OR ACCELERATION AND TERMINATION OF OPTION UNDER CERTAIN CIRCUMSTANCES. Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation or sale of substantially all of the property of the Company to another corporation, this Option shall terminate, unless, in connection with any such transaction, provision shall have been made in writing for the substitution of Options. As used herein, "substitution of options" shall mean either the issuance of a new option in exchange for this Option by the surviving corporation or its parent or subsidiary as such terms are defined in Section 425 of the Code in such form and on such terms and conditions that the substituted options shall meet the requirements of Section 425 of the Code. A substitute option may not be less favorable to the Optionee than this Option, except to the extent to qualify the same under Section 425 of the Code. In the event that the provision is not so made for the substitution of options in connection with any such transaction, exercisability of this Option shall become accelerated and the Optionee shall have the right, immediately prior to or concurrently with such transaction, to exercise this Option to the full extent theretofore not exercised, regardless of any installment provisions for the exercise of such option rights which may be provided in Section 3 hereof. Section 13. RIGHTS IN SHARES BEFORE ISSUANCE AND DELIVERY. Neither Optionee nor his or her transferees by will or the laws of descent and distribution shall be, or have any rights or privileges of, a shareholder of the Company with respect to any share issuable upon exercise of its Option, unless and until certificates representing such shares have been issued and delivered. Section 14. NOTICES. Any notice to be given to the Company shall be addressed to the Company in care of its Secretary at its principal office, or at such other address as the Company may hereinafter designate in writing to the Optionee, and any notice to the Optionee shall be addressed to him or her at the address given beneath his or her signature hereto, or at such other address as the Optionee may hereafter designate in writing to the Company. Any such notice shall have been deemed duly given when enclosed in a properly sealed envelope or wrap and addressed as aforesaid, registered or certified, and deposited, postage and registration or certification fee prepaid, in a post office or a branch post office regularly maintained due the United States Government. Section 15. LAWS APPLICABLE TO CONSTRUCTION. This Agreement has been executed and delivered the day and year first written above at Arlington, Texas and this agreement shall be construed and enforced in accordance with the laws of the State of California. Section 16. EFFECTIVE DATE. This Agreement shall be effective as of the effective date and time of the Registration Statement on Form S-8 registering the Shares issuable pursuant hereto. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. INNOSERV TECHNOLOGIES, INC. By: /s/ DUDLEY A. RAUCH ---------------------------------- Name: Dudley A. Rauch Title: Chairman OPTIONEE By: /s/ MICHAEL G. PULS ---------------------------------- Name: Michael G. Puls Title: President & CEO Address: 3020 Arbor Oaks Dr. Arlington, Tx 76006 Social Security Number: ###-##-#### EX-10.3 4 EXHIBIT 10.3 Exhibit 10.3 INNOSERV TECHNOLOGIES, INC. BONUS AGREEMENT This Bonus Agreement (this "Agreement") is entered into between InnoServ Technologies, Inc. (the "Company") and Michael G. Puls, President and Chief Executive Officer of the Company (the "Executive"). WITNESSETH: WHEREAS, the Executive is currently employed by the Company in the capacity of President and Chief Executive Officer; and WHEREAS, the board of directors of the Company (the "Board of Directors") has determined that it is in the best interests of the Company and the shareholders of the Company that the Company from time to time investigate strategic alternatives in order to maximize shareholder value; and WHEREAS, the Executive is a member of senior management of the Company and has access to proprietary information pertaining to the business and operations of the Company; and WHEREAS, the Board of Directors has determined that it is in the best interests of the Company to provide an incentive to the Executive to remain in the employ of the Company while the Company is investigating such strategic alternatives; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and Executive agree as follows: 1. Subject to paragraph 2 below, if Executive is a full-time employee of the Company in good standing on the closing of a Sale of the Company (as defined in paragraph 3 below), then Executive will be entitled to a one-time bonus of $150,000, less all applicable withholdings (the "Bonus"). The Bonus will be payable in full, in cash on the closing date of such Sale of the Company. 2. Executive will not be eligible for benefits hereunder if he resigns, retires, becomes disabled, fails to return from a leave of absence, dies, or is terminated for cause prior to the close of the Sale of the Company. 3. For purposes of this Agreement, a Sale of the Company shall be deemed to have occurred if the Company disposes of all of its stock or substantially all of its assets to another party, whether by way of merger, transfer of assets or otherwise, for cash or securities, in one or a series of transactions. 4. This Agreement is not and shall not be deemed an employment agreement, and shall not give the Executive the right to be retained in the employment of the Company. 5. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives, and assigns. 6. Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive, his beneficiaries or legal representatives. 7. If any provision of this Agreement shall be determined to be invalid, illegal or unenforceable in whole or in part, neither the validity of the remaining part of such provision nor the validity of any other provision of this Agreement shall in any way be affected thereby. In lieu of such invalid, illegal or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable. 8. This Agreement shall be governed by Texas law. 9. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 10. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument. [SIGNATURES ON THE NEXT PAGE] IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the day and year indicated below. INNOSERV TECHNOLOGIES, INC. Dated: December 20, 1996 By: /s/ Dudley A. Rauch ------------------------ ------------------------------ Name: Dudley A. Rauch ---------------------------- Its: Chairman ----------------------------- EXECUTIVE: Dated: December 20, 1996 /s/ Michael G. Puls ------------------------ --------------------------------- Printed Name: Michael G. Puls -------------------- EX-10.4 5 EXHIBIT 10.4 Exhibit 10.4 INNOSERV TECHNOLOGIES, INC. BONUS AGREEMENT This Bonus Agreement (this "Agreement") is entered into between InnoServ Technologies, Inc. (the "Company") and Thomas Hoefert, Vice President and Chief Financial Officer of the Company (the "Executive"). WITNESSETH: WHEREAS, the Executive is currently employed by the Company in the capacity of Vice President and Chief Financial Officer; and WHEREAS, the board of directors of the Company (the "Board of Directors") has determined that it is in the best interests of the Company and the shareholders of the Company that the Company from time to time investigate strategic alternatives in order to maximize shareholder value; and WHEREAS, the Executive is a member of senior management of the Company and has access to proprietary information pertaining to the business and operations of the Company; and WHEREAS, the Board of Directors has determined that it is in the best interests of the Company to provide an incentive to the Executive to remain in the employ of the Company while the Company is investigating such strategic alternatives; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and Executive agree as follows: 1. Subject to paragraph 2 below, if Executive is a full-time employee of the Company in good standing on the closing of a Sale of the Company (as defined in paragraph 3 below), then Executive will be entitled to a one-time bonus determined according to paragraph 4 below (the "Bonus"). The Bonus will be payable in full, in cash on the closing date of such Sale of the Company. 2. Executive will not be eligible for benefits hereunder if he resigns, retires, becomes disabled, fails to return from a leave of absence, dies, or is terminated for cause prior to the close of the Sale of the Company. 3. For purposes of this Agreement, a Sale of the Company shall be deemed to have occurred if the Company disposes of all of its stock or substantially all of its assets to another party, whether by way of merger, transfer of assets or otherwise, for cash or securities, in one or a series of transactions. 4. a. For purposes of this Agreement, Executive's Bonus shall be based upon the Sale Price (as hereinafter defined) of the Company. The Bonus shall be a cash payment, less all applicable withholdings, computed as follows: ------------------------------------------------------------------------ SALE PRICE AMOUNT OF BONUS ------------------------------------------------------------------------ up to $25,000,000 $125,000 ------------------------------------------------------------------------ $25,000,001 to $125,000 + ($75,000 x [(Sale Price - $29,999,999 $25,000,000)/$5,000,000]) ------------------------------------------------------------------------ $30,000,000 to $200,000 + ($50,000 x [(Sale Price - $34,999,999 $30,000,000)/$5,000,000]) ------------------------------------------------------------------------ $35,000,000 or more $250,000 ------------------------------------------------------------------------ b. The Sale Price of the Company, if a stock sale, shall be the product of (i) the average consideration paid for a share of common stock of the Company and (ii) the sum of (A) the number of such shares acquired by the other party to the transaction, plus (B) the number of such shares issuable upon exercise of options, warrants or other rights or conversion or exchange of securities all as outstanding on the date of this Agreement and, without duplication, as thereafter issued or granted. For the purpose of clause (i) of the foregoing sentence, all shares shall be deemed to have been acquired if more than 50% of the Company's outstanding common stock is acquired by a "group" as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934. c. For the purposes of calculating the Sale Price of the Company, equity securities constituting a part of the consideration referred to in clause (i) of paragraph 4.b. above that are traded on a national securities exchange or quoted on the National Association of Securities Dealers National Market System shall be valued at the last closing price thereof prior to the date of the consummation or closing of any such Sale of the Company. d. The Sale Price of the Company, if an asset sale, shall be the sum of (i) the cash (or other consideration) paid by the purchaser for such assets and (ii) any debt incurred by the purchaser of such assets. 5. This Agreement is not and shall not be deemed an employment agreement, and shall not give the Executive the right to be retained in the employment of the Company. 6. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representative, and assigns. 7. Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive, his beneficiaries or legal representatives. 8. If any provision of this Agreement shall be determined to be invalid, illegal or unenforceable in whole or in part, neither the validity of the remaining part of such provision nor the validity of any other provision of this Agreement shall in any way be affected thereby. In lieu of such invalid, illegal or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable. 9. This Agreement shall be governed by Texas law. 10. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 11. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument. [SIGNATURES ON THE NEXT PAGE] IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the day and year indicated below. INNOSERV TECHNOLOGIES, INC. Dated: December 20, 1996 By: /s/ Michael G. Puls ------------------------ ------------------------------ Name: Michael G. Puls ---------------------------- Its: President and CEO ----------------------------- EXECUTIVE: Dated: December 20, 1996 /s/ Thomas Hoefert ------------------------ --------------------------------- Printed Name: Thomas Hoefert -------------------- EX-11.1 6 EXHIBIT 11.1 EXHIBIT 11.1 - COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share amounts) Three Months Ended Nine Months Ended January 31, January 31, ------------------ ------------------ 1997 1996 1997 1996 ------- ------- -------- ------- Primary: Earnings: Net income (loss) $ 36 $ (540) $ (1,047) $ (469) Shares: Weighted average shares outstanding 5,036 5,036 5,036 5,036 Net shares issuable on exercise of certain stock options -- 1 -- 1 ------- ------- -------- ------- Weighted average shares outstanding, as adjusted 5,036 5,037 5,036 5,037 Per share amounts: Net income (loss) $ .01 $ (.11) $ (.21) $ (.09) ------- ------- -------- ------- ------- ------- -------- ------- Fully diluted (A): Earnings: Net income (loss) $ 36 $ (540) $ (1,047) $ (469) Shares: Weighted average shares outstanding 5,036 5,036 5,036 5,036 Net shares issuable on exercise of certain stock options -- 3 45 6 ------- ------- -------- ------- Weighted average shares outstanding, as adjusted 5,036 5,039 5,081 5,042 Per share amounts: Net income (loss) $ .01 $ (.11) $ (.21) $ (.09) ------- ------- -------- ------- ------- ------- -------- -------
Note A: This calculation is submitted for the three months ended January 31, 1996, and the nine months ended January 31, 1997 and 1996, in accordance with Regulation S-K item 601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive result. EX-27.1 7 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS APR-30-1997 MAY-01-1996 JAN-31-1997 1,551 0 5,039 890 5,949 12,213 28,195 23,250 20,643 11,224 1,048 0 0 51 8,868 20,643 1,727 32,703 1,299 27,273 1,515 (126) 167 (1,047) 0 (1,047) 0 0 0 (1,047) (.21) (.21)
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