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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 of 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994
Commission File Number 1-1969
CERIDIAN CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 52-0278528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8100 34th Avenue South
Minneapolis, Minnesota 55425
(Address of principal executive offices)
Telephone No.: (612) 853-8100
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which
registered:
Common Stock, par value $.50 New York Stock Exchange,
Inc.; The Chicago Stock
Exchange; and Pacific Stock
Exchange
Depositary Shares, each representing
a One One-Hundredth Interest in a
Share of 5/% Cumulative Convertible
Exchangeable Preferred Stock,
Par Value $100........................ New York Stock Exchange, Inc.
5/% Cumulative Convertible
Exchangeable Preferred Stock,
Par Value $100........................ None
5/% Convertible Subordinated
Debentures Due 2008................... None
Has the Registrant (1) filed all reports required by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months and (2)
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 voting stock held by non-affiliates of
the Registrant as of February 28, 1995 was $1,418,184,842.
The shares of Common Stock outstanding as of February 28, 1995 were
45,534,311.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1994 Annual Report to Stockholders of Registrant: Parts I & II
Portions of the Proxy Statement for Annual Meeting of Stockholders, May 10,
1995: Parts III and IV
1
CERIDIAN CORPORATION
PART I
Item 1. Business.
Ceridian Corporation ("Ceridian" or the "Company"), known as Control
Data Corporation until June 1992, has been significantly reshaped through
divesting or discontinuing various business units and by narrowing and
reorienting the focus of certain of its continuing operations. As a result
of these reshaping efforts, the Company is comprised of two business
segments, Information Services and Defense Electronics.
Information Services Segment
The Information Services segment, which consists of Ceridian Employer
Services ("Employer Services") and Arbitron, provides technology-based
services on a repetitive or subscription basis as well as applications
software. The Information Services businesses collect, manage and analyze
data on behalf of customers, report information resulting from that process
to customers, and provide customers with related software applications and
services. The products and services provided by the Information Services
businesses address specified information management needs of other
businesses to help them to improve their productivity and competitive
position. The technology-based products and services of the Information
Services businesses are typically provided through long-term customer
relationships that result in a high level of recurring revenue.
Information regarding Information Services' revenue, operating profit or
loss and identifiable assets for the years 1992-1994 is in Note G, Segment
Data, on page 48 of the Company's 1994 Annual Report to Stockholders, which
is incorporated herein by reference.
Employer Services. Employer Services offers a broad range of products
and services designed to help employers more effectively manage their work
forces and the information that is integral to human resource processes.
These products and services include payroll processing, payroll tax filing
and training services; payroll, human resources management and benefits
administration software; and employee assistance programs. Employer
Services' revenue for the years 1992, 1993 and 1994 was $209.9 million,
$232.6 million and $303.3 million, respectively.
Markets. The employer services market covers a comprehensive range of
information management services and software and employer/employee
assistance services. These products and services include transaction-
oriented information management services such as payroll, tax filing and
benefits administration services; management support software and services
such as human resource information, skills management, time and attendance
and applicant tracking systems; employee-focused services such as employee
assistance programs; and other services such as compensation and benefits
consulting. The market for these products and services is expected to
continue to grow as companies continue to outsource administrative
services, seek to further automate internal processes, and avail themselves
of external expertise to foster high performance workplaces. The factors
driving the movement toward outsourcing include the increasing scope and
complexity of legislation regulating businesses and their employees, the
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rising costs of providing payroll and other employer services in-house and
the introduction of new types of employer services.
Traditionally, the employer services market consisted of payroll
processing, payroll tax filing and other services that were transaction-
based, generally routinized and technology-oriented. Although these types
of services continue to account for a significant portion of the employer
services market and demand for them continues to grow, the employer
services market is expanding into other value-added services that address
other aspects of the employment relationship, such as human resource
management, benefits administration, compensation, staffing, training
development and employee relations. For example, employers seek to combine
records for payroll and these value-added services to create a single
database of employee information for on-line inquiry, updating and
reporting in areas important to human resource administration and
management. Employer Services believes that the ability to provide a
number of these other services and to integrate payroll and human resource
information databases can be an important factor in customer retention
because it provides customers with a stronger connection to their payroll
service provider and offers a means to distinguish their service from
others provided in the market. Accordingly, it is increasingly important
for companies in the employer services market, particularly for those
targeting medium and large employers, to offer a wide range of services
that are designed to address a broad spectrum of employer services needs.
The Company segments the employer services market by classifying
employers into three categories: small (fewer than 75 employees), medium
(75 to 5,000 employees) and large (over 5,000 employees). Small employers
in the payroll services market are relatively price sensitive, tend to
focus more narrowly on payroll services and payroll tax filing and have low
costs in switching from one provider to another. Medium and large
employers generally require more complex, customized payroll services, have
a greater need for additional services and integrated databases and have
higher costs in switching from one provider to another.
Services. During 1994, payroll processing and payroll tax filing
services accounted for 82% of Employer Services' total revenue. Payroll
processing consists primarily of preparing and furnishing employee payroll
checks, direct deposit advices and supporting journals, summaries and other
reports. Payroll tax filing services consist primarily of processing
federal, state and local withholding taxes on behalf of employers based on
payroll information provided, and remitting those taxes along with
necessary reports to the appropriate taxing authorities. These payroll-
related services are typically priced on a fee-per-item-processed basis,
and quarterly revenue consequently fluctuates with the volume of items
processed. Revenue from payroll tax filing services also includes
investment income Employer Services receives from tax filing deposits
temporarily held pending remittance on behalf of customers to taxing
authorities. Over half of Employer Services' 1994 payroll tax filing
revenue was attributable to such investment income. As a result, quarterly
revenue and profitability will vary as a result of changes in interest
rates and in the amount of tax filing deposits held by Employer Services.
Because the volume of payroll items processed increases in the first and
fourth quarters of each year in connection with employers' year-end
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reporting requirements, and because the amount of tax filing deposits also
tends to be greatest in the first quarter, Employer Services' revenue and
profitability tend to be greater in those quarters.
Payroll processing is currently conducted by Employer Services at 31
district offices located throughout the United States, all of which are
linked in a nationwide network. Employer Services' payroll system allows
customers to input their own payroll data via personal computers, transmit
the data on-line to Employer Services for processing, retrieve reports and
data files from Employer Services and print reports and, in certain
instances, payroll checks or direct deposit advices on site. Customers can
also input payroll data by telephone or batch transmittal, with payroll
checks and related reports prepared by Employer Services at one of its
district processing centers. Employer Services' payroll system also
interfaces with both customer and third-party transaction processing
systems to facilitate services such as direct deposit of payroll checks.
Through its MiniData Services, Inc. subsidiary, the Company provides
payroll services to customers in the mid-Atlantic states with fewer than
100 employees.
Because Employer Services' existing payroll processing system
incorporates older technology, particularly the payroll processing software
utilized, the system requires a significant amount of manual intervention
and is relatively labor intensive to install, maintain and customize. As a
result, the Company decided in 1993 to upgrade that software in order to
achieve a payroll processing system that would be more highly automated,
easier and less costly to install and maintain and would provide greater
flexibility to customers in terms of product and service options. Toward
that end, the Company acquired Tesseract Corporation ("Tesseract") in
June 1994. Tesseract, which provides proprietary payroll processing
software to very large companies that process their payrolls internally,
has provided the Company with a proven payroll processing software
application that contains the features desired by the Company and is being
adapted to run in Employer Services' multi-customer data center
environment. The Company is capitalizing certain costs of this software
adaptation effort.
In connection with the decision to enhance its payroll processing
software, Employer Services also determined in late 1993 to seek additional
operational efficiencies by discontinuing payroll data processing in its
district offices and consolidating such processing in centralized
facilities. Toward that end, the Company entered into a technology
services agreement with Integrated Systems Solutions Corporation
("ISSC"), a wholly-owned subsidiary of International Business Machines
Corporation in January 1995. Under that agreement, the term of which
extends through December 31, 2004, ISSC will provide the centralized
payroll data processing services required by Employer Services in
connection with the program to consolidate payroll data processing from the
district offices into centralized facilities. The other aspects of
Employer Services' payroll processing activities, such as the printing of
checks and reports, will continue to occur in its district offices.
Employer Services believes that the technology services agreement with ISSC
represents the most expeditious, cost-effective and technologically sound
and secure means for it to effect the consolidation of its payroll data
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processing. The timing of this consolidation will principally be
determined by the timing of the Company's introduction of its enhanced
payroll processing software. The Company expects that beta testing of this
software with selected new and existing customers will begin in mid-1995,
that all new customers and additional existing customers will begin
utilizing the this software in the first quarter 1996, and that the
transition of the remainder of the existing customer base to the enhanced
software will begin in mid-1996 and continue for approximately eighteen
months.
Also in the fourth quarter 1993, Employer Services decided to
consolidate most aspects of telephonic customer support from its district
offices into a single national telephone customer support center. By
creating a national telephone support center, Employer Services believes
that it can improve customer service by creating a single point of contact
for most customer inquiries involving payroll processing or tax filing,
while at the same time eliminating inefficiencies inherent in the current
system involving multiple points of contact. Completion of the phased
transition of customers to the national center is expected to be completed
by the end of the first quarter 1995. Employer Services will, however,
retain the capability in the district offices to address certain customer
support needs.
Employer Services' payroll tax filing services are provided by its
Systems Tax Service ("STS") division located in Fountain Valley,
California. STS was acquired by the Company in October 1993 to provide the
Company with a more highly automated payroll tax filing system, and 1994
payroll tax filing processing for all of Employer Services' tax filing
customers was conducted on STS' system. The STS acquisition also expanded
Employer Services' tax filing customer base beyond employers who utilize
Employer Services' payroll processing service to include local and regional
payroll processors who utilize STS' tax filing service for their customers.
Further increasing the tax filing customer base was the December 1994
acquisition of the assets of Payroll Tax Management, Inc., a payroll tax
filing processor which had fiscal 1994 revenue of $3.8 million. As noted
earlier, compensation for providing tax filing services is a combination of
fee generated revenue and investment income from tax payments held pending
remittance to taxing authorities. During 1994, the Company established a
tax filing trust to hold these funds to more clearly evidence the fiduciary
capacity in which such funds are held.
Employer Services' human resource information service provides
application software to customers that enables them to combine their
payroll and human resource information databases and can serve as a
"front-end" to Employer Services' payroll processing system. This
enables the customer to create a single database of employee information
for on-line inquiry, updating and reporting in areas important to human
resource administration and management. Employer Services has developed
and expects to offer during 1995 an integrated human resource/payroll
information management software to run in a Windows* environment in
conjunction with its enhanced payroll processing software. Employer
* "Windows" is a trademark of Microsoft Corporation.
5
Services also provides related human resources information management
consulting services.
Employer Services' employee assistance service provides confidential,
around-the-clock assessment and referral services to customers' employees
to help them address legal and financial problems, substance abuse, child
care, eldercare and other personal problems. Employer Services maintains a
network of professional counselors who are available to work with employees
to solve problems and to provide referrals to specialists if such referrals
are warranted by the circumstances. Employer Services expanded its
presence in the employee assistance field during 1994 by acquiring the
customer base of Human Effectiveness, Inc., which generated approximately
$1 million of revenue in 1994.
The acquisition of Tesseract and User Technology Services, Inc.
("UserTech") during 1994 have enabled Employer Services to further expand
its range of products and services. In addition to providing the Company
with the payroll processing software that will be the core of Employer
Services' enhanced payroll processing system, the Tesseract acquisition
provided payroll processing, human resources management and benefits
administration software offerings for large customers with complex
information management needs that prefer to handle such tasks in-house.
Although Tesseract's product offerings have historically been mainframe-
based, it is developing client/server versions of these offerings.
UserTech, which was acquired in October 1994 and had fiscal 1994 revenue of
$4.4 million, provides training, communications and other services to
facilitate customers' effective utilization of information management
systems.
Employer Services expects that the enhancement of its payroll
processing system software and the development of a new generation of human
resources information software, including applications in Windows and
client/server environments, will require a relatively high level of
investment in technology (a portion of which will be capitalized) and may
entail certain risks, such as possible delays in the development process,
that can often occur in software development projects. In addition, the
transition of customers from payroll processing on the existing system in
district offices to centralized processing on the enhanced system is
expected to be a complicated undertaking that must be carefully managed to
maintain acceptable levels of customer satisfaction during the transition
process. This process is also expected to entail a relatively high level
of incremental costs, such as costs to temporarily provide duplicate
processing of payrolls at district offices and the centralized facilities,
associated with a conversion plan intended to insure that customers will
incur no interruption of or decline in service during the transition
period. The portion of these incremental costs relating to the
discontinuance of processing in the district offices is covered by existing
restructuring reserves.
Sales and Marketing. Employer Services markets its products and
services through a direct sales force operating through about three dozen
offices located throughout the U.S. A modest decrease in the size of
Employer Services' sales force during 1994 reflected increased
concentration of sales and marketing efforts on medium and large employers.
6
Employer Services also has established marketing relationships with banks,
accounting firms and insurance companies, pursuant to which Employer
Services offers its services to the business clients of these entities.
Employer Services has also entered into a marketing agreement with ISSC
under which ISSC will remarket Employer Services' payroll and tax filing
services and Tesseract software and services where payroll software and
services are required as part of a larger information technology
outsourcing project, and Employer Services will jointly market with ISSC
its information technology services where a customer requires information
technology outsourcing beyond Employer Services' payroll services.
Employer Services markets its payroll processing and tax filing
services by identifying customers that use or are contemplating using a
third party service provider. Although Employer Services' most significant
source of customer leads for such services are referrals from existing
customers and from the numerous banks and accounting firms with which it
has relationships, it also identifies potential customers through newspaper
articles, periodicals, trade publications and, to a limited extent, direct
mailings. Customer leads for Employer Services' other products and
services are generally obtained through referrals, trade shows and direct
sales efforts. Employer Services currently has somewhat more than 30,000
contracts with approximately 25,000 different customers from a wide range
of industries and markets, with no single customer representing more than
1% of Employer Services' 1994 revenue.
Employer Services believes that further increasing the effectiveness
of its sales and marketing efforts will be an important factor in achieving
its profitability and growth objectives. Toward that end, Employer
Services is increasingly orienting sales and marketing efforts toward
medium and large employers, which tend to purchase a greater variety of
services, require more flexibility and customization in services offerings
and have higher costs associated with changing providers. At the same
time, the previously described efforts to upgrade technology and expand
product and service offerings should also increase sales effectiveness by
shortening the length of the sales/installation cycle and by building
greater variety and flexibility into service offerings. Employer Services'
goal is to identify the overall human resource information management needs
arising out of the employment relationship, and address those needs through
a broad range of integrated customer-driven solutions, such as outsourcing
services, software applications and consulting services. The Company
believes that broadening and integrating its product and service offerings
should also play an important role in attracting and retaining customers by
differentiating Employer Services from other service providers and by
providing customers with a stronger connection to Employer Services.
Competition. The employer services industry is characterized by
intense competition in the small, medium and large employer segments of the
market. Competitors in this market include national, regional and local
third party providers, banks, in-house payroll processors, software
companies and consulting firms.
A substantial portion of the overall payroll processing and tax filing
market is supported in-house with the remainder supported by third party
providers. Automatic Data Processing, Inc. ("ADP") is the dominant third
7
party provider in this market, with Employer Services and Paychex, Inc.
("Paychex") comprising the other two large, national providers. ADP
serves all segments of this market, while Paychex focuses on the small
employer segment of the market. The remainder of the third party payroll
market is highly fragmented and is represented by smaller regional and
local competitors. Consolidation within this industry continues as the
larger national providers acquire smaller regional and local providers and
as banks sell their payroll service operations. In addition, software
companies, including Tesseract, market application software to customers
that allows these customers to support their payroll services in-house.
The market for the non-payroll portion of the employer services industry is
evolving and is not dominated by any one competitor.
Currently, the principal competitive factors in the employer services
market are price, quality and service. Employer Services believes that it
is able to compete effectively in the overall employer services market with
respect to all of these competitive factors. In addition, Employer
Services believes that offering a broad range of information management
products and services applicable to the employment relationship will become
an increasingly important competitive factor, particularly with respect to
medium and large employers.
Employer Services' ability to continue to compete effectively in the
employer services market will depend in large measure on its ability to
implement and effectively use new technology, offer additional products and
services, and increase its market penetration. Employer Services intends
to seek additional strategic acquisition and partnering opportunities that
would better enable it to achieve these objectives.
Arbitron.
Arbitron is the leading provider of radio audience
measurement information in terms of revenue and market share, and also
provides electronic media and marketing information to radio and television
broadcasters, cable operators, advertising agencies and advertisers.
Arbitron's proprietary data regarding radio audience size and demographics
is provided to customers through multi-year license agreements. In
addition, through acquisitions, joint ventures and the introduction of new
products, Arbitron has obtained access to or developed services that
provide data regarding product purchasing decisions.
Arbitron's revenue for the years 1992, 1993 and 1994 was $178.3
million, $172.2 million and $121.3 million, respectively. The greatest
portion of the revenue decrease from 1993 to 1994 was due to the
discontinuance of Arbitron's syndicated television and cable ratings
service, effective at the end of 1993. Through this service, Arbitron had
provided local market television and cable audience measurement information
gathered electronically and through written diaries. This service provided
approximately 26% of Arbitron's 1993 revenue.
Markets. Because of the significant amounts spent by advertisers on
radio advertising, radio broadcasters, advertising agencies and advertisers
all have a strong interest in information regarding the size and
composition of audiences for radio broadcasts. Nevertheless, the market
for audience measurement of radio broadcasts, from which Arbitron currently
8
derives most of its revenue, has grown slowly in recent years due in large
measure to consolidation within the radio broadcast industry and
competition from other forms of media. However, as advertisers
increasingly seek to tailor advertising strategies to target specific
demographic groups through specific media, and as audiences become more
fragmented with increased programming choices, the audience information
needs of radio broadcasters, advertising agencies and advertisers become
more complex. Increasingly, more detailed information regarding the
demographics and buying behavior of audiences is required, as well as more
sophisticated means to analyze such information. The Company believes
these trends represent growth opportunities for Arbitron.
These trends are not confined to the radio broadcast industry, but
also affect other media. As the importance of reaching niche audiences
with targeted marketing strategies increases, broadcasters, publishers,
advertising agencies and advertisers increasingly require that information
regarding exposure to advertising be provided on an individualized rather
than a household basis and that such information be coupled with
information regarding shopping patterns and purchaser behavior. The need
for such qualitative information may create opportunities for innovative
approaches to satisfy these information needs, particularly as
technological advances increase the alternatives available to advertisers
for reaching potential customers, including the possibilities of
interactive communication.
Services. Arbitron estimates audience size and demographics in the
U.S. for local radio stations, and reports this and related data to its
customers. This information is used by radio stations to price and sell
advertising time and by advertising agencies and large corporate
advertisers in purchasing advertising time. Arbitron uses listener diaries
to gather radio listener data from sample households in the 261 local
markets for which it currently provides radio ratings. Respondents mail
the diaries to Arbitron's processing center in Columbia, Maryland, where
Arbitron compiles periodic audience measurement estimates. The Company
believes that the proprietary database which Arbitron has developed and
maintains through its position as the leading provider of radio audience
measurement data in the U.S. is a very valuable asset. Arbitron also
provides software applications that give customers flexible and unlimited
access to Arbitron's database, and enable them to more effectively analyze
and understand that information and develop sales strategies for maximum
effectiveness. Arbitron is also developing applications that will enable
customers to link information provided by Arbitron's database with
information from other databases (such as product purchase behavior) so
as to enable customers to further refine sales strategies and compete more
effectively for advertising dollars. Additional efforts to enhance
Arbitron's radio audience measurement service include projects to increase
the sample size and response rate of Arbitron's radio surveys as cost-
effective means of enhancing the reliability of its audience estimates.
The radio audience measurement service represented slightly less than 90%
of Arbitron's revenue during 1994.
Arbitron is also exploring opportunities to expand its information
service offerings to the radio industry in the areas of marketing and
promotion systems and systems to provide perceptual data for programmers.
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In that regard, in December 1994, the Company acquired the assets of
MediaMaps International (now known as Media Marketing Technologies), which
provides Arbitron with a proprietary marketing analysis system that creates
block group-coded data bases of radio listeners and provides segmentation
analyses and map displays of key listener segments.
Arbitron believes it will become increasingly important to address the
more comprehensive information needs of the broadcast and cable industries
by providing customers with services and technology that link audience
measurement data with product purchasing data to enable customers to make
more productive marketing decisions. Arbitron took several actions toward
that end during 1994. In December 1994, the Company exchanged its interest
in the Competitive Media Reporting ("CMR") joint venture with VNU
Business Information Services, Inc. ("VNU") for an interest in the
business of VNU's Scarborough Research Corporation subsidiary, which
produces the "Scarborough Report" that provides qualitative information
regarding product/service usage and media usage in 58 major U.S. markets.
The Scarborough Report measures products purchased based on a sample of
consumers in the relevant markets. Under the terms of this arrangement,
Arbitron will have the exclusive right to market the Scarborough Report to
radio broadcasters and cable systems. The CMR joint venture had provided
Arbitron with access to services which, among other things, monitored
commercials and tracked advertising expenditures. Also during 1994,
Arbitron introduced in eleven smaller markets its LocalMotion service,
which is a locally oriented, qualitative audience research service. The
service, which utilizes diaries and telephone surveys, provides a profile
of the broadcast audience in terms of local media, retail and consumer
preferences so that local radio and television broadcasters and cable
systems will have information that helps them develop targeted sales and
programming strategies.
Arbitron intends to further develop its capabilities and technologies
through acquisitions, alliances and licensing arrangements that will enable
it to provide the comprehensive information management services that
broadcasters, cable systems, telecommunications companies, advertising
agencies and advertisers will require to market their products and services
more effectively. Arbitron obtained a minority equity interest in the
second quarter 1994 in ADcom Information Services, Inc., which is
developing hardware and software technology to provide cost-effective,
electronic audience measurement systems to the cable industry. Arbitron is
also involved in a cooperative effort to develop a passive, personalized
electronic measurement device to record broadcast listening or viewing.
Sales and Marketing. Arbitron provides its radio audience measurement
and related services to almost 2,500 radio stations and about 2,200
advertising agencies nationwide. Contracts with customers vary in length
from one to seven years, and no single customer represented more than 4% of
Arbitron's 1994 revenue. Arbitron markets its products and services
through a direct sales force operating through offices in six cities around
the U.S.
Competition. Arbitron competes with providers of other forms of
research used by broadcasters, cable systems, advertising agencies and
advertisers. The principal competition for Arbitron's radio audience
10
measurement service consists of a company utilizing a different methodology
that is seeking to establish itself.
Defense Electronics Segment - Computing Devices International
The Defense Electronics segment, consisting of Computing Devices
International ("Computing Devices"), develops, manufactures and markets
electronic systems, subsystems and components, and provides systems
integration and other services, primarily to government defense agencies.
In addition, its Business Information Services division runs custom data
processing applications for customers (primarily the U.S. government) and
delivers them via a timesharing network. Computing Devices' revenue for
the years 1992, 1993 and 1994 was $412.4 million, $461.3 million and $486.3
million, respectively. Information regarding Computing Devices' operating
profit and identifiable assets for the years 1992-1994 is in Note G,
Segment Data, on page 48 of the Company's 1994 Annual Report to
Stockholders, which is incorporated herein by reference.
Markets. The defense contracting market has undergone dramatic change
in recent years. With changing geo-political conditions and government
budgetary constraints, defense spending has declined and the number of
companies serving the defense industry has decreased. At the same time,
the defense market focus has shifted from strategic defense (nuclear) to
tactical defense (non-nuclear), as the threat of military conflicts shifts
toward regional and ethnic conflicts.
The reduction in overall defense spending and the shift in focus
toward tactical defense needs, coupled with advances in commercially-
available technologies, is also shifting the focus of defense spending.
Computing Devices believes that customers will increasingly emphasize, and
that therefore the most attractive business opportunities in the defense
contracting market will exist in, areas such as (i) weapons sophistication,
electronics, surveillance and intelligence; (ii) extending the service life
of existing military equipment by upgrading, enhancing and retrofitting
such equipment, including the insertion of new technology, in order to
reduce the costs (including substantial training costs) associated with the
development and production of new equipment; and (iii) incorporating lower
cost commercial off-the-shelf technology and components into military
equipment.
Products and Services. Computing Devices' products and services
feature its capabilities in signal processing, digital image manipulation,
"ruggedized" subsystems for harsh environments and real-time software
systems. These products and services are produced primarily through its
operations in the U.S. and Canada, with only a small portion produced in
the United Kingdom ("U.K."). A majority of Computing Devices' revenue is
attributable to products and services relating to avionics systems,
including the AN/AYK-14 standard Navy airborne mission computer systems;
communications systems, including the Iris contract described below; and
intelligence and surveillance systems, including advanced parallel
processing, reconnaissance systems and imaging software. In December 1994,
Computing Devices complemented its imaging capabilities through the
acquisition of Paragon Imaging, Inc., a provider of imaging software to
11
U.S. defense department intelligence agencies and service commands, which
emphasizes commercial off-the-shelf technology and had fiscal 1994 revenue
of $4.2 million. The remainder of Computing Devices' revenue is primarily
attributable to products and services relating to shipboard subsystems,
anti-submarine warfare subsystems, ground subsystems, space processing,
display subsystems and tactical reconnaissance systems. Computing Devices
employs technology developed through internal research and development,
contract research and development and customer funded development programs.
During 1991, Computing Devices secured, through its Canadian
subsidiary, a contract to modernize the tactical command, control and
communications system used by the Canadian armed forces in defense and
peacekeeping situations. This system, called Iris, incorporates a broad
range of technologies, including satellite, fiber optic and microwave
communication. During 1994 and 1993, Computing Devices recorded revenue
from this contract of $154 million and $105 million, respectively,
representing about 32% and 23%, respectively, of Computing Devices' revenue
in those years. This contract has a remaining term of approximately six
years and estimated total remaining revenue of $751 million over the life
of the contract. Although Computing Devices' Canadian subsidiary is the
prime contractor under this contract, a significant portion of the contract
has been subcontracted to other communications technology companies.
Computing Devices is also seeking to expand the scope of its product
offerings and the markets its serves, including the application of existing
products and technologies to business opportunities in other worldwide
defense markets and in civilian and civil government markets. In so doing,
Computing Devices may, from time to time, establish cooperative
arrangements with other entities where their expertise or familiarity with
other markets, products or technologies would prove beneficial. For
example, Computing Devices, Sextant Avionique and Northwest Airlines have
collaborated on the development of an on-board maintenance terminal to
facilitate information management in connection with the maintenance of
commercial airliners. In January 1995, the Company also obtained a
minority equity investment in Key Idea Development, LLC, which is
developing a lightweight, voice-activated wearable computer. In connection
therewith, the Company obtained an exclusive license to develop military
applications for this computer.
Sales and Marketing. Computing Devices markets its products and
services through a direct sales force operating in the U.S., Canada, the
U.K., France and Malaysia. Sales of products and services are made
principally through competitive proposals in response to requests for bids
from government agencies and prime contractors. In addition, Computing
Devices has independent sales agents who represent Computing Devices'
products and services in a number of European and Asian markets.
Competition. Computing Devices faces intense competition with respect
to all of its products and services. Competition has increased in recent
years, largely reflecting factors such as reduced defense spending,
consolidation among defense contractors, increasing vertical integration
(and a corresponding decrease in subcontracting) on the part of larger
defense contractors, and procurement reform efforts (such as an increasing
emphasis on the use of commercial off-the-shelf technology). Although many
12
of Computing Devices' competitors are companies (or divisions or
subsidiaries of companies) that are larger and have substantially greater
financial resources, Computing Devices believes that smaller companies
within the defense contracting industry may at times be able to adjust more
quickly to changes in the defense contracting environment.
The principal competitive factors include price, compliance with
technical specifications, service and ability to perform in accordance with
the established schedule. Due to the diversity and specialized nature of
the products and services provided and the governmental security
restrictions applicable to certain of Computing Devices' activities, it is
difficult to generalize as to Computing Devices' market position in certain
segments of its business. Computing Devices does believe, however, that it
is able to compete effectively in each of its market segments with respect
to these competitive factors. In particular, Computing Devices believes
that its high rate of schedule adherence is one of its principal
competitive advantages. The demonstrated ability to complete a project
within the required time schedule is an important factor to governments and
prime contractors in selecting companies for new projects. Computing
Devices currently has preferred supplier status with two prime contractors.
In light of market conditions such as decreases in defense spending,
increasing price sensitivity from government customers, and over-capacity
and consolidation among defense contractors, Computing Devices believes
that the ability to become a low cost provider of products and services
will be an increasingly important competitive factor.
Government Contracts. Approximately 46% and 50%, respectively, of
Computing Devices' revenue for 1994 and 1993 was derived from contracts
with the U.S. Government or with prime contractors to the U.S. Government,
and approximately 36% and 30%, respectively, of Computing Devices' revenue
for 1994 and for 1993 was derived from contracts with the Canadian
Government or with prime contractors to the Canadian Government. Companies
which do business with governments are subject to certain unique business
risks. Among these are dependence on annual government appropriations,
changing procurement policies and regulations, complexity of design and
possible cost overruns. In addition, government efforts to detect and
eliminate irregularities in defense procurement programs have increased the
complexity and cost of doing business for government contractors.
Moreover, any government contractor determined to be in noncompliance with
applicable laws and regulations may be subject to penalties and debarment
or suspension from receiving additional U.S. Government contracts. Any
government contract may also be terminated by the government at any time it
believes that such termination would be in its best interests. In such
event, Computing Devices would generally be entitled to receive payments
for its allowable costs and, in general, a proportionate share of its fee
or profit for the work actually performed.
Approximately 81% of Computing Devices' 1994 revenue came from
government contracts that were fixed price contracts, including the Iris
contract. Under this type of contract, the price paid to Computing Devices
is not subject to adjustment by reason of the costs incurred by the Company
in the performance of the contract, except for costs incurred due to
contract changes ordered by the government. Thus, under fixed price
13
contracts, the Company bears the risk of cost overruns, which may result
from factors such as the need to bid on programs in advance of design
completion, unforseen technological difficulties, design complexity and
uncertain cost factors, particularly in connection with multi-year
contracts. Multi-year fixed price contracts in Canada and the U.K. do,
however, normally allow for price revision based on government price
indices.
Computing Devices is usually entitled to invoice governments monthly
on fixed price and cost reimbursable contracts. Computing Devices does not
normally acquire inventory in advance of contract award, and does not
maintain significant stocks of finished products for sale. Moreover,
Computing Devices obtains advance funding from customers in connection with
certain of its contracts. The amount of progress payments and customer
advances and the amount of the holdback from such payments and advances
affect the amount of working capital necessary for Computing Devices to
finance work-in-process costs in the performance of these contracts.
Governments typically do not recognize interest or other costs associated
with the use of capital and, therefore, the timing of payments may affect
Computing Devices' profitability either positively or negatively.
Computing Devices also performs work under cost reimbursable and
incentive type contracts. Cost reimbursable contracts provide for
reimbursement of costs incurred, to the extent such costs are allowable
under applicable government regulations, plus a fee. Under incentive type
contracts, the amount of profit or fee realized varies with the attainment
of incentive goals such as costs incurred, delivery schedule, quality and
other criteria. Fixed price contracts normally carry a higher profit rate
than cost reimbursable and incentive type contracts to compensate for
higher business risk. In addition, laws and regulations applicable to
government contracting provide that certain types of costs may not be
included in either the directly-billed cost or the indirect overheads for
which the government is responsible. Many of these so-called "unallowable"
costs include ordinary costs of doing business in a commercial context.
These costs must be borne out of the pretax profit of the corporation and,
thus, tend to reduce margins on government work.
Recognition of profits is based upon estimates of final performance,
which may change as contracts progress. Work may be performed prior to
formal authorization or adjustment of contract price for increased work
scope, change orders and other funding adjustments. Because of the
complexity of government contracts and applicable regulations, contract
disputes may occur. The resolution of such disputes may affect the
profitability of Computing Devices in performing these contracts. The
Company believes that adequate provision has been made in its financial
statements for these and other normal uncertainties incident to its
Computing Devices business.
International Sales. International sales of Computing Devices'
products and services totaled approximately $258 million and $216 million,
respectively, or 53% and 47%, respectively, of Computing Devices' total
revenue in 1994 and in 1993. About 90% of these products and services were
produced by the Company's Canadian or U.K. subsidiaries for customers in
those countries. Because most of Computing Devices' sales involve
14
technologically advanced products, services and expertise, export control
regulations can limit the type of products and services that may be offered
and the countries and governments to which sales may be made. Computing
Devices' international sales are subject to risks inherent in foreign
commerce, including currency fluctuations and devaluations, changes in
foreign governments and their policies, differences in foreign laws and
difficulties in negotiating and litigating with foreign governments.
Computing Devices believes that the location of its international
operations tends to minimize certain of these risks, and that it has
mitigated other of these risks by obtaining letters of credit and advance
payments, by contractual protections on currency fluctuations and by
denominating contracts in U.S. dollars where possible.
Divestitures
The Company sold its TeleMoney Services business in May 1994.
TeleMoney provided network-based transaction services, credit and debit
card authorization and check verification. In February 1994, the Company
disposed of the remaining Business and Technology Center it owned, as well
as its remaining interest in five Business and Technology Center
partnerships.
Additional Information
Patents. The Company owns or is licensed under a number of patents
which relate to its products and are of importance to its business.
However, the Company believes that none of its businesses is materially
dependent upon any particular patent or license, or any particular group of
patents or licenses. Instead, the Company believes that its success and
growth are far more dependent, among other things, on the quality of its
services and products and its reputation with its customers.
Backlog. The Company's backlog is attributable to the Defense
Electronics segment, since no backlog amount is determinable for revenue
from the Company's Information Services businesses. Backlog does not
include those portions of government contracts for which funding has not
yet been approved, but does include the remaining value of the Iris
contract.
As of December 31, 1994, the backlog of the Company's orders was
$1,209 million, of which $751 million relates to the Iris contract and $458
million relates to other contracts and programs. At December 31, 1993, the
comparable total backlog was $1,213 million, of which Iris represented $862
million and other contracts and programs represented $351 million. The
portion of the backlog at the end of 1994 expected to be reflected in 1995
revenue is $362 million (30%), of which Iris represents $147 million and
other contracts and programs represent $215 million.
The portion of the total backlog under government prime contracts and
subcontracts was 95% at December 31, 1994 and 97% at December 31, 1993,
while the portion of government contract backlog under fixed-price
contracts was 95% at December 31, 1994 and 1993. In each case, these
percentages include the Iris contract, which is a fixed-price contract with
the Canadian government.
15
Research and Development. The table below sets forth the amount of
the Company's research and development expenses for the periods indicated.
Year ended December 31,
1994 1993 1992
(Dollars in millions)
Research and development $35.4 $33.4 $30.5
Percent of revenues 3.9% 3.8% 3.7%
Customer sponsored research
and development $78.2 $77.4 $59.6
The Company's research and development efforts, including those
sponsored cooperatively by the Company and other participants, are
generally described earlier in this Item in the descriptions of the
Company's business segments. The amounts shown above as customer sponsored
research and development primarily represent government funded product
development efforts.
Geographic Segment Data. For financial information regarding the
Company's U.S. and international operations, see Note G, Segment Data, on
page 49 of the Company's 1994 Annual Report to Stockholders, which is
incorporated herein by reference.
Employees. As of December 31, 1994, the Company employed
approximately 7,500 people on a full- or part-time basis.
16
Item 2. Properties.
At February 28, 1995, the Company's principal production and office
facilities were located in the metropolitan areas of Minneapolis,
Minnesota; Atlanta, Georgia; Columbia, Maryland; New York, New York;
Fountain Valley and San Francisco, California; St. Louis, Missouri; Ottawa
and Calgary, Canada; and Hastings, England.
The following table summarizes the usage and location of the Company's
facilities as of February 28, 1995.
FACILITIES
(In thousands of square feet)
Type of Property
U.S. Non-U.S. Worldwide
Interest 341 428 769
Owned
Leased 3,276 205 3,481
Total Square 3,617 633 4,250
Feet
Utilization
Manufacturing &
Warehousing 294 449 743
Office, Computer
Center & Other 1,753 184 1,937
Vacant/Idle 422 -- 422
Leased or Subleased
to Others 1,148 -- 1,148
Total Square Feet 3,617 633 4,250
The 4.3 million square feet of aggregate space is essentially
unchanged from February 28, 1994. Space subject to assigned leases is not
included in the table above, and the Company remains secondarily liable
under all such leases. These assigned leases involve 1.7 million square
feet of space and future rental obligations totaling $41.4 million. The
principal elements of these amounts are 0.5 million square feet and $7.6
million related to the spinoff of Control Data Systems, Inc. and 1.1
million square feet and $33.5 million related to the 1989 sale of Imprimis
Technology Incorporated to Seagate Technology, Inc. The Company does not
anticipate any material nonperformance by the assignees of these leases.
17
Except for one building utilized by Computing Devices' Canadian
subsidiary (which is subject to a mortgage securing $6.1 million in debt
obligations), no facilities owned by the Company are subject to any major
encumbrances.
The Company believes that all of the facilities it currently utilizes
in its continuing operations are adequate for their intended purposes and
are adequately maintained. Utilization of those facilities varies among
the Company's operations. Generally, most of the facilities relating to
the Company's information services segment are reasonably necessary for
current and anticipated output levels of those businesses, although
Arbitron has vacant space as a result of the consolidation of its
processing activities following the discontinuance of its syndicated
television ratings service, and some excess space is expected to develop in
Employer Services' district offices as customer telephone support and
payroll data processing are consolidated. Both Arbitron and Employer
Services have established restructuring reserves for the expected cost of
such facilities in excess of continuing requirements. There is also excess
production capacity in the Defense Electronics segment. Efforts are
ongoing to identify operations and facilities that can be consolidated and
to dispose of excess or idle space.
Item 3. Legal Proceedings.
Information regarding legal proceedings involving the Company and its
subsidiaries is contained in Note O, Legal Matters, on page 56 of the
Company's 1994 Annual Report to Stockholders, which is incorporated herein
by reference.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
18
Executive Officers of the Registrant
The executive officers of Ceridian as of March 1, 1995, are as
follows:
Executive
Name (Age) Position Officer Since
Lawrence Perlman Chairman, President and 1980
(56) Chief Executive Officer
John R. Eickhoff Vice President and 1989
(54) Chief Financial Officer
Loren D. Gross (49) Vice President and 1993
Corporate Controller
Linda J. Jadwin (51) Vice President, Corporate 1990
Communications
Glenn W. Jeffrey Executive Vice President 1990
(48)
James D. Miller (46) Vice President, Strategic 1993
Initiatives
Stephen B. Morris Vice President and 1992
(51) President,
Arbitron
Steven J. Olson (54) Vice President and General 1994
Counsel
Patrick C. Sommers Vice President and 1992
(47) President, Ceridian
Employer Services
Ronald L. Turner Vice President and 1993
(48) President,
Computing Devices
International
The executive officers of the Company are elected by the Board of
Directors and serve at the pleasure of the Board of Directors and the Chief
Executive Officer. They are customarily elected each year at the first
meeting of the Board of Directors immediately following the annual meeting
of stockholders.
Lawrence Perlman has been President and Chief Executive Officer of the
Company since January 1990, and was appointed Chairman in November 1992.
Mr. Perlman was President and Chief Operating Officer of the Company from
December 1988 to January 1990. He is a director of Inter-Regional
Financial Group, Inc.; Seagate Technology, Inc.; The Valspar Corporation;
Computer Network Technology Corporation; and Bio-Vascular, Inc. He is also
19
a member of the National Advisory Board of the Chemical Banking
Corporation. Mr. Perlman has been a director of the Company since 1985.
John R. Eickhoff has been Vice President and Chief Financial Officer
of the Company since June 1993. Mr. Eickhoff was Vice President and
Corporate Controller of the Company from July 1989 to June 1993.
Loren D. Gross has been Vice President and Corporate Controller of the
Company since July 1993. Mr. Gross was Assistant Corporate Controller of
the Company from March 1987 to July 1993.
Linda J. Jadwin has been Vice President, Corporate Communications of
the Company since March 1990. Ms. Jadwin was Vice President,
Communications and Administration of the Company's Computer Products
business from April 1989 to March 1990.
Glenn W. Jeffrey has been Executive Vice President of the Company
since December 1992. Mr. Jeffrey was Executive Vice President,
Organization Resources of the Company from June 1990 to December 1992;
President of Jeffrey & Associates, an executive and organization
development firm, from September 1989 to June 1990; and Vice President,
Human Resources, Corporate Staff and Restaurants, for The Pillsbury
Company, a food and restaurant company, from August 1988 to April 1989.
James D. Miller has been Vice President, Strategic Initiatives of the
Company since January 1993. From February 1989 to January 1993, Mr. Miller
was Vice President and Associate General Counsel for the Company.
Stephen B. Morris has been Vice President of the Company and President
of Arbitron since December 1992. Mr. Morris was President and Chief
Executive Officer, Vidcode, Inc., which electronically monitors, verifies
and reports the broadcast of television commercials, from August 1990 to
December 1992; and Director and co-founder of Spectra Marketing Systems, a
micro-marketing firm, from March 1987 to March 1992. Prior to that time,
he spent seventeen years at General Foods Corporation, the last three as
General Manager/President of the Maxwell House Division.
Steven J. Olson has been Vice President and General Counsel of the
Company since October 1994. From October 1984 to October 1994, Mr. Olson
was Vice President and Associate General Counsel for the Company.
Patrick C. Sommers has been Vice President of the Company and
President of Ceridian Employer Services since November 1992. Mr. Sommers
was President, GTE Industry Services, a group of diversified companies
providing software, medical information, networking and publishing products
and services, from April 1990 to November 1992; and President, D&B
Information Resources, Inc., a subsidiary of Dun & Bradstreet Corporation
which collects and assimilates information into databases, from May 1988 to
April 1990.
Ronald L. Turner has been Vice President of the Company and President
of Computing Devices International since January 1993. Mr. Turner was
President and Chief Executive Officer, GEC-Marconi Electronics Systems
Corporation, a defense electronics company, from March 1987 to January
1993. Mr. Turner is a director of Advanced Technology Services, Inc. and
FLIR Systems, Inc.
20
PART II
All information incorporated by reference into Items 5 through 8 below
is contained in the financial portion of the Company's 1994 Annual Report
to Stockholders, which is filed with this Report as Exhibit 13.
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Company's common stock, par value $.50 per share ("Common Stock"),
is listed and trades on the New York Stock Exchange as well as on the
Chicago and Pacific Stock Exchanges. The following table sets forth the
high and low sales prices for a share of Common Stock on the New York Stock
Exchange.
1994 1993
High Low High Low
1st Quarter 24 3/4 18 1/2 16 1/8 14 3/8
2nd Quarter 25 5/8 21 1/2 16 1/8 13
3rd Quarter 27 1/2 24 18 1/2 14 3/8
4th Quarter 27 1/8 23 1/2 19 7/8 17 1/2
The number of holders of record of Common Stock on February 28, 1995
was 18,157. No dividends have been declared or paid on the Common Stock
since 1985. The Company's domestic revolving credit agreement (which
expires May 30, 1995) limits the amount of cash the Company may expend to
pay dividends on its Common Stock or to repurchase shares of its Common
Stock or 5 1/2% Preferred Stock to 25% of the amount of the Company's net
income in profitable quarters after the first quarter of 1993. Pursuant to
a program approved by the Board of Directors in 1994, the Company
repurchased 70,000 shares of Common Stock in the open market during 1994
for $1.8 million. As of December 31, 1994, the additional amount the
Company could expend for additional stock repurchases or cash dividends
totaled $22.6 million.
Item 6. Selected Financial Data.
See "Selected Five-Year Data" on page 1, which is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 22 through 35, which is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
21
The financial statements described in Item 14(a)1 of this Report are
incorporated herein by reference. See "Supplementary Quarterly Data
(Unaudited)" on page 57, which is incorporated herein by reference.
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
See information regarding the directors and nominees for director of
Ceridian under the heading "Nominees for Director" on pages 4 and 5 of the
Proxy Statement for the Annual Meeting of Stockholders, May 10, 1995 (the
"Proxy Statement"), which is incorporated herein by reference.
See the information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934 under the heading "Compliance With Section
16(a) of the Securities Exchange Act" on page 25 of the Proxy Statement,
which is incorporated herein by reference.
Information regarding the executive officers of Ceridian is on pages
18 and 19 of this Report, and is incorporated herein by reference.
Item 11. Executive Compensation.
See information under the headings "Directors' Compensation" on pages
6 and 7 of the Proxy Statement and "Executive Compensation" on pages 17
through 22 of the Proxy Statement, all of which is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
See information under the heading "Share Ownership Information" on
pages 23 and 24 of the Proxy Statement, which is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
See information under the heading "Compensation Committee Interlocks
and Insider Participation" on page 7 of the Proxy Statement, which is
incorporated herein by reference.
22
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements of Registrant
Incorporated by reference from the
pages indicated in the Company's
1994 Annual Report to Stockholders
into Part II, Item 8, of this Report:
Page
Report of Management.....................................36
Independent Auditors' Report.............................37
Consolidated Statements of
Operations for the years ended
December 31, 1994, 1993 and 1992.........................38
Consolidated Balance Sheets as of
December 31, 1994 and 1993...............................39
Consolidated Statements of Cash Flows
for the years ended
December 31, 1994, 1993 and 1992......................40-41
Notes to Consolidated Financial Statements for
the three years ended December 31, 1994...............42-56
(a) 2. Financial Statement Schedules of Registrant
Included in Part IV of this Report:
Page
Independent Auditors' Report on financial
statement schedule... .................................27
Schedule II - Valuation and qualifying accounts.......28-29
All other financial statement schedules are omitted as the required
information is inapplicable or the information is presented in the
consolidated financial statements or related notes.
23
(a) 3. Exhibits
The following is a complete list of Exhibits filed or incorporated by
reference as part of this report.
Exhibit Description
2.01 Asset Purchase Agreement, dated as of March 4, 1992, as amended,
among the Company, as seller, and Video Lottery Technologies, Inc.
and Automated Wagering International, Inc., as purchasers
(incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K dated June 23, 1992 (File No. 1-1969))
2.02 Asset Purchase Agreement, dated as of March 14, 1993, between the
Company and Siemens Energy & Automation, Inc. (incorporated by
reference to Exhibit 10.24 to the Company's Annual Report on Form
10-K for the year ended December 31, 1992 (File No. 1-1969))
2.03 Transfer Agreement between the Company and Control Data Systems,
Inc., dated as of July 15, 1992 (incorporated by reference to
Exhibit 10.1 to Amendment No. 1, dated July 10, 1992, to Control
Data Systems, Inc.'s Registration Statement on Form 10
(File No. 0-20252))
2.04 Distribution Agreement between Control Data Systems, Inc. and the
Company dated as of July 15, 1992 (incorporated by reference to
Exhibit 10.2 to Amendment No. 1, dated July 10, 1992, to Control
Data Systems, Inc.'s Registration Statement on Form 10
(File No. 0-20252))
2.05 Agreement and Plan of Reorganization, dated as of May 25, 1994,
among Tesseract Corporation, Braemar Acquisition Corp. and the
Company (incorporated by reference to Exhibit 2 to the Company's
Current Report on Form 8-K dated June 24, 1994, as amended
(File No. 1-1969))
3.01 Restated Certificate of Incorporation of the Company (incorporated
by reference to Exhibit 4.01 to the Company's Registration
Statement on Form S-8 (File No. 33-54379))
3.02 Bylaws of the Company, as amended (incorporated by reference to
Exhibit 3.01 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993 (File No. 1-1969))
4.01 Form of Deposit Agreement, dated as of December 23, 1993, between
The Bank of New York and the Company (incorporated by reference to
Exhibit 4.5 to the Company's Registration Statement on Form S-3
(File No. 33-50959))
4.02 Form of Indenture, with respect to the 5 1/2% Convertible
Subordinated Debentures Due 2008, dated as of December 23, 1993,
between The Bank of New York and the Company (incorporated by
24
reference to Exhibit 4.7 to the Company's Registration Statement
on Form S-3 (File No. 33-50959))
10. 01* Executive Employment Agreement between the Company and Lawrence
Perlman, dated February 1, 1994 (incorporated by reference to
Exhibit 10.01 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 (File No. 1-1969))
10.02* Executive Employment Agreement between the Company and Ronald L.
Turner, dated February 3, 1995
10.03* Executive Employment Agreement between the Company and Patrick C.
Sommers, dated February 3, 1995
10.04* Executive Employment Agreement between the Company and Stephen B.
Morris, dated February 3, 1995
10.05* Executive Employment Agreement between the Company and John R.
Eickhoff, dated February 3, 1995
10.06* Employee Non-Statutory Stock Option Award Agreement between the
Company and Patrick C. Sommers, dated as of January 3, 1994
10.07* Employee Non-Statutory Stock Option Award Agreement between the
Company and John R. Eickhoff, dated as of January 3, 1994
10.08* Directors Deferred Compensation Plan - 1993 Restatement (As amended
through December 13, 1993) (incorporated by reference to Exhibit
10.05 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1993 (File No. 1-1969))
10.09* Directors' Benefit Protection Trust Agreement, dated as of December
1, 1994, between the Company and First Trust National Association
10.10* 1993 Non-Employee Director Stock Plan (incorporated by reference
to Exhibit 2 to the Company's Proxy Statement for Annual Meeting
of Stockholders, May 12, 1993 (File No. 1-1969))
10.11* 1993 Long-Term Incentive Plan (As amended through October 21, 1994)
10.12* 1990 Long-Term Incentive Plan (1992 Restatement) (As amended
through October 21, 1994)
10.13* Description of the Company's Annual Executive Incentive Plan
10.14* Benefit Equalization Plan, as amended (Effective generally as of
January 1, 1994)
10.15* Employees' Benefit Protection Trust Agreement, dated as of December
1, 1994, between the Company and First Trust National Association
10.16* Deferred Compensation Plan
10.17* Form of Indemnification Agreement between the Company and its
Directors (incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991 (File No. 1-1969))
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this report.
25
10.18 Agreement for Information Technology Services, dated as of January
10, 1995, between the Company and Integrated Systems Solutions
Corporation
10.19 Amended and Restated Credit Agreement, dated as of May 13, 1994,
among the Company, Bank of America N.T. & S.A., as Agent, and the
Other Financial Institutions Parties Thereto (incorporated by
reference to Exhibit 10.01 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994 (File No. 1-1969))
10.20 Form of Underwriting Agreement among the Company, Bear, Stearns &
Co. Inc., Cowen & Company and Piper Jaffray, Inc., dated December
16, 1993 (incorporated by reference to Exhibit 1.1 to the
Company's Registration Statement on Form S-3 (File No. 33-50959))
11. Statement re computation of earnings (loss) per share
12. Statements re computation of ratio of earnings to fixed charges
13. 1994 Annual Report to Stockholders of the Company
22. Subsidiaries of the Company
24. Consent of Independent Auditors
25. Power of Attorney
27. Financial Data Schedule
If requested, the Company will provide copies of any of the exhibits
listed above upon payment of its reasonable expenses in furnishing such
exhibits. The Company will provide to the Securities and Exchange
Commission, upon request, any schedule to any of the foregoing exhibits
which has not been filed.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended
December 31, 1994. A report on Form 8-K dated January 19, 1995 was filed
by the Company, reporting in "Item 5: Other Events" the signing of
technology services and marketing agreements with ISSC and the announcement
of the Company's financial results for the quarter and year ended December
31, 1994. Included in that report were the Company's consolidated
statements of operations for the three and twelve month periods ended
December 31, 1994 and 1993, and condensed consolidated balance sheets for
the Company as of December 31, 1994 and 1993. The Company also filed on
January 25, 1995 an amendment to a report on Form 8-K dated June 24, 1994,
which reported the acquisition of Tesseract Corporation by the Company.
26
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
THE BOARD OF DIRECTORS AND STOCKHOLDERS
CERIDIAN CORPORATION:
Under date of January 24, 1995, we reported on the consolidated
balance sheets of Ceridian Corporation and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of operations and
cash flows for each of the years in the three-year period ended December
31, 1994, as contained in the 1994 Annual Report to Stockholders. These
consolidated financial statements and our report thereon are incorporated
by reference in the Annual Report on Form 10-K for the year 1994. In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedules
as listed in the accompanying index (see Item 14.(a)2.). These financial
statement schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statement
schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth
therein.
As discussed in notes A and I to the consolidated financial
statements, the Company changed its method of accounting for postretirement
benefits other than pensions in 1992.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 24, 1995
27
SCHEDU
CERIDIAN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
Restructure and Discontinued Operations Reserves (1)
Employer Computing
Arbitron Arbitron Services Devices
TV ScanAm Consolidation Severance Oth
Reserve Balance 12/31/91 $ $
- - $ $ 5.1
- $ 113
1992 Restructure Loss (2) 29.9 8.8 1.1
Cash Payments 44
(0.8) (1.7) (5.2)
Asset Write-Off (79
(28.5) (1.1)
Discontinued Operations(3) (2
Adoption of FAS 106 (4) 71
Other Non-cash Items (14
0.1
Reserve Balance 12/31/92 $ $ 0.6
- $ 6.0 $ 1.1 $ 133
1993 Restructure Loss (2) 57.0 18.9 5.5
Cash Payments 0
(4.1) (0.6) (4.0) (6.1)
Asset Write-Off (44
(26.8)
Adoption of FAS 112 (4) (15
(12
Other Non-cash Items (0
Reserve Balance 12/31/93 $ 26.1 $ $ 20.9
- $ 0.5 $ 60
1994 Restructure Loss (2) 15
Sale of TeleMoney (5) 14
Cash Payments (17.4) (8.5) (0.5) (27
Other Non-cash Items 2.4 2
Reserve Balance 12/31/94 $ 11.1 $ - $ 12.4 $ $ 64
-
(1) For additional information, see Note B to the consolidated financial stateme
(2) Does not include restructure gains of $7.6 in 1992, $14.7 in 1993 and $15.0
(3) Represents obligations related to the disposition of discontinued operations
(4) Represents the reclassification to other liabilities of FAS 106 and FAS 112
obligations as described in Notes A and I to the consolidated financial stat
(5) Represents obligations undertaken in connection with the sale of TeleMoney.
28
SCHEDULE II (CONT.)
CERIDIAN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
Allowance for Doubtful Accounts Receivable Year Ended December 31
1994 1993 1992
Balance at beginning of year $ 5.4 $ 4.3 $ 3.8
Additions charged to costs and
expenses 0.9 1.7 1.1
Write-offs and other adjustments* (0.1) (0.6) (0.6)
Balance at end of year $ 6.2 $ 5.4 $ 4.3
(*)Other adjustments include balances removed as a result of sales of
businesses.
Investments and Advances Year Ended December 31,
1994 1993 1992
Balance of Seagate note
at beginning of year $ 10.0 $ 10.0 $ 47.9
Principal payment received (37.9)
Discount on Seagate note
as initially recorded or
at beginning of year (6.2)
Amortization/Recovery of discount 6.2
Balance of Seagate note
at end of year $ 10.0 $ 10.0 $ 10.0
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on
March 21, 1995.
CERIDIAN CORPORATION
By /s/Lawrence Perlman
Lawrence Perlman
Chairman, President 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 the
Registrant and in the capacities indicated on March 21, 1995.
/s/Lawrence Perlman /s/J. R. Eickhoff
Lawrence Perlman John R. Eickhoff
Chairman, President and Chief Vice President and Chief
Executive Officer (Principal Financial Officer
Executive Officer) and (Principal Financial Officer)
Director
/s/Loren D. Gross
Loren D. Gross */s/George R. Lewis
Vice President and Corporate George R. Lewis, Director
Controller (Principal Accounting
Officer) */s/Charles Marshall
Charles Marshall, Director
*/s/Ruth M. Davis */s/Carole J. Uhrich
Ruth M. Davis, Director Carole J. Uhrich, Director
*/s/Allen W. Dawson */s/Richard W. Vieser
Allen W. Dawson, Director Richard W. Vieser, Director
*/s/Ronald James */s/Paul S. Walsh
Ronald James, Director Paul S. Walsh, Director
*/s/Richard G. Lareau /s/John A. Haveman
Richard G. Lareau, Director *By: John A. Haveman
Attorney-in-fact
30
Exhibit 10.13
Description of the Ceridian Corporation Annual Executive Incentive Plan
The Company's Annual Executive Incentive Plan provides yearly cash
bonuses to Company executives, although the Board's Compensation and Human
Resources Committee (the "Committee" ) may, in its discretion, permit
individuals to elect to receive part or all of their annual bonus in the
form of stock options rather than cash. The annual determination of an
individual executive's target bonus, expressed as a percentage of base
salary, is based on a subjective assessment by the Committee of the
responsibilities of the position, competitive practice and the Committee's
desire to give greater weight to performance-based compensation at higher
levels of responsibility within the Company.
For 1994, target bonus percentages for executives ranged from 20% to
65% of base salary, with the maximum possible bonus generally one and one-
half times the target amount. Of the total potential bonus, 80% consisted
of a financial component, and 20% was based on a subjective assessment of
the executive's individual performance in the areas of quality improvement
and fostering work force diversity. The financial component consisted of a
requirement that the Company achieve a specified level of earnings per
share ("EPS") during 1994 and, for executives assigned to operating units,
a requirement that the operating unit achieve specified financial goals,
generally a specified level of pre-tax earnings. With respect to the
financial component, bonus payments at, above or below the target
percentages could be made depending on whether the financial performance of
the Company (and, if applicable, the business unit to which the executive
is assigned) met, exceeded or fell short of the applicable targeted
financial goal. The targeted financial component of the bonus would be
payable if budgeted earnings were achieved, but no bonus would be payable
if an earnings threshold amount were not achieved. For 1994, both the
financial and non-financial components of the annual incentive program were
paid at or slightly above the superior level for executives, resulting in
bonus payments for executives ranging between 30% and 97.5% of base salary.
The Committee retains discretion to adjust upward the annual incentive if,
in its judgment, such an action is warranted under the circumstances.
31
Exhibit 11
CERIDIAN CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS (LOSS) PER SHARE
(Amounts in thousands, except per
share data) Year Ended December 31
1994 1993 1992
Net earnings (loss) applicable to
common stockholders - primary $ 65,626 $ (30,676) $ (392,800)
Discontinued operations (321,600)
Extraordinary loss (8,400)
Change in accounting (FAS 106) (41,800)
Earnings (Loss) from continuing
operations 65,626 (22,276) (29,400)
Restore dividends on convertible
preferred stock (a) 12,980 325
Restore interest expense on
convertible debentures (a) (b) 13,900
Net earnings (loss) for fully $ 78,606 $ (21,951) $ (15,500)
diluted earnings per share
Weighted average common shares 44,504 43,131 42,617
outstanding
Common share equivalents from stock 1,361
options (c)
Weighted average common shares and 45,865 43,131 42,617
equivalents outstanding - primary
Shares issuable assuming conversion 10,384 260
of preferred stock (a)
Shares issuable assuming 6,794
conversion of debentures (a)
Weighted average common shares and 56,249 43,391 49,411
equivalents outstanding - adjusted
for full dilution
Primary earnings (loss) per share:
Continuing operations $ 1.43 $ (0.52) $ (0.69)
Discontinued operations (7.55)
Extraordinary loss (0.19)
Change in accounting (FAS 106) (0.98)
Total $ 1.43 $ (0.71) $ (9.22)
Fully diluted earnings (loss) per $ 1.40 $ (0.51) $ (0.31)
share (c)
(a) Convertible preferred stock issued and convertible debentures
redeemed in December 1993.
(b) Net of income tax effect which is nil.
(c) Common stock equivalents and shares issuable assuming
conversion of convertible debentures
not reported in 1993 and 1992 because the result is anti-
dilutive or additional dilution is less than 3%
as prescribed by APBO No. 15. This calculation is
submitted in accordance with
Regulation S-X item
601(b)(11).
32
Exhibit 12
CERIDIAN CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Year Ended December 31,
1994 1993 1992 1991 1990
Earnings (Loss) before
income taxes and other
items(1) . . . . . . $ 85.2 $ (18.2) $(186.3) $ 1.9 $ 15.9
Less undistributed earnings
and non-guaranteed losses
from less than 50% owned
affiliates included above -- -- (0.6) (2.6) 1.3
Total earnings (loss)
before income taxes
and other items. . . $ 85.2 ($18.2) (185.7) (4.5) 14.6
Add:
Interest . . . . . . . 1.6 16.4 17.7 25.4 43.8
Interest portion
of rentals (2) . . . 11.9 12.4 31.8 17.2 31.6
Adjusted earnings (loss)
before income taxes
and other items. . . . $ 98.7 $ 10.6 $(150.8) $ 61.7 $ 90.0
referred stock dividends $ 13.0 $ 0.3 $ 0.3 $ 0.5 $ 0.5
Pre-tax to net
income ratio (3) . . . 100% 100% 100% 100% 100%
Preferred dividend factor
on a pre-tax basis . . 13.0 0.3 0.3 0.5 0.5
Interest . . . . . . . . 1.6 16.4 17.7 25.4 43.8
Interest portion
of rentals (2) . . . . 11.9 12.4 17.2 31.8 31.6
Total fixed charges and
preferred dividends $ 26.5 $ 29.1 $ 35.2 $ 57.7 $ 75.9
Ratio of earnings to
fixed charges and
preferred dividends. . 3.72 1.07 1.19
Earnings to combined fixed
charges and preferred
stock deficiency. . . $18.05 $ 186.0
(1) Results include discontinued operations.
(2) Assumed to be one-third of rental expense.
A tax gross-up would not have a material effect in any year.
(3)
-33-
Exhibit 22
CERIDIAN CORPORATION
SUBSIDIARIES
AT DECEMBER 31, 1994
State or
other Jurisdiction
Name of Incorporation
CD Plus S.A. France
Ceridian Properties, Inc. Delaware
Computing Devices Canada Ltd. Canada
Computing Devices Company Limited (Hastings) United Kingdom
Computing Devices Hastings Limited United Kingdom
Computing Devices Eastborne Limited United Kingdom
Computing Devices International Employment, Inc. Delaware
Earth Energy Systems, Inc. New Jersey
Paragon Imaging, Inc. Florida
ScanAmerica, L.P. (Limited Partnership) Delaware
Scarborough Research Delaware
Tesseract Corporation California
User Technology Services Inc. New York
VTC C-MOS Incorporated Delaware
34
Exhibit 24
CONSENT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS
OF CERIDIAN CORPORATION
We consent to incorporation by reference in Registration Statements
Nos. 2-97570, 2-67753, 33-15920, 2-93345, 2-81865, 33-26839, 33-34045, 33-
49601, 33-54379, 33-56325 and 33-56833 on Forms S-8 of Ceridian Corporation
of our reports dated January 24, 1995. Such reports relate to the
consolidated financial statements and related financial statement schedule
of Ceridian Corporation and subsidiaries as of December 31, 1994 and 1993
and for each of the years in the three-year period ended December 31, 1994
and are included or incorporated by reference in the 1994 Annual Report on
Form 10-K of Ceridian Corporation.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 21, 1995
35
Exhibit 25
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a Director of
Ceridian Corporation (the "Company"), a Delaware corporation, do hereby
make, nominate and appoint JOHN R. EICKHOFF, STEVEN J. OLSON and JOHN A.
HAVEMAN, and each of them, to be my attorney in fact for three months from
the date hereof, with full power and authority to sign his name on the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994, to be filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended; provided that such Form
10-K is first reviewed by the Audit Committee of the Board of Directors of
the Company and by my attorney in fact; and his name, when thus signed,
shall have the same force and effect as though I had manually signed such
Form 10-K.
IN WITNESS WHEREOF, I have signed this Power of Attorney as of
February 3, 1995.
/s/Lawrence Perlman /s/George R. Lewis
Lawrence Perlman George R. Lewis
/s/Ruth M. Davis /s/Charles Marshall
Ruth M. Davis Charles Marshall
s/Allen W. Dawson /s/Carole J. Uhrich
llen W. Dawson Carole J. Uhrich
s/Ronald James /s/Richard W. Vieser
onald James Richard W. Vieser
s/Richard G. Lareau /s/Paul S. Walsh
ichard G. Lareau Paul S. Walsh
-36-
EXHIBIT INDEX
Exhibit Description
2.01 Asset Purchase Agreement, dated as of IBR
March 4, 1992, as amended, among the
Company, as seller, and Video Lottery
Technologies, Inc. and Automated Wagering
International, Inc., as purchasers
(incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K
dated June 23, 1992 (File No. 1-1969))
2.02 Asset Purchase Agreement, dated as of IBR
March 14, 1993, between the Company and
Siemens Energy & Automation, Inc.
(incorporated by reference to Exhibit
10.24 to the Company's Annual Report on
Form 10-K for the year ended December 31,
1992 (File No. 1-1969))
2.03 Transfer Agreement between the Company IBR
and Control Data Systems, Inc., dated as
of July 15, 1992 (incorporated by reference
to Exhibit 10.1 to Amendment No. 1, dated
July 10, 1992, to Control Data Systems,
Inc.'s Registration Statement on Form 10
(File No. 0-20252))
2.04 Distribution Agreement between Control IBR
Data Systems, Inc. and the Company dated
as of July 15, 1992 (incorporated by
reference to Exhibit 10.2 to Amendment
No. 1, dated July 10, 1992, to Control
Data Systems, Inc.'s Registration Statement
on Form 10 (File No. 0-20252))
2.05 Agreement and Plan of Reorganization, IBR
dated as of May 25, 1994, among Tesseract
Corporation, Braemar Acquisition Corp.
and the Company (incorporated by reference
to Exhibit 2 to the Company's Current
Report on Form 8-K dated June 24, 1994,
as amended (File No. 1-1969))
3.01 Restated Certificate of Incorporation IBR
of the Company (incorporated by reference
to Exhibit 4.01 to the Company's Registration
Statement on Form S-8 (File No. 33-54379))
3.02 Bylaws of the Company, as amended (incorporated IBR
by reference to Exhibit 3.01 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993 (File No. 1-1969))
1
4.01 Form of Deposit Agreement, dated as of December 23, IBR
1993, between The Bank of New York and the Company
incorporated by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-3 (File
No. 33-50959))
4.02 Form of Indenture, with respect to the 5 1/2% IBR
Convertible Subordinated Debentures Due 2008,
dated as of December 23, 1993, between the
The Bank of New York and the Company
(incorporated by reference to Exhibit 4.7
to the Company's Registration Statement on
Form S-3 (File No. 33-50959))
10. 01* Executive Employment Agreement between the IBR
Company and Lawrence Perlman, dated
February 1, 1994 (incorporated by reference
to Exhibit 10.01 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1993 (File No. 1-1969))
10.02* Executive Employment Agreement between the E
Company and Ronald L. Turner, dated
February 3, 1995
10.03* Executive Employment Agreement between the E
Company and Patrick C. Sommers, dated
February 3, 1995
10.04* Executive Employment Agreement between the E
Company and Stephen B. Morris, dated
February 3, 1995
10.05* Executive Employment Agreement between the E
Company and John R. Eickhoff, dated
February 3, 1995
10.06* Employee Non-Statutory Stock Option Award E
Agreement between the Company and Patrick C.
Sommers, dated as of January 3, 1994
10.07* Employee Non-Statutory Stock Option Award E
Agreement between the Company and John R.
Eickhoff, dated as of January 3, 1994
10.08* Directors Deferred Compensation Plan - IBR
1993 Restatement (As amended through
December 13, 1993) (incorporated by
reference to Exhibit 10.05 to the Company's
Annual Report on Form 10-K for the year
ended December 31, 1993 (File No. 1-1969))
10.09* Directors' Benefit Protection Trust Agreement, E
2
dated as of December 1, 1994, between the
Company and First Trust National Association
10.10* 1993 Non-Employee Director Stock Plan IBR
incorporated by reference to Exhibit 2 to
the Company's Proxy Statement for Annual
Meeting of Stockholders, May 12, 1993
File No. 1-1969))
10.11* 1993 Long-Term Incentive Plan (As amended E
through October 21, 1994)
10.12* 1990 Long-Term Incentive Plan (1992 E
Restatement) (As amended through
October 21, 1994)
10.13* Description of the Company's Annual E
Executive Incentive Plan
10.14* Benefit Equalization Plan, as amended E
Effective generally as of January 1, 1994)
10.15* Employees' Benefit Protection Trust Agreement, E
dated as of December 1, 1994, between the Company
and First Trust National Association
10.16* Deferred Compensation Plan E
10.17* Form of Indemnification Agreement between the IBR
Company and its Directors (incorporated by
reference to Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 1-1969))
10.18 Agreement for Information Technology Services, E
dated as of January 10, 1995, between the Company
and Integrated Systems Solutions Corporation
10.19 Amended and Restated Credit Agreement, dated IBR
as of May 13, 1994, among the Company, Bank of
America N.T. & S.A., as Agent, and the Other
Financial Institutions Parties Thereto
incorporated by reference to Exhibit 10.01
to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994
File No. 1-1969))
10.20 Form of Underwriting Agreement among the IBR
Company, Bear, Stearns & Co. Inc., Cowen &
Company and Piper Jaffray, Inc., dated
December 16, 1993 (incorporated by reference
*Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this report.
3
to Exhibit 1.1 to the Company's Registration
Statement on Form S-3 (File No. 33-50959))
11. Statement re computation of earnings (loss) E
per share
12. Statements re computation of ratios E
13. 1994 Annual Report to Stockholders of E
the Company
22. Subsidiaries of the Company E
24. Consent of Independent Auditors E
25. Power of Attorney E
27. Financial Data Schedule E
4