Item 1. Business.
General
The Company is engaged in the design, development, manufacture, lease and sale of direct access storage products used with IBM mainframe and client server computers.
Products
The Company offers direct access storage products for use with IBM mainframe and client/server computers. The products include memory, disk, RAID disk arrays and tape storage systems. All products are priced for under $10,000 to approximately $200,000. The Company also sells or leases trade-in memory which it acquires from its customers when this memory is replaced by new memory. In most transactions, when the Company upgrades a computer system with its memory, the customer pays the Company in whole or in part with memory already resident on the machine. On certain occasions, the memory already resident on the customer's machine is more valuable than the Company's memory, and in those cases, the Company pays the difference to the customer, net of a customary gross profit for the Company. Under the terms of a manufacturing agreement entered into in July, 1996, the Company also manufactures and distributes frame relay access devices developed by Jupiter Technology, Inc.
Maintenance
The Company arranges for maintenance of its products at the time of lease or sale on a monthly or lifetime fee per system basis. It normally provides this maintenance through its own maintenance personnel or through authorized maintenance companies supported by the Company's personnel.
Research and Development and New Products
The Company maintains a research and development program directed to the development of new products and systems, to the improvement and refinement of its present products and systems and to the expansion of their uses and applications. The new products include memory and cached high availability RAID disk array products. The dollar amount spent by the Company during each of its last three fiscal years on such activities was approximately $3,433,000 in 1996, $1,659,000 in the four months ended December 31, 1995 and $6,345,000 and $6,417,000 in fiscal years ended August 31, 1995 and 1994.
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Manufacturing
The production of the Company's products involves primarily electronics assembly and testing. These operations are performed primarily at the Company's plant in Waltham, Massachusetts. The Company also subcontracts some assembly operations to several circuit board assembly companies. Most of the electronic components used in the Company's products are purchased from outside suppliers and are either standard items or custom manufactured to the Company's design and specifications and are generally available from several sources.
Marketing
In the United States, Europe, the Far East and Canada, the Company has its own marketing organization, sales representatives and distributors. Sales are made to end users, original equipment manufacturers and distributors. The Company established European sales and marketing subsidiaries in the Netherlands, the United Kingdom and Germany during fiscal 1991 and in France during fiscal 1993.
Competition
The market for the Company's memory products is dominated by International Business Machines Corporation (IBM). In the disk storage market, the Company's current competitors include several large companies in addition to IBM. IBM announcements concerning new systems, improved performance characteristics of existing systems and price reductions have had adverse effects on the markets for the Company's products in the past.
The Company believes that its success in competing with IBM is dependent upon its ability to offer products with substantially better cost/performance characteristics than those provided by IBM. In relation to other independent companies with which it competes, the Company believes that the most important competitive factors are non-price factors such as product quality, reliability and product features, as well as service and support capability.
Competition in the IBM-compatible and disk array markets is intense. The industry is one characterized by rapid technological advances resulting in the frequent introduction of new products and services and by price reductions in established product categories. A number of other companies, some of which are substantially larger and have substantially greater resources than the Company, are engaged in the manufacture and marketing of products similar to those manufactured and marketed by the Company.
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Backlog
As of December 31, 1996, the dollar amount of the Company's firm backlog was approximately $163,000. On the same date of the preceding year, the comparable amount was approximately $267,000. All such backlog was deliverable within a year. Such backlog has no material seasonal characteristics. All equipment ordered by customers is subject to acceptance and satisfactory performance as well as the Company's ability to meet delivery schedules. The Company believes that backlog is not a meaningful indication of future business.
Patents
Although the Company owns 26 patents, it does not consider its patent position to be significant from a competitive standpoint.
Significant Customers
No single customer accounted for 10% or more of sales during fiscal years ended August 31, 1995 and August 31, 1994, and for the four month period ended December 31, 1995. During fiscal 1996, sales to one customer accounted for 14% of the Company's sales.
Employees
On March 27, 1997, the Company employed 67 persons.
Item 2.
Item 2. Properties
The Company leases approximately 68,000 square feet of floor space in Waltham, Massachusetts, under a lease for a term ending May 31, 2003. This facility consists of office, manufacturing and R & D space. The Company subleases 8,000 square feet of this space to Jupiter Technology for a term ending December 31, 1998. The Company also leases additional sales and support offices throughout the United States, Europe and Canada.
Item 3.
Item 3. Legal Proceedings
The Company is involved in certain legal proceedings arising in the ordinary course of business. The Company believes that the outcome of these proceedings will not have a material adverse effect on the Company's financial condition.
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Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
On December 18, 1996, the Company announced that it has entered into an agreement to acquire privately held Jupiter Technology, Inc., a supplier of multiprotocol frame relay access devices (FRADs) and network integration systems.
The acquisition will involve the issuance of Cambex common stock to Jupiter Technology shareholders and is subject to approval by the shareholders of both companies and the receipt of a fairness opinion from an independent investment bank. Joseph F.Kruy, Chairman of Cambex, and members of his family are holders of the controlling interest in Jupiter, and for this reason the transaction has been negotiated and will be under the supervision of a committee of independent Directors of Cambex chaired by Phillip C. Hankins.
Under terms of the acquisition, 9,000,000 shares of Cambex common stock will be issued for shares of Jupiter Technology. The proxy statement soliciting the approval of Cambex shareholders will contain detailed information about Jupiter as well as information on the proforma effect of the merger.
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PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.
The Company's common stock is traded on the Nasdaq Stock Market. The approximate number of shareholders of record at March 27, 1997 was 708. The high and low sales prices for the Company's stock for each quarter during the years ended December 31, 1996 and August 31, 1995 are as follows:
1996 1995
High Low High Low
First Quarter 8-1/8 5-1/8 4-7/8 3-1/2 Second Quarter 7-1/8 5-3/8 4-1/2 3-3/8 Third Quarter 5-3/4 3 6-3/4 3-1/2 Fourth Quarter 3-7/8 1-11/16 13 6-1/8
The Company has not paid dividends on its common stock in the past and does not expect to do so in the foreseeable future.
Item 6.
Item 6. Selected Financial Data.
The following selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this Form 10-K.
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Year Four Year Year Year Year Ended Months Ended Ended Ended Ended December December August August August August 1996 1995 1995 1994 1993 1992
(In thousands, except per share amounts)
Revenues $ 22,917 $8,509 $35,152 $40,549 $ 46,160 $52,083 Net income (loss)( 8,632) ( 2,855) ( 9,899) 590 ( 2,407) 9,847
Per share data: Net income(loss) ( 0.96) ( 0.32) ( 1.14) 0.07 ( 0.28) 1.13
Weighted Average Common and Common Equivalent Shares Outstanding 9,000 8,920 8,700 8,550 8,650 8,680
Total assets $ 13,033 $26,212 $32,027 $38,048 $ 36,119 $45,754
Long-term debt ------ ------- ------ 3,900 2,050 ------
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Fiscal 1996 as compared with Fiscal 1995
The year to year comparisons as they relate to the results of operations are being made between the twelve months ended December 31, 1996 and the twelve months ended August 31, 1995. The balance sheet comparisons are between December 31, 1996 and December 31, 1995.
The Company's revenues decreased 35% to $22,900,000 in 1996 as compared to $35,200,000 in 1995 due to lower mainframe memory and client/server product revenues and the delay in the development of the cost-reduced Cascade expanded disk array product. During 1995, there was an unprecedented slowdown and price erosion in the ES/9000 mainframe computer market. This slowdown continued throughout 1996 and the Company is unable to predict whether or when the market will return to its former position. The Company was unable to gain significant market share with its mainframe and client server disk storage products to offset the slowdown.
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Gross profit decreased 53% to $5,600,000 (24% of revenues) in 1996 from $11,700,000(33% of revenues),before the recognition of the decline in value of IBM trade-in memory as described in the next section, in 1995. The decrease in the gross profit percentage in 1996 is due to inventory write-downs and in- crease in reserves approximating $3,000,000 in the aggregate, lower margins on the Company's mainframe disk storage products and significantly lower which volume prevented the full absorption of manufacturing overhead.
Operating expenses decreased 28% to $12,400,000 in 1996 from $17,200,000 in 1995 due principally to cost savings achieved through several expense control actions. Research and development expenses decreased 46% due to completion of major projects in 1995 in addition to the expense control actions.
Interest expense decreased to $244,000 in 1996 from $254,000 in 1995 due to lower bank borrowings. Interest income decreased to $92,000 in 1996 from $108,000 in 1995. Other expense included $1,842,000 in 1996 and $1,700,000 in 1995 in amortization expenses related to a technology acquisition.
The Company recorded a credit for income taxes in both 1996 and 1995. The Company's prepaid tax asset is realizable through carrybacks against taxes paid in prior years. The full amount of the prepaid taxes, as it related to the United States portion, was received from the Internal Revenue Service subsequent to the end of 1996.Total accounts receivable decreased to $1,900,000 in 1996 from $2,600,000 in 1995 due to lower revenues. Inventories decreased to $6,200,000 in 1996 from $12,000,000 in 1995 due to decreased purchases, significantly lower levels of IBM trade-in memory and an additional $3,000,000 in inventory writedowns and reserves in 1996. Property and equipment (net) decreased to $1,000,000 in 1996 from $1,500,000 in 1995 since total purchases amounted to $100,000 while depreciation and amortization was $600,000.
Four months ended December 31, 1995 as compared with four months ended December 31, 1994.
Revenues for the four months ended December 31, 1995 decreased 26% from the comparable four months of the prior year due principally to decreased sales of the Company's STOR/9000 memory products for the IBM ES/9000 computers.
Operating expenses for the four months ended December 31, 1995 increased 6% from the comparable four months of the prior year. Selling and general and administrative expenses increased 16% due to expansion in Europe. Research and development expenses decreased 12% due to completion of major projects in fiscal 1995.
Other expense in the four months ended December 31, 1995 and December 31, 1994 included approximately $567,000 in amortization expenses relating to the Company's technology license/marketing agreement.
Accounts receivable decreased due to a lower volume of sales.
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Fiscal 1995 as compared with Fiscal 1994
The Company's revenues decreased 13% to $35,200,000 in fiscal 1995 as compared to $40,500,000 in fiscal 1994 due to lower mainframe memory product revenues, partially offset by an increase in revenues in the Company's client/server products.
During fiscal 1995, there was an unprecedented slowdown and price erosion in the ES/9000 mainframe computer market, resulting in decreased revenues and a significant devaluation in the value of the Company's inventory of trade-in IBM memories. The lower memory prices impacted revenues for the entire year, but most significantly in the fourth quarter. As a result, the Company recorded a decline in the value of its IBM trade-in memory of $4,600,000 in the fourth quarter.
Gross profit, before the recognition of the decline in value of IBM trade in memory, decreased 40% to $11,700,000 (33% of revenues) in fiscal 1995 from $19,500,000 (48% of revenues) in fiscal 1994. The degradation in the gross profit percentage is due primarily to reduced volume and price erosion plus a $1,900,000 inventory valuation reduction which was provided in fiscal 1995. There were no write-downs or reserves in fiscal 1994.
Operating expenses increased 2% to $17,200,000 in fiscal 1995 from $16,900,000 in fiscal 1994 and as a percent of revenues, increased to 49% from 42% in fiscal 1994. Selling expenses increased 6% to $8,200,000 in fiscal 1995 from $7,800,000 in fiscal 1994 due to increased staffing in Europe. Research and development expenses and general and administrative expenses decreased slightly from fiscal 1994.
Interest expense increased to $254,000 in fiscal 1995 from $203,000 in fiscal 1994 due to higher bank borrowings and higher interest rates. Interest income increased to $108,000 in fiscal 1995 from $96,000 in fiscal 1994.
Other expense in both fiscal 1995 and 1994 included $1,700,000 in amortization expenses related to a technology acquisition.
The Company's effective tax rate was 43% in fiscal 1994. The Company recorded a credit for income taxes in fiscal 1995. The Company's prepaid tax asset is realizable through carrybacks against taxes paid in prior years.
Total accounts receivable decreased to $5,000,000 in fiscal 1995 from $6,900,000 in fiscal 1994 due to a decrease in orders shipped near the end of fiscal 1995. Obligations for trade-in memory increased to $2,700,000 in fiscal 1995 from $700,000 in fiscal 1994 due to the purchase of certain IBM trade-in memory, which was subsequently sold. Inventories decreased to $11,600,000 in fiscal 1995 from $14,200,000 in fiscal 1994 due to lower levels of IBM trade-in memory.
Prepaid expenses decreased to $200,000 in fiscal 1995 from $800,000 in fiscal 1994 due to higher prepayments to customers for IBM trade-in memory in 1994.
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Property and equipment (net) decreased to $1,600,000 in fiscal 1995 from $1,900,000 in fiscal 1994 since total purchases amounted to $500,000 while depreciation and amortization was $800,000.
Inflation
The Company did not experience any material adverse effects in 1996, 1995 and 1994 due to general inflation.
Liquidity and Capital Resources
The Company's present operating plans indicate that available cash and invest- ments and the expected cash flow generated from operations will be adequate to meet its obligations to creditors and will be sufficient to fund operations for the coming fiscal year. As discussed more fully in Note 1 to the financial statements, the Company has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. The Company's management believes it has taken the appropriate corrective actions to reduce expenses through consolidation of the workforce and to increase revenue through new strategic alliances and selling products with improved gross margins. The Company's cash and marketable securities were $616,000 and $588,000 at December 31, 1996 and December 31, 1995, respectively. Working capital was $3,160,000 at December 31, 1996 compared with $8,812,000 at December 31, 1995. During 1996, the Company expended $140,000 for capital equipment to support its growth. During fiscal 1997, the Company expects to acquire approximately $100,000 of capital equipment.
During 1993, the Company obtained a $10 million unsecured, revolving line of bank credit, bearing interest at the prime rate plus one-half percent with a commitment fee of 3/8 of 1% per year on the unused portion. The Company was required to repay any borrowings under this revolving credit line on March 29, 1996.
During the second quarter of 1996, the Company agreed with its bank to extend and modify its Revolving Credit Agreement. Under the terms of the Modification Agreement, the outstanding balance at that time, $3,020,000 would be repaid, after an initial payment of $320,000, over a period of twenty four (24) months at $120,000 per month, with interest at the prime rate plus one percent. The Company granted to its bank a security interest in the Company's accounts receivable, inventory and general intangibles. In addition, the Company agreed to apply its anticipated refund from the Internal Revenue Service of not less than $1,900,000 to the outstanding balance upon receipt.
As of December 31, 1996, $1,800,000 remained outstanding under this Agreement. Subsequent to the end of the year, the Company received its refund from the Internal Revenue Service and repaid its bank in full and the agreement was terminated. Consequently, the bank released its security interest in the Company's accounts receivables, inventory and general intangibles.
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Item 8.
Item 8. Financial Statements and Supplementary Data.
See financial statements, beginning at page, incorporated herein by reference.
Unaudited quarterly financial data pertaining to the results of operations for 1996 and 1995 are as follows:
Q1 Q2 Q3 Q4
(In thousands, except per share amounts)
December 31, 1996
Revenues $8,020 $7,124 $ 4,193 $ 3,580 Gross Profit (Loss) 3,538 3,789 1,604 ( 3,370) Net Income (Loss) ( 988) 204 ( 1,919) ( 5,929) Earnings (Loss) Per Share ( 0.11) 0.02 ( 0.21) ( 0.96)
August 31, 1995
Revenues $10,167 $10,511 $11,167 $ 3,307 Gross Profit (Loss) 4,750 4,619 4,870 ( 7,149) Net Income (Loss) 156 156 93 (10,304) Earnings (Loss) Per Share .02 .02 .01 ( 1.19)
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
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PART III
Item 10.
Item 10. Director and Executive Officers of the Registrant.
Directors and Executive Officers of the Company are as follows:
Positions and Offices with the Company: Name Business Experience During Last Five Years
Joseph F. Kruy President and a Director from incorporation in Age: 65 1968 to December, 1975 and from June, 1976 to date; Chairman of the Board of Directors from December, 1975 to date. Treasurer from June, 1985 to April, 1987 and January, 1988 to April, 1988.
Philip C. Hankins Director since 1979. President, Charter Age: 65 Information Corporation (Information Processing).
C. V. Ramamoorthy Director since 1968. Professor of Electrical Age: 70 Engineering and Computer Sciences, University of California at Berkeley.
Robert Spain Director since 1995. President, CFC, Inc. Age: 59 (Electronic Components Manufacturing)
Sheldon M. Schenkler Vice President of Finance and Chief Financial Age: 45 Officer from April, 1988 to date; Treasurer from April, 1988 to June, 1991.
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Item 11.
Item 11. Executive Compensation.
The Company will file with the Securities and Exchange Commission a definitive Proxy Statement (the "Proxy Statement") not later than 120 days after the close of the fiscal year ended December 31, 1996. The information required by this item is incorporated herein by reference to the section titled Remuneration in the Proxy Statement.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated herein by reference in the section titled Election of Directors in the Proxy Statement.
Solely for the purpose of calculating the aggregate market value of voting stock held by non-affiliates of the Company as set forth on the Cover Page, it was assumed that only directors and executive officers on the calculation date together with spouses and dependent children of such persons constituted affiliates.
Item 13.
Item 13. Certain Relationships and Related Transactions.
During the third quarter of 1996, the Company entered into a Manufacturing Agreement with Jupiter Technology, Inc. ("Jupiter"), the majority of which is owned by Joseph F. Kruy, Chairman and Chief Executive Officer of Cambex Corporation, and his son, Peter Kruy. Under the terms of this Agreement, Cambex agreed to manufacture, sell and deliver products exclusively to Jupiter. Cambex agreed to purchase approximately $300,000 of Jupiter inventory from Jupiter and paid Jupiter $100,000 towards that amount. During 1996, the Company shipped and billed to Jupiter $298,000 for Jupiter products plus $43,000 for expenses related to a sublease agreement. As of December 31, 1996, Cambex owes Jupiter $256,000 for inventory purchases and Jupiter owes Cambex $341,000 for revenue shipments plus expenses.
On December 18, 1996, the Company announced that it entered into an agreement to acquire privately held Jupiter Technology, Inc., a supplier of multiprotocol Frame Relay Access Devices (FRADs) and network integration systems.
The acquisition will involve the issuance of Cambex common stock to Jupiter Technology shareholders and is subject to approval by the shareholders of both companies and the receipt of a fairness opinion from an independent investment bank. Joseph F. Kruy, Chairman of Cambex, and members of his family are holders of the controlling interest in Jupiter, and for this reason the transaction has been negotiated and will be under the supervision of a committee of independent Directors of Cambex, chaired by Phillip C. Hankins.
Under terms of the acquisition, 9,000,000 shares of Cambex common stock will be issued for shares of Jupiter Technology. The proxy statement soliciting the approval of Cambex shareholders will contain detailed information about Jupiter as well as information on the proforma effect of the merger.
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PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) The financial statements listed in the index to financial statements appearing at page of this report, which index is incorporated in this item by reference.
(2) The financial statement schedules as set forth in the above-mentioned index to financial statements.
(3) See the exhibit index following on page A-1.
(b) No reports on Form 8-K were filed during the last quarter of the period covered by this report.
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EXHIBIT INDEX
The following exhibits are filed herewith or incorporated by reference herein.
Exhibit
3.1 Articles of Organization of Cambex Corporation, as amended (incorporated herein by reference to Exhibit 1.1 to Form 10-K for the fiscal year ended August 31, 1981).
3.1.1 Articles of Amendment to Articles of Organization filed with the Massachusetts Secretary of State on December 11, 1987 (incorporated herein by reference to Exhibit 3.1.1 to Form 10-K for the fiscal year ended August 31, 1987).
3.1.2 Articles of Amendment to Articles of Organization filed with the Massachusetts Secretary of State on June 8, 1988 (incorporated herein by reference to Exhibit 3.1.2 to Form 10-K for the fiscal year ended August 31, 1988).
3.1.3 Articles of Amendment to Articles of Organization filed with the Massachusetts Secretary of State on January 23, 1992 (incorporated herein by reference to Exhibit 3.1.3 to Form 10-K for the fiscal year ended August 31, 1993).
3.2 By-Laws of Cambex Corporation, as amended (incorporated herein by reference to Exhibit 1.2 to Form 10-K for the fiscal year ended August 31, 1981).
10.1 Employment Agreement between Joseph F. Kruy and Cambex Corporation, dated as of April 22, 1987 (incorporated herein by reference to Exhibit 10.1.1 to Form 10-K for the fiscal year ended August 31, 1987).
10.2 Incentive Bonus Plan (incorporated herein by reference to Exhibit 10.3 to Form 10-K for the fiscal year ended August 31, 1983).
10.4 1985 Non-Qualified Stock Option Plan (incorporated herein by reference to Exhibit 10.6 to Form 10-K for the fiscal year ended August 31, 1985).
10.6 1987 Combination Stock Option Plan (incorporated herein by reference to Exhibit 10.8 to Form 10-K for the fiscal year ended August 31, 1987).
10.8 9021 Memory Products Business Acquisition Agreement dated January 10, 1992 between the Company and EMC Corporation (incorporated herein by reference to Exhibit 1 to Form 8-K dated January 14, 1992).
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Exhibit Index - Continued
Exhibit - Continued
10.9 Cambex Corporation Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended August 31, 1994).
10.10 Revolving Credit Agreement dated April 15, 1993 between the Company and the First National Bank of Boston (incorporated herein by reference to Exhibit 10.10 to Form 10-K for the fiscal year ended August 31, 1994).
23. Consent of Independent Public Accountants.
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CAMBEX CORPORATION AND SUBSIDIARIES
(Information required by Part II, Item 8 and Part IV, Item 14 of Form 10-K)
FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants F - 2
Consolidated Balance Sheets - December 31, 1996 and 1995 F - 3
Consolidated Statements of Operations for the Years Ended December 31, 1996, August 31, 1995 and August 31, 1994 and for the Four Months Ended December 31, 1995 F - 4
Consolidated Statements of Stockholders' Investment for the Years Ended December 31, 1996, August 31, 1995 and August 31, 1994 and for the Four Months Ended December 31, 1995 F - 5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, August 31, 1995 F - 6 and August 31, 1994 and for the Four Months Ended December 31, 1995
Notes to Consolidated Financial Statements F - 7
SUPPLEMENTARY SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 1996, AUGUST 31, 1995 AND AUGUST 31, 1994 AND FOR THE FOUR MONTHS ENDED DECEMBER 31, 1995
Schedule Number
II Valuation and Qualifying Accounts
Schedules other than those referred to above have been omitted, as they are not required or the information is included elsewhere in the financial statements or the notes thereto.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Stockholders of Cambex Corporation:
We have audited the accompanying consolidated balance sheets of Cambex Corporation (a Massachusetts corporation) and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, stock- holders' investment and cash flows for the years ended August 31, 1994, August 31, 1995, the four month period ended December 31, 1995 and the year ended December 31, 1996. These financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cambex Corporation and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for the years ended August 31, 1994, August 31, 1995, the four month period ended December 31, 1995 and the year ended December 31, 1996, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of the financial statements is presented for the purpose of complying with the
Report of Independent Public Accounts Page - 2 -
Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts March 4, 1997
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The accompanying notes are an integral part of these consolidated financial statements.
CAMBEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND 1995
LIABILITIES AND STOCKHOLDERS' INVESTMENT
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The accompanying notes are an integral part of these consolidated financial statements.
CAMBEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
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The accompanying notes are an integral part of these consolidated financial statements.
CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(1) Liquidity
The Company has suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. The Company's management believes it has taken the appropriate corrective actions to reduce expenses through consolidation of the workforce and to increase revenue through new strategic alliances and selling products with improved gross margins. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the company be unable to continue as a going concern.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Cambex Corporation and its wholly-owned subsidiaries (the Company). All material intercompany transactions and balances have been eliminated in consolidation.
Revenue Recognition
The Company manufactures equipment for sale or lease. Revenue from product sales is recognized at the time the hardware and software are shipped. The Company accepts memory in trade as consideration in certain revenue transactions. Revenue is recorded at the estimated net realizable value of the memory received plus the net cash received. If the memory is subsequently sold at a price in excess of the estimated net realizable value, the excess is recorded as revenue. Service and other revenues are recognized ratably over the contractual period or as the services are provided. Under certain equipment leases which qualify as sales type leases, the present value of noncancelable payments is currently included in revenues as sales, and all related costs, exclusive of the residual value of the equipment, are currently included in cost of sales. The unearned interest is recognized over the non- cancelable term of the lease. The Company has deferred revenue associated with the sale of certain products that have future perform- ance obligations.
For equipment leased under operating lease agreements, revenue is recognized over the lease term and the equipment is depreciated over its estimated useful life.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(2) Summary of Significant Accounting Policies - Continued
License fees are amortized over the useful life of the technologies being licensed.
Inventories
Inventories, which include materials, labor and manufacturing overhead, are stated at the lower of cost (first-in, first-out) or market and consist of the following: December 31, December 31, 1996 1995
Raw materials $ 2,386,454 $ 2,600,433 Work-in-process 861,073 1,017,749 Finished goods 2,765,006 7,097,086 Trade-in memory 187,500 1,315,056
$ 6,200,033 $12,030,324
Property and Equipment
The Company provides for depreciation and amortization on a straight- line basis to amortize the cost of property and equipment over their estimated useful lives as follows:
Leasehold improvements 2-10 Years Machinery and equipment 3- 8 Years Furniture and fixtures 3- 8 Years Leased equipment 3- 5 Years
Maintenance and repair items are charged to expense when incurred; renewals or betterments are capitalized.
If property is sold or otherwise disposed of, the Company's policy is to remove the related cost and accumulated depreciation from the accounts and to include any resulting gain or loss in income.
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CAMBEX CORPORATOIN AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(2) Summary of Significant Accounting Policies - Continued
Net Income (Loss) Per Common Share
Income (loss) per share amounts are based on the weighted average number of common shares and common share equivalents outstanding during each year. Common share equivalents consist of dilutive stock options and warrants, in certain circumstances, under the modified treasury stock method.
On March 3, 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings Per Share". The new standard must be applied beginning in 1998 and at that time will require restatement of previously reported earnings per share. The new statement cannot be applied early. The Company believes that the effect of applying the new standards will not be material.
Cash and Cash Equivalents
Cash and cash equivalents are recorded at cost which approximates market value. Cash equivalents include certificates of deposit, government securities and money market instruments purchased with maturities of less than three months.
Stock Options and Employee Stock Purchase Plan
Proceeds from the sale of newly issued stock to employees under the Company's stock option plans and Employee Stock Purchase Plan are credited to common stock to the extent of par value and the excess to capital in excess of par value. Income tax benefits attributable to stock options are credited to capital in excess of par value.
Disclosures about the Fair Value of Finanical Instruments
The Company's financial instruments consist mainly of cash, cash equivalents, accounts receivable, investment in sales-type leases, property held for sale, accounts payable, notes payable, and a revolving credit agreement. The carrying amounts of these financial instruments approximate their fair value due to the short-term nature of these instruments.
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CAMBEX CORPORATIONA ND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(2) Summary of Significant Accounting Policies - Continued
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates.
Accounting for Impairment of Long-Lived Assets and for Long-Lives Assets To Be Disposed Of
On January 1, 1996, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of". SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The statement also requires that certain long-lived assets and identifiable intangibles to be disposed of be reported at the lower of the carrying amount or fair value less cost to sell. Based on its review, the Company does not believe that any material impairment of its long-lived assets has occurred. The Company's review was based on the assumption that the Company continues as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the company be unable to continue as a going concern.
Investment Securities
On January 1, 1994, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." This statement addresses the accounting and reporting for all investments in debt securities and for investments in equity securities that have readily determinable fair values. When securities are purchased, they are classified as securities held to maturity if it is management's intent and ability to hold them until maturity. These securities are carried
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 (Continued)
(2) Summary of Significant Accounting Policies - Continued
Investment Securities - Continued
at cost, adjusted for amortization of premiums and accretion of discounts, both computed by the effective yield method. If it is managements intent at the time of purchase not to hold the securities to maturity, these securities are classified as securities available for sale and are carried at market value with unrealized gains and losses reported, net of the related tax effect, as a separate component of stockholders' equity. When securities are sold, the adjusted cost of the specific security sold is used to compute gain or loss on the sale. The Company had no investment securities as of December 31, 1996.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation", encourages but does not require companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for such plans using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the exercise price of the stock (See Note 8).
(3) Business, Operations and Segment Information
The Company is in the business of developing and manufacturing hardware and software for use with a variety of IBM computer systems. The Company's principal products include memory storage systems for large-scale IBM mainframe computers and storage subsystems for client server platforms.
The Company sells its equipment to both end users and to distributors. The Company's principal customers operate in a wide variety of industries and in a broad geographical area. No single customer or distributor accounted for 10% or more of total sales in fiscal years ended August 31, 1995 and 1994 or the four month period ended December 31, 1995. During 1996, one customer accounted for 14% of total revenues. Foreign sales were 20% in 1996 and 17% in fiscal 1994 and less than 10% of total revenues in fiscal 1995.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANICAL STATEMENTS
December 31, 1996
(Continued)
(4) Income Taxes
In accordance with SFAS No. 109, "Accounting For Income Taxes", deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
The following table presents the components of income (loss) before income taxes:
Four months Year ended ended Year ended Year ended December 31, December 31, August 31, August 31, 1996 1995 1995 1994
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(4) Income Taxes - Continued
The following table presents a reconciliation between taxes provided at the statutory federal income tax rate and the actual tax provision recorded for the following periods:
Four months Year ended ended Year ended Year ended December December August August 1996 1995 1995 1994
Provision (credit) at federal statutory rate $(3,003,000) $( 969,000) $(3,970,000) $ 351,000
State tax provision (credit), net of federal tax benefit ( 380,000) ( 143,000) ( 700,000) 43,000
Foreign and other losses for which no benefits have been recorded 853,000 155,000 973,000 147,000
Change in valuation allowances 2,711,000 759,000 1,976,000 ( 250,000)
Other ( 381,000) 201,000 ( 58,000) ( 151,000) $( 200,000) $ 3,000 $(1,779,000) 442,000
The 1996 and 1995 tax benefit recognized is primarily for current federal and foreign tax refunds receivable.
The 1994 provision includes a deferred provision of approximately $130,000, offset by a reduction of a previously established valuation allowance of approximately $250,000.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(4) Income Taxes - Continued
Refundable income taxes as of December 31, 1996 and 1995 and August 31, 1995 consisted of approximately $2,335,000, $6,389,000 and $6,505,000 of federal and foreign incomes taxes refundable as a result of taxable losses incurred during fiscal 1995, 1994 and 1993.
The tax effects of the significant items which comprise the deferred tax liability and tax asset, as of fiscal 1996 and 1995 are as follows:
December December August 1996 1995 1995
Assets Reserves not currently deductible for tax purposes $ 1,186,000 $ 961,000 $ 1,290,000 State tax net operating loss carryforward 1,223,000 844,000 700,000 Federal net operating loss carryforward 2,965,000 813,000 - - - Employee benefits 112,000 148,000 152,000 Other 75,000 112,000 166,000
Total deferred tax assets $ 5,561,000 $ 2,878,000 $ 2,308,000
Liabilities Fixed asset basis difference $( 67,000) $( 95,000) $( 145,000) Other ( 48,000) ( 48,000) ( 187,000)
Total deferred tax liabilities $( 115,000) $( 143,000) $( 332,000)
Net deferred tax asset $ 5,446,000 $ 2,735,000 $ 1,976,000 Valuation allowance (5,446,000) (2,735,000) (1,976,000) Tax asset 0 0 0
Tax refunds receivable 2,335,000 6,389,000 6,505,000
Total tax asset $ 2,335,000 $ 6,389,000 $ 6,505,000
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(4) Income Taxes - Continued
Due to the uncertainty of the realizability of the deferred tax assets, the Company has established a valuation allowance for the net deferred tax assets.
(5) Technology/Marketing Agreement
During the second quarter of fiscal 1992, the Company acquired from EMC Corporation technology rights, inventory, and other assets associated with EMC's IBM 3090 and ES/9000, Model 9021 compatible mainframe memory products. The purchase price of $11,500,000 was paid in fiscal 1992 and 1993. The use of the technology is exclusive to Cambex for five years.
The financial statement impact included the recording of inventory in the amount of $3,000,000, a marketing agreement in the amount of $7,500,000 and a technology license amounting to $1,000,000. The marketing agree- ment and technology license were amortized over a five-year period, ending December 31, 1996. Amortization of $1,700,000 related to the technology license and marketing agreement was recognized as other expense in fiscal 1995, $1,842,000 in 1996 and $567,000 for the four months ended December 31, 1995.
(6) Revolving Credit Agreement
During 1993, the Company obtained a $10 million unsecured, revolving line of bank credit, bearing interest at the prime rate plus one-half percent with a commitment fee of 3/8 of 1% per year on the unused portion. The Company was required to repay any borrowings under this revolving credit line on March 29, 1996.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(6) Revolving Credit Agreement - Continued
During the second quarter of 1996, the Company agreed with its bank to extend and modify its Revolving Credit Agreement. Under the terms of the Modification Agreement, the outstanding balance at that time, $3,020,000 would be repaid, after an initial payment of $320,000, over a period of twenty four (24) months at $120,000 per month, with interest at the prime rate plus one percent. The Company granted to its bank a security interest in the Company's accounts receivable, inventory and general intangibles. In addition, the Company agreed to apply its anticipated refund from the Internal Revenue Service of not less than $1,900,000 to the outstanding balance upon receipt.
As of December 31, 1996, $1,800,000 remained outstanding under this Agreement. Subsequent to the end of the year, the Company received its refund from the Internal Revenue Service and repaid its bank in full and the agreement was terminated. Consequently, the bank released its security interest in the Company's accounts receivables, inventory and general intangibles.
The Company's debt consists of the following at December 31, 1996 and 1995:
1996 1995
Revolving Credit Agreement $1,800,000 $3,200,000
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(7) Commitments and Contingenices
At December 31, 1996, the Company had minimum rental commitments under long-term, noncancelable operating leases for facilities and other equipment as follows:
Due during Fiscal Year
1997 $ 705,915 1998 $ 381,924 1999 $ 381,924 2000 $ 381,924 2001-2003 $ 922,983 $2,774,670
Total rental expense, including the cost of short-term equipment leases, real estate taxes and insurance paid to the landlord and charged to operations approximated $1,691,000 for the year ended December 31, 1996, $436,000 for the four months ended December 31, 1995, $1,733,000 for the year ended August 31, 1995, and $1,934,000 for the year ended August 31, 1994.
In the ordinary course of business, the Company is involved in legal proceedings. The Company believes that the outcome of these proceedings will not have a material adverse effect on the Company's financial condition or results of operations.
(8) Stock Options and Warrants
At December 31, 1996, the Company had two stock option plans for officers and certain employees under which 630,130 shares were reserved and options for 261,310 shares were available for future grants. Options are granted at not less than 85%, or in certain cases, not less than 100%, of the fair market value of the common stock on the date of grant. Options outstanding have a term of ten years and become exercisable in installments as determined by the Board of Directors. The plan's options vest between one through six years and all expire between January 21, 1996 and November 11, 2006.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(8) Stock Options and Warrants - Continued
Stock option activity for the three years and four months ended December 31, 1996 was as follows:
Option Shares Number Option Price
Outstanding at August 31, 1993 474,388 .25 - 16.15
Granted 199,950 3.40 - 4.68 Exercised, cancelled or expired ( 98,250) .29 - 16.15 Outstanding at August 31, 1994 576,088 .25 - 16.15
Granted 138,250 3.19 - 10.41 Exercised, cancelled or expired (276,830) .27 - 16.15 Outstanding at August 31, 1995 437,508 .25 - 16.15
Granted 182,500 7.22 - 7.65 Exercised, cancelled or expired (148,550) .92 - 11.69 Outstanding at December 31, 1995 471,458 .25 - 16.15
Granted 217,000 2.23 - 5.95 Exercised, cancelled or expired (319,638) 3.19 - 11.69 Outstanding at December 31, 1996 368,820 .25 - 16.15
As of December 31, 1996 and 1995, options for 140,218 and 86,490 shares were exercisable at aggregate option prices of $435,613 and $523,632, respectively.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(8) Stock Options and Warrants - Continued
Had compensation cost for these plans been determined consistent with SFAS No. 123, the Company's net loss and loss per share would have been increased to the following pro forma amounts: Four months Year ended ended Year ended December 31, December 31, August 31, 1996 1995 1995
Net Income (Loss): As Reported (000's) (8,632) (2,855) ( 9,899) Pro Forma (9,456) (3,120) (10,280)
Primary EPS: As Reported ( .96) ( .32) ( 1.14) Pro Forma ( 1.05) ( .35) ( 1.18)
The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions and values for grants in the periods presented.
Four months Year ended ended Year ended December 31, December 31, August 31, 1996 1995 1995
Assumptions: Risk free interest rate 6.35% 6.03% 6.58% Expected dividend yield 0% 0% 0% Expected life in years 10 10 10 Expected volatility 65.56% 65.56% 65.56%
Values: Weighted average fair value of options granted 4.35 7.22 8.95
Weighted average exercise price 4.58 7.64 9.40
Because the SFAS No. 123 method of accounting has not been applied to options granted prior to September 1, 1994, the resulting pro forma compensation cost may not be representative of that to be expected in future years.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(9) Incentive Bonus Plan and 401(k) Profit Sharing Retirement Plan
The Company has an incentive bonus plan under which certain key employees as a group are entitled to receive additional compensation up to a maximum of 15% of the Company's pre-tax income, as defined. The pro- vision for incentive bonus amounted to approximately $35,000, $55,000, and $138,000 in fiscal years 1996, 1995 and 1994, respectively and $5,000 for the four month period ended December 31, 1995.
On September 1, 1988, the Company established the Cambex Corporation 401(k) Profit Sharing Retirement Plan (the Plan). Under the Plan, employees are allowed to make pre-tax retirement contributions. In addition, the Company may provide matching contributions based on pre-established rates as determined by the Board of Directors. The Company provided approximately $400,000 in fiscal year 1994 for matching contributions. In fiscal 1995, the Company recorded a net reversal of prior accruals of approximately $200,000. The Company's contributions have been in the form of Cambex common stock since fiscal 1994.
The Company offers no post-retirement benefits other than those provided under the Plan.
(10) Employee Stock Purchase Plan
On December 20, 1993, the Company established the Cambex Corporation Employee Stock Purchase Plan (the Plan), which was approved by the shareholders. Under the Plan, employees may elect to have a specified percentage of their wages withheld through payroll deduction and purchase common stock shares at 85% of the lower of the fair market value of Common Stock on the first or last trading day of each Purchase Period. There are two (2) Purchase Periods each year - the first six months and the last six months of each calendar year. During fiscal 1996 and fiscal 1995, there were 50,060 and 94,440 shares issued under the Plan, respectively. At December 31, 1996, there were 212,590 shares reserved for issuance under the Plan.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(11) Decline in Value of IBM Trade-In Memory
During the year ended August 31, 1995, the Company was negatively impacted by the decreasing demand and rapidly declining prices in the ES/9000 mainframe memory market. Consequently, the Company wrote down the value of its ES/9000 trade-in memory by $4,647,000 in fiscal 1995 to levels that were expected to be realized in light of the changes in market conditions. These charges have been shown separately in the financial statements as "Decline in Value of IBM Trade-In Memory."
(12) Related Party Transactions and Proposed Acquisition
During the third quarter of 1996, the Company entered into a Manufacturing Agreement with Jupiter Technology, Inc. ("Jupiter"), the majority of which is owned by Joseph F. Kruy, Chairman and Chief Executive Officer of Cambex Corporation, and members of his family. Jupiter is a supplier of multiprotocol frame relay access devices (FRADs) and network integration systems. Under the terms of this Agreement, Cambex agreed to manufacture, sell and deliver products exclusively to Jupiter. Cambex agreed to purchase approximately $300,000 of Jupiter inventory from Jupiter and paid Jupiter $100,000 towards that amount. During 1996, the Company shipped and billed to Jupiter $298,000 for Jupiter products plus $43,000 for expenses related to a sublease agreement. As of December 31, 1996, Cambex owes Jupiter $256,000 for inventory purchases and Jupiter owes Cambex $341,000 for revenue shipments plus expenses.
On December 18, 1996, the Company announced that it has entered into an agreement to acquire Jupiter.
The acquisition will involve the issuance of Cambex common stock to Jupiter Technology shareholders and is subject to approval by the shareholders of both companies and the receipt of a fairness opinion from an independent investment bank. Since Joseph F. Kruy and members of his family are holders of the controlling interest in Jupiter, the transaction has been negotiated and will be under the supervision of a committee of independent Directors of Cambex, chaired by Phillip C. Hankins.
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CAMBEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Continued)
(12) Related Party Transactions and Proposed Acquisition - Continued
Under terms of the acquisition, 9,000,000 shares of Cambex common stock will be issued for shares of Jupiter Technology. The proxy statement soliciting the approval of Cambex shareholders will contain detailed information about Jupiter as well as information on the proforma effect of the merger.
(13) Events (Unaudited) Subsequent to date of Report of Independent Public Accountants
On March 7, 1997, the Company established the 1997 Stock Option Plan (subject to stockholder approval). The 1997 Stock Option Plan provides for the issuance of up to 1,000,000 shares in the aggregate and up to 300,000 shares to any one employee.
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CAMBEX CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions Charged To Balance at (Recovered Balance Beginning From) Writeoffs/ at End of Year Income Deductions of Year ---------- --------- ---------- --------
YEAR ENDED AUGUST 31, 1994:
Reserve for doubtful accounts $324,000 $(150,000) $(36,000) $ 138,000
YEAR ENDED AUGUST 31, 1995:
Reserve for doubtful accounts $138,000 $ - $ (3,000) $ 135,000
FOUR MONTHS ENDED DECEMBER 31, 1995:
Reserve for doubtful accounts $135,000 $ - $ 1,000 $ 136,000
YEAR ENDED DECEMBER 31, 1996:
Reserve for doubtful accounts $136,000 $ - $ (5,000) $ 131,000
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CAMBEX CORPORATION
By: /s/Joseph F. Kruy Joseph F. Kruy, President March 27, 1997
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 Company and in the capacities indicated as of March 27, 1997.
By: /s/ Joseph F. Kruy Joseph F. Kruy, Chairman of the Board, President and Director (Principal Executive Officer)
By: /s/ Sheldon M. Schenkler Sheldon M. Schenkler, Vice President of Finance (Principal Financial and Accounting Officer)
By: /s/ Robert J. Spain Robert J. Spain, Director
By: /s/ Philip C. Hankins Philip C. Hankins, Director
By: /s/ C. V. Ramamoorthy C. V. Ramamoorthy, Director
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CONSENT_OF_INDEPENDENT_PUBLIC_ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statements on Form S-8 (File Nos. 2-77667 and 33-18072).
Boston, Massachusetts March 28, 1997
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