SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1996
--------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
- ----- THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------- ---------
Commission file number: 0-12643
-----------------
GANDALF TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
ONTARIO, CANADA NOT APPLICABLE
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
130 COLONNADE ROAD SOUTH, NEPEAN, ONTARIO, CANADA K2E 7M4
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code:(613) 274-6500
----------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Shares
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
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 ]
[Cover page 1 of 2 pages]
The aggregate market value of the common shares held by non-affiliates
of the registrant, based upon the closing sales price of the common
shares as reported on The Nasdaq Stock Market (National Market System)
on May 31, 1996 (the last trading day prior to June 1, 1996) was
approximately $592,724,210. This amount excludes 544,079 common
shares held by all executive officers, directors, and shareholders
holding over five percent of the outstanding common shares on that
date, as such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive
determination for other purposes. As of June 1, 1996, 43,262,941
common shares, without nominal or par value, were issued and outstanding.
All dollar amounts in the Annual Report on Form 10-K are in United States
dollars, except where indicated. C$ refers to Canadian dollars.
References to years are to fiscal years ended March 31.
DOCUMENTS INCORPORATED BY REFERENCE
PART I None
PART II
Item 5. Market for Registrant's Common Stock
and Related Security Holder Matters
Page 35 of the Annual Report to Shareholders
for the fiscal year ended March 31, 1996
(Exhibit 13).
Item 7 Management's Discussion and Analysis
of Financial Condition and Results of
Operations. Pages 28 to 34 of the
Annual Report to Shareholders for the
fiscal year ended March 31, 1996
(Exhibit 13).
Item 8. Financial Statements and Supplementary
Data. Pages 14 to 27 of the Annual Report
to Shareholders for the fiscal year ended
March 31, 1996 (Exhibit 13).
PART III None
[Cover page 2 of 2 pages}
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business 4
Industry Background 4
Business Environment and Risk Factors 5
The Company and Corporate Structure 6
Products and Services 6
Sales and Marketing 8
Research and Development 8
Manufacturing 9
Customers 9
Competition 10
Backlog 10
Intellectual Property and Proprietary Rights 10
Employees 11
Environmental Affairs 11
Item 2. Properties 12
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote
of Security Holders 13
PART II
Item 5. Market for Registrant's Common Stock
and Related Security Holder Matters 13
Item 6. Selected Financial Data 13
Item 7 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 14
Item 8. Financial Statements and Supplementary
Data 14
Item 9. Disagreements on Accounting and
Financial Disclosure 14
PART III
Item 10. Directors and Executive Officers
of the Registrant 15
Item 11. Executive Compensation 19
Item 12. Security Ownership of Certain
Beneficial Owners and Management 25
Item 13. Certain Relationships and Related
Transactions 26
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 26
Signatures 30
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
Industry Background
- -------------------
For many organizations, access to information is a strategic element of
business. A number of current factors have influenced the way
information is accessed, including the corporate trend towards moving the
business closer to the customer, spurring the creation of branch offices;
the provision of flexible work environments as a means to attract and
retain highly-skilled employees; the popularity of the Internet; and
government environmental legislation requiring the reduction of work-
related travel. All of these dynamics have resulted in a growing number
of teleworkers, business travelers and remote office users increasing the
demand for network infrastructure products and services.
Challenges associated with managing such a network infrastructure include
asset control in an increasingly distributed environment;
interoperability in a multivendor environment; technical skill shortages;
maximization of an installed base of legacy networking equipment; and
information security.
Gandalf Technologies Inc. and its subsidiaries (Gandalf or the Company)
participates in three areas of the networking market - the remote access
market, the wide area networking market and the network services market.
Remote access is defined as extending corporate network-based, or public
network-based resources to remote, distributed locations. Wide area
networks are defined as those networks designed to carry a variety of
traffic types (video, data, voice, fax, LAN) over private or public
networks. Network services are defined as the provision of value added
services, which are customized to meet specific customer needs and
designed to increase productivity, reduce costs, or add value through the
design and implementation of well-managed networks.
Business Environment and Risk Factors
- -------------------------------------
The Company's future operating results may be affected by various trends
and factors that the Company must successfully address in order to
achieve favorable operating results. In addition, there are trends and
factors beyond the Company's control which affect its operations. Such
trends and factors include adverse changes in general economic
conditions, or conditions in the specific markets for the Company's
products, government regulation or intervention affecting networking,
fluctuations in foreign exchange rates and other factors including those
listed in other sections below.
The Company's success depends in substantial part on the timely and
successful introduction of new products. An unexpected change in one or
more of the technologies affecting data networking or in market demand
for products based on a particular technology could have a material
adverse effect on the Company's operating results if the Company does not
respond quickly and effectively to such changes. Failure to keep pace
with such advances could negatively affect the Company's competitive
position and prospects for growth.
The market price of the Company's common stock has been, and may continue
to be, extremely volatile. Factors such as new product announcements by
the Company or its competitors, quarterly fluctuations in the Company's
operating results and general conditions in the networking market may
have a significant impact on the market price of the Company's common
stock. These conditions, as well as factors which generally affect the
market for stocks of high technology companies, could cause the price of
the Company's stock to fluctuate substantially over short periods.
See also Factors That May Affect Future Financial Performance
contained in Management's Discussion and Analysis of Financial
Condition and Results of Operations and Volatility of Stock Prices
contained in Market for Registrant's Common Stock and Related
Security Holder Matters at page 29 and 35 respectively, of the Company's
Annual Report to Shareholders for the fiscal year ended March 31, 1996
incorporated by reference herein.
The Company and Corporate Structure
- -----------------------------------
Gandalf Technologies Inc. was created by Articles of Amendment on July 22,
1981 as the continuation of Gandalf Data Communications Limited which was
incorporated on April 29, 1971 under the laws of the Province of Ontario,
Canada. The registered office of the Company is 130 Colonnade Road South,
Nepean, Ontario, Canada K2E 7M4, telephone (613) 274-6500. The Company's
common shares are traded on The Toronto Stock Exchange and The Nasdaq Stock
Market (National Market System).
The Company operates through six principal subsidiary companies: Gandalf
Canada Ltd., Gandalf Systems Corporation in the United States, Gandalf
Digital Communications Limited in the United Kingdom, Gandalf S.A. in France,
Gandalf Nederland B.V. and Gandalf International Limited. The Company's
operations are conducted through four distinct operating units: the North
America Group based in Nepean, Ontario and Delran, New Jersey covering
Canada, the United States and Mexico; the Europe, Middle East and Africa
Group, based in Bracknell, UK, consisting of the UK, France, Italy, Spain,
Eastern Europe, the Middle East and Africa (excluding South Africa); the
Northern Europe Group, located in Amsterdam, Netherlands, encompassing
the Netherlands, Belgium, Germany, Austria, Switzerland, Luxembourg,
Norway, Sweden, Finland and Denmark; and the Asia Pacific Group, located
in Tokyo, Japan which includes Japan, Korea, Singapore, Taiwan, Hong Kong,
China, Australia, New Zealand and South Africa. For information regarding
Gandalf's foreign and domestic operations, see Note 16 to the Company's
consolidated financial statements incorporated by reference herein.
Products and Services
- ---------------------
The Company's vision is to provide people with access to information
through technology. More specifically, the Company's vision is to
provide the most effective, efficient, user-friendly, advanced products
and services that provide its customers with needed and secure access to
information, while preserving and enhancing their investment.
The Company designs, supplies, markets and services equipment that is
designed to transport information in a manner that is efficient, cost
effective, secure and reliable. Gandalf creates value for its customers
through its ability to integrate a variety of technologies and a range of
telephone company services with its customers' information applications.
Gandalf accomplishes this through four lines of business -- Access,
Concentration, Backbone and Services.
Access and Concentration Products
Gandalf addresses the remote access market with two lines of business,
Access and Concentration, encompassing three families of products,
XpressConnect(R), XpressStack(R) and Xpressway(R).
The XpressConnect line of high performance, internetworking access
products delivers the response time and performance of a local (LAN)
connection over a low speed, wide area network (WAN) facility. The
XpressConnect line comprises a range of access solutions for the mobile
or part-time teleworker, the full-time teleworker, the small or large
branch office user and Internet users.
The modular, stackable XpressStack line of concentration and
internetworking products can be deployed in an enterprise network to
concentrate a number of small and large branch offices and teleworkers,
or in an Internet service provider to deliver access concentration of
many subscribers over telephone services such as ISDN or switched 56K.
An XpressStack solution can be scaled upwards, in small increments, to
deliver a solution which is a precise cost fit to the requirements of
customers.
The Xpressway line of concentration and internetworking products is a
higher-density, chassis-based solution which allows enterprises and
service providers alike to concentrate great numbers of remote users onto
a single, robust system over telephone services such as ISDN, switched
56K, Frame Relay, and the public switched telephone network. A scaleable
design ensures that performance is consistent as additional remote users
are added to the system. In addition to concentration, a number of other
internetworking modules can be configured into an Xpressway system
(multiprotocol router, campus LAN switch, hub cards, terminal servers) to
enable a complete solution.
Backbone Products
Gandalf addresses the wide area market with its backbone line of
business. Gandalf's WAN 2000 family of multiplexers and concentrators is
designed to carry in a very efficient manner, a variety of traffic - LAN,
voice, fax, video, data - over a single leased line, saving customers
long distance charges and line costs by integrating their traffic.
The family has three products: the 2120, a modular feeder product which
can accommodate concentration at speeds of up to 24Kbps; the 2300, which
can grow up to 20 T1s (20 x 1.544Mbps) or 16 E1s (16 x 2.048Mbps) in
total capacity; and the 2050 network communications switch, which permits
switching capacity up to 80 T1s.
Network Services and Support
The Company provides its customers with a suite of services ranging from
ongoing maintenance support to a full life cycle of services such as
network design, implementation, management and operations, asset
management and training. Services are sold as a complementary part of
the product sale. They are delivered with business partners and often
through distribution channels. Gandalf's services vision is to be best
of breed at satisfying the needs of its customers by providing the full
life cycle of support solution delivered by Gandalf and its business
partners.
Gandalf's end user service programs include the ServiStart Program for
network installation, the ServiStat Extended Warranty Program for
additional product coverage, and the ServiSelect Services for network
maintenance. Partner services include the Partner Program, for those
channel partners who want to enhance their own service capabilities, and
the Alliance Program for those channel partners who do not have their own
service organization. Teleworking services include RemoteConnect, a
turnkey, value-add, integrated services package encompassing
installation, projection management, line provisioning end user support,
designed to provide customers with a cost-effective solution for
deploying teleworking programs.
Sales and Marketing
- -------------------
Gandalf markets its products and services through both direct and
indirect channels through its wholly-owned subsidiaries in the United
States, Canada, United Kingdom, the Netherlands and France. The
Company's International subsidiary sells through local distributors
worldwide. The Company's sales and marketing model focuses on four
channels of distribution - national resellers, service providers,
corporate accounts and OEM (Original Equipment Manufacturer)
partnerships.
Research and Development
- ------------------------
The Company believes that success in the rapidly changing communications
segment of the information industry is dependent upon the ability to
anticipate and respond to customer needs and to develop reliable, cost-
effective products with expanded capabilities and performance.
The Company is engaged in research and development activities in both LAN
and WAN technologies. The Company spent $11.5 million on product
development in fiscal 1996, and $10.1 million in fiscal 1995 and $15.0
million in fiscal 1994.
Manufacturing
- -------------
The Company's manufacturing operations consist of materials planning and
procurement, assembling and testing electronic assemblies.
The quality systems of Gandalf's manufacturing operation are managed to
the ISO 9002-1994 quality standard and are recognized under the Quality
Management Institute's (QMI's) registration program, registration number
000367. The Company's adherence to known international and national
quality standards provides one of the strongest assurances of
product/service quality available.
In some cases, the Company may subcontract part of the manufacturing
process, or the entire manufacturing, of a product to a single supplier.
Also, a single source supplier may be used in instances when the Company
designs components and sub-assemblies. As a corporation, the Company
believes that the close working relationship with a single supplier
enhances product quality, delivery and cost control. However, there can
be no assurance that in the future the Company's suppliers will be able
to meet the Company's demand for components in a timely and cost-
effective manner. The Company's operating results and customer
relationships could be adversely affected by either an increase in prices
for, or an interruption or reduction in supply of, any key components.
Customers
- ---------
Gandalf's target customers are end users of data processing equipment and
include major corporations, institutions, carriers and governments in all
of its major geographic markets.
The Company's business is not seasonal. The Company is not dependent
upon a single customer or a few customers, and the loss of any one or
more would not be anticipated to have a material adverse effect on the
Company. During the three-year period ended March 31, 1996, no customer
accounted for 10 percent or more of the Company's revenues in any year.
Competition
- -----------
The networking industry has become increasingly competitive, and the
Company's results may be adversely affected by the actions of existing or
future competitors. Such actions may include the development or
acquisition of new technologies, the introduction of new products and the
reduction of prices by competitors to gain or retain market share.
Industry consolidation or alliances may also affect the competitive
environment.
The Company's competitors vary depending upon the sector of the network
being identified and include networking vendors as well as independent
systems integrators. Principal competitors include companies such as
3Com Corporation, Ascend Communications, Inc., Bay Networks Inc., and
Cisco Systems Inc. These and other competitors and potential competitors
may have greater financial, technological, manufacturing, marketing and
personnel resources than the Company. Gandalf believes its worldwide
coverage, its technology leadership, its operational support excellence
and its market driven management system will allow it to compete
effectively in its chosen markets.
Backlog
- -------
The Company attempts to manufacture inventory in quantities sufficient to
provide timely delivery of its products. Because of the short delivery
cycle, backlog is not considered to be a meaningful indication of future
revenues.
Intellectual Property and Proprietary Rights
- --------------------------------------------
The Company believes that intellectual property constitutes a valuable asset
of the Company and protects its intellectual property through certain patents
and trademarks on a worldwide basis. The Company holds international
trademark registrations on its corporate name, GANDALF, and has either
applied for, or obtained, trademark registrations on its product and services
brand names. The Company holds a patent on proprietary compression
technology, which, in the view of the Company, represents a significant
competitive advantage. The Company utilizes non-disclosure and
confidentiality agreements to disclose proprietary information to its
resellers, distributors, customers and potential customers. The Company's
products include proprietary software and firmware which is provided under
license to customers and end users.
Employees
- ---------
On March 31, 1996, the Company had 812 employees worldwide. Of these,
377 were sales, marketing and customer support personnel, 128 were
engaged in engineering development, 191 were engaged in manufacturing and
distribution and 116 held general administrative positions. On March 31,
1995 the Company had 897 employees and on March 31, 1994 the Company had
1,127 employees. Outsourcing to partners by the Company of the delivery
of field service maintenance in the United States led to the majority of
the reduction in employees from fiscal 1995 to fiscal 1996.
Since March 31, 1996, the Company has also outsourced the delivery of
field service maintenance in the United Kingdom and Canada, restructured
certain aspects of its sales and marketing organization worldwide in
accordance with its distribution channel strategy, consolidated the
manufacturing distribution function in a single location and outsourced
its manufacturing repair function in Europe. As a result of these
changes the Company presently has fewer than 700 employees.
Approximately two-thirds of these employees are located in North America
and the remainder are employed in Europe and in the other International
operations.
While the attrition rate in the Company is within acceptable norms, the
Company has experienced the loss of some employees with valuable skills.
The Company continues to recruit and hire qualified and skilled
employees.
Environmental Affairs
- ---------------------
The Company is currently in the final stages of remediation of certain non-
hazardous materials at the Company's former engineering, administration and
distribution facility in Cherry Hill, New Jersey, in compliance with the
State of New Jersey's Environmental Cleanup Responsibility Act. The Company
continues to maintain a letter of credit in the amount of $500,000 with the
Royal Bank of Canada to secure its clean-up obligations under New Jersey law.
It is anticipated that the remediation will be completed during fiscal 1997
and, in the opinion of management, is not anticipated to have a material
effect on future expenditures or earnings.
ITEM 2. PROPERTIES
Properties
- ----------
The Company's head office is located in Nepean, Ontario, Canada, near Ottawa.
The Company operates from three leased premises at this location. A research
and administration facility (97,000 square feet) is located on land adjacent
to the Company's manufacturing facility (58,000 square feet) in Nepean. Both
facilities were sold to the builder upon completion in 1987 and leased back
to the Company for a 10-year term with four options to renew of five years
each. The Company also occupies an 18,250 square foot printed circuit board
manufacturing facility on land adjacent to the Company's other buildings in
Nepean. In 1988, this building was sold to the builder and leased back to
the Company for a 20-year term.
The Company's principal property in the United States is located in Delran,
New Jersey. The leased building comprises 27,000 square feet and is occupied
by certain engineering, sales and marketing and administrative staff of the
Company.
The Company owns a facility in Warrington, Cheshire, England (37,200 square
feet) which contains office space and warehouse space which, until June 1996,
had been used as a distribution and repair centre for the Company's products
in Europe.
It is management's belief that the existing principal properties described
above are adequate for the Company's current needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is a third party defendant in an action begun in April 1993 in
the Ontario Court (General Division) by Deskin Inc. and a Quebec numbered
company as plaintiffs against Digital Equipment of Canada Limited,
Distribution Architects International Inc.(DAI) and D.A. Distribution
Software Systems Ltd. (DAD) as defendants. The main action claims damages
totaling C$2.6 million and unspecified damages for lost sales and profits of
C$20.0 million relating to the design, supply and installation of a computer
system. The third party claim brought by DAI and DAD alleges improper
network design and selection of network hardware by the Company and seeks
contribution and indemnity. Each of the defendants has defended the claim.
The plaintiff has not sued the Company. Counsel for the Company believes the
Company has a good defence to the third party claim on the merits, and that
based on the information available to date and the Company's limited
involvement in the project, the Company's liability, if any, should only
be for a nominal portion of the amount claimed in the main action.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
For information relating to the registrant's common stock and
related shareholder matters, reference is made to page 35 of
the 1996 Annual Report to Shareholders, filed as Exhibit 13
hereto, which information is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
Thousands of U.S. dollars except per share amounts
1996* 1995* 1994* 1993* 1992** 1991***
- ------------------------------------------------------------------------------------------------------------------------
Income Statement Data:
Revenues $116,533 $120,511 $131,323 $160,900 $119,181 $129,013
Gross margin 45.9% 44.4% 41.7% 43.7% 46.5% 49.4%
Selling, general and administration 39,996 40,661 54,772 62,807 45,778 54,223
Research and development 11,524 10,197 14,316 17,279 13,679 13,788
Net income (loss) 260 1,406 (47,238) (19,507) (9,912) (5,869)
Basic earnings (loss) per share 0.01 0.05 (2.27) (1.24) (0.63) (0.48)
- ------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
Total assets 79,375 81,508 89,186 129,603 141,408 102,999
Fixed assets 16,253 18,619 20,214 30,768 38,416 22,761
Working capital 29,361 21,057 13,978 25,596 19,276 22,050
Current ratio 2.0 1.6 1.3 1.5 1.3 1.6
Cash and cash equivalents net of current bank debt 13,602 5,963 (5,239) (688) (17,918) (9,030)
Long-term debt 2,496 1,877 2,020 22,980 23,729 5,548
Convertible debentures - 10,051 21,681 23,862 - -
Shareholders' equity 48,586 34,442 19,109 34,308 55,491 59,363
<FN>
* Year ended March 31
** For eight months only, ended March 31, 1992
*** Year ended July 31
</FN>
Acquisition
- -----------
On August 2, 1991, the Company's subsidiary in the United States,
Gandalf Data, Inc. completed a merger with Infotron, an international
data communications company headquartered in Cherry Hill, New Jersey,
U.S.A.
Change in Reporting Currency
- ----------------------------
During the fiscal 1992 period, the Company adopted the U.S. dollar as
the unit of measurement for presentation in its consolidated financial
statements. This change was made due to the significant increase in
the Company's activities in the United States as a result of the merger
with Infotron. The comparative figures for the fiscal year 1991
were restated in U.S. dollars using a translation method of convenience
by which amounts previously stated in Canadian dollars were converted to
U.S. dollars using the July 31, 1991 exchange rate of $0.8683, without
any other effects on previous results stated in Canadian dollars. The
results of operations for the eight month period ended March 31, 1992
were converted at the average exchange rate for the period of $0.8690.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For information relating to management's discussion and analysis of
financial condition and results of operations, reference is made to
pages 28 to 34 of the 1996 Annual Report to Shareholders, filed as
Exhibit 13 hereto, which information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For information relating to the Company's consolidated financial statements
and supplementary data, reference is made to pages 14 to 27 of the 1996
Annual Report to Shareholders, filed as Exhibit 13 hereto, which
information is incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table and the notes thereto set out, as of June 1, 1996, the
name and age of each director of the Company and any nominees for director of
the Company; his present principal occupation, business or employment; his
principal occupation, business or employment during the past five years, the
period during which he has served as a director of the Company, all other
major positions and offices with the Company and significant affiliates
thereof now held by him, if any.
BUSINESS EXPERIENCE
DIRECTOR DURING THE PAST FIVE YEARS,
NAME SINCE DIRECTORSHIPS AND OTHER INFORMATION
__________________________________________________________________________________________________________________
Desmond Cunningham, 65 1971 Past Chairman and co-founder of the
Company. Retiring, effective August 1,
1996.
Alexander Curran, 69 1987 President, Alex Curran Consultant Inc.
(management consultant) since December
1988. Retiring, effective August 1, 1996.
John F. Gamba, 57 1995 Senior Vice President, Corporate
Resources and Performance Assurance,
Bell Atlantic Corporation (regional
operating telephone company) since May
1994. Group President, Network
Technologies & Systems of Bell Atlantic
Network Services, Inc. from March 1992
to May 1994. Executive Vice President,
Bell Atlantic Network Services from
April 1990 to March 1992.
Charles J. Gardner, 60 1981 Partner of Goldberg, Shinder, Gardner
& Kronick (barristers & solicitors) since
1965.
Donald M. Gleklen, 59 1991 President, Jocard Financial Services,
Inc. (merchant banking), since October
1994. Special Counsel to Robert J.
Brobyn & Associates, Attorneys at Law,
from February 1994 to October 1994.
Senior Vice President of MEDIQ
Incorporated (health care services
company) from September 1984 to February
1994.
Barclay C. Isherwood, 50 Nominee President, B.C. Isherwood & Associates
(consultant). From 1992 to March 1996,
principal in Iles & Isherwood Inc., co-
managing an investment fund specializing
in technology companies. Prior to 1992,
Vice President, Motorola Inc.
Robert E. Keith, 54 1992 President, Technology Leaders Management
Inc. (high technology venture
capitalists) since December 1991 and
Managing Director of Radnor Venture
Partners, L.P. (high technology venture
capitalists) since July 1989.
Ian McLaren, 39 Nominee President, SHL Canada, since December
1995 (a wholly-owned subsidiary of
MCI, providing systems integration
and outsourcing services). From early
1994 to December 1995, Executive Vice
President and General Manager of the
Ottawa Region for SHL Canada. Prior to
joining SHL Canada in 1994, Group Vice
President, Finance, Professional and
Public Administration Sector of Digital
Equipment of Canada.
A. Graham Sadler, 71 1994 President, Moreline Inc. (supplier of
electronic and mechanical components and
parts) since 1991. Retiring, effective
August 1, 1996.
Albert Sinyor, 49 1995 President, Amico Corporation (medical
equipment manufacturing) since 1993.
From 1988 to 1993, General Manager,
Canadian Operations of Bell Atlantic
Business Systems Services.
Thomas A. Vassiliades, 60 1993 Chairman of the Company since May 1995,
and President and Chief Executive
Officer since May 1994. President
and Chief Executive Officer of Avatar
Management Services, Inc. (management
and consulting services) since June
1993. President and Chief Executive
Officer of Bell Atlantic Business
Systems Inc. (international independent
computer and network services) from
February 1990 to June 1993.
Mihkel E. Voore, 41 Nominee Partner, since 1991, with the law firm
of Stikeman, Elliott in Toronto
practicing in the areas of corporate and
securities law.
Johnny Wai-Nang Wong, 48 Nominee Currently on sabbatical from the
University of Waterloo, Waterloo,
Ontario to the IBM Zurich Research
Laboratory, as Visiting Scientist in
the Department of Communication Systems.
From 1985 to present, Professor,
Department of Computer Science,
University of Waterloo, with cross-
appointment in the Department of
Electrical and Computer Engineering.
From 1989 to 1994 served as Associate
Provost, Computing and Information
Systems with the University of Waterloo.
There are no family relationships between directors or executive officers of
the Company. Under the provisions of the Ontario Business Corporations Act,
1982, a majority of the directors must be resident Canadians.
The names, ages, positions with the Company and business experience of the
executive officers of the Company as of June 1, 1996, other than Mr.
Vassiliades, are as follows:
Richard Busto, 52, has been Vice President, Strategy, Business Development
and Network Services since January 1996. Mr. Busto joined the Company in
October 1995 as Vice President of Networking Services, Education and Quality
after 29 years of industry experience at the IBM Corporation of Armonk, New
York. Before joining the Company, Mr. Busto was director of business
development for IBM's services division. From 1990 to 1993, Mr. Busto was
general manager for field service operations for the U.S. and has held
various management positions throughout IBM's services organization,
including director of networking services, director of service planning and
director of finance.
Michael Chawner, 49, has been Vice President, Product Operations and Chief
Technology Officer since January 1996 and is responsible for product
development, manufacturing and supply. Previously, Mr. Chawner was Vice
President, Strategy and Business Development, a position which he held from
February 1995 when he joined the Company. From 1988 to February 1995, Mr.
Chawner was with Newbridge Networks Corporation and held positions as Vice
President of Research and Development and Vice President of Network
Engineering. Mr. Chawner has over 20 years of combined experience in the
industry with Bell-Northern Research Ltd., Mitel Corporation, Leigh
Instruments and British Telecom in the United Kingdom.
Joceline Lemieux, 37, was appointed Vice President, Worldwide Marketing in
January 1996. Her mandate encompasses corporate marketing, product line
management and field marketing. Ms. Lemieux has been with the Company's
sales organization since April 1986. From September 1995 to April 1996 she
was Vice President, Canadian Sales and from April 1992 to September 1995 was
the Regional Manager for the Eastern Canada region.
Walter R. MacDonald, 34, has been Vice President, Finance and Chief Financial
Officer since September 1993. From June 1992 to September 1993, he was
Controller; from June 1991 to June 1992 he was Treasurer and from January
1990 to June 1991 he was Assistant Treasurer of the Company.
John McGoldrick, 43, was appointed president of the Company's newly formed
Asia Pacific Group in April 1996 located in Tokyo, Japan. From April 1995 to
April 1996, Mr. McGoldrick was managing director for sales, services and
marketing in Europe, the Middle East, Australasia and Africa. From January
1995 to April 1995, Mr. McGoldrick was Managing Director of Gandalf Digital
Communications Limited, the Company's subsidiary in the United Kingdom, and
from October 1994 to January 1995, was General Manager, European Direct for
Gandalf Digital Communications Limited. Between February 1990 and October
1994, Mr. McGoldrick was Vice President of Sorbus UK, and from July 1991 to
October 1994 was also general manager of a joint venture between ICL Company
located in the United Kingdom and Bell Atlantic Customer Services, located in
the United States.
Peter Merrifield, 35, has been Managing Director, Europe, Middle East and
Africa, since April 1996. Prior to April 1996, Mr. Merrifield was Regional
Sales Director, Gandalf International Limited. Between 1984 and March 1996
he held various positions within Gandalf Digital Communications Limited and
Gandalf International Limited including International Sales Support Director,
Sales Support Manager and Product Line Manager.
Kenneth Stess, 37, was appointed Vice President, North American Sales in
April 1996. From January 1996 to April 1996, he was Vice President, Sales
and Marketing, United States and from 1991 to 1996, Mr. Stess held various
positions in the Company, including Vice President, North American Marketing;
Vice President, Marketing of Gandalf Systems Corporation; Strategic Marketing
(Remote Access) and Marketing Manager, New Business Development.
Frank van der Poll, 31, has been Managing Director, Northern Europe, since
April 1996. From March 1994 to April 1996, Mr. van der Poll was Managing
Director, Gandalf Nederland B.V. From 1993 to February 1994, Mr. van der
Poll was Sales Director, Gandalf Nederland B.V. From 1990
to 1993, Mr. van der Poll held positions with ICL Company.
ITEM 11.
EXECUTIVE COMPENSATION
Overview
- --------
The Company currently has 9 executive officers of whom two became executive
officers subsequent to March 31, 1996 and whose compensation during fiscal
1996 does not form part of the amounts contained in this section. The
aggregate cash compensation, including amounts paid under the Executive
Incentive Plan paid to all executive officers as a group (9 persons,
including two individuals who were executive officers during fiscal 1996, but
were not serving at March 31, 1996) by the Company and its subsidiaries for
services rendered during the fiscal year ended March 31, 1996 was $1,260,786.
In addition, during the fiscal year ended March 31, 1996, executive officers
were given the use of automobiles leased by the Company at an aggregate
incremental cost to the Company and its subsidiaries of $45,348.
Liability Insurance
- -------------------
The Company provides liability insurance for directors and officers of the
Company and its subsidiaries. Effective November 1, 1995 the Company had
directors' and officers' liability insurance with policy limits of $18.3
million per loss with an annual aggregate of $18.3 million. The Company's
annual deductible is $73,000 except $257,000 for claims originating in the
United States, and no deductible to the individual. The premium for
directors' and officers' liability insurance in respect of fiscal 1996 was
$226,000. The individual directors and officers of the Company and its
subsidiaries are insured for losses arising from claims against them for
certain of their acts, errors or omissions. The Company is insured against
any loss arising out of any liability to indemnify a director or officer.
Summary Compensation Table
- --------------------------
The following table presents information provided in accordance with
regulations under the Securities Act (Ontario) which requires the disclosure
of compensation paid during each of the years in the three year period ended
March 31, 1996, in respect of the individuals serving as executive officers
at March 31, 1996, who during fiscal 1996 held the position of chief
executive officer of the Company or who were the other four most highly
compensated executive officers of the Company. The table also includes two
additional individuals who were executive officers during fiscal 1996, but
were not serving at March 31, 1996. In addition, the Company has included
information in respect of two other executive officers of the Company serving
at March 31, 1996.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
----------------------------------- -----------
Securities
Under
Name and Fiscal Other Annual Options All Other
Principal Positions Year Salary Bonus Compensation Granted Compensation
($) ($) (#)
(a) (b) (c) (d) (e) (f) (g)
- -------------------------------------------------------------------------------------------------------
Executive officers serving with the Company as at June 1, 1996
- -------------------------------------------------------------------------------------------------------
T.A. Vassiliades 1996 $200,000 --- --- 800,000 ---
Chairman, President and CEO 1995 $178,498 (1) --- --- 600,000 ---
1994 --- --- --- --- ---
R. Busto 1996 $146,125 (2) --- --- 100,000 ---
VP Strategy, Business 1995 --- --- --- --- ---
Development and Network 1994 --- --- --- --- ---
Services
M. Chawner 1996 $ 89,903 --- --- 50,000 ---
VP Product Operations and 1995 $ 10,228 (3) --- --- 75,000 ---
Chief Technology Officer 1994 --- --- --- --- ---
J. Lemieux 1996 $ 99,760 (4) --- --- 50,000 ---
VP Worldwide Marketing 1995 --- --- --- --- ---
1994 --- --- --- --- ---
W. R. MacDonald 1996 $ 89,536 $18,164 --- 64,000 ---
VP Finance and CFO 1995 $ 84,443 --- --- 40,000 ---
1994 $ 71,287 --- --- 50,000 ---
J. McGoldrick 1996 $103,376 $ 3,671 --- 50,000 ---
President Asia Pacific 1995 62,240 (5) --- --- 50,000 ---
Group 1994 --- --- --- --- ---
K. Stess 1996 $169,751 (4) --- --- 35,000 ---
VP North American Sales 1995 --- --- --- --- ---
1994 --- --- --- --- ---
Executive officers no longer serving with the Company as at June 1, 1996
- ------------------------------------------------------------------------------------------------------
P. Beaumont 1996 $157,883 (6) --- --- 25,000 ---
VP Sales, Services and 1995 $149,376 (4) --- --- 125,000 ---
Marketing for the Americas 1994 --- --- --- --- ---
G.A. Daniello 1996 $131,463 (7) $35,219 --- 25,000 ---
VP Product Operations 1995 $137,478 --- --- 75,000 ---
and Chief Technology Officer 1994 $111,493 (8) --- --- 125,000 ---
<FN>
(1) T.A. Vassiliades was appointed President and CEO on May 10, 1994. He held this office for ten months
in fiscal 1995, and previously provided consulting services to the Company through Avatar Management
Services, Inc., a company controlled by him.
(2) R. Busto was employed by the Company for seven months during fiscal 1996.
(3) M. Chawner was employed by the Company for one month during fiscal 1995.
(4) Includes sales commissions.
(5) J. McGoldrick was employed by the Company for five months during fiscal 1995.
(6) P. Beaumont resigned from the Company March 31, 1996.
(7) G.A. Daniello resigned from the Company on January 19, 1996.
(8) G.A. Daniello was employed by the Company for ten months during fiscal 1994.
</FN>
OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL
YEAR
% Market
of Total Value of
Options Securities
Securities to Granted Underlying
Under Employees Option on
Name and Options Financial Exercise or the Date Expiration
Principal Positions Granted Year Base Price of Grant (1) Date
(#) ($/Security) ($/Security)
(a) (b) (c) (d) (e) (f)
Executive officers serving with the Company as at June 1, 1996
- ----------------------------------------------------------------------------------------------
T.A. Vassiliades 800,000 45.9% 800,000 @ $ 3.77 $ 3.77 April 7, 2005
Chairman, President
and CEO
R. Busto 100,000 5.7% 100,000 @ $ 7.65 $ 7.65 August 27, 2005
VP Strategy, Business
Development and
Network Services
M. Chawner 50,000 2.8% 25,000 @ $ 4.77 (2) $ 4.77 May 10, 2005
VP Product Operations 25,000 @ $15.96 (2) $15.96 January 21, 2006
and Chief Technology
Officer
J. Lemieux 50,000 2.8% 5,000 @ $ 8.80 (2) $ 8.80 July 16, 2005
VP Worldwide 20,000 @ $ 5.50 (2) $ 5.50 October 31, 2005
Marketing 25,000 @ $13.39 (2) $13.39 January 10, 2006
W. R. MacDonald 64,000 3.7% 44,000 @ $ 4.77 (2) $ 4.77 May 10, 2005
VP Finance and CFO 20,000 @ $13.85 (2) $13.85 March 17, 2006
J. McGoldrick 50,000 2.8% 50,000 @ $ 4.72 (3) $ 4.72 May 10, 2002
President Asia
Pacific Group
K. Stess
VP North American 35,000 2.0% 10,000 @ $ 8.85 $ 8.85 July 16, 2005
Sales 25,000 @ $15.70 $15.70 January 3, 2006
Executive officers no longer serving with the Company as at June 1, 1996
- ----------------------------------------------------------------------------------------------
P. Beaumont
VP Sales, Services 25,000 1.4% 25,000 @ $ 4.72 (3) $ 4.72 May 10, 2002
and Marketing for
the Americas
G.A. Daniello 25,000 1.4% 25,000 @ $ 4.77 (2) $ 4.77 May 10, 2005
VP Product Operations
and Chief Technology
Officer
<FN>
(1) The market value of the common shares underlying the options was the closing market price on the Toronto
Stock Exchange on the day prior to the date of the grant.
(2) Options were granted in Canadian dollars. Translated at the year end exchange rate of C$1=$0.7336.
(3) Options were granted in pounds sterling. Translated at the year end exchange rate of 1 pound sterling=$1.5263
</FN>
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY
COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION VALUES
Value of
Unexercised
Unexercised in-the-Money
Options Options
at Fiscal at Fiscal
Securities Aggregate Value of Year End (1)(#) Year End (2)($)
Name and Acquired Securities Acquired Exercisable/ Excerciseable/
Principal Positions on Exercise on Exercise Unexerciseable Unexcerciseable
(#) ($)
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------------------------------------------------------
Executive officers serving with the Company as at June 1, 1995
- ------------------------------------------------------------------------------------------------------------------
T.A. Vassiliades 1,152,502 $12,008,388 266,665 Exercisable $2,930,649 Exercisable
Chairman, President 10,833 Unexercisable $ 126,711 Unexercisable
and CEO
R. Busto --- --- 100,000 Unexercisable $ 711,000 Unexercisable
VP Strategy, Business
Development and Network
Services
M. Chawner --- --- 25,005 Exercisable $ 309,462 (3) Exercisable
VP Product Operations and 99,995 Unexercisable $ 868,538 (3) Unexercisable
Chief Technology Officer
J. Lemieux --- --- 1,667 Exercisable $ 17,267 (3) Exercisable
VP Worldwide Marketing 53,333 Unexercisable $ 283,768 (3) Unexercisable
W. R. MacDonald --- --- 67,671 Exercisable $ 871,750 (3) Exercisable
VP Finance and CFO 107,329 Unexercisable $1,061,147 (3) Exercisable
J. McGoldrick 5,000 $ 52,021 11,667 Exercisable $ 157,073 (4) Exercisable
President Asia Pacific 83,333 Unexercisable $ 950,662 (4) Unexercisable
Group
K. Stess 6,667 $ 91,837 48,333 Unexercisable $ 243,509 Unexercisable
VP North American Sales
Executive officers no longer serving with the Company as at June 1, 1996
- ------------------------------------------------------------------------------------------------------------------
P. Beaumont 41,666 $ 225,968 NIL (5) NIL
VP Sales, Services
and Marketing for the
Americas
G.A. Daniello 116,675 $1,214,670 NIL (6) NIL
VP Product Operations
and Chief Technology
Officer
<FN>
(1) Includes options granted prior to appointment as an executive officer.
(2) The market value of common shares underlying the options on March 31, 1996 was $14.76.
(3) Options were granted in Canadian dollars. Translated at the year end exchange rate of C$1=0.7336.
(4) Options were granted in pounds sterling. Translated at the year end exchange rate of 1 pound
sterling=$1.5263.
(5) P. Beaumont resigned from the Company on March 31, 1996. 108,334 options expired upon the
Optionee ceasing to be employed by the Company.
(6) G. Daniello resigned from the Company on January 19, 1996. 108,325 options expired upon
the Optionee ceasing to be employed by the Company.
</FN>
Bonus and Stock Plans
- ---------------------
The Company has an executive incentive plan under which cash compensation is
distributed to executive officers during the year. The plan is administered
by the Compensation Committee of the board of directors which determines
the amount that may be paid to executive officers as a bonus during the year.
The criteria used to determine the amount awarded reflects the position held
by the executive officer in the Company, the level of responsibility,
and the degree to which established objectives are achieved. Bonuses paid to
executive officers during the fiscal year ended March 31, 1996 totaled
$57,054.
The Company has five stock option plans as set out below, of which only
one is an active plan. All option grants made during the fiscal year
ended March 31, 1996 were from the Stock Option Plan for Key Employees
and Directors (formerly the Stock Option Plan for Executives and Directors).
1983 Stock Option Plan for Key Employees
1984 Stock Option Plan for Directors
1988 Stock Option Plan for Key Employees
1988 Stock Option Plan for Directors
Stock Option Plan for Key Employees and Directors
As at March 31, 1996, 1,859,225 Common Shares were subject to options at
prices ranging from C$0.88 to C$23.00 and expiring at various dates between
January 10, 1997 and March 17, 2006. Of such options, 1,167,165 Common Shares
were subject to options held by all directors and executive officers as a
group.
Compensation of Directors
- -------------------------
The by-laws of the Company authorize the Board to determine the amount
of remuneration to be paid to directors for their services as directors.
The Board has approved the following schedule of fees for directors who are
not employees of the Company (Outside Directors). Outside Directors
resident in Canada receive an annual retainer of C$7,500 . Outside
Directors resident in the United States receive an annual retainer of
$7,000. In addition, each director receives an attendance fee of
$400 (in local currency) for meetings of shareholders, the Board of Directors
and Committees of the Board of which he is a member. Directors are entitled
to reimbursement by the Company for all reasonable expenses incurred in
attending such meetings. Directors who are employees receive no remuneration
for serving as members of the Board or as members of Committees of the Board.
No additional compensation is paid to the Chairs of the various Committees.
During the fiscal year ended March 31, 1996, the following amounts were paid
to directors of the Company in their capacity as directors, including amounts
paid for Committee participation or special assignments: Desmond Cunningham
C$10,660; Alexander Curran $11,100; John F. Gamba $6,096; Charles J. Gardner
C$15,900; Donald M. Gleklen $11,000; Robert E. Keith $14,600; A. Graham
Sadler C$10,700; Albert Sinyor C$6,417. Thomas A. Vassiliades was appointed
Chairman on May 31, 1995 and President and Chief Executive Officer on May 10,
1994. Desmond Cunningham resigned as Chairman of the Company on May 31,
1995.
Directors of the Company, are eligible to receive stock options under the
Stock Option Plan for Key Employees and Directors. Pursuant to the terms of
the Plan, as amended and ratified by the shareholders on August 10, 1995,
directors are to be awarded stock options on 10,000 common shares of the
Company on the date of their initial election, and stock options on 5,000
common shares of the Company on each subsequent re-election, up to a maximum
of 50,000 unexercised stock options. On August 10, 1995, Mr. Gamba and Mr.
Sinyor were elected directors of the Company and each received a stock option
under the Stock Option Plan for Key Employees and Directors to purchase
10,000 common shares at an exercise price of $10.86 per common share (the
equivalent of the Canadian market price on the date of grant), and C$14.75,
respectively.
The remaining directors of the Company each received option grants, effective
May 31, 1995, at an exercise price equal to the market price on the date of
grant. The number of stock options granted vary by individual director, in
recognition of additional responsibilities undertaken for committee work as
well as length of service as a director. Resident Canadian directors
received option grants at an exercise price of C$7.50, as follows: Desmond
Cunningham, 10,000; Alexander Curran, 15,000; Charles J. Gardner, 15,000; A.
Graham Sadler, 10,000. United States resident directors received option
grants at an exercise price of $5.48 (the equivalent of the Canadian market
price on the date of grant), as follows: Donald M. Gleklen, 20,000; Robert
E. Keith, 10,000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of June 1, 1996 with respect to
(1) all shareholders known to the Company to be beneficial owners of more
than 5 percent of its outstanding Common Shares and (2) share ownership by
each director and nominee for director and by each named executive officer
still in the employ of the Company and by all executive officers and
directors as a group.
Amount Percent
Name Beneficially Owned (1) of Class (7)
- ----------------------------------------------------------------------------------
Richard Busto - -
Michael Chawner 34,640 (4) -
Desmond Cunningham 83,693 (2) -
Alexander Curran 18,917 (3) -
John F. Gamba 800 -
Charles J. Gardner 25,667 (4) -
Donald M. Gleklen 75,668 (4) -
Barclay C. Isherwood 287,200
Robert E. Keith 47,943 (4) -
Joceline Lemieux 3,334 (3) -
Ian McLaren - -
John McGoldrick 10,337 (3) -
A. Graham Sadler 3,250 (3) -
Albert Sinyor - -
Kenneth Stess 6,667 (3) -
Walter R. MacDonald 95,673 (3) -
Peter Merrifield 5,001 (3) -
Frank van der Poll 5,001 (3) -
Mihkel E. Voore - -
Johnny Wai-Nang Wong - -
Thomas A. Vassiliades 665,844 (4) (5) 1.5%
All executive officers and
directors as a group (21 persons) 1,369,635 (6) 3.1%
<FN>
FOOTNOTES
(1) All shares are owned of record or beneficially and the sole investment
and voting power is held by the person named, except as set forth below.
(2) 81,692 shares are owned of record by Donosti Investments Inc., a
corporation controlled by Desmond Cunningham, and the balance represent
options currently exercisable (or exercisable within the next 60 days) by
Desmond Cunningham.
(3) Represents options (currently exercisable or exercisable within 60 days).
(4) Includes options (currently exercisable or exercisable within 60 days) on
the following shares:
Michael Chawner 33,340
Charles J. Gardner 24,667
Donald M. Gleklen 25,668
Robert E. Keith 3,250
Thomas A. Vassiliades 1,250
(5) Includes 300,000 common shares held by Mr. Vassiliades wife.
(6) Includes options (currently exercisable or exercisable within 60 days) on
238,356 common shares.
(7) Percentage ownership is calculated based upon total shares outstanding
plus shares subject to options (currently exercisable or exercisable within
60 days) held by the individual named or the persons included in the relevant
group. - indicates beneficial ownership of less than 1% of the class.
</FN>
Statements contained in the table as to securities beneficially owned by
directors, officers and certain shareholders or over which they exercise
control or direction are, in each instance, based upon information obtained
from such directors, executive officers and shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Charles J. Gardner, a current Board member, and Mihkel E. Voore, a nominee to
the Board, are each partners in law firms which provides legal services to
the Company. Mr. Cunningham had a consulting arrangement under which he
performed services for the Company during the fiscal year ended March 31,
1996. Mr. Vassiliades had a consulting arrangement with the Company prior to
his becoming President and Chief Executive Officer on May 10, 1994. Other
than as described above, there are no material relationships and related
transactions with directors and executive officers of the Company.
PART IV
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 following financial statements, included in the 1996 Annual Report to
Shareholders are incorporated by reference into this report.
Auditors' Report.
Consolidated Financial Statements of Gandalf Technologies Inc. including:
Consolidated Balance Sheets at March 31, 1996 and March 31, 1995.
Consolidated Statements of Income for the years ended March 31, 1996, March
31, 1995 and March 31, 1994.
Consolidated Statements of Changes in Financial Position for the years ended
March 31, 1996, March 31, 1995 and March 31, 1994.
Consolidated Statements of Shareholders' Equity for the years ended March 31,
1996, March 31, 1995 and March 31, 1994.
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedule.
Auditors' Report on Schedule.
Schedule II: Valuation and qualifying accounts.
Note: Schedules other than the one above are omitted as not applicable, not
required, or the information is included in the consolidated financial
statements thereto.
(3) Exhibits
Exhibit No. Description
----------- -----------
*3.1 Articles of Incorporation of the Registrant and amendments
thereto (filed as Exhibit 3.1 to Registration Statement No. 2-
74405 on Form S-1).
*3.2 Articles of Amendment to Articles of Incorporation of the
Registrant effective December 14, 1983 and December 13, 1985
(filed as Exhibit 4.4 to Registration Statement No.33-14899 on
Form S-2).
*3.3 By-laws of the Registrant (filed as Exhibit 3.2 to the Form
10-K for the fiscal year ended July 31, 1985).
*3.4 Amendment to By-laws of the Registrant (filed as Exhibit 4.5
to Registration Statement No. 33-14899 on Form S-2).
*4.1 Common Share certificate (filed as Exhibit 4.1 to the Form 10-
K for the fiscal year ended March 31, 1993).
*10.1 Lease dated 15th September, 1987 between The Glenview
Corporation, the Company and Gandalf Data Limited whereby The
Glenview Corporation leased the land and buildings known as
130 Colonnade Road South, Nepean to the Company and Gandalf
Data Limited for an initial term of 10 years at an initial
rent of C$1,125,000 per annum with four options to extend each
being for five year periods (filed as Exhibit 10.2 to the Form
10-Q for the quarter ended April 30, 1988).
*10.2 Lease dated 15 September, 1987 between The Glenview
Corporation, the Company and Gandalf Data Limited whereby The
Glenview Corporation leased the land and the buildings known
as 100 Colonnade Road South, Nepean, to the Company and
Gandalf Data Limited for an initial term of 10 years at an
initial rent of C$402,000 per annum with four options to
extend each being for five year periods (filed as Exhibit 10.3
to the Form 10-Q for the quarter ended April 30, 1988).
*10.3 Agreement of Purchase and Sale dated October 14, 1988 between
the Company and The Glenview Corporation of the land and
building known as 40 Concourse Gate in Nepean, Ontario for
C$3,000,000 subject to a lease-back to the Company for 20
years at a basic rent of C$420,000 per annum; and providing
the Company with an exclusive option to re-purchase the lands
for C$3,500,000 within 10 years or C$4,000,000 after October
31, 1998 and before October 31, 2003 (filed as Exhibit 10.27
to the Form 10-K for the fiscal year ended July 31, 1989).
*10.4 Agreement dated as of July 3, 1991, among Radnor Venture
Partners, L.P., Safeguard Scientifics (Delaware), Inc., the
Company and Gandalf Systems Corporation (filed as Exhibit
10.17 to the Form 10-K for the fiscal year ended July 31,
1991).
*10.5 Registration Agreement dated as of August 1, 1991, among
Radnor Venture Partners, L.P., Safeguard Scientifics
(Delaware), Inc. and the Company (filed as Exhibit 10.18 to
the Form 10-K for the fiscal year ended July 31, 1991).
*10.6 Lease dated September 13, 1988 between Cherry Hill Industrial
Sites, Inc. and Gandalf Systems Corporation (filed as Exhibit
10.52 to the Form 10-K for the fiscal year ended July 31,
1991).
*10.7 Consulting Agreement dated as of February 21, 1994 between the
Company and Thomas A. Vassiliades (filed as Exhibit 10.17 to
the Form 10-K for the fiscal year ended March 31, 1994).
*10.8 Consulting Agreement dated as of March 1, 1995 between
Thomas A. Vassiliades and the Company (filed as Exhibit
10.11 to the Form 10-Q for the quarter ended July 1, 1995).
*10.9 Credit Agreement dated as of May 30, 1995 between the
Royal Bank of Canada and the Company (filed as Exhibit
10.12 to the Form 10-Q for the quarter ended July 1, 1995).
*10.10 Credit Agreement, dated as of May 30, 1995 between the
Royal Bank of Canada and Gandalf Canada Limited/Gandalf
Technologies Inc. (filed as Exhibit 10.13 to the Form
10-Q for the quarter ended July 1, 1995).
13 Pages 14 to 34 of the Annual Report to Shareholders for the
fiscal year ended March 31, 1996.
21 List of subsidiaries.
23 Consent of KPMG Peat Marwick Thorne.
- ----------------------------------
*Incorporated herein by reference.
(b) The Company did not file any reports on Form 8-K during the fourth
quarter of the fiscal year ended March 31, 1996.
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.
GANDALF TECHNOLOGIES INC.
By: s/THOMAS A. VASSILIADES
-----------------------
(Thomas A. Vassiliades)
Chairman, President and Chief Executive Officer
Dated: June 3, 1996
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas A. Vassiliades and
Walter R. MacDonald, jointly and severally, his attorneys-in-fact,
each with full power of substitution, for him in any and all
capacities, to sign any amendments to the Report on Form 10-K,
and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission
hereby ratifying and confirming all that each said attorneys-in-fact,
or his substitute or substitutes, may do or cause to be done by
virtue hereof.
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 and on the date indicated.
Signatures Title Date
- ------------------ ----- --------
s/DESMOND CUNNINGHAM
- --------------------
(Desmond Cunningham) Director June 3, 1996
s/ALEXANDER CURRAN
- ------------------
(Alexander Curran) Director June 3, 1996
s/JOHN F. GAMBA
- ---------------
(John F. Gamba) Director June 3, 1996
s/CHARLES J. GARDNER
- --------------------
(Charles J. Gardner) Director June 3, 1996
s/DONALD M. GLEKLEN
- -------------------
(Donald M. Gleklen) Director June 3, 1996
s/ROBERT E. KEITH
- -----------------
(Robert E. Keith) Director June 3, 1996
s/WALTER R. MACDONALD
- ---------------------- Vice President June 3, 1996
(Walter R. MacDonald) of Finance
(Principal Financial and
and Accounting Officer)
s/A. GRAHAM SADLER
- ------------------
(A. Graham Sadler) Director June 3, 1996
s/ALBERT SINYOR
- ---------------
(Albert Sinyor) Director June 3, 1996
s/THOMAS A. VASSILIADES
- ------------------------ Director, Chairman, June 3, 1996
(Thomas A. Vassiliades) President, and
Chief Executive Officer
(Principal Executive Officer)
Consolidated Financial Statements of Gandalf Technologies Inc.
These financial statements are prepared in accordance with Canadian
generally accepted accounting principles which in the case of the
Company differ in certain respects from those in the United States.
See note 17 to the consolidated financial statements.
AUDITORS' REPORT ON SCHEDULE
To the Board of Directors and Shareholders
of Gandalf Technologies Inc.
Under date of May 10, 1996, we reported on the consolidated balance
sheets of Gandalf Technologies Inc. as at March 31, 1996 and 1995
and the consolidated statements of income, changes in financial
position and shareholders' equity for each of the years in the three
year period ended March 31, 1996 as contained in the 1996 annual report
to shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K
for the fiscal year 1996. In connection with our audits of the
aforementioned consolidated financial statements, we also have audited
the related financial statement schedule as listed in item 14 of Form
10-K. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on
this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
s/KPMG PEAT MARWICK THORNE
Chartered Accountants
Ottawa, Canada
May 10, 1996
Schedule II: Valuation and qualifying accounts and reserves.
(Thousands of United States dollars)
- -------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
Additions
---------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts Deductions at end
Description of year expenses - describe(1) - describe of year
- -------------------------------------------------------------------------------
Year ended March 31, 1996
- -----------
Reserve for bad
debts deducted
in the balance
sheet from amounts
receivable ....... $ 4,430 $ 836 $ (364) $ - $ 4,902
Year ended March 31, 1995
- -----------
Reserve for bad
debts deducted
in the balance
sheet from amounts
receivable ...... $ 4,414 $ 519 $ (503) $ - $ 4,430
<FN>
(1) Relates to accounts receivable charged directly against
reserve for bad debts.
</FN>