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From brucef@access.digex.net Tue May 3 12:05:00 1994 From: brucef@access.digex.net (Bruce M. Franklin) Newsgroups: comp.sys.amiga.advocacy Subject: Commodore's Financial Condition - The Facts Date: 27 Apr 1994 01:05:26 -0400 Organization: Express Access Online Communications, Greenbelt, MD USA NNTP-Posting-Host: access3.digex.net Summary: The facts, not speculation about Commodore's finances. Keywords: commodore finances This file is from the GEnie Starship. It represents a LOT of hard work. It's the facts, not speculation ========================================================================= Here's some information about Commodore from public records and SEC filings, corporate databases and such. You will note that some of the information was updated only after the posting of the final reports of the last fiscal year [ending June] and some of it has been updated to include the quarterly report released at the end of March. NONE of this is speculation. Commodore International Limited is the parent company of Commodore Business Machines Inc, the people who operate the West Chester facility. You will see the SEC records which list all owners of Commodore stock in excess of 5%. There is only one, Irving Gould. He owns 19-20%. Other insiders have very little stock, all things considered, but the insider reports are here, too. Medhi Ali earns a higher yearly salary, but his 300,000 shares of stock do not even leave him owning 1 percent. You will see records of the debts, loans and other long term reports and history included here. There are analysis statements of record from professionals and SEC filings. There's probably more here than you ever knew existed, let alone care about. :) The Prudential loan is already overdue, and even after this length of time, Commodore has been unable to raise the cash to pay it off. What will be happening over the next week and month will determine the course and future of the company and the technology which we love so dearly. Many experts and industry watchers think only liquidation faces the company now. Some hold out some hope that portions of the technology could be acquired. If the lenders and creditor force the issue before then, there may not even be negotiating room for that much. I have cited sources of all this information enclosed in headers which seperate it marked with: /*/*/*/*/*/*/*/*/*/*/*/*/*/ Those of you who are number crunchers may enjoy this information. deb, from the *StarShip* on GEnie /*/*/*/*/*/*/*/*/*/*/*/*/*/ Corporate Affiliations /*/*/*/*/*/*/*/*/*/*/*/*/*/ Commodore International Limited Commodore International Inc P.O. Box N-10256 1200 Wilson Dr. Nassau West Chester, PA 19380 Bahamas USA Executives: Chairman of the Board,Chief Executive Officer Irving Gould/Chief Executive Officer President Mehdi R Ali/President Vice President - No Function,Chief Financial Officer,Corporate Secretary Ronald B Alexander/Corporate Secretary Technical/Engineering/Technical Svcs Lewis C Eggebrecht/Technical/Engineering/Technical Svcs Vice President - No Function Stephen Franklin/Vice President - No Function Vice President - No Function,General Counsel J Edward Goff/General Counsel Vice President - No Function Helmut Jost/Vice President - No Function General Counsel James W Olson/General Counsel Vice President - No Function,Controller Anthony D Ricci/Controller Finance Executive-Other Hock E Tan/Finance Executive-Other Board of Directors: Gould, Irving; Ali, Mehdi R; Haig, Alexander M, Jr, Gen; Seligman, Ralph D; Winberg, Burton Corporate Family Hierarchy: =>Commodore International Limited 1942036<= Commodore Electronics Ltd (Subsidiary) 1942035 Commodore-Amiga Inc (US Subsidiary) 1942034 Commodore Business Machines Inc (US Subsidiary) 1942033 Commodore Software Div (Division) 1942032 Computer Systems Div (Division) 1942031 Consumer Products Group (Division) 1942030 Commodore International Limited (Division) 1942029 Commodore International Limited (Division) 1942028 Commodore Semiconductor Group (Division) 1942027 Commodore AB (Non-US Subsidiairy) 1942026 Commodore AG (Non-US Subsidiairy) 1942025 Commodore Buromaschinen GmbH (Non-US Subsidiairy) 1942024 Commodore Buromaschinen GmbH (Non-US Subsidiairy) 1942023 Commodore Business Machines Ltd (Non-US Subsidiairy) 1942022 Commodore Business Machines (Asia Pacific) Ltd (Non-US Subsidiairy) 194 2021 Commodore Business Machines (NZ) Ltd (Non-US Subsidiairy) 1942020 Commodore Business Machines (UK) Ltd (Non-US Subsidiairy) 1942019 Commodore Business Machines Pty Limited (Non-US Subsidiairy) 1942018 Commodore BV (Non-US Subsidiairy) 1942017 Commodore Computer GmbH (Non-US Subsidiairy) 1942016 Commodore Computers Norge A/S (Non-US Subsidiairy) 1942015 Commodore Computer NV/SA (Non-US Subsidiairy) 1942014 Commodore Data A/S (Non-US Subsidiairy) 1942013 Commodore Electronics Ltd (Non-US Subsidiairy) 1942012 Commodore Electronics Ltd (Non-US Subsidiairy) 1942011 Commodore France SARL (Non-US Subsidiairy) 1942010 Commodore Italiana SpA (Non-US Subsidiairy) 1942009 Commodore Japan Limited (Non-US Subsidiairy) 1942008 Commodore Networking Division (Non-US Subsidiairy) 1942007 Commodore Philippines BV (Non-US Subsidiairy) 1942006 Commodore Portuguesa Electronica SA (Non-US Subsidiairy) 1942005 Commodore SA (Non-US Subsidiairy) 1942004 /*/*/*/*/*/*/*/*/*/*/*/*/*/ S & P Online /*/*/*/*/*/*/*/*/*/*/*/*/*/ S & P Online remarks [last updated 12-Apr-94] in company information listing: Makes multimedia computers, PC compatible computers, entry level model... 3/25/94 in talks with creditors to restructure debt... may become subject to reorganization or other liquidation proceeding if unsuccessful... FY 93 (June) EPS fell to loss on 36% sales decline, narrower gross margins, higher interest expense, inventory writedowns... 1st half FY 94 loss narrowed despite 61% sales decline... absence of non-recurring charge... CEO has 19%. Tel.# 215-431-9100 --------- EARNINGS PER SHARE ---------- 6 Mo Dec -.54 ..Prev. Yr. -2.90 Last 12 Mos -8.42 P/E def 5-Yr. Growth % .... --------- DIVIDENDS PER SHARE --------- Rate Nil Yield Last Div. None Ex-Date 12/29 PayDate 01/31/65 ------------ MARKET ACTION ------------ 1994 Range High 3.87 Low .37 Average Volume 59885 Beta 2.4 Institutional Holdings 2% Primary Exchange NYSE S&P Rank C ------------ BALANCE SHEET ------------ Current Ratio .64 Long Term Debt 18 Shares 33.08 Report of 06/30/93 (Long Term Debt and Shares in millions) --------- FISCAL YEAR HISTORY --------- Book Fiscal Value Year Net Per Jun EPS Revenue Income Share 93 -10.78d 590.8 -356.5 ........ 92 .82 911.0 27.6 9.84 91 1.73y 1047.2 57.4 8.87 90 .05 887.3 1.5 7.81 /*/*/*/*/*/*/*/*/*/*/*/*/*/ Company Profile on Record /*/*/*/*/*/*/*/*/*/*/*/*/*/ COMMODORE INTERNATIONAL LTD Company Profile COMMODORE INTERNATIONAL LTD Disclosure Co No: C527625 SASSOON HOUSE Ticker: CBU SHIRLEY & VICTORIA CUSIP: 202660 NASSAU BAHAMAS , FF Exchange: NYS PHONE: 8093223807 CROSS REFERENCE: WAS COMMODORE BUSINESS MACHINES CANADA LTD DESCRIPTION OF BUSINESS: DESIGNS, MANUFACTURES, MARKETS AND SUPPORTS A FULL LINE OF ADVANCED MICROCOMPUTER SYSTEMS AND PERIPHERAL EQUIPMENT, INCLUDING COMPUTER SYSTEMS FOR HOME, EDUCATION, PERSONAL AND SMALL BUSINESS MARKETS. AUDITOR: COOPERS & LYBRAND (SOURCE: 10-K) AUDITOR'S REPORT: UNQUALIFIED;EXPLANATION, GOING CONCERN We have audited the accompanying consolidated balance sheets of Commodore International Limited (a Bahamian corporation) and subsidiaries (the Company) as of 30 June 1993, and the related consolidated statements of operations, shareholders' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of the Company for the years ended 30 June 1992 and 1991 were audited by other auditors. The Company has not obtained an updated auditors' report on the consolidated financial statements for the years ended 30 June 1992 and 1991. We conducted our audit 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 audit provides a reasonable basis for our report. The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern. As discussed in notes 1, 4, and 5 to the consolidated financial statements, the Company experienced a significant decline in sales and incurred a loss of $356 million for the year ended 30 June 1993, and had deficit equity of $53 million and deficit working capital of $107 million as of 30 June 1993. In addition, the Company was in default on various credit agreements and a mortgage loan. While the Company is attempting to negotiate appropriate credit terms with suppliers and restructure its credit arrangements with institutional lenders to allow the Company to continue normal operations, in many of the countries in which the Company operates, unlike the United States, the Company may not have the ability to seek judicial protection to prevent liquidation while it reorganizes its operations. All of these factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in the notes to the consolidated financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Because of the possible material effects of the uncertainty about whether the Company will continue as a going concern discussed in the preceding paragraph, we are unable to express, and we do not express, an opinion on the consolidated financial statements as of 30 June 1993 or for the year then ended. 18 October 1993, except as to the information presented in paragraph 3 of Note 5, for which the date is 1 November 1993 Incorporation State: BAHAMAS Fiscal Year Ends: 6/30/1993 Shares Outstanding: 33,854,611 Shrs Held by Off/Dir: 1 Number of Employees: 1 Fortune Number: NA D-U-N-S Number: NA SIC'S: 3571 ELECTRONIC COMPUTERS 3577 COMPUTER PERIPHERAL EQ, NEC SEC Filings COMMODORE INTERNATIONAL LTD Document Type Effective Date ------------- -------------- 20-F 06/30/93 ARS 06/30/93 6-K 1 03/31/93 8-K 12/31/92 8-K 11/01/92 8-K 09/30/92 PROXY 09/28/92 ARS 06/30/92 COMMODORE INTERNATIONAL LTD Exhibits PRESS RELEASE, 12-31-92 (8-K 12-31-92) COMMODORE INTERNATIONAL LTD Corporate Events PRESS RELEASE, 12-31-92 SECOND QUARTER REPORT (8-K 12-31-92) FILING, THIRD QUARTERLY FINANCIALS (8-K 03-31-92) FILING, FIRST QUARTER REPORT FOR PERIOD ENDED 09-30-92 (8-K 09-30-92) /*/*/*/*/*/*/*/*/*/*/*/*/*/ Company Analyzer, Dialogue /*/*/*/*/*/*/*/*/*/*/*/*/*/ Dividends: [Yup, last dividend paid was in 1983] Rate Type Ex-Date Record Payment ------------------------------------------------------------ 1.500 Split 9/10/79 8/30/79 9/07/79 1.500 Split 3/03/80 2/22/80 2/29/80 3.000 Split 11/13/80 11/05/80 11/12/80 1.500 Split 5/04/82 4/21/82 5/03/82 2.000 Split 6/10/83 5/26/83 6/09/83 Dividends Available: 9/10/79 through 6/10/83 Stock History: April 91 to April 94 Friday Weeks Weeks Weeks Friday Date Volume High/Ask Low/Bid Close/Avg --------- ---------- ---------- ---------- ---------- 4/05/91 2,828,200 21 5/8 17 5/8 20 7/8 4/12/91 1,610,900 20 3/4 19 19 5/8 4/19/91 2,207,700 19 3/4 18 1/4 18 1/2 4/26/91 2,434,600 20 17 1/2 18 1/8 5/03/91 2,906,000 18 1/4 14 1/4 15 1/8 5/10/91 1,168,100 15 5/8 14 3/4 15 1/4 5/17/91 1,975,100 17 15 1/4 15 1/4 5/24/91 859,500 16 3/8 15 1/8 16 1/4 5/31/91 636,500 16 3/4 15 3/4 16 1/2 6/07/91 1,153,800 17 3/4 15 1/8 15 1/2 6/14/91 1,129,400 15 5/8 14 1/4 14 1/2 6/21/91 3,104,500 14 1/2 11 5/8 12 1/2 6/28/91 1,832,400 12 3/4 10 7/8 11 5/8 7/05/91 842,400 13 11 5/8 12 3/8 7/12/91 1,225,200 14 12 1/4 13 1/4 7/19/91 553,000 13 3/8 12 12 3/4 7/26/91 433,100 12 7/8 12 1/8 12 7/8 8/02/91 1,476,000 15 1/8 12 3/4 14 1/2 8/09/91 2,879,600 14 7/8 11 1/2 12 8/16/91 1,135,800 12 1/2 11 5/8 11 5/8 8/23/91 1,731,100 11 1/4 10 1/4 11 8/30/91 713,400 11 1/4 10 3/4 11 1/4 9/06/91 787,400 11 7/8 10 1/8 10 1/2 9/13/91 931,000 11 1/4 10 3/8 10 5/8 9/20/91 1,120,500 12 1/8 10 5/8 12 9/27/91 1,230,900 12 7/8 11 3/8 12 1/2 10/04/91 1,234,600 13 1/4 12 1/8 12 5/8 10/11/91 1,392,400 13 7/8 12 1/4 13 1/2 10/18/91 1,450,400 13 7/8 12 1/2 13 1/2 10/25/91 2,395,600 14 7/8 12 7/8 13 3/4 11/01/91 731,500 14 7/8 13 5/8 14 3/8 11/08/91 999,100 15 1/8 14 1/4 14 5/8 11/15/91 742,400 14 3/4 12 7/8 12 7/8 11/22/91 800,000 13 1/2 12 1/4 12 1/4 11/29/91 508,700 13 12 1/4 12 7/8 12/06/91 575,900 14 1/4 12 1/2 12 5/8 12/13/91 518,300 13 1/4 12 5/8 13 12/20/91 832,600 13 1/2 12 1/8 12 1/4 12/27/91 4,150,200 18 1/8 12 16 3/4 1/03/92 1,233,500 16 1/2 15 1/2 16 1/10/92 1,594,400 17 3/8 15 3/4 16 1/8 1/17/92 2,863,600 17 1/2 15 1/4 17 1/24/92 3,248,500 19 1/4 16 1/4 19 1/31/92 4,185,300 17 3/4 15 15 3/8 2/07/92 1,842,600 15 3/4 14 1/2 15 2/14/92 961,300 15 3/4 14 3/4 14 7/8 2/21/92 843,500 14 7/8 14 14 2/28/92 1,585,500 14 5/8 13 5/8 14 1/8 3/06/92 1,515,200 15 3/8 13 5/8 13 3/4 3/13/92 1,013,800 14 7/8 13 3/4 14 3/8 3/20/92 765,900 14 5/8 13 3/4 13 7/8 3/27/92 4,589,000 16 1/4 12 7/8 15 1/4 4/03/92 1,155,000 15 3/8 14 1/8 14 3/8 4/10/92 1,120,200 14 5/8 13 1/8 13 7/8 4/17/92 540,900 14 1/4 13 5/8 13 3/4 # 4/24/92 782,900 13 5/8 13 13 1/2 5/01/92 1,841,300 13 3/8 11 1/8 12 1/8 5/08/92 1,287,900 12 7/8 12 12 1/8 5/15/92 635,700 12 1/4 11 3/8 11 1/2 5/22/92 491,500 12 11 1/2 11 3/4 5/29/92 262,700 11 7/8 11 3/8 11 3/8 6/05/92 731,400 12 1/2 11 1/2 11 3/4 6/12/92 431,600 12 1/8 11 1/4 11 3/8 6/19/92 599,200 11 3/8 10 1/8 10 1/4 6/26/92 742,600 10 1/4 9 1/2 9 5/8 7/03/92 598,800 10 5/8 9 1/2 10 1/8 # 7/10/92 590,200 10 1/4 9 1/4 9 3/8 7/17/92 553,100 9 7/8 9 1/8 9 1/2 7/24/92 500,300 9 3/4 9 9 5/8 7/31/92 450,000 9 5/8 9 1/4 9 5/8 8/07/92 703,400 10 1/4 9 3/8 9 1/2 8/14/92 213,700 9 1/2 9 1/8 9 1/4 8/21/92 2,576,300 9 3/8 6 3/4 7 1/8 8/28/92 1,027,300 7 5/8 6 7/8 7 1/2 9/04/92 912,300 8 1/2 7 3/8 8 1/2 9/11/92 492,500 8 5/8 7 7/8 8 9/18/92 513,000 8 1/4 7 3/8 7 1/2 9/25/92 443,600 7 3/4 7 1/8 7 1/4 10/02/92 341,900 7 3/8 7 7 10/09/92 454,200 7 1/8 6 3/4 7 10/16/92 876,700 8 1/8 6 7/8 7 1/2 10/23/92 453,000 7 7/8 7 3/8 7 3/8 10/30/92 324,400 7 3/4 7 1/4 7 1/4 11/06/92 1,140,800 7 3/4 6 3/4 7 1/4 11/13/92 836,400 7 7/8 7 7 1/2 11/20/92 344,100 7 3/4 7 7 5/8 11/27/92 331,600 7 5/8 7 1/8 7 3/8 12/04/92 1,766,100 9 1/4 7 3/8 8 5/8 12/11/92 978,900 8 5/8 7 1/2 7 3/4 12/18/92 691,200 8 7 1/2 7 3/4 12/25/92 562,800 7 3/4 7 1/4 7 3/8 # 1/01/93 1,134,800 7 1/2 7 7 1/8 # 1/08/93 1,208,600 7 1/4 6 1/8 6 1/4 1/15/93 756,400 6 3/4 6 1/4 6 1/4 1/22/93 826,900 7 1/4 6 1/4 7 1/4 1/29/93 1,044,200 7 5/8 6 3/8 6 1/2 2/05/93 1,523,800 6 3/4 5 1/4 5 1/2 2/12/93 879,600 6 3/8 5 5/8 6 2/19/93 423,000 6 1/8 5 5/8 5 7/8 2/26/93 666,200 5 7/8 5 3/8 5 1/2 3/05/93 592,700 5 5/8 5 1/4 5 3/8 3/12/93 1,054,800 5 3/8 4 3/4 5 1/4 3/19/93 733,400 5 5/8 5 1/8 5 1/2 3/26/93 446,900 5 1/2 5 5 4/02/93 293,900 5 1/8 4 7/8 4 7/8 4/09/93 303,900 5 1/8 4 7/8 4 7/8 # 4/16/93 579,700 5 4 3/8 4 5/8 4/23/93 520,600 5 4 1/4 4 1/2 4/30/93 352,700 4 1/2 4 1/4 4 1/4 5/07/93 792,400 4 3/8 3 1/2 3 5/8 5/14/93 757,700 4 1/2 3 5/8 4 3/8 5/21/93 398,400 4 1/2 4 4 1/8 5/28/93 643,900 4 1/4 3 3/4 4 6/04/93 2,434,100 3 3/8 2 5/8 3 6/11/93 1,105,500 3 1/4 2 7/8 2 7/8 6/18/93 607,900 3 2 5/8 2 7/8 6/25/93 757,100 2 7/8 2 1/2 2 3/4 7/02/93 446,400 3 2 5/8 3 7/09/93 877,200 3 7/8 3 1/8 3 5/8 7/16/93 386,900 3 3/4 3 1/2 3 5/8 7/23/93 229,300 3 5/8 3 3/8 3 1/2 7/30/93 231,400 3 1/2 3 1/8 3 3/8 8/06/93 228,700 3 5/8 3 1/4 3 5/8 8/13/93 396,100 3 7/8 3 1/2 3 5/8 8/20/93 189,400 3 5/8 3 3/8 3 5/8 8/27/93 171,000 3 1/2 3 3/8 3 1/2 9/03/93 352,600 3 7/8 3 3/8 3 3/4 9/10/93 223,400 3 3/4 3 1/2 3 5/8 9/17/93 233,400 3 5/8 3 1/4 3 1/4 9/24/93 212,200 3 1/2 3 1/8 3 1/8 10/01/93 226,100 3 1/4 3 3 1/8 10/08/93 334,500 3 1/2 3 3 1/4 10/15/93 248,200 3 5/8 3 1/4 3 1/4 10/22/93 415,800 3 1/2 2 7/8 3 10/29/93 174,000 3 1/8 3 3 11/05/93 1,757,900 4 5/8 2 7/8 4 1/4 11/12/93 899,600 4 1/4 3 3/8 3 7/8 11/19/93 570,100 4 3 1/2 4 11/26/93 237,500 4 3 3/4 3 3/4 12/03/93 525,200 4 3 3/8 3 1/2 12/10/93 361,300 3 1/2 3 3/8 3 1/2 12/17/93 565,000 3 7/8 3 3/8 3 3/8 12/24/93 438,500 3 5/8 3 1/8 3 1/4 # 12/31/93 1,017,300 3 1/2 3 3 1/07/94 609,000 3 3/4 3 3 3/4 1/14/94 231,600 3 3/4 3 1/4 3 3/8 1/21/94 302,900 3 3/8 3 1/8 3 3/8 1/28/94 727,000 3 3/8 3 3 3/8 2/04/94 428,600 3 3/8 3 3 1/8 2/11/94 226,100 3 1/4 3 3 2/18/94 424,600 3 1/4 3 3 1/4 2/25/94 160,100 3 1/4 3 3 1/4 3/04/94 612,100 3 7/8 3 3 1/4 3/11/94 246,400 3 3/8 3 3 1/8 3/18/94 199,500 3 1/4 3 3 1/8 3/25/94 236,400 3 1/8 3 3 4/01/94 58,000 1 1/2 3/8 3/4 # 4/08/94 472,900 1 1/8 7/16 7/8 4/15/94 371,500 1 1/16 3/4 7/8 4/22/94 46,800 1 5/8 1 # indicates 'last' is from an earlier date in the period Prices Available: 9/21/81 through 4/22/94 >>> Officers and Directors Salaries Officers and Directors COMMODORE INTERNATIONAL LTD Name Age Salary Title ------------------------------ --- ----------- ------------------------------ Officers -------- ALI, MEHDI R. 49 N/A PRESIDENT TAN, HOCK E. N/A VICE PRESIDENT ' ' CHIEF FINANCIAL OFFICER HELMSOE-ZINCK, JOHN N/A VICE PRESIDENT Directors 9/28/1992 --------- ALI, MEHDI R. 48 2,000,000 PRESIDENT ' ' NOMINEE GOULD, IRVING 73 1,750,000 CHAIRMAN OF THE BOARD ' ' CHIEF EXECUTIVE OFFICER HAIG, ALEXANDER M., JR. 67 N/A NA SELIGMAN, RALPH D. 72 N/A NA WINBERG, BURTON 68 N/A NOMINEE >>> Management Discussion: COMMODORE INTERNATIONAL LTD Management Discussion Commodore International Limited and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations This review should be read in conjunction with the consolidated financial statements and related notes beginning on page 6 of this annual report. Basis of Presentation As a result of the significant loss of $356 million for fiscal 1993 the Company had deficit equity of $53 million and deficit working capital of $107 million as of 30 June 1993. The Company's financial position and operating results raise substantial doubts about the Company's ability to continue as a going concern. As of 30 June 1993 the Company was in default on various credit agreements. See Footnote 1 for further information. Sales Commodore's net sales decreased 35% in fiscal 1993 to $591 million compared with $911 million in fiscal 1992 and $1,047 in fiscal 1991. The decline in fiscal 1993 and the later half of fiscal 1992 was due to economic softness throughout all major markets, especially Europe, and intense competitive pricing pressure. The Amiga product line accounted for almost three fourths of the total sales decline for the year. Approximately half of the Amiga sales decline was attributable to unit volume and the other half was attributable to pricing declines. Unit sales of Amiga computers were slightly over 800,000 units in fiscal 1993 compared with 1 million units in fiscal 1992. Unit sales of Amiga computers declined 20% in fiscal 1993 compared with increases of 17% in fiscal 1992 and 38% in fiscal 1991. Revenues of the Amiga product line decreased by 40% in fiscal 1993 compared with a decline of 1% in fiscal 1992 and an increase of 23% in fiscal 1991. The decrease in fiscal 1992 was due to a significant decrease in sales of peripherals, such as monitors , and pricing reductions. The Amiga product line accounted for 59% of net sales in fiscal 1993 compared with 63% in fiscal 1992 and 56% in fiscal 1991. MS-DOS PC compatible products accounted for 37% of net sales in fiscal 1993 compared with 24% in fiscal 1992 and 28% in fiscal 1991. Unit sales increased 17% in fiscal 1993, but revenues increased only nominally due to competitive pricing pressure. In fiscal 1992 unit sales and revenues declined 23% due to a discontinuation of low-end PCs. In fiscal 1991 unit sales declined 3% but revenues increased 14% due to a shift to high-end products. Due to low profitability the Company decided to discontinue the sale of MS-DOS PCs and licensed the brand name for PC sales in Europe to another supplier. C64 products accounted for only 4% of net sales in fiscal 1993 compared with 13% in fiscal 1992 and 16% in fiscal 1991. In fiscal 1993 C64 unit sales declined to less than 200,000 units compared with 650,000 units in fiscal 1992 and over 800,000 units in fiscal 1991. Revenues from C64 products decreased over 80% in fiscal 1993 and 34% in fiscal 1992 and increased 4% in fiscal 1991. Geographically, European markets accounted for 84% of net sales in fiscal 1993 compared with 88% in 1992 and 84% in 1991. North American sales accounted for 10% of sales in fiscal 1993 compared with 8% in 1992 and 11% in 1991. Australia/Asia sales accounted for 6% of sales in fiscal 1993 compared with 4% in 1992 and 5% in 1991. The US dollar fluctuated in relation to European currencies during fiscal 1993 with a mixed impact on reported sales. The effect of currency movements increased reported sales during the first quarter of fiscal 1993 but decreased reported sales during the last three quarters. The dollar value of sales for fiscal 1993 would have been approximately $14 million higher if prior year exchange rates had been in effect. In fiscal 1992 the effect of currency movements decreased reported sales during the first two quarters and increased reported sales during the fourth quarter, with only a nominal impact on sales for the third quarter. The dollar value of sales for fiscal 1992 would have been approximately $25 million higher if prior year exchange rates had been in effect. In fiscal 1991, the effect of currency movements increased reported sales during the first three quarters but decreased reported sales during the fourth quarter. The dollar value of sales for fiscal 1991 would have been approximately $94 million lower if prior year exchange rates had been in effect. Since a substantial portion of the Company's sales are denominated in European currencies, reported U.S. dollar sales will continue to be affected by the strengthening or weakening of U.S. dollar versus European currencies. The sales in the second quarter of each year reflect the seasonal impact of Christmas. Profitability Gross margin was a loss of $132 million in fiscal 1993 compared with a profit of $246 million, or 27% of net sales on fiscal 1992 and $333 million, or 32% of net sales in fiscal 1991. The loss in fiscal 1993 was attributable to the sales decline and to writedowns of inventory, fixed assets and other assets, and significant pricing and promotional allowances resulting >from severe competitive pricing pressure. The decrease in gross margin in fiscal 1992 was due primarily to lower prices for MS-DOS PC compatibles and unfavorable effects of foreign currency exchange rate fluctuations. In fiscal 1991 the gross margin was impacted by favorable effects of foreign currency exchange rate fluctuations. In fiscal 1993 operating expenses included $50 million of restructuring and other unusual charges, including severance and costs for early cancellation of leases. Excluding these charges operating expenses in fiscal 1993 were $152 million or 26% of net sales compared with $215 million or 24% of net sales in fiscal 1992 and $259 million or 25% of net sales in fiscal 1991. In fiscal 1992, operating expenses were tightly controlled and declined 17% compared with a sales decline of 13%. In fiscal 1991, operating expenses were also tightly controlled and increased only 3% compared with a sales increase of 18%. Selling and marketing expenses decreased 39% to $84 million in fiscal 1993 due to a reduction in advertising and other selling expenses, compared with $137 million in 1992 and $174 million in 1991. General and administrative expenses decreased 7% to $49 million in fiscal 1993, compared with $52 million in 1992 and $54 million in 1991. Research and development expenses decreased 24% to $19 million in fiscal 1993 compared with $26 million in 1992 and $31 million in 1991. Net interest expense was $18 million in fiscal 1993 compared with $15 million in 1992 and 1991. Other expense was $4 million in fiscal 1993 and $6 million in 1991. In fiscal 1992 other income was $9 million and included $14 million in net gains from the sale of certain properties and investments reduced by other expenses of $5 million. In fiscal 1993 the net loss for the year of $356 million, or $10.78 per share, included $237 million for asset writedowns, restructuring costs and special pricing and promotional allowances. In fiscal 1992 net income of $28 million, $0.82 per share, included an income tax benefit of $2 million. In fiscal 1991 pre-tax income was $52 million and the income tax benefit was $5 million due to the reduction of certain income tax accruals no longer needed to meet certain tax contingencies. In fiscal 1991 income before extraordinary item was $57 million or $1.73 per share and there was an extraordinary charge of $9 million, or $0.28 per share, for the court settlement of litigation. Net income for fiscal 1991 was $48 million or $1.45 per share. Liquidity and Capital Resources In fiscal 1993 the Company's cash and cash equivalents decreased by $56 million to $10 million as of 30 June 1993 compared with an increase of $1 million in fiscal 1992. The major activities were as follows (in millions): (Table Follows) Despite the net loss of $356 million in fiscal 1993, the cash used for operations was only $16 million due primarily to decreases of over $120 million each for accounts receivable and inventories and non-cash charges of over $50 million for depreciation and amortization and writedown of long-term assets. In fiscal 1992 net income of $28 million accounted for the major portion of the cash provided from operations of $32 million. In fiscal 1993 capital expenditures accounted for $20 million of the total $26 million cash used for investing activities. The major additions included a new building in Germany which was under construction in 1992, additional manufacturing equipment and tooling for new products. In fiscal 1992 capital expenditures were $25 million but there was significant cash received from property dispositions resulting in cash used for investing activities of $12 million. In fiscal 1993 long-term debt payments were $32 million, including $25 million to two institutional lenders. In fiscal 1992 long-term debt payments were $93 million, including $66 million of seven-year Deutsche Mark debentures which had matured and $25 million to two institutional lenders. In fiscal 1993 net new borrowings were $20 million (including $17 million from a company controlled by the chairman of Commodore) resulting in net cash used for financing activities of $12 million. In fiscal 1992 new borrowings, primarily short-term bank borrowings, offset a significant amount of the repayments resulting in net cash used for financing activities of $19 million. As of 30 June 1993 short-term debt included $50 million from various banks in 18 countries and $7.5 million from a company controlled by the chairman of Commodore. The bank loans are not collateralized and as of 30 June 1993 there were no unused short-term lines of credit available. As of 30 June 1993 the Company was in default under the provisions of certain long-term collateralized and other obligations totaling $51.7 million. For financial statement purposes these amounts have been classified as current debt. As of 30 June 1993 the Company had total current assets of $194 million with total current debt of $114 million, and accounts payable and accrued liabilities of $187 million, resulting in a deficit working capital of $107 million. As a result of the deficit the Company has found it necessary to delay payments to creditors. A successful debt restructuring is critical to the Company's ability to continue as a going concern. The Company is attempting to negotiate appropriate credit terms with suppliers who have restricted the Company's credit and intends to work out a restructuring plan with its creditors, including those which have instituted legal action against the Company, to allow the Company to continue normal operations. However, there can be no assurance that a successful debt restructuring will be achieved. >>> Footnotes to the annual report, fiscal year ending 30 June 93: COMMODORE INTERNATIONAL LTD Footnotes (SOURCE 20-F) Notes to consolidated financial statements Commodore International Limited and Subsidiaries 30 June 1993 1. Basis of Presentation-For the fiscal year ended 30 June 1993 the Company experienced a 35% sales decline and a net loss of $356.5 million. The loss included $237 million for asset writedowns, restructuring costs and special pricing and promotional allowances, of which $50 million is included in operating expenses and the remaining balance is included in cost of sales. The loss has resulted in deficit equity of $53 million and deficit working capital of $107 million as of 30 June 1993. The Company's consolidated financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which contemplates continuity of the Company's operations and the realization of its assets and the payment of its liabilities in the ordinary course of business. However, the Company's financial position and operating results raise substantial doubts about the Company's ability to continue as a going concern. The financial statements do not reflect adjustments that would be required should the Company be unable to continue as a going concern. The Company has addressed its current financial difficulties by restructuring the business in a number of ways including eliminating unprofitable product lines to focus exclusively on Amiga products. A new Amiga CD(32) was launched in September 1993 and the plan is dependent upon significant future sales of this product. With the restructuring actions taken in fiscal 1993 it is expected that the total expenses for fiscal 1994 will be significantly below fiscal 1993. The Company is attempting to negotiate appropriate credit terms with suppliers who have restricted the Company's credit and intends to work out a restructuring plan with its creditors, including those which have instituted legal action against the Company, to allow the Company to continue normal operations. However, there can be no assurance that a successful debt restructuring will be achieved. The Company's long-term liquidity needs cannot reasonably be determined at this time principally because these needs are dependent, in large part, upon the outcome of the Company's debt restructuring. 2. Summary of Accounting Policies-Commodore International Limited is incorporated in the Bahamas. The Consolidated financial statements of Commodore International Limited and Subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States. Within those principles, the Company's more important accounting policies are set forth below. Principles of Consolidation-The consolidated financial statements include the accounts of all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. Translation of Non-U.S. Currencies-Assets and liabilities recorded in functional currencies other than U.S. dollars are translated at current exchange rates. The resulting adjustments are charged or credited directly to cumulative translation adjustment in the shareholders' equity section of the consolidated balance sheets. Sales and expenses are translated at the weighted average exchange rates for the period. Foreign currency transaction gains and losses are included in income in the period in which they occur. Foreign currency transaction gains (losses) were $(28.1) million, $16.5 million and $(10.2) million for fiscal 1993, 1992 and 1991, respectively. Cash and Cash Equivalents-The Company has included cash, overnight deposits and time deposits with maturities less than 91 days as cash and cash equivalents. Accounts Receivable-At 30 June 1993 and 1992 a majority of the trade accounts receivable were due from distributors and dealers within the personal computer industry. Inventories-Inventories are stated at the lower of cost (first-in, first-out) or market, and included material, labor and overhead. Intercompany profits are eliminated from inventory valuations. Inventories, net of reserves of $58 million at 30 June 1993 and $14 million at 30 June 1992, consisted of the following (000s omitted): 30 June 30 June 1993 1992 Raw materials and work-in process $20,700 $76,300 Finished goods 59,000 128,100 $79,700 $204,400 Property and Equipment-Major classes of property and equipment were as follows (000s omitted): 30 June 30 June Estimated Description 1993 1992 Useful Lives Land $ 1,900 $ 1,600 Buildings and improvements 48,000 42,700 10-40 years Machinery and equipment 67,800 102,000 3-10 years Furniture and fixtures 8,700 13,900 3-10 years Tooling 2,200 8,100 2-3 years Leasehold improvements 14,300 15,300 Lease Term $142,900 $183,600 Depreciation has been provided over the estimated useful lives of the assets using primarily the straight-line method. Expenditures for additions, renewals, and betterments are capitalized. Maintenance and repairs are expensed as occurred. Upon sale or other disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to income. Income Taxes-The Company and its subsidiaries provide taxes on income in accordance with the enacted tax rules and regulations of the many taxing jurisdictions where income is earned. The income tax rates imposed by these jurisdictions vary substantially. Taxable income may differ from pretax income for financial accounting purposes. Deferred taxes are based on the estimated future tax effects of differences between the financial statements and tax bases of assets and liabilities. The Company does not provide income taxes on undistributed earnings of foreign subsidiaries which are permanently reinvested. Investment credits and other allowances provided by income tax laws of respective countries are credited to current income tax expense under the flow-through method of accounting. In fiscal 1992, the Company implemented the provisions of Statement of Financial Accounting Standards (Statement) No. 109, "Accounting for Income Taxes." Statement No. 109 utilize the liability method of accounting for income taxes. The effect of adopting Statement No. 109 was not significant. Revenue Recognition-Sales are recognized when products are shipped or title is transferred to the customer, net of allowances for estimated returns and discounts. Anticipated warranty costs are provided in the same period in which the corresponding revenues are generated. Research and Development Costs-The Company expenses research and development costs as incurred. Foreign Exchange Contracts-The Company periodically enters into foreign exchange contracts to hedge financial statement amounts denominated in foreign currencies. Gains and losses related to contracts which hedge future revenues are included in net sales. Gains and losses on contracts which hedge against certain payables denominated in foreign currencies offset the foreign currency transaction gains or losses on those payables. Gains and losses arising from foreign exchange contracts which are designated as, and are effective as, economic hedges of the Company's net foreign investments are reported as translation adjustments. In the first quarter of 1993, $7.5 million of losses were recorded as translation adjustments. In the fourth quarter of 1992, $5.7 million of such losses were recorded as translation adjustments. Per Share Data-Per share data are calculated using the weighted average number of shares of capital stock and dilutive capital stock equivalents (stock options and warrants) outstanding during each year. The weighted average number of shares used to compute earnings per share was 33,073,000, 33,593,000 and 33,163,000 in 1993,1992 and 1991, respectively. Net income per share is equivalent to fully diluted earnings per share. 3. Income Taxes-The income tax provision (benefit) consisted of the following (000s omitted): 1993 1992 1991 Current: U.S. Federal $ -- $ -- $ -- Non-U.S. and other 500 (2,200) (4,700) Subtotal 500 (2,200) (4,700) Deferred: U.S. Federal Non-U.S. and other -- -- (100) Subtotal -- -- (100) Total $ 500 $(2,200) $(4,800) Non-U.S. earnings (losses) before income taxes amounted to $(337) million, $44 million and $70 million in fiscal 1993, 1992 and 1991, respectively. The Company and its subsidiaries are engaged in business in countries with statutory rates ranging from zero to approximately 60%. As a result, the Company's effective tax rate may vary year to year depending upon the operating results of individual subsidiaries. In fiscal 1993, 1992 and 1991, exclusive of the adjustments described below, the Company's effective tax rate was zero, zero and 6%, respectively, due to operating losses in certain countries with high tax rates (without currently recoverable tax benefits) and income in countries with low or zero statutory rates. Certain of the Company's non-U.S. subsidiaries are undergoing audits by their respective tax authorities for various fiscal years. In fiscal 1992, the Company resolved tax disputes in the U.S. for the fiscal years 1981 through 1986 and in Italy for the fiscal years 1982 through 1984. In October 1993 the Company received a favorable ruling in the Japanese tax case. The total refund is $20 million plus interest. In the fourth quarters of fiscal 1992 and 1991, after consultation with tax counsel concerning the likely outcome of certain tax audits and litigation, the Company reduced by $3 million and $8 million, respectively, income tax accruals no longer considered necessary to meet the probable liabilities in those proceedings. As of 30 June 1993, the Company's U.S. subsidiaries have net operating loss carryforwards of approximately $140 million. Certain of the Company's non-U.S. subsidiaries have net operating loss carryforwards of approximately $100 million, which expire at various dates through 2002. As of 30 June 1993, the Company's deferred tax assets consisted primarily of its net operating loss carryforwards, accrued restructuring costs, inventory reserves and allowance for doubtful accounts receivable. Management has assigned a valuation allowance to offset fully the future tax benefits of these deferred tax assets. 4. Short-term Debt-As of 30 June 1993, short-term debt included $50.1 million from various banks in 18 countries and $7.5 million from a company controlled by the chairman of Commodore. Several of the banks have demanded repayment and in most cases the Company has reached temporary resolutions to any legal action in order to allow time to develop a restructuring plan. The bank loans are no collateralized. As of 30 June 1993, there were no unused short-term lines of credit available. For short-term bank borrowings of $50.1 million at 30 June 1993, the average interest rate was 6.6% (1992-8.6% 1991 - 11.2%). The maximum month-end short-term borrowings during fiscal 1993 were $67.2 million (1992 - $67.8 million 1991 - $26.6 million). The average month-end short-term borrowings outstanding during fiscal 1993 were $60.3 million (1992 - $28.5 million 1991 - $17.4 million) at a weighted average interest rate of 7.7% (1992 - 9.8% 1991 - 12.7%). In order to obtain needed working capital, Transpacific Company Limited (TPC), a company controlled by the chairman of Commodore, loaned the Company $17.0 million in February and April 1993. An agreement was made to sell $9.5 million of inventory in satisfaction of a portion of the debt. The proceeds of these sales were temporarily retained by the Company but subsequently repaid to TPC. As of 30 June 1993, the $9.5 million obligation to TPC has been recorded as an accrued for financial accounting purposes. The remaining amount of $7.5 million is presented by a collateralized demand loan and the has been classified as short-term debt as of 30 June 1993. (000s omitted) 30 June 30 June 1993 1992 Notes, 11.0% due March 1993 $ -- $ 5,000 Notes, 10.75% due through March 1995 25,000 37,500 Notes, 12.0% due through March 1994 8,000 16,000 Real estate mortgages, 7.25% to 17.0%, due through 2006 16,400 5,800 Collateralized equipment loans, 7.5% to 9.6%, due through 2001 16,400 15,800 Capitalized lease obligations averaging 12.4% due through 2019 9,100 9,700 74,500 89,800 Current Portion (56,400) (29,500) $ 18,100 $ 60,300 In May 1987, the Company issued $60 million of senior and subordinated notes with warrants to purchase 2,250,000 shares of capital stock to an insurance company. The warrants are exercisable at $11.40 per share until March 1994. The Company repurchased 750,000 warrants in March 1989 for $4.5 million and an additional 750,000 warrants in April 1991 for $4.5 million. In March 1993 the unpaid balance of $8 million of subordinated notes were retired in exchange for a similar amount of senior notes. In August 1988, the Company issued an additional $50 million of senior notes to two insurance companies. The notes are uncollateralized. As of 30 June 1993 the Company was in default under the provisions of the notes. The note agreements contain various covenants which, among others, provide for the maintenance of a minimum level of net worth and contain restrictions on dividends. For financial statement purposes the entire amount of debt has been reclassified as current. The Company is engaged in negotiations with the lenders to restructure the debt, although there can be no assurance an agreement will be reached. As of 1 November 1993, the Company received a waiver of non-compliance with the provisions of the note agreements through 31 January 1994. The waiver provides that the exercise price of the 750,000 warrants is reduced from $11.40 per share to $3.50 per share and the exercise period is extended from March 1994 to March 1996. In addition, the exercise price is further reduced to $.50 per share if the interest payments due on 1 January 1994 are not made in full. As of 30 June 1993 the Company was in default under a real estate mortgage for $5.7 million. The bank commenced legal action which has been suspended based on mutually agreed payment terms. For financial statement purposes the entire amount of the mortgage has been classified as current. As of 30 June 1993 the Company was in default under an equipment loan for $13.0 million. The Company intends to sell the equipment in the near future and retire the debt. For financial statement purposes the entire amount of the equipment loan has been classified as current. It is not practicable to estimate the fair value of the debt. Approximate annual maturities of long-term debt as of 30 June 1993 are as follows (000s omitted): 1994 $56,400 1995 1,700 1996 300 1997 200 1998 7,500 Later years 8,400 $ 74,500 6. Capital Stock-As of 30 June 1993 the following shares of capital stock were reserved for future issuance: Stock Incentive Plan 3,930,063 Warrants 750,000 The Stock Incentive Plan for Key Employees provides for certain key employees to receive grants or options to purchase up to 6,000,000 shares of the Company's capital stock. Although the Plan allows for non-qualified stock options to be granted at a price below the market value, all options have been granted at the fair market value at the date of grant except for options for 300,000 shares, granted to an officer at a price of $7.25, which was below the fair market value at the date of the grant. Options granted under the Plan expire ten years from the date of the grant and outstanding options granted before 1 January 1989 are exercisable in annual increments of 33 1/3% beginning one year from the date of grant. Options granted after 31 December 1988 but before 1 June 1993 are exercisable in annual increments of 25% beginning one year from the date of the grant. Of the options granted after 1 June 1993, 14%, 43% and 43% are exercisable on 2 June 1993, 1 January 1994 and 1 January 1995, respectively. As of 30 June 1993 options were held by 59 employees and range in exercise price from $2.75 to $13.25. These options expire on various dates from May 1996 to June 2003. Options for 634,000 shares were exercisable as of 30 June 1993. Option activity during 1992 and 1993 was as follows: Number of Average Price Shares Per Share Outstanding as of 30 June 1991 1,591,432 $ 6.98 Granted 273,000 12.75 Exercised (365,000) 6.43 Cancelled (231,341) 7.72 Outstanding as of 30 June 1992 1,268,091 $ 8.25 Granted 2,232,500 2.96 Exercised (49,000) 5.94 Cancelled (973,834) 8.38 Outstanding as of 30 June 1993 2,477,757 $ 3.48 When options are exercised, the proceeds, including any applicable income tax benefits, are credited to capital stock and contributed surplus. In fiscal 1990 a total of 650,000 shares of restricted capital stock were granted to two officers at a price of $6,500 or $0.01 per share. In fiscal 1991, 120,000 shares were granted to an officer at a price of $1,200 or $0.01 per share. As of 30 June 1993, 140,000 shares are restricted. The difference between the grant price and the fair market value at the date of the grants has been recorded as unearned compensation in the consolidated balance sheets and has been completely amortized to earnings by 30 June 1993. 7. Leases The Company leases certain machinery and equipment, manufacturing facilities, warehouses and administrative offices with terms expiring at various dates to 2020. Typically, the Company pays property taxes, insurance and maintenance expenses related to the leased property. The gross cost of property included under capital leases as of 30 June 193 and 1992 was $9.8 million and $10.4 million, respectively. The related accumulated amortization as of 30 June 1993 and 1992 was $2.8 million and $3.1 million, respectively. Amortization expense of property under capital leases was $.4 million in 1993, $.7 million in 1992 and $.5 million in 1991. Total rental expense under operating leases was $9.7 million in 1993, $8.8 million in 1992 and $8.2 million in 1991. Operating lease commitments exclude leases with a total obligation of $21.2 million which the Company plans to terminate as part of the restructuring plan. Minimum future obligations under leases as of 30 June 1993 are as follows (000s omitted): Capital Operating Leases Leases 1994 $ 1,500 $ 3,700 1995 1,400 2,800 1996 1,200 2,100 1997 1,100 1,800 1998 1,100 1,400 Later Years 24,100 9,600 Total minimum obligations $ 30,400 $ 21,400 Amounts representing interest (21,300) -- Present value of net minimum obligations $ 9,100 -- 8. Geographic Segment Information North Asia/ (In Thousands of Dollars) America Europe Australia 1993 Sales to unaffiliated customers $ 63,400 $ 495,100 $ 32,300 Intersegment sales 31,200 242,000 480,900 Net sales 94,600 737,100 513,200 Income (loss) from operations (42,800) (304,700) (5,800) Interest expense, net Other income, net (Loss) before income taxes Identifiable assets 64,300 138,100 65,700 Depreciation expense 6,100 4,800 4,800 Capital expenditures 2,300 11,800 6,200 1992 Sales to unaffiliated customers $ 76,900 $ 798,500 $ 35,600 Intersegment sales 64,800 294,200 586,400 Net sales 141,700 1,092,700 622,000 Income (loss) from operations (6,100) 31,400 (100) Interest expense, net Other income, net Income before income taxes Identifiable assets 103,300 451,800 98,100 Depreciation expense 7,800 6,600 3,300 Capital expenditures 5,900 5,900 13,300 1991 Sales to unaffiliated customers $ 110,100 $ 883,100 $ 54,000 Intersegment sales 82,700 454,800 711,100 Net sales 192,800 1,337,900 765,100 Income (loss) from operations (24,700) 74,400 (800) Interest expense, net Other expense, net Income before income taxes Identifiable assets 137,000 414,400 87,100 Depreciation expense 7,600 6,600 3,400 Capital expenditures 16,900 8,600 2,400 (In Thousands of Dollars) Eliminations Consolidated 1993 Sales to unaffiliated customers $ -- $ 590,800 Intersegment sales (754,100) -- Net sales (754,100) 590,800 Income (loss) from operations 18,700 (334,600) Interest expense, net (17,800) Other income, net (3,600) (Loss) before income taxes (356,000) Identifiable assets (2,300) 265,800 Depreciation expense -- 15,700 Capital expenditures -- 20,300 1992 Sales to unaffiliated customers -- $ 911,000 Intersegment sales (945,400) -- Net sales (945,400) 911,000 Income (loss) from operations 6,100 31,300 Interest expense, net (14,700) Other income, net 8,800 Income before income taxes 25,400 Identifiable assets (6,100) 647,100 Depreciation expense -- 17,700 Capital expenditures -- 25,100 1991 Sales to unaffiliated customers -- $ 1,047,200 Intersegment sales (1,248,600) -- Net sales (1,248,600) 1,047,200 Income (loss) from operations 24,500 73,400 Interest expense, net (15,400) Other expense, net (5,400) Income before income taxes 52,600 Identifiable assets (12,100) 626,400 Depreciation expense -- 17,600 Capital expenditures -- 27,900 9. Commitments and Contingencies In fiscal 1993 the Company completed an investigation and feasibility study regarding ground water contamination at its semiconductor manufacturing facility in Pennsylvania. As a result of the study the Company and a previous owner were ordered by the United States Environmental Protection Agency (EPA) to remedy the contamination. The previous owner of the facility has agreed to undertake the cleanup of the site. Settlement discussions have taken place with the previous owner and an insurer to relieve Commodore from future costs related to the cleanup. Management anticipates that the settlement discussions will be concluded favorably. The Company is a party to various claims and litigation matters incidental to the normal course of business, including certain collections actions by creditors. Although it is impossible to predict the results of specific matters, management believes that the aggregate liability, if any, for all lawsuits to which the Company is a party, in excess of insurance coverage and financial statement provisions, will not have a material adverse effect on the Company's operations or financial position. 10. Legal Settlement-During the third quarter of fiscal 1991, the Company under a court order, settled a lawsuit brought by its former president. The suit arose from facts surrounding the former president's employment. As a result of the unfavorable outcome the Company paid $9.2 million which has been classified as an extraordinary charge in the accompanying consolidated statement of operations. (000's omitted, except per share amounts) For the Year Ended 30 June 1993 First Second Third Net sales $ 158,600 $ 237,700 $ 120,900 Gross profit (loss)(a) 25,200 (16,700) (111,300) Income (loss) before income taxes (18,600) (76,700) (177,600) Income tax provision 200 500 -- Net income (loss) (18,800) (77,200) (177,600) Net income (loss) per share $ (0.57) $ (2.33) $ (5.37) For the Year Ended 30 June 1992 Net sales $ 204,100 $ 371,600 $ 194,600 Gross profit 57,100 120,600 54,300 Income (loss) before income taxes 5,800 42,200 4,300 Income tax provision (benefit) 500 2,100 200 Net income (loss) $ 5,300 $ 40,100 $ 4,100 Net income (loss) per share $ 0.16 $ 1.18 $ 0.12 For the Year Ended 30 June 1993 Fourth Year Net sales $ 73,600 $ 590,800 Gross profit (loss)(a) (29,300) (132,100) Income (loss) before income taxes (83,100) (356,000) Income tax provision (200) 500 Net income (loss) (82,900) (356,500) Net income (loss) per share $ (2.51) $ (10.78) For the Year Ended 30 June 1992 Net sales $ 140,700 $ 911,000 Gross profit 14,300 246,300 Income (loss) before income taxes (26,900) 25,400 Income tax provision (benefit) (5,000)(b) (2,200) Net income (loss) $ (21,900) $ 27,600 Net income (loss) per share $ (0.66) $ 0.82(c) (a) Certain amounts have been reclassified to conform with the presentation or the fiscal year. (b) Reflects reduction of certain income tax accruals. See Note 3. (c) Total for year differs from sum of quarters due to fluctuations in the stock price affecting quarterly common stock equivalents. /*/*/*/*/*/*/*/*/*/*/*/*/*/ DISCLOSURE II /*/*/*/*/*/*/*/*/*/*/*/*/*/ COMMODORE INTERNATIONAL LTD Ownership Summary GOULD, IRVING, 20% (PRX 12-30-93) *** TYPE DATE(Q,M) OWNERS CHANGE (000S) HELD %OWN INVEST. COS. 12/31/93(Q) 0 0 0.00 INSTITUTIONS 12/31/93(Q) 15 -452 645 1.95 5% OWNERS 03/31/94(M) 1 NA 6,595 19.96 INSIDERS 02/29/94(M) 4 NA 310 0.93 Subsidiaries: No subsidiaries reported. COMMODORE INTERNATIONAL LTD Ownership Detail 5% Owners: Shares SEC Filing Owner Name Location Held Form Date ------------------------------ ---------------- ----------- ---- ---------- GOULD IRVING CANADA 6,595,338 13G 12/31/1989 ----------- Totals for 1 owners: 6,595,338 Insider Owners (SEC Forms 3 and 4): Shares Change Filing Rank Owner Name Rel Held in Shares Date ---- ------------------------------ --- ----------- ----------- ---------- 1 ALI MEDHI P 300,000 -100,982 4/30/1991 2 SPIERS DAVID R AF 6,334 000 3/31/1989 3 WEYMAN BRIAN C VP 3,000 3,000 11/30/1989 4 SELIGMAN RALPH D D 1,000 600 10/31/1991 ----------- ----------- Totals for 4 owners: 310,334 -97,382 Institutional Owners (SEC Form 13-F): Shares Change Filing Rank Owner Name Held in Shares Date ---- ------------------------------ ----------- ----------- ---------- 1 QUEST ADVISORY CO 354,100 -19,800 12/31/1993 2 COLLEGE RETIRE EQUITIES 110,000 -78,900 12/31/1993 3 AMERICAN NATL B&T/CHICAG 49,500 -500 12/31/1993 4 MELLON BANK CORPORATION 36,500 000 12/31/1993 5 COMERICA INC 31,800 31,800 12/31/1993 6 UNITED STATES TRUST/N Y 26,965 000 9/30/1993 7 U S BANCORP 18,000 -10,000 9/30/1993 8 NATL WESTMINSTER BK PLC 10,000 -7,500 12/31/1993 9 SMITH BARNEY SHEARSON 6,000 2,600 12/31/1993 10 PAINEWEBBER INC. 5,300 800 12/31/1993 11 BANC ONE CORPORATION 4,150 3,150 9/30/1993 12 BANKERS TRUST N Y CORP 4,100 4,100 12/31/1993 13 BOATMEN'S BANCSHARES INC 2,000 000 12/31/1993 14 MERRILL LYNCH & CO INC 1,150 1,150 12/31/1993 15 CALIF PUBLIC EMP. RET. 300 -152,512 12/31/1993 16 MACKENZIE FINANCIAL CORP 000 -152,500 12/31/1993 16 MERRILL LYNCH PIERCE F&S 000 -1,500 12/31/1993 16 OPPENHEIMER MGMT. CORP. 000 -55,000 12/31/1993 16 WELLS FARGO INST. TR NA 000 -12,500 12/31/1993 ----------- ----------- Totals for 15 owners: 659,865 -447,112 Market value (in $millions): 2 as of 31-Dec-93 ============================================================================== ______________________________________________________________ | | | B r u c e M. F r a n k l i n | | brucef@access.digex.com | |______________________________________________________________|