Item 1. Business --------
The Registrant (which term unless otherwise indicated, includes the Registrant and its subsidiary) was incorporated in Ohio in 1972 and was a bank holding company prior to August 15, 1978. Effective as of that date, the Registrant sold all of its controlling interest in the Community National Bank of Mt. Gilead, Ohio ("Mt. Gilead Bank").
Following the disposition of the Mt. Gilead Bank, the intention of the Registrant was to utilize a portion of the sale proceeds to commence operations as a reinsurer in the credit life and disability reinsurance business. These operations, however, were frustrated as a result of shareholder litigation which was eventually settled and dismissed.
On January 12, 1988, American Legal Publishing Corporation ("ALP Corporation"), a newly formed, wholly-owned subsidiary of Westford Group, Inc., purchased substantially all of the assets of AM Comp, Inc., formerly American Legal Publishing Company. The acquired assets consisted generally of inventory, equipment, supplies, computer software, contracts, leasehold interest and various other intangibles. See note 1(f) to the consolidated financial statements.
ALP Corporation's primary business consists of the codification of municipal and county Codes of Ordinances and the supplementing thereof. The services provided by ALP Corporation to a customer in providing codification services include:
(1) A review of the municipal ordinances of the customer to detect possible conflicts with state and federal law, state and federal constitutions, and state and federal court decisions. This review is done at the specific direction of the customer's attorney.
(2) A review of the ordinances of the customer to make sure that they do not conflict with other ordinances or the charter, if one exists.
(3) Suggestions to the customer for changes, additions and deletions to their ordinances. After editorial and indexing work is concluded, the code is enacted into law and published in a loose-leaf or electronic form to facilitate regular supplementing to reflect changes in state and local law.
ALP Corporation believes that the additional services it provides in codifying a customer's ordinances distinguish it from competitors.
Most of ALP Corporation's codification contracts include a provision to supplement the customer's code, not less than annually, for a period of five (5) years. Although the agreement may usually be terminated by the customer by written notice prior to ninety (90) days before the anticipated delivery date of the supplement, ALP Corporation has generally been successful in retaining municipalities on supplemental contracts, and in having these contracts renewed prior to expiration.
Some states now require that municipalities and/or counties each have a Code of Ordinances. For this reason, ALP Corporation has prepared and marketed a "Basic Code of Ordinances" to smaller municipalities in these states who do not need or cannot afford a custom Code of Ordinances but who, by adoption of a basic code, can meet state law requirements or receive the economic benefits of having a local code. ALP Corporation has developed this basic or model Code of Ordinances for the states of Ohio, Illinois, Indiana, Kentucky and North Carolina. It has also developed, and is marketing with a Texas firm, a model Code of Ordinances for Texas. In North Carolina and Kentucky, ALP Corporation serves as the official code consultant to the state municipal leagues. Furthermore, in 1985, the State of Kentucky enacted legislation providing grants to municipalities to fund a Code of Ordinances as mandated by state law.
ALP Corporation presently has twenty-five full-time employees. The staff consists of marketing, production, general administrative and editorial personnel, eight of whom have law degrees.
Item 1. Business (continued) --------------------
There are approximately twenty-five (25) companies involved in the codification of local government ordinances. Five (5) companies operate on either a national or regional basis, with the rest serving clients only within a relatively small geographic area. ALP Corporation currently represents approximately 850 local governmental units in twenty-seven (27) states.
In the past few years, ALP Corporation has worked to develop a strong telemarketing program. The result has been more comprehensive coverage of market areas, an increase in the number of proposals generated, and higher projected sales volume. ALP Corporation intends to establish a consistent direct mail program and to develop a print media advertising campaign.
The success of ALP Corporation's basic code programs has induced the Registrant to continue to search for similar opportunities in other states. Basic code products fill a need at the low end of the price market. They are attractive low cost options for small municipalities who would otherwise forego any code service.
Rapid growth in the codification industry is most easily attainable through acquisition of competitors. In recent years, ALP Corporation held serious discussions with competitors regarding the purchase of such operations by ALP Corporation. However, no agreements have been reached to date.
A logical opportunity for diversification lies in the school textbook market. Nearly all states require the teaching of the rudiments of civics and government in elementary and secondary schools. ALP Corporation, by the nature of its business, enjoys a unique position through which it can provide educational institutions with pertinent social studies topics and other textbook update materials. Presently, the company publishes an educational newsletter which aids teachers in presenting current state and local government issues to students.
The publication of local government material in electronic formats has become a growing market segment. Local governments are looking for ways to manage information electronically rather than to rely on growing stacks of paper documents. ALP Corporation has developed programs for maintaining codes of ordinances, meeting minutes, attorney opinions and other public documents in an electronic format. In Ohio, Texas, Michigan and Wisconsin, ALP Corporation contracts with the state municipal leagues to provide various electronic records management services.
Item 2.
Item 2. Properties ----------
The executive offices of the Registrant are located in an office building at 20 East Broad Street, Columbus, Ohio. The office facilities are shared with other affiliated entities and rental and bookkeeping expenses are allocated among them. The Registrant does not own any materially important property used in its operations.
In August 1991, ALP Corporation relocated to occupy 3,520 square feet of rentable area on the 12th floor of the building located at 432 Walnut Street, Cincinnati, Ohio and effective March 1, 1994, expanded into an additional 2,038 square feet for a total square footage of 5,558 under an operating lease which will expire July 31, 1998. The lease provides for a monthly rental of $5,342, net of reimbursements payable to the lessor for cost of maintenance and operation of the building.
Item 3.
Item 3. Legal Proceedings -----------------
Two discrimination charges were filed by an employee against ALP Corporation with the Federal Equal Employment Opportunity Commission ("EEOC"). In the first charge, filed on June 21, 1996, the employee alleged discrimination in pay on the basis of age, sex and disability. The employee also alleged denial of accommodation for alleged disabilities and oral intimidation and harassment in retaliation for the employee's internal complaints. In the second discrimination charge, filed on November 21, 1996, the employee claimed the company has retaliated against the employee for pursuing the first charge. ALP Corporation has submitted responses to both discrimination charges.
No determination has been made as yet by the EEOC on either charge.
On or about January 27, 1997, a tort claim was filed on behalf of the same employee of ALP Corporation, in the Court of Common Pleas, Hamilton County, Ohio. The Complaint alleges that the employee's supervisors are guilty of "intentional or negligent infliction of emotional distress" by their "verbal and emotional abuse" of the employee. The Complaint also alleges a claim on behalf of the employee's spouse for loss of consortium. ALP Corporation has filed an Answer and will contest these claims vigorously since it believes it has strong defenses to the claims.
Item 4.
Item 4. Submission of Matters To a Vote of Security Holders ---------------------------------------------------
None.
PART II
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Security Holders --------------------------------------------------------------------- Matters -------
(a) Market information
There is no established public trading market for the Registrant's shares.
The Registrant does not have reliable information with respect to high and low bid prices for each quarter.
(b) Holders
The number of holders of record of the Registrant's Common Stock as of February 14, 1997 was 2,085.
(c) Dividends
There has been no cash dividend declared or paid on the Registrant's outstanding common stock for the two most recent fiscal years. The Registrant's intent is to reinvest earnings to finance its growth for the purpose of improving and increasing both earnings per share and net worth, and therefore it is not anticipated that the Registrant will pay dividends in the foreseeable future.
(THIS SPACE INTENTIONALLY LEFT BLANK)
Item 6.
Item 6. Selected Financial Data -----------------------
Selected Income Statement Data:
Selected Balance Sheet Data:
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations ---------------------
Summary
The following table sets forth changes in certain items reflected in the financial data as compared to the indicated prior period.
Results of Operations - ---------------------
The Company's business is principally carried on through its wholly-owned subsidiary, ALP Corporation. ALP Corporation's sales increased 8.4% during 1996 as compared to 1995, primarily due to production efficiencies resulting from introduction of electronic technologies. Codification revenue remained relatively constant during 1996 as compared to 1995. Subscription services on existing codes of ordinance increased 17.4% due to increased subscription sales in electronic formats. Gross margin increased in 1996 as compared to 1995 as sales increased at a higher percentage rate than the percentage rate increase in cost of sales. Selling, general and administrative expenses increased 37.0% in 1996 as compared to 1995 due to increases in administrative salaries and related costs, legal and professional and sales related expenses.
ALP Corporation's sales increased 12.5% during 1995 as compared to 1994. Codification revenue increased 5.2% due to the addition of several significant customers primarily resulting from an accelerated marketing effort and the recognition of additional revenues earned on contract escalator charges. Subscription services on existing codes of ordinance increased 17.7% due to production reorganization which resulted in accelerated completion of codification production and commencement of supplementation production. Gross margin increased in 1995 as compared with 1994. However, as sales increased, cost of sales increased 11.5% primarily due to increases in production salaries and related costs, insurance and maintenance expense. Selling, general and administrative expenses increased 2.1% in 1995 as compared to 1994 due to increases in administrative salaries and related costs, legal and professional, advertising and travel.
ALP Corporation's sales increased 15.7% during 1994 as compared to 1993. Codification revenue increased 16.2% during 1994 as compared to 1993 due to the addition of a significant new customer. Subscription services on existing codes of ordinance increased 15.4%. Cost of sales increased 23.2% during 1994 as compared to 1993 due to increases in production supply expense, salaries and rent. Selling, general and administrative expenses increased 17.7% during 1994 as compared to 1993 due to increases in advertising, consulting, rent, sales commissions and travel.
Liquidity and Capital Resources - -------------------------------
Although it is impossible to estimate accurately the future cash flow from the operations of the Registrant's codification business, management believes the Registrant's effective capital costs may increase. Management is actively exploring further avenues for preserving capital and improving liquidity. As of December 31, 1996, the Company had a revolving credit agreement with a bank to provide a $250,000 note. The credit facility has a maturity date of April 30, 1997, and bears interest at the banks prime rate (8.25% per annum at December 31, 1996). Management does not know of any trends, events or uncertainties that will have or that are reasonably likely to have material effect on the Registrant's liquidity, capital resources or results of operations.
Item 7. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) ---------------------------------
Factors to Consider Forward Looking - -----------------------------------
Management has undertaken several initiatives in 1996 which should favorably impact operating performance in 1997, although there can be no assurance that a favorable impact will result. Significant cost-cutting measures have been implemented in an effort to reduce overhead and production-related expenses. Increased market penetration should position the Company to take advantage of a number of growth opportunities in the future.
Management has restructured a number of production functions intended to improve the Company's productivity going forward. Reassignment of experienced production staff to selected line positions should provide increased efficiencies. Additional efficiencies should result from the introduction of new production equipment and production flows utilizing optical scanners, a computer communications network and a high capacity printer.
The Company expects to continue expanding its direct sale force, which should allow the Company to increase its market penetration. These activities will be directed toward selected market niches where management believes the Company will be able to provide customers with additional services which distinguish it from competitors.
Deferred Taxes - --------------
The Company has substantial tax loss carryforwards and temporary differences at December 31, 1996, which give rise to deferred tax assets. Based on an analysis of the likelihood of realizing the Company's gross deferred tax asset, the Company has determined that the recognition criteria set forth in SFAS No. 109, "Accounting for Income Taxes", are not met for the entire deferred tax asset and, accordingly, the net deferred tax asset is reduced by a valuation allowance.
Management believes that it is more likely than not that the net deferred tax asset at December 31, 1994 will be realized primarily through the generation of taxable income during the loss carryforward period. This belief derives from an analysis of estimated future taxable income that incorporates an increase in sales during the loss carryforward period generated by increases in new contracts and code supplements related to the prior years new contracts. The Company will need to generate taxable income of approximately $95,000 a year over the next two years in order to realize a significant portion of the net deferred tax assets. After 1996, the amount of taxable income required to realize the remaining net deferred tax assets is approximately $50,000 a year. Historically, there has been an insignificant difference between pre-tax earnings for financial reporting purposes and taxable income for income tax purposes. As is the case with any estimate of future results, there will be differences between assumed and actual economic and business conditions of future periods. Moreover, the estimate may also be affected by unpredictable future events, including, but not necessarily limited to, changes in the Company's capital structure and future acquisitions and dispositions. Therefore, the analysis of estimated future taxable income will be reviewed and updated periodically and any required adjustments, which may increase or decrease the net deferred tax asset, will be made in the period in which the developments on which they are based become known. During 1993, the Company reduced the valuation allowance to reflect management's revised projection of future taxable income resulting in a $133,837 increase to income in the fourth quarter of 1993.
As of December 31, 1996, the Company has available unused operating loss carryovers for Federal tax and financial statement purposes of approximately $332,000 which expire as follows:
Item 7. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations (continued) ---------------------------------
Intangible Asset - ----------------
The excess of net assets acquired in a business combination over the purchase price of approximately $160,000 was allocated to a database acquired. The database is comprised of the municipal code data and related files. Provision for amortization of the database is based on an estimated useful life of forty years reflecting the long lived nature of municipal codes.
Inflation - ---------
Management does not consider the impact of changing prices to be material in the analysis of the Company's overall operations.
Trends - ------
The Company's results of operations have varied from quarter to quarter principally because of fluctuations in production results. The Company's experience indicates that sales increase during second and third quarters as a result of sales to basic code subscribers. The Company expects that such quarterly fluctuations may lessen as the percentage of the Company's new sales are made to clients with fiscal years other than December 31, although there can be no assurance that this will occur.
Safeharbor Statement Under the Private Securities Litigation Reform Act of 1995 - -------------------------------------------------------------------------------
Except for the historical information contained herein, the matters discussed in this Form 10-K includes forward-looking statements that involve risks and uncertainties, including, but not limited to, quarterly fluctuations in results, the management of growth, and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. Actual results may differ materially from management expectations.
Item 8.
Item 8. Financial Statements and Supplementary Data -------------------------------------------
Index to Consolidated Financial Statements - ------------------------------------------
Included in Part II of this report:
Independent Auditors' Reports
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders Westford Group, Inc.:
We have audited the consolidated balance sheets of Westford Group, Inc. and subsidiary as of December 31, 1996 and 1995, and the related consolidated statements of income, shareholders' equity, and cash flows, for each of the years in the three-year period ended December 31, 1996, as listed in Item 8 of this Form 10-K. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Westford Group, Inc. and subsidiary as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1996, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Columbus, Ohio February 28, 1997
WESTFORD GROUP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1996 and 1995
(Continued)
WESTFORD GROUP, INC. AND SUBSIDIARY
Consolidated Balance Sheets, Continued
See accompanying notes to consolidated financial statements.
WESTFORD GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Years Ended December 31, 1996, 1995, and 1994
See accompanying notes to consolidated financial statements.
WESTFORD GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1996, 1995, and 1994
See accompanying notes to consolidated financial statements.
WESTFORD GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1996, 1995 and 1994 Increase (Decrease) in Cash
(Continued)
WESTFORD GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
Supplemental Schedule of non-cash investing and financing activities: Capital lease obligations of $24,491 were incurred when the Company entered into leases for new equipment in 1994.
See accompanying notes to consolidated financial statements.
WESTFORD GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1996, 1995, and 1994
(1) Summary of Significant Accounting Policies ------------------------------------------
The accompanying consolidated financial statements include the following significant accounting policies:
(a) Consolidation Policy --------------------
The accompanying financial statements include the accounts of Westford Group, Inc. (the Company) and its wholly-owned subsidiary, American Legal Publishing Corporation (ALP Corporation). ALP Corporation is engaged in the codification of municipal and county codes of ordinances and the supplementing thereof. All significant intercompany transactions and balances have been eliminated in this consolidation.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 1(b).
(b) Revenue and Cost Recognition ----------------------------
Revenue from municipal code contracts is recognized on the percentage-of- completion method; completion is measured based on the percentage of direct labor costs incurred to date to estimated direct labor costs for each contract. While management uses available information to estimate total direct labor costs on each contract, actual experience may vary from estimated amounts. Under this method, the costs incurred and the related revenues are included in the statement of operations as work progresses. Adjustments to contract cost estimates are made in the periods in which the facts which require such revisions become known. If a revised estimate indicates a loss, such loss is provided for in its entirety. The amount by which revenues are earned in advance of contractual collection dates is an unbilled receivable and the amount by which contractual billings exceed earned revenues is unrealized revenue which is carried as a liability.
Revenue from code supplements is recognized on the completed-contract method because the typical supplement is completed in approximately two months. No progress payments are billed due to the short production time and the low average supplement contract price. Supplement contracts in process are valued at the lower of cost or contract price less estimated cost of completion. The asset, "Costs of uncompleted code supplements," represents all supplement costs incurred to date. Provisions for estimated losses on uncompleted contracts are made in the period in which losses are determined.
WESTFORD GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(c) Property and Equipment ----------------------
Property and equipment are recorded on a cost basis. Depreciation is computed using the straight-line method in amounts adequate to amortize costs over the estimated useful life of the applicable asset. Equipment under capital leases is stated at the present value of the net minimum lease payments and is amortized over the lease term. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized as income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized.
(d) Federal Income Taxes --------------------
Westford Group, Inc. files a consolidated Federal income tax return with its subsidiary. Deferred tax liabilities and assets have been recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes for temporary differences between financial statement and income tax bases of assets and liabilities and net operating loss carryforwards are recognized at the average graduated tax rate for the estimated amount of taxable income in future years.
(e) Net Income Per Common Share ---------------------------
Net income per common share is computed on the basis of the weighted average number of common shares outstanding during the year, including the outstanding convertible debenture, which is included as a common stock equivalent.
(f) Intangible Asset ----------------
During 1988, the Company acquired substantially all the assets of AM Comp, Inc., in an acquisition accounted for as a purchase. The excess of AM Comp, Inc.'s net assets acquired over the purchase price of $165,654 was allocated to the database. The database is comprised of the municipal code data and related files. Provision for amortization of the database is based on an estimated useful life of forty years and is computed on the straight-line method.
In 1996, the Company adopted SFAS No.121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed" which requires that long-lived assets be evaluated for impairment and establishes guidance for recognizing and measuring impairment losses. The adoption of this statment did not have a significant impact on the financial statements.
WESTFORD GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(2) Uncompleted Contracts ---------------------
Costs on uncompleted codification contracts were $645,051 and $771,893 and billings to date on those contracts were $541,620 and $659,213 at December 31, 1996 and 1995, respectively. The excess of costs and estimated earnings over billings to date are presented in the accompanying consolidated balance sheets.
(3) Property and Equipment ----------------------
Property and equipment at December 31, consists of the following:
(4) Note Payable - Bank -------------------
The Company has a revolving credit agreement with a bank to provide a $250,000 note with repayment on demand by the lender with a maturity of April 30, 1997. The Company had an outstanding balance of $3,575 at December 31, 1996 and $83,594 at December 31, 1995 under this arrangement. Advances under the revolving credit line bear interest payable quarterly at the lending bank's prime rate (8.25% at December 31, 1996).
The note is personally guaranteed by the Company's Chief Executive Officer up to $100,000 plus accrued interest and collateralized by the assignment of the Company's property and equipment and accounts receivable.
WESTFORD GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(5) Leases ------
The Company's office facilities are shared with other affiliated entities and rental and bookkeeping expenses are allocated among them. The Company's share of these expenses were $2,940 in 1996, 1995 and 1994.
ALP Corporation occupies space under an operating lease which will expire July 31, 1998.
The following is a schedule of ALP Corporation's future minimum lease payments for capital and operating leases as of December 31, 1996.
Total rental expenses under operating leases were $61,313, $58,751, and $56,354 in 1996, 1995 and 1994, respectively. Included in accumulated depreciation and amortization is $15,453 and $58,077 of accumulated amortization applicable to capital lease equipment at December 31, 1996 and 1995, respectively.
(6) Debenture Payable -----------------
On August 7, 1992, a resolution was adopted by the Company to authorize a $50,000 convertible subordinated debenture, due December 31, 1995, issued to Bancinsurance Corporation, an affiliate of the Company through a common officer and principal shareholder. Each $1,000 of principal is convertible into 6,900 shares of common stock at the holder's option. The debenture may be prepaid, in whole or in part, by the Company upon thirty days prior written notice without penalty. Interest accrues at the rate of ten percent per annum and is payable quarterly on the last day of each March, June, September, and December until the principal sum has been paid. In the event of default, all obligations shall become immediately due and payable at the option of the holder. On December 1, 1995, a resolution was adopted by the Company to renew the debenture. The maturity was extended to December 31, 2000.
WESTFORD GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(7) Federal Income Taxes
Deferred income taxes for 1996 and 1995 reflect the impact of "temporary differences" between amounts of assets and liabilities for financial reporting purposes and such amounts as measured on an income tax basis. Temporary differences and carryforwards which give rise to the net deferred tax asset at December 31, are as follows:
As of December 31, 1996, the Company has net operating loss ("NOL") carryforwards of approximately $332,000 which expire at various dates through 2009. The valuation allowance represents the portion of these net operating loss carryforwards at enacted tax rates not expected to be utilized through future taxable income. Net deferred tax assets and federal income tax expense in future years can be significantly affected by changes in enacted tax rates or by unexpected adverse events that would impact management's conclusions as to the ultimate realizability of deferred tax assets.
The provision for Federal income taxes at December 31, consists of the following:
WESTFORD GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
For 1996, 1995 and 1994, the Federal income tax expense differs from the amount computed by applying the normal tax rate of 34% to income before Federal income taxes as follows:
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure --------------------
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant --------------------------------------------------
Originally elected to Name Age Position office - ---- --- -------- ---------- Si Sokol 69 Chairman and Director 1972 President 1980
James Davis 62 Director 1981
David White 60 Director 1981
John Sokol 34 Director 1990
Daniel Harkins 67 Director 1996
Steve Wolf 45 President American Legal 1988 Publishing, Inc.
Sally Cress 42 Treasurer 1985 Secretary 1985
In addition to his positions with the Registrant, Si Sokol has been Chairman of the Board of Bancinsurance Corporation since 1970 and Chairman of the Board of Ohio Indemnity Company since 1969. He became President and Director of Bancinsurance Corporation and President of Ohio Indemnity Company in 1980. Bancinsurance Corporation, whose common stock is registered pursuant to Section 12 of the Securities Exchange Act of 1934, and its wholly-owned property and casualty insurance subsidiary, Ohio Indemnity Company, are engaged in the underwriting and sales of specialized property and casualty insurance. In addition, Mr. Sokol serves as President of BCIS Services, Inc. and is a Director of Fifth Third Bank, Columbus, Ohio. Mr. Sokol is the father of John Sokol.
James Davis joined Ohio Indemnity in 1989 as the Administrator of Ohio Indemnity's Bonded Service Program and was elected a Vice President of the Ohio Indemnity Company in 1992. He has served as a Director of Ohio Indemnity and Bancinsurance Corporation since 1987 and as Vice President of BCIS Services, Inc. since 1993. From 1986 to 1989, Mr. Davis served as an independent consultant to third party administrators of self-insured workers' compensation programs. He acted as President and Director of James R. Davis & Associates, Inc., a corporation providing cost management services, from 1980 to 1986, which he sold in 1985. He was President of Gates, McDonald & Company, a corporation providing cost management services from 1971 to 1979.
David White has been President of Oakfield Convalescent Center since 1979 to the present date. He was also President of White Realty Company from 1972 to 1981, a real estate company.
Item 10. Directors and Executive Officers of the Registrant (continued) --------------------------------------------------------------
John Sokol, son of Si Sokol, became a Director of Bancinsurance Corporation and Ohio Indemnity Company in 1990. He was a Vice President of Bancinsurance Corporation and Ohio Indemnity from 1993 to 1996 and was elected to Executive Vice President of both companies in 1996. From 1989 until 1993, he served as an officer for what is now The Chase Bank of New York (formally Manufacturers Hanover and Chemical Bank). In 1989, he received a Masters of Business Administration Degree from Vanderbilt University. From 1985 to 1987, he was a Client Services Manager for Financial Guaranty Insurance Company (FGIC).
Daniel Harkins is a private investor. He also serves as a Director of Ohio Indemnity Company and Bancinsurance Corporation. Prior to 1987, Mr. Harkins was the owner and president of Ace Beverage Distributing Company. From 1973 to 1978, he served as General Sales Manager and International Sales Manager for several divisions of Ashland Chemical Co., and from 1978 to 1980, he served as a consultant for A.T. Kearney Inc., a management consulting firm.
Stephen Wolf has been the President of American Legal Publishing Corporation since its incorporation in 1988. He was formerly President of American Legal Publishing Company from 1984 to 1988, and served in other positions including Staff Attorney and Vice President from 1979 to 1984. In addition, Mr. Wolf has been an elected official of the City of Mt. Healthy, Ohio, serving as Law Director from 1980 to 1983, as a Council person from 1984 to 1985, as Mayor from 1988 to 1995 and again as Law Director from 1996 to the present.
Sally Cress has been Secretary and Treasurer of the Registrant as well as of Bancinsurance Corporation and Ohio Indemnity Company since March 1985. She also serves as a Director of Ohio Indemnity Company and as Secretary and Treasurer of BCIS Services, Inc. Mrs. Cress is a Certified Public Accountant.
There are no arrangements or understandings between any of the officers and directors of the Registrant and other persons relating to their selections as officers and directors.
All Directors of the Registrant serve a term of one year or until their successors are elected and qualified. The officers serve at the discretion of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance - -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Registrant's officers and directors, and greater than 10% shareholders, to file reports of ownership and changes in ownership of the Registrant's securities with the Securities and Exchange Commission (SEC). Copies of the reports are required by SEC regulation to be furnished to the Registrant. Based on its review of such reports and written representations from reporting persons, the Registrant believes that, during fiscal 1996, all filing requirements were complied with.
Item 11.
Item 11. Executive Compensation ----------------------
The table below shows the cash compensation paid or accrued by the Registrant during the fiscal years ended December 31, 1996, 1995 and 1994, respectively, to the Chief Executive Officer of the Registrant. During the fiscal year ended December 31, 1996, 1995 and 1994, respectively, no other executive officer received cash compensation in excess of $100,000 (based on salary and bonus).
SUMMARY COMPENSATION TABLE
Compensation Pursuant to Plans:
The Registrant has no annuity, pension, retirement stock option, stock appreciation or similar plans for its officers or employees.
On March 1, 1996, the Company implemented the American Legal Publishing Corporation Employee 401(k) Plan (the "401(k) Plan"). The 401(k) Plan is available to full-time employees who meet the 401(k) Plan's eligibility requirements. Under the 401(k) Plan, the Company matches 50% of the qualified employee's contribution up to 6%. The total cost of the matching contribution was $13,295 for the year ended December 31, 1996.
Compensation of Directors:
The Registrant pays each director a fee of $150 per meeting for attending meetings of the Board of Directors.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management --------------------------------------------------------------
The following table sets forth: (i) the name and address of each person known by the Registrant to be the beneficial owner of more than 5% of any class of the Registrant's voting securities and each director and each officer named in the Summary Compensation Table of the Registrant; and (ii) the number and percent of the Registrant's common shares beneficially owned by each such person and by all directors and officers of the Registrant as a group as of December 31, 1996:
Item 13.
Item 13. Certain Relationships and Related Transactions ----------------------------------------------
See Item 2, Properties.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ---------------------------------------------------------------
(a) Exhibits --------
3(a) Amended Articles of Incorporation (reference is made to Exhibit 3(a) of Form 10-K for the fiscal year ended December 31, 1986 (file number 0-8254), which is incorporated herein by reference).
3(b) Amended Articles of Incorporation (reference is made to Exhibit 3(b) of Form 10-K for the fiscal year ended December 31, 1988 (file number 0-8254), which is incorporated herein by reference).
3(c) Amended Code of Regulations (reference is made to Exhibit 3(b) of Form 10-K for the fiscal year ended December 31, 1980 (file number 0-8254), which is incorporated herein by reference).
10 Acquisitions. Asset Purchase Agreement among American Legal Publishing Corporation, the Registrant, American Legal Corporation and AM Comp, Inc. dated January 12, 1988 (references made to Exhibit 10 of Form 10-K for the fiscal year ended December 31, 1987 (file number 0-8254), which is incorporated herein by reference).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K --------------------------------------------------------------- (Continued) -----------
(b) Financial Statement Schedules -----------------------------
Financial Statement schedules are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements or notes thereto.
(c) Reports on Form 8-K -------------------
No reports on Form 8-K were filed by the Registrant during the quarter ended December 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.
Westford Group, Inc. (Registrant)
3/17/97 By Si Sokol --------- ---------------------- DATE Si Sokol Chairman of Board of Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, which include the Chief Executive Officer, the Chief Financial Officer and a majority of the Board of Directors, on behalf of the Registrant and in the capacities and on the dates indicated:
3/17/97 Si Sokol 3/17/97 Sally Cress - --------- ------------------------ --------- ------------------------ DATE Si Sokol DATE Sally Cress Chairman of Board of Treasurer, Secretary Directors, President and hief Financial Officer Chief Executive Officer and Chief Accounting Officer
3/17/97 David J. White 3/17/97 Daniel D. Harkins - --------- ------------------------ --------- ------------------------ DATE David J. White DATE Daniel D. Harkins Director Director
3/17/97 James R. Davis 3/17/97 John S. Sokol - --------- ------------------------ --------- ------------------------ DATE James R. Davis DATE John S. Sokol Director Director