Annual Report (Form 10-K), fiscal year 1994

ITEM 1 (b). FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information on net sales, operating profit, depreciation and amortization, capital expenditures and assets employed for each segment of the Company's business for the three-year period ended December 31, 1994 is contained under the caption "Financial Information--Industry Segments" on page 26 of the Company's Annual Report to Shareholders for 1994, which page is filed as part of Exhibit 13 hereto and is incorporated herein by reference.
ITEM 1 (c). NARRATIVE DESCRIPTION OF BUSINESS
GENERAL
As noted under Item 1(a) above, the Company has operations in three industry segments: Information Technology, Metal Finishing and Commercial Real Estate.
In the Information Technology segment, the Company's business is conducted primarily through majority-owned subsidiaries: CompuCom Systems, Inc., Tangram Enterprise Solutions, Inc., and Premier Solutions Ltd. Micro Decisionware, Inc. was a majority-owned subsidiary of the Company through April 1994 when it was sold to Sybase, Inc. Coherent Communications Systems Corporation was a majority-owned subsidiary of the Company through July 1994 when it made a rights offering. CenterCore, Inc. was a majority-owned subsidiary of the Company through the end of 1994, when the Company wrote off its investment in CenterCore and determined to dispose of a substantial portion of its investment in CenterCore. The Information Technology segment currently consists of the following classes of products and services: Microcomputer Systems, which involves the delivery of personal computer (PC) services, including procurement and configuration of PCs, application software and related products, network integration, and technical support; and Information Solutions, which involves the design, development and sale of strategic business applications systems software solutions. The activities of the Company's Information Technology segment are described below under "INFORMATION TECHNOLOGY SEGMENT."
Operations under the Metal Finishing segment consist of specialty metal finishing services which are performed by a division and by a wholly-owned subsidiary of Safeguard. Operations under the Commercial Real Estate segment involve the ownership and leasing of income-producing commercial real estate properties. The activities of the Company under each of these segments are described below under "METAL FINISHING SEGMENT" and "COMMERCIAL REAL ESTATE SEGMENT," respectively.
The Company also holds equity positions in a number of other companies, most of which operate in the Information Technology field, and provides venture capital fund management services. The Company provides active strategic management, operating guidance and innovative financing to its minority-owned partnership companies. These investments and activities are described under "OTHER ACTIVITIES."
INFORMATION TECHNOLOGY SEGMENT
MICROCOMPUTER SYSTEMS
CompuCom Systems, Inc., together with its subsidiaries ("CompuCom"), is a leading PC services integration company that provides services primarily to Fortune 1000 companies throughout the United States, ranging from product procurement and configuration to network integration and support. CompuCom is an authorized dealer for major PC lines including Apple Computer Corporation ("Apple"), Compaq Computer Corporation ("Compaq"), Hewlett- Packard Company ("HP") and International Business Machines Corporation ("IBM"). CompuCom also sells a broad selection of applications software products, computer-related peripheral equipment and a range of computer equipment, principally DOS based, from AST, 3Com, Epson, Lotus, Microsoft, NEC, Novell, Toshiba and WordPerfect. CompuCom stocks approximately 1,400 products, thereby providing "one-stop-shopping" to its customers. To further meet customer needs, CompuCom offers its corporate customers a variety of services, such as custom configuration of PC systems, network design and integration, installation, and on-site services.
CompuCom focuses its efforts on serving the needs of large businesses throughout the United States, working with those customers to apply PC technology to meet their business objectives. CompuCom markets its product procurement, configuration, network integration and technology support services through its direct sales force and service employees, operating through 40 sales and service centers. No one customer accounted for more than 5% of CompuCom's sales in 1994.
During 1994, CompuCom completed the transition to centralize its customer service representatives, previously located at various locations, to its customer center in a newly leased facility in Dallas, Texas. The primary goal of the customer center is to provide greater support to CompuCom's customers and to allow its direct sales force to focus on soliciting new business and to provide the necessary support for the customer's more complex networking solutions. The reorganization of the sales process helped enable CompuCom to handle a 24% increase in sales for 1994 while reducing its direct sales force.
CompuCom is actively focusing on increasing sales of services to meet customer needs and improve profitability. During 1994, CompuCom acquired three small service companies in order to enhance CompuCom's ability to meet the service needs of its customers, to expand its service business and build a nationwide service infrastructure. CompuCom will continue to make acquisitions which meet its strategic goals.
CompuCom is dependent upon the continued supply of products from its principal suppliers, Compaq, IBM and HP. Historically, certain suppliers have occasionally experienced shortages of selected products which render components unavailable or necessitate product allocations among resellers. Certain product shortages did exist throughout 1994, which affected the industry as a whole. There can be no assurance that product allocations or product unavailability, or both, will not increase in 1995. However, the impact of such an interruption is not expected to be unduly troublesome because of the breadth of alternative product lines available to CompuCom and CompuCom's established programs to accelerate configuration and delivery times when such events occur.
CompuCom has dealer agreements with Compaq, IBM and HP which are renewable annually or bi-annually and are subject to termination by the respective vendors without cause upon prior written notice, which ranges from 30 to 90 days depending upon the vendor. The termination or non- renewal of CompuCom's Compaq dealer agreement or IBM dealer agreement, or both, would materially adversely affect its business. The loss of HP as a supplier would adversely affect CompuCom's ability to continue its expansion. However, CompuCom is not aware of any basis for the termination or non-renewal of any of those dealer agreements and believes that its relationships with Compaq, HP and IBM are satisfactory. During 1994, sales of IBM and Compaq products accounted for, in the aggregate, approximately 43% of Information Technology segment sales, with sales of each of those supplier's products accounting for at least 18% of such sales; and sales of HP products accounted for approximately 10% of the Information Technology segment sales. Sales of IBM and Compaq products accounted for, in the aggregate, approximately 42% of the Information Technology segment sales in 1993 and 39% in 1992, with sales of each of those supplier's products accounting for at least 21% and 16% of such sales in 1993 and 1992, respectively. Sales of HP products accounted for approximately 9% of 1993 Information Technology segment sales.
All of CompuCom's principal suppliers require that CompuCom purchase certain minimum volumes of products in a specified period in order to maintain favorable pricing levels. CompuCom believes that it purchases products from Compaq, HP and IBM at pricing levels which are the lowest prices available to those vendors' respective dealers with the exception of certain consumer-oriented products from HP. CompuCom also has certain selling and promotional and related expenses reimbursed by vendors under dealer programs offered by its vendors. There can be no assurance that CompuCom will continue to meet the volume requirements to qualify for such favorable pricing, that any of these programs will continue in 1995, or that the regular renewals of CompuCom's dealer agreements with its principal suppliers will continue. Due to rapid delivery requirements of customers and to assure itself of continuous allotment of products from suppliers, CompuCom maintains adequate levels of inventory funded through its line of credit and vendor credit. CompuCom is entitled to credits from certain vendors on items in inventory when the vendor reduces its product prices, subject to certain limitations. Purchases may also be returned to vendors for restocking fees of up to 5%. CompuCom did not incur any material restocking fees in 1994.
Competition in the PC reseller business is intense, primarily in the areas of price, product availability, breadth of product line, and customer technical service and support. CompuCom faces substantial competition from other large resellers that focus on the corporate market. In addition, CompuCom will experience additional direct competition if Compaq, HP or IBM authorize alternative channels of distribution for products on substantially similar terms to those available to CompuCom, elect to sell direct to customers, or authorize other distributors to sell direct to corporate customers.
The industry-wide decline in product margins continued through the first half of 1994, which resulted in CompuCom seeking alternate ways to offset lower margin through control of operating expenses and major account profitability reviews. Product margins increased somewhat in the fourth quarter, reversing the negative trend, as a result of price reductions by certain major manufacturers, and competitors' realization of the need to increase margins. CompuCom believes that gross margins will continue to be reactive to industry-wide changes in 1995. Future improved profitability will depend on vendor product pricing, product availability and competition, as well as CompuCom's operating efficiencies, cost containment measures and effective utilization of vendor programs.
Customer support, prompt delivery, product availability, product line choices, price and the knowledge of the sales and service staffs are the important elements in retaining current customers and obtaining new customers. During 1995, CompuCom expects to continue its strategy of expanding sales of technical service and support, improving the efficiency of its support and sales forces, and increasing overall sales volume.
At March 23, 1995, Safeguard owned approximately 62% of CompuCom's outstanding common stock.
INFORMATION SOLUTIONS
Safeguard currently has two continuing majority-owned subsidiaries in the Information Solutions field: Tangram Enterprise Solutions, Inc. and Premier Solutions Ltd.
TANGRAM ENTERPRISE SOLUTIONS, INC. Tangram Enterprise Solutions, Inc. ("Tangram"), is focused on being a full service provider of enterprise-wide distributed resource management solutions for large commercial and governmental organizations, encompassing mainframe, UNIX-based mini, and LAN server platforms. Tangram services include software, systems integration, and custom applications development.
Tangram's AM:PM(Registered Trademark) products and companion products, which address the electronic software distribution market, provide automated data and software distribution, data collection, and remote data management with a variety of connectivity options to multiple platforms; automatically perform software and hardware inventories and provide information on software usage; and allow end-users to backup workstation data by distributing it to a remote location for protection in the case of disaster.
In August 1994, Tangram acquired the business of Knozall Systems, Inc., an Arizona-based developer of network management tools that allow organizations to optimize their Novell NetWare(registered trademark) computing resources. As a result of the acquisition of Knozall's LAN expertise, Tangram recently completed development of a LAN version of its AM:PM software, giving Tangram the ability to provide enterprise resource management solutions in a broad spectrum of computing environments, whether in local area networks, wide area networks, mainframes, or distributed UNIX- based client/server computing environments.
The Arbiter(registered trademark) products provide file transfer capability and PC-to-mainframe connectivity with an IBM mainframe used as a local area network file server, and allow host data to be automatically converted to popular workstation application formats. Tangram's Open Advantage product line provides high-speed connectivity between mainframes and LANs. Tangram's mainframe connectivity products have experienced declining markets.
Tangram markets its products to Fortune 1000 companies, government agencies and other customers worldwide that have a need to move mission- critical business information across a heterogeneous computing configuration of workstations, mainframes, servers, local area networks and wide area networks. Tangram's AM:PM and Arbiter products have been sold in the United States through a direct sales force operating from its Raleigh, NC office using a combination of telesales and in-person contacts at the customer location. The Open Advantage products and the Knozall products are presently sold through distributors, although an effort is underway to use more direct sales for the Knozall products. Foreign sales are made through distributors in Europe, the Pacific Rim and Africa.
Product development resources are allocated between the enhancement of existing products and the development of new products. Existing products are enhanced to keep them current with market requirements and to allow them to support new standards and environments. New products are developed that are complementary to existing products and exploit new markets for Tangram. The majority of Tangram's products and associated documentation are developed internally, although Tangram has in the past and intends to continue to acquire certain software technology from others and integrate those technologies into its product lines.
The market for Tangram's products is highly competitive and is characterized by rapid changes in technology and user needs. Many of Tangram's actual and potential competitors have substantially greater financial, marketing and technological resources than Tangram. Tangram believes that the principal competitive factors in the industry are the compatibility of products with the customer's computer hardware and software, ease of use, price, and the substantial base of technology that is required to join together the various platforms in today's heterogeneous enterprises.
At March 23, 1995, the Company owned approximately 73% of Tangram's common stock.
PREMIER SOLUTIONS LTD. Premier Solutions Ltd. ("Premier") markets sophisticated asset management systems solutions to the financial services industry worldwide. Premier's GLOBAL(bullet)PLUS(registered trademark) software provides complete multi-currency accounting and global custody processing capabilities, two of the demanding functions required by international asset management organizations. Premier's MAXIMIS(trademark) software provides a wide range of asset management and investment accounting solutions on multiple platforms, and is targeted at investment advisors, insurance companies and pension funds.
Premier markets its products through a direct sales force based at its headquarters in Pennsylvania and regional offices in Dallas, New York, Chicago and Toronto. A significant portion of Premier's sales for 1994 were in Canada. Target industries are major financial institutions, including traditional trust organizations, investment advisory firms, domestic and global custodians, international asset management organizations, insurance companies and large pension funds. In 1994 Premier had two customers which each accounted for over 10% of sales. An in-house design and development team is responsible for product development.
Premier is proceeding with its strategic plan to re-engineer its GLOBAL(bullet)PLUS product line to operate in a client/server environment. This process will occur in staged deliverables to allow both existing clients and future clients to take advantage of new technology in an orderly fashion and without disruption to their existing operations. The MAXIMIS product line is utilizing state of the art technology through the use of case tools and data modeling.
In 1994, Premier entered into an agreement with Digital Equipment Corporation whereby Premier outsourced its data center operations to Digital, allowing Premier to focus its manpower on product development and support.
Although certain of Premier's competitors offer multi-currency capabilities, Premier believes that its GLOBAL(bullet)PLUS product is currently the only full-featured, installed and proven global asset management system. Certain of Premier's domestic competitors have a significantly larger installed domestic customer base; however, these competitors have only limited multi-currency functionality. In those markets where global investment management is required, Premier has been successful. Premier's ability to remain competitive will be partially dependent on the success of its conversion to a client/server environment.
In the fourth quarter of 1994, the Company converted all of the Premier debt held by it into Premier common stock. At March 23, 1995, Safeguard owned approximately 99% of Premier's outstanding common stock and approximately 96% of Premier's voting stock.
Product Development Expenses
For the Information Solutions continuing product lines in the aggregate, the Company spent $11.7 million, or 22% of Information Solutions net sales, for product development in 1994, compared to $6.8 million or 10% of net sales in 1993 and $7.2 million or 12.6% of net sales in 1992. The increased development expenditures for 1994 reflect significant development projects commenced by Tangram and Premier. Only an immaterial amount of product development expenditures were customer-sponsored.
Other Segment Information
Export sales in the Information Technology segment for the three-year period ended December 31, 1994 were less than 5% of the segment's total sales in each of these years. However, export and foreign sales made up approximately one-third of Information Solutions net sales, with Coherent Communications Systems Corporation accounting for over half of that amount during the six months it was consolidated in the Company's results. Backlog for this segment, most of which was accounted for at year-end by CompuCom, is not considered to be a meaningful indication of future business prospects due to CompuCom's relatively quick order fulfillment cycle.
METAL FINISHING SEGMENT
This segment is engaged in the finishing of aluminum and other metal parts. Operations are conducted in Minneapolis, Minnesota; Green Bay, Wisconsin; and Phoenix, Arizona under the name "Pioneer Metal Finishing." Major technical processes include sulfuric, hardcoat and R-5 bright dip anodizing, chromate conversion, electroless nickel and the application of other specialty coatings. Pioneer Metal Finishing provides insulation, heat dispersal, decoration and protection to a wide range of metal parts, including highly sophisticated equipment and small parts with precision tolerance requirements for the computer, ordnance, automotive, cookware and recreational industries, electronic components and other applications. Pioneer refurbished and upgraded its Minneapolis production line during the first quarter of 1995 at a cost of approximately $1 million.
Safeguard believes that all facilities comply with existing environmental pollution control regulations, compliance with which in recent years has been an important competitive factor in the industry.
Metal Finishing services are sold to a wide range of customers and industries by a direct sales force and independent representatives. Finishing is usually performed on customer-owned material. Because of transportation costs, most customers are located within a 200-300 mile radius of the finishing facilities.
Backlog is not considered material to this business as work is generally processed in a one-to-two-week period.
Pioneer Metal Finishing competes with many other metal finishers serving its geographical areas, several of which are similar in size to it, but Pioneer Metal Finishing has established itself as a reputable industry leader and quality metal finisher. Prompt service, quality of work performed and geographic location are the most important competitive factors.
COMMERCIAL REAL ESTATE SEGMENT
As of March 23, 1995, Safeguard owns and leases approximately 254,000 square feet of commercial office and industrial space in 8 commercial real estate properties in suburban Philadelphia. The properties are carried at a book value, after depreciation, in excess of $18 million subject to related mortgage debt, primarily non-recourse, of approximately $21 million.
Safeguard also holds a 40% interest in The Nichols Company, a real estate company that owns, manages and leases commercial office and industrial space.
Competition in the commercial real estate market in the suburban Philadelphia area is intense, due in part to the level of available commercial space. Financing is difficult to obtain due to the restrictive lending environment. Competitors in the suburban Philadelphia area have been offering reduced rental rates to attract tenants in this difficult market environment. Safeguard's occupancy rate was 94% at December 31, 1994 after excluding three properties which the Company is in the process of turning over to its mortgage lenders in satisfaction of the related non- recourse debt. The Company will not incur any loss on these properties, as the depreciated book value of the properties is less than the outstanding mortgage balances. Location, building design and rental rates are the most important competitive factors for attracting tenants.
Safeguard believes that its real estate holdings are quality commercial properties in well-positioned suburban locations. The Company sold one of its properties at a gain in 1994. The Company's real estate operations typically generate pretax losses because of depreciation, but are approximately break-even on a cash basis.
OTHER COMPANY INFORMATION
Safeguard and its consolidated subsidiaries have approximately 2,900 employees, of which approximately two-thirds are employed by CompuCom. The Company believes relations with employees are good.
OTHER ACTIVITIES
Safeguard has equity interests in, and provides management and support services to, the following businesses.
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC. In the second quarter of 1993, Safeguard participated in a rights offering to its shareholders of shares of Cambridge Technology Partners, a Massachusetts- based company which provides information technology consulting and software design and development services to organizations with large scale information processing and distribution needs that are utilizing or migrating to open systems computing environments. In performing these services, Cambridge Technology Partners employs a rapid development methodology utilizing client/server architectures. It provides these services on a fixed-price, fixed-timetable basis with client involvement at all stages of the process. Software design and development services have accounted for most of the revenues to date. However, consulting services are expected to provide important leads to software development projects. Software applications are designed to enable clients to achieve a competitive advantage, enhance the efficiency and functionality of specific business processes, and support their financial goals.
Cambridge Technology Partners markets its services to a wide variety of industries, and its clients include a diverse group of business and governmental organizations with large scale information access and processing needs, both in North America and in Europe. Cambridge Technology Partners' revenues grew over 80% in 1994 to $59.7 million, with earnings nearly doubling to $6.6 million.
At March 23, 1995, Safeguard had approximately a 24% equity position in Cambridge Technology Partners and held warrants which, if exercised, would increase its ownership to approximately 26%.
COHERENT COMMUNICATIONS SYSTEMS CORPORATION. In the third quarter of 1994, Safeguard participated in a rights offering to its shareholders of shares of Coherent. Coherent develops, manufactures, and markets voice enhancement products for wireless (including digital cellular), satellite- based and wireline telecommunications systems throughout the world. Coherent's principal products include echo canceller and teleconference products which utilize a proprietary high speed reduced instruction set computer (RISC) microchip and Coherent's proprietary echo cancellation software to enhance the quality of voice communication during a telephone call. Coherent's echo canceller products enhance voice quality in several ways, including eliminating voice echoes inherent in modern telecommunications systems. Coherent's teleconference products include equipment and related software used in teleconferencing and in videoconferencing applications.
Coherent sells its echo canceller products to network operators and other end-users through its direct sales force and third party distributors, and to telecommunications equipment manufacturers through its direct sales force. Users of Coherent's echo canceller products include telecommunications network operators throughout the world, such as British Telecommunications PLC, Deutsche Bundespost, McCaw Cellular Communications, Inc., Telefonos de Mexico, SA, and Teleglobe Canada. Coherent has directed its sales efforts for its echo canceller products primarily in international markets in which competition is based principally on technological characteristics, rather than price. Over 70% of Coherent's sales in 1994 were international. Echo canceller products accounted for approximately 78% of Coherent's revenues in 1994. Coherent's sales for 1994 increased by 33%, and earnings grew by over 150% excluding the impact of $1.1 million non- recurring write-off of goodwill in 1993.
Coherent's product development expenditures in 1994 accounted for approximately 13% of revenues. Coherent's product markets are intensely competitive and are characterized by short product life cycles. Coherent's ability to continuously improve its product technology has enabled it to successfully compete with much larger competitors.
At March 23, 1995, Safeguard owned approximately 40% of Coherent's outstanding stock.
CENTERCORE, INC. CenterCore designs, manufactures and distributes space-efficient, modular workstation systems, a line of complementary office products, including cable and wiring systems and ergonomically designed seating products, air management systems for temperature blending and breathing zone filtration, and portable and room-size cleanroom and air filtration components and systems, and provides integration, installation and servicing of advanced electronic systems for security access control, fire alarm, sound, communications and other applications. CenterCore's management is pursuing a strategy to significantly downsize its business and the Company is substantially reducing its ownership of CenterCore.
DIAMOND TECHNOLOGY PARTNERS. Diamond Technology Partners is a consulting company which helps clients redesign their business processes based on their overall strategic plan, and implements the redesigned business process through organizational changes, systems integration services, custom software applications development, and outsourcing of information systems management.
At March 23, 1995, Safeguard owned approximately 23% of Diamond Technology Partners outstanding stock.
MICRO DYNAMICS, LTD. Micro Dynamics, Ltd. develops and markets document imaging systems on a Macintosh platform which combine traditional database and full-text searching capabilities and streamline the process of retrieving information. Micro Dynamics' MARSTM (Multi-User Archival and Retrieval System) can be used for many traditionally paper intensive applications from signature verification in banking to land title searches in real estate and can also play a role in mission critical applications such as litigation support and new drug applications for pharmaceutical companies. During 1994, Micro Dynamics continued its development of a cross-platform product that includes both Macintosh and PC workstation clients.
At March 23, 1995, Safeguard had approximately a 54% equity position in Micro Dynamics.
MULTIGEN, INC. MultiGen is a leading supplier of interactive, graphical modeling tools for 3D real-time computer simulations. Its primary product line, called MultiGen(registered trademark), is used to create scenes used in real-time applications for visual simulation, location-based entertainment, virtual reality, game development, CAD visualization and architectural walk-through. MultiGen markets its products worldwide through partnerships with leading computer and real-time simulation companies and a network of distributors. MultiGen's products currently operate primarily on Silicon Graphics workstations. MultiGen has developed software tools under an agreement with Nintendo to be used by developers of video games for Nintendo's next-generation 64-bit operating system.
At March 23, 1995, Safeguard owned approximately 31% of MultiGen's outstanding stock.
NATIONAL MEDIA CORPORATION. National Media is the leading worldwide marketer of consumer products through infomercials. National Media's programming reaches over 80 million households in 40 countries. At March 23, 1995, Safeguard held $4 million of National Media debt, preferred stock convertible into 3% of National Media's outstanding common stock and warrants which could increase its position to 14%.
NEW PARADIGM VENTURES, INC. New Paradigm Ventures provides consulting and project implementation assistance to nationally recognized, branded product companies. New Paradigm Ventures seeks to develop joint venture arrangements with its clients, assisting them in accessing new markets for their products and new methods of delivering their products to target markets.
At March 23, 1995, Safeguard owned approximately 33% of New Paradigm Ventures outstanding stock.
SANCHEZ COMPUTER ASSOCIATES, INC. Sanchez Computer Associates ("Sanchez") develops and installs a comprehensive set of integrated banking and accounting software for the financial services industry worldwide under the trademark PROFILE(registered trademark). The PROFILE product line runs on an open platform and includes a multi-currency cost center-based accounting system with integrated functions that support the front- and back-office processing requirements of financial institutions, and a full treasury support system that includes a sophisticated set of asset and liability tools.
A substantial majority of Sanchez' sales are international, particularly in Central Europe, Canada, the Carribean and Portugal.
At March 23, 1995, Safeguard owned 41% of the common stock of Sanchez and held warrants which, if exercised, would increase its ownership percentage to 44%.
SKY ALLAND MARKETING, INC. Sky Alland Marketing, Inc. ("Sky Alland") provides research services that assist Fortune 500 companies in acquiring and retaining customers. Sky Alland performs its customer monitoring services and customer relationship enhancement services for automotive, banking and health care industries. Its clients include Mitsubishi, BMW, Cadillac, Chemical Bank, First Interstate Bank and Columbia Health Care. At March 23, 1995, Safeguard held approximately 49% of Sky Alland's voting stock, which would increase to approximately 55% if Safeguard were to convert the shares of convertible preferred stock it holds.
USDATA CORPORATION. USDATA has been for 20 years a leading provider of real-time software-enabling tools for manufacturing and process industries. USDATA also provides integrated automatic data collection systems. USDATA's FactoryLink(registered trademark) product line enables customers to rapidly develop real-time applications which provide interactive graphical linkages between an organization's management information systems and its manufacturing processes. USDATA's Systems Integration Division delivers to customers turnkey implementation of integrated data collection systems featuring bar code labelling and remote, real-time data collection using automatic identification techniques.
At March 23, 1995, Safeguard owned approximately 30% of USDATA's outstanding stock.
XL VISION, INC. In 1993, Safeguard acquired a minority voting equity interest in XL Vision, Inc., a Florida-based company which develops and manufactures applications-specific electronic imaging products for sale to original equipment manufacturers and systems integrators. XL Vision is targeting its products to specific market segments, including orthophoto scanning, to support geographic information systems; an automated microscope, to perform cancer screening and other procedures for clinical labs; photodocumentation scanning, to support national identification and border control security systems; and a night-vision system for commercial applications.
At March 23, 1995, Safeguard held voting control over approximately 16% of the common stock of XL Vision and had ownership of non-voting preferred stock convertible into a majority of the common stock.
RADNOR VENTURE PARTNERS, L.P. Safeguard, through its wholly-owned subsidiary, SSI Management Company, Inc., serves as the managing general partner of the general partner of Radnor Venture Partners, L.P. ("RVP"), a $33 million venture capital fund organized as a limited partnership. RVP invests in high technology companies with high growth and profit potential and is fully invested. Safeguard owns 13.7% of the limited partnership interests in RVP, and has a 6% carried interest in the net gains after the return of the investors' capital.
TECHNOLOGY LEADERS. Safeguard, through its wholly-owned subsidiary, Technology Leaders Management, Inc., serves as the manager of Technology Leaders, a $60 million high technology venture capital fund organized in two components: a domestic limited partnership and an offshore limited partnership. Technology Leaders invests in early-stage opportunities in the areas of biotechnology, information services, health care and certain other technologies, and is fully invested. Safeguard owns 3.3% of the aggregate limited partner interests of Technology Leaders and has a 6% carried interest in the net gains after the return of the investors' capital.
TECHNOLOGY LEADERS II. Safeguard, through Technology Leaders Management, Inc., serves as the manager of this high technology venture capital fund, also organized in parallel domestic and offshore limited partnerships. Technology Leaders II has raised over $80 million of committed capital, and invests in the areas of information services, health care, biotechnology and certain other technologies.
ITEM 1(d). FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company does not believe that foreign or geographic area revenues are material or significant to an understanding of its business and operations during the three-year period ended December 31, 1994. Where appropriate, information concerning the Company's export sales is discussed in Item 1(c) "Narrative Description of Business."
ITEM 1(e). EXECUTIVE OFFICERS
Information about the Company's executive officers can be found in Part III of this report under "Item 10. Directors and Executive Officers of Registrant."
ITEM 2.



ITEM 2. PROPERTIES
The Company owns its corporate headquarters and administrative offices located in Wayne, Pennsylvania. In addition to sales offices, leased warehouses, and certain properties not used by the Company in its operations, the principal properties consisted of the following as of March 23, 1995:
INDUSTRY SEGMENT/LOCATION TYPE OF FACILITY LEASE EXPIRES ------------------------- ---------------- -------------
INFORMATION TECHNOLOGY ---------------------- MICROCOMPUTER SYSTEMS Dallas, TX Office/Sales Center * Woolwich, NJ Distribution Center 1998(1) Stockton, CA Distribution Center 1999(2) Dallas, TX Customer Center 2000 Fort Worth, TX Distribution Center 2000(3)
INFORMATION SOLUTIONS Raleigh, NC Office/Data Center 1997 Malvern, PA Office/Distribution 1998(4) Dallas, TX Office/Distribution 2000 Malvern, PA Office/Distribution 2001
METAL FINISHING --------------- Minneapolis, MN Manufacturing/Office * Green Bay, WI Manufacturing/Office * Phoenix, AZ Manufacturing/Office *
OTHER ACTIVITIES ---------------- Sebastian, Florida Office Space/Assembly Facility *
COMMERCIAL REAL ESTATE ---------------------- Horsham Business Center Commercial Office Space * Horsham, PA
Iron Run Warehouse/Commercial * Allentown, PA Office Space
Meetinghouse Business Center Commercial Office Space * Plymouth Meeting, PA (5 buildings)
Whiteland Business Center Warehouse/ * Commercial Office Space _________
(*) Owned facility.
(1) The Company has a cancellation option exercisable at any time after February 1996.
(2) The Company has a cancellation option exercisable beginning May 1995 and each year thereafter.
(3) The Company has a cancellation option exercisable after April 1998.
(4) The Company has a cancellation option exercisable beginning April 1996.
In the opinion of management, the properties and plants are in good condition and repair and are adequate for the particular operations for which they are used. The extent of utilization of manufacturing facilities varies from plant to plant. The existing facilities generally are capable of supporting increased activity without any significant capital expenditures.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 1994.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company incorporates by reference the information contained under the caption "Common Stock Data" on page 39 of its Annual Report to Shareholders for 1994 which page is filed as part of Exhibit 13 hereto.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The Company incorporates by reference the information contained under this caption on page 21 of its Annual Report to Shareholders for 1994 which page is filed as part of Exhibit 13 hereto.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company incorporates by reference the information contained under this caption on pages 21 through 25 of its Annual Report to Shareholders for 1994 which pages are filed as part of Exhibit 13 hereto.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company incorporates by reference the information on pages 27 through 39 in its Annual Report to Shareholders for 1994 which pages are filed as part of Exhibit 13 hereto.
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 REGISTRANT
EXECUTIVE OFFICERS:
The following persons were executive officers of the Registrant at March 23, 1995:
HAS BEEN AN OFFICER NAME AGE SINCE POSITION ---- --- ----- -------- Warren V. Musser 68 1953 Chairman of the Board, Chief Executive Officer, and President Donald R. Caldwell(1) 48 1993 Executive Vice President Charles A. Root 62 1984 Executive Vice President Gerald M. Wilk 58 1973 Vice President - Finance James W. Dixon(2) 48 1990 Chairman of the Board, CompuCom Systems, Inc. Edward R. Anderson(3) 48 1994 President and Chief Executive Officer, CompuCom Systems, Inc.
(1) Prior to joining the Company, from 1991 through 1993 Mr. Caldwell was President of Valley Forge Capital Group, Ltd., a business mergers and acquisition advisory firm which he founded. From 1990 through 1991, Mr. Caldwell was Chief Administrative Officer of Cambridge Technology Partners (Massachusetts), Inc., an information technology consulting and software development company.
(2) Mr. Dixon has held the position of Chairman of the Board of CompuCom Systems, Inc. from January 1989 to the present. Mr. Dixon also held the positions of President from June 1988 to January 1989 and Co-Chief Executive Officer from January 1989 to March 1991. From 1987 to June 1988, he served as President of CompuShop Incorporated, a subsidiary of Bell Atlantic Investment Development Corporation, the assets of which were acquired by CompuCom Systems, Inc. in June 1988.
(3) Mr. Anderson has served as President and Chief Executive Officer of CompuCom Systems, Inc. since January 1994 and served as Chief Operating Officer from August 1993 through December 1993. Prior to joining CompuCom, Mr. Anderson served from May 1988 to July 1993 as President and Chief Operating Officer of Computerland Corporation, a computer reseller.
DIRECTORS:
The Company incorporates by reference the information contained under the caption "ELECTION OF DIRECTORS" in its definitive Proxy Statement relative to its May 11, 1995 annual meeting of shareholders, to be filed within 120 days after the end of the year covered by this Form 10-K Report pursuant to Regulation 14A under the Securities Exchange Act of l934, as amended.
DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K:
The Company incorporates by reference the information contained under the caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" in its definitive Proxy Statement relative to its May 11, 1995 annual meeting of shareholders, to be filed within 120 days after the end of the year covered by this Form 10-K Report pursuant to Regulation 14A under the Securities Exchange Act of l934, as amended.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The Company incorporates by reference the information contained under the captions "Directors' Compensation," "Compensation Committee Interlocks and Insider Participation" and "EXECUTIVE COMPENSATION" in its definitive Proxy Statement relative to its May 11, 1995 annual meeting of shareholders, to be filed within 120 days after the end of the year covered by this Form 10-K Report pursuant to Regulation 14A under the Securities Exchange Act of l934, as amended.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company incorporates by reference the information contained under the caption "SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in its definitive Proxy Statement relative to its May 11, 1995 annual meeting of shareholders, to be filed within 120 days after the end of the year covered by this Form 10-K Report pursuant to Regulation 14A under the Securities Exchange Act of l934, as amended.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company incorporates by reference the information contained under the captions "Compensation Committee Interlocks and Insider Participation" and "CERTAIN TRANSACTIONS" in its definitive Proxy Statement relative to its May 11, 1995 annual meeting of shareholders, to be filed within 120 days after the end of the year covered by this Form 10-K Report pursuant to Regulation 14A under the Securities Exchange Act of l934, as amended.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules
CONSOLIDATED FINANCIAL STATEMENTS * INDEPENDENT AUDITORS' REPORT INDUSTRY SEGMENTS OPERATIONS - years ended December 31, 1994, 1993, and 1992 BALANCE SHEETS - December 31, 1994 and 1993 CASH FLOWS - years ended December 31, 1994, 1993, and 1992 SHAREHOLDERS' EQUITY - years ended December 31, 1994, 1993, and 1992 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS QUARTERLY FINANCIAL DATA
FINANCIAL STATEMENT SCHEDULES** INDEPENDENT AUDITORS' REPORT Schedule I - Condensed Financial Information of Registrant Schedule II - Valuation and Qualifying Accounts Schedule III - Real Estate and Accumulated Depreciation Schedule IV - Mortgage Loans on Real Estate
-------- * Incorporated by reference from pages 26 through 39 of the Company's Annual Report to Shareholders for 1994, which pages are filed as part of Exhibit 13 hereto. ** Filed herewith.
(b) Reports on Form 8-K
On October 17, 1994, the Company filed a Form 8-K disclosing under Item 2 the acquisition by its subsidiary, Premier Solutions Ltd., of the MAXIMIS software business unit from Texas Instruments Incorporated.
On December 16, 1994, the Company filed a Form 8-K/A for such acquisition, containing the following financial statements under Item 7: (1) financial statements for the MAXIMIS business unit, and (2) pro forma consolidated financial statements for Safeguard Scientifics, Inc.
(c) Exhibits
The following is a list of exhibits required by Item 601 of Regulation S-K filed as part of this Report. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated in parentheses.
EXHIBIT NO. EXHIBIT ---------- -------
2.1 Asset Purchase Agreement among MEC Acquisition, Inc., CenterCore, Inc. and Maris Equipment Company dated September 15, 1993 (excluding schedules and exhibits) (9)(Exhibit 2.1)
2.2 Promissory Note dated September 22, 1993 from MEC Acquisition, Inc. to Maris Equipment Company (9)(Exhibit 2.2)
2.3 Asset Purchase Agreement between Texas Instruments Incorporated and Premier Solutions Ltd. dated as of September 30, 1994 (excluding schedules and exhibits) (13) (Exhibit 2.1)
2.4 Services Agreement between Texas Instruments Incorporated and Premier Solutions Ltd. dated as of September 30, 1994 (13) (Exhibit 2.2)
3.1 Articles of Incorporation of the Company, as amended (6)(Exhibit 3.1)
3.2 By-laws of the Company, as amended (6)(Exhibit 3.2)
4.2 Rights Agreement dated March 31, 1988 between Safeguard Scientifics, Inc. and Mellon Bank (East) N.A., as Rights Agent (3)(Exhibit 1)
4.3 Form of letter sent to shareholders regarding adoption of Shareholder Rights Plan (3)(Exhibit 2)
4.4 Form of certificate of Safeguard Scientifics, Inc. Common Stock, par value $.10 per share (5)(Exhibit 4.3)
4.5** 1979 Stock Option Plan (1)(Exhibit 10)
4.6** 1980 Stock Option Plan (1)(Exhibit 10)(5)(Exhibit 10.5)
4.7** 1990 Stock Option Plan (11) (Exhibit 4.7)
4.8** Stock Option Plan for Non-Employee Directors (11) (Exhibit 4.8)
4.9** Safeguard Scientifics, Inc. Amended and Restated Stock Savings Plan*
4.10** Safeguard Scientifics, Inc. Stock Savings Plan Trust Agreement (5)(Exhibit 4.2)
10.1** Safeguard Scientifics Money Purchase Pension Plan (6)(Exhibit 10.3)
10.2** First Amendment to Safeguard Scientifics Money Purchase Pension Plan (11) (Exhibit 10.2)
10.3** Second Amendment to Safeguard Scientifics Money Purchase Pension Plan*
10.4** Safeguard Scientifics Money Purchase Pension Plan Trust Agreement (6)(Exhibit 10.4)
10.5** Safeguard Management Incentive Compensation Plan (7)(Exhibit 10.3)
10.6** Safeguard Scientifics, Inc. Long Term Incentive Plan, as amended and restated effective June 15, 1994 *
10.7** Form of Promissory Notes dated December 22, 1994 given by certain executives in payment for restricted stock grants*
10.8** Form of Promissory Notes dated January 3, 1995 given by certain executives in payment for restricted stock grants*
10.9** Safeguard Scientifics, Inc. Deferred Compensation Plan (2)(Exhibit 10.12)
10.10** Amended and Restated Credit Agreement dated June 30, 1994 by and among Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc., and Midlantic Bank (excluding schedules and exhibits) (12) (Exhibit 10)
10.11** Amended and Restated Revolving Note dated June 30, 1994 made by Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc. (12) (Exhibit 10)
10.12 Term Note dated June 30, 1994 from Safeguard Scientifics, Inc. and Safeguard Scientifics (Delaware), Inc. (12) (Exhibit 10)
10.13 Second Amended and Restated Credit Agreement dated February 1, 1995 by and among Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc. and Midlantic Bank (excluding schedules and exhibits)*
10.14 Second Amended and Restated Revolving Loan Note dated February 1, 1995 made by Safeguard Scientifics, Inc., and Safeguard Scientifics (Delaware), Inc.*
10.15 Revolving Credit Financing and Security Agreement dated as of August 4, 1993 between CompuCom Systems, Inc. and NationsBank of Texas, N.A.(excluding schedules and exhibits) (11) (Exhibit 10.12)
10.16 $125,000,000 Master Revolving Promissory Note from CompuCom Systems, Inc. to NationsBank of Texas, N.A. dated as of August 4, 1993 (11) (Exhibit 10.13)
10.17 First Amendment to Financing and Security Agreement dated as of March 31, 1994 between CompuCom Systems, Inc. and NationsBank of Texas, N.A.*
10.18 Master Revolving Promissory Note dated March 31, 1994 made by CompuCom Systems, Inc.*
10.19** Letter agreement between Safeguard Scientifics, Inc. and Jean C. Tempel dated November 5, 1993 (11) (Exhibit 10.20)
10.20** Letter agreements among Continental Capital Partners, Charterhouse North America Securities, Inc., Valley Forge Capital Group Ltd., MIG Securities, Inc. and Safeguard Scientifics, Inc. dated September 6, 1991 (11) (Exhibit 10.21)
10.21** Memo of Understanding between Valley Forge Capital Group, Ltd. and Safeguard Scientifics, Inc. dated as of October 15, 1992 (11) (Exhibit 10.22)
10.22** Letter agreement dated August 13, 1991 between Valley Forge Capital Group, Ltd. and CenterCore, Inc. (11) (Exhibit 10.23)
10.23 Stock Purchase Agreement between CompuCom Systems, Inc. and Rosetta Stone Corporation dated January 5, 1994, regarding sale of common stock of PC Parts Express, Inc. (exhibits omitted) with attached $3,500,000 Promissory Note, Pledge and Security Agreement, and PC Parts Express, Inc. Common Stock Purchase Warrant (11) (Exhibit 10.24)
10.24 Asset Purchase Agreement among Rosetta Stone Corporation, Teknowlogy Corp. and CompuCom Acquisition Corporation, d/a/a Micro Solutions, dated January 5, 1994, regarding sale of MicroSolutions' Network Training Group division (exhibits omitted), with attached $1,000,000 Installment Promissory Note and Pledge and Security Agreement (11) (Exhibit 10.25)
10.25** Resignation Agreement, effective January 1, 1994, between Avery More and CompuCom Systems, Inc. (11) (Exhibit 10.26)
10.26** Promissory Note dated August 31, 1994 from Edward Anderson to CompuCom Systems, Inc.*
10.27** Pledge Agreement dated August 31, 1994 between Edward Anderson and CompuCom Systems, Inc.*
10.28** Promissory Note dated January 5, 1995 from James Dixon to CompuCom Systems, Inc.*
11 Computation of Per Share Earnings*
13 Pages 21 to 39 of Annual Report to Shareholders for year ended December 31, 1994*
21 List of Subsidiaries*
23 Consent of KPMG Peat Marwick LLP, independent auditors*
27 Financial Data Schedule* ________________________________
* Filed herewith.
** These exhibits relate to compensatory plans, contracts or arrangements in which directors and/or executive officers of the registrant may participate.
(1) Filed on March 30, 1981 as an exhibit to the Annual Report on Form 10-K (No. 1-5620) and incorporated herein by reference. (2) Filed on March 30, 1987 as an exhibit to Annual Report on Form 10-K (No. 1-5620) and incorporated herein by reference. (3) Filed on April 8, 1988 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference. (4) Filed on March 29, 1991 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (5) Filed on December 13, 1991 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference. (6) Filed on March 30, 1992 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (7) Filed on March 31, 1993 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (8) Filed on April 9, 1993 as an exhibit to Form 8 Amendment to Form 10- K (No. 1-5620) and incorporated herein by reference. (9) Filed on October 22, 1993 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference. (10) Filed on November 15, 1993 as an exhibit to Form 10-Q (No. 1-5620) and incorporated herein by reference. (11) Filed on March 30, 1994 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (12) Filed on August 15, 1994 as an exhibit to Form 10-Q (No. 1-5620) and incorporated herein by reference. (13) Filed on October 17, 1994 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders Safeguard Scientifics, Inc.:
Under date of February 16, 1995, we reported on the consolidated balance sheets of Safeguard Scientifics, Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of operations, cash flows and shareholders' equity for each of the years in the three-year period ended December 31, 1994, as contained in the 1994 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in note 1 to the consolidated financial statements, the Company changed its method of accounting for investments by adopting the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" as of January 1, 1994.
/s/ KPMG Peat Marwick LLP Philadelphia, Pennsylvania February 16, 1995
Notes to Condensed Consolidated Financial Statements
NOTE 1 - DEBT
1994 1993 ------ ----- ($000 omitted)
Revolving credit facility and term note payable, interest at prime and/or LIBOR plus 2.25% $44,100 $10,200 Notes payable, interest ranging from 1% to 2% below prime 6,975 9.75% mortgage note; payable monthly through 2002 3,543 3,568 Industrial Development Revenue Bonds, due in installments through 2002 2,550 2,890 Variable rate Industrial Development Revenue Bond mortgage due monthly through 2000 757 1,013 Term loan, interest at 1% above prime rate; payable monthly through 1998 729 867 Other 1,382 1,514 -------- -------- 60,036 20,052 Current debt obligations (2,154) (3,360) -------- -------- Long-term debt $57,882 $16,692 ======== ========
Aggregate maturities of long-term debt during future years are as follows: $2.2 million-1995; $.8 million--1996; $.8 million--1997; $51.6 million--1998; $.4 million--1999 and $4.2 million thereafter.
Interest paid in 1994, 1993 and 1992 was $4.9 million, $4.8 million, and $5.0 million, respectively, of which $2.7 million, $3.5 million and $4.1 million in 1994, 1993 and 1992, respectively, related to commercial real estate debt.
In connection with investments in certain unconsolidated subsidiaries and investee companies, the Company is contingently obligated for approximately $13.8 million in bank loan and other guarantees and $7.5 million for possible future investments.
(Continued)
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.
Dated: March 27, 1995 SAFEGUARD SCIENTIFICS, INC.
By: Warren V. Musser --------------------------- Warren V. Musser Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Dated: March 27, 1995 Warren V. Musser -------------------------------------- Warren V. Musser Chairman, President and Chief Executive Officer (Principal Executive Officer)
Dated: March 27, 1995 Gerald M. Wilk -------------------------------------- Gerald M. Wilk, Vice President-Finance (Principal Financial and Accounting Officer)
Dated: March 27, 1995 Vincent G. Bell -------------------------------------- Vincent G. Bell, Jr., Director
Dated: March 27, 1995 Robert A. Fox -------------------------------------- Robert A. Fox, Director
Dated: March 27, 1995 Delbert W. Johnson -------------------------------------- Delbert W. Johnson, Director
Dated: March 27, 1995 Peter Likins -------------------------------------- Peter Likins, Director
Dated: March 27, 1995 Russell E. Palmer -------------------------------------- Russell E. Palmer, Director
Dated: March 27, 1995 John W. Poduska Sr. -------------------------------------- John W. Poduska Sr., Director
Dated: March 27, 1995 Hubert J. P. Schoemaker -------------------------------------- Hubert J. P. Schoemaker, Director
Dated: March 27, 1995 Heinz Schimmelbusch -------------------------------------- Heinz Schimmelbusch, Director
Dated: March 27, 1995 Jean C. Tempel -------------------------------------- Jean C. Tempel, Director
EXHIBIT INDEX
The following is a list of exhibits required by Item 601 of Regulation S-K filed as part of this Report. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated in parentheses.
EXHIBIT NO. EXHIBIT ----------- -------
2.1 Asset Purchase Agreement among MEC Acquisition, Inc., CenterCore, Inc. and Maris Equipment Company dated September 15, 1993 (excluding schedules and exhibits) (9)(Exhibit 2.1)
2.2 Promissory Note dated September 22, 1993 from MEC Acquisition, Inc. to Maris Equipment Company (9)(Exhibit 2.2)
2.3 Asset Purchase Agreement between Texas Instruments Incorporated and Premier Solutions Ltd. dated as of September 30, 1994 (excluding schedules and exhibits) (13) (Exhibit 2.1)
2.4 Services Agreement between Texas Instruments Incorporated and Premier Solutions Ltd. dated as of September 30, 1994 (13) (Exhibit 2.2)
3.1 Articles of Incorporation of the Company, as amended (6)(Exhibit 3.1)
3.2 By-laws of the Company, as amended (6)(Exhibit 3.2)
4.2 Rights Agreement dated March 31, 1988 between Safeguard Scientifics, Inc. and Mellon Bank (East) N.A., as Rights Agent (3)(Exhibit 1)
4.3 Form of letter sent to shareholders regarding adoption of Shareholder Rights Plan (3)(Exhibit 2)
4.4 Form of certificate of Safeguard Scientifics, Inc. Common Stock, par value $.10 per share (5)(Exhibit 4.3)
4.5** 1979 Stock Option Plan (1)(Exhibit 10)
4.6** 1980 Stock Option Plan (1)(Exhibit 10)(5)(Exhibit 10.5)
4.7** 1990 Stock Option Plan (11) (Exhibit 4.7)
4.8** Stock Option Plan for Non-Employee Directors (11) (Exhibit 4.8)
4.9** Safeguard Scientifics, Inc. Amended and Restated Stock Savings Plan*
4.10** Safeguard Scientifics, Inc. Stock Savings Plan Trust Agreement (5)(Exhibit 4.2)
10.1** Safeguard Scientifics Money Purchase Pension Plan (6)(Exhibit 10.3)
10.2** First Amendment to Safeguard Scientifics Money Purchase Pension Plan (11) (Exhibit 10.2)
10.3** Second Amendment to Safeguard Scientifics Money Purchase Pension Plan*
10.4** Safeguard Scientifics Money Purchase Pension Plan Trust Agreement (6)(Exhibit 10.4)
10.5** Safeguard Management Incentive Compensation Plan (7)(Exhibit 10.3)
10.6** Safeguard Scientifics, Inc. Long Term Incentive Plan, as amended and restated effective June 15, 1994 *
10.7** Form of Promissory Notes dated December 22, 1994 given by certain executives in payment for restricted stock grants*
10.8** Form of Promissory Notes dated January 3, 1995 given by certain executives in payment for restricted stock grants*
10.9** Safeguard Scientifics, Inc. Deferred Compensation Plan (2)(Exhibit 10.12)
10.10** Amended and Restated Credit Agreement dated June 30, 1994 by and among Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc., and Midlantic Bank (excluding schedules and exhibits) (12) (Exhibit 10)
10.11** Amended and Restated Revolving Note dated June 30, 1994 made by Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc. (12) (Exhibit 10)
10.12 Term Note dated June 30, 1994 from Safeguard Scientifics, Inc. and Safeguard Scientifics (Delaware), Inc. (12) (Exhibit 10)
10.13 Second Amended and Restated Credit Agreement dated February 1, 1995 by and among Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc. and Midlantic Bank (excluding schedules and exhibits)*
10.14 Second Amended and Restated Revolving Loan Note dated February 1, 1995 made by Safeguard Scientifics, Inc., and Safeguard Scientifics (Delaware), Inc.*
10.15 Revolving Credit Financing and Security Agreement dated as of August 4, 1993 between CompuCom Systems, Inc. and NationsBank of Texas, N.A.(excluding schedules and exhibits) (11) (Exhibit 10.12)
10.16 $125,000,000 Master Revolving Promissory Note from CompuCom Systems, Inc. to NationsBank of Texas, N.A. dated as of August 4, 1993 (11) (Exhibit 10.13)
10.17 First Amendment to Financing and Security Agreement dated as of March 31, 1994 between CompuCom Systems, Inc. and NationsBank of Texas, N.A.*
10.18 Master Revolving Promissory Note dated March 31, 1994 made by CompuCom Systems, Inc.*
10.19** Letter agreement between Safeguard Scientifics, Inc. and Jean C. Tempel dated November 5, 1993 (11) (Exhibit 10.20)
10.20** Letter agreements among Continental Capital Partners, Charterhouse North America Securities, Inc., Valley Forge Capital Group Ltd., MIG Securities, Inc. and Safeguard Scientifics, Inc. dated September 6, 1991 (11) (Exhibit 10.21)
10.21** Memo of Understanding between Valley Forge Capital Group, Ltd. and Safeguard Scientifics, Inc. dated as of October 15, 1992 (11) (Exhibit 10.22)
10.22** Letter agreement dated August 13, 1991 between Valley Forge Capital Group, Ltd. and CenterCore, Inc. (11) (Exhibit 10.23)
10.23 Stock Purchase Agreement between CompuCom Systems, Inc. and Rosetta Stone Corporation dated January 5, 1994, regarding sale of common stock of PC Parts Express, Inc. (exhibits omitted) with attached $3,500,000 Promissory Note, Pledge and Security Agreement, and PC Parts Express, Inc. Common Stock Purchase Warrant (11) (Exhibit 10.24)
10.24 Asset Purchase Agreement among Rosetta Stone Corporation, Teknowlogy Corp. and CompuCom Acquisition Corporation, d/a/a Micro Solutions, dated January 5, 1994, regarding sale of MicroSolutions' Network Training Group division (exhibits omitted), with attached $1,000,000 Installment Promissory Note and Pledge and Security Agreement (11) (Exhibit 10.25)
10.25** Resignation Agreement, effective January 1, 1994, between Avery More and CompuCom Systems, Inc. (11) (Exhibit 10.26)
10.26** Promissory Note dated August 31, 1994 from Edward Anderson to CompuCom Systems, Inc.*
10.27** Pledge Agreement dated August 31, 1994 between Edward Anderson and CompuCom Systems, Inc.*
10.28** Promissory Note dated January 5, 1995 from James Dixon to CompuCom System, Inc.*
11 Computation of Per Share Earnings*
13 Pages to of Annual Report to Shareholders for year ended December 31, 1994*
21 List of Subsidiaries*
23 Consent of KPMG Peat Marwick, independent auditors*
27 Financial Data Schedule* -------------------------------
* Filed herewith.
** These exhibits relate to compensatory plans, contracts or arrangements in which directors and/or executive officers of the registrant may participate.
(1) Filed on March 30, 1981 as an exhibit to the Annual Report on Form 10-K (No. 1-5620) and incorporated herein by reference. (2) Filed on March 30, 1987 as an exhibit to Annual Report on Form 10-K (No. 1-5620) and incorporated herein by reference. (3) Filed on April 8, 1988 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference. (4) Filed on March 29, 1991 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (5) Filed on December 13, 1991 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference. (6) Filed on March 30, 1992 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (7) Filed on March 31, 1993 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (8) Filed on April 9, 1993 as an exhibit to Form 8 Amendment to Form 10- K (No. 1-5620) and incorporated herein by reference. (9) Filed on October 22, 1993 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference. (10) Filed on November 15, 1993 as an exhibit to Form 10-Q (No. 1-5620) and incorporated herein by reference. (11) Filed on March 30, 1994 as an exhibit to Form 10-K (No. 1-5620) and incorporated herein by reference. (12) Filed on August 15, 1994 as an exhibit to Form 10-Q (No. 1-5620) and incorporated herein by reference. (13) Filed on October 17, 1994 as an exhibit to Form 8-K (No. 1-5620) and incorporated herein by reference.