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INTRADO INC. 2003 ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS
INTRADO INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

COMMISSION FILE NUMBER: 000-29678

INTRADO INC.
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý    No o

        The aggregate market value of voting common stock held by non-affiliates of the Registrant on June 30, 2003 and February 25, 2004, based upon the closing sale price of the common stock as reported on the Nasdaq National Market on such dates, was approximately $227,707,000 and $309,615,000, respectively.

        As of February 25, 2004, the Registrant had 17,025,210 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the Registrant's definitive proxy statement, which will be issued to stockholders in conjunction with the 2004 Annual Meeting of Stockholders, are incorporated by reference in Part III, of this Annual Report on Form 10-K.

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 10-K and the information incorporated by reference contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In particular, we direct your attention to Item 1. Business, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We intend the forward-looking statements throughout this Annual Report on Form 10-K and the information incorporated by reference to be covered by the safe harbor provisions for forward-looking statements. All projections and statements regarding our expected financial position and operating results, our business strategy, our financing plans and the outcome of any contingencies are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as "may," "believe," "plan," "will," "anticipate," "estimate," "expect," "intend" and other words and phrases of similar meaning. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on information available as of the date of this Annual Report on Form 10-K and on numerous assumptions and developments that are not within our control. Although we believe these forward-looking statements are reasonable, we cannot assure you they will turn out to be correct. Actual results could be materially different from our expectations due to a variety of factors, including the following:

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Our reliance on large contracts from a limited number of significant telecommunications customers and their ability to pay for our services, especially in light of recent competitive pressures in the telecommunications industry;



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Our ability to integrate businesses and assets that we have acquired or may acquire;



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Whether our efforts to expand into European and other international markets will prove to be economically viable;



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Adverse trends in the telecommunications industry in general, including bankruptcy filings by our customers, such as MCI (formerly known as WorldCom, Inc.) and other factors that are beyond our control;



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Whether our investments in research and development and capitalized software will expand our service offerings and prove to be economically viable;



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Competition in service, price and technological innovation from entities with substantially greater resources than us;



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Constraints on our sales and marketing channels due to the fact that many of our customers compete with each other;



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Our ability to accurately predict and recoup the large amount of up-front expenditures necessary to serve new customers and possible delays in sales cycles;



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Our ability to expand our services beyond our traditional business and into the highly competitive data management industry, such as our proposed IntelliBase^SM National Repository Line Level Database and IntelliCast^SM Target Notification services;



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The unpredictable rate of adoption of wireless 9-1-1 services, including further delays in the Federal Communications Commission's mandated deployment of Phase I and Phase II wireless location services;



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The potential for liability claims, including product liability claims relating to our software;

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Technical difficulties and network downtime, including those caused by sabotage or unauthorized access to our systems;



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Changes in interest rates, including the LIBOR and prime rate and their potentially adverse effect on our liquidity;



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The possibility that we will not generate taxable income in an amount sufficient to allow us to utilize previously generated net operating loss carryforwards and/or research and development tax credits;



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Developments in telecommunications regulation and the unpredictable manner in which existing or new legislation and regulation may be applied to our business; and



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Developments in governance, accounting and financial regulation, including Section 404 of the Sarbanes-Oxley Act of 2002 and their unpredictable impact on general and administrative expenses.

This list is intended to identify some of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere in this report. These factors are not intended to represent a complete list of all risks and uncertainties inherent in our business and should be read in conjunction with the more detailed cautionary statements included in this Annual Report on Form 10-K under the caption Item 1. Business—Risk Factors, our other Securities and Exchange Commission filings and our press releases.

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INTRADO INC.

2003 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

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ITEM 1.    BUSINESS

Overview and History

        Now in our 25^th year, we are North America's leading provider of 9-1-1 infrastructure, systems and services, as well as innovative solutions for telecommunications providers and public safety organizations. We were founded and incorporated in July 1979 in the State of Colorado under the name Systems Concepts of Colorado, Inc. and reincorporated in September 1993 in the State of Delaware under the name SCC Communications Corp. In June of 1998, we completed an initial public offering and listed our common stock on the NASDAQ National Market. We acquired Lucent Public Safety Systems, or LPSS, in May 2001. In June 2001, we changed our name to Intrado Inc. Our corporate office is located at 1601 Dry Creek Drive, Longmont, Colorado and our telephone number is (720) 494-5800.

        We maintain a website with the address www.intrado.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this report. We make available, free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.

        We engineer and manage complex integrated data and telecommunications solutions and critical operations management. Our core business is the support of the nation's 9-1-1 emergency response infrastructure for wireline, wireless and voice over Internet protocol, or VoIP, networks. The data we manage enables a 9-1-1 call to be routed to the appropriate public safety answering point, or PSAP. We provide callback data and the caller's location. This critical information enables public safety organizations to quickly respond to calls for assistance. In addition, this data allows the telecommunications carriers to meet state and federal regulatory mandates. Since we launched our 9-1-1 data management services in 1994, our 9-1-1 data integrity infrastructure has provided virtually uninterrupted service to our telecommunications and public safety customers.

        Our customers include all major incumbent local exchange carriers, or ILECs, 41 competitive local exchange carriers, or CLECs, 38 wireless service providers, and a wide variety of state, local and federal government agencies. We directly manage more than 105 million wireline subscriber data records, with another 113 million records under customer management with Intrado-provided licensed software. We manage over 91 million wireless records and also provide 9-1-1 emergency calling services to VoIP providers.

        During 2003 we continued to strengthen and expand our 9-1-1 leadership position. In our wireline business, we renewed or extended long-term contracts with major ILEC customers and acquired new ILEC and CLEC customers. We also introduced and deployed our VoIP Emergency Calling Services offer, the first to provide carriers with a nationwide, accurate, reliable and cost-effective way to process VoIP calls for emergency assistance for subscribers. We continued to expand our wireless business as we assisted wireless service providers in their efforts to comply with Federal Communications Commission, or FCC, mandates addressing the mobility of the wireless caller. These mandates require carriers to provide Enhanced 9-1-1, or E9-1-1, service to the appropriate PSAP. The FCC defined the implementation of E9-1-1 technology in two phases:

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Phase I requires wireless service providers to route wireless calls to the PSAP assigned to handle that area. The wireless service provider is responsible for providing the callback number if it is available.



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Phase II requires wireless service providers to locate wireless 9-1-1 callers within more precise location parameters, route the call to the nearest PSAP and provide the PSAP with an accurate location of the mobile handset as well as the subscriber's callback number.

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        We provide a location-positioning platform to support both Phase I and Phase II deployments. Our internally developed technology includes a Mobile Positioning Center, or MPC, and a Gateway Mobile Location Center, or GMLC. The MPC and GMLC are essential components for the proper routing and processing of a wireless emergency call. During 2003, we successfully migrated approximately 99% of our customers from a third-party solution to the new Intrado platform. We anticipate the completion of this migration in early 2004 and have already seen an improvement in customer satisfaction through quicker response times and system availability. The platform is also used for our VoIP solutions and IntelliVector^SM Enhanced Emergency Services.

        The total number of wireless service provider cell sites for which we provide Phase I and Phase II services has grown at a cumulative annualized growth rate of greater than 200% during the past three years. In 2004, we will seek to continue to increase the number of sites with our current wireless service provider customer base and to add new wireless service provider customers as well.

        We continued to have success with new public safety and commercial products during 2003. IntelliCast^SM Target Notification service is now deployed in three of the top ten population centers in the United States. In addition, several new CLECs joined us to become input providers to our National Repository Line Level Database, or NRLLDB, bringing us to approximately 55% of the CLEC market for access lines. We also added two of the top five inter-exchange carriers, or IXCs, as NRLLDB subscribers.

        Other key activities during 2003 included the announcement of our NextGen Emergency Services Network initiative, which is focused on designing and delivering the next generation of emergency communications services. The NextGen Emergency Services Network is a key element of our strategy to protect and expand our existing 9-1-1 services business. We also commenced our global expansion plans with the formation of a European subsidiary, Intrado International Ltd. and the acquisition of bmd wireless AG in Switzerland.

        We continue to maintain ISO 9001 certification, which we first achieved in December 2001. This certification demonstrates our strong commitment to the quality and continuous improvement of our products, services and internal processes. Recognized worldwide, this certification verifies that we have an effective, documented quality management system that gives customers a basis for confidence in the quality of our services.

        We believe that our knowledge of public safety and telecommunications domains, our ability to engineer complex systems and our understanding of critical operations management—in conjunction with our long-term customer relationships—provide us with a strong foundation to continue to deliver traditional 9-1-1 services as well as to expand our portfolio of new public safety and commercial applications. We continue to assess opportunities to provide new services that protect and complement our existing business and to seek opportunities to extend our core competencies into new safety and commercial markets.

Recent Event

        On February 3, 2004, we entered into a Share Purchase Agreement to acquire bmd wireless AG, a Swiss corporation headquartered in Zug, Switzerland. bmd wireless provides core network messaging solutions, enabling cross network mobile and application messaging traffic for a wide range of mobile operators and service providers. Upon closing the acquisition on February 20, 2004, bmd wireless became a wholly-owned subsidiary of Intrado.

        Under the terms of this agreement, we acquired all of the outstanding common stock of bmd wireless in exchange for:

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Approximately $4.3 million of cash;

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700,002 shares of common stock; and



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An obligation to issue up to 200,000 additional shares of common stock, which we refer to as the "Earn-out Shares," during the first quarter of 2005, subject to bmd's achievement of specified revenue targets for the year ending December 31, 2004.

Under the earn-out provision, we will issue 0.02 Earn-out Shares for each US$1.00 of qualifying 2004 revenue up to a maximum of 200,000 Earn-out Shares. This consideration excludes a finder's fee, payable to bmd wireless' representative agent, equal to $200,000 of cash, 35,000 shares of common stock and up to 10,000 Earn-out Shares.

        bmd wireless will focus primarily on designing, building and delivering messaging platforms, tools and solutions for wireless service providers. bmd's product offerings include the following:

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Wireless Application Messaging Server, which enables global SMS access to applications and services;



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Personal Call Collector, which captures attempted or missed calls when a mobile user is out of coverage, not reachable or when no voice mail is left; and



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SMS Spam Filtering, which offers functionality to block unsolicited SMS messages from on-net or off-net sources.

Industry Background

Wireline

        9-1-1 service involves the routing of emergency calls to the appropriate PSAP responsible for dispatching police, fire and other emergency services. For wireline service, most jurisdictions in the United States provide E9-1-1 that gives the caller's street address and callback telephone number to the call handler at the PSAP. When a caller dials 9-1-1, the call is routed through the network and the 9-1-1 data server is queried. The 9-1-1 data servers associate the caller's telephone number with the caller's location and provide the identity of the appropriate primary and secondary PSAP.

        The data in the 9-1-1 database must be constantly updated to reflect both changes to telephone service and PSAP boundaries, such as the addition of a street or a change in the name of a street. If changes to the 9-1-1 database are not made accurately and in a timely manner, the response to a 9-1-1 call could be affected. The complicated and critical process of 9-1-1 service delivery requires coordination of data from multiple sources, review and processing of the data, resolution of data errors and conflicts and insertion of data into network and mission-critical data servers. Local exchange carriers are currently required to provide wireline 9-1-1 service.

Wireless

        The advent of wireless telecommunications created significant new challenges for 9-1-1 service delivery. Because a wireless caller's location is constantly changing, the location of the caller is not as easily identified as the fixed locations of traditional wireline calls. Recognizing the public safety need for improved wireless E9-1-1 services, the FCC issued a report and order in June 1996 mandating implementation of wireless E9-1-1 service in two phases. Phase I requires wireless service providers to provide the PSAP receiving the call with the 9-1-1 caller's telephone number and the location of the cell sector from which the call originated. Phase I allows the call to be routed to a PSAP that is near the caller and is assigned to handle that area. Since April 1998, wireless service providers have been required to comply with the Phase I mandate within six months of a valid PSAP request. Except in states that have passed specific cost-recovery legislation, or where carriers and public safety agencies have otherwise agreed, recovery of the carriers' costs is no longer a prerequisite to the carriers' obligation to provide Phase I services.

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        Phase II requires carriers to locate wireless 9-1-1 callers within more precise location parameters, as specified by the FCC. Under the FCC rules, wireless service providers were required to declare by October 2000 whether they would use technology in the wireless telephone handset or a network-based solution to locate wireless 9-1-1 callers. The FCC rules included a timeline for implementation that required Phase II service to be available to requesting PSAPs by October 1, 2001. However, on October 5, 2001, the FCC granted a waiver of its Phase II E9-1-1 rules to five of the six nationwide wireless service providers. These wireless service providers asserted that the unavailability of network components and other obstacles prevented them from complying with the October 1, 2001 deadline. The sixth national wireless provider, T-Mobile, also received a Phase II waiver one year earlier, in September 2000.

        The FCC approved, with certain modifications, the alternative deployment schedules proposed by Verizon Wireless, Sprint PCS and Nextel Communications, for their networks, and by AT&T Wireless Services and Cingular Wireless for the GSM, or Global System for Mobile communications, portion of their systems. The delayed Phase II deployment schedules vary by carrier. The six national providers serve more than 75% of U.S. mobile phone subscribers.

        The FCC's extensions only apply to initial Phase II milestones. Although all of the carriers are currently planning to meet the final December 31, 2005 deadline for deployment of Phase II services, the FCC issued fines in 2002 to several carriers that failed to meet required deployment schedules. The FCC imposed specific reporting requirements to ensure that wireless service providers follow through on providing Phase I and II services. Since February 2002, carriers have been required to file quarterly reports with the FCC. The FCC's Enforcement Bureau is responsible for monitoring carrier deployment schedules and then holding carriers to those schedules. The FCC has announced its intent to take action against companies that fail to meet their milestones.

        In addition to the FCC's mandate, wireless service providers are motivated to implement wireless E9-1-1 services because of increasing pressure from public safety agencies, a desire to improve emergency services and the fact that the technology required for Phase II service can also be used by wireless service providers to provide other value-added location services to their customers. These services include location-based traffic reporting, emergency roadside assistance, location-based dispatch services and other services based on the location of the caller. In June 2003, the Wireless Telecommunications Bureau provided further guidance to small Tier III carriers, regarding the reporting of wireless E9-1-1 deployment and implementation status. On July 26, 2002, the Commission adopted an Order staying certain E9-1-1 Phase II deployment deadlines for Tier II and Tier III carriers, with conditions. In the Non- Nationwide Carrier Order, Tier II carriers were defined as non-nationwide carriers that had over 500,000 subscribers as of year-end 2001 and Tier III carriers were defined as all other non-nationwide carriers. The Commission extended the E9-1-1 Phase II interim handset and network upgrade compliance deadlines by 13 months from the date of the Non-Nationwide Carrier Order for Tier III carriers.

Voice Over IP

        New technology developments continue to affect the 9-1-1 network. During 2003, the use of VoIP, a telecommunications technology enabling voice traffic to be carried over an Internet Protocol-based network, grew significantly. In a VoIP call, voice is broken into packets at the transmitting end and then reassembled at the receiving device. The location of the VoIP caller is not fixed, presenting a challenge related to the handling and routing of emergency calls. Regulators, industry trade groups, carriers and suppliers are working together to address this issue. VoIP-based services are projected to grow from $13 billion in 2002 to just under $197 billion by 2007 according to a recent Insight Research Study.

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Telephone Notification

        Telephone notification systems and services were designed to manage public safety data for outbound emergency communications. Public safety entities use telephone notification systems to initiate outbound calls to selected geographic areas in the event of potential disasters, such as floods, hazardous materials incidents, industrial accidents, localized weather events and potential public safety issues, such as a missing child or suspect at large. Recent national and world events have showcased the need for notification tools that can quickly reach and inform large numbers of people before, during and after an emergency. Opportunities for telephone notification continue to grow both in the public safety/Homeland Security arena as well as for more conventional applications in the enterprise market.

Commercial Database Solutions

        Commercial database solutions are designed, among other things, to address the issues that result from increased competition and number portability. In 2001, a task force formed by the Alliance for Telecommunications Industry Solutions, or ATIS, and the Order and Billing Forum, or OBF, sought solutions designed to address lost toll revenue issues faced by the telecommunications industry. The ATIS/OBF task force objective was to minimize unbillable revenue due to the inability to accurately identify service providers for specific telephone numbers. The task force issued a request for proposal to which we responded. Although the ATIS/OBF joint committees did not reach consensus on a single vendor solution, leading ILECs, CLECs, and virtually all IXCs present expressed strong support for our proposal. We went forward in developing the NRLLDB and launched the database in October 2002.

        In February 2003, the Florida Public Service Commission ruled that carriers operating in Florida must make billing name and address, or BNA, data available to requesting carriers in a timely manner and at a reasonable cost. Since this ruling, several states have opened similar dockets. NRLLDB can help carriers comply with the BNA data requirement.

        Moreover, carriers have become increasingly concerned about revenue assurance issues. As a result, carriers are creating departments and positions dedicated to identifying lost revenue opportunities. We believe that our commercial database services, including NRLLDB, will help these carriers identify previously unknown billing opportunities. On November 24, 2003, Wireless Number Portability went into effect, thereby adding to the toll, traffic and provisioning complexities wireline and wireless carriers experience in connection with number porting. Wireline and wireless carriers can use data housed in NRLLDB to help them resolve new service provisioning difficulties, known as "fallout," and identify telecommunications traffic.

Other Opportunities

        New technologies have increased the complexity of delivery of public safety services. The expansion of the Internet into homes and the widespread use of wireless Internet devices introduce multiple new points of connectivity. They also create the potential for enhanced public safety support. Telematics devices, automobile communication devices that are used for location-based services such as traffic reporting and emergency roadside assistance, are entering the market at a rapid pace. The Strategis Group, a Washington D.C. research firm, projects more than 11 million domestic telematics subscribers by 2004, generating revenues of $1.7 billion. In addition, telephony products and services based on Internet protocols are becoming common elements of telecommunications infrastructure.

        Internationally, the European Union's initiative to implement enhanced emergency services through a common emergency number, 1-1-2, is gaining momentum. In July 2003, the EU directive for making caller location information available to authorities handling emergencies became effective and in October 2003, the EU took steps to enforce the regulatory framework for its implementation by member states. In December 2003, the European Telecommunications Standards Institute, or ETSI, published a special report on requirements for emergency call handling and the recently formed

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European Emergency Number Association, or EENA, held the First European 1-1-2 Conference and Exhibition in Brussels, bringing together the emergency services community, citizen representatives and technology suppliers to discuss the present and future of 1-1-2 in Europe. At the conference we delivered a presentation, "Protecting Privacy or Protecting Citizens." In this presentation we reviewed rules and methodologies that can be employed to make life-saving information available during emergency situations, showing systems and potential architectures that provide critical data while protecting the citizen's personal information from unnecessary or inappropriate access.

Our Strategy

        Our objective is to expand our leadership position in emergency communications systems while pursuing new public safety and commercial opportunities that build on our current products and/or core competencies. Key elements of our strategy include:

        Maintain and extend our leadership position in the wireline 9-1-1 data management market.    Our systems currently manage more than 218 million Wireline subscriber data records out of an estimated 252 million total wireline telephone subscriber records in the United States. We are working to maintain and extend our market leadership in the Wireline 9-1-1 services market by adding new service and license customers, increasing the number of subscriber data records under management, enhancing our existing 9-1-1 services and supporting the evolving telecommunications infrastructure.

        We have 41 contracts to provide 9-1-1 clearinghouse services to CLECs. Under these contracts, we process updates to our CLEC customers' 9-1-1 databases, prepare the data to conform to the ILEC's network requirements and insert the data into the appropriate ILEC's 9-1-1 system. Our services allow CLECs to grow their subscriber bases while minimizing their investment in 9-1-1 data management technology infrastructure and personnel. CLECs receive the benefit of our 9-1-1 service delivery expertise and relationships with PSAPs and other agencies necessary to provide 9-1-1 services. We plan to build upon our position as a neutral, carrier-independent service provider by working cooperatively with newly emerging dial tone providers, including CLECs, fixed-position wireless carriers and cable television carriers, to increase sales.

        We have also expanded our CLEC service to support Internet Telephony and have announced key contracts with major Internet Telephony providers. We will continue to play a lead role in the evolving VoIP market and plan to offer more services to these and other VoIP carriers as the industry better defines the E9-1-1 solution for Internet Telephony.

        Retain and grow our existing wireless 9-1-1-customer base.    We have contracts to provide Phase I wireless 9-1-1 services to 38 wireless customers. There is a significant opportunity to increase our Phase I wireless 9-1-1 penetration by implementing service to a larger portion of the subscribers we have under contract and signing contracts with more wireless service providers. We have also successfully rolled out Phase II wireless services, beginning with the nation's first Phase II deployments in late 2001. The significant growth in the number of wireless telephone users, the FCC mandates and the increased demand for enhanced wireless service offerings present opportunities for growth in our wireless 9-1-1 services.

        Deliver the Next Generation of Emergency Services.    As the leader in 9-1-1 infrastructure, systems and services, Intrado is well positioned to deliver the next generation of emergency communications services. Intrado's NextGen initiatives will encompass secure Internet Protocol (IP) networking and allow the industry to move away from relying solely on outdated analog technologies. We are designing and building the next generation of 9-1-1 network infrastructure, in which we plan to incorporate the latest technologies such as IP, Internet Telephony and message switching. We intend to use our expertise in providing highly accurate 9-1-1 data management services over the past two decades to ensure that the same high standards are applied to future emergency management solutions.

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        Our current VoIP solution has already been adopted by leading service providers and our strong relationships with an extensive customer base of traditional wireline and wireless carriers provide us with a solid foundation for the introduction and acceptance of the NextGen Emergency Services Network. According to the Monitor Group, U.S.-based telecommunications companies are estimated to have generated $2.2 billion of subscriber surcharges for 9-1-1 services in 2003; we believe that our NextGen initiatives have the potential to garner a larger portion of the market for 9-1-1 services and related enhancements in future years.

        Extend our position in the broader public safety market.    Telecommunications carriers, as well as state and local governmental entities, all seek to apply emerging technologies in response to competitive pressures and regulatory mandates. By using our experience and economies of scale obtained in managing the 9-1-1 infrastructure for multiple carriers, we are well positioned to continue to develop and offer flexible, scalable solutions that allow carriers to cost-effectively support new technological developments and regulatory mandates.

        Leverage core competencies and relationships with existing service providers into new data services markets.    By leveraging our core competency of managing dynamic subscriber location information and routing traffic within a telephony network, we are well positioned to expand into the growing data services market. The rapid introduction of Internet and wireless devices presents public safety challenges that are not addressed today. We believe we can leverage our wireline and wireless call routing, large volume transaction processing and mission critical networks to provide solutions for these emerging technologies.

        Continue our expansion into new markets.    According to ATIS, complications in data management of telephone records for billing purposes result in revenue losses estimated in excess of one billion dollars annually for carriers. This estimate continues to grow substantially every year. Based on our long-term track record of managing large, volatile databases for telecommunications customers, we believe that our NRLLDB services deliver a useful solution to the industry.

        Our NRLLDB will contain line, switch and company-level information specific to telephone numbers in the North American Dialing Plan. We use this capability to address billing, wireline and wireless LNP and customer care issues. We expect to roll out new services that extend the capabilities and uses of NRLLDB. These extensions will continue to aid the telecommunications market's back-office billing and provisioning departments. These new services are designed to provide telecommunications companies with the ability to bill and collect toll calls and inter-carrier transactions and to manage subscriber churn. In addition, Intrado will focus on the broader opportunities for telephone notification services that exist in the public safety and enterprise markets.

        Extend Our Emergency Communications Leadership Beyond North America.    We continue to gain visibility in the European emergency communications and notification market. We are actively involved with ETSI in defining requirements for E1-1-2 deployment and with EENA, in advancing the development and implementation of 1-1-2. We are also engaged in discussions with key European carriers, government organizations and deployment partner prospects.

        Expand our Focus on Government Opportunities.    In 2003, we launched a new initiative to extend our position in the federal, state and local government markets with the establishment of the Government Markets Group. This group acts as a cross-business-unit marketing and sales resource in analyzing potential government market opportunities and developing and executing cohesive product portfolio plans, promotional programs and distribution strategies designed for maximum impact in this market. The group's activities include the direct sales of IntelliCast^SM, advanced wireless applications and portions of our wireline product portfolio.

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Intrado Products and Services

        Intrado provides a wide range of products and services for the telecommunications, public safety and commercial markets. Our key products are listed below.

Wireline Offerings

IntelliBase^SM Data Management Services and Systems

        There are two models for providing our wireline 9-1-1 services: a service model and a license model. In the service model, we house and maintain the customer's data. The customer outsources virtually all of its 9-1-1 data management operations, including system activation, routine data administration, event transaction processing and performance management. Our services are secure and reliable and easily interface with an individual carrier's proprietary or open systems.

        In the second model, we provide a licensed software application that allows the carriers to manage the data on their own equipment, at their own facilities, with their own personnel.

9-1-1 Data Management Services—Outsourced Model

Customers: ILECs, CLECs, Independent Operating Companies (IOCs), State of Texas, VoIP Carriers

        Data Management Services ensure that hundreds of millions of complex records are current, accurate and available on demand. These services encompass the processes that enable a 9-1-1 call to be routed to the appropriate PSAP along with accurate and timely information about the caller's identification, callback number and location. We receive daily service order updates from our telecommunications carrier customers, which reflect changes to subscriber data that can affect 9-1-1 call processing. We also receive updates to boundary and routing data needed to route 9-1-1 calls to the appropriate PSAP. We screen this data for accuracy and analyze and resolve data discrepancies. Some discrepancies are referred back to the customer for resolution. Screened data is inserted into the 9-1-1 databases. When a 9-1-1 call occurs, it is routed to the 9-1-1 voice switch, which queries our databases. The call is then routed to the appropriate PSAP and the database simultaneously sends the caller's location and call back number with the call. The delivered data enables PSAPs to dispatch personnel and equipment to the emergency.

        Our CLEC data management services provide a single point of contact to process and format 9-1-1 data for CLECs and independent telephone companies. These entities may be located in multiple communities that have diverse requirements for delivery of 9-1-1 information. We have the processes and systems in place to deliver the data in communities throughout the United States. CLECs and independent telephone companies electronically transmit subscriber information to us. We then reformat the data to comply with the destination community's local standards, test for detectable errors and deliver the data to the 9-1-1 data systems serving that community. The receiving data systems may be operated by us or by a carrier that does not use our services or products.

        The individual components of our Data Management Services include the following:

        Systems Preparation and Administration.    Collect, organize, review and analyze the data necessary to prepare our systems, including collecting information on PSAP jurisdictional boundaries, performing a full inventory of addresses located in an area and loading the subscriber information.

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        Routine Data Administration.    Receive and process daily service order updates from telecommunications carriers and boundary updates from PSAPs to maintain current data in the 9-1-1 databases. The information received is verified and then distributed throughout our network of geographically dispersed servers.

        Event Transaction Processing.    Manage requests for information and routing for 9-1-1 calls.

        Performance Management.    Provide performance metrics on service operations including response time, systems availability, data accuracy and error resolution intervals.

        Mapping Services.    Document, review and analyze call routing boundaries and specific address information for optimal management of 9-1-1 call records. We also assist in system preparation and quality control programs to ensure that geographical information is current.

Enhancements to 9-1-1 Data Management Services:

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9-1-1Net®.    Web-based tool for maintaining the Master Street Address Guide, or MSAG, and Automated Location Identification, or ALI, databases. Using 9-1-1Net®, users can view live address routing rules, send address updates, review inbound call load, error statistics and ALI discrepancy reports and receive product updates.



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PS/ALI.    Allows PBX system managers to create and transmit appropriate data records that identify a caller's precise extension location within a facility.



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Address Verification Manager.    Web-based application linking Intrado to a local exchange carrier. Address Verification Manager facilitates automated synchronization between the Street Address Guide, or SAG, and MSAG databases and provides a consistent method for resolving address discrepancies.



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e-Bonding.    Provides full end-to-end electronic confirmation of each E9-1-1 Transaction. e-Bonding reports help customers confirm records processed by carriers even when Intrado is not the designated ALI database manager. Reports include Daily Errors Corrected Confirmation, Referred Errors and Outstanding Errors.



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Advanced Error Correction.    Identifies, investigates and resolves specific records that error at the E9-1-1 Service Provider.



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VoIP Services.    Enables emergency calls over VoIP network by providing VoIP call interface to the Public Switched Telephone Network and call routing to the appropriate PSAP.

9-1-1 Data Management Systems—Licensed Model

Customers: ILECs, PSAPs

        Data Management Systems include both hardware and software offerings. Our software offerings within Data Management Systems include DBMS and ALISA. DBMS is a tool for processing service orders, maintaining MSAG records and validating service orders. ALISA is a database that uses automated number identification to recognize the number of the person calling and associate this number with an address and emergency service number, or ESN, in the database. The ESN tells the PSAP the corresponding police, fire, or emergency medical dispatcher associated with the telephone number and address.

        Add-on Offerings include:    9-1-1 Information Manager and Telco Map Server.

        9-1-1 Information Manager.    Software tool for querying the MSAG and telephone number databases used to help maintain the records within these databases.

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        Telco Map Server.    Tool that geo-codes service orders, maintains graphic MSAG boundaries, validates service order addresses, and updates ALI nodes with telephone number and location coordinates and location-ESN data.

Professional Services

Customers: CLECs and IOCs

        Professional services enable customers to improve their operations. Key offerings include 9-1-1 Reconciliation, 9-1-1 Diagnostic Assessment, 9-1-1 Service Agreement Review, 9-1-1 Surcharge Review and 9-1-1 Training.

        9-1-1 Reconciliation.    Ensures data integrity between our transaction services system database and the E9-1-1 database provider's database.

        9-1-1 Diagnostic Assessment.    Customized assessment conducted by one of our senior 9-1-1 subject matter experts to evaluate efficiency of existing 9-1-1 processes.

        9-1-1 Service Agreement Review.    Review of customer's state-level service agreements, ILEC inter-connection agreements and other agreements with PSAPs and other public safety agencies.

        9-1-1 Surcharge Review.    Review of customer's billing, collection, and remittance methods and procedures.

        9-1-1 Training.    Customized training on a variety of 9-1-1-related topics.

Palladium® Call Handling Solutions

Customers: PSAPs

        Palladium® Call Handling solutions accommodate both small and mid-size customers with telephone subscriber counts ranging from 2 million to 10 million telephone numbers. A complete line of 9-1-1 PSAP customer premise equipment is available offering controllers, printers, and fully integrated TDD, or telecommunications devices for the deaf, functionality at every call handling position. This call handling equipment helps increase the speed of 9-1-1 call delivery, increases the information available to the call taker through the switching network and offers computer control of telephony functions.

Wireless Offerings

IntelliVector® Services

        We are the leading provider of outsourced emergency response services and solutions for wireless service providers. We provide a range of products and services, including outsourced transaction management, system integration and a host of educational and professional services, all centered on our scalable and redundant software platforms.

        IntelliVector wireless network transaction services and systems route information quickly and accurately, assuring that callers receive rapid and appropriate responses to their calls. These services provide a wide range of applications, including support of Phase I and Phase II E9-1-1 deployments, enhanced emergency services and wireless data services. We offer both service and licensed models. In the service model, we manage the entire E9-1-1 call delivery to the local exchange carrier infrastructure, called the selective router, which in turn delivers the calls to the PSAPs. We manage all of the wireless PSAP boundary data and provisioning of all cell site information for our service customers. In the licensed model, we deliver our location-positioning platform to our customers and provide professional services to implement train and engineer the in-house solution. We can also

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provide on-going remote provisioning and PSAP boundary data access for our licensed customers. In either model, our wireless routing data is maintained with the highest possible accuracy and is utilized in the provision of emergency response services throughout North America.

Enhanced 9-1-1 Services

Customers: Wireless service providers

        We provide wireless service providers with 9-1-1 services similar to those provided to wireline customers. These services enable the wireless service provider to comply with the FCC's Phase I and Phase II mandates. After a wireless service provider receives an activation request from a PSAP, our program managers develop a plan with the wireless service provider to activate the service they are requesting. This plan includes development of ILEC network interconnections for both data and voice specific to the local wireless network configuration and interface requirements. The program managers develop graphic coverage area maps that are superimposed on current maps of public safety agency boundaries. Routing recommendations can then be made and coordinated with the appropriate PSAP. As a result, 9-1-1 calls are routed to the appropriate PSAP with the callback number and cell location of the caller. Our Phase I and Phase II services provide an end-to-end wireless transaction solution from the MPC to the PSAP customer premise equipment and from the PSAP request for service to the completion of service implementation and beyond. Wireless 9-1-1 offerings include: IntelliVector® Wireless Gateway, IntelliVector Coordinate Routing Database, IntelliVector Position Determination Entity, IntelliVector Mobile Positioning Center, IntelliVector Gateway Mobile Location Center and IntelliVector Standalone ALI.

        IntelliVector Wireless Gateway (IWG).    Network and services solution for integrating and maintaining connectivity to national and regional ALI systems. IWG has the flexibility to handle the real-time ALI exchange interfaces, messaging requirements, and data formats required by ILECs and PSAPs while using standards-based interfaces.

        IntelliVector Coordinate Routing Database.    Provides wireless service providers who already own an MPC with MPC provisioning, data collection, mapping services, call routing facilitation, Emergency Services Messaging Entity (ESME) and Emergency Services Network Entity (ESNE) provisioning, as well as dedicated program management to be handled by experienced professionals who understand 9-1-1 infrastructure.

        IntelliVector Position Determination Entity (PDE).    Offers wireless service providers access to a full-service hosted hardware and software application for their Phase II CDMA deployments. Our hosted PDE service provides the ability to locate the latitude and longitude of the wireless caller with remarkable precision without the need for expensive additions or changes to the wireless service provider's network. Hosted PDE service provides access to a centralized PDE server as well as the necessary application software and engineering expertise for a complete PDE solution.

        IntelliVector Mobile Positioning Center (MPC).    Acts as the point of interface to the wireless network for the location network. The MPC serves as the entity that retrieves, forwards, stores and controls position data within the location network.

        IntelliVector Gateway Mobile Location Center.    Routes 9-1-1 calls and provides call-back number and caller location information to the PSAP, as required by the FCC mandate.

        IntelliVector Standalone ALI.    Connects PSAPs that utilize on-site ALI databases with IntelliVector Wireless Gateway Services, enabling PSAPs to receive caller location information when wireless 9-1-1 calls are initiated.

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Professional Services

Customers: Wireless service providers

        Our wireless professional services provide customers with the opportunity to meet their unique E9-1-1 project management requirements as well as their need to allocate resources effectively.

        IntelliVector® E9-1-1 Implementation Services.    Provides assessment of existing capabilities with the technical and operational requirements for successful deployment and management of E9-1-1.

        IntelliVector E9-1-1 Infrastructure Services.    Provides drive testing, translations and mapping information.

        IntelliVector Cost Recovery Services.    Provides expertise in customized cost recovery and billing services.

        IntelliVector E9-1-1 Analytics.    Presents performance indicators in areas such as uncertainty and sector call counts that provide insight to E9-1-1 system efficiency and integrity.

        IntelliVector E9-1-1 Data Services.    Provides accurate cell site data.

Customers: Government

        Our government professional services provide customers with the opportunity to meet their unique E9-1-1 project management requirements.

        IntelliVector E9-1-1 Consulting Services.    Provides states, counties and municipalities with complete technical and operational readiness assessments, facility reviews, personnel training and other services.

Integration Lab Services

Customers: Wireless service providers

        IntelliVector Integration Lab Services.    Allows wireless service providers and vendors to perform regression testing, verification testing and location testing of new hardware, software and applications and ensure efficient optimization and operation of all technologies.

Enhanced Emergency Services

Customers: Telematics Service Providers, Automotive Manufacturers, Call Centers

        IntelliVector Enhanced Emergency Services (EES).    Allows commercial fleet operators, Telematics Service Providers and roadside assistance call centers to receive emergency verbal or text messages from their subscribers. IntelliVector EES delivers vital information to call centers so that calls are quickly and correctly routed to the appropriate PSAP call center, the first time. After the PSAP dispatches the emergency first responders, IntelliVector EES is able to deliver critical, driver-approved medical and health care provider information to the emergency medical service vehicle.

Location Services

Customers: Wireless service providers

        IntelliVector Location Based Services (LBS).    Supports commercial LBS arena with the development of a MPC and GMLC solution for both the CDMA and GSM markets.

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IntelliCast^SM Offerings

IntelliCast Telephone Notification/Call List Services

        The concept of public safety officials and police and fire departments using the public telephone system to notify citizens of crisis situations has revolutionized emergency communications services. Our IntelliCast^SM Target Notification and Call List services provide the fastest, most efficient means of notifying the public and specialized groups during a crisis. Call events can be launched on a geographical basis or through the use of dedicated lists of telephone numbers. At the onset of an incident, IntelliCast^SM notification services can be used to provide citizens and emergency personnel with critical information and ongoing updates until the situation is resolved and a final all-clear notice is delivered. Our notification system and services lead the industry in high-volume voice notification. We are constantly updating our technology to better serve the needs of public safety. During 2003, we began exploring broader opportunities for expansion into notification services in the public safety and enterprise markets.

Target Notification

Customers: Government (Federal/State/Local) and Enterprises

        IntelliCast^SM Target Notification.    Emergency telephone notification tool used by local officials to rapidly identify, notify and instruct individuals and first responders in crisis situations. Target Notification is a fully redundant, hosted service, combining a high-capacity calling platform with in-house expertise in database management. A web-based application, it can be accessed via the Internet or any telephone.

Call List

Customers: Government (Federal/State/Local) and Public and Private Enterprises

        IntelliCast Call List.    Telephone-based communications tool for reliably distributing information to public safety officials, first responders and others who must rapidly mobilize in response to a crisis. Call list services are based on telephone number data supplied by the customer. The list typically contains the name, title and telephone number of specific individuals to be contacted. Call lists are built and maintained via the Internet. Call lists may contain multiple wireline and wireless telephone numbers for each individual.

Commercial Database Solutions

IntelliBase NRLLDB

Customers: IXCs, ILECs, CLECs and IOCs

        The Commercial Database's IntelliBase^SM services are based on our NRLLDB platform. NRLLDB will contain line-, switch- and company-level information for working telephone numbers in the North American Dialing Plan. We use this capability to address billing, wireline and wireless number portability and customer care issues.

        First introduced in 2002, NRLLDB addresses the industry's need for a centralized, highly reliable database containing the transactional and consumer data needed to resolve ownership issues. Prior to federal deregulation of the telecommunications industry, it was possible to know which local service provider owned a ten-digit telephone number, simply by examining the first six digits and comparing these to the national Numbering Plan. However, as local competition grew, this method for tracing ownership and number assignment became obsolete. Today, no industry database houses the level of information contained in NRLLDB. We believe that the NRLLDB service will meet the information and billing support needs of service providers across the industry.

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        NRLLDB Services.    NRLLDB offers two models of participation. Input providers, ILECs and CLECs, can input their back-office data into NRLLDB and benefit from shared revenue and NRLLDB's data warehousing capabilities. Carriers that choose to subscribe to NRLLDB can access NRLLDB data to resolve issues around unbillable revenue, number portability and provisioning.

        Billing Name and Address Services.    In 2003, additional data capabilities were added to the NRLLDB platform to help subscribers with the problem of not being able to identify a telephone number's billing address for direct billing. IXCs need to direct bill end-users for calls that cannot be billed through the CLEC, such as calls made using a 10-10-XXX number. BNA Clearing and BNA Direct are two models of participation, carriers can input data or subscribe, similar to NRLLDB.

Service and Product Pricing

        For revenue derived primarily from monthly data management and maintenance services, we typically enter into long-term contracts with our customers, ranging from two to ten years. Within the terms of these contracts, pricing is negotiated based on a variety of factors, including current and expected market conditions, scope of work and value of services provided.

        For revenue derived from system, new product and professional services sales, including sales of software enhancements, pricing is primarily based on a competitive proposal and acceptance process that takes into account a variety of factors including our costs to acquire, develop, or produce the related system or software enhancement, recovery of overhead, profit and the relative value to the customer.

Seasonality

        The timing of our customers' internal capital budgeting processes may occasionally have an impact on our ability to sell new software products and service offerings. As a result, our business and financial results may be affected. Although we do not consider our business to be highly seasonal, we generally experience higher revenue, especially in the area of system and software sales and enhancements, in the second half of the year.

Customers

        We provide our products, services and systems to a range of customers, including IXCs, ILECs, CLECs, VoIP carriers, wireless service providers, and federal, state and local government agencies. Although we license our software to ILECs and provide 9-1-1 data management services indirectly to over 750 independent telephone companies, we are primarily dependant upon large contracts from a limited number of significant customers. In 2003, we received approximately 55% of our revenue from four customers. See "Risk Factors." Although we intend to expand our customers to include potential purchasers of our call notification services and commercial database products such as NRLLDB, there is no assurance that we will succeed.

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        Historically, we have entered into contracts with carriers and their affiliates to provide services to some or all of the carrier's operating entities and we have contracts that govern the licensing of our proprietary software. We currently have three revenue generating segments: Wireless, Wireline and New Markets. Following is a partial list of carriers and government entities using our services or products within these segments. We believe this list is representative of our overall customer base.

Sales and Marketing

        Our marketing efforts target telecommunications carriers, government agencies and PSAPs in each geographical market through advertising in industry and government publications, participation in trade shows, presentations at key events, direct sales and marketing campaigns and other initiatives. In addition, our employees serve as the chairpersons and members of key standards committees related to emergency communications services and telecommunications technology and operations. Although our sales strategy relies primarily on our direct channels of distribution, we also have an Alliance Program to jointly market our products and services with companies who sell complementary products and/or address our target markets. Our account teams work directly with existing and potential customers in a consultative, problem-solving sales process, to determine and fulfill their needs with appropriate offerings. Sales cycles range from one month to three years. Our indirect channel program team provides distribution partners with a support program framework including channel sales representative training, marketing collateral, product and process support and incentive campaigns.

Research and Development

        We direct our research and development efforts toward providing highly scalable, fault tolerant applications to the public safety, telecommunications and government markets. Development efforts in process are focused on integrating Internet technology, spatial data mapping systems, advanced switching and transport elements capable of interfacing with existing networks and enabling the more efficient E9-1-1 OSS processes that improve data quality. Our research and development expenses totaled $2.3 million, $2.8 million and $6.4 million for the years ended December 31, 2003, 2002 and 2001, respectively.

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Competition

        The market for wireline and wireless 9-1-1 solutions continues to be competitive. We believe that the principal competitive factors affecting the market for 9-1-1 solutions include:

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Effectiveness of existing infrastructure



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Reliability and manageability



•

Technical features



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Wireless support



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Performance



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Ease of technical migration




•

Ease of use



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Price



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Scope of product offerings



•

Customer service and support



•

Scalability



•

Useful life of new technology

        Although we believe that our solutions compete favorably with respect to these attributes, we may not be able to maintain our competitive position against competitors, especially if companies with significantly greater financial, marketing, service support, technical and other competitive resources enter the market.

        In the 9-1-1 solutions market, our principal competitors fall generally within one of four categories:

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Internal development departments of major carriers or consulting firms that support such departments;



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Companies that offer applications featuring portions of our comprehensive set of E9-1-1 solutions;



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Larger companies that are either in the process of entering our market or have the potential to develop comparable products and services; and



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Companies that attempt to integrate product components from a number of providers into a targeted customer solution.

        Potential customers sometimes rely on their own internal development teams to formulate 9-1-1 related services or retain consultants to undertake such a project. We believe that our 9-1-1 data management solutions compete favorably with internally developed systems, which may be expensive to develop and maintain, may not provide a comprehensive, reliable approach to 9-1-1 services and may not provide the flexibility to adapt readily to regulatory, technological and market changes.

        In addition, a number of companies currently market or have under development software products and services to provide 9-1-1 administration. In the wireless market we compete with smaller companies, including TeleCommunications Systems and OpenWave, for the provision of 9-1-1 data management services to wireless carriers. In the CLEC market we compete with smaller companies for CLEC 9-1-1 services, including HBF Group.

        Although we expect more significant competition to emerge, we believe that, to date, no one offers products or services that are as robust in features or as comprehensive in scope as our products and services. While it is likely that these companies may develop products that are competitive with our service offerings, we intend to expand our capabilities by dedicating resources to product development. Nonetheless, we expect additional competition from established competitors, emerging companies and larger entities that decide to move into this market space. Mergers or consolidations among these competitors or acquisitions of these companies by larger competitors would make them more formidable. Our current and potential competitors may develop products and services that may be more effective than our 9-1-1 data management solutions, rendering our technologies and offerings less competitive.

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        Finally, a number of competitors have successfully marketed and sold various products and services, such as billing software and advanced telecommunications equipment, to our customers and potential customers. In addition, vendors of telecommunications software and hardware may enhance their products to include functionality that is currently provided by our solutions. The widespread inclusion of the functionality of our service offerings as standard features of other telecommunications software or hardware could render our services less competitive and unmarketable, particularly if the functionality were comparable to that of our services. Furthermore, even if the 9-1-1 functionality provided by telecommunications software or networking hardware is more limited than that of our services, a significant number of customers may elect to accept more limited functionality in lieu of purchasing additional products or services. Larger competitors have longer operating histories, greater name recognition, wider access to the market and significantly greater financial, technical and marketing resources. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements, or to devote more resources to the promotion and sale of their products and services. If larger companies enter our market, we believe that they are likely to face significant uncertainties in developing and providing a range of products and services to comprehensively address 9-1-1 requirements. However, if these companies were to introduce products or services that effectively compete with our service offerings, they may be in a position to substantially reduce the price of their 9-1-1 products and services or to bundle such products and services with their other product and service offerings.

        In the commercial database market, competition consists of a carrier's current in-house procedures and commercial database providers. When examining a carrier's current way of handling line-level operations, one challenge to NRLLDB is a carrier's reluctance to change. With a market that has had tremendous downsizing, many carriers choose to keep with standard practice rather than introduce new processes or enter new relationships. Carriers that are burdened with operational issues are reluctant to spend time and money to introduce new practices, which can be perceived as overly burdensome. Therefore, our challenge is to recognize the strain these carriers face and to help them see that our commercial database services can ease their burdens. We also assist carriers with the integration of NRLLDB into their business. A carrier can start slowly with small queries and apply the data to small areas of their business. This practice often allows the carrier to see where NRLLDB can help them save time, money and increase operational efficiencies.

        The second category of competition includes other commercial database providers. Although we do not believe that other back-office solutions are equivalent to NRLLDB, other databases, such as the Line Information Database, National Porting Administration Center (NPAC) and national databases, do contain data specific to central office codes or pooling blocks. Their advantage is that carriers already have an established relationship with many of these database providers. However, these databases are specific to resolving "real-time" network routing and do not perform the same functions as NRLLDB. Carriers that use these industry databases can still benefit from NRLLDB because only NRLLDB houses exception and historical data. NRLLDB contains information on resale and unbundled network element carriers, in addition to facility-based CLECs and data on ported and unported telephone numbers. NRLLDB can provide carriers with data beyond that of assignment or network level. Our challenge is to clarify for carriers the advantages of NRLLDB over competitive databases and understanding why a carrier uses a given database.

        In the notification market, our competitors include Dialogic, Sigma and First Call. There are two principal applications for notification services—emergency warning and workforce mobilization. The IntelliCast^SM system is primarily designed for emergency warning applications, which require high-volume, high-availability capabilities for the mass notification of the general public within a dynamically defined target geographic area. Most of our competitors' systems have been designed for workforce mobilization applications, where a pre-defined list of individuals is notified in the event of an incident requiring their attention or attendance. IntelliCast^SM and competing products can individually

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support both applications to some degree; however, the difference in application focus impacts features, system architecture and the resulting cost structure. Where prospective purchasers require both applications, competitors position their systems on the merits of the workforce mobilization capabilities and as a lower cost alternative for emergency warning applications. Where prospective customers require mass notification capabilities, competitors frequently position their offerings as a lower cost but sufficiently effective alternative in an attempt to offset IntelliCast's premium capabilities.

        Emergency Telephone Notification, or ETN, is used to warn the public in times of crisis. As such, an effective ETN system must provide a high calling capacity, a high level of data accuracy and geographic precision, be easy to use, be fully redundant, and offer round-the-clock support. IntelliCast^SM Target Notification was designed specifically to meet these critical public safety requirements.

        Conversely, most of our competitors' ETN systems are primarily designed for non-emergency notification applications, such as workforce mobilization, with ETN comprising only a small fraction of their overall market. Because they are designed for non-emergency notifications, they do not need to achieve higher levels of reliability required for effective public safety, and as a result are less expensive than Intrado's offering. To minimize failure in emergency situations requires a more robust, and therefore costly, system architecture. Obviously, the ramifications of failure for a non-public safety notification system are far less severe. The result is that the competitors appear to offer the same thing for less than IntelliCast ETN costs, when in fact their product does not have the high capabilities for effectively warning the public of an emergency.

        For the foregoing reasons, we may not be able to compete successfully against our current and future competitors. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which would materially and adversely affect our business, financial condition and results of operations.

Intellectual Property Rights

        We have a limited exclusive license to twelve issued patents and eight patents pending. We currently have eleven patent applications pending at the U.S. Patent and Trademark Office.

        We are the owner of the following registered trademarks and service marks in the United States: 9-1-1Net®; 911.net®; 9-1-1 Extended Architecture®; 9-1-1 National Reference Center®; 9-1-1XA®; 9-1-1NRC®; EWE®; Emergency Warning and Evacuation®; 9-1-1Connect®; 911plus®; Palladium®; Critical information for critical situations®; LNP2000®; RealWorld 9-1-1® (stylized); Intrado®; Intrado® (stylized); Intrado University® (stylized); Informed Response®; "When it counts. Where it counts. We make connections."®; Triangle beacon (design)®; TelConnect®; SCC®; SCC® (stylized); Helping you respond at the speed of life®; and IntelliVector®. We are the owner, and are seeking federal registration in the United States, of the following marks: AlertUS; Loc-ALI™; IntelliCast^SM; IntelliBase^SM; IntelliBase^SM (stylized); IntelliVector^SM; IntelliVector^SM (stylized); Powered by Intrado^SM (stylized); and V9-1-1^SM. We are the owner under common-law in the United States of the following marks: Intelligent PSAP Solution™; E9-1-1 Gateway™; Telco-Map Server™; Total digital PSAP™; Idata™; ASKII™; ASK™; Database Management System™; PSMAP™; and ALISA™.

        We are the owner of the following registered trademarks in Europe: Intrado®; Intrado® (stylized); IntelliCast®; IntelliBase®; IntelliVector®; and Reverse112®. We are seeking registration in Europe for the following trademarks: Reverse 999^SM and Intrado Informed Response^SM (stylized). We are the owner of these registered marks in Chile: Intrado®, Intrado® (stylized), and IntelliVector®. We are seeking registration in Chile for the following trademarks: Informed Response; IntelliCast^SM; and IntelliBase^SM.

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Employees

        As of February 25, 2004, we employed 716 full-time employees in 16 states and three countries. No employees are covered by any collective bargaining agreements. We believe that our relationships with our employees are good.

Facilities

        Our corporate headquarters and principal administrative, sales and marketing, research and development and support facilities are located in:

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Longmont, Colorado, where we occupy 275,000 square feet of office space under a lease expiring December 2009. As of December 31, 2003, the annual base rent for this facility was approximately $2.8 million.



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Lisle, Illinois, where we occupy 29,000 square feet of office and warehouse space under a lease that expires August 2007. As of December 31, 2003, the annual base rent for this facility was approximately $580,000.



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Austin, Texas, where we occupy approximately 2,100 square feet of office space on a month-to month basis. As of December 31, 2003, the annual base rent for this facility was approximately $40,000.



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Washington, DC, where we occupy 160 square feet of office space under a lease that expires December 31, 2004. The annual base rent for this facility is approximately $11,000.



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Leatherhead, Surrey, United Kingdom, where we occupy one suite on a month-to-month basis. The annual base rent for this facility is approximately $2,000.



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Zug, Switzerland, where we occupy 3,700 square feet of office space, with an annual base rent of approximately $120,000.

All of the above leases provide for periodic defined increases in rent over the life of the lease.

SEC Filings

        We file the following reports with the SEC under Section 13(a) of the Securities Exchange Act of 1934: Annual Reports on Form 10-K; Quarterly Reports on Form 10-Q; Current Reports on Form 8-K; and any amendments to these reports. We make these reports available free of charge on or through our Internet website, www.intrado.com, as soon as reasonably practicable after we electronically file such material with the SEC; however, information on our website should not be considered to be a part of this report or any other SEC filing. You may request a copy of these filings at no cost. Please direct your requests to:

Michael D. Dingman, Jr.
Chief Financial Officer
Intrado Inc.
1601 Dry Creek Drive
Longmont, Colorado 80503

You can also read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site (http://www.sec.gov) that contains our reports, proxy and information statements and other information that we file electronically with the SEC.

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RISK FACTORS

        In evaluating our business, you should carefully consider the risks and uncertainties discussed in this section, in addition to the other information presented in this Annual Report on Form 10-K. The risks and uncertainties described below may not be the only risks that we face. If any of these risks or uncertainties actually occurs, our business, operating results or financial condition could be materially adversely affected and the market price of our common stock may decline.

We depend on large contracts from a limited number of significant customers and the loss of any of those contracts would adversely affect our operating results.

        We depend on large contracts from a limited number of significant customers. We provide our services to a range of customers, including incumbent local exchange carriers, competitive local exchange carriers, wireless carriers and state and local government agencies. During the year ended December 31, 2003, we recognized approximately 55% of our total revenue from BellSouth, Qwest, SBC and Verizon each of which accounted for greater than 10% of our revenue. During the year ended December 31, 2002, we recognized approximately 56% of our total revenue from BellSouth, Qwest, SBC and Verizon, each of which accounted for greater than 10% of our revenue. During the year ended December 31, 2001, we recognized approximately 50% of total revenue from BellSouth, Qwest, SBC and Verizon, each of which accounted for greater than 10% of our revenue. No other customers accounted for more than 10% of our total revenue during those periods.

        We believe that these customers and others may continue to represent a substantial portion of our total revenue in the future. One of these contracts will expire in the first half of 2004. As we enter negotiations to renew these contracts, our customers may demand price or other contractual concessions. Our customers could decide to develop and utilize their own proprietary 9-1-1 software and to perform internally the services that they presently outsource to us. Moreover, existing contract provisions allow these customers and others to receive contract concessions or to cancel their contracts in the event of customer consolidations, changes in regulatory, legal, labor or business conditions. Contract concessions, or the loss of a major customer, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our market is characterized by rapid technological change, and we could lose our competitive position if we are not successful in developing new products that achieve market acceptance.

        The market for 9-1-1 data management solutions is intensely competitive and we expect competition to increase in the future. We believe that the principal competitive factors affecting the market for 9-1-1 data management services include flexibility, reliability, manageability, technical features, performance, ease of use, price, scope of product offerings and customer service and support. We may not be able to maintain our competitive position against current and potential competitors, especially those with significantly greater financial, marketing, support service, technical and other competitive resources.

        In addition, the market for our services is characterized by rapid technological change, frequent new product or service introductions, evolving industry standards and changing customer needs. Existing products may become obsolete and unmarketable when products introducing new technologies are introduced. To be successful, we must be able to enhance existing products and to develop new products that keep pace with technological changes, satisfy our customers and achieve market acceptance. In addition to new enhancements to our traditional 9-1-1 database services, we are attempting to expand into the highly competitive commercial database market. If a new product or service does not achieve market acceptance, we may have to write-off related capitalized software costs. If we are unable to develop and introduce new services and products to these new markets in a timely manner, our business, financial condition and results of operations could be adversely affected.

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        Historically, we have issued new releases of our software periodically, with minor interim releases issued more frequently. As a result of the complexities inherent in our offerings, major enhancements and new products often require long development and testing periods before they are released. We have occasionally experienced delays in the scheduled release date of new or enhanced products and we cannot provide assurance that we will achieve future scheduled release dates. The delay of products, or the failure of such products to achieve market acceptance, could materially affect our business.

If we do not realize anticipated benefits from our capitalized software, we may be forced to record an impairment, thereby adversely affecting our operating results.

        In assessing the recoverability of our existing capitalized software assets, we rely on estimates and judgments to determine the net realizable value of each product. When evaluating the net realizable value of a given product, we prepare a forward-looking business case that is comprised of an assessment of future expected benefits to be generated. The expected benefits are compared to the direct costs associated with supporting the product on an ongoing basis to arrive at a contribution margin, defined as expected benefits less direct costs. This contribution margin is compared to the carrying value of the asset at the reporting date to determine if the contribution margin exceeds the asset carrying value plus any additional investments such as hardware or additional development required to enhance or maintain the product. If the contribution margin is less than the carrying value, an impairment is recorded. Our ability to estimate future expected revenues and benefits with a measured degree of probability is the most significant factor in our estimate of recoverability. If our ability to estimate the expected benefits changes significantly in any given period, we could record impairment charges for certain assets and our operating results could be adversely affected.

If we fail to integrate businesses and assets that we may acquire, we may lose customers and our liquidity, capital resources and profitability may be adversely affected.

        We acquired the LPSS business from Lucent during 2001 and bmd wireless AG on February 20, 2004. In the past, we also have acquired product source code rights to help broaden and strengthen our product portfolio. We will continue to evaluate strategic acquisitions as part of our long-term business strategy. Acquisitions often involve a number of special risks, including the following:

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We may encounter difficulties integrating acquired software, operations and personnel and our management's attention could be diverted from other business concerns;



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We may be unable to retain customers of the acquired company;



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We may not be able to successfully incorporate acquired technology and rights into our service offerings and maintain uniform standards, controls, procedures and policies;



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The businesses or assets we acquire may fail to achieve the revenues and earnings we anticipated, causing us to incur additional debt to fund operations and to write down the value of acquisitions on our financial statements;



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We may assume product liability or intellectual property liability associated with the sale of the acquired company's products;



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Our resources may be diverted in asserting and defending our legal rights and we may ultimately be liable for contingent and other liabilities, not previously disclosed to us, of the companies that we acquire;



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The acquisition may disrupt our ongoing business and dilute your ownership interest;



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Acquisitions may result in litigation from former employees or third parties; and

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Due diligence may fail to identify significant issues with product quality, product architecture, ownership rights and legal contingencies, among other matters.

Any of these factors could have a material adverse effect on our business and on the market value of our common stock. We are currently integrating the bmd wireless AG operations. However, there can be no assurance that we will realize the full benefits that we anticipated from the acquisition of bmd wireless AG or any future acquisitions. Our failure to successfully gain market acceptance of the products acquired or to gain market share could seriously harm our business, operating results, cash flows and financial condition.

        In addition, we may make future acquisitions or enter into other agreements that may not be successful. We may acquire additional businesses, products and technologies—or enter into joint venture arrangements—that could complement or expand our business. Management's negotiations of potential acquisitions or joint ventures, and management's integration of acquired businesses, products, or technologies, could divert their time and resources. Future acquisitions could include the issuance of dilutive equity securities or cause us to incur debt, contingent liabilities, additional amortization charges from intangible assets, asset impairment charges, or write-off charges for in-process research and development that could impact our financial condition, cash flows and operating results.

If we do not adequately anticipate and respond to the risks inherent in international operations, our operating results and stock price could be adversely affected.

        Although our consolidated financial statements are prepared in U.S. dollars, the operations of our foreign subsidiary, bmd wireless AG, are conducted primarily in Swiss and other European currencies. Consequently, changes in exchange rates can unpredictably and adversely affect our consolidated operating results and could result in exchange losses. We do not hedge against the risks associated with fluctuations in exchange rates. Although we may use hedging techniques in the future, we may not be able to eliminate or reduce the effects of currency fluctuations. Thus, exchange rate fluctuations could have a material adverse impact on our operating results and stock price.

        In addition, our financial results may be adversely affected by other international risks, such as:

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Changes in government regulation in various countries;



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Trade barriers;



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Adverse tax consequences;



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The absence or significant lack of legal protection for intellectual property rights;



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The adoption of data privacy laws or regulations;



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Political and economic instability; and



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Costs associated with expansion into new territories.

With the recent acquisition of bmd wireless, international revenues will represent a portion of our 2004 revenues. If we do not anticipate and respond to the risks associated with international operations, it could have a material adverse effect on our operating results and stock price.

The market price of our common stock may experience price fluctuations for reasons over which we have no control, including trends that affect the telecommunications industry as a whole.

        The market price of shares of our common stock has fluctuated greatly since our initial public offering in June 1998 and could continue to fluctuate due to a variety of factors, some of which are not within our control. In the past, companies that have experienced volatility in the market price of thei