UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For quarterly period ended June 30, 2003
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from                   to

 

Commission File Number:  000-29678

 

 

 

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ý    No o

 

As of July 31, 2003, there were 15,719,742 shares of common stock outstanding.

 

 

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q 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. We intend the forward-looking statements throughout the Quarterly Report on Form 10-Q 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 report on Form 10-Q 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:

 

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

•                  fluctuations in quarterly operating results, including those that are due to adverse trends in the telecommunications industry, bankruptcy filings by WorldCom and other customers, and other factors that are beyond our control;

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

•                  our ability to retain key executives, particularly George Heinrichs, our co-founder, President, Chief Executive Officer and Chairman of the Board;

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

•                  our ability to integrate businesses and assets that we may acquire;

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

•                  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;

•                  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;

•                  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;

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

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

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

•                  the possibility that we will not generate taxable income in an amount sufficient to allow us to utilize previously generated net operating loss carryforwards;

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

•                  developments in governance, accounting and financial regulation 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 our 2002 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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INDEX

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
Consolidated Statements of Operations for the three months ended June 30, 2003 and 2002 and the six months ended June 30, 2003 and 2002		1
Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002		2
Consolidated Statements of Cash Flows for the three months ended June 30, 2003 and 2002 and the six months ended June 30, 2003 and 2002		3
Notes to Consolidated Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	21
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 2.	Changes in Securities and Use of Proceeds	22
Item 4.	Submission of Matters to a Vote of Security Holders	23
Item 6.	Exhibits and Reports on Form 8-K	23
Signatures		24

 

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PART I - FINANCIAL INFORMATION

 

INTRADO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data; Unaudited)

 

		THREE MONTHS ENDED						SIX MONTHS ENDED
		JUNE 30,						JUNE 30,
		2003			2002			2003			2002
Revenue:
Wireline business unit		$	20,178		$	19,945		$	41,049		$	39,154
Wireless business unit		9,590			6,188			18,216			11,061
New markets business unit		383			251			755			408
Total revenue		30,151			26,384			60,020			50,623
Costs and expenses:
Wireline business unit		9,293			9,942			19,580			19,222
Wireless business unit		5,137			3,592			10,393			7,053
New markets business unit		1,160			499			2,375			870
Sales and marketing		4,032			4,362			8,442			8,891
General and administrative		5,582			5,343			11,679			10,422
Inventory impairment		—			4,697			—			4,697
Research and development		638			494			1,240			1,473
Total costs and expenses		25,842			28,929			53,709			52,628
Income (loss) from operations		4,309			(2,545		)	6,311			(2,005		)
Other income (expense):
Interest and other income		53			38			88			95
Interest and other expense		(356		)	(371		)	(622		)	(655		)
Net income (loss) before income taxes		4,006			(2,878		)	5,777			(2,565		)
Income tax expense		1,422			—			2,051			—
Net income (loss)		$	2,584		$	(2,878	)	$	3,726		$	(2,565	)
Net income (loss) per share:
Basic		$	0.17		$	(0.19