UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

INTRADO INC.

(Exact name of registrant as specified in its charter)

 

 

Registrant’s Telephone Number, Including Area Code:  (720) 494-5800

 

 

(Former name or former address, if changed since last report)

 

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 October 28, 2003, there were 16,083,459 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 and the timing of such payments;

•                  fluctuations in quarterly operating results, including those that are due to adverse trends in the telecommunications industry, bankruptcy filings by MCI (formally known as 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;

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

•                  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 tax 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.

 

i

 

INDEX

 

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited):

Consolidated Statements of Operations for the three months ended September 30, 2003 and 2002 and the nine months ended September 30, 2003 and 2002

Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002

Consolidated Statements of Cash Flows for the three months ended September 30, 2003 and 2002 and the nine months ended September 30, 2003 and 2002

Notes to Consolidated Financial Statements

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Item 4.  Controls and Procedures

PART II – OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

Signatures

 

ii

 

PART I  - FINANCIAL INFORMATION

 

INTRADO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data; Unaudited)

 

		Three Months Ended September 30,						Nine Months Ended September 30,
		2003			2002			2003			2002
Revenue:
Wireline business unit		$	20,779		$	20,295		$	61,828		$	59,449
Wireless business unit		10,466			6,731			28,682			17,792
New markets business unit		438			326			1,193			734
Total revenue		31,683			27,352			91,703			77,975
Costs and expenses:
Wireline business unit		9,725			9,150			29,305			28,372
Wireless business unit		5,611			3,279			16,004			10,332
New markets business unit		1,082			838			3,457			1,708
Sales and marketing		4,008			4,065			12,450			12,956
General and administrative		5,535			5,242			17,214			15,664
Inventory impairment		—			—			—			4,697
Research and development		580			555			1,820			2,028
Total costs and expenses		26,541			23,129			80,250			75,757
Income from operations		5,142			4,223			11,453			2,218
Other income (expense):
Interest and other income		59			35			147			130
Interest and other expense		(392		)	(312		)	(1,014		)	(967		)
Income before income taxes		4,809			3,946			10,586			1,381
Income tax expense		1,707			—			3,758			—
Net income		$	3,102		$	3,946		$	6,828		$	1,381
Net income per share:
Basic		$	0.20		$	0.26		$	0.44		$	0.09
Diluted		$	0.18		$	0.24		$	0.41		$	0.08
Shares used in computing net income per share:
Basic		15,749,993			15,237,882			15,641,085			15,203,188