UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

Commission File Number:  000-29678

 

 

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 May 5, 2004, there were 17,270,854 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 their ability to pay for our services, especially in light of recent competitive pressures in the telecommunications industry;

 

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

 

•                  Whether our efforts to expand into European and other international markets will prove to be economically viable and whether we will be able to generate revenue sufficient to justify our investment in bmd wireless AG;

 

•                  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;

 

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

 

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

 

•                  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, control 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 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 and/or research and development tax credits;

 

 

•                  Our ability to economically attract, motivate and retain high-quality employees with skills that match our business needs;

 

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

 

•                  The possibility that we may be required to treat the value of the stock options granted to employees and directors as compensation expense if proposals that are currently under consideration by accounting standards organizations and governmental authorities are adopted; and

 

•                  Developments in governance, accounting and financial regulations, 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 risks included in our 2003 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

 

PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements (unaudited):
Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003
Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003
Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003
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 6 – Exhibits and Reports on Form 8-K
Signatures
Certifications

 

 

PART I - FINANCIAL INFORMATION

 

INTRADO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

		Three Months Ended March 31,
		2004			2003
Revenues:
Wireline		$	20,429		$	20,871
Wireless		10,862			8,626
New Markets		841			372
Total revenues		32,132			29,869
Costs and expenses:
Direct costs—Wireline		10,913			10,287
Direct costs—Wireless		5,804			5,256
Direct costs—New Markets		1,322			1,215
Sales and marketing		4,624			4,410
General and administrative		5,554			6,097
Research and development		583			602
Total costs and expenses		28,800			27,867
Income from operations		3,332			2,002
Other income (expense):
Interest and other income		87			35
Interest and other expense		(368		)	(266		)
Income before income taxes		3,051			1,771
Income tax expense		1,130			629
Net income		$	1,921		$	1,142
Net income per share:
Basic		$	0.12		$	0.07
Diluted		$	0.11		$	0.07
Shares used in computing net income per share:
Basic		16,631,019			15,502,936
Diluted		17,957,929			15,862,929

 

The accompanying notes to the consolidated financial statements are an integral part of these consolidated statements.

 

1

 

INTRADO INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands; Unaudited)

 

		March 31, 2004			December 31, 2003
ASSETS
Current assets:
Cash and cash equivalents		$	38,631		$	37,981
Accounts receivable, net of allowance for doubtful accounts of $399 and $357, respectively		14,493			15,678
Unbilled revenue		1,263			1,560
Prepaids and other		3,054			1,695
Deferred contract costs		4,339			4,195
Deferred income taxes		10,810			11,105
Total current assets		72,590			72,214
Property and equipment, net of accumulated depreciation of $40,843 and $38,808, respectively		25,030			26,220
Goodwill, net of accumulated amortization of $1,394		43,455			24,517
Other intangibles, net of accumulated amortization of $5,283 and $6,172, respectively		5,303			5,586
Deferred contract costs		3,088			2,865
Software development costs, net of accumulated amortization of $6,208 and $6,189, respectively		14,811			12,910
Other assets		635			955
Total assets		$	164,912		$	145,267
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: