UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1994
OR
/ / 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 1-8948
INTELOGIC TRACE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 74-2368260
(STATE OR OTHER JURISDICTION OF (I. R. S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
TURTLE CREEK TOWER I
P.O. BOX 400044, SAN ANTONIO, TX 78229-8415
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
210-593-5700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
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 /X/ No / /
The number of shares outstanding of registrant's common stock, par value $.01
per share, as of December 8, 1994 was 12,505,631 shares.
INTELOGIC TRACE, INC.
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Financial Position as
of October 31, 1994 (Unaudited) and July 31, 1994....... 4
Unaudited Consolidated Statements of Operations for the
Three Months Ended October 31, 1994 and 1993............ 5
Unaudited Consolidated Statements of Cash Flows for the
Three Months Ended October 31, 1994 and 1993............ 6
Notes to Unaudited Consolidated Financial Statements...... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................... 17
Item 5. Other Information......................................... 18
Item 6. Exhibits and Reports on Form 8-K.......................... 18
SIGNATURES .......................................................... 22
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTELOGIC TRACE, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands, except share data)
OCTOBER 31, JULY 31,
1994 1994
---------- --------
(Unaudited)
ASSETS
Current Assets
Cash and temporary investments .................... $ 202 $ 605
Marketable securities, net ........................ 750 --
Accounts receivable, net .......................... 4,594 7,192
Field support spares, net ......................... 2,511 --
Net assets of discontinued operations ............. 167 200
Inventory ......................................... 675 326
Prepaid expenses .................................. 1,120 1,038
Deposits and other current assets ................. 324 260
---------- --------
Total current assets ........................... 10,343 9,621
Leasehold Improvements and Equipment, net ............ 1,009 1,213
Field Support Spares, net ............................ 100 2,625
Intangible Assets, net ............................... 1,850 1,864
Other Assets ......................................... 427 246
---------- --------
Total assets ................................... $ 13,729 $ 15,569
========== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities Not Subject To Compromise
Accounts payable .................................. 2,438 1,571
Accrued expenses .................................. 3,270 2,534
Note payable ...................................... 1,076 --
Short-term borrowings ............................. 6,689 7,919
Deferred revenue .................................. 6,455 9,690
Total current liabilities ...................... 19,928 21,714
Liabilities Subject to Compromise .................... 62,205 62,252
Deferred Income Taxes and Other Liabilities .......... 441 441
$10.00 Redeemable Preferred Stock; 65,000 shares
authorized; 0 and 46,301 shares issued and
outstanding at October 31, 1994 and July 31, 1994,
respectively; $100 mandatory redemption value ..... -- 4,691
Commitments and Contingencies (Note 6)
Shareholders' Deficit
Preferred stock ($.01 par; 20,000,000 shares
authorized) ..................................... -- --
Common stock ($.01 par; 40,000,000 shares
authorized, 19,908,398 shares issued) ........... 199 199
Additional paid-in capital ........................ 56,925 51,508
Retained deficit .................................. (70,561) (69,695)
Foreign currency translation adjustment ........... (17) 28
Less common stock in treasury - at cost (7,402,174
and 7,420,764 shares at October 31, 1994 and
July 31, 1994, respectively ) ................... (52,974) (53,152)
Retirement valuation reserve ...................... (2,417) (2,417)
---------- --------
Total shareholders' deficit .................... (68,845) (73,529)
---------- --------
Total liabilities and shareholders' deficit . $ 13,729 $ 15,569
========== ========
See accompanying notes to consolidated financial statements.
INTELOGIC TRACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS
ENDED OCTOBER 31,
----------------------
1994 1993
------- -------
Revenue
Service ....................................... $12,914 $19,870
Sales ......................................... 3,708 232
------- -------
Total Revenue .............................. 16,622 20,102
------- -------
Cost of Revenue
Service ....................................... 9,430 $16,175
Sales ......................................... 2,855 86
------- -------
Total Cost of Revenue ...................... 12,285 16,261
------- -------
Gross Profit ............................... 4,337 3,841
Operating Expenses
Selling, general and administrative expenses .. 3,837 4,691
Restructuring charges ......................... 47 --
------- -------
Total Operating Expenses ................... 3,884 4,691
------- -------
Earnings (Loss) From Operations ............ 453 (850)
Other Income (Expense)
Reorganization charges - bankruptcy ........... (934) --
Interest expense .............................. (554) (1,636)
Other, net .................................... 169 (100)
------- -------
Loss From Continuing Operations Before Taxes (866) (2,586)
Income Tax Benefit ............................... -- 1,193
------- -------
Loss From Continuing Operations ............ (866) (1,393)
------- -------
Earnings from Discontinued Operations ............ -- 828
------- -------
Net Loss ................................... $ (866) $ (565)
======= =======
Net Loss, Less Preferred Stock Dividends ... $ (866) $ (744)
======= =======
Earnings (Loss) Per Common Share
Loss from continuing operations ............... $ (.07) $ (.13)
Earnings from discontinued operations ......... -- .07
------- -------
Net Loss Per Common Share ............... $ (.07) $ (.06)
======= =======
Weighted Average Common Shares Outstanding ....... 12,497 12,074
======= =======
See accompanying notes to consolidated financial statements.
INTELOGIC TRACE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
THREE MONTHS
ENDED OCTOBER 31,
----------------------
1994 1993
------- -------
Operating Activities
Net loss ...................................... $ (866) $ (565)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ........... 224 3,565
Adjustment to net assets of discontinued
operations ............................ -- (828)
Deferred income tax benefit ............. -- (1,191)
Provision for doubtful accounts ......... 1,971 1,963
Other ................................... (26) 272
Changes in operating assets and liabilities
Accounts receivable ........................ 627 (892)
Other assets ............................... (634) 273
Accounts payable and accrued expenses ...... 1,696 1,436
Deferred revenue ........................... (3,235) (2,779)
Other current liabilities .................. -- (116)
------- -------
Net Cash Provided By (Used In)
Operating Activities .................. (243) 1,138
Investing Activities
Purchase of spares and other fixed assets ..... (6) (2,208)
------- -------
Net Cash Used In Investing Activities ... (6) (2,208)
Financing Activities
Net change in revolving loan facility ......... (1,230) 438
Proceeds from note payable .................... 1,300 --
Payments on note payable ...................... (224) --
------- -------
Net Cash Provided By (Used In) Financing
Activities ............................ (154) 438
Net Decrease in Cash and Temporary Investments ... (403) (632)
Cash and Temporary Investments, beginning
of period ...................................... 605 1,626
------- -------
Cash and Temporary Investments, end of period .... $ 202 $ 994
======= =======
See accompanying notes to consolidated financial statements.
INTELOGIC TRACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1994
1. INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the Interim Unaudited Consolidated Financial
Statements of Intelogic Trace, Inc. and its wholly owned subsidiaries (the
"Company") include all adjustments, consisting of normal recurring adjustments,
necessary to present fairly the Company's financial position as of October 31,
1994, and the results of its operations for the three months ended October 31,
1994 and 1993. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
promulgated by the Securities and Exchange Commission. The Interim Unaudited
Consolidated Financial Statements should be read in conjunction with the audited
Consolidated Financial Statements and accompanying notes of Intelogic Trace,
Inc. for the year ended July 31, 1994.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Intelogic Trace,
Inc. and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.
EARNINGS PER COMMON SHARE
Earnings per common share are based on the weighted average number of shares
outstanding during the period, after giving effect for preferred stock
dividends. Because operations resulted in a loss, common stock equivalents were
not considered in the computation as their effect would be anti-dilutive.
CERTAIN RECLASSIFICATIONS
Certain reclassifications have been made to the prior period statements to
conform them to the October 31, 1994, presentation.
3. STATEMENTS OF CASH FLOWS SUPPLEMENTARY DISCLOSURE
Cash paid for interest was $261,000 and $123,000 for the three months ended
October 31, 1994 and 1993, respectively. Cash paid for income taxes was $25,000
and $6,000 for the three months ended October 31, 1994 and 1993, respectively.
For the three months ended October 31, 1994, the Company entered into a noncash
transaction with Datapoint Corporation ("Datapoint").
See Note 5 for further discussion.
4. PETITION FOR RELIEF UNDER CHAPTER 11
During Spring 1994, the Company experienced an increased reliance on borrowed
funds to satisfy working capital requirements, principally as a result of a
continued erosion in operating performance. The Company engaged a company which
specializes in consulting with financially troubled businesses to review cash
flows, liquidity concerns, and provide recommendations to establish both
immediate and long-term improvements in cash flow, profitability, asset
management, and capital structure. Liquidity pressures continued to increase and
the Company determined that the aggregate borrowing availability under its
revolving credit agreement would not be sufficient to meet the Company's
obligations on a current basis. The Company's liquidity shortfall was compounded
by the semi-annual interest payment due July 15, 1994 of $3.0 million on the
$49.9 million in principal amount of 11.99% Subordinated Debentures due 1996
(the "Debentures"). In addition to ongoing discussions with its lender, during
late June and early July 1994, the Company held discussions with the holders of
a majority in principal amount of Debentures (the "Principal Debentureholders")
regarding a potential restructuring of that obligation. On July 15, 1994, the
Company filed a Current Report on Form 8-K disclosing that it was negotiating
with its Principal Debentureholders and that it would not make the interest
payment on the Debentures. On July 21, 1994, the Indenture Trustee for the
Debentures issued its notice of default. Pursuant to the terms of the Indenture,
a failure to make the semi-annual interest payment within the thirty-day grace
period allowed by the Indenture would cause an Event of Default to have
occurred. Due principally to increasing pressures on available capital, the
nonpayment of a promissory note to the Company and potential terminations of
certain leases, licenses, and contracts due to financial defaults, the Company
reached the conclusion that the protection of the Bankruptcy Code was necessary
in order to consummate the restructuring of the Debentures and the revolving
financing agreement.
On August 5, 1994, the Company filed a voluntary petition for reorganization
under Chapter 11. As a result of discussions with its Principal
Debentureholders, contemporaneously with filing the petition, the Company filed
a Plan of Reorganization setting forth the terms of the proposed restructuring.
Under Chapter 11, enforcement of certain claims in existence prior to the filing
of the petition are stayed, while the Company continues operations in the
ordinary course of business as debtor-in-possession. These claims are reflected
in the consolidated financial statements as of October 31, 1994, as "liabilities
subject to compromise." Additional prepetition claims may arise subsequent to
the petition date resulting from the rejection of executory contracts and/or
leases and determination of the Court of allowed claims for contingencies and
other disputed amounts.
On October 4, 1994, the Court approved the Company's Disclosure Statement. The
Disclosure Statement, as modified and amended, describes the Plan proposed by
the Company. The Plan was submitted to a vote of creditors, security holders and
parties in interest, was confirmed by the Bankruptcy Court on November 22, 1994,
and the confirmation order was entered on November 28, 1994. The Plan will,
among other things, cause the following to occur following December 8, 1994, the
Effective Date of the Plan: (1) administrative and tax claims will be paid in
full; (2) a new series of Preferred Stock will be issued to certain holders of
unsecured claims; (3) a four-for-one reverse split of the common stock will be
consummated, with existing common shareholders retaining approximately 25% of
the Company's common stock outstanding after the Effective Date, and (4) certain
holders of unsecured claims will also receive shares of new common stock that
will equal 75% of the shares of common stock outstanding after the Effective
Date.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the ordinary course of business. The
Plan, however, will materially change the amounts reported in the consolidated
financial statements as of the Effective Date. The financial statements included
herein do not give effect to any adjustments to the carrying value of assets or
amounts of liabilities that might be necessary as a consequence of the Plan. The
appropriateness of using the going concern basis is dependent upon, among other
things, the ability to comply with financing agreements, generation of
sufficient cash from operations and financing sources to meet obligations, and
achievement of satisfactory levels of future operating profit.
In November 1990, the American Institute of Certified Public Accountants issued
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" ("SOP 90-7"). Pursuant to the guidance provided by
SOP 90-7, the Company will adopt "fresh start" reporting as of the effective
date of the Plan. Under "fresh start" reporting, the reorganization value of the
entity will be allocated to the entity's assets. If any portion of the
reorganization value cannot be attributed to specific tangible or identifiable
intangible assets of the emerging entity, such amounts are to be reported as
"reorganization value in excess of amounts allocable to identifiable intangible
assets" and amortized over a period of years, generally substantially less than
forty years. As a result of adopting "fresh start" reporting upon emerging from
Chapter 11 status, the Company's consolidated financial statements will not be
comparable with those prepared before the Plan is confirmed, including the
historical consolidated financial statements included herein. The Company is in
the process of obtaining an independent determination of such reorganization
value.
In addition to fresh start reporting, SOP 90-7 provides guidance for financial
reporting by entities that have filed petitions with the Court and expect to
reorganize under Chapter 11. The Company followed these guidelines in the
accompanying October 31, 1994, consolidated financial statements. Pursuant to
SOP 90-7, prepetition liabilities are reported on the basis of the expected
amount of such allowed claims, as opposed to the amounts for which those allowed
claims may be settled. Under the Plan, holders of those claims will receive
Company securities based upon the amount of their claims.
As of October 31, 1994, prepetition liabilities subject to compromise consist of
the following (in thousands):
11.99% Subordinated Debentures due 1996..... $ 49,924
Accounts payable............................ 6,532
Accrued interest payable.................... 3,324
Contribution payable to pension plan........ 2,417
Other liabilities........................... 8
-------
$62,205
=======
During October 1994, the Company notified the Pension Benefit Guaranty
Corporation (the "PBGC") of its intent to terminate its pension plan effective
December 31, 1994. A Bankruptcy Court hearing was held on November 9, 1994, at
which the Judge found that a distress termination of the retirement income plan
was appropriate and so ordered. The Company has negotiated a settlement with the
PBGC consistent with the Plan under which the PBGC shall be treated as a Class 6
creditor and shall receive a prorata distribution with other Class 6 creditors
and an amount of new preferred stock equal to 20% of the new preferred stock
that the PBGC would otherwise receive as a Class 6 creditor.
The Company has requested approval from the Court to pay or otherwise honor
certain of its prepetition obligations, including certain wages, salaries and
related benefits of employees, claims for certain limited contributions to an
employee benefit plan, and claims up to $900 per creditor arising from the
deposit of money for certain services, claims of vendors to contracts under
which the Company has posted a bond. The Plan provides that unsecured claims
(other than subordinated Debentureholders) of $5,000 or less, which will be
entitled to receive the lesser of a payment of cash equal to 50% of such claim
or such creditors pro rata share of $650,000. The Company's short-term
borrowings under a revolving financing agreement is a secured claim. Under the
Plan, the Company is responsible for either renegotiating the revolving
financing agreement or finding a lender that will satisfy the creditor's claim.
Under the terms of the Plan, each holder of an unsecured claim not specifically
classified in another class will receive, after the Effective Date of the Plan,
a pro rata share of a new series of preferred stock and new common stock. The
new series of preferred stock will consist of 1,133,333 shares, subject to
increase based upon unsecured claims other than the Debentureholders in excess
of $5 million, and will have an aggregate liquidation preference of at least $17
million. The new common stock will constitute 75% of the total outstanding
common stock of the Company after the Effective Date.
5. INVESTMENT IN AFFILIATE
On September 27, 1994, the Company entered into an agreement (the "Agreement")
with Datapoint. Of the 2,743,385 shares of Datapoint common stock held by the
Company at July 31, 1994, 2.4 million shares were distributed to Datapoint
pursuant to the terms of the Agreement. The remaining 343,385 shares were
retained by the Company. In addition, the Agreement called for the cancellation
of the Company's $10 Redeemable Preferred Stock (the "Preferred Stock") issued
to Datapoint on November 9, 1990, in connection with the purchase of Datapoint
Canada, subsequently renamed Intelogic Trace Canada, Inc. Also resulting from
the purchase of Datapoint Canada and subsequently canceled on September 27,
1994, was an option issued to Datapoint to purchase all of the Company's
holdings of Datapoint common and preferred stock. The effect of the Agreement
caused the cancellation and return to the Company of the Preferred Stock and the
recording of the shares of Datapoint common stock at fair market value resulting
in an increase to additional paid-in capital of $5.7 million.
Of the 343,385 shares of Datapoint common stock held by the Company, 43,385
shares were sold as of October 31, 1994. The Company intends to sell the
remaining 300,000 shares which are classified as marketable securities and
recorded at their fair market value as of October 31, 1994.
6. CONTINGENCIES
The Company filed a Voluntary Petition on August 5, 1994 under Chapter 11 of the
United States Bankruptcy Court. A Disclosure Statement to the Plan of
Reorganization of the Company was approved by the Court. The Company's Plan was
confirmed by the Court on November 22, 1994. See Note 4 for further discussion.
Two shareholders of the Company have filed lawsuits against the Company and its
Board of Directors demanding that the Company seek damages from its Board of
Directors with respect to the Company's 1990 purchases of the stock of the
Company and Datapoint. A committee of the Board of Directors was appointed to
consider the demands raised in each case. The committee retained independent
counsel to review the matters raised in the lawsuits and determined that it was
not in the best interest of either the Company or its shareholders to accept
either demand and, accordingly, instructed counsel to seek the dismissal of both
lawsuits. In January 1992, a motion for summary judgment on behalf of the
Company and the Board of Directors was denied in the lawsuit pending in the New
York State Court and is currently on appeal. A similar motion, involving only
the Company's purchase of its own stock, was denied with leave to renew after
the appeal in the New York State Court action is decided. The second case is
pending in the United States District Court for the Southern District of New
York. This action charged a violation of the proxy laws and breach of fiduciary
duties with respect to several actions by the Board, including the purchase of
the Company's own stock. In June 1993, another shareholder commenced a
derivative action against certain members of the Company's Board of Directors
and Datapoint. Because this latest action is substantially similar to one of the
previously filed suits, the plaintiffs in the latest action have filed a motion
to dismiss their complaint without prejudice.
On May 13, 1994, the Company announced that although it and the Board of
Directors expressly disclaim and deny any liability or wrongdoing with respect
to the allegations, a settlement had been reached in order to avoid the
additional expense, burden, inconvenience and distraction of continued
litigation. Pursuant to the settlement agreement, which is subject to Bankruptcy
and District Court approval, the Company will receive $2.4 million less
attorney's fees and expenses (not to exceed $800,000) awarded by the Court. In
addition, the Company has agreed to form a committee of the Board to address and
approve certain matters relating to the Company's current and prospective
investments. The cash portion of the settlement is fully covered by the
Company's director and officer liability insurance but may be offset in whole or
in part by future director and officer liability insurance premium increases. A
United States District Judge for the Southern District of New York has held a
hearing concerning the fairness of the proposed settlement. However, no opinion
has yet been issued. The Judge has referred the case to the Bankruptcy Court for
further adjudication consistent with bankruptcy laws. Due to the current
uncertainty as to any recovery, the Company has not recorded any receivable. The
Judge held a hearing on this matter on November 28, 1994, and has requested that
the parties submit briefs on certain matters. The matter is still under
advisement.
On October 4, 1994, certain Debentureholders filed an adversary proceeding in
the Bankruptcy Court against the Company alleging securities law violations and
certain other common law causes of action. The litigation relates to the
Company's purchases of securities, including Datapoint Stock and related
actions. The plaintiffs in the adversary proceeding seek monetary damages,
attorney's fees, and costs of suit. A hearing on this matter is scheduled
for January 23, 1995.
The Internal Revenue Service ("IRS") has issued assessment letters relating to
the consolidated federal income tax returns of the Company for the years 1986
through 1992. The IRS letters propose assessments totaling $31.0 million in
additional taxes plus interest. The assessment primarily involves the
industry-wide issue of the appropriate method for cost recovery of spare parts.
A recent case on the same issue was decided in the taxpayer's favor by the
United States Tax Court, but is being appealed by the IRS. If the decision was
followed by courts with jurisdiction over the Company, the remaining proposed
assessment would be approximately $2.5 million in additional taxes plus
interest. The Company strongly disagrees with the proposed adjustments and has
filed a protest, appealing each of the adjustments in the IRS report. During
1994, the Company negotiated a settlement with the IRS and on October 3, 1994,
the IRS appeals officer provided the Company a settlement document indicating a
refund of $1.1 million net of interest costs. The IRS settlement document is
subject to approval by the Joint Committee of Congress and therefore, the
ultimate outcome cannot presently be determined. Accordingly, the Company has
not recorded a receivable for any possible refund.
The Company is a party to various legal proceedings in the ordinary course of
business. The Company believes that there is no proceeding either threatened or
pending against the Company that could result in a materially adverse effect on
the business or the financial condition of the Company.
7. SUBSEQUENT EVENTS
CONFIRMATION OF PLAN OF REORGANIZATION
On November 22, 1994, the Company's proposed Plan of Reorganization was
confirmed by the Bankruptcy Court. See Note 4 for further discussion.
EXIT FINANCING
Prior to the confirmation of the Plan, the Company obtained commitments for exit
financing from Foothill Capital Corporation ("Foothill") and Fidelity Capital &
Income Fund ("Fidelity") to make certain loan and financial accommodations to
the Company. The Company entered into an amended and restated general loan and
security agreement with Foothill. The agreement provides for revolving advances,
the proceeds of which may be used for working capital needs and limited capital
expenditures. The revolving advances may not exceed the lesser of: the maximum
amount defined as (a) $4.5 million until June 30, 1995, reducing $100,000 per
month thereafter through December 1, 1995, at which time such amount shall be
and remain at $3.9 million or (b) a defined borrowing base. The defined
borrowing base is a percentage of eligible accounts receivable plus an allowed
overadvance of up to $1.0 million of which such overadvance, if any, is to be
purchased by Fidelity from Foothill on or before January 17, 1995. The
percentage to be applied to eligible accounts for purposes of calculating the
borrowing base will decrease ratably from 80% over the period from the Effective
Date through March 22, 1995, at which time such percentage shall be and will
remain at 70% through December 31, 1995, the final maturity of Foothill's loan.
Borrowings from Foothill are secured by a first lien on the Company's accounts
receivable and a first lien on inventory until the allowed overadvance, if any,
is repaid. Foothill will retain a junior lien in all other existing assets and
shall share prorata in the after acquired assets with Fidelity based upon
outstanding balances owed. Outstanding borrowings accrue interest at 4 1/2
percentage points above the prime rate. The Company is required to pay a
commitment fee of 1/2 of 1% per annum on the average unused portion of the
maximum amount. The agreement expires on December 31, 1995, at which time all
borrowings are due.
The Company also entered into a loan agreement with Fidelity which provides for
an initial advance of $5.0 million to the Company and an amount not to exceed
$1.0 million solely for the purpose of purchasing an overadvance, if any, from
Foothill on or before January 17, 1995. The proceeds of the initial advance were
used to repay the existing overadvance on the Company's indebtedness to Foothill
and the remaining proceeds were used to pay claims of creditors and expenses
incurred by the Company in connection with the Plan of Reorganization.
Borrowings from Fidelity are secured by a first lien on inventory (after the
overadvance, if any); a potential refund from the IRS; shares of Datapoint
common stock; and amounts, if any, from the settlement of shareholder litigation
described in Note 6 to the Consolidated Financial Statements. Fidelity will
retain a junior lien on all other existing assets and shall share prorata in the
after acquired assets with Foothill. Mandatory prepayments are required only
upon the realization of proceeds from assets securing the loan. The outstanding
borrowings accrue interest at 15% per annum. In addition, the Company will pay
Fidelity a closing fee consisting of 6,667 shares of the Company's new 10%
Preferred Stock. The principal amount of the loan, together with any accrued and
unpaid interest is due and payable on December 31, 1995.
SALE OF FIELD SUPPORT SPARES
On November 22, 1994, the Company sold its field support spares for a total of
$2.6 million to PC Service Source ("PCSS"). The Company received $1.4 million of
the proceeds and will receive the remaining proceeds of $1.2 million in
installments of $100,000 per month beginning in December 1994. In connection
with the sale of the field support spares, the Company negotiated an agreement
with PCSS for the outsourcing of the Company's logistics and repair operations.
In anticipation of this sale, the Company valued its field support spares as of
July 31, 1994 at their estimated net realizable value of $2.6 million.
Accordingly, during the quarter ended October 31, 1994, the Company ceased
depreciating its field support spares and commenced recording the purchase of
all new field support spares as cost of service currently.
SUSPENSION OF TRADING BY NEW YORK STOCK EXCHANGE / TRADING ON THE OTC
BULLETIN BOARD
On December 8, 1994, the New York Stock Exchange suspended trading of the
Company's common stock and 11.99% Subordinated Debentures based on the failure
of the Company to meet the continued listing criteria of the New York Stock
Exchange. The Company commenced trading under the symbol "ITLG" on the OTC
Bulletin Board Service on December 13, 1994.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Years referred to are fiscal years)
OVERVIEW
During Spring 1994, the Company experienced an increased reliance on borrowed
funds to satisfy working capital requirements, principally as a result of
continued erosion in operating performance. The Company engaged a company to
review cash flows, financial needs, liquidity concerns, and provide
recommendations to establish both immediate and long-term improvements in cash
flow, profitability, asset management, and capital structure. Liquidity
pressures continued to increase and the Company determined that the aggregate
borrowing availability under its revolving credit agreement would not be
sufficient to meet the Company's obligations on a current basis. The Company's
liquidity shortfall was compounded by the semi-annual interest payment due July
15, 1994, of $3.0 million on the $49.9 million in principal amount of
Debentures. In addition to ongoing discussions with its lender, during late June
and early July 1994, the Company held discussions with the Principal
Debentureholders regarding a potential restructuring of that obligation. On July
15, 1994, the Company filed a Current Report on Form 8-K disclosing that it was
negotiating with its Principal Debentureholders and that it would not make the
interest payment on the Debentures. On July 21, 1994, the Indenture Trustee for
the Debentures issued its notice of default. Pursuant to the terms of the
Indenture, a failure to make the semi-annual interest payment within the
thirty-day grace period allowed by the Indenture would cause an Event of Default
to have occurred. Due to increasing pressures on available capital, the
nonpayment of a promissory note to the Company and potential terminations of
certain leases, licenses, and contracts due to financial defaults, the Board of
Directors reached the conclusion that the protection of the Bankruptcy Code was
necessary in order to consummate the restructuring of the Debentures and the
revolving financing facility.
On August 5, 1994, the Company filed a voluntary petition for reorganization
under Chapter 11. As a result of discussions with its Principal
Debentureholders, contemporaneously with filing the petition, the Company filed
a Plan of Reorganization setting forth the terms of the proposed restructuring.
Under Chapter 11, enforcement of certain claims in existence prior to the filing
of the petition are stayed, while the Company continues operations in the
ordinary course of business as debtor-in-possession. These claims are reflected
in the consolidated financial statements as of October 31, 1994, as "liabilities
subject to compromise." Additional prepetition claims may arise subsequent to
the petition date resulting from the rejection of executory contracts and/or
leases and determination of the Court of allowed claims for contingencies and
other disputed amounts.
On October 4, 1994, the Court approved the Company's Disclosure Statement. The
Disclosure Statement, as modified and amended, describes the Plan proposed by
the Company. The Plan was submitted to a vote of creditors, security holders and
parties in interest, was confirmed by the Bankruptcy Court on November 22, 1994,
and the confirmation order was entered on November 28, 1994. The Plan will,
among other things, cause the following to occur following December 8, 1994, the
Effective Date of the Plan: (1) administrative and tax claims will be paid in
full; (2) a new series of Preferred Stock will be issued to certain holders of
unsecured claims; (3) a four-for-one reverse split of the common stock will be
consummated, with existing common shareholders retaining approximately 25% of
the Company's common stock outstanding after the Effective Date, and (4) certain
holders of unsecured claims will also receive shares of new common stock that
will equal 75% of the shares of common stock outstanding after the Effective
Date.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the ordinary course of business. The
Plan, however, will materially change the amounts reported in the consolidated
financial statements as of the Effective Date. The financial statements included
herein do not give effect to any adjustments to the carrying value of assets or
amounts of liabilities that might be necessary as a consequence of the Plan. The
appropriateness of using the going concern basis is dependent upon, among other
things, the ability to comply with financing agreements, generation of
sufficient cash from operations and financing sources to meet obligations, and
achievement of satisfactory levels of future operating profit.
DEBTOR-IN-POSSESSION FINANCING
On September 16, 1994, the Court entered an order approving a
debtor-in-possession credit agreement (the "DIP Facility"). The DIP Facility
consists of an extension and modification of the previously existing credit
agreement with Foothill. Borrowings under the DIP Facility bear interest at the
prime rate plus 4.5 percent, are payable monthly in arrears, and are secured by
a lien on substantially all of the assets of the Company. Under the terms of the
DIP Facility, the Company is not authorized to use the collateral (i) upon an
event of non-compliance with the Bankruptcy Court order approving the DIP
Facility, (ii) after December 31, 1994, unless extended by mutual agreement of
the Company and Foothill, or (iii) after entry of an order by the Court
confirming a plan of reorganization of the Company.
In September, the Company determined that it would require $1.3 million
post-petition credit in addition to the DIP Facility to provide additional
working capital for continued operations. Under approval of the Court, the
Company obtained this additional credit from Fidelity Capital and Income Fund
("Fidelity"), a Principal Debentureholder, at an annual interest rate of 15%.
The balance of this note is classified as a note payable in the October 31, 1994
statement of financial position.
Although no assurance can be made, management believes the Company can generate
sufficient cash from operations and from existing financing sources to meet its
obligations on a current basis during the pendency of the Case.
EXIT FINANCING
Prior to the confirmation of the Plan, the Company obtained commitments for exit
financing from Foothill and Fidelity to make certain loan and financial
accommodations to the Company. The Company entered into an amended and restated
general loan and security agreement with Foothill. The agreement provides for
revolving advances, the proceeds of which may be used for working capital needs
and limited capital expenditures. The revolving advances may not exceed the
lesser of: the maximum amount defined as (a) $4.5 million until June 30, 1995,
reducing $100,000 per month thereafter through December 1, 1995, at which time
such amount shall be and remain at $3.9 million or (b) a defined borrowing base.
The defined borrowing base is a percentage of eligible accounts receivable plus
an allowed overadvance of up to $1.0 million of which such overadvance, if any,
is to be purchased by Fidelity from Foothill on or before January 17, 1995. The
percentage to be applied to eligible accounts for purposes of calculating the
borrowing base will decrease ratably from 80% over the period from the Effective
Date through March 22, 1995, at which time such percentage shall be and will
remain at 70% through December 31, 1995, the final maturity of Foothill's loan.
Borrowings from Foothill are secured by a first lien on the Company's accounts
receivable and a first lien on inventory until the allowed overadvance, if any,
is repaid. Foothill will retain a junior lien in all other existing assets and
shall share prorata in the after acquired assets with Fidelity based upon
outstanding balances owed. Outstanding borrowings accrue interest at 4 1/2
percentage points above the prime rate. The Company is required to pay a
commitment fee of 1/2 of 1% per annum on the average unused portion of the
maximum amount. The agreement expires on December 31, 1995, at which time all
borrowings are due.
The Company also entered into a loan agreement with Fidelity which provides for
an initial advance of $5.0 million to the Company and an amount not to exceed
$1.0 million solely for the purpose of purchasing an overadvance, if any, from
Foothill on or before January 17, 1995. The proceeds of the initial advance were
used to repay the existing overadvance on the Company's indebtedness to Foothill
and the remaining proceeds were used to pay claims of creditors and expenses
incurred by the Company in connection with the Plan of Reorganization.
Borrowings from Fidelity are secured by a first lien on inventory (after the
overadvance, if any); a potential refund from the IRS; shares of Datapoint
common stock; and amounts, if any, from the settlement of shareholder litigation
described in Note 6 to the Consolidated Financial Statements. Fidelity will
retain a junior lien on all other existing assets and shall share prorata in the
after acquired assets with Foothill. Mandatory prepayments are required only
upon the realization of proceeds from assets securing the loan. The outstanding
borrowings accrue interest at 15% per annum. In addition, the Company will pay
Fidelity a closing fee consisting of 6,667 shares of the Company's new 10%
Preferred Stock. The principal amount of the loan, together with any accrued and
unpaid interest is due and payable on December 31, 1995.
REORGANIZATION ACCOUNTING ISSUES
In November 1990, the American Institute of Certified Public Accountants issued
SOP 90-7. Pursuant to the guidance provide by SOP 90-7, the Company will adopt
"fresh start" reporting as of the Effective Date. Under "fresh start" reporting,
the reorganization value of the entity will be allocated to the entity's assets.
If any portion of the reorganization value cannot be attributed to specific
tangible or identifiable intangible assets of the emerging entity, such amounts
are to be reported as "reorganization value in excess of amounts allocable to
identifiable intangible assets" and amortized over a period of years, generally
substantially less than forty years. As a result of adopting "fresh start"
reporting upon emerging from Chapter 11 status, the Company's consolidated
financial statements will not be comparable with those prepared before the Plan
is confirmed, including the historical consolidated financial statements
included herein. The Company is in the process of obtaining an independent
determination of such reorganization value.
In addition to "fresh start" reporting, SOP 90-7 provides guidance for financial
reporting by entities that have filed petitions with the Court and expect to
reorganize under Chapter 11. The Company followed these guidelines in the
accompanying October 31, 1994 consolidated financial statements. Pursuant to SOP
90-7, prepetition liabilities are reported on the basis of the expected amount
of such allowed claims, as opposed to the amounts for which those allowed claims
may be settled. Under the Plan, holders of those claims will receive Company
securities based upon the amount of their claims.
As of October 31, 1994, prepetition liabilities subject to compromise consist of
the following (in thousands):
11.99% Subordinated Debentures due 1996.... $49,924
Accounts payable........................... 6,532
Accrued interest payable................... 3,324
Contribution payable to pension plan....... 2,417
Other liabilities.......................... 8
-------
$62,205
=======
OTHER
On December 8, 1994, the New York Stock Exchange suspended trading of the
Company's common stock and 11.99% Subordinated Debentures based on the failure
of the Company to meet the continued listing criteria of the New York Stock
Exchange. The Company's common stock commenced trading under the symbol "ITLG"
on the OTC Bulletin Board Service on December 13, 1994.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 1994 AND 1993
Earnings (loss) from operations improved from a loss of $850,000 in first
quarter 1994 to earnings of $453,000 in first quarter 1995. This was due
primarily to profit of $650,000 on the sale of certain parts to a customer. In
addition, the Company has been successful in implementation of its cost
reduction program which was launched in connection with the anticipated decline
in revenue.
REVENUE
Total revenue for the first quarter 1995 declined $3.5 million (17.3%) compared
to the first quarter 1994 due largely to the cancellation and non-renewal of
various service contracts. Additionally, $675,000 was due to a decline in
revenue from servicing Datapoint-manufactured products. This was due primarily
to the continued decline of the Datapoint customer base. The decline in revenue
was partially offset by the one-time sale of certain parts to a customer for
$2.5 million. Included in the cost of sales is $1.8 million of costs associated
with these parts. This sales activity is not expected to continue in future
quarters.
During the first quarter 1995, the cancellation of various service contracts
resulted in the decline reflected in accounts receivable and deferred revenue
from July 31, 1994 to October 31, 1994. For most service contracts, the Company
bills in advance and records the billing as a receivable and as deferred
revenue. When the contracts were canceled, the related receivable and deferred
revenue were written off.
Management believes that the decline in revenue during 1994 and 1995 is
attributable to a variety of factors including the price of service offerings,
new product warranty offerings, an increased level of competition in the market
for service-related products and a negative reaction to the bankruptcy filing.
These factors are expected to continue through much of 1995 and as a result,
revenues are expected to continue to fall below fiscal year 1994 levels.
COST OF REVENUE
Excluding the effects of the sale of parts as discussed in "Revenue" above, the
decrease in the total cost of revenue approximated the decline in revenue.
OPERATING EXPENSES
Operating expenses decreased $807,000 (or 17.2%) due to the Company's cost
reduction efforts. Total personnel costs accounted for the majority of the
decline due to the reduction in staff during the spring of 1994. Also
contributing to the improvement in operating expenses were lower facility lease
costs resulting from the Company's ability to renegotiate lease costs during
bankruptcy.
On November 22, 1994, the Company sold its field support spares for a total of
$2.6 million to PCSS. The Company received $1.4 million of the proceeds and
will receive the remaining proceeds of $1.2 million in installments of $100,000
per month beginning in December 1994. In connection with the sale of the field
support spares, the Company negotiated an agreement with PCSS for the
outsourcing of the Company's logistics and repair operations. The Company
anticipates that this agreement will result in a reduction of operating costs
associated with the logistics and repair operations. In anticipation of this
sale, the Company valued its field support spares as of July 31, 1994 at their
estimated realizable value of $2.6 million. Accordingly, during the quarter
ended October 31, 1994, the Company ceased depreciating its field support spares
and commenced recording the purchase of all new field support spares as cost of
service currently.
REORGANIZATION CHARGES - BANKRUPTCY
For the first quarter 1995, reorganization charges includes fees and other
charges related to the Company's reorganization under Chapter 11. The majority
of the costs are legal and consulting fees associated with the bankruptcy.
The increase in fees and other charges related to the bankruptcy resulted in the
increase in accrued expenses from July 31, 1994 to October 31, 1994.
INTEREST EXPENSE
Interest expense decreased $1.1 million (or 66.1%) for the first quarter 1995
compared to the same period in 1994. The decline was largely due to the
suspension of the accrual of interest expense associated with the 11.99%
Subordinated Debentures following the filing of Chapter 11.
FEDERAL AND STATE INCOME TAX BENEFIT
The tax benefit of $1.2 million during the first quarter 1994 was the result of
the change in the valuation allowance associated with the tax refunds previously
received.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company filed a Voluntary Petition on August 5, 1994 under Chapter 11 of the
United States Bankruptcy Court. A Disclosure Statement to the Plan of
Reorganization of the Company was approved by the Court. The Company's Plan was
confirmed by the Court on November 22, 1994. See Note 4 to the Consolidated
Financial Statements for further discussion.
Two shareholders of the Company have filed lawsuits against the Company and its
Board of Directors demanding that the Company seek damages from its Board of
Directors with respect to the Company's 1990 purchases of the stock of the
Company and Datapoint. A committee of the Board of Directors was appointed to
consider the demands raised in each case. The committee retained independent
counsel to review the matters raised in the lawsuits and determined that it was
not in the best interest of either the Company or its shareholders to accept
either demand and, accordingly, instructed counsel to seek the dismissal of both
lawsuits. In January 1992, a motion for summary judgment on behalf of the
Company and the Board of Directors was denied in the lawsuit pending in the New
York State Court and is currently on appeal. A similar motion, involving only
the Company's purchase of its own stock, was denied with leave to renew after
the appeal in the New York State Court action is decided. The second case is
pending in the United States District Court for the Southern District of New
York. This action charged a violation of the proxy laws and breach of fiduciary
duties with respect to several actions by the Board, including the purchase of
the Company's own stock. In June 1993, another shareholder commenced a
derivative action against certain members of the Company's Board of Directors
and Datapoint. Because this latest action is substantially similar to one of the
previously filed suits, the plaintiffs in the latest action have filed a motion
to dismiss their complaint without prejudice.
On May 13, 1994, the Company announced that although it and the Board of
Directors expressly disclaim and deny any liability or wrongdoing with respect
to the allegations, a settlement had been reached in order to avoid the
additional expense, burden, inconvenience and distraction of continued
litigation. Pursuant to the settlement agreement, which is subject to Bankruptcy
and District Court approval, the Company will receive $2.4 million less
attorney's fees and expenses (not to exceed $800,000) awarded by the Court. In
addition, the Company has agreed to form a committee of the Board to address and
approve certain matters relating to the Company's current and prospective
investments. The cash portion of the settlement is fully covered by the
Company's director and officer liability insurance but may be offset in whole or
in part by future director and officer liability insurance premium increases. A
United States District Judge for the Southern District of New York has held a
hearing concerning the fairness of the proposed settlement. However, no opinion
has yet been issued. The Judge has referred the case to the Bankruptcy Court for
further adjudication consistent with bankruptcy laws. Due to the current
uncertainty as to any recovery, the Company has not recorded any receivable. The
Judge held a hearing on this matter on November 28, 1994 and has requested that
the parties submit briefs on certain matters. The matter is still under
advisement.
On October 4, 1994, certain Debentureholders filed an adversary proceeding in
the Bankruptcy Court against the Company alleging securities law violations and
certain other common law causes of action. The litigation relates to the
Company's purchases of securities, including Datapoint Stock and related
actions. The plaintiffs in the adversary proceeding seek monetary damages,
attorney's fees, and costs of suit. A hearing for this matter is scheduled
for January 23, 1995.
The IRS has issued assessment letters relating to the consolidated federal
income tax returns of the Company for the years 1986 through 1992. The IRS
letters propose assessments totaling $31.0 million in additional taxes plus
interest. The assessment primarily involves the industry-wide issue of the
appropriate method for cost recovery of spare parts. A recent case on the same
issue was decided in the taxpayer's favor by the United States Tax Court, but is
being appealed by the IRS. If the decision was followed by courts with
jurisdiction over the Company, the remaining proposed assessment would be
approximately $2.5 million in additional taxes plus interest. The Company
strongly disagrees with the proposed adjustments and has filed a protest,
appealing each of the adjustments in the IRS report. During 1994, the Company
negotiated a settlement with the IRS and on October 3, 1994, the IRS appeals
officer provided the Company a settlement document indicating a refund of $1.1
million net of interest costs. The IRS settlement document is subject to
approval by the Joint Committee of Congress and therefore, the ultimate outcome
cannot presently be determined. Accordingly, the Company has not recorded a
receivable for any possible refund.
The Company is a party to various legal proceedings in the ordinary course of
business. The Company believes that there is no proceeding either threatened or
pending against the Company that could result in a materially adverse effect on
the business or the financial condition of the Company.
ITEM 5. OTHER INFORMATION
On December 8, 1994, the New York Stock Exchange suspended trading of the
Company's common stock and 11.99% Subordinated Debentures based on the failure
of the Company to meet the continued listing criteria of the New York Stock
Exchange. The Company's common stock commenced trading under the symbol "ITLG"
on the OTC Bulletin Board Service on December 13, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.0 - Modified First Amended Plan of Reorganization of the Company, dated
October 12, 1994 (filed as Exhibit 99 to the 1994 Form 10-K and
incorporated herein by reference).
3.1 - Restated Certificate of Incorporation of the Company effective
December 9, 1994.
3.2 - By-laws of the Company, as amended (filed as Exhibit 3.2 to Form 10,
Amendment No. 2 and incorporated herein by reference).
4.1 - Form of 11.99% Subordinated Debenture due July 15, 1996 (filed as
Exhibit 4(a) to the Company's Registration Statement on Form S-1 filed
with the Commission on July 22, 1986 (the "Form S-1") and incorporated
herein by reference).
4.2 - Form of Indenture between the Company and Manufacturers Hanover Trust
Company, as Trustee, relating to the Debentures registered (filed as
Exhibit 4(b) to the Form S-1 and incorporated herein by reference).
4.3 - Indenture dated October 1, 1985 between the Company and the
Manufacturers Hanover Trust Company, as Trustee, relating to the 14 1/2%
Subordinated Notes Due 1995 (filed as Exhibit (c) to Amendment No. 2 on
Form 8 to the Company's Registration Statement on Form 8-A filed with
the Commission on September 19, 1985 and incorporated herein by
reference).
4.4 - Article Fourth of the Certificate of Incorporation of the Company
(included in Exhibit 3.1).
4.5 - Registration Rights Agreement, among the Company, Fidelity Capital and
Income Fund and Salvatore Curiale, Superintendent of Insurance of the
State of New York, as rehabilitator for Executive Life of New York,
dated as of December 8, 1994.
10.1 - Agreement for Transfer of Assets and Liabilities in Exchange for
Stock, dated June 29, 1985, between Datapoint and the Company (filed as
Exhibit 10.1 to the Form 10 and incorporated herein by reference).
10.2 - Master Maintenance Agreement, dated June 28, 1985, between Datapoint
and the Company (filed as Exhibit 10.2 to the Form 10 and incorporated
herein by reference).
10.3 - Assignment and License, dated as of June 29, 1985, between the Company
and Datapoint (filed as Exhibit 10.3 to the Form 10 and incorporated
herein by reference).
10.4 - Datapoint License Agreement, dated as of June 29, 1985, between the
Company and Datapoint (filed as Exhibit 10.4 to the Form 10 and
incorporated herein by reference).
10.5 - I T License Agreement, dated as of June 29, 1985, between the Company
and Datapoint (filed as Exhibit 10.5 to the Form 10 and incorporated
herein by reference).
10.6 - Employment Agreement, dated January 27, 1986, between Philip D.
Freeman and the Company (filed as Exhibit 10(j) to the Form S-1 and
incorporated herein by reference).
10.7 - 1985 Directors Stock Option Plan (filed as Exhibit 10.10 to the Form
10 and incorporated herein by reference).
10.8 - 1985 Employee Stock Option Plan (filed as Exhibit 10.11 to the Form 10
and incorporated herein by reference).
10.9 - Retirement Income Plan (filed as Exhibit 10.12 to the Form 10 and
incorporated herein by reference).
10.10 - Executive Benefit Plan (filed as Exhibit 10.14 to the Form 10 and
incorporated herein by reference).
10.11 - Directors' and Officers' Liability Insurance Policy (filed as Exhibit
10(s) to the Form S-1 and incorporated herein by reference).
10.12 - TexCom Purchase Agreement, dated November 25, 1987, between the
Company and TexCom, Inc. (filed as Exhibit C(2) to the Form 8-K filed
with the Commission on December 9, 1987 and incorporated herein by
reference).
10.13 - Amendment to the 1985 Directors Stock Option Plan (filed as Exhibit
10(o) to the 1989 Form 10-K and incorporated herein by reference).
10.14 - First Amendment to the TexCom Purchase Agreement, dated June 20, 1989,
between the Company and TexCom, Inc. (filed as Exhibit 10(v) to the 1989
Form 10-K and incorporated herein by reference).
10.15 - Acquisition Agreement, dated November 9, 1990, between Datapoint and
the Company (filed as Exhibit 10(v) to the 1990 Form 10-K and
incorporated herein by reference).
10.16 - Option Agreement, dated November 9, 1990, between Datapoint and the
Company (filed as Exhibit 10(w) to the 1990 Form 10-K and incorporated
herein by reference).
10.17 - Employment Agreement, dated July 1, 1991, between Asher B. Edelman and
the Company (filed as Exhibit 10(s) to the 1991 Form 10-K and
incorporated herein by reference).
10.18 - Intelogic Trace, Inc. 401(k) Retirement Savings Plan (filed as Exhibit
10.22 to the 1992 Form 10-K and incorporated herein by reference).
10.19 - Purchase Agreement, dated June 23, 1992, between Gemini Systems
Leasing Corp., Intelogic Trace TexCom Group, Inc. and The Lockwood
Association, Inc. (filed as Exhibit 10.23 to the 1992 Form 10-K and
incorporated herein by reference).
10.20 - First Amendment to Purchase Agreement, dated June 23, 1992, between
Gemini Systems Leasing Corp., Intelogic Trace TexCom Group, Inc. and The
Lockwood Association, Inc. (filed as Exhibit 10.24 to the 1992 Form 10-K
and incorporated herein by reference).
10.21 - First Amendment to the Employment agreement, dated July 1, 1991,
between Asher B. Edelman and the Company (filed as Exhibit 10.29 to the
1992 Form 10-K and incorporated herein by reference).
10.22 - Second Amendment to the Employment Agreement, dated July 1, 1991,
between Asher B. Edelman and the Company (filed as Exhibit 10.35 to the
1992 Form 10-K and incorporated herein by reference).
10.23 - First Amendment to the Employment Agreement, dated July 28, 1991,
between Mark S. Helwege and the Company (filed as Exhibit 10.36 to the
1992 Form 10-K and incorporated herein by reference).
10.24 - Employment Agreement, dated August 1, 1993, between Martin J. Landon
and the Company (filed as Exhibit 10.37 to the 1993 Form 10-K and
incorporated herein by reference).
10.25 - Employment Agreement, dated October 26, 1992, between John Alexander
Wilder and the Company (filed as Exhibit 10.38 to the 1993 Form 10-K and
incorporated herein by reference).
10.26 - Employment Agreement, dated November 2, 1992, between Michael E.
Schultz and the Company (filed as Exhibit 10.39 to the 1993 Form 10-K
and incorporated herein by reference).
10.27 - Second Amendment to the Employment Agreement, dated July 28, 1991,
between Mark S. Helwege and the Company (filed as Exhibit 10.27 to the
1994 Form 10-K and incorporated herein by reference).
10.28 - Second Amendment to the Employment Agreement dated January 27, 1986,
between Philip D. Freeman and the Company (filed as Exhibit 10.28 to the
1994 Form 10-K and incorporated herein by reference).
10.29 - Agreement, dated September 27, 1994, between the Company and Datapoint
Corporation (filed as Exhibit 10.29 to the 1994 Form 10-K and
incorporated herein by reference).
10.30 - Final Order Authorizing Use of Cash Collateral, Post-Petition
Financing, and Grant of Security Interest (describing
debtor-in-possession Financing Facility between the Company and Foothill
Capital Corporation) dated September 16, 1994 (filed as Exhibit 10.30 to
the 1994 Form 10-K and incorporated herein by reference).
10.31 - Final Order (1) Authorizing the Debtor to Incur Secured Priority
Administrative Indebtedness Pursuant to Section 364 (c) of the
Bankruptcy Code, (2) Granting Security Interests, (3) Approving
Agreement Related to the Foregoing and (4) Granting Other Relief
(describing the loan agreement between Fidelity Capital and Income Fund
and the Company) dated November 8, 1994 (filed as Exhibit 10.31 to the
1994 Form 10-K and incorporated herein by reference).
10.32 - Master Repair Services and Spare Parts Supply Agreement between PC
Service Source, Inc. and the Company, dated November 17, 1994.
10.33 - Employment Agreement between the Company and Mark S. Helwege, dated
December 1, 1994.
10.34 - Employment Agreement between the Company and Philip D. Freeman, dated
December 1, 1994.
10.35 - Loan and Security Agreement, between Fidelity Capital & Income Fund
and the Company, dated as of December 8, 1994.
10.36 - Settlement Agreement, between the Pension Benefit Guaranty
Corporation, the Company, Intelogic Trace Systems Group, Inc., Intelogic
Trace Canada, Inc., ITTG, Inc., TLA, Inc., and Intelogic Trace Marion
Group of Puerto Rico, Inc., dated as of November 22, 1994.
10.37 - Amended and Restated General Loan and Security Agreement between
Foothill Capital Corporation and the Company, dated December 8, 1994.
11 - Computation of Earnings Per Share.
27 - Financial Data Schedule for the three months ended October 31, 1994.
(b) REPORTS ON FORM 8-K:
During the quarter ended October 31, 1994, the Company filed the following
current reports on Form 8-K:
DATE FILED DESCRIPTION
- ---------- -----------
August 5, 1994 Form 8-K reported the Company's filing of a voluntary
petition on August 5, 1994 under Chapter 11 of the
Bankruptcy Act, Case No. 94-52172-C, in the United
States Bankruptcy Court, Western District of Texas, San
Antonio Division, Judge Leif M. Clark presiding.
September 16, 1994 Form 8-K announced the hiring of Ellen Kipfer as vice
president of the Company's marketing and field support
organization headquartered in San Antonio.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 14, 1994
INTELOGIC TRACE, INC.
(Registrant)
By /S/ MIKE R. ELLIS
Mike R. Ellis
Vice President and
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
and Accounting Officer)