UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from to
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Commission file number 0-26140
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@TRACK COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0352879
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1155 Kas Drive, Suite 100, Richardson, Texas 75081
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 301-2000
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Not Applicable
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(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
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Number of Shares Outstanding as of
Title of each class November 1, 2001
------------------------- -----------------------------------
Common Stock, $.01 par value 48,050,254
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
Form 10-Q
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at September 30, 2001
and December 31, 2000 3
Consolidated Statements of Operations for the three and
nine months ended September 30, 2001 and 2000 4
Consolidated Statements of Cash Flows for the
nine months ended September 30, 2001 and 2000 5
Consolidated Statement of Changes in Stockholders' Equity
(Deficit) for the nine months ended September 30, 2001 6
Notes to Consolidated Financial Statements 7-10
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
Item 3 Quantitative and Qualitative Disclosures About
Market Risk 13
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 15
2
PART I - FINANCIAL INFORMATION
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
ASSETS
September 30, December 31,
2001 2000
--------- ---------
Current assets:
Cash and short-term investments $ 13,509 $ 20,641
Accounts receivable, net 11,863 12,738
Inventories 8,538 13,216
Deferred product costs - current portion 6,480 7,406
Other current assets 1,198 1,759
--------- ---------
Total current assets 41,588 55,760
Network, equipment and software, net 9,655 12,851
Deferred product costs - non-current portion 5,778 9,770
License rights, net 38,334 --
Other assets, net 665 2,663
--------- ---------
Total assets $ 96,020 $ 81,044
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 3,438 $ 7,992
Telecommunications costs payable 4,036 5,358
Accrued interest payable 82 3,784
Deferred product revenues - current portion 7,830 8,975
Other current liabilities 7,338 8,826
--------- ---------
Total current liabilities 22,724 34,935
Deferred product revenues - non-current portion 7,046 11,966
Senior notes payable 14,094 92,484
--------- ---------
Total liabilities 43,864 139,385
--------- ---------
Commitments and contingencies (Note 11)
Stockholders' equity (deficit):
Common Stock 481 256
Common Stock - Class B -- --
Preferred Stock - Series E -- --
Additional paid-in capital 217,495 149,996
Accumulated deficit (165,272) (208,046)
Treasury stock (548) (547)
--------- ---------
Total stockholders' equity (deficit) 52,156 (58,341)
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 96,020 $ 81,044
========= =========
See accompanying notes to consolidated financial statements.
3
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2001 2000 2001 2000
-------- -------- -------- --------
Revenues:
Product $ 5,391 $ 16,021 $ 14,829 $ 26,156
Ratable product 2,136 2,015 7,617 10,254
Service 11,945 11,744 36,674 35,939
-------- -------- -------- --------
Total revenues 19,472 29,780 59,120 72,349
-------- -------- -------- --------
Cost of revenues:
Product 3,858 11,224 11,336 18,281
Ratable product 1,804 1,732 6,306 8,332
Service 7,164 7,363 20,617 21,376
Provision for settlement of litigation (Note 11) -- -- 2,100 --
-------- -------- -------- --------
Total cost of revenues 12,826 20,319 40,359 47,989
-------- -------- -------- --------
Gross profit 6,646 9,461 18,761 24,360
-------- -------- -------- --------
Expenses:
General and administrative 2,776 2,883 9,325 8,736
Customer service 1,621 1,806 5,566 5,207
Sales and marketing 951 1,199 3,099 3,546
Engineering 871 1,158 4,368 2,732
Network services center 457 433 1,326 1,102
Depreciation and amortization 1,966 1,490 5,370 4,365
-------- -------- -------- --------
8,642 8,969 29,054 25,688
-------- -------- -------- --------
Operating income (loss) (1,996) 492 (10,293) (1,328)
Interest income 128 262 436 1,155
Interest expense (538) (3,342) (6,830) (10,026)
Other income -- -- -- 142
-------- -------- -------- --------
Loss before income taxes, cumulative effect of accounting
change and extraordinary item (2,406) (2,588) (16,687) (10,057)
Income tax (provision) benefit -- -- -- --
-------- -------- -------- --------
Loss before cumulative effect of accounting change and
extraordinary item (2,406) (2,588) (16,687) (10,057)
Cumulative effect of accounting change -- -- -- (5,206)
Extraordinary item, net (Note 3) -- -- 59,461 --
-------- -------- -------- --------
Net income (loss) $ (2,406) $ (2,588) $ 42,774 $(15,263)
======== ======== ======== ========
Basic income (loss) per share:
Loss before cumulative effect of accounting change and
extraordinary item $ (0.05) $ (0.51) $ (0.79) $ (1.99)
Cumulative effect of accounting change -- -- -- (1.03)
Extraordinary item -- -- 2.81 --
-------- -------- -------- --------
Net income (loss) $ (0.05) $ (0.51) $ 2.02 $ (3.02)
======== ======== ======== ========
Diluted income (loss) per share:
Loss before cumulative effect of accounting change and
extraordinary item $ (0.05) $ (0.51) $ (0.77) $ (1.99)
Cumulative effect of accounting change -- -- -- (1.03)
Extraordinary item -- -- 2.74 --
-------- -------- -------- --------
Net income (loss) $ (0.05) $ (0.51) $ 1.97 $ (3.02)
======== ======== ======== ========
Weighted average number of shares outstanding:
Basic 48,056 5,065 21,148 5,056
======== ======== ======== ========
Diluted 48,056 5,065 21,675 5,056
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
4
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands, except share information)
Nine months ended
September 30,
-------------------------
2001 2000
-------- --------
Cash flows from operating activities:
Net income (loss) $ 42,774 $(15,263)
Adjustments to reconcile net loss to cash used in
operating activities:
Extraordinary item - non-cash portion (56,682) --
Depreciation and amortization 5,370 4,365
Amortization of discount on notes payable 204 296
Provision for bad debts 900 915
(Increase) in accounts receivable (25) (1,820)
(Increase) decrease in inventory 4,678 (2,579)
(Increase) decrease in deferred product costs 4,918 (18,599)
Increase (decrease) in accounts payable (4,554) 8,110
Increase (decrease) in deferred product revenues (6,065) 22,613
(Decrease) in accrued expenses and other current liabilities (6,512) (6,388)
Other 704 535
-------- --------
Net cash used in operating activities (14,290) (7,815)
-------- --------
Cash flows from investing activities:
Additions to network, equipment and software (1,241) (1,610)
Decrease in pledged securities -- 12,705
Decrease in short-term investments -- 12,601
License rights (1,050) --
-------- --------
Net cash provided by (used in) investing activities (2,291) 23,696
-------- --------
Cash flows from financing activities:
Proceeds from sale of common stock, net 9,450 --
Proceeds from exercise of stock options -- 255
Common stock repurchased (1) --
-------- --------
Net cash provided by financing activities 9,449 255
-------- --------
Increase (decrease) in cash and cash equivalents (7,132) 16,136
Cash and cash equivalents, beginning of period 20,641 5,167
-------- --------
Cash and cash equivalents, end of period 13,509 21,303
Short-term investments -- --
-------- --------
Cash and short-term investments $ 13,509 $ 21,303
======== ========
Supplemental cash flow information:
Interest paid $ 6,539 $ 12,974
======== ========
Non-cash investing and financing activities:
Fair value of License Rights acquired in exchange for
28,000,000 shares of common stock $ 38,000 $ --
======== ========
Principal amount of Senior Notes exchanged for
12,670,497 shares of common stock $ 80,022 $ --
======== ========
See accompanying notes to consolidated financial statements.
5
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(in thousands, except share information)
Common Stock Common Stock - Class B Preferred Stock
-------------------------- ---------------------- ----------------
Shares Amount Shares Amount Shares Amount
----------- --------- --------- --------- ------ -------
Stockholders' equity (deficit) at December 31, 2000 25,638,826 $ 256 1,000 $ -- -- $ --
---------- -------- ----- ------- ---- ------
Conversion of Class B Common to Common 1,600,000 16 (1,000) -- --
Issuance of Series E Preferred Stock 1 --
Reverse stock split (21,791,070) (218)
Common Stock issued to Minorplanet 30,000,000 300
Common Stock issued in Note Exchange 12,670,497 127
Common Stock repurchased
Net income
---------- -------- ----- ------- ---- ------
Stockholders' equity (deficit) at September 30, 2001 48,118,253 $ 481 $ -- $ -- 1 $ --
========= ======== ======= ======== ==== ======
Additional Treasury Stock
Paid-in ------------------- Accumulated
Capital Shares Amount Deficit Total
-------- ------- ------- --------- ---------
Stockholders' equity (deficit) at December 31, 2000 $149,996 311,997 $(547) $(208,046) $(58,341)
-------- ------- ----- --------- --------
Conversion of Class B Common to Common (16) --
Issuance of Series E Preferred Stock 1 1
Reverse stock split 218 (249,598) -- --
Common Stock issued to Minorplanet 47,625 47,925
Common Stock issued in Note Exchange 19,671 19,798
Common Stock repurchased 1,000 (1) (1)
Net income 42,774 42,774
-------- ------- ----- --------- --------
Stockholders' equity (deficit) at September 30, 2001 $217,495 63,399 $(548) $(165,272) $ 52,156
======= ======= ===== ========= ========
6
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
(Unaudited)
1. BUSINESS OVERVIEW
The Company develops and implements mobile communications
solutions, including integrated voice, data and position location
services. The initial application for the Company's wireless enhanced
services has been developed for, and is marketed and sold to, companies
that operate in the long-haul trucking market. The Company provides
long-haul trucking companies with a comprehensive package of mobile
communications and management information services, thereby enabling
its trucking customers to effectively monitor the operations and
improve the performance of their fleets. The initial product
application was customized and has been sold to and installed in the
service vehicle fleets of the member companies of SBC Communications,
Inc., pursuant to the service vehicle contract (the "Service Vehicle
Contract" or "Contract"). During the fourth quarter of 1999, the
Company entered the mobile asset tracking market with the introduction
of its trailer-tracking product, Trackware. Trackware is currently
being tested by prospective customers. There were no significant
revenues from Trackware during the periods ended September 30, 2000 or
2001. During the third quarter of 2001, the Company commenced marketing
the Vehicle Management Information ("VMI") product licensed from
Minorplanet Systems PLC into the automatic vehicle location ("AVL")
marketplace in the United States. See Note 3.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements presented
herein have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all footnote disclosures required by generally accepted accounting
principles. These consolidated financial statements should be read in
conjunction with the Company's audited financial statements for the
year ended December 31, 2000. The accompanying consolidated financial
statements reflect all adjustments (all of which are of a normal
recurring nature except as described in Note 11), which are, in the
opinion of management, necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for
the interim periods. The results for any interim period are not
necessarily indicative of the results for the entire year.
3. STOCK SPLIT AND RECAPITALIZATION
On June 4, 2001, the 1,000 shares of Class B Common Stock were
converted into 1,600,000 shares of Common Stock at the option of the
holder, SBC Wireless LLC, which is wholly owned by Cingular Wireless,
LLC, a joint venture in which SBC Communications, Inc. ("SBC") is a
lead venturer. On June 5, 2001, the Company effected a reverse stock
split in the ratio of one (1) share of post-split common stock for
every five (5) shares of pre-split common stock and amended the
Company's Certificate of Incorporation to increase the number of
authorized shares of common stock from 50,000,000 shares to 100,000,000
shares. All references to Common Stock and all per share references for
periods prior to the stock split have been restated to reflect the one
for five reverse stock split.
In addition, the Company created a new class of Series E
Preferred Stock and on June 5, 2001 issued one (1) share of Series E
Preferred Stock. The Series E Preferred Stock has a liquidation
preference of $1,000 per share and is entitled to the payment of annual
dividends at the rate of 7% per share. The Series E Preferred Stock
does not have any voting, conversion or preemptive rights.
7
On June 21, 2001, the Company consummated the stock issuance
transactions approved by the Company's stockholders at the annual
meeting on June 4, 2001. As a result of the closing of transactions
contemplated by that certain Stock Purchase and Exchange Agreement by
and among the Company, Minorplanet Systems PLC, a United Kingdom public
limited company ("Minorplanet"), and Mackay Shields LLC ("MacKay"),
dated February 14, 2001 (the "Purchase Agreement"), the Company issued
30,000,000 shares of its common stock in a change of control
transaction to Minorplanet, which is now the majority stockholder of
the Company. In exchange for this stock issuance, Minorplanet paid the
Company $10,000,000 in cash and transferred to the Company all of the
shares of its wholly-owned subsidiary, Minorplanet Limited, which holds
an exclusive, royalty-free, 99-year license to market, sell and operate
Minorplanet's VMI technology in the United States, Canada and Mexico.
As a result of this transaction, Minorplanet beneficially owns
approximately 62.4% of the outstanding shares of the Company's common
stock (on a non-fully diluted basis), which is now the sole voting
security of the Company. The "License Rights" acquired are valued in
the accompanying Consolidated Balance Sheet as an asset purchase at an
amount which reflects the fair value of the common stock issued by the
Company based on the market price of the Company's common stock on the
date of consummation of the transaction ($1.60 per share on June 21,
2001), plus the incremental direct costs incurred in effecting the
transaction.
Also, the Company issued 12,670,497 shares of its common stock
(valued at $1.60 per share) to holders of its Senior Notes due 2005
("Senior Notes") in exchange for the cancellation of Senior Notes with
an aggregate principal amount of $80,022,000 (the "Exchange Offer").
The total principal amount of Senior Notes that remains outstanding is
$14,333,000. As a result of this Exchange Offer, the Company recognized
a $59,461,000 gain, net of $995,000 of Federal income taxes and
$3,067,000 in the aggregate amount of unamortized debt discount and
issuance costs, and including $3,773,000 of waived accrued interest
payable, which is reflected as an extraordinary item in the
accompanying Consolidated Statements of Operations.
The foregoing transactions are hereinafter collectively
referred to as the "Recapitalization." As a result of the
Recapitalization, the Company significantly reduced its indebtedness
and related interest expense. In addition, the Company acquired the VMI
technology and commenced distribution of Minorplanet's VMI product in
the United States.
4. COMPLIANCE WITH NASDAQ LISTING REQUIREMENTS
In December, 2000, the Company was notified by letter from the
Nasdaq Stock Market, Inc. ("Nasdaq"), that it was no longer in
compliance with the net tangible assets, market capitalization, net
income and minimum bid price requirements for continued listing on the
Nasdaq Small Cap Market, and therefore Nasdaq was commencing delisting
proceedings. Since February 12, 2001, the Company's common stock has
been conditionally listed on the Nasdaq Small Cap Market via an
exception from these requirements granted by Nasdaq. As a result of the
completion of the Recapitalization described in Note 3, on August 3,
2001, the Nasdaq Listing Qualifications Panel issued an order ending
the delisting proceedings against the Company.
5. FUTURE OPERATIONS
The Company has incurred significant operating losses since
inception and has limited financial resources to support it until such
time that it is able to generate positive cash flow from operations. As
a result of the Recapitalization, the Company has reduced its Senior
Notes due in 2005 in the principal amount of $80,022,000 and its
related annual cash outflow for interest service by $11,003,000, which
will extend its financial viability. In addition, the Company believes
acquisition of the License Rights will provide the Company significant
marketing potential of the licensed tracking VMI technology, enhancing
future results of operations and reducing the need for capital
resources to develop similar tracking technology. The critical success
factors in Management's plans to achieve positive cash flow from
operations are as follows: (1) achieve significant market acceptance of
the VMI product line, (2) complete existing orders and secure
additional orders under the Service Vehicle Contract, and (3) retain
the majority of the Company's existing customer base.
8
Based on projected operating results, the Company believes its
existing capital resources will be sufficient to fund its currently
anticipated operating needs and capital expenditure requirements for
the next 18 months assuming it can achieve the critical success factors
outlined above. However, the Company's future cash flow from operations
and operating requirements may vary depending on a number of factors,
including acceptance in the marketplace of the Company's products, the
level of competition, general economic conditions and other factors
beyond the Company's control.
6. EARNINGS PER SHARE
The Company computes earnings per share in accordance SFAS No.
128, "Earnings Per Share." Net income (loss) per basic share was
computed by dividing net income (loss) by the weighted average number
of shares outstanding during the respective periods. Diluted earnings
per share has been presented for the nine months ended September 30,
2001, to reflect the weighted average shares outstanding assuming the
issuance of common stock upon exercise of potentially dilutive stock
options. Diluted earnings per share is computed using the "Treasury
Stock Method." The Company's potentially dilutive securities have been
excluded from the weighted average number of shares outstanding for the
other periods presented, since their effect would be anti-dilutive.
Earnings per share amounts for all periods presented have been
restated to reflect the reverse stock split effected June 5, 2001, as
described in Note 3.
7. INVENTORIES
September 30, December 31,
2001 2000
------------- ------------
Complete systems $ 823 $ 3,240
Component parts 6,636 5,919
Equipment shipped not yet accepted 1,079 4,057
------------- -----------
$ 8,538 $ 13,216
=========== ===========
8. LICENSE RIGHTS
As part of the Recapitalization, the Company received a
99-year exclusive license right to market, sell and operate
Minorplanet's VMI technology in the United States, Canada and Mexico.
The license covers rights to existing technologies of Minorplanet as
well as any future developments. In addition, the Company agreed to pay
an annual fee of $1,000,000 to aid in funding research and development
of future products covered by the license rights. Based on the
Company's evaluation of the useful life of the existing technology,
probability of future developments to bring new products to market and
projected cash flows from these products, the license rights are being
amortized over a 15-year life.
9. CHANGE IN ACCOUNTING PRINCIPLE
During the fourth quarter of 2000, as a result of new
interpretations of generally accepted accounting principles by the
Securities and Exchange Commission (the "SEC"), through issuance of SEC
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), the Company was required to change its
accounting policy for product revenue recognition, effective January 1,
2000. The September 30, 2000 consolidated financial statements have
been restated to reflect the adoption of this new accounting principle.
9
10. RELATED PARTY TRANSACTIONS
As a result of the Recapitalization, Minorplanet Systems PLC
holds in excess of 50 percent of the Company's outstanding common stock
and thus controls the Company. As a result of this control, Minorplanet
Systems PLC is a related party. Transactions with Minorplanet Systems
PLC are summarized below.
Nine months ended September 30, 2001
---------------
Purchases $ 275
As of: September 30,
2001
---------------
Accounts receivable $ --
Accounts payable $ 275
Prior to the consummation of the Recapitalization, SBC
Wireless LLC was considered a related party by virtue of the control
provisions afforded by the shareholder agreement executed upon its
purchase of the Company's common stock. As a result of the
Recapitalization, such control provisions were eliminated, and SBC
Wireless LLC is no longer a related party.
Certain affiliates of SBC Wireless LLC, which is wholly owned
by Cingular Wireless, LLC, a joint venture in which SBC Communications,
Inc. ("SBC") is a lead venturer, serve as customers of and vendors to
the Company. The Company sells mobile communication units and provides
services pursuant to the Service Vehicle Contract. Additionally, one
affiliated company serves as "administrative carrier" and provides
clearinghouse services, and other affiliated companies of SBC are among
the cellular carriers with whom the Company purchases airtime in
connection with the Company's provision of its services. Sales to these
affiliated companies of SBC for the nine months ended September 30,
2000 and the six months ended June 30, 2001, the periods when it was a
related party, are summarized below.
2001 2000
------------ ----------
$ 15,331 $ 30,006
11. COMMITMENTS AND CONTINGENCIES
During the first quarter of 2001, the outsource manufacturer
(the "vendor") that supplies substantially all of the Company's
finished goods inventory asserted a claim for reimbursement for excess
and obsolete inventory purchased in its capacity for use in the
manufacture of the Company's products. This claim was disputed by the
Company. As a result of this dispute, beginning in April 2001, the
vendor ceased to perform on its contract to provide finished goods
inventory and certain other services to the Company. The claims and
counterclaims ultimately led to each of the parties filing litigation
against the other. The vendor and the Company executed a Compromise
Settlement Agreement on October 9, 2001. While the ultimate liability
in connection with this settlement will not be known until December 31,
2002, based on information currently available, the Company has
recorded a provision of $2.1 million as its estimate of the cost to be
incurred to settle this litigation. As part of the settlement, the
Company will continue to use K-Tec as a manufacturer.
12. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, The Financial Accounting Standards Board Issued
Statements of Financial Accounting Standards Nos. 141 and 142,
"Business Combinations" and "Goodwill and Other Intangible Assets,"
respectively. Adoption of these statements will have no material impact
on the financial position of the Company.
10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended September 30, 2001, Compared to Three Months Ended
September 30, 2000
Total revenues decreased 34.6% to $19.5 million in 2001, from $29.8
million in 2000. Product revenues decreased 66.4% to $5.4 million in 2001, from
$16.0 million in 2000 primarily due to a decrease in unit sales for the Service
Vehicle Contract. While installations and revenue recognition under the Service
Vehicle Contract are expected to continue for the remainder of 2001,
installation schedules are not consistent from quarter to quarter. Service
revenues were $11.9 million in 2001 compared to $11.7 million in 2000, an
increase of 1.7%. While the average installed base of mobile units increased
20.8% from 2000 to 2001, the average monthly revenue per mobile unit decreased
15.9% to $55.54 in 2001 from $66.05 in 2000, primarily due to the increasing
proportion of service vehicles in the installed base. Average revenue for
service vehicles is significantly less than that of long-haul trucking because
of different product functionality. The installed base of mobile units increased
to 69,862 at September 30, 2001 from 60,716 at September 30, 2000. The increase
in the installed base is attributable to the Service Vehicle Contract.
Service gross profit margin was 40.0% in 2001 compared to 37.3% in
2000. The increase in service gross profit margin is primarily the result of
rate reductions obtained from cellular carriers and other telecommunications
providers.
Product gross profit margin decreased to 28.4% in 2001 from 29.9% in
2000. This decrease is primarily due to increased provision for excess and
obsolete inventory, offset, in part, by improvement in installation margin.
Operating expenses decreased 3.6% to $8.6 million in 2001 from $9.0
million in 2000. This decrease is primarily due to a reduction in payroll
related costs. Personnel reductions were made as a consequence of the
Recapitalization described in Note 3 to the Consolidated Financial Statements,
and the subsequent cancellation of various technology initiatives.
Operating income decreased $2.5 million from 2000 to 2001. This
decrease is the result of the $2.8 million decrease in gross profit margin, due
primarily to the 66.4% decrease in product revenues, reduced by the $0.3 million
decrease in operating expenses. The Company's ability to generate operating
income is significantly influenced by the gross margin related to product
revenues. The decrease in the Service Vehicle Contract unit sales during the
third quarter of 2001 significantly reduced gross profit margin. Presently, the
Service Vehicle Contract is responsible for the majority of product revenues.
Product shipments under that contract for the remainder of the year are expected
to be less than the corresponding period of 2000. The Company's financial
condition and results of operations are heavily dependent upon the Company's
ability to market and sell the VMI products. Although the Company introduced the
VMI product during the third quarter of 2001, revenues and gross margin from
that product are not expected to contribute significantly to 2001 results.
Therefore, the Company believes that its 2001 revenues will decrease relative to
2000.
Interest expense decreased to $0.5 million in 2001 from $3.3 million in
2000, due to the $80.0 million reduction in Senior Notes payable as a result of
the Recapitalization.
Nine Months Ended September 30, 2001, Compared to Nine Months Ended
September 30, 2000
Total revenues decreased 18.3% to $59.1 million in 2001, from $72.3
million in 2000. Product revenues decreased 43.3% to $14.8 million in 2001, from
$26.2 million in 2000, primarily due to a decrease in unit sales for the Service
Vehicle Contract. Ratable Product Revenues decreased 25.7% to $7.6 million in
2001, from $10.3 million in 2000. This decrease is due to the fact that Ratable
Product Revenues in 2000 include the recognition of all previously deferred
revenues related to a significant customer for whom service was terminated
during the nine months ended September 30, 2000. Service revenues were $36.7
million in 2001 compared to $35.9 million in 2000, an increase of 2.0%. While
the average installed base of mobile units increased 23.0% from 2000 to 2001,
the average monthly revenue per mobile unit decreased 21.5% to $57.41 in 2001
from $73.13 in 2000, primarily due to the increasing proportion of service
vehicles in the installed base. Average revenue for service vehicles is
significantly less than that of long-haul trucking because of different product
functionality. The installed base of mobile units increased to 69,862 at
September 30, 2001 from 60,716 at September 30, 2000. The increase in the
installed base is attributable to the Service Vehicle
11
Contract.
Service gross profit margin was 43.8% in 2001 compared to 40.5% in
2000. The increase in service gross profit margin is primarily the result of
rate reductions obtained from cellular carriers and other telecommunications
providers.
Product gross profit margin, excluding the $2.1 million provision for
settlement of litigation, was 23.6% in 2001 compared to 30.1% in 2000. The
decrease in gross profit margin is primarily attributable to TrackWare. During
2001, the Company began receiving significant quantities of TrackWare finished
goods inventory, the carrying amount of which was written down by approximately
$0.6 million to estimated market value. Excluding the effect of the write-down
from cost to market, product gross profit margin would have been 27.7%. The
Company has completed the receipt of the initial version of TrackWare units for
which cost was in excess of market value. The Company has made substantial
modifications to the design of the Trackware unit to reduce future production
costs and does not currently expect any additional TrackWare related cost to
market write-downs in subsequent periods. As described in Note 11 to the
Consolidated Financial Statements, the Company has settled the litigation with
its outsource manufacturer for reimbursement for excess and obsolete inventory.
The Company has recorded a provision of $2.1 million as its current estimate of
the cost to be incurred as a result of this settlement.
Operating expenses increased 13.1% to $29.1 million in 2001 from $25.7
million in 2000. This increase is primarily due to expenditures related to an
increase in the number of employees and independent contractors. Such increases
relate primarily to increasing the resources for (1) research and development
activities, (2) development and maintenance of the Company's information
systems, and (3) enhancing the network capabilities for the Company's products
and services. Personnel reductions were made as a consequence of the
Recapitalization described in Note 3 to the Consolidated Financial Statements,
and the subsequent cancellation of various technology initiatives. Operating
expenses in 2001 include approximately $0.4 million of severance payments to
terminated employees as a result of these personnel reductions. A significant
amount of the research and development activities referred to above, which were
subsequently cancelled, were performed by these former employees. In the future,
the Company will be charged a fee for research and development activities
performed by Minorplanet.
Operating loss increased $9.0 million from 2000 to 2001. This increase
is the combined effect of the $5.6 million decrease in gross profit margin,
primarily due to the 43.3% decrease in product revenues and 25.7% decrease in
ratable product revenues, and the $3.4 million increase in operating expenses
discussed above. The Company's ability to generate operating income is
significantly influenced by the gross margin related to product revenues. The
decrease in the Service Vehicle Contract unit sales during 2001 significantly
reduced gross profit margin. Presently, the Service Vehicle Contract is
responsible for the majority of product revenues. Product shipments under that
contract for the remainder of the year are expected to be less than the
corresponding period of 2000. The Company's financial condition and results of
operations are heavily dependent upon the Company's ability to market and sell
the VMI products. Although the Company introduced the VMI product during the
third quarter of 2001, revenues and gross margin from that product are not
expected to contribute significantly to 2001 results. Therefore, the Company
believes that its 2001 revenues will decrease relative to 2000.
Interest expense decreased to $6.8 million in 2001 from $10.0 million
in 2000, due to the $80.0 million reduction in Senior Notes payable as a result
of the Recapitalization.
The extraordinary gain in 2001 of $59.5 million, net of Federal income
taxes, reflects the difference between the fair value of the common stock issued
in exchange for $80.0 million principal amount of Senior Notes retired, together
with accrued interest thereon, net of expenses associated with the exchange
offer. See Note 3 to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Recapitalization resulted in a $10 million cash infusion to the
Company. The exchanging note holders agreed to waive payment of interest on the
Senior Notes that accrued from December 16, 2000 through April 30, 2001.
However, the Company was required to pay the interest that accrued from May 1,
2001 though the closing date, June 21, 2001. After payment of accrued interest
on the Senior Notes that were exchanged for common stock, and expenses and
income taxes associated with the Recapitalization, the net cash proceeds to the
Company were $5.9 million.
12
The Company has incurred significant operating losses since inception
and has limited financial resources to support it until such time that it is
able to generate positive cash flow from operations. As a result of the
Recapitalization, the Company has reduced its Senior Notes due in 2005 in the
principal amount of $80.0 million and its related annual cash outflow for
interest service by $11.0 million, which will extend its financial viability. In
addition, the Company believes acquisition of the License Rights will provide
the Company significant marketing potential of the licensed tracking VMI
technology, enhancing future results of operations and reducing the need for
capital resources to develop similar tracking technology. The critical success
factors in Management's plans to achieve positive cash flow from operations are
as follows: (1) achieve significant market acceptance of the VMI product line,
(2) complete existing orders under the Service Vehicle Contract, and (3) retain
the majority of the Company's existing customer base.
Based on projected operating results, the Company believes its existing
capital resources will be sufficient to fund its currently anticipated operating
needs and capital expenditure requirements for the next 18 months assuming it
can achieve the critical success factors outlined above. However, the Company's
future cash flow from operations and operating requirements may vary depending
on a number of factors, including acceptance in the marketplace of the Company's
products, the level of competition, general economic conditions and other
factors beyond the Company's control.
In connection with the acquisition of the License Rights to the VMI
technology, and access to future research and development of Minorplanet, the
Company is evaluating the applicability of the VMI technology and ongoing
research and development initiatives by Minorplanet to markets the Company
currently serves. In addition, the Company is evaluating each of the markets it
serves and their future potential in an effort to bring the Company to positive
cash flow and profitability. The conclusions from these evaluations could result
in material changes in the Company's operating structure and require provision
in the financial statements for restructuring costs as well as certain asset
write-downs.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have any material exposure to market risk
associated with its cash and short-term investments. The Company's Senior Notes
are at a fixed rate and, thus, are not exposed to interest rate risk.
FORWARD LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, that are based upon
management's current beliefs and projections, as well as assumptions made by and
information currently available to management. When used in this Form 10-Q, the
words "anticipate," "believe," "estimate," "expect" and similar expressions are
intended to identify forward-looking statements. Any statement or conclusion
concerning future events is a forward-looking statement, and should not be
interpreted as a promise or conclusion that the event will occur. The Company's
actual operating results or the actual occurrence of any such event could differ
materially from those projected in the forward-looking statements. Factors that
could cause or contribute to such differences include those discussed in this
report, and the Company's Annual Report on Form 10-K for the year ended December
31, 2000.
13
@TRACK COMMUNICATIONS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the first quarter of 2001, K*TEC Electronics Corporation
("K*TEC"), the outsource manufacturer that supplies substantially all
of the Company's finished goods inventory asserted a claim against the
Company for reimbursement for excess and obsolete inventory purchased
in its capacity for use in the manufacture of the Company's products.
Following review of the claim, the Company believed that it had
meritorious defenses to the alleged claim and vigorously denied
liability. In April 2001, K*TEC refused to ship products, placing the
Company on "credit hold," refused to ship finished goods unless the
Company prepaid for such finished goods, refused to ship finished goods
unless the Company paid the excess inventory balance, refused to
manufacture goods, and refused to process goods received under Return
Merchandise Authorizations ("RMA's"). K*TEC also refused to return to
the Company certain test equipment and RMA equipment owned by the
Company.
On May 18, 2001, the Company filed an Original Petition styled
and numbered @Track Communications, Inc, f/k/a HighwayMaster
Corporation v. K-TEC Electronics Corporation, Cause No. 01-04173 in the
B44th District Court of Dallas County, Texas seeking recovery against
K*TEC for breach of contract, breach of bailment and conversion,
replevin, and also seeking a declaratory judgment, an accounting,
attorney's fees and costs of court (the "Dallas Lawsuit").
On June 21, 2001 K*TEC filed an Original Petition styled and
numbered K*Tec Electronics Corporation, L.P. doing business as K*Tec
Electronics v. @Track Communications, Inc. formerly known as
HighwayMaster Corporation, Cause No. 01CV-119321 in the 268th District
Court of Fort Bend County, Texas seeking recovery against the Company
for sworn account, breach of contract, promissory estoppel,
quasi-estoppel, equitable estoppel, quantum meruit, negligent
misrepresentation, attorney's fees and costs of court (the "Fort Bend
Lawsuit").
On July 10, 2001, the Company and K*TEC reached agreement on
all material terms of settlement of the lawsuits subject to the
execution of a definitive settlement document. As per the settlement,
the Company will continue to utilize K*TEC as a manufacturer. On
October 9, 2001, the Company and K*TEC executed a Compromise Settlement
Agreement. In accordance with the Compromise Settlement Agreement, the
parties have filed an Agreed Order Dismissing with Prejudice both the
Dallas Lawsuit and the Fort Bend Lawsuit. The $2.1 million reserve for
loss recorded in the Company's financial statements at September 30,
2001, reflects the Company's current estimate of the cost to be
incurred to resolve this matter.
Item 2. Changes in Securities - None.
Item 3. Defaults Upon Senior Securities - None.
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See the Index to Exhibits
14
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.
@TRACK COMMUNICATIONS, INC.
Date: November 13, 2001
By: /s/ Jana Ahlfinger Bell
------------------------------------
Jana Ahlfinger Bell
President and Chief Executive Officer
By: /s/ W. Michael Smith
------------------------------------
W. Michael Smith
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
15
INDEX TO EXHIBITS
EXHIBIT
NUMBER TITLE
------ -----
3.1 - Certificate of Incorporation of the Company, as amended.(1)(9)
3.2 - Amended and Restated By-Laws of the Company.(13)
4.1 - Specimen of certificate representing Common Stock, $.01 par
value, of the Company.(1)
4.2 - Warrant Certificate, dated September 27, 1996, issued to
SBW.(7)
4.3 - Recapitalization Agreement, dated September 27, 1996, by and
among the Company, the Erin Mills Stockholders, the Carlyle
Stockholders and the other persons named therein.(7)
4.4 - Amended and Restated Stockholders Agreement, dated September
27, 1996, by and among the Company, SBW, the Erin Mills
Stockholders, the Carlyle Stockholders, the By-Word
Stockholders and the other persons named therein.(7)
4.5 - Indenture dated September 23, 1997 by and among the Company,
HighwayMaster Corporation and Texas Commerce Bank, National
Association.(12)
4.6 - Pledge Agreement dated September 23, 1997, by and among the
Company, Bear, Stearns & Co. Inc. and Smith Barney Inc.(12)
4.7 - Registration Rights Agreement dated September 23, 1997, by and
among the Company, HighwayMaster Corporation, Bear, Stearns &
Co. Inc. and Smith Barney Inc.(12)
4.8 - Warrant Agreement dated September 23, 1997, by and among the
Company, Bear, Stearns & Co. Inc. and Smith Barney Inc.(12)
4.9 - Warrant Registration Rights Agreement dated September 23,
1997, by and among the Company, Bear, Stearns & Co. Inc. and
Smith Barney, Inc.(12)
10.1 - License Agreement, dated April 23, 1992, by and between Voice
Control Systems and the Company (as successor to By-Word
Technologies, Inc.)(1)
10.2 - Second Amendment to Employment Agreement, dated September 1,
1998, by and between HighwayMaster Corporation and William C.
Saunders. (16)
10.3 - Agreement and General Release, dated September 30, 1998, by
and between HighwayMaster Corporation and William C. Kennedy,
Jr.(15)
10.4 - Release of HighwayMaster Communications, Inc. and
HighwayMaster Corporation by William C. Saunders, dated
December 15, 1998. (16)
10.5 - Release of William C. Saunders by HighwayMaster
Communications, Inc. and HighwayMaster Corporation, dated
December 15, 1998. (16)
10.6 - Amended and Restated 1994 Stock Option Plan of the Company,
dated February 4, 1994, as amended.(1)(5)(6)
10.7 - Purchase Agreement, dated September 27, 1996, between the
Company and SBW.(7)
10.8 - Mobile Communications (Voice and Data) Services Agreement,
dated as of July 15, 1993, between the Company and EDS
Personal Communications Corporation.(1)(2)
10.9 - Stock Option Agreement, dated June 22, 1998, by and between
the Company and John Stupka. (16)
10.10 - Services Agreement, dated March 20, 1996, between the Company
and GTE-Mobile Communications Service Corporation.(3)(4)
10.11 - Acknowledgment by William C. Saunders dated December 15, 1998.
(16)
10.12 - Amendment dated November 16, 1995 to that certain Mobile
Communications (Voice and Data) Services Agreement, dated as
of July 15, 1993, between the Company and EDS Personal
Communications Corporation.(3)(4)
10.13 - Mutual Separation and Release, dated December 22, 1998, by and
between HighwayMaster Corporation and Gordon D. Quick. (16)
10.14 - Product Development Agreement, dated December 21, 1995,
between HighwayMaster Corporation and IEX Corporation.(3)(4)
10.15 - Technical Services Agreement, dated September 27, 1996,
between HighwayMaster Corporation and Southwestern Bell
Wireless Holdings, Inc.(7)
10.16 - Letter Agreement, dated February 19, 1996, between
HighwayMaster Corporation and IEX Corporation.(3)
10.17 - Form of Adoption Agreement, Regional Prototype Cash or
Deferred Profit-Sharing Plan and Trust Sponsored by McKay
Hochman Co., Inc., relating to the HighwayMaster Corporation
401(k) Plan. (1)
10.18 - February 27, 1997 Addendum to Original Employment Letter,
dated September 19, 1997 by and between the HighwayMaster
Corporation and Robert LaMere. (16)
10.19 - Software Transfer Agreement, dated April 25, 1997, between
HighwayMaster Corporation and Burlington Motor Carriers,
Inc.(9)(10)
10.20 - Employment Agreement, dated June 3, 1998, by and between
HighwayMaster Corporation and Todd A. Felker. (16)
10.21 - Employment Agreement, dated June 3, 1998, by and between
HighwayMaster Corporation and William McCausland.(16)
10.22 - Employment Agreement, dated May 29, 1998, by and between
HighwayMaster Corporation and Jana Ahlfinger Bell. (14)
10.23 - Lease Agreement, dated March 20, 1998, between HighwayMaster
Corporation and Cardinal Collins Tech Center, Inc.(15)
10.24 - First Amendment to Employment Agreement, dated September 15,
1998, by and between HighwayMaster Corporation and Jana A.
Bell. (16)
10.25 - Employment Agreement, dated November 24, 1998, by and between
HighwayMaster Corporation and Michael Smith. (16)
10.26 - September 18, 1998 Amended and Restated Stock Option Agreement
of May 29, 1998 by and between the Company and Jana Ahlfinger
Bell. (16)
10.27 - Stock Option Agreement, dated August 12, 1998, by and between
the Company and Jana Ahlfinger Bell. (16)
10.28 - Stock Option Agreement, dated September 18, 1998, by and
between the Company and Jana Ahlfinger Bell. (16)
10.29 - September 18, 1998 Amended and Restated Stock Option Agreement
of February 29, 1996, by and between the Company and William
H. McCausland. (16)
10.30 - Stock Option Agreement, dated September 18, 1998, by and
between the Company and William H. McCausland. (16)
10.31 - September 18, 1998 Amended and Restated Stock Option Agreement
of April 25, 1997, by and between the Company and Robert
LaMere. (16)
10.32 - September 18, 1998 Amended and Restated Stock Option Agreement
of June 3, 1998, by and between the Company and Todd A. Felker
(16)
10.33 - Stock Option Agreement dated November 24, 1998, by and between
the Company and Michael Smith. (16)
10.34 - Stock Option Agreement, dated April 4, 1995, by and between
the Company and Terry Parker. (16)
10.35 - Agreement No. 980427 between Southwestern Bell Telephone
Company, Pacific Bell, Nevada Bell, Southern New England
Telephone and HighwayMaster Corporation executed on January
13, 1999. (17)(18)
10.36 - Administrative Carrier Agreement entered into between
HighwayMaster Corporation and Southwestern Bell Mobile
Systems, Inc. on March 30, 1999. (17)(18)
10.37 - Addendum to Agreement entered into between HighwayMaster
Corporation and International Telecommunications Data Systems,
Inc. on February 4, 1999. (17)(18)
10.38 - Second Addendum to Agreement entered into between
HighwayMaster
Corporation and International Telecommunications Data Systems,
Inc. on February 4, 1999. (17)(18)
10.39 - Manufacturing and Equipment Purchase Agreement entered into
between HighwayMaster Corporation and Wireless Link
Corporation on March 9, 1999. (17)(18)
10.40 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 19, 1999. (17)(18)
10.41 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 19, 1999. (17)(18)
10.42 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 19, 1999. (17)(18)
10.43 - Agreement entered into between HighwayMaster Corporation and
Cellemetry LLC on January 7, 1999. (17)(18)
10.44 - Stock Option Agreement dated June 24, 1999, by and between the
Company and J. Raymond Bilbao. (19)
10.45 - Stock Option Agreement dated June 24, 1999, by and between the
Company and Marshall Lamm. (19)
10.46 - Stock Option Agreement dated June 14, 1999, by and between the
Company and Marc A. Bringman. (19)
10.47 - Transition Agreement entered into between GTE Wireless
Services Corporation and HighwayMaster Corporation on April
30, 1999. (19)(20)
10.48 - Fleet-on-Track Services Agreement entered into between GTE
Telecommunications Services Incorporated and HighwayMaster
Corporation on May 3, 1999. (19)(20)
10.49 - Confidential Memorandum of Understanding entered into between
Criticom International Corp. and HighwayMaster Corporation on
April 16, 1999. (19)(20)
10.50 - Stock Option Agreement dated September 3, 1999, by and between
the Company and J. Raymond Bilbao. (21)
10.51 - Stock Option Agreement dated September 3, 1999, by and between
the Company and Todd Felker. (21)
10.52 - Stock Option Agreement dated September 3, 1999, by and between
the Company and C. Marshall Lamm. (21)
10.53 - Stock Option Agreement dated September 3, 1999, by and between
the Company and William H. McCausland. (21)
10.54 - Stock Option Agreement dated September 3, 1999, by and between
the Company and Pierre H. Parent. (21)
10.55 - Stock Option Agreement dated September 3, 1999, by and between
the Company and W. Michael Smith. (21)
10.56 - Stock Option Agreement dated September 3, 1999, by and between
the Company and Robert W. LaMere. (21)
10.57 - Stock Option Agreement dated September 3, 1999 by and between
the Company and Stephen P. Tacke. (21)
10.58 - Employment Agreement, dated March 13, 2000, by and between the
Company and W. Michael Smith. (22)
10.59 - Employment Agreement, dated March 13, 2000, by and between the
Company and J. Raymond Bilbao. (22)
10.60 - Employment Agreement, dated March 13, 2000, by and between the
Company and Todd A. Felker. (22)
10.61 - Employment Agreement, dated March 13, 2000, by and between the
Company and Marshall Lamm. (22)
10.62 - Employment Agreement, dated March 13, 2000, by and between the
Company and Pierre Parent. (22)
10.63 - Limited Liability Company Agreement of HighwayMaster of
Canada, LLC executed March 3, 2000. (22)
10.64 - Investor Relations Services Agreement, dated March 31, 2000,
by and between the Company and N.D. Hamilton Associates, Inc.
(22)
10.65 - Employment Agreement, dated May 31, 2000, by and between the
Company and Jana A. Bell. (24)
10.66 - Employment Agreement, dated June 6, 2000, by and between the
Company and Robert W. LaMere. (24)
10.67 - Monitoring Services Agreement dated May 25, 2000, by and
between the Company and Criticom International Corporation.
(23) (24)
10.68 - Commercial Lease Agreement dated April 26, 2000 by and between
the Company and 10th Street Business Park, Ltd. (24)
10.69 - Special Customer Arrangement for MCI WORLDCOM On-Net Services
dated October 23, 2000 by and between the Company and MCI
WORLDCOM. (25) (26)
10.70 Stock Option Agreement dated July 18, 2001, by and between the
Company and Jana A. Bell (27)
10.71 Stock Option Agreement dated June 21, 2001, by and between the
Company and Jana A. Bell (27)
10.72 Stock Option Agreement dated July 18, 2001, by and between the
Company and J. Raymond Bilbao (27)
10.73 Stock Option Agreement dated June 21, 2001, by and between the
Company and J. Raymond Bilbao (27)
10.74 Stock Option Agreement dated July 18, 2001, by and between the
Company and Todd A. Felker (27)
10.75 Stock Option Agreement dated June 21, 2001, by and between the
Company and Todd A. Felker (27)
10.76 Stock Option Agreement dated July 18, 2001, by and between the
Company and Robert W. LaMere (27)
10.77 Stock Option Agreement dated June 21, 2001, by and between the
Company and Robert W. LaMere (27)
10.78 Stock Option Agreement dated July 18, 2001, by and between the
Company and Marshall Lamm (27)
10.79 Stock Option Agreement dated June 21, 2001, by and between the
Company and Marshall Lamm (27)
10.80 Stock Option Agreement dated July 18, 2001, by and between the
Company and W. Michael Smith (27)
10.81 Stock Option Agreement dated June 21, 2001, by and between the
Company and W. Michael Smith (27)
11 Statement Regarding Computation of Per Share Earnings (27)
- -----------
(1) Filed in connection with the Company's Registration Statement on Form
S-1, as amended (No. 33-91486), effective June 22, 1995.
(2) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with
Registration Statement on Form S-1 (No. 33-91486) effective June 22,
1995.
(3) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
(4) Certain confidential portions deleted pursuant to Application for
Confidential Treatment filed in connection with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
(5) Indicates management or compensatory plan or arrangement required to be
identified pursuant to Item 14(a)(4).
(6) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1996.
(7) Filed in connection with the Company's Current Report on Form 8-K filed
on October 7, 1996.
(8) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.
(9) (9) Filed in connection with the Company's Form 10-Q Quarterly Report
for the quarterly period ended March 31, 1997.
(10) (10) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with the
Company's Form 10-Q Quarterly Report for the quarterly period ended
March 31, 1997.
(11) (11) Filed in connection with the Company's Form 10-Q Quarterly Report
for the quarterly period ended June 30, 1997.
(12) Filed in connection with the Company's Registration Statement on Form
S-4, as amended (No. 333-38361).
(13) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997.
(14) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1998.
(15) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended September 30, 1998.
(16) Filed in connection with the Company's Form 10-K fiscal year ended
December 31, 1998.
(17) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended March 31, 1999.
(18) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued June 22, 1999 in
connection with the Company's Form 10 - Q Quarterly Report for the
quarterly period ended March 31, 1999.
(19) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1999.
(20) Certain confidential portions deleted pursuant to letter granting
application for confidential treatment issued October 10, 1999 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 1999.
(21) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended September 30, 1999.
(22) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended March 31, 2000.
(23) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued December 5, 2000 in
connection with the Company's Form 10 - Q Quarterly Report for the
quarterly period ended June 30, 2000.
(24) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 2000.
(25) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued June 20, 2001 in
connection with the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000.
(26) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000.
(27) Filed herewith.