Intrado (NASDAQ:TRDO)
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Intrado Inc. (NASDAQ: TRDO) (www.intrado.com), a global
provider of integrated data and telecommunications solutions, today
reported third-quarter financial results.
-- For the three months ended September 30, 2005, Intrado
reported revenue of $35.4 million, compared to third quarter
2004 revenue of $35.3 million. For the nine months ended
September 30, 2005, Intrado reported revenue of $107.5
million, compared to $96.4 million for the same period in
2004.
-- Net income for the third quarter of 2005 was $3.5 million, or
$0.19 per diluted share, compared to $4.0 million, or $0.22
per diluted share, for the same period in 2004. Net income for
the nine months ended September 30, 2005, was $8.6 million, or
$0.47 per diluted share, compared to $6.1 million, or $0.34
per diluted share, for the same period in 2004.
-- Net cash from operations for the third quarter of 2005 was
$9.3 million, compared to $10.9 million for the same period in
2004.
-- Free cash flow (net cash from operations of $9.3 million less
cash used in acquisition of property and equipment of $3.3
million, investment in joint venture of $1.0 million and
capitalized software development costs of $1.2 million) for
the third quarter of 2005 was $3.8 million compared to $7.4
million for the same period in 2004 (cash from operations of
$10.9 million less cash used in acquisition of property and
equipment of $0.4 million and capitalized software development
costs of $3.1 million).
"We delivered another quarter of solid financial performance,"
said George Heinrichs, Chief Executive Officer of Intrado. "In the
third quarter, our VoIP customer base continued to grow as we deploy
the nation's first native VoIP 9-1-1 solution. Furthermore, we engaged
JP Morgan to evaluate strategic alternatives for the company,
underscoring our commitment to maximize long-term shareholder value."
Recent Highlights
Wireline
-- Intrado now supports 31 V9-1-1(SM) Mobility Service customers
and has over one million VoIP subscriber records under
contract, the largest subscriber base in the industry.
-- Intrado added several VoIP service providers to its growing
list of V9-1-1 Mobility Service customers. AT&T, CommPartners,
Affinity, DNA, Ecuity, Heartland, I2, Spirit, Telefinity and
US LEC have all chosen Intrado V9-1-1 Mobility Service as they
work to comply with the FCC VoIP E9-1-1 mandate, currently
scheduled to go into effect on November 28, 2005.
-- Intrado reached agreement to enhance Target Notification
services for a federal government agency. The initial phase of
this effort is expected to generate $400,000 of revenue over
the next nine months.
Wireless
-- Intrado continued to expand its market leadership in the
delivery of wireless 9-1-1 services with the addition of eight
new wireless carriers. This brings total wireless carriers
served by Intrado to 60.
-- Intrado announced that it had passed the 50 million-call-mark
for the delivery of wireless 9-1-1 calls, a reflection of the
growing role Intrado is playing in the networks of its
wireless carrier customers.
-- Intrado also announced availability of its V9-1-1 Mobility
Service for wireless service providers intending to offer
wireless broadband VoIP service. The service extends the
existing V9-1-1 Mobility Service to assist wireless service
providers in complying with the FCC's VoIP E9-1-1 Mandate.
-- Intrado announced availability of the Intrado(R) Hosted
User-Plane Position Determining Entity (PDE) which provides
enhanced functionality needed to successfully launch and
manage location-based applications. Using the most broadly
deployed position location solution, Intrado will assist
wireless service providers in offering more reliable and
precise services.
International
-- Intrado announced that Intrado (XieAn) Technology (China) Co.
Ltd., a joint venture between Intrado International Ltd. and
PDAger, has been granted a business license allowing it to
operate in China. Headquartered in Beijing, XieAn will develop
enhanced emergency communications solutions for public safety
and disaster management agencies in China.
Intelligent Emergency Network(TM)
-- Intrado continued to enhance the Intrado(R) Intelligent
Emergency Network(TM) with the addition of IP-based voice
delivery, which will provide the nation's PSAPs with increased
agency interoperability and collaboration capabilities,
dynamic routing of 9-1-1 calls and intelligent congestion
control.
Third-Quarter Operational Results
Wireline. Revenue was $21.2 million in the third quarter of 2005,
down 1.2% from $21.4 million in the third quarter of 2004. Revenue for
the nine months ended September 30, 2005, was $64.1 million, up 9.1%
from the same period in 2004.
Wireless. Revenue was $14.2 million in the third quarter of 2005,
up 2.5% from $13.9 million in the third quarter of 2004. Revenue for
the nine months ended September 30, 2005, was $43.4 million, up 15.1%
from the same period in 2004.
Direct Costs. Direct costs for the third quarter of 2005 were
$18.5 million, compared to $17.9 million in the year-ago quarter, an
increase of 3.4%. Direct costs for the nine months ended September 30,
2005, were $58.5 million, up 11.1% from the same period in 2004.
Indirect Overhead Expenses. Total indirect overhead expenses
increased 9.9% to $11.6 million in the third quarter of 2005, compared
to the same period in 2004. Total indirect overhead expenses are
defined as sales and marketing expenses of $5.4 million, general and
administrative expenses of $5.3 million and research and development
expenses of $0.9 million. During the third quarter of 2004, indirect
overhead expenses were $10.5 million and consisted of $5.1 million of
sales and marketing expenses, $4.6 million of general and
administrative expenses and $0.8 million of research and development
expenses. Total indirect overhead expenses increased 8.3% to $35.5
million during the nine months ended September 30, 2005, compared to
the same period in 2004.
Intrado had $49.1 million in cash and cash equivalents at
September 30, 2005. The company had $17.3 million available under its
revolving line of credit with GE Capital and an additional $10.5
million under existing capital lease facilities.
Days sales outstanding (DSOs) were 43 days at September 30, 2005,
down from 59 days at September 30, 2004. DSOs is defined as gross
accounts receivable plus unbilled revenue divided by total quarterly
revenue, multiplied by 90 days.
Intrado's Fourth-Quarter 2005 Outlook
-- Total revenue of $37 million to $39 million.
-- Wireline revenue of $23 million to $24 million.
-- Wireless revenue of $14 million to $15 million.
-- Direct costs of $21 million to $22 million, including
approximately $1.5 million in costs related to the Intrado(R)
Intelligent Emergency Network(TM).
-- Earnings per diluted share of $0.15 to $0.17, based on an
estimated effective tax rate of 36.5% and (18.6) million
shares outstanding.
-- Free cash flow of $2 to $5 million, consisting of estimated
net cash provided by operating activities ranging between $6
million and $8 million, less estimated capital expenditures of
$1.5-$2.5 million and estimated capitalized software
development costs of $1.5 million.
-- Sales and marketing expenses of $5.7 million to $5.9 million.
-- General and administrative expenses of $5.4 million to $5.6
million.
-- Research and development costs of approximately $850,000.
Intrado expects that incremental investments in the Intelligent
Emergency Network(TM) will continue in future quarters, temporarily
putting pressure on operating margins and earnings in the near and
medium term. The company plans to provide 2006 financial guidance in
the first quarter of 2006.
Conference Call Webcast
Intrado's third-quarter earnings conference call will be hosted
live via the Internet on November 1, 2005, at 4:30 p.m. ET at
www.intrado.com. An online archive of the broadcast will be available
through November 8, 2005.
About Intrado
For over two decades, telecommunications providers, public safety
organizations and government agencies have turned to Intrado for their
communications needs. Intrado provides the core of the nation's 9-1-1
network and delivers innovative solutions to communications service
providers and public safety organizations, including complex data
management, network transactions, wireless data services and
notification services. The company's unparalleled industry knowledge
and experience reduce the effort, cost and time associated with
providing reliable information for 9-1-1, safety and mobility
applications. Additional information on Intrado, its products and
services, and past press releases can be found at Intrado's Web site:
www.intrado.com.
Note Concerning Non-GAAP Financial Measures
Certain information set forth herein, including net income, direct
expenses and earnings per share excluding non-cash asset impairment
charges are non-GAAP financial measures; further, total indirect
overhead expenses and free cash flow, may be considered non-GAAP
financial measures. Intrado believes this information, along with
comparable GAAP measurements, is useful to investors because it
provides a basis for measuring its operating performance, ability to
retire debt and invest in new business opportunities. Intrado's
management uses these financial measures, along with the most directly
comparable GAAP financial measures, in evaluating Intrado's operating
performance and capital resources. Non-GAAP financial measures should
not be considered in isolation from, or as a substitute for, financial
information presented in compliance with GAAP, and non-GAAP financial
measures as reported by Intrado may not be comparable to similarly
titled amounts reported by other companies. A reconciliation of GAAP
and non-GAAP Statements of Operations is provided in the financial
statements attached to this press release.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
Statements in this announcement that are not historical facts are
hereby identified as forward-looking statements for the purpose of the
safe harbor provided by Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Readers are
cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date of this announcement. Known and
unknown risks, uncertainties and other factors could cause actual
results to differ materially from those contemplated in
forward-looking statements.
The forward-looking statements included in this announcement are
estimates reflecting the best judgment of senior management as of the
date of this announcement. Although we believe that these
forward-looking statements are reasonable, we cannot promise that they
will turn out to be correct. Our actual results could be materially
different from our expectations due to a variety of risks and
uncertainties, including, but not limited to, the following:
-- Our reliance on large contracts from a limited and potentially
decreasing number of significant telecommunications customers
and their ability to pay for our services, especially in light
of recent competitive pressures in the telecommunications
industry;
-- Whether acquisitions, consolidations, bankruptcies and
reorganizations among our telecommunications customers will
result in volume pricing discounts or otherwise have a
material, adverse effect on our market share, revenue,
liquidity and profitability;
-- Competition in service, price and technological innovation
from entities with substantially greater resources, especially
in light of the fact that the increased use of Voice over
Internet Protocol (VoIP) technology has opened our traditional
9-1-1 data management services business to new competition;
-- Our ability to enter and renew wireline, wireless and VoIP
contracts at prices that will allow us to maintain current
profit margins;
-- Our ability to integrate businesses and assets that we have
acquired or may acquire;
-- Whether our efforts to expand into European, Asian and other
international markets will prove to be economically viable and
whether we will be able to generate revenue sufficient to
recover our investment in bmd wireless AG or other
international investments;
-- Adverse trends in the telecommunications industry in general,
including bankruptcy filings by our customers and other
factors that are beyond our control;
-- Whether our investments in research and development and
capitalized software will expand our service offerings and
prove to be economically viable;
-- Constraints on our sales and marketing channels because many
of our customers compete with each other;
-- Our ability to accurately predict, control and recoup the
large amount of up-front expenditures necessary to serve new
customers and possible delays in sales cycles;
-- Our ability to expand beyond our traditional business and into
highly competitive notification and data management sectors,
including, but not limited to, our efforts to deploy
IntelliCast(R) Target Notification and Commercial Database
(CDB) services;
-- The unpredictable rate of adoption of wireless 9-1-1 services,
including further delays in the Federal Communications
Commission's mandated deployment of VoIP 9-1-1 services and
Phase I and Phase II wireless location services;
-- The potential for liability claims, including product
liability claims relating to our software and services;
-- Technical difficulties and network downtime, including those
caused by sabotage or unauthorized access to our systems;
-- Changes in interest rates, including the LIBOR and prime
rates, and in foreign currency exchange rates, and their
potentially adverse effect on our results of operations and
cash flows;
-- The possibility that we will not generate taxable income in an
amount sufficient to allow us to utilize previously generated
research and development tax credits;
-- Our ability to economically attract, motivate and retain
high-quality employees with skills that match our business
needs;
-- Developments in telecommunications regulation and the
unpredictable manner in which existing or new legislation and
regulation may be applied to our business;
-- The potential impact of recent accounting pronouncements
related to share-based payments on our prospective financial
statements; and
-- Developments in governance, accounting and financial
regulations, and their impact on general and administrative
expenses.
This list is intended to identify some of the principal factors
that could cause actual results to differ materially from those
described in the forward-looking statements included elsewhere in this
announcement. These factors are not intended to represent a complete
list of all risks and uncertainties inherent in our business, and
should be read in conjunction with the more detailed risk factors
included in our SEC filings. Except for our ongoing obligations to
disclose material information under U.S. federal securities laws, we
undertake no obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after
the date of this announcement or to reflect the occurrence of
unanticipated events.
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INTRADO INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenues:
Wireline business
unit $21,170 $21,427 $64,104 $58,732
Wireless business
unit 14,226 13,884 43,361 37,671
----------- ----------- ----------- -----------
Total revenues 35,396 35,311 107,465 96,403
Costs and expenses:
Direct costs -
Wireline 12,123 11,341 37,989 33,301
Direct costs -
Wireless 6,358 6,535 20,510 19,344
Sales and
marketing 5,414 5,124 16,746 14,479
General and
administrative 5,302 4,615 16,130 16,158
Research and
development 848 787 2,594 2,126
----------- ----------- ----------- -----------
Total costs and
expenses 30,045 28,402 93,969 85,408
----------- ----------- ----------- -----------
Equity in loss from
joint venture (48) - (48) -
----------- ----------- ----------- -----------
Income from
operations 5,303 6,909 13,448 10,995
Other income
(expense):
Interest and other
income 361 102 804 282
Interest and other
expense (59) (277) (447) (971)
----------- ----------- ----------- -----------
Income before income
taxes 5,605 6,734 13,805 10,306
Income tax expense 2,156 2,669 5,141 4,075
----------- ----------- ----------- -----------
Income from
continuing
operations 3,449 4,065 8,664 6,231
Discontinued
operations:
Income (loss) from
discontinued
operations before
income taxes 40 (108) (66) (231)
Income tax benefit
(expense) (16) 39 25 88
----------- ----------- ----------- -----------
Income (loss)
from
discontinued
operations 24 (69) (41) (143)
----------- ----------- ----------- -----------
Net income $3,473 $3,996 $8,623 $6,088
=========== =========== =========== ===========
Net income (loss) per
share:
Basic:
Continuing
operations $0.20 $0.23 $0.49 $0.37
Discontinued
operations (0.00) (0.00) (0.00) (0.01)
----------- ----------- ----------- -----------
Total $0.20 $0.23 $0.49 $0.36
=========== =========== =========== ===========
Diluted:
Continuing
operations $0.19 $0.22 $0.47 $0.35
Discontinued
operations (0.00) (0.00) 0.00 (0.01)
----------- ----------- ----------- -----------
Total $0.19 $0.22 $0.47 $0.34
=========== =========== =========== ===========
Shares used in
computing net income
per share:
Basic 17,753,690 17,360,546 17,646,486 17,102,066
=========== =========== =========== ===========
Diluted 18,559,656 17,803,487 18,342,108 18,073,339
=========== =========== =========== ===========
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INTRADO INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
September 30, December 31,
2005 2004
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $49,096 $10,657
Short-term investments - 28,705
Accounts receivable, net of allowance for
doubtful accounts of $126 and $190 13,366 17,556
Unbilled revenue 3,384 1,675
Prepaids and other 3,940 3,032
Deferred contract costs 5,065 5,775
Deferred tax asset 4,073 7,507
----------- ------------
Total current assets 78,924 74,907
----------- ------------
Property and equipment, net of accumulated
depreciation of $52,484 and $46,591 23,140 22,703
Goodwill 29,532 30,278
Other intangibles, net of accumulated
amortization of $8,764 and $7,836 3,217 4,260
Long-term investments - 898
Deferred contract costs 3,129 1,541
Software development costs, net of
accumulated amortization of $13,763 and
$8,875 14,910 16,551
Investment in joint venture 952 -
Other assets 314 410
----------- ------------
Total assets $154,118 $151,548
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $12,346 $9,777
Current portion of capital lease
obligations 1,777 1,504
Mandatorily redeemable preferred stock
payable - 4,431
Deferred contract revenue 9,465 19,742
----------- ------------
Total current liabilities 23,588 35,454
----------- ------------
Capital lease obligations, net of current
portion 1,710 1,312
Line of credit 2,000 2,000
Deferred rent, net of current portion 1,708 1,643
Deferred contract revenue 8,110 5,620
Deferred tax liability 1,750 1,174
----------- ------------
Total liabilities 38,866 47,203
----------- ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value;
15,000,000 shares authorized; 0 and
4,552 issued and outstanding - -
Common stock, $.001 par value; 50,000,000
shares authorized; 17,817,940 and
17,473,860 shares issued and
outstanding 18 17
Accumulated other comprehensive
income (loss) (233) 656
Additional paid-in-capital 115,364 112,192
Retained earnings (accumulated deficit) 103 (8,520)
----------- ------------
Total stockholders' equity 115,252 104,345
----------- ------------
Total liabilities and
stockholders' equity $154,118 $151,548
=========== ============
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INTRADO INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
---------- -------- -------- --------
Cash flows from operating
activities:
Net income $3,473 $3,996 $8,623 $6,088
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 3,919 3,801 12,958 11,646
Asset impairment - - - 2,536
Tax benefit for stock option
exercises 228 47 581 1,349
Loss from sale of discontinued
operations, net of tax - - 5 -
Equity in loss from
joint venture 48 - 48 -
Accretion of interest on
mandatorily redeemable
preferred stock payable - 68 120 66
Stock-based compensation 87 172 198 273
Provision for doubtful accounts (182) 44 (53) 205
Other, including loss on
disposal of assets 1 3 37 12
Change in-
Accounts receivable and
unbilled revenue 2,554 (963) 2,457 (5,679)
Prepaids and other assets (881) 31 (832) (1,069)
Deferred contract costs (1,173) 937 (916) 516
Deferred income taxes 1,572 2,582 4,040 2,621
Accounts payable and accrued
liabilities 2,924 452 2,539 (1,722)
Deferred revenue (3,257) (234) (7,402) 763
---------- -------- -------- --------
Net cash provided by
operating activities 9,313 10,936 22,403 17,605
Cash flows from investing
activities:
Acquisition of property and
equipment (3,346) (367) (4,620) (1,173)
Purchases of investments - (655) (9,109) (31,119)
Proceeds from sales of
investments - - 38,713 23,153
Investment in joint venture (1,000) - (1,000) -
Capitalized software
development costs (1,213) (3,122) (4,157) (7,709)
Cash paid on disposal of
discontinued operations (9) - (291) -
Acquisition, net of cash
acquired - - - (4,354)
---------- -------- -------- --------
Net cash provided by (used in)
investing activities (5,568) (4,144) 19,536 (21,202)
Cash flows from financing
activities:
Principal payments on capital
lease obligations (483) (804) (1,342) (2,566)
Principal payments on notes
payable and mandatorily
redeemable preferred stock - (1,083) (4,552) (7,547)
Proceeds from exercise of stock
options, warrants and employee
stock purchase plan 862 408 2,429 4,120
---------- -------- -------- --------
Net cash provided by (used in)
financing activities 379 (1,479) (3,465) (5,993)
Effect of exchange rate changes
on cash 13 9 (35) 13
Net increase (decrease) in cash
and cash equivalents 4,137 5,322 38,439 (9,577)
Cash and cash equivalents,
beginning of period 44,959 23,082 10,657 37,981
---------- -------- -------- --------
Cash and cash equivalents, end of
period $49,096 $28,404 $49,096 $28,404
========== ======== ======== ========
Supplemental schedule of noncash
financing and investing activities:
Property acquired with capital
leases $503 $606 $2,010 $1,585
========== ======== ======== ========
Supplemental reconciliation of free
cash flow, not including
acquisitions and investments
Net cash provided by operating
activities $9,313 $10,936 $22,403 $17,605
Net cash provided by (used in)
investing activities (5,568) (4,144) 19,536 (21,202)
---------- -------- -------- --------
Free cash flow 3,745 6,792 41,939 (3,597)
add back net purchases
(sales) of ST and LT
investments - 655 (29,604) 7,966
add back acquisitions, net
of cash acquired 9 - 282 4,354
---------- -------- -------- --------
Free cash flow, not including
acquisitions and investments $3,754 $7,447 $12,617 $8,723
========== ======== ======== ========
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