TRDO Intrado Inc. (MM)

Intrado Inc. (Nasdaq:TRDO) (www.intrado.com), a leading provider of integrated data and telecommunications solutions, today reported second-quarter growth in revenues and earnings. -- For the three months ended June 30, 2005, Intrado reported revenue of $34.5 million, up 9.4% from $31.5 million in the second quarter of 2004. -- Net income for the second quarter of 2005 was $2.2 million, or $0.12 per diluted share, compared to $171,000, or $0.01 per diluted share, for the same period in 2004. -- Cash from operations for the second quarter of 2005 was $11.8 million, compared to negative $0.3 million for the same period in 2004. -- Free cash flow (cash from operations of $11.8 million less cash used in acquisition of property and equipment of $0.7 million and capitalized software development costs of $1.2 million) for the second quarter of 2005 was $9.8 million compared to negative $3.3 million for the same period in 2004 (cash from operations of negative $0.3 million less cash used in acquisition of property and equipment of $0.3 million and capitalized software development costs of $2.6 million). "We continued to execute on our business strategy and delivered another quarter of strong financial performance," said George Heinrichs, Chief Executive Officer of Intrado. "In the second quarter, we executed a major wireline renewal. We completed all of our major wireless renewals, and we began the rollout of our nationwide VoIP Peering Service, a fundamental element of Intrado's Intelligent Emergency Network(TM). Our recent successes empirically support our strategy." Recent Highlights VoIP -- On May 19, the Federal Communications Commission announced its ruling making E9-1-1 access mandatory by November 28, 2005, for interconnected VoIP providers who offer fixed and nomadic services. The announcement reinforced Intrado's position regarding delivery of VoIP calls through the existing E9-1-1 network and expanded Intrado's market opportunity for its proven VoIP E9-1-1 product suite. -- Intrado announced the availability of its VoIP 9-1-1 Peering Service, designed to overcome the challenge of interconnecting VoIP 9-1-1 calls with the existing 9-1-1 network. The service provides a common access point for VoIP Service Providers to deliver VoIP 9-1-1 calls directly into the dedicated 9-1-1 network. -- Intrado and the City of New York announced the deployment of new infrastructure to enable VoIP Service Providers to provide E9-1-1 service for their subscribers throughout New York City. Intrado worked closely with city officials and the local 9-1-1 service provider to complete the deployment, which was the first to provide such capability. -- Recently, Intrado signed agreements with several major VoIP providers to deploy services that enable them to deliver nationwide VoIP E9-1-1 services. The deployment of the Intrado V9-1-1 Mobility Service will allow VoIP service providers to seamlessly route subscriber 9-1-1 calls into the dedicated wireline E9-1-1 network. The deployment is the first of its kind and builds upon Intrado's recent deployment of VoIP E9-1-1 infrastructure for New York City. Renewals -- One of our major ILEC customers signed an eight-year renewal which contained both license and service components. -- Several of our largest wireless customers extended existing agreements, reaffirming their relationship with Intrado. Intelligent Emergency Network(TM) -- Intrado began to deploy additional resources to its nationwide rollout of the next generation of emergency services technology, including a significant infrastructure upgrade with a key ILEC customer. -- Intrado and HP announced plans to develop a highly secure, scalable and efficient HP server platform to support the Intrado(R) Intelligent Emergency Network(TM), a robust emergency communications architecture that is intended to serve as the backbone of the 9-1-1 system. Second-Quarter Operational Results Wireline: Revenue was $19.9 million in the second quarter of 2005, up 6.7% from $18.6 million in the second quarter of 2004. Wireless: Revenue was $14.7 million in the second quarter of 2005, up 13.4% from $12.9 million in the second quarter of 2004. Wireless revenue growth was driven primarily by additional wireless customers and deployments of enhanced 9-1-1 services. Direct Costs: Direct costs for the second quarter of 2005 were $19.2 million, compared to $18.6 million in the year-ago quarter, an increase of 3.1%. Indirect Overhead Expenses: Total indirect overhead expenses increased 2.1% to $11.9 million in the second quarter of 2005, compared to the same period in 2004. Total indirect overhead expenses are defined as sales and marketing expenses of $5.9 million, general and administrative expenses of $5.2 million and research and development expenses of $0.8 million. During the second quarter of 2004, indirect overhead expenses were $11.6 million and consisted of $4.8 million of sales and marketing expenses, $6.0 million of general and administrative expenses and $0.8 million of research and development expenses. Intrado had $45.0 million in cash and cash equivalents at June 30, 2005. The company had $17.2 million available under its revolving line of credit with GE Capital and an additional $12.0 million under existing capital lease facilities. Days sales outstanding (DSOs) were 52 days at June 30, 2005, up from 50 days at March 31, 2005. DSOs is defined as gross accounts receivable plus unbilled revenue divided by total quarterly revenue, multiplied by 90 days. Intrado's Third-Quarter 2005 Outlook -- Total revenue of $33 million to $34.5 million. -- Wireline revenue of $19 million to $20 million. -- Wireless revenue of $14 million to $14.5 million. -- Direct costs of $19.5 million to $20.5 million, including an incremental new spend of approximately $1.1 million in the Intrado(R) Intelligent Emergency Network(TM). -- Earnings per diluted share of $0.07 to $0.13, based on an estimated effective tax rate of 36.5% and 18.3 million shares outstanding. -- Free cash flow of $3.5 to $5.5 million, consisting of estimated net cash provided by operating activities ranging between $6 million and $8 million, less estimated capital expenditures of $1.0 million and estimated capitalized software development costs of $1.4 million. -- Sales and marketing expenses of $5.6 million to $5.8 million. -- General and administrative expenses of $4.7 million to $4.9 million. -- Research and development costs of approximately $0.8 million. Fourth-Quarter 2005 Outlook -- Total revenue of $34 million to $39 million. -- Earnings per diluted share of $0.08 to $0.15, based on an estimated effective tax rate of 36.5% and 18.4 million shares outstanding. This estimate includes the impact of additional Intelligent Emergency Network(TM) related costs of $2.5 million to $3.0 million in the fourth quarter. 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. Conference Call Webcast Intrado's second-quarter earnings conference call will be hosted live via the Internet on August 9, 2005, at 4:30 p.m. ET at www.intrado.com. An online archive of the broadcast will be available through August 16, 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 necessarily estimates reflecting the best judgment of senior management. 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 and liquidity; -- 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 may open our traditional 9-1-1 data management services business to new competition; -- Our ability to enter or renew wireline, VoIP and wireless 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 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; -- 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 employ 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 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 rate 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 net operating loss carryforwards or research and development tax credits; -- Our ability to economically attract, motivate and retain high-quality employees with skills that match our business needs; -- Developments in telecommunications regulation and the unpredictable manner in which existing or new legislation and regulation may be applied to our business; -- The potential impact of recent accounting pronouncements related to share-based payments on our prospective and historical financial statements; and -- Developments in governance, accounting and financial regulations, including Section 404 of the Sarbanes-Oxley Act of 2002 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. -0- *T INTRADO INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data) (Unaudited) THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, JUNE 30, 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenues: Wireline $19,852 $18,612 $42,934 $37,305 Wireless 14,653 12,925 29,135 23,787 ----------- ----------- ----------- ----------- Total revenues 34,505 31,537 72,069 61,092 Costs and expenses: Direct costs - Wireline 12,316 11,634 25,866 21,960 Direct costs - Wireless 6,893 7,005 14,152 12,809 Sales and marketing 5,868 4,845 11,332 9,355 General and administrative 5,186 6,013 10,828 11,543 Research and development 803 756 1,746 1,339 ----------- ----------- ----------- ----------- Total costs and expenses 31,066 30,253 63,924 57,006 ----------- ----------- ----------- ----------- Income from operations 3,439 1,284 8,145 4,086 Other income (expense): Interest and other income 278 93 443 180 Interest and other expense (180) (326) (388) (694) ----------- ----------- ----------- ----------- Income before income taxes 3,537 1,051 8,200 3,572 Income tax expense 1,306 478 2,985 1,406 ----------- ----------- ----------- ----------- Income from continuing operations 2,231 573 5,215 2,166 Discontinued operations: Income (loss) from discontinued operations before income taxes 27 (653) (106) (123) Income tax benefit (expense) (10) 251 41 49 ----------- ----------- ----------- ----------- Income (loss) from discontinued operations 17 (402) (65) (74) ----------- ----------- ----------- ----------- Net income $2,248 $171 $5,150 $2,092 =========== =========== =========== =========== Net income (loss) per share: Basic: Continuing operations $0.13 $0.03 $0.29 $0.13 Discontinued operations $(0.00) $(0.02) $(0.00) $(0.01) ----------- ----------- ----------------------- Total $0.13 $0.01 $0.29 $0.12 =========== =========== ======================= Diluted: Continuing operations $0.12 $0.03 $0.29 $0.12 Discontinued operations $(0.00) $(0.02) $(0.01) $(0.00) ----------- ----------- ----------- ----------- Total $0.12 $0.01 $0.28 $0.12 =========== =========== =========== =========== Shares used in computing net income per share: Basic 17,676,123 17,069,354 17,603,089 16,937,933 =========== =========== =========== =========== Diluted 18,284,288 18,072,533 18,219,403 18,114,282 =========== =========== =========== =========== *T -0- *T INTRADO INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) June 30, December 31, 2005 2004 ----------- ------------ ASSETS Current assets: Cash and cash equivalents $44,959 $10,657 Short-term investments - 28,705 Accounts receivable, net of allowance for doubtful accounts of approximately $309 and $190 16,986 17,556 Unbilled revenue 2,146 1,675 Prepaids and other 3,052 3,032 Deferred contract costs 4,183 5,775 Deferred tax asset 3,043 7,507 ----------- ------------ Total current assets 74,369 74,907 ----------- ------------ Property and equipment, net of accumulated depreciation of $50,540 and $46,591 21,288 22,703 Goodwill 29,573 30,278 Other intangibles, net of accumulated amortization of $8,499 and $7,836 3,597 4,260 Long-term investments - 898 Deferred contract costs 2,838 1,541 Deferred tax asset 854 - Software development costs, net of accumulated amortization of $12,112 and $8,875 15,281 16,551 Other assets 325 410 ----------- ------------ Total assets $148,125 $151,548 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $9,418 $9,777 Current portion of capital lease obligations 1,689 1,504 Mandatorily redeemable preferred stock payable - 4,431 Deferred contract revenue 13,000 19,742 ----------- ------------ Total current liabilities 24,107 35,454 ----------- ------------ Capital lease obligations, net of current portion 1,776 1,312 Line of credit 2,000 2,000 Deferred rent, net of current portion 1,689 1,643 Deferred contract revenue 7,847 5,620 Deferred tax liability - 1,174 ----------- ------------ Total liabilities 37,419 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; 17,726,400 and 17,473,860 shares issued and outstanding as of June 30, 2005 and December 31, 2004, respectively 18 17 Accumulated other comprehensive income (loss) (144) 656 Additional paid-in-capital 114,202 112,192 Accumulated deficit (3,370) (8,520) ----------- ------------ Total stockholders' equity 110,706 104,345 ----------- ------------ Total liabilities and stockholders' equity $148,125 $151,548 =========== ============ *T -0- *T INTRADO INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) THREE MONTHS SIX MONTHS ENDED ENDED JUNE 30, JUNE 30, 2005 2004 2005 2004 -------- -------- -------- -------- Cash flows from operating activities: Net income $2,248 $171 $5,150 $2,092 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 3,865 3,966 9,039 7,845 Asset impairment - 2,536 - 2,536 Tax benefit for stock option exercises 149 289 353 1,302 Loss from sale of discontinued operations, net of tax 10 - 5 - Accretion of interest on mandatorily redeemable preferred stock payable 52 (140) 120 (2) Stock-based compensation 52 31 111 101 Provision for doubtful accounts 59 119 129 161 Other, including loss on disposal of assets 10 3 36 9 Change in- Accounts receivable and unbilled revenue 1,417 (6,500) (97) (4,716) Prepaids and other assets 537 (142) 49 (1,100) Deferred contract costs 179 (115) 257 (421) Deferred income taxes 1,014 (63) 2,468 39 Accounts payable and accrued liabilities (1,217) (1,828) (385) (2,174) Deferred revenue 3,385 1,340 (4,145) 997 -------- -------- -------- -------- Net cash provided by (used in) operating activities 11,760 (333) 13,090 6,669 Cash flows from investing activities: Acquisition of property and equipment (665) (321) (1,274) (806) Purchases of investments (413) (22,093) (9,109) (29,726) Proceeds from sales of investments 34,653 14,803 38,713 23,153 Capitalized software development costs (1,248) (2,616) (2,944) (4,587) Cash paid on disposal of discontinued operations 9 - (282) - Acquisition, net of cash acquired - 20 - (4,354) -------- -------- -------- -------- Net cash provided by (used in) investing activities 32,336 (10,207) 25,104 (16,320) Cash flows from financing activities: Principal payments on capital lease obligations (404) (804) (859) (1,762) Principal payments on notes payable and mandatorily redeemable preferred stock (4,552) (5,380) (4,552) (6,464) Proceeds from exercise of stock options, warrants and employee stock purchase plan 881 1,192 1,567 3,712 -------- -------- -------- -------- Net cash used in financing activities (4,075) (4,992) (3,844) (4,514) Effect of exchange rate changes on cash (24) 4 (48) 4 Net increase (decrease) in cash and cash equivalents 39,997 (15,528) 34,302 (14,161) Cash and cash equivalents, beginning of period 4,962 18,648 10,657 17,281 -------- -------- -------- -------- Cash and cash equivalents, end of period $44,959 $3,120 $44,959 $3,120 ======== ======== ======== ======== Supplemental schedule of noncash financing and investing activities: Property acquired with capital leases and accounts payable $1,512 $685 $1,757 $979 ======== ======== ======== ======== Supplemental reconciliation of free cash flow, not including acquisitions and investments Net cash provided by operating activities $11,760 $(333) $13,090 $6,669 Net cash used in investing activities 32,336 (10,207) 25,104 (16,320) -------- -------- -------- -------- Free cash flow 44,096 (10,540) 38,194 (9,651) add back net purchases (sales) of ST and LT investments (34,240) 7,290 (29,604) 6,573 add back acquisitions (disposals), net of cash acquired (9) (20) 282 4,354 -------- -------- -------- -------- Free cash flow, not including acquisitions and investments $9,847 $(3,270) $8,872 $1,276 ======== ======== ======== ======== *T