ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
ALPNET, Inc., incorporated in the state of Utah in 1980, and the subsidiaries it acquired in 1987 and 1988 (the "COMPANY" or "ALPNET"), together with its affiliates, form a worldwide network dedicated to providing specialized language services for businesses engaged in international trade. The Company has combined computer translation technology with experienced human translators in its worldwide network to provide a full spectrum of services to fulfill the language needs of customers in international business. The following table shows the operating companies in the network.
ALPNET, Inc. U.S.A. Multiscript International Inc. Canada ALPNET U.K. Ltd. U.K. ALPNET S.A. Switzerland Interlingua S.L. Spain Dr. W.D. Haehl GmbH Germany INTERDOC SARL France Interlingua Language Services Ltd. Hong Kong Interlingua Language Services (Singapore) Pte. Ltd. Singapore ALPNET, Inc. Korea Branch Korea
ALPNET affiliates are independent companies in which ALPNET has no ownership interest, but which produce work for the Company. ALPNET affiliates are located in the following cities:
Utrecht, The Netherlands Prague, Czech Republic Stockholm, Sweden Budapest, Hungary Milan, Italy Moscow, Russia Buenos Aires, Argentina Charleroi, Belgium Sao Paulo, Brazil
In 1987 and 1988, ALPNET organized holding companies in certain countries in connection with the formation of its network and related acquisitions. The Korea branch of ALPNET, Inc. was formed in 1994.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENT
The Company operates in one business segment: language translation and related services.
(C) NARRATIVE DESCRIPTION OF BUSINESS
GENERAL
The Company provides a full range of language services specifically tailored to clients engaged in international business. ALPNET translates product information, brochures, operating manuals, schematics, maintenance manuals, training materials and a host of other materials for businesses engaged in selling products and services into markets where multiple languages are required. The Company also has specialized capabilities to help its customers localize the actual products they sell in foreign markets. This may be as complex as the translation of software in computer-based products, or as simple as the translation of packaging and labels for traditional products. ALPNET provides interpretation services for private business meetings, as well as for business conferences, enabling delegates to meet and communicate. The Company also provides intensive language training courses for individuals with assignments to foreign locations. Less than 10% of the Company's revenues derive from interpretation and language training services.
The Company has the knowledge and experience to manage a global project from a central point, through a single contact. This eliminates the need for the client to have to deal with several different providers in different locations in order to receive translation and related services in multiple languages. Because of the Company's international organization and worldwide locations, it can also deal directly with a client's international counterparts for development of preferred terminologies and quality reviews and ensure that the translated product is "localized" or "customized" according to the client's standards and preferences.
The Company has developed a set of sophisticated computer programs, collectively called the Translation Support System ("TSS"), which it uses to differentiate itself from other translation providers in the market. The use of TSS by experienced translation professionals allows the Company to provide better quality translation services at lower overall cost, by standardizing the use of approved terminology, providing translation consistency, and preserving formatting information for later use in desktop publishing. TSS facilitates these functions and provides ALPNET personnel with the means to accomplish the complete translation and desktop publishing process on an improved schedule, thereby allowing clients to bring products to market faster.
TSS can be utilized in translation from English, French, or German, into any Roman alphabet language, as well as Japanese, Korean, and simplified and traditional Chinese. TSS is a proprietary asset, and the Company protects its use with non-disclosure agreements and license agreements, as well as protection provided by copyright and trademark law.
The Company believes that today's multinational companies do not want to be in the translation business, and would prefer to devote their resources to managing their principal businesses. Translation is ALPNET's principal business and it manages that business on behalf of its client "partners."
Project management services provided by the Company eliminate the client's need for a large and costly in-house staff to manage the translation process. The Company coordinates the translation into as many languages as required, on one schedule, under a common contract, and provides a single status reporting system and point of contact.
Following translation, ALPNET can provide any form of production support needed including layout and design, camera-ready copy, printing and magnetic media production, together with packaging and distribution. The Company can produce complete, final products to its clients' specifications.
The Company also has software development capabilities, allowing it to provide software product localization services, and to develop interfaces tailored to the client's information and document creation tools and systems if required. This assures that the client's tools and the Company's translation system are integrated and compatible.
The Company is keenly aware that the internationalization process is much more than just translation and, accordingly, has organized its network to provide the services and support required to affect this process economically and efficiently for its clients.
TRANSLATION MARKET
Recent political and economic changes have created and expanded opportunities for significant increases in international trade. As companies increase their operations on a global basis, they require marketing, sales and technical information in a wide variety of languages. Traditionally, translation services have been supplied by in-house departments, governmental units, commercial translation agencies and individual freelance translators. While there are thousands of individual free-lance translators and many commercial agencies, it appears that all but a handful of operations are too small to effectively deal with the increasingly complex translation and multilingual publication requirements of large corporate businesses. The Company is well positioned to serve such companies. Multinational companies are looking for a new type of supplier to replace the cottage labor that has historically dominated the translation services industry. The Company has combined its proprietary computer translation technology with established suppliers to enable it to obtain a significant market share of this expanding industry. The Company believes that the available market is much larger than the combined revenue of the current providers and that no one provider accounts for a significant portion of the commercial translation market.
MARKETING
The Company has developed and implemented a very structured, multi-phased sales plan in several of its key markets to enable it to achieve its growth objectives. The following information summarizes this plan.
Strategy:
o Offer basic translation services and expand revenues by providing value-added pre- and post-translation services. o Target key industry segments which track to the ideal client profile. o Identification of specific prospects in targeted industries. o Telephone contact to establish client interest and need. o Personalized direct-mail introduction to ALPNET. o Consultative selling from experienced direct sales force. o Utilize an internal sales support and project management organization to provide support to the sales force and interface to the ALPNET network production facilities.
Targeted industries:
o Computer Hardware and Software o Automotive o Chemical and Pharmaceutical o Telecommunications and Electronics o Aerospace and Defense o Banking and Finance
Ideal client profile:
o Multilingual translation needs o Translation of documentation required to support international revenue o Need is continuous or growing o Information is developed "on-line" o Has unique terminology requirements o Recognize translation as a purchased service o Require value-added services with translation
Other Value-Added Services:
o Pre-translation consulting including:
Organization Planning Developing materials for translation Administration Project/facilities management Custom development, layout, design and production
o Post-translation services including:
Desktop publishing Typesetting Multilingual printing Packaging Storage Shipping
MAJOR CUSTOMERS
Fourteen percent of the Company's 1994 revenues were for services provided to a single customer in the computer industry. Relations with this customer are good and management believes a significant portion of 1995 revenues will also be attributable to this customer. No other customer accounts for more than 10% of revenues.
MANPOWER
The Company requires both sales and project management personnel to obtain and manage major translation projects. In all network countries, sales is one of the primary responsibilities of the country manager and the local direct sales personnel. The Company also has project managers dedicated to specific clients. Project managers are introduced to potential clients as a part of the sales planand are vital for obtaining major contracts, where the ability to demonstrate the Company's management strengths can be as important as the quality of translation itself.
BACKLOGS
As of December 31, 1994, the Company and its subsidiaries had a backlog of approximately $1,900,000 of translation services orders compared with a backlog of approximately $900,000 as of December 31, 1993. The increase in backlog in 1994 is a result of an increase in both the size and volume of customer orders in most countries, but especially in the U.K. and the U.S.
COMPETITION
The Company experiences competition in two primary forms: (1) large commercial translation services companies, and (2) local translation services providers.
The Company is aware of very few large commercial translation services companies, and the Company believes that no one company accounts for a significant portion of the commercial translation market. Certain of the Company's principal competitors are owned by large companies in the publishing industry.
Local translation services providers generally service the needs of specific customers on a very localized basis. These providers typically consist of a small number of translators who provide translation into one or two languages, or serve only limited market segments. Although they frequently cooperate in loosely formed networks and alliances, these competitors do not presently offer the broad range of languages, services and support that are available from ALPNET.
Beginning in late 1993 and continuing throughout 1994 and into early 1995, the translation industry has been extremely price-competitive. Many competitors adopted a policy of buying market share by cutting prices and this practice has escalated throughout the industry as other competitors have reduced prices in an effort to maintain their revenues. This has led to the loss of some orders and required the Company to re-evaluate its pricing strategy and to reduce prices in many areas, which has had a significant affect on profitability in 1994.
Cost reductions from a restructuring in late 1992 and the use of proprietary computer translation technology has allowed the Company to compete at reduced price levels. Nevertheless, the Company does not have the financial resources of some of its largest competitors. Management does believe the Company is better positioned to sustain operations at these levels than many of its smaller competitors, and this situation could ultimately be resolved by the elimination of some current providers which may not be able to continue in business at the current price levels. Although the Company must effectively compete and prices have been reduced, the Company has determined that it will not be the price leader. ALPNET will compete by offering fair prices for superior quality service.
1994 revenues and results have been affected by these conditions but the effect on the first half of 1994 was much greater than it was during the last half of the year. 1995 results will also be affected, the extent of which depends on how quickly the competitive situation improves.
DEVELOPMENT AND CUSTOMER SUPPORT
During 1994, 1993 and 1992, the Company spent approximately $124,000 , $179,000 and $279,000, respectively, on technology development and support activities. These amounts reflect the amounts spent on the further development and support of technology for use within the Company. Management does not expect significant variation from the 1994 level of expenditure.
EMPLOYEES
As of December 31, 1994, the Company employed 224 persons. Due to the nature of its business, the Company also retains a large number of free-lance translators on an as-needed basis.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Financial information concerning the Company's foreign and domestic operations is presented in Note 2 to the Consolidated Financial Statements included in Item 8 of this Form 10-K and is incorporated herein by reference.
(E) EXECUTIVE OFFICERS OF ALPNET, INC.
The following table sets forth certain information concerning the executive officers of the Company as of March 17, 1995.
Name, Age and Positions with the Company Business Experience
Thomas F. Seal, 41 Mr. Seal joined the Company in January President, Chief 1987 as its Vice President of Research Executive Officer and Development. In June 1988, Mr. Seal and Director assumed responsibility for the Company's Canadian operations and he resided in Canada from October 1988 to March 1989 where he directed the restructuring of Canadian operations. In April 1989, Mr. Seal returned to the U.S., and was named President and Chief Executive Officer on May 16, 1989. Mr. Seal was elected to the Board of Directors in June 1989. Mr. Seal received his B.S. degree in Computer Science from Brigham Young University in 1975, and since that time has held a variety of technical and management positions in companies related to the computer industry.
John W. Wittwer, 49 Mr. Wittwer is one of the founders of Executive Vice the Company. He is currently serving as President Executive Vice President, and has been and Director employed by the Company since 1982 serving in various positions including Vice President of Finance and Administration, Director of Administration, Executive Vice President, Chief Executive Officer, Treasurer and Chief Financial and Accounting Officer. Mr. Wittwer served as Executive Vice President of R. L. Warner Enterprises from 1978 to 1982. Mr. Wittwer is a Certified Public Accountant and practiced public accounting with Ernst & Young and other certified public accounting firms from 1968 to 1978. Mr. Wittwer has served as a director of the Company since May 1993.
D. Kerry Stubbs, 40 Mr. Stubbs joined the Company in Chief Financial November 1993 as Vice President Finance. Officer, He has been Chief Financial Officer and Treasurer and Treasurer since June 1994 and Secretary Secretary since February 1995. His responsibilities include coordinating the international accounting, finance and taxation functions of the Company as well as managing and directing these functions in the U.S. A Certified Public Accountant, he practiced with Ernst & Young for 13 years prior to joining the Company.
There is no family relationship between any of the directors or executive officers of the Company.
ITEM 2:
ITEM 2: PROPERTIES
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
None.
ITEM 4:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter ended December 31, 1994.
PART II
ITEM 5:
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of December 31, 1994, there were 546 shareholders of record. No dividends have been declared on the Company's Common Stock. The Company is currently prohibited from paying dividends under Utah corporate law.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
A large majority of the Company's operations are in foreign countries. Accordingly, the Company is significantly affected by foreign currency exchange rate fluctuations. The following table shows what sales and results of operations would have been for the years presented, had foreign currency exchange rates remained at 1990 levels for all years.
ITEM 7:
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and notes thereto.
FOREIGN OPERATIONS
The Company serves its customers from 27 offices in 10 countries. The operations of the Company are predominantly located outside the U.S. Accordingly, the Company is subject to the effects of foreign currency exchange rate fluctuations among U.S. dollars, Canadian dollars, British pounds sterling, German marks and other European and Asian currencies. For all of the Company's foreign subsidiaries, the functional currency has been determined to be the local currency. Accordingly, assets and liabilities are translated at year-end exchange rates, and operating statement items are translated at average exchange rates prevailing during the year. The resultant cumulative foreign currency adjustments to the assets and liabilities are recorded as a separate component of shareholders' equity. The 1994 foreign currency equity adjustment was positive $514,000, compared to negative adjustments of $333,000 in 1993 and $1,552,000 in 1992. As of December 31, 1994, the cumulative net effect to the Company of the equity adjustment from movements in foreign currency exchange rates was a reduction of $1.6 million in shareholders' equity. A significant portion of the cumulative foreign currency adjustment relates to changes in the recorded amount of goodwill.
Because most of the Company's operations are located outside the U.S. and its foreign operations' financial results must be translated into U.S. dollars, the Company's actual and reported financial results and financial condition are susceptible to movements in foreign currency exchange rates. Furthermore, since the Company has relatively few long-term monetary assets and liabilities denominated in currencies other than the U.S. dollar, it does not have any ongoing hedging programs in place to manage currency risk.
RESULTS OF OPERATIONS
The following paragraphs discuss 1994 results as compared with 1993 and 1993 results as compared with 1992, including the significant effects of fluctuating foreign currency exchange rates.
The Company sustained a net loss of $741,000 in 1994 compared to net income of $458,000 in 1993 and a net loss of $613,000 in 1992. If foreign currency exchange rates for 1994 had remained unchanged from 1993, the Company would have recorded a net loss of $733,000 instead of $741,000 and therefore currency exchange rate fluctuations did not have a material affect on 1994 results. In 1993, however, such fluctuations did have a significant affect and the Company would have recorded net income of $630,000 instead of $458,000 if currency exchange rates for 1993 had remained unchanged from 1992 levels.
Sales of services were $20.5 million for 1994 compared to $19.5 million for 1993 and $19.7 million for 1992. The $1.0 million increase in reported sales for 1994 consisted of an increase in sales volume of $800,000 and an increase of $200,000 due to currency exchange rate variances. The $200,000 decrease in reported sales for 1993 consisted of an increase in sales volume of $1.6 million and a $1.8 million decrease due to currency exchange rate variances. The increases in sales volume in both 1994 and 1993 are largely the result of an increase in the need for language related services in an increasingly global marketplace where more and more businesses are entering foreign markets and becoming involved in worldwide trade. Management believes that international trade agreements such as the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) have also had a positive effect on demand for the language services provided by the Company.
The Company competes on the basis of quality, service and geographical proximity to clients and potential clients, and opened several new offices in 1994 and 1993 in order to increase its market share in what management believes has been and will continue to be an expanding industry. While reported revenue growth from 1993 to 1994 was 5%, management believes the actual growth in business volume in terms of words translated was 10% to 15%. However, because of intense price competition which the Company encountered in 1994, prices the Company could charge in the marketplace were severely restricted.
The following table shows a comparison of sales of services in each of the Company's significant geographic areas for 1994, 1993 and 1992, along with the effect of foreign currency exchange rate fluctuations on the sales between years.
As shown in the above table, with the exception of the U.S., which experienced a 4% sales decline, every major geographical region reported increased sales in 1994 over 1993. In the U.S., sales can fluctuate widely from period to period due to industry conditions which are often less predictable and stable than those found in the Company's foreign markets. Such conditions are characterized by the inexperience of many U.S. companies in international business and clients which may be unsophisticated in the nuances of marketing to foreign countries and the importance of related language issues. These factors, along with the unpredictable timing and the nonrecurring nature of most large translation projects for U.S. companies, contribute to a deficiency of "core" or repeat business and also have a tendency to depress the profitability of work performed by the Company for U.S. clients. Despite these conditions, U.S. sales have remained relatively level in 1994 from 1993, and while management is hopeful that 1995 sales will increase over 1994, there is no assurance that this will occur.
Canada's reported sales for 1994 increased 11% over 1993, however, the increase would have been 17% if currency exchange rates in 1994 had remained the same as in 1993. The increase in sales in Canada was due in part to increased international trading as well as marketing and sales efforts which were initiated during 1993. This increase in sales has occurred despite a difficult economic situation in Canada, which has continued into 1995 and which is expected to eventually depress sales if the economy and the strength of the Canadian dollar do not improve in the coming year.
In Europe, where the U.K. and Germany contributed 87% of that region's total reported sales for 1994, a decrease in sales from 1993 of 5% in Germany was overshadowed by a sales increase of 12% in the U.K. The overall increase in reported European sales of 4% in 1994 was due to currency exchange rate fluctuations as well as sales volume increases.
The decline in sales in Germany from 1993 to 1994 was primarily attributable to lower sales to large customers, especially during the first half of 1994, due to a general slowdown of the German economy. Sales levels during the last half of 1994 were actually higher than average 1993 levels as the German economy improved, but were not high enough to compensate for the low sales experienced in the first two quarters of the year. The positive results in the U.K. were due to several factors, including enhanced sales and marketing efforts initiated in 1993, increased core business and more large project work, all of which was helped by an improved economic situation in that country. The Company expects sales to continue to expand in Europe as the investments made in new offices and in human and equipment resources in the past two years, combine with growing demand for language services and a generally positive economic outlook. Nevertheless, the Company's business can be impacted dramatically by changes in the strength of the economies of the countries in which it has a presence and results of operations are highly dependent on general economic trends.
In Asia, 1994 sales increased 54% over 1993 levels as Hong Kong and Singapore increased sales over the prior year by a combined total of 41%. In addition, the Company's Korean office, which was opened in July 1994, contributed to the improved sales results. Substantially all of the increase in reported Asian sales in 1994 over 1993 was attributable to actual volume increases, with only a small portion of the increase due to currency exchange rate fluctuations. Management expects the increased demand for Asian language services to continue into 1995 as many Asian countries are experiencing very high economic growth rates and the interest in Asia from the business communities in the U.S., Europe and elsewhere is accelerating rapidly.
In 1993, the Company produced fewer large translation projects for multinational clients than in 1992. Due to poor global economic conditions, which were prevalent throughout 1992 and much of 1993, major clients significantly reduced the size and frequency of their orders for the translation of their product documentation and this negatively affected sales in all major geographic regions and in most countries, with the exception of the U.K. and Germany. As a result, 1993 sales increased in Europe, and declined in Canada and Asia, while remaining level in the U.S. compared to 1992 sales.
The 5% increase in reported sales in Europe in 1993 over 1992 was the net result of an 18% increase in volume, offset by a 13% decrease caused by currency exchange rate fluctuations. The volume increase in 1993 over 1992 was attributable to high growth rates in both the U.K. (16%) and in Germany (25%). However, these growth rates in volume were largely negated by currency exchange rate fluctuations and, in the U.K., the increase in sales volume was more than offset by the movement in the currency exchange rate. Likewise, currency exchange rate fluctuations negatively affected 1993 sales of services in every country in which the Company operates, with the exception of Singapore.
In 1993, management increased its sales and marketing efforts in several key markets, which consisted in part of a structured, multi-phased sales plan. The sales strategy was specifically targeted toward multinational clients with requirements for large volumes of technical documentation to be translated into multiple languages. The Company believes that this plan has been and will continue to be effective, even with unfavorable business conditions.
Cost of services sold as a percentage of sales of services has fluctuated primarily as a result of competition in the marketplace, the volume and nature of direct production costs of large project sales in each year, and programs to reduce direct and indirect production costs. Due to increased competition at the end of 1993 and continuing throughout 1994, especially with regard to pricing, the Company's gross margins deteriorated significantly from 1993 to 1994. While the Company has largely been able to contain the growth in costs of services sold to levels consistent with growth in the volume of work produced and at rates at or below inflationary increases, prices charged to clients, especially in the U.S. and Europe, have been limited by competitive price pressures which have in turn severely compressed margins. Management expects pressures on gross margins to continue in 1995, but does not expect pricing pressures to intensify beyond current levels. The Company does not expect to be able to return to 1993 pricing levels in the foreseeable future and is continuing its efforts to contain costs to offset the effects of these pricing pressures.
Gross margins increased from 1992 to 1993 primarily because of the successful efforts to reduce costs which were initiated during 1992. In the third quarter of that year, the Company took action to restructure its operations with the principal goal of reducing direct and indirect production-related costs. Included in 1992 results were approximately $260,000 of nonrecurring expenses related to this restructuring which reduced ongoing expenses of the Company by approximately $50,000 per month and enabled the Company to report net income for the fourth quarter of 1992 and for 1993.
The decreases in development costs and in selling, general and administrative expenses for 1994 and 1993 are also the result of management's continuing cost control measures. Total operating expenses, including cost of services sold, increased by $2.4 million in 1994 from 1993. This increase resulted from a $2.2 million increase in actual expenses and an increase of $200,000 due to currency exchange rate differences. Total operating expenses in 1993 decreased by $1.4 million from 1992. This decrease resulted from a $200,000 increase in actual expenses and a decrease of $1.6 million due to currency exchange rate differences. The increases in actual expenses for both years resulted primarily from the increased volume of work produced. Decreases in corporate administrative costs have been partially offset by the costs of increased marketing efforts and the opening of new offices in the U.S., Germany and Korea in 1994 and 1993.
Interest expense decreased approximately $160,000 in 1994 compared to 1993 and approximately $160,000 in 1993 compared to 1992. In 1994, the decrease resulted primarily from the capital restructuring completed in early 1994 which eliminated approximately $1.8 million of long-term debt to affiliates, as discussed in more detail in Note 3 to the Consolidated Financial Statements. In 1993, the decrease in interest expense resulted from lower overall borrowings under both short-term and long-term bank obligations, and to a lesser extent, lower interest rates worldwide over 1992 rates.
Fluctuations in the amount of goodwill amortization resulted solely from foreign currency exchange rate fluctuations from year to year.
The U.S. parent company and each of its subsidiaries are separate legal and taxable entities subject to the domestic or foreign taxes pertaining to operations in their respective jurisdictions. For tax purposes, the U.S. parent company and most of its subsidiaries have unused net operating losses from prior years which can be utilized to reduce future years' taxable income of the respective entities. The availability of these net operating losses is governed by applicable domestic and foreign tax rules and regulations, some of which limit the utilization of such losses due to minimum tax requirements and other provisions.
Income tax expense as presented in the Consolidated Financial Statements represents the combined income tax expense and income tax credits of each of the entities of the Company. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which requires the use of the asset and liability method for calculating deferred income taxes. In 1992 and prior years, the Company used the deferred method of accounting for income taxes as set forth in Accounting Principles Board Opinion No. 11. Implementation of Statement No. 109 did not have a material effect on the consolidated financial statements, which have not been restated for any prior periods.
After consideration of the effect of the utilization of net operating loss carryforwards, shown as an extraordinary item in 1992, income taxes were approximately $90,000 in 1994, $80,000 in 1993 and $(150,000) in 1992. Fluctuations in the amount of income taxes arise primarily from the varying combinations of income and losses of the Company's subsidiaries in the various domestic and foreign tax jurisdictions, including the utilization in various degrees of net operating loss carryforwards in many of these jurisdictions. In 1993, the net operating loss carryforwards of the U.S. parent company expired for state income tax purposes. The income tax credit in 1992 relates primarily to a tax loss carryback in France for that year.
Note 6 to the Consolidated Financial Statements, "Income Taxes," contains additional information pertaining to the computation of income taxes as well as the Company's net operating loss carryforwards as of December 31, 1994.
LIQUIDITY AND SOURCES OF CAPITAL
In 1994, the Company had a net negative cash flow from operations of approximately $600,000 compared with a positive cash flow from operations in 1993 of $370,000. In 1994, as in prior years, the Company's investing activities consisted primarily of the acquisition of equipment (approximately $490,000) needed to maintain or upgrade production capability.
The Company's 1994 financing activities were highlighted by the capital restructuring effective as of March 31, 1994, whereby approximately $1.8 million of current and long-term debt to affiliates was converted to a new series of preferred stock of the Company. Additionally, in 1994, the Company increased its borrowings from affiliates by $185,000 in order to finance a pension obligation owed to the former owner of one of its subsidiaries. In 1993, the Company's financing activities included an equity offering which realized net proceeds of approximately $1.5 million, about half of which was used to retire long-term debt. Financing activities for both years included fluctuations in the amounts utilized under bank lines of credit used to finance the Company's working capital needs.
The most important 1994 and 1993 transactions which affected the Company's liquidity and sources of capital, as well as additional details of the Company's notes payable to banks, long-term debt and long-term debt to affiliates, are described in Note 3, "Financing Transactions," and in Note 4, "Borrowings," to the Consolidated Financial Statements included herein.
At the end of 1994, the Company's cash and cash equivalents were approximately $340,000, representing a decrease of approximately $670,000 during 1994. However, at December 31, 1994, the Company had working capital of approximately $1.2 million, compared to working capital of approximately $100,000 at December 31, 1993. One of the primary reasons for the increase in working capital during 1994 was the elimination of the current portion of long-term debt as a result of the previously mentioned capital restructuring.
The Company's primary working capital requirements relate to the funding of client accounts receivable. The Company funds its working capital needs with various bank lines of credit with banks in the U.K., Canada, Spain and Germany. Most of the lines of credit are secured by accounts receivable and other assets of the respective subsidiaries. As of December 31, 1994, the Company has unused amounts under these lines of credit of approximately $500,000. The Company believes the available amounts under these lines of credit are sufficient to fund the Company's operations at current levels as well as enable the Company to grow at a modest level without seeking significant new sources of working capital. Most of the Company's credit facilities are subject to annual renewals and the Company expects them to be renewed on substantially the same terms as those which currently exist. Some of the banks which have loaned funds to the Company's subsidiaries under the credit facilities noted above, have placed certain limits on the flow of cash outside the respective countries. Such limitations have not been an undue burden to the Company in the past, nor are they expected to be unduly burdensome in the foreseeable future.
The Company has no present significant commitments for capital expenditures, which generally consist almost entirely of computer equipment and related peripheral hardware and software. Such equipment purchases in future years are not expected to vary materially from the general levels of equipment purchases experienced in recent years. However, the Company does plan to acquire and place additional translation services workstations in its offices worldwide in connection with future orders from customers, as such orders are received. The Company expects to finance a certain portion of future equipment costs through bank and/or leasing sources. Additionally, while there are no material current commitments, the Company may open additional offices in strategic locations worldwide, as customer demands dictate and opportunities arise. For example, in July 1994, the Company opened a sales and production office in Korea in order to meet the increased demand for translation into the Korean language. The costs of opening this office were not substantial and were almost exclusively related to the procurement of computers and other translation-related equipment. The costs of any additional offices are not expected to require a significant amount of cash.
Following the capital restructuring in early 1994, the Company's long-term debt to affiliates (including approximately $820,000 which was due in 1994) was reduced from $2,050,000 to approximately $240,000 and outstanding preferred stock increased by over $1.7 million. As a result of this and other transactions since December 31, 1993, the Company's total shareholders' equity has increased from $6.1 million to $7.2 million during 1994.
The Company believes it has the ability to issue additional equity securities if necessary, but does not currently have any firm plans to do so. In past years, the Company has relied on major shareholders of the Company to fund certain obligations, but the Company does not anticipate using this source of capital in the foreseeable future.
As a result of the financing transactions described above, current working capital, anticipated cash flows and available lines of credit, together with management's expectations of increased revenues and plans to control expenses, management believes that the Company's cash flow will be adequate to meet financial obligations during 1995. It is more difficult to assess cash flows beyond 1995 and the ability of the Company to meet its commitments without additional sources of capital is directly related to the Company's operations providing a positive cash flow. Should the Company's operations fail to provide adequate funds to enable it to meet its future financial obligations, management has the option, because of the Company's organizational structure, to cut costs by selectively eliminating operations which are not contributing to the Company financially.
Inflation has not been a significant factor in the Company's operations; competition, however, has been and is expected to remain a major factor. To the extent permitted by competition and general economic and market conditions, the Company will pass on increased costs from inflation and operations to customers by increasing prices.
Due to prior years' operating losses, the Company and many of its subsidiaries have net operating loss carryforwards available to offset future taxable income in the various countries in which the Company operates. As a result, the Company historically has not had significant income tax liabilities arise requiring the expenditure of cash. Due to currently available net operating loss carryforwards, the Company expects this general trend to continue through 1995. Substantially all of the Company's deferred tax assets at December 31, 1994 and 1993 were comprised of net operating loss carryforwards for which the Company has provided allowances. The ability of the Company to utilize these loss carryforwards in the future is dependent on profitable operations in the various countries in which loss carryforwards exist and the specific rules and regulations governing the utilization of such losses, including the timeframes by which the losses must be used.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements: Page
Report of Independent Auditors
Consolidated Financial Statements:
Balance Sheets as of December 31, 1994 and 1993
Statements of Operations for the years ended December 31, 1994, 1993 and
Statements of Shareholders' Equity for the years ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the years ended December 31, 1994, 1993 and
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders ALPNET, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of ALPNET, Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Multiscript International Inc., a subsidiary of ALPNET, Inc., which statements reflect total assets constituting 9% in 1994 and 7% in 1993, and total revenues constituting 17% in 1994, 14% in 1993 and 16% in 1992 of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for Multiscript International Inc., is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ALPNET, Inc. and subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Salt Lake City, Utah March 10, 1995
ALPNET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
ALPNET, Inc. and its subsidiaries (the "Company"), together with its independent affiliates, form a worldwide network dedicated to providing specialized language services for businesses engaged in international trade. The Company has combined computer translation technology with experienced human translators in its worldwide network to provide a full spectrum of services to fulfill the language needs of customers in international business.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of ALPNET, Inc. and its wholly-owned subsidiaries or branches located in the United States, Canada, United Kingdom, Switzerland, Spain, Germany, France, Hong Kong, Singapore and Korea. Significant intercompany accounts and transactions have been eliminated in consolidation.
For all of the Company's foreign subsidiaries, the functional currency has been determined to be the local currency. Accordingly, assets and liabilities are translated at year-end exchange rates, and operating statement items are translated at average exchange rates prevailing during the year. The resultant cumulative translation adjustments to the assets and liabilities are recorded as a separate component of shareholders' equity. Exchange adjustments resulting from foreign currency transactions are included in the determination of net income. Such amounts are immaterial for all years presented.
In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows from the Company's foreign subsidiaries are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
CASH AND CASH EQUIVALENTS
The Company considers cash equivalents to be all highly liquid investments with a maturity of three months or less when purchased.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements are recorded at cost. Depreciation and amortization are calculated using the straight-line method over estimated useful lives of 3 to 25 years.
GOODWILL
Goodwill consists of the excess of the purchase price over the fair value of net assets of purchased subsidiaries and is amortized on the straight-line method over a 25-year period.
The Company periodically reviews goodwill for impairment by comparing undiscounted projected income over the remaining amortization period for each acquired subsidiary to the unamortized balance of goodwill for each subsidiary. No impairments have been recorded for any of the years presented.
REVENUE RECOGNITION
Revenue from translation services is recognized as work is performed. Customers are billed according to the terms of their purchase orders. Work-in-process represents costs on incomplete and unbilled projects as well as revenues recognized in excess of amounts billed. Deferred revenue arises when payments are received prior to being earned under the terms of customer purchase orders. Such revenue is subsequently recognized as the requirements specified in the purchase orders are completed.
Collateral is not required for receivables and reserves are provided for bad debts.
INCOME TAXES
The Company files a consolidated U.S. Federal income tax return which includes all domestic operations. Tax returns for states within the U.S. and for foreign subsidiaries are filed in accordance with applicable laws.
Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement No. 109"), which requires use of the asset and liability method for calculating deferred income taxes. Implementation of Statement No. 109 did not have a material effect on the consolidated financial statements. In 1992 and prior years, the Company used the deferred method of accounting for income taxes as set forth in Accounting Principles Board Opinion No. 11.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is based upon the average shares of Common Stock and Common Stock equivalents outstanding during the respective years, to the extent they are dilutive. Common Stock equivalents consist of the Company's series B and series C Preferred Stock. Other Common Stock equivalents, consisting of warrants and employee stock options, have not been included in the calculation as their effect is antidilutive or immaterial for the years presented.
RECLASSIFICATIONS
Certain prior-year amounts have been reclassified to conform to the 1994 presentation.
2. GEOGRAPHICAL DATA
Fourteen percent of the Company's 1994 revenues were for services provided to a single customer in the computer industry. No other customer accounts for more than 10% of revenues.
3. FINANCING TRANSACTIONS
In 1990, the Company completed certain refinancing transactions with three of its principal shareholders. One of these shareholders is a former chairman of the board of directors (the "Chairman"), another is also a former director (the "Shareholder"), and the third is a corporate affiliate of another former director and a current director (the "Corporate Affiliate"). The terms of the agreements arising from these 1990 transactions were revised in 1991, 1992 and 1994 as discussed in more detail below and in Note 4.
1992 TRANSACTIONS
In September 1992, the Company entered into the following major transactions with respect to its long-term debt to a Swiss bank and its long-term debt to affiliates:
(1) Obtained a 300,000 Swiss franc (approximately $243,000) long-term loan from a shareholder, who is also a director of the Company (the "Director") (see Note 4); (2) Entered into loan modification agreements with the Shareholder and the Chairman which provided for loan principal payments scheduled for 1992 and 1993 to be deferred under a revised repayment schedule; and (3) Entered into a loan modification agreement with the Swiss bank which granted a one-year deferral on the repayment schedule. The Swiss bank loan was subsequently repaid in full during 1993.
Warrants to purchase 373,000 shares of Common Stock were issued in September 1992 to the Director in connection with the 300,000 Swiss franc loan.
1993 TRANSACTIONS
During 1993, the Company entered into a stock purchase agreement whereby the Company sold 3,000,000 shares of Common Stock to a Liechtenstein company. The net proceeds of $1,488,000 were used to retire the Company's remaining obligations under the Swiss bank debt discussed above and for operating purposes. The terms of the stock purchase agreement included an option for the purchaser to acquire up to 1,500,000 additional shares at various prices depending on the exercise date. The option expired on its own terms without any additional shares being purchased.
1994 TRANSACTIONS
Effective March 31, 1994, the Company completed a capital restructuring with all three of the shareholders holding the debt described above. The agreements with these shareholders provided for the following:
(1) Conversion of $1,807,000 of long-term debt due to the Shareholder and the Corporate Affiliate into a new series of convertible Preferred Stock (series C) of the Company; (2) Deferral of the due dates for repayment of the 300,000 Swiss franc (approximately $243,000) note payable to the Director; and (3) Elimination of all of the outstanding warrants currently held by these shareholders to purchase up to 8,390,000 additional shares of the Company's Common Stock.
The conversion of $1,807,000 of debt ($1,743,000, net of related costs) to preferred shares resulted in the issuance of 584,257 shares of series C Preferred Stock (see Note 5).
Substantially all of the Company's assets were encumbered under the former debt agreements with affiliates. Following the March 1994 transactions, the only assets which remain as security for long-term debt to affiliates are the accounts receivable and inventory, if any, of ALPNET, Inc. (the U.S. parent company).
In conjunction with the capital restructuring described above, the Company entered into a "financial monitoring agreement" with the Shareholder which requires the Company, among other things, to obtain prior approval for major financing transactions, significant asset purchases or sale of a major portion of the Company's assets.
In July 1994, the Company entered into an agreement with a current shareholder (who is also the former owner of the Company's German subsidiary) to finance a portion of a pension obligation owed to this shareholder. In connection with this agreement, the Company signed a 300,000 Deutsche mark (approximately $185,000) note payable (see Note 4).
4. BORROWINGS
NOTES PAYABLE TO BANKS
All of the above credit facilities have variable interest rates. The interest percentages shown are the actual rates at December 31, 1994.
The credit facility with the U.K. bank has a maximum limit of Pounds700,000 (approximately $1,095,000) at December 31, 1994 and intercompany debts have been subordinated to the bank. The note agreement requires the U.K. subsidiary to maintain net equity of Pounds750,000 (approximately $1,175,000) and a 2:1 ratio of accounts receivable to outstanding borrowings under the facility.
The credit facility with the Canadian bank has a maximum limit of Canadian $450,000 (approximately $320,000) at December 31, 1994 and intercompany debts have been subordinated to the bank. The credit facilities with the Spanish banks have a maximum limit of PTS 14.2 million (approximately $110,000) at December 31, 1994.
The secured credit facility with the German bank has a maximum limit of DM 500,000 (approximately $325,000) at December 31, 1994 and intercompany debts have been subordinated to the bank. The unsecured credit facility has a maximum limit of DM 100,000 (approximately $65,000) at December 31, 1994. The credit facility with the French bank had a maximum limit of FF 300,000 (approximately $55,000) at December 31, 1994 but this facility expired in January 1995.
Most of the Company's credit facilities are subject to annual renewals and, except as noted above, the Company expects them to be renewed on substantially the same terms as exist at December 31, 1994. The weighted average interest rate on notes payable to banks was 9.8% at December 31, 1994 and 1993, and 10.8% at December 31, 1992.
LONG-TERM DEBT
LONG-TERM DEBT TO AFFILIATES
Interest expense on notes payable to affiliates was approximately $61,000 in 1994, $156,000 in 1993, and $147,000 in 1992. The note payable to the Director is collateralized by a security position in the accounts receivable and inventory, if any, of ALPNET, Inc. (the U.S. parent company).
DEBT MATURITIES
5. CAPITAL STOCK
CONVERTIBLE PREFERRED STOCK
The Company has 1,043,668 outstanding shares of Preferred Stock, of which 459,411 shares are designated as series B and 584,257 shares are designated as series C. The series B Preferred Stock is convertible at the option of the holder into three shares of the Company's Common Stock, has voting rights as if the shares were already converted, and features a 10% non-cumulative dividend subject to the discretion of the Board of Directors. All of the outstanding shares of series B Preferred Stock were issued in 1991.
The series C Preferred Stock is convertible at the option of the holder into nine shares of the Company's Common Stock and otherwise has the same general terms as the series B Preferred Stock. All of the outstanding shares of series C Preferred Stock were issued in 1994 as described in Note 3.
COMMON STOCK
In addition to the 1993 sale of Common Stock described in Note 3, the Company issued 1,068,076 shares of Common Stock, valued at Canadian $1.2 million (approximately $960,000), in September 1992 in exchange for all of the minority interest in the Company's Canadian subsidiary. With the completion of this transaction, all of the Company's subsidiaries became wholly-owned.
As discussed in more detail in Note 7, the Company has a guarantee liability related to the purchase of its German subsidiary which could result in the issuance of additional shares of Common Stock.
The Company is currently prohibited from paying dividends under Utah corporate law.
STOCK OPTIONS
The Company has an incentive stock option plan and a nonstatutory stock option plan whereby 136,577 and 1,063,423 shares, respectively, of the Company's authorized but unissued Common Stock are reserved for ultimate issuance under the plans.
The exercise terms of the options provide that the options expire six years after date of grant and cannot be exercised during the first year. No more than 20% of the options can be exercised in any one year; however, any unexercised options may be accumulated and exercised in succeeding years. The exercise price of options exercised during 1992 was $.81 per share.
6. INCOME TAXES
In 1993, the net operating loss carryforwards of the U.S. parent company expired for state income tax purposes. The income tax credit in 1992 relates primarily to a tax loss carryback in France for that year.
The change in the valuation allowances during 1994 and 1993 was not significant.
The Company's Swiss subsidiary has been granted an exemption from Swiss taxes until 1996.
The Company has approximately $400,000 of general business tax credit carryforwards available to offset future U.S. federal income taxes which expire beginning in 1997 through 2001.
7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Substantially all of the Company's office space and various equipment is rented under leases which are classified as operating leases. These leases have remaining terms of up to 20 years. Certain of the leases for office space contain renewal options and adjustment clauses based on consumer price indices. Total rental expense for all operating leases was approximately $1.6 million in 1994, $1.6 million in 1993 and $1.8 million in 1992.
Certain office space is subleased under agreements with remaining terms of up to four years with various renewal options. Total sublease rental income was approximately $248,000 in 1994, $229,000 in 1993 and $293,000 in 1992.
EMPLOYEE BENEFIT PLANS
ALPNET, Inc. has a contributory profit sharing plan ("Plan") which is designed to meet the requirements for qualification under Section 401(k) of the U.S. Internal Revenue Code. Under this provision, contributions by U.S. employees are excluded from their taxable income. The Plan provides retirement benefits for U.S. employees meeting certain eligibility requirements. Employer contributions are discretionary and become fully vested after two years. Employer contributions of $1,700 were made in 1994, but no employer contributions were made to the Plan in 1993 or 1992. Total employer and employee contributions may not exceed specified limits.
The Company's U.K. subsidiary has two defined contribution plans which cover substantially all of its employees. Contributions are based upon percentages of participating employees' compensation. The cost of these plans was approximately $81,000 in 1994, $61,000 in 1993 and $96,000 in 1992.
ACQUISITION GUARANTEE
In 1988, the Company acquired its German subsidiary for a combination of cash and shares of the Company's Common Stock. The acquisition agreement required the Company to give additional consideration if the value of the shares of Common Stock did not reach an agreed-upon level within a specified period following the acquisition, and remain at that level until the former owner was able to sell the shares of the Company's Common Stock for an amount equal to the stipulated purchase price in the acquisition agreement. As a result of this requirement, the Company issued additional shares to the former owner in 1990.
In 1993, the Company and the former owner entered into an agreement which amended the original acquisition agreement. This agreement waives the requirement to pay any additional consideration if the value of all shares of Common Stock previously issued reached the stipulated purchase price on or before September 30, 1994 (which date was subsequently extended to September 30, 1996, in conjunction with the capital restructuring discussed in Note 3). If the stock value does not reach such amount, the Company is required to pay interest on the stock value deficiency beginning on September 30, 1996. Alternatively, the Company could settle such deficiency by making additional payments (in cash or stock) to the former owner.
As a result of this waiver agreement, the Company recorded a guarantee liability in the consolidated balance sheets for the stock value deficiency calculated based on the trading value per share of the Company's Common Stock as compared to the guaranteed value at the balance sheet dates. A decrease in shareholders' equity has also been recorded for the same amounts.
8. RELATED PARTY TRANSACTIONS
Related party transactions not previously disclosed are as follows.
The Company incurred legal costs of approximately $53,000 in 1994, $57,000 in 1993 and $27,000 in 1992 for services performed by a law firm whose Chairman of the Board was a director and also the secretary of the Company. Approximately $25,000 in 1994 and $36,000 in 1993 of these legal fees related to financing transactions discussed in Note 3.
As of December 31, 1994, the Company has a $76,000 unsecured promissory note receivable, bearing interest at prime plus 3%, from an officer and director of the Company. The note balance was $84,000 at December 31, 1993 and $93,000 at December 31, 1992.
ITEM 9:
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10:
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information with respect to directors required by Item 10 of Form 10-K is presented in the section titled "Information About Directors" in the Company's definitive Proxy Statement dated March 27, 1995 and is incorporated herein by reference. The information with respect to Executive Officers is presented in the section titled "Executive Officers of ALPNET, Inc." in Item 1 hereof. The information with respect to other significant employees is presented in the section titled "Certain Significant Employees" in the Company's definitive Proxy Statement dated March 27, 1995 and is incorporated herein by reference.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
Information required by Item 11 of Form 10-K is presented in the sections titled "Compensation of Directors," "Executive Compensation" and "Compensation Pursuant to Plans" in the Company's definitive Proxy Statement dated March 27, 1995 and is incorporated herein by reference.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 of Form 10-K is presented in the sections titled "Principal Shareholders" and "Information About Directors" in the Company's definitive Proxy Statement dated March 27, 1995 and is incorporated herein by reference.
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 of Form 10-K is presented in the section titled "Certain Relationships and Related Transactions" in the Company's definitive Proxy Statement dated March 27, 1995 and is incorporated herein by reference.
PART IV
ITEM 14:
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) (1)FINANCIAL STATEMENTS:
The financial statements are included in Item 8, Financial Statements and Supplementary Data, as listed in the Index to Consolidated Financial Statements at the beginning of Item 8.
(2) FINANCIAL STATEMENT SCHEDULES:
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions and therefore have been omitted or are not
presented because the information required is included in the financial statements or notes thereto.
(b) REPORTS ON 8-K:
The following reports on Form 8-K were filed during the fourth quarter of the year ended December 31, 1994, which are incorporated herein by reference: Financial Date of Statements Report Item Reported Filed
11/10/94 ALPNET Announces Third Quarter 1994 Results N/A
(C) EXHIBITS:
The response to this portion of Item 14 is submitted as a separate section of this report. See Item 14(a)(3) above.
(D) FINANCIAL STATEMENT SCHEDULES:
The response to this portion of Item 14 is submitted as a separate section of this report. See Item 14(a)(2) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ALPNET, INC.
By: \s\ Thomas F. Seal Thomas F. Seal, President Date: 27 March 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.