ITEM 1. BUSINESS
(a) General Development of Business
ALPNET, Inc. ("ALPNET" or the "Company") is a United States multinational corporation which was incorporated in the State of Utah in 1980. The Company provides services and solutions in the multilingual information management services sector to businesses engaged in international trade. These services include information consultancy, language technology integration, translation and localization. ALPNET is one of the largest dedicated suppliers of such services and solutions in the world.
The Company was originally established to develop and market foreign language translation software, which included its invention of translation memory technology. ALPNET is regarded as a pioneer in the field of multilingual software development. The acquisition by the Company of several leading translation service providers in 1987 and 1988 established the Company's international presence and multilingual information services capabilities. The Company further expanded into foreign markets in 1994 through the formation of additional foreign subsidiaries and branches and in 1999 with the acquisition of subsidiaries in Germany and the Netherlands. As of December 31, 2000, the Company has wholly-owned foreign subsidiaries or branches in the following countries: Canada, Brazil, United Kingdom, Republic of Ireland, Germany, Belgium, France, the Netherlands, Sweden, Singapore, Korea, China, Japan and Thailand.
The globalization of business and rapid growth of the Internet has intensified the need for companies to implement effective multilingual information strategies to support their Internet and eCommerce business models as well as their traditional business models. Product life cycles and time-to-market requirements are shortening in many industries and businesses need to manage information in accelerated time frames while reducing multilingual information costs. The Company's 21-year history has provided it with substantial experience in managing linguistic resources spanning people, linguistic data and technology which enable it to meet the globalization requirements of such companies.
During 1999 and 2000, the Company embarked on a strategic repositioning to evolve its service offering to include a full range of value-added multilingual information services, supported by its ALPNETXchangeTM technology and move up the services chain in the information creation, localization and information management process (the "InfoCycleTM"). The Company also planned to offer an Internet-based Application Service Provider ("ASP") business model, under which it would offer multilingual information management software applications via the Internet.
During the fourth quarter of 2000, the Company commenced implementation of certain strategic initiatives along with a restructuring plan as a result of limited capital resources, and depressed capital market conditions and the Company's operating performance. The primary focus of these initiatives is to strengthen the Company's sales team worldwide; reduce costs by centralizing and consolidating production operations; reduce infrastructure and overhead; eliminate various unprofitable operations; and increase outsourcing of certain production activities. ALPNET will also expand its consultancy and systems integration services capabilities. The Company's technology development will be focused on enabling ALPNET to efficiently manage the InfoCycleTM process in support of its clients' global businesses through its modular ALPNETXchangeTM system which is expected to automate the sales, project management, production workflow, supply chain and finance functions. Further implementation of the ASP business model will be subject to client requirements. The Company will focus on its distinctive service benefits and core competencies and on becoming the vendor of choice for new and existing clients to secure a greater portion of their multilingual information management services business.
(b) Financial Information About Industry Segment
The Company operates in one business segment: multilingual information management services.
(c) Narrative Description of Business
General
The Company's service offering provides a full range of multilingual information management services and solutions specifically tailored to clients engaged in international business. Among the services the Company offers are information consultancy, language technology integration, translation, and localization. Information consultancy services include information development and content creation. Such services include information analysis and development of information strategies. The Company can assist clients to significantly increase efficiency and reduce costs by applying controlled language authoring tools, creating information using systems for defining markup languages for data representation such as SGML or XML, implementing document management systems, and by following established industry standards.
Language technology integration services include benchmarking and evaluation of language tools, workflow definition and customization, process optimization, controlled language definition, training, terminology management, tools integration, database development and other language services such as the utilization of translation memories, machine translation, and the definition of production and quality assurance procedures.
Translation services are offered to a wide range of clients from major industries, including the automotive, consumer electronics, telecommunication, financial services and manufacturing industries. The Company provides a complete service for clients that produce printed and electronic documentation and training materials. Translation services include terminology development, translation, electronic publishing, graphics and web publishing.
Localization is primarily offered to clients in the information technology (IT) market and encompasses a complete linguistic, technical and cultural adaptation of computer software products for foreign language markets. Localization services include terminology development, translation, content adaptation, electronic and web publishing, graphics, multimedia, creative tasks, and a complete range of engineering and software testing activities.
The Company has recognized that a key business problem faced by its clients is the absence of cost-effective information management systems and processes that exploit the systematic use and reuse of information. Information reuse is essential in translating and managing content in multiple languages. Poor reuse compromises information quality and value and increases the cost of doing business globally. The Company will aggressively market its full range of InfoCycleTM services to its clients to assist them in developing systems and processes that will utilize technology solutions integrated with ALPNET's multilingual information management capabilities. This will enable clients to effectively develop and prepare their products and services for the global marketplace, including reducing their costs and time-to-market.
ALPNETXchangeTM, Development and Support
ALPNET is continuing its development and implementation of its ALPNETXchangeTM system which is a modular, enterprise information and management system. ALPNETXchangeTM is expected to automate the Company's sales, project management, production workflow, supply chain and finance functions. The most valuable part of the ALPNETXchangeTM system is a knowledge management module called GlobelixTM which centralizes and leverages all translation memories and terminology databases. This module provides the critical function of information reuse. The implementation of certain of the ALPNETXchangeTM modules commenced in third quarter 2000 with other modules to be implemented as development and testing of each module is completed, generally in fourth quarter 2001.
During 2000 and 1999, the Company capitalized certain costs totaling approximately $3.9 million and $2.8 million, respectively, for a total of $6.7 million in connection with acquired software, purchased software, and developed software for internal use. In the fourth quarter of 2000, in connection with management's evaluation of its technology module and future requirements, the Company wrote-off $2.4 million related to certain modules of ALPNETXchangeTM in connection with the restructuring of the Company, as discussed in note 5 to the Consolidated Financial Statements. During 2000, 1999 and 1998, the Company expensed approximately $944,000, $ 99,000 and $730,000, respectively, of technology development and support activities.
Market
The market for multilingual information management services has been growing in recent years in line with the growth of global business. Political, economic and technological changes have created and expanded opportunities for significant increases in international trade. A single world market is emerging where it is possible for companies to reach their clients around the world in just seconds, regardless of distances, borders and barriers.
As borders disappear, the need to localize domestic products for foreign markets is increasing rapidly. Globalization is opening up an era of multilingual information management. Traditionally, products and documentation are first completed for the home market and then companies face the difficult challenge of localization before shipping the products to their foreign customers. Increased competition is forcing companies to reduce time-to-market and cut costs. As a result, information must be enabled for global markets so that the localization process is easier to manage. The keys to reduced time to market and lower costs are standardization and process integration. If information is standardized in a universal format such as SGML or XML, it can be stored in a central repository and it is then possible to integrate the processes of information development, translation, distribution and consumption as information is needed.
Outsourcing of non-core business activities such as translation, localization and related services is a general trend as many companies critically question the rationale for maintaining in-house information management capabilities. Estimates of the current size of the outsourced translation and localization market worldwide vary, but are consistently projected as several billion dollars. The Company's target markets are characterized as being global and information intensive. The current client base spans several vertical industry sectors including automotive, information technology, telecommunications, business-to-business services, Internet, healthcare, pharmaceutical, financial services, and consumer electronics. New horizontal market sectors will also be targeted for the Company's services including human resource management, help desk, corporate administration, marketing and corporate communications. Each of these sectors has the potential for significant volumes of globally reusable information assets.
The growth of the Internet and the rapid emergence of eCommerce are having a dramatic effect on the size of the market. As the Web grows, the demand for multilingual information management services is expected to increase significantly and may exceed supply. There has been a significant increase in the non-English speaking Web user population across the world. These users have a natural preference for localized content in both language and culture. Business users on the Web are significantly more likely to purchase when addressed in their own language and the majority of users who encounter a non-native language site either leave or look for a translated version. It is predicted that a majority of Web users will soon be non-English speakers which will be reflected in the increasing volume of multilingual Web content.
Marketing
In marketing the Company's existing services and solutions, the Company believes it has the following key strengths:
Global reach and size of operations. The Company is one of the largest providers in its industry sector with operations and supply chain resources in all the economically significant markets.
Command of technology. The Company utilizes state-of-the-art technology in all areas of its activity, from authoring tools to document management, translation technology and information management. The Company's in-house technical specialists are experts in customizing and deploying tools for specific applications.
Process Specialization. ALPNET is very process oriented. The implementation of quality management and standard processes throughout the Company facilitates performance measurement and improvement of services.
Management depth and experience. ALPNET was an early consolidator in the industry and has extensive management experience. The management team has significant language industry experience and international business skills.
Innovative strength. The Company has been an innovator in the industry for many years. It was the first company to develop translation memory technology and the first to establish a global translation network. ALPNET is one of the first global providers to focus on new solutions such as information consultancy services and language technology integration.
Major Clients
No single client accounted for more than 10% of revenues in 2000, 1999 or 1998.
Competition
The Company has traditionally competed with companies focused mainly on the information translation needs at the end of the information creation and management process. Competition in this area is widely diverse. At one end of the spectrum are small, single-site agencies with a generalist approach that offer services normally limited to translation. At the other end of the spectrum are a few large, multi-site companies that offer turnkey services (more than translation only) and that often focus on providing "solutions" for specific industries.
The industry has been highly fragmented and often referred to as a "cottage industry." In the last five years, however, there has been significant consolidation with many mid-sized translation companies being acquired by large companies in various industries. A number of new companies, perceiving the significant market opportunity, have also entered the market. In addition to the Company, a top-tier of industry players has emerged . Despite these recent trends, all of the major companies within the industry have a relatively small market share with no one dominant provider. The Company differentiates itself from its competition through its technology, established global presence and existing client base.
Technology. The Company has developed technology and has been a recognized technology innovator in the industry since incorporation. The basis of the Company's current and future service offering is its ALPNETXchangeTM technology that represents many man-years of development and contains unique functional capabilities. This technology forms a substantial barrier to entry that could only be overcome by a comparable investment. Key technology owned by the Company includes existing translation and multilingual information management software in addition to the ALPNETXchangeTM technology currently under development.
Established global presence. The Company was the first to create a global translation network in key countries throughout the world. This global presence is organized into regionally-focused sales and operations divisions allowing the Company to leverage direct access to native-speaker localization expertise. Centrally focused competitors often rely on non-native resources. Creating a global presence requires significant investment and the successful integration of previously disparate operations is difficult and time consuming.
Established client base. The Company has established revenue generating relationships with thousands of clients over many years. The Company has built strong relationships with numerous Fortune 500 clients and industry leaders. These relationships represent a significant penetration of key market segments. This base represents a significant barrier to entry, especially for new entrants to the industry.
Employees
As of December 31, 2000, the Company employed 702 persons. The Company requires sales, project management, language services production, technical support, and consultancy services personnel in order to obtain, manage and produce major multilingual information projects. The Company is dependent upon an adequate supply of skilled professionals in each of these primary disciplines to meet the requirements of its clients and prospective clients. The ability to attract and retain the best professional staff is a key corporate goal. A dedicated human resources function, organized on a regional basis, maintains global employee policies and supports recruitment, training and career management. Employees of the Company's subsidiary in the Netherlands are represented by a labor union and there is a works council in Germany. The Company believes relationships with its employees to be good.
Due to the nature of its business, the Company also retains, on an as-needed basis, a supply chain consisting of a large number of translators and other service professionals who are independent contractors.
(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.
ITEM 2:
ITEM 2: PROPERTIES
ALPNET's corporate headquarters are located in Salt Lake City, Utah. Customer service and production facilities used by the Company as of December 31, 2000, all of which are leased, are listed below.
Location
Americas
USA, Canada, Brazil
Europe
United Kingdom (2), Germany (7), Republic of Ireland, France, the Netherlands, Sweden
Asia
Singapore, Korea, China, Japan, Thailand
Subsequent to December 31, 2000, as part of management's restructuring plan, the Company's production facilities in Brazil, France, Sweden, and its technology facility in Nuremburg, Germany will be sold or closed.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
No substantive matters currently pending.
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, 2000.
PART II
ITEM 5:
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ALPNET's Common Stock trades on The Nasdaq Stock Market under the symbol AILP. The following table shows the range of high and low trading prices as reported by The Nasdaq Stock Market for the years 1999 and 2000:
As of March 15, 2001, there were 364 shareholders of record; however, the Company estimates the actual number of beneficial owners approximates 10,000. Due to its accumulated deficit, the Company is currently prohibited from paying dividends under Utah corporate law.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
The following selected financial data are derived from the Consolidated Financial Statements of the Company. The data should be read in conjunction with the Consolidated Financial Statements, related notes and other financial information included therein.
FINANCIAL SUMMARY
A majority of the Company's operations are located in foreign countries. Accordingly, the Company is affected by foreign currency exchange rate fluctuations as described in detail in Item 7A, "Foreign Exchange Risk".
(1)Includes restructuring and related charges of $3,016,000 and $2,383,000 related to the write-off of certain modules of the ALPNETXchangeTM system.
(2)Includes restructuring and related charges of $1,291,000.
SELECTED QUARTERLY FINANCIAL DATA
The following table shows selected quarterly financial data for 1999 and 2000 as previously reported in the quarterly reports on Form 10-Q:
(1)Includes restructuring and related charges of $3,016,000 and $2,383,000 related to the write-off of certain modules of the ALPNETXchangeTM system.
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.
Results of Operations
The following paragraphs discuss 2000 results as compared with 1999, and 1999 results as compared with 1998. The Company reported a net loss for the year ended December 31, 2000 of $11.0 million including restructuring and related charges of $5.4 million. This compares to net income in 1999 of $716,000 and a net loss in 1998 of $818,000. The restructuring and related charges recorded in the fourth quarter of 2000 included a charge of $3.0 million related to a restructuring and consolidation of the Company's operations worldwide and $2.4 million related to the write-off of certain modules of the ALPNETXchangeTM system. Cost of services sold and operating expenses for the fourth quarter and year ended December 31, 2000 included a charge of approximately $1 million related to excess telecommunications capabilities and other costs that are expected to be reduced in the future as a result of renegotiation of commitments. Included in the net loss for 1998 is $1.3 million of restructuring expense. The restructuring and related charges for 2000 and 1998 are discussed more fully in note 4 to the Consolidated Financial Statements.
Sales of services were $50.4 million for 2000 compared to $51.5 million for 1999 and $48.5 million for 1998. During 2000, ALPNET continued its strategic repositioning, which commenced in late 1998, to evolve its service offering to include a full range of value-added multilingual information services, supported by technology, and move up the service chain, assisting its clients to streamline, optimize and leverage their multilingual information development and management processes. This innovative offering involves all aspects of information creation, localization and information management - the InfoCycleTM.
The transition to the new InfoCycleTM offering has had a significant impact on the operating results of the Company. The necessary investment in technical infrastructure, human resources, branding and marketing support have involved significant operating expenditures which has contributed to the operating loss. Weak European currencies have also negatively affected results and have contributed to the Company reporting net losses for the fourth quarter of 1999 and throughout the year 2000. The investments that have been made in 1999 and 2000 are expected to position the Company for accelerated growth and profitability in future years.
In November 2000, management approved and commenced implementation of a restructuring and consolidation plan to strengthen the Company's sales team worldwide; reduce costs by centralizing and consolidating production operations; reduce infrastructure and overhead; eliminate various unprofitable operations; and increase outsourcing of certain production activities. ALPNET will also expand its consultancy and systems integration services capabilities. Financial information relating to the implementation of this plan is contained in note 4 to the Consolidated Financial Statements.
In the second half of 1998, losses were incurred as the entire industry experienced adverse operating conditions resulting from volatile global trading economic conditions and market changes. These adverse conditions led to management's reorganization of the Company in late 1998. The reorganization was successfully completed in early 1999 and prepared the Company for its strategic acquisitions in Hengelo, the Netherlands and in Nuremburg, Germany at the end of June and July 1999, respectively. For the first three quarters of 1999, the Company reported net income. In the fourth quarter of 1999, the Company incurred additional operating costs in connection with its strategic repositioning and the integration of the 1999 acquisitions into existing operations. These additional costs, together with a revenue shortfall arising out of delays in some business opportunities due to year 2000 concerns on the part of some clients and the impact of weak European currencies, contributed to a net loss in the fourth quarter 1999.
Sales of Services by Geographic Segment
Sales in 2000 decreased by $1.1 million compared with 1999. Revenues and costs in 2000 measured in US dollars have been negatively impacted approximately $3.7 million by the effects of fluctuations in foreign currencies against the US dollar. However, the impact on net income has not been significant. This is described in more detail in Item 7A
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Exchange Risk
The Company serves its customers from offices throughout North America, Europe and Asia. The majority of the Company's operations are located outside the US. Consequently, the Company is exposed to fluctuations of the dollar against the foreign currencies of those countries in which the Company has a substantial presence. 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 weighted-average exchange rates prevailing during the years presented. The principal currencies to which the Company is exposed are the Canadian Dollar, the British Pound and the Euro. The Singapore Dollar is closely tied to the US dollar and therefore has low exchange risk.
Fluctuations against the US dollar can produce significant differences in the reported value of revenues and expenses.
The following table shows a comparison of sales of services in each of the Company's significant geographic segments for 2000, 1999 and 1998, along with the effect of foreign currency exchange rate fluctuations on sales between years.
The revenue mix of the Company's operations and the effect of foreign currency exchange rate fluctuations on costs and expenses mitigate the consolidated net income impact. For revenues in the US which are produced outside of the US, any weakening of the US dollar against a particular country's currency reduces the amount of net income reported in US dollars. Conversely, the same weakening of the dollar generates an offsetting increase in the dollar value of profits arising from revenues sold and produced within that country. This natural currency effect reduces the net foreign exchange risk to the Company.
The Company has not historically experienced significant differences in net income as a result of fluctuations in foreign currencies. Due to the nature of its business, the Company does not currently use any financial instruments to manage or hedge foreign exchange risk either for trading or other purposes. The revenue mix and currency trends are monitored on an ongoing basis to identify any changes that might significantly affect the Company's net results.
The translation of foreign denominated assets and liabilities at year-end exchange rates results in an unrealized foreign currency translation adjustment recorded as a separate component of shareholders' equity. The 2000 foreign currency adjustment to shareholders' equity was negative $1.5 million compared to a negative $733,000 in 1999. As of December 31, 2000, the cumulative net effect to the Company of the equity adjustment from movements in foreign currency exchange rates was a reduction of $4.0 million in shareholders' equity. A substantial portion of the cumulative foreign currency adjustment relates to changes in the carrying value of goodwill, of which a significant amount is denominated in foreign currencies.
Interest Rate Risk
The Company obtains part of its working capital requirements from credit facilities with various banks which provide for interest at variable rates linked to base interest rates. If base interest rates increase, the Company is potentially exposed to higher interest expense. This would be partially offset by higher interest income on cash balances.
The majority of the Company's credit facilities are denominated in foreign currencies and any increases in the respective interest rates will normally be compensated through correspondingly weakened exchange rates translating the increased interest expense reported into fewer US dollars. If US base rates increase, the increase in US interest expense will again normally be reduced by the consequent strengthening of the dollar reducing the reported interest expense on the foreign denominated debt. Thus, any unilateral changes in the interest rates in any of the countries where the Company has a significant amount of debt will be compensated through natural exchange rate adjustments such that there is no material impact on the level of net interest expense reported. If all or a majority of the interest rates increase in the countries in which the Company has significant amounts of debt, there would be a risk of increase in the amount of interest expense reported. In the opinion of management, such a general increase is unlikely.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ALPNET, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ALPNET, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
See accompanying notes.
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
See accompanying notes.
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
See accompanying notes.
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
Supplemental disclosure of cash flow information:
During 1999, the Company purchased all of the capital stock of EP and TPS (as described in note 3). In conjunction with the acquisitions, liabilities were assumed as follows:
See accompanying notes.
ALPNET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31,
1. Significant Accounting Policies
Nature of Operations
ALPNET, Inc. (the "Company") is a United States multinational corporation. The Company provides services and solutions in the multilingual information management services sector to businesses engaged in international trade. These services include information consultancy, language technology integration, translation and localization. The principal markets for the Company's services are North America, Europe, and Asia. During 1999 and 2000, the Company embarked on a strategic repositioning to evolve its service offering to include a full range of value-added multilingual information services and move up the chain in the information creation, localization and information management process (the "InfoCycleTM").
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, Brazil, United Kingdom, Republic of Ireland, Germany, France, Spain, the Netherlands, Sweden, Singapore, Korea, China, Japan and Thailand. 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.
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.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
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. Cash equivalents are stated at cost, which approximates fair value.
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 5 years for equipment, 5 to 25 years for leasehold improvements.
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 12 to 25 years. Annually and upon significant changes, the Company reviews goodwill for impairment. In determining whether an impairment should be recognized, the Company compares undiscounted cash flows over the remaining amortization period to the unamortized balance of goodwill for each acquired subsidiary. Based upon management's review at December 31, 2000, the Company has expensed certain goodwill amounts as discussed in note 4 to the financial statements.
1. Significant Accounting Policies (continued)
Software
Purchased software is recorded at cost. The Company capitalized certain of the costs of developed software for internal use in accordance with Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software. Amortization of software is provided on a straight line basis over useful lives ranging from two to six years.
Revenue Recognition
Revenue from sales of services is recognized as work is performed on either the completed-contract or percentage-of-completion method, depending on the terms of the purchase order or contract. The completed-contract method is applied to purchase orders for short-term, low value projects. The percentage-of-completion method is used for longer-term, higher value contracts with defined specifications and deliverables. Revenue is recognized according to management's assessment of the progress of completion. Anticipated losses, if any, are recognized in the period in which determined. Work-in-process represents costs on incomplete projects as well as revenues earned in excess of amounts billed.
Stock Options
The Company accounts for stock options using the intrinsic value method and provides pro forma footnote disclosure of the impact of using the fair value method.
Income (Loss) Per Share
The Company presents basic and diluted income (loss) per share on the face of the consolidated statements of income. Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the accounting period excluding any dilutive effects of options and convertible securities. Diluted income per share includes the potential dilution as a result of exercising stock options and convertible securities.
Comprehensive Income
The Company presents comprehensive income in the shareholders' equity section of the consolidated balance sheet. Accumulated other comprehensive income is entirely accumulated foreign currency translation adjustments.
Segment Data
The Company operates in one business segment: multilingual information management services. Within this segment, the Company also evaluates its performance by significant geographic regions: North America, Europe and Asia.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Recent Accounting Pronouncements
In the third quarter of 1999, the Company adopted FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This requires the Company to record all derivative instruments as assets or liabilities, measured at fair value. The adoption of this statement had no material affect on the financial statements of the Company.
In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," ("SAB 101"). The bulletin summarizes the views of the staff on applying generally accepted accounting principles to revenue recognition. SAB 101 expresses the opinion that revenue is earned when four criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the sales price to the buyer is fixed or determinable; and collectibility is reasonably assured. The Company believes that its existing revenue recognition policies are in conformity with SAB 101.
2. Geographical and Segment Data
The following selected financial data summarizes the Company's domestic and foreign operations for financial reporting purposes. Allocations of corporate and country overheads to domestic and foreign operations are based upon the Company's policies for financial reporting consistently applied during the periods. Intercompany sales are normally billed on a margin-sharing basis. All intercompany sales are eliminated in determining the totals.
No single client accounted for more than 10% of revenues in any year.
3. Acquisitions
On June 30, 1999, the Company acquired the entire outstanding share capital of EP Electronic Publishing Partners GmbH ("EP"), a German corporation based in Nuremberg, Germany. The acquisition cost of approximately $1,007,000 was paid as follows:
The acquisition was accounted for using the purchase method. The purchase price was allocated to software ($630,000) and goodwill ($377,000) which are being amortized on the straight-line method over 6 and 12 years, respectively. $330,000 of goodwill was written off at December 31, 2000 in connection with the restructuring of the Company, as discussed in note 4 to the Notes of the Consolidated Financial Statements. The 8% unsecured note due June 30, 2000 was paid when due.
On July 30, 1999, the Company acquired the entire outstanding share capital of Technical Publishing Services B.V. ("TPS"), formerly Stork TPS, a Dutch corporation based in Hengelo, the Netherlands. The acquisition cost of approximately $6,392,000 was paid as follows:
The acquisition was accounted for using the purchase method and the purchase price was allocated entirely to goodwill which is being amortized on the straight-line method over 12 years.
The results of operations at EP and TPS have been included in the consolidated results of operations since July 1 and August 1, 1999, respectively.
Pro forma financial information
The following table shows the effect of acquisitions on the consolidated financial statements of the Company on a pro forma basis, as if the acquisitions had taken place on January 1, 1998.
4. Restructuring and Related Activities
During 2000, ALPNET substantially completed all of the remaining actions contemplated under the 1998 restructuring plan which included lease cancellation commitments in the Company's European operations of approximately $124,000. The Company paid all other obligations prior to December 31, 1999.
In November 2000, ALPNET's Board approved a restructuring plan to realign the Company's organization, centralize and consolidate production operations, reduce infrastructure and overhead, and eliminate various unprofitable operations. Restructuring and other related charges of approximately $3.0 million were expensed. These charges were composed of approximately $2.1 million of severance and closure costs, approximately $500,000 of goodwill impairment in locations being closed with no further business relationships and approximately $400,000 related to losses incurred on assets disposed from operation closures. Costs for employee separations of approximately $1.2 million related to 13 employees in North America, 41 employees in Europe and 9 employees in Asia. Terminated employees worldwide affected all the major business functions and job classes. Employee separation benefits include severance, medical and other benefits and are payable according to relevant local law, which often provides for payments to be made over a number of months.
An analysis of accrued costs and amounts charged against the restructuring and related activities follows:
Employee separation expenses will all be paid in 2001. Amounts related to lease cancellation costs will be paid over the respective remaining lease terms and other exit costs will all be paid in 2001.
In addition to the foreign restructuring costs, the Company also reported an impairment charge of approximately $2.4 million related to the write-off of certain modules of its ALPNETXchange software. This expense is included with the restructuring and related charges in the accompanying statement of operations.
5. Software
During 2000 and 1999, the Company capitalized certain costs totaling approximately $3.9 million and $2.8 million, respectively, for a total of $6.7 million in connection with acquired software, purchased software, and developed software for internal use. In the fourth quarter 2000, the Company wrote off $2.4 million related to certain modules of ALPNETXchangeTM in connection with the restructuring of the Company as discussed in note 4 to the Consolidated Financial Statements and following a thorough evaluation of the future utility of each module of the ALPNETXchangeTM system. The amounts for 2000, below, are net of amounts written off. Amortization for certain modules commenced in the third quarter of 2000. Amortization expense for 2000 was $88,000. The remaining software modules are expected to be ready for use in the fourth quarter of 2001.
6. Borrowings
Credit Facilities with Banks
Credit facilities with banks consisted of the following at December 31:
All of the Company's credit facilities have variable interest rates. The interest percentages shown are the actual rates at December 31, 2000. The weighted average interest rate on notes payable to banks was 8.9% at December 31, 2000 and 7.95% at December 31, 1999. 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 currently exist. Due to the short-term nature of these notes, their carrying values at December 31, 2000 approximate their fair values.
The credit facility with the US bank is collateralized by US-based accounts receivable, has a maximum limit of $2,000,000 at December 31, 2000, and is limited to 80% of US accounts receivable. A leasing facility of $2,000,000 is also available under this banking relationship.
The credit facility with the Canadian bank is collateralized by the accounts receivable of the Canadian subsidiary and is guaranteed by the Company. There is a maximum limit of Canadian $2,500,000 (approximately $1,670,000) at December 31, 2000, and intercompany debts have been subordinated to the bank.
The credit facilities with the UK bank as of December 31, 2000 are provided under an invoice factoring agreement. There is a maximum limit of 80% of UK receivables (approximately $500,000) at December 31, 2000.
The secured credit facility with a German bank is collateralized by the accounts receivable of the German subsidiaries and DM 400,000 (approximately $190,000) is guaranteed by the Company. There is a maximum limit of DM 1.1 million (approximately $530,000) at December 31, 2000. Intercompany debts have been subordinated to the bank. The unsecured credit facility with another German bank has a maximum limit of DM 200,000 (approximately $95,000) at December 31, 2000.
The credit facility with the Spanish bank was guaranteed by the UK subsidiary and had a maximum limit of PTS 9.2 million (approximately $56,000) at December 31, 1999. It was paid off in full during 2000.
As of December 31, 2000, the Company had unused amounts under these credit facilities of approximately $1,677,000.
6. Borrowings (continued)
Related Party Debt
Related party debt consists of the following at December 31:
The convertible notes to former shareholders of EP were issued on completion of the acquisition (as described in note 3). These notes bear an interest rate of 8 percent and are repayable in three equal installments due 36, 48 and 60 months from the date of the notes, June 30, 1999. The outstanding principal may be converted, at the option of the lender, into restricted shares of the Company's common stock at any time after June 30, 2000. The beginning conversion price is $1.78 (based on the average market value of the Company's stock for the five trading days prior to the note date, June 30, 1999) and increases by 10 percent per year beginning June 30, 2001. The Company has the right to repay the outstanding principal of the notes at any time without penalty.
During 1999, the Company issued approximately $1.8 million of convertible notes to private investors, $490,000 of which were issued to related parties. These notes have a variable interest rate of US prime plus 2% (11.5% and 10.25% as of December 31, 2000 and 1999, respectively), and are repayable in three equal installments due 36, 48 and 60 months from the date of issuance. The outstanding principal is convertible, at the option of the lender, into restricted shares of the Company's common stock at any time after issuance. The conversion price is the average market value of the Company's stock for the five trading days prior to issuance of the note. The conversion price of the notes ranges from $1.72 to $2.73. The Company has the right to prepay the notes at any time prior to maturity, upon 30 days' notice. One of the private investor lenders with a convertible note in the amount of $150,000, who was a related party in 1999, ceased to be a related party in 2000.
The aggregate maturities of long-term related party debt as of December 31, 2000 were as follows:
6. Borrowings (continued)
Long-Term Debt
Long-term debt consisted of the following at December 31:
The convertible notes issued in 1999 provide for terms identical to the notes issued to related parties, as described above.
During 2000, the Company issued approximately $2.0 million of convertible notes to private investors. These notes have a variable interest rate of U.S. prime plus 2%, and are repayable in three equal installments due 36, 48, and 60 months from the date of issuance. The outstanding principal is convertible, at the option of the lender, into shares of the Company's common stock at any time after issuance. The conversion price of each note is the average market value of the Company's stock for the five trading days prior to issuance of the note. The conversion price of the notes ranges from $2.22 to $5.29. The Company has the right to prepay the notes at any time prior to maturity. In connection with approximately $1.7 million of the notes, the Company issued warrants for approximately 385,000 additional shares at an exercise price of $3.33 which are immediately exercisable and expire two years from the date of grant. The fair value of the warrants and conversion feature of $315,000 approximately results in an effective interest rate for the related debt of 17.7%.
The aggregate maturities of long-term debt as of December 31, 2000 were as follows:
Based on a discounted cash flow analysis, the carrying values of long-term debt at December 31, 2000 approximate fair values.
At December 31, 2000 and 1999, the gross amount of equipment recorded under capital leases was $2,095,000 and $724,000, respectively. Accumulated amortization on these assets at December 31, 2000 and 1999 was $520,000 and $445,000, respectively.
7. Capital Stock
Equity Transactions
In 1995, the Company issued 87,339 shares of series D Convertible Preferred Stock to a shareholder and director, in exchange for the cancellation of a 300,000 Swiss franc (approximately $243,000) note payable. Each share of the series D Preferred Stock is convertible at the option of the holder into nine 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. Due to its accumulated deficit, the Company is currently prohibited from paying dividends under Utah corporate law.
On July 7, 2000, the Company completed a private equity financing of $6.5 million of the Company's common stock with a group of investors. The agreement includes certain anti-dilution provisions. The net proceeds from the transaction were approximately $5.8 million. The private placement consisted of approximately 2.9 million shares of Common Stock.
In connection with the private placement, the Company issued warrants to purchase a total of 826,000 shares of Common Stock at an exercise price from $3.09 to $3.14 per share. The Company determined the approximate fair value of the warrants to be $1.67 million.
Income (Loss) per Share
The following table sets forth the computation of basic and diluted income (loss) per share.
The total number of shares for convertible preferred stock, employee stock options, warrants and convertible notes that would have been antidilutive, have been excluded from the calculations of net loss per share - assuming dilution. The number of shares excluded were approximately 6,441,000 for the year ended December 31, 2000.
7. Capital Stock (continued)
Stock Options
During the year ended December 31, 2000, the Company had two stock option plans (the "Option Plans"). At December 31, 2000, a total of 4,941,151 shares of the Company's authorized Common Stock were reserved for ultimate issuance under the Company's non-statutory stock option plan, of which 532,851 shares have been issued. The Company also had an executive stock option plan, under which 2,173,332 shares have been issued. The executive plan expired on September 1, 2000, all existing outstanding options were exercised and 776,668 unissued shares were transferred to the non-statutory plan. The Company has granted non-qualified stock options to employees, officers and independent members of the Board of Directors under both plans.
The exercise terms of the options granted under the non-statutory stock option plan provide that the options expire six years after date of grant and cannot be exercised during the first year. The options vest 20% per year over a five year period. The exercise terms of the options granted under the executive stock option plan generally provided for vesting over the period from June 1998 through June 2000. All unexercised options under this plan expired on September 1, 2000 or when the employee terminated employment with the Company, if sooner.
The Company has elected to continue to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations in accounting for its Option Plans. The alternative fair value method of accounting prescribed by Financial Accounting Standard No. 123, "Accounting for Stock- Based Compensation" ("FAS 123"), requires the use of option valuation models that were not developed for use in valuing employee stock options, as discussed below. Accordingly, under APB 25, no compensation expense has been recognized for stock option grants because the exercise price of stock options equals or exceeds the market price of the Company's Common Stock on the date of grant.
If the Company had elected to account for options granted in 2000, 1999 and 1998 based on their fair value, as prescribed by FAS 123, net income and income per share would have been adjusted to the pro forma amounts shown in the table below.
The fair value of each stock option grant was determined using the Black-Scholes option pricing model and the following assumptions: expected stock price volatility of .8 to 1.0, risk-free interest rate of 6%, weighted average expected option lives ranging from three to four years, and no dividends. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value, in management's opinion the existing models do not necessarily provide a reliable single measure of the fair value of stock options. The method of accounting for stock options as defined by FAS 123 has not been applied to options granted prior to January 1, 1996, and therefore the resulting pro forma compensation cost may not be representative of that to be expected in future years.
7. Capital Stock (continued)
The following table is a summary of activity for the Company's Option Plans for the years ended December 31:
The following table summarizes information about stock options outstanding at December 31, 2000:
8. Income Taxes
The Company files a consolidated US Federal income tax return which includes all domestic operations. Tax returns for states within the US and for foreign subsidiaries are filed in accordance with applicable laws. The following summarizes for income tax purposes, the domestic and foreign components of income (loss) before income taxes for the year ended December 31:
Income tax expense, including the effect of net operating loss carryforwards, consisted of the following for the year ended December 31:
8. Income Taxes (continued)
Income tax expense varied from the expected statutory domestic federal income tax amount as follows for the year ended December 31:
The approximate tax effect of the temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows for the year ended December 31:
Due to prior years' operating losses, the Company and certain of its subsidiaries have net operating loss carryforwards available to offset future taxable income in the various countries in which the Company operates. The Company has approximately $100,000 of general business tax credit carryforwards available to offset future US federal income taxes which expire in 2001. The valuation allowance has been adjusted for net operating losses generated and utilized in each of the three years.
The following table summarizes by geographic region the significant available operating loss carryforwards and the related expiration dates.
9. Commitments and Contingencies
Operating Leases
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 15 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 $2.4 million in 2000, $2.4 million in 1999, and $2.4 million in 1998. Certain office space was subleased pursuant to a contract expiring in 1999. Total sublease rental income was approximately $42,000 in 2000, $54,000 in 1999, and $79,000 in 1998.
At December 31, 2000, future minimum payments under non-cancelable operating leases with initial terms of one year or more, are as follows:
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 US Internal Revenue Code. Under this provision, contributions by US employees are excluded from their taxable income. The Plan provides retirement benefits for US employees meeting certain eligibility requirements.
Certain of the Company's subsidiaries have defined contribution plans which cover substantially all of their employees. Contributions are based upon percentages of participating employees' compensation.
The cost of all of these plans was approximately $306,000 in 2000, $277,000 in 1999, and $180,000 in 1998.
10. Related Party Transactions
As of December 31, 2000, the Company has a $7,000 unsecured promissory note receivable, bearing interest at prime plus 3%, from an officer and director of the Company. The note balance was $21,000 at December 31, 1999 and $34,000 at December 31, 1998.
Sales of services include approximately $246,000 in 2000 and $325,000 in 1999 to companies controlled by Stork N.V., former owner of TPS and significant shareholder of the Company. The balance receivable from related companies amounted to approximately $97,000 as of December 31, 2000 and $140,000 in 1999. The Company also paid approximately $188,000 in 2000 and $80,000 in 1999 for a lease on facilities to a subsidiary of Stork N.V.
11. Valuation and Qualifying Accounts
The following table sets out the activity in the Company's allowance for doubtful receivables:
Additions represent amounts charged to costs and expenses for doubtful receivables. Deductions represent the write-off of specific accounts receivable.
12. Subsequent Events
During February, 2001, the Company implemented a program under its non-statutory stock option plan whereby employees could voluntarily elect to terminate all or a portion of their current stock option grant(s). The number of shares covered by the terminated stock option will be held by the Company and following a waiting period of at least six months, will be made available for future stock option grants. New options granted to participating employees will be in the same number as the terminated stock options and at an option price equal to the then prevailing market price for the Company's common stock. On February 21, 2001, the effective date of the program, options for 576,120 shares were terminated by employees participating in the program.
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, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. 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 ALPNET Canada Inc., a subsidiary of ALPNET, Inc., which statements reflect total assets constituting 10% as of December 31, 2000 and 12% as of December 31, 1999, and total revenues constituting 16% in 2000, 17% in 1999 and18% in 1998 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 ALPNET Canada, Inc., is based solely on the report of other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the United States. 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, 2000 and 1999, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Salt Lake City, Utah
February 16, 2001, except for
Note 12, as to which the date is
February 21, 2001
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
ALPNET Canada, Inc.
We have audited the balance sheets of ALPNET Canada, Inc. as at December 31, 2000 and 1999 and the statements of operations, deficit and cash flows for each of the years ended December 31, 2000, 1999 and 1998. 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 conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2000 and 1999 and the results of its operations and its cash flows for each of the years ended December 31, 2000, 1999 and 1998 in accordance with Canadian generally accepted accounting principles.
\s\ RICHTER, USHER & VINEBERG
Chartered Accountants
Montreal, Quebec
January 29, 2001
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 and Nominees for Director" in the Company's definitive Proxy Statement dated March 27, 2001 and is incorporated herein by reference. The information with respect to Executive Officers is presented in the section titled "Information About Directors and Nominees for Director in the Company's definitive Proxy Statement dated March 27, 2001 and is incorporated herein by reference. 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, 2001 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 Related Information" and "Compensation Pursuant to Plans" in the Company's definitive Proxy Statement dated March 27, 2001 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 and Nominees for Director" in the Company's definitive Proxy Statement dated March 27, 2001 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, 2001 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 following index:
(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.
(3) Listing of Exhibits:
(b) Exhibits:
The response to this portion of Item 14 is submitted as a separate section of this report. See Item 14(a)(3) above.
(c) 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.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ MICHAEL F. EICHNER
27 March 2001
Michael F. Eichner
Acting CEO, Chairman of the
Board of Directors
/s/ JAAP VAN DER MEER
27 March 2001
Jaap van der Meer
President and Director
/s/ JOHN W. WITTWER
27 March 2001
John W. Wittwer
Vice President Finance, Chief Financial
Officer and Director
/s/ JAMES R. MORGAN
27 March 2001
James R. Morgan
Vice President Legal, Chief Legal
Officer and Director
/s/ DONALD N. REEVES
27 March 2001
Donald N. Reeves
Director
/s/ DARNELL L. BOEHM
27 March 2001
Darnell L. Boehm
Director
/s/ GERARD J. M. DIJKSTRA
27 March 2001
Gerard J. M. Dijkstra
Director
/s/ ECKART WINTZEN
27 March 2001
Eckart Wintzen
Director
PART I
ITEM 1. BUSINESS
ITEM 2: PROPERTIES
ITEM 3: LEGAL PROCEEDINGS
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6: SELECTED FINANCIAL DATA
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11: EXECUTIVE COMPENSATION
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
SIGNATURES