SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
International Telecommunication Data Systems, Inc.
---------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS, INC.
225 High Ridge Road
Stamford, Connecticut 06905
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 8, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
International Telecommunication Data Systems, Inc., a Delaware corporation
(the "Corporation"), will be held on Tuesday, April 8, 1997 at 10:00 a.m. at
the Corporation, 225 High Ridge Road, Stamford, Connecticut (the "Meeting")
for the purpose of considering and voting upon the following matters:
1. To elect two Class I Directors for the ensuing three years;
2. To ratify the selection of Ernst & Young LLP as the Corporation's
independent public accountants for the current year; and
3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on Monday, February
24, 1997 as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting and at any adjournments thereof.
A copy of the Corporation's Annual Report to Stockholders for the year
ended December 31, 1996, which contains financial statements and other
information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
By order of the Board of Directors,
LEWIS D. BAKES, Secretary
March 8, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED ENVELOPE
IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED
IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS, INC.
225 High Ridge Road
Stamford, Connecticut 06905
PROXY STATEMENT
For Annual Meeting of Stockholders
To Be Held April 8, 1997
----------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of International Telecommunication Data
Systems, Inc. (the "Corporation") at the Annual Meeting of Stockholders to be
held on Tuesday, April 8, 1997 at 10:00 a.m. at the Corporation, 225 High
Ridge Road, Stamford, Connecticut and at any adjournment of that meeting (the
"Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the
Corporation or by voting in person at the Meeting. Attendance at the Meeting
will not itself be deemed to revoke a Proxy unless the stockholder gives
affirmative notice at the Meeting that the stockholder intends to revoke the
Proxy and vote in person.
On February 24, 1997, the record date for determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote
an aggregate of 8,436,504 shares of Common Stock of the Corporation, $.01 par
value per share (the "Common Stock"). Each share entitles the record holder
to one vote on each of the matters to be voted upon at the Meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of December 31, 1996
with respect to the beneficial ownership of shares of Common Stock by (i)
each person known to the Corporation to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) the directors and director nominees
of the Corporation, (iii) the Chief Executive Officer and the other executive
officers listed in the Summary Compensation Table below (the "Named Executive
Officers"), and (iv) the directors and executive officers of the Corporation
as a group.
<PAGE>
Amount and Nature
of Beneficial Ownership(2)
--------------------------------
Name and Address(1) Number of
of Beneficial Owner Shares Percent of Class
- -------------------------------------------- --------------- ----------------
Connecticut Innovations, Incorporated ....... 437,724 5.2%
845 Brook Street
Rocky Hill, CT 06067
Essex Investment Management Company .......... 1,079,100 12.8%
125 High Street
South Boston, MA 02110
Anne Wells(3) ................................ 588,391 7.0%
45 Augur Lane
Durham, CT 06422
Charles L. Bakes(4) .......................... 1,301,573 15.4%
Mark D. Spitzer .............................. 1,039,960 12.3%
Lewis D. Bakes(5) ........................... 998,500 11.8%
Barry K. Lewis(6) ........................... 21,083 *
Stuart L. Bell .............................. 10,000 *
Michael E. Kalogris .......................... 0 *
All directors and executive officers as a
group (7 persons) .......................... 3,395,116 40.2%
- ----------------------
* Less than 1%
(1) The address of each person in the table other than Connecticut
Innovations, Incorporated, Essex Investment Management Company and Anne
Wells is 225 High Ridge Road, Stamford, Connecticut 06905.
(2) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after December 31,
1996 through the exercise of any stock option or other right. The
inclusion herein of such shares, however, does not constitute an
admission that the named stockholder is a direct or indirect beneficial
owner of such shares. Unless otherwise indicated, each person or entity
named in the table has sole voting power and investment power (or shares
such power with his or her spouse) with respect to all shares of capital
stock listed as owned by such person or entity. Percentage of Class is
based on 8,436,504 shares of Common Stock outstanding as of December 31,
1996, plus any shares subject to outstanding stock options held by the
person in question.
(3) Includes 177,600 shares beneficially owned by Ms. Wells' husband, as to
which shares Ms. Wells disclaims beneficial ownership.
(4) Represents 1,301,573 shares beneficially owned by Mr. C. Bakes' wife, as
to which shares Mr. C. Bakes disclaims beneficial ownership.
(5) Represents 998,500 shares beneficially owned by Mr. L. Bakes' wife, as to
which shares Mr. L. Bakes disclaims beneficial ownership.
(6) Includes 2,750 shares issuable pursuant to outstanding options
exercisable within 60 days.
2
<PAGE>
Votes Required
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum exists
at the Meeting.
The affirmative vote of the holders of a plurality of the votes cast by
the stockholders entitled to vote at the Meeting is required for the election
of the Class I Directors. The affirmative vote of the holders of a majority
of the shares of Common Stock present or represented by proxy and voting on
the matter is required for the ratification of the appointment of the
Corporation's independent accountants.
Shares which abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies
that they do not have discretionary authority to vote such shares as to a
particular matter, will not be counted as votes in favor of such matter, and
will also not be counted as votes cast or shares voting on such matter.
Accordingly, abstentions and "broker non-votes" will have no effect on the
voting on the election of the Class I Directors or the ratification of the
appointment of independent accountants.
ELECTION OF DIRECTORS
The Corporation has a classified Board of Directors consisting of two
Class I Directors, two Class II Directors, and one Class III Director. The
Class I, Class II and Class III Directors will serve until the annual meeting
of stockholders to be held in 1997, 1998 and 1999, respectively, and until
their respective successors are elected and qualified. At each annual meeting
of stockholders, directors are elected for a full term of three years to
succeed those whose terms are expiring.
The persons named in the enclosed proxy will vote to elect, as Class I
Directors, Stuart L. Bell and Michael E. Kalogris, the two director nominees
named below, unless the proxy is marked otherwise. Messrs. Bell and Kalogris
are currently directors of the Corporation.
Each Class I director will be elected to hold office until the 2000 annual
meeting of stockholders and until his successor is elected and qualified.
Each of the nominees has indicated his willingness to serve, if elected;
however, if any nominee should be unable to serve, the person acting under
the proxy may vote the proxy for a substitute nominee. The Board of Directors
has no reason to believe that any of the nominees will be unable to serve if
elected.
For each member of the Board of Directors, including those who are
nominees for election as Class I Directors, listed below is information given
by each concerning his principal occupation and business experience for the
past five years, the names of other publicly held companies of which he
serves as a director and his age and length of service as a director of the
Corporation.
<TABLE>
<CAPTION>
Director Principal Occupation, Other Business Experience
Name Age Since During Past Five Years and Other Directorships
- --------------------- ----- ------------------ -----------------------------------------------------------------------------
<S> <C> <C> <C>
Nominees for Terms Expiring in 2000 (Class I Directors)
Stuart L. Bell 43 1996 Chairman of the Board of Innovative Medical Research, Inc., a company that
executes clinical trials, Assistant to the Chief Executive Officer of CUC
International, a membership services company, and a director of Harbinger
Corporation, an electronic commerce company since 1995; Chief Financial
Officer, Treasurer and Executive Vice President, Office of the President, of
CUC International from 1975 to 1995.
3
<PAGE>
Director Principal Occupation, Other Business Experience
Name Age Since During Past Five Years and Other Directorships
--------------------- ----- ------------------ ----------------------------------------------------------------------------
Michael E. Kalogris 47 1996 President and Chief Executive Officer of Horizon Cellular Group, an owner and
operator of cellular telephone systems, since September 1991; Member of the
Board of Directors of Horizon Cellular Group and Systems/Link Corporation, a
provider of fraud technology and fraud technology services.
Directors Whose Terms Expire in 1998 (Class II Directors)
Lewis D. Bakes 39 1990 Executive Vice President and Chief Operating Officer of the Corporation since
1990.
Mark D. Spitzer 47 1990 Executive Vice President and Chief Financial Officer of the Corporation since
1990.
Director Whose Term Expires in 1999 (Class III Director)
Charles L. Bakes 66 1990 President and Chief Executive Officer of the Corporation since 1990.
</TABLE>
For information relating to shares of Common Stock owned by each of the
directors, see "Security Ownership of Certain Beneficial Owners and
Management."
Board and Committee Meetings
The Corporation has a standing Audit Committee of the Board of Directors,
which was established in 1996 and is responsible for reviewing financial
reports, accounting procedures and the scope and results of the annual audit
of the Corporation's financial statements. The Audit Committee did not meet
during 1996. The current members of the Audit Committee are Messrs. Bell,
Kalogris and Spitzer.
The Corporation has a standing Compensation Committee of the Board of
Directors, which was established in 1996 and is responsible for reviewing
compensation issues and making decisions concerning the compensation
(including stock option grants) of the Corporation's executive officers. The
Compensation Committee did not meet during 1996. The current members of the
Compensation Committee are Messrs. Bell and Kalogris.
The Board of Directors met three times during 1996. Each director attended
at least 75% of the aggregate of the number of Board meetings and the number
of meetings held by all committees on which he then served.
Director Compensation
Directors are not entitled to compensation in their capacities as
directors. All of the directors are reimbursed for their expenses incurred in
connection with their attendance at Board and committee meetings.
On September 30, 1996, the Corporation granted to each of Messrs. Bell and
Kalogris an option to purchase up to 25,000 shares of Common Stock at an
exercise price of $12.00 per share. Each option becomes exercisable in four
equal annual installments beginning September 30, 1997.
4
<PAGE>
Compensation of Executive Officers
Employment Agreement
The Corporation has an employment agreement dated June 1994, as amended on
September 30, 1996 with Barry K. Lewis, Senior Vice President of Customer
Services. The agreement terminates on July 4, 1997, unless sooner terminated
as provided therein. The agreement provides for an annual base salary of
$135,000 per year (plus performance bonuses to be determined in the sole
discretion of the Board of Directors). The agreement also contains a
non-competition provision pursuant to which Mr. Lewis is prohibited from
competing with the Corporation during his employment with the Corporation and
for one year thereafter.
Summary Compensation Table
The following table sets forth the compensation for the fiscal years ended
December 31, 1995 and 1996 for the Corporation's Chief Executive Officer and
its three most highly compensated executive officers (other than the Chief
Executive Officer) whose total annual salary and bonus exceeded $100,000 in
1996 (the Chief Executive Officer and such other executive officers are
hereinafter referred to as the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation Awards
------------------------- -------------------------
Restricted Securities
Fiscal Stock Underlying All Other
Name and Principal Position Year Salary Bonus Awards Options Compensation
-------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles L. Bakes ................ 1996 $362,136 $ 87,084 -- -- --
President, Chief Executive 1995 $239,950 $308,825 -- -- --
Officer and Director
Mark D. Spitzer ................. 1996 $376,647 $ 87,083 -- -- --
Executive Vice President, 1995 $322,887 $294,798 -- -- --
Chief Financial Officer,
Treasurer and Director
Lewis D. Bakes .................. 1996 $376,647 $ 87,083 -- -- --
Executive Vice President, 1995 $321,172 $290,913 -- -- --
Chief Operating Officer,
Secretary and Director
Barry K. Lewis .................. 1996 $129,588 -- $293,145 14,000 $275,000(1)
Senior Vice President of 1995 $115,000 $ 7,500 -- -- --
Customer Services
</TABLE>
- ----------
(1) Mr. Lewis received a one-time payment of $275,000 on November 7, 1996
pursuant to the terms of his employment agreement with the Corporation.
5
<PAGE>
Option Grants Table
The following table sets forth certain information concerning grants of
stock options made during fiscal 1996 to each of the Named Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Individual Grants Assumed
--------------------------------------------------------- Annual Rates
Percentage of Stock
of Total Price
Number of Options Appreciation
Securities Granted Exercise for
Underlying to Employees Price Option Term(2)
Options in Fiscal Per Expiration --------------
Name Granted Year Share Date(1) 5% 10%
- -------------------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Charles L. Bakes ......... -- -- -- -- --
Mark D. Spitzer .......... -- -- -- -- --
Lewis D. Bakes .......... -- -- -- -- --
Barry K. Lewis .......... 12,000(3) 3.0% $14.00 9/30/06 $105,654/$267,749
2,000(4) 0.5% $21.00 12/17/06 $ 26,413/$ 66,937
</TABLE>
- ----------
(1) The expiration date of an option is the tenth anniversary of the date on
which the option was originally granted.
(2) The amounts shown in these columns represent hypothetical gains that
could be achieved for the respective options if exercised at the end of
the option term. These gains are based on assumed rates of stock
appreciation of 5% and 10%, compounded annually from the date the
respective options were granted to their expiration date. The gains shown
are net of the option exercise price, but do not include deductions for
taxes or other expenses associated with the exercise. Actual gains, if
any, on stock option exercises will depend on the future performance of
the Common Stock, the optionholders' continued employment through the
option period, and the date on which the options are exercised.
(3) Options become exercisable in 16 quarterly installments beginning on the
date of grant.
(4) Options were immediately exercisable upon grant.
Aggregated Option Exercises and Year-End Option Table
The following table sets forth certain information concerning each
exercise of a stock option during the fiscal year ended 1996 by each of the
Named Executive Officers and the number and value of unexercised options held
by each of the Named Executive Officers on December 31, 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares in the Money
Underlying Options at
Option at Fiscal
Fiscal Year-End Year-End(1)
Number of Shares ---------------- ----------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
------------------------------ ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Charles L. Bakes ............ -- -- -- --
Mark D. Spitzer ............. -- -- -- --
Lewis D. Bakes ............. -- -- -- --
Barry K. Lewis ............. -- -- 2,750/11,250 $14,187.50/$115,312.50
</TABLE>
- ----------
(1) Based on the difference between each option exercise price and the fair
market value of the Common Stock as of December 31, 1996 ($24.25 per
share, as quoted on the Nasdaq National Market) multiplied by the number
of shares underlying the options.
6
<PAGE>
Report of the Board of Directors on Executive Compensation
The Corporation's Board of Directors was responsible for establishing
compensation for 1996 and all previous years, with respect to the
Corporation's executive officers, including the Chief Executive Officer.
Charles L. Bakes is a member of the Board of Directors and is also the Chief
Executive Officer of the Corporation. Mark D. Spitzer and Lewis D. Bakes are
each members of the Board of Directors and are also executive officers of the
Corporation.
The Board of Directors established a Compensation Committee in September
1996. The Compensation Committee will be responsible for establishing the
compensation of executive officers in the future and currently anticipates
doing so in a manner that is consistent with the prior methods and policies
of the Board of Directors.
The Board of Directors sought to achieve two primary goals in connection
with the Corporation's executive compensation programs and decisions
regarding individual compensation. First, the Board of Directors structured
executive compensation programs in a manner that it believed would enable the
Corporation to attract and retain key executives. In order to ensure
continuity of certain key members of management, the Board of Directors
approved multi-year employment contracts for those executive officers who
were not among the Corporation's founders. Second, the Corporation's
executive compensation programs are intended to provide new executives with
an equity interest in the Corporation so as to link a portion of the
compensation of the Corporation's executives with the performance of the
Corporation's Common Stock.
The compensation programs for the Corporation's executives established by
the Board of Directors consist of a base salary, an annual cash bonus and/or
a stock-based equity incentive award.
In establishing base salaries for the executive officers, including the
Chief Executive Officer, the Board of Directors monitored salaries at other
companies, particularly those that are in the same industry as the
Corporation or related industries and/or located in the same general
geographic area as the Corporation, considered historic salary levels of the
individual and the nature of the individual's responsibilities and compared
the individual's base salary with those of other executives at the
Corporation. To the extent determined to be appropriate, the Board of
Directors also considered the Corporation's financial performance and the
individual's performance.
In establishing bonuses for the executive officers, including the Chief
Executive Officer, the Board of Directors considered a combination of
individual and corporate performance during the past year.
A number of the executive officers hold a substantial security interest in
the Corporation. For those executive officers who do not hold such an
interest, the Board of Directors has used restricted stock grants and stock
options as a significant element of the compensation package. It is not
currently the policy of the Board of Directors to grant stock options to
executives annually, and the timing of such grants, if any, will depend upon
a number of factors, including new hires of executives, the executives'
current stock and option holdings and such other factors as the Compensation
Committee deems relevant. When granting stock options, it has generally been
the policy of the Board of Directors to fix the exercise price of such
options at 100% of the fair market value of the Common Stock on the date of
grant.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1,000,000 paid to its chief executive
officer and its four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. In this regard, the
Corporation has limited the number of shares subject
7
<PAGE>
to stock options which may be granted to Corporation employees in a manner
that complies with the performance-based requirements of Section 162(m). It
does not appear that the Section 162(m) limitation will have a significant
impact on the Corporation in the near term. While the Committee does not
currently intend to qualify its incentive awards as a performance-based plan,
it will continue to monitor the impact of Section 162(m) on the Corporation.
BOARD OF DIRECTORS
Charles L. Bakes
Mark D. Spitzer
Lewis D. Bakes
Stuart L. Bell
Michael E. Kalogris
Compensation Committee Interlocks and Insider Participation
The Corporation's Board of Directors was responsible for establishing
compensation for 1997 and all previous years, with respect to the
Corporation's executive officers, including the Chief Executive Officer.
Charles L. Bakes is a member of the Board of Directors and is also the Chief
Executive Officer of the Corporation. Mark D. Spitzer and Lewis D. Bakes are
each members of the Board of Directors and are also executive officers of the
Corporation.
The current members of the Corporation's Compensation Committee are
Messrs. Bell and Kalogris. Other than as stated in the preceding paragraph,
no executive officer of the Corporation has served as a director or member of
the compensation committee (or other committee serving an equivalent
function) of any other entity, whose executive officers served as a director
of or member of the Compensation Committee of the Corporation.
Certain Transactions
Since January 1, 1996, the Corporation has entered into or engaged in the
following transactions with the following directors, officers and
stockholders who beneficially own more than 5% of the outstanding Common
Stock of the Corporation ("5% Stockholders"), and affiliates of such
directors, officers and 5% Stockholders:
Pursuant to Software License Agreements entered into by the Corporation in
the normal course of its business, in January 1994 and May 1994, Horizon
Cellular Group ("Horizon") paid the Corporation $2,014,571 for billing
software and services rendered in 1996. Mr. Kalogris, who became a director
of the Corporation in August 1996, serves as President, Chief Executive
Officer and a director of Horizon.
In connection with its recapitalization (the "Recapitalization"), in 1996,
the Corporation was reincorporated in the State of Delaware pursuant to a
merger and an 800-for-1 stock split was effected. Pursuant to the
Recapitalization, the Corporation's treasury shares and Class A and Class B
Preferred Stock were retired, and the holders of shares of Class A and Class
B Preferred Stock were issued as merger consideration an aggregate of 852,812
shares of Common Stock valued at $12 per share (for an aggregate of
$10,233,744, treated as a distribution to such shareholders) and promissory
notes in the aggregate amount of $825,000, evidencing the Corporation's
obligations to repay capital. The promissory notes were repaid in full at the
time of the initial public offering (the "Initial Public Offering") in
October 1996.
In December 1995, the Corporation issued to Connecticut Innovations,
Incorporated ("CII"), a beneficial owner of more than 5% of the Common Stock,
129 shares of Class C Convertible Preferred Stock at a purchase price of
$4,961.24 per share. Each share of Class C Convertible Preferred Stock
converted into one share of Series C Convertible Preferred Stock in
connection with the Recapitalization. Each share of Series C Convertible
Preferred Stock automatically converted into 800 shares of Common Stock upon
the closing of the Initial Public Offering. The holder of such shares of
Common Stock is entitled to certain registration rights with respect thereto.
See "Shares Eligible for Future Sale."
In addition, immediately prior to the Initial Public Offering, CII
exercised warrants to purchase an aggregate of 334,524 shares of Common Stock
at an aggregate purchase price of $822,959.
8
<PAGE>
In October 1996, the Corporation issued to Barry K. Lewis, 18,333 shares
of Common Stock at a purchase price of $.01 per share, pursuant to the terms
of Mr. Lewis' employment agreement.
The Corporation has an employment agreement, dated as of October 5, 1996,
with Joseph Juliano, Executive Vice President of Strategic Product
Management. The agreement terminates on October 31, 2000, unless sooner
terminated as provided therein. The agreement provides for an annual base
salary of $175,000 per year (plus a performance bonus of up to 10% of Mr.
Juliano's annual base salary, in the sole discretion of the Board of
Directors). Pursuant to the agreement, Mr. Juliano received on the
commencement of his employment 24,000 shares of restricted Common Stock, of
which shares, 25% becomes vested on April 1, 1997, and an additional 25%
becomes vested on October 31 of each of 1998, 1999 and 2000, provided that
vesting will accelerate upon the sale of the Corporation. The agreement also
contains a non-competition provision pursuant to which Mr. Juliano is
prohibited from competing with the Corporation during his employment with the
Corporation and for one year thereafter.
On December 31, 1996 and January 1, 1997, the Company loaned Mr. Juliano,
an executive officer of the Company, an aggregate of $106,000, at an interest
rate of 8.5% per annum pursuant to three promissory notes. Of the total
amount, $40,000 was due on February 28, 1997 and was repaid in February 1997.
Of the remaining $66,000 outstanding, $54,000 is payable on November 2, 1998
and $12,000 is payable on demand by the Company or the holder of the
respective promissory note. The $54,000 is secured by a pledge of a security
interest in 24,000 shares of restricted Common Stock held by Mr. Juliano.
For a description of an employment agreement between the Corporation and
Barry K. Lewis, see "Compensation of Executive Officers--Employment
Agreement" above. For a description of stock options granted to certain
directors of the Corporation, see "Director Compensation" above.
Stock Performance Graph
The following graph compares the cumulative total stockholder return on
the Common Stock of the Corporation between October 24, 1996 (the date the
Corporation's Common Stock commenced public trading) and December 31, 1996
with the cumulative total return of (i) the Standard & Poors 500 Index (the
"S&P 500 Index") and (ii) the Standard and Poor's Computers Index (Software
and Services) (the "S&P Computers Index"), over the same period. This graph
assumes the investment of $100.00 on October 24, 1996 in the Corporation's
Common Stock, the S&P 500 Index and the S&P Computers Index, and assumes any
dividends are reinvested.
9
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN*
Among International Telecommunication Data Systems, Inc.,
The S&P 500 Index and the S&P Computers (Software & Services) Index
[typeset representation of line chart]
INTERNATIONAL
TELECOMMUNICATION S&P COMPUTERS
DATA SYSTEMS, INC. S&P 500 (SOFTWARE & SERVICES)
------------------ ------- ---------------------
10/24/96 100 100 100
12/31/96 152 108 111
[end line chart]
*$100 invested on 10/24/96 in stock or index--including reinvestment of
dividends. Fiscal year ending December 31.
<TABLE>
<CAPTION>
October 24, 1996 December 31, 1996
---------------- -----------------
<S> <C> <C>
INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS, INC. $100 $152
S&P 500 $100 $108
S&P COMPUTERS (SOFTWARE & SERVICES) $100 $111
</TABLE>
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as independent
accountants of the Corporation for the year ending December 31, 1997, subject
to ratification by stockholders at the Meeting. If the stockholders do not
ratify the selection of Ernst & Young LLP, the Board of Directors will
reconsider the matter. A representative of Ernst & Young LLP, which served as
independent accountants for the year ended December 31, 1996, is expected to
be present at the Meeting to respond to appropriate questions, and to make a
statement if he or she so desires.
10
<PAGE>
OTHER MATTERS
Matters to be Considered at the Meeting
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
Solicitation of Proxies
The Corporation will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Corporation's directors, officers and regular
employees may, without additional remuneration, solicit proxies by telephone,
telegraph, facsimile and personal interviews. The Corporation will also
request brokerage houses, custodians, nominees and fiduciaries to forward
copies of the proxy material to those persons for whom they hold shares and
request instructions for voting the proxies. The Corporation will reimburse
such brokerage houses and other persons for their reasonable expenses in
connection with this distribution.
Stockholder Proposals for 1998 Annual Meeting
Any proposal that a stockholder intends to present at the 1998 Annual
Meeting of Stockholders must be submitted to the Secretary of the Corporation
at its offices, 225 High Ridge Road, Stamford, Connecticut 06905, no later
than November 8, 1997 in order to be considered for inclusion in the Proxy
Statement relating to that meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on its review of copies of reports filed by the directors and
executive officers of the Company pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, or written representations from certain
Reporting Persons, the Company believes that during 1996 all filings required
to be made by its Reporting Persons were timely made in accordance with the
requirements of the Securities Exchange Act of 1934, as amended.
By Order of the Board of Directors,
Lewis D. Bakes, Secretary
March 8, 1997
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
11
<PAGE>
PROXY PROXY
INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS -- April 8, 1997
The undersigned, having received notice of the meeting and management's
Proxy Statement therefor, and revoking all prior proxies, hereby appoint(s)
Charles L. Bakes, Mark D. Spitzer and John H. Chory, Esq., and each of them
(with full power of substitution), as proxies of the undersigned to attend the
Annual Meeting of Stockholders of International Telecommunication Data Systems,
Inc. (the "Company") to be held on Tuesday, April 8, 1997, and any adjourned
sessions thereof, and there to vote and act upon the following matters in
respect of all shares of Common Stock of the Company which the undersigned would
be entitled to vote or act upon, with all powers the undersigned would possess
if personally present.
Attendance of the undersigned at the meeting or at any adjourned session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of the undersigned to vote said
shares in person. If the undersigned hold(s) any of the shares of the Company in
a fiduciary, custodial or joint capacity or capacities, this proxy is signed by
the undersigned in every such capacity as well as individually.
In their discretion, the named Proxies are authorized to vote upon such
other matters as may properly come before the meeting, or any adjournment
thereof.
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
A [X] Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY Nominees: Stuart L. Bell
1. To elect [ ] [ ] Michael E. Kalogris
Class I
Directors:
INSTRUCTION: To withhold authority for any individual nominee, write the
nominee's name in the space provided below.
___________________________________________________
FOR AGAINST ABSTAIN
2. To ratify the selection of Ernst & Young [ ] [ ] [ ]
LLP as the Company's independent
auditors for the current fiscal year.
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal specified above, this proxy will be voted for such election to office
or proposal.
This proxy is solicited on behalf of the Board of Directors of the Company.
Signature(s): ______________ Signature(s): _______________ Dated: ___________
NOTE: Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator or other fiduciary, please give your full title
as such. Joint owners should each sign personally. If a corporation, sign
in full corporate name, by authorized officer. If a partnership, please
sign in partnership name, by authorized person.
