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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
TRANSITION REPORT ON FORM 10-K
For the Transition Period January 1, 1996 to July 31, 1996.
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PART I - REGISTRANT INFORMATION
FULL NAME OF REGISTRANT: VTEL Corporation
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE: 108 Wild Basin Road
CITY, STATE AND ZIP CODE: Austin, Texas 78746
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PART II - RULES 12B-25(b) AND (c)
The Transition Report on Form 10-K will be filed on or before the fifteenth
calendar day following the prescribed due date.
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PART III - NARRATIVE
The Transition Report on Form 10-K for the period January 1, 1996 to July 31,
1996 could not be filed within the prescribed period due to issues related to
the change in the Company's fiscal year end and the preparation of a
transitional report.
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PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Paul Ruiz - Corporate Controller - (512) 314-2682
(2) All other periodic reports required under section 13 or 15(d) of the
Securities and Exchange Act of 1934 have been filed.
(3) It is anticipated that a significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statement included in the subject report as follows (note that the
Company has already filed all required information through June 30, 1996
in previous filings with the Securities and Exchange Commission):
The Company generated net income of $1.5 million and incurred a net loss of
$9.9 million during the seven months ended July 31, 1995 and 1996,
respectively. The net loss incurred during the seven months ended July 31,
1996 is the result of lower gross margins generated by the Company,
incremental operating expenses related to the growth in the Company's
operations and its service and system integration operations, inventory
write-downs during the period, and restructuring expenses recorded during
the period. The net income generated during the seven months ended July 31,
1995 was the result of revenues increasing at a faster rate than operating
expenses and of higher gross margins generated by the Company.
During the seven months ended July 31, 1996, the Company finalized its plan
to realign its resources into Customer Business Units ("CBU"). These CBU's
will provide the framework for moving decision making closer to the
customer and for responding to customer requirements quickly. The
realignment of resources resulted in the Company recording a charge during
the seven months ended July 31, 1996 of approximately $553,000 related to
restructuring costs that the Company will incur in adjusting its business
operations and resources such that the Company will be able to effectively
implement its CBU model. These restructuring charges primarily represent
the costs associated with the elimination of positions which do not support
the CBU strategy.
Gross margins were 38% for the seven months ended July 31, 1996 and 57% for
the seven months ended July 31, 1995. A portion of the decrease in gross
margin from the seven months ended July 31, 1995 to the seven months ended
July 31, 1996 results from a shift in the sales mix such that product
revenues represented a smaller percentage of total revenues for the seven
months ended July 31, 1996 due to the incremental revenues generated by the
Company's systems integration and service operations which were acquired in
the fourth quarter of 1995. The Company's service and systems integration
operations carry a lower gross margin percentage than
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its product revenues such that the Company's overall gross margin is lower.
Although the service and systems integration revenues generally carry a
lower gross margin, the service and system integration activities also
generally carry lower operating expenses than the Company's other revenue
sources.
Additionally, the Company experienced a shift in its product sales mix such
that sales of its multipoint control units, which generally carry higher
gross margins, represented a smaller percentage of the Company's total
product revenues. Also contributing to the Company's lower gross margin
during the seven months ended July 31, 1996 was higher per unit
manufacturing costs due to lower than expected manufacturing throughput
which resulted in the Company spreading relatively fixed manufacturing
costs over fewer units produced. The Company also recorded approximately $1
million in inventory write-downs during the seven months ended July 31,
1996 to provide for potential inventory issues related to product
transitions and to reflect the net realizable value of inventory quantities
on-hand at its foreign subsidiary in the United Kingdom. The inventory
adjustments had the effect of lowering the Company's gross margins during
the seven months ended July 31, 1996.
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VTEL Corporation has caused this notification to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE : 10/28/96 BY: /s/ DIANNE JOHNSON, Assistant Treasurer
