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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ x ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1999. OR
[ ] Transition report pursuant to Section 13(d) or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______ to ________.
Commission file number: 0-23296
CIDCO INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3500734
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
220 Cochrane Circle
Morgan Hill, CA 95037
(Address of principal executive offices and zip code)
(408) 779-1162
(Registrant's telephone number, including area code)
----------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of the Registrant's Common Stock on November 9,
1999 was: 13,724,288
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CIDCO INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION Page
ITEM 1. Financial Statements:
Balance sheets at September 30, 1999
and December 31, 1998 .....................................3
Statements of operations for the three and nine months
ended September 30, 1999 and 1998 .........................4
Statements of cash flows for the nine months
ended September 30, 1999 and 1998 .........................5
Notes to financial statements ................................6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............8
ITEM 3. Quantitative and Qualitative Disclosure about Market Risks...18
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ...........................................19
ITEM 2. Changes in Securities .......................................19
ITEM 3. Defaults upon Senior Securities .............................19
ITEM 4. Submission of Matters to a Vote of Security Holders .........19
ITEM 5. Other Information ...........................................19
ITEM 6. Exhibits and Reports on Form 8-K ............................19
SIGNATURES ...................................................................20
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIDCO INCORPORATED
BALANCE SHEETS
(in thousands, except per share data; unaudited)
September 30, December 31,
1999 1998
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents ...................... $ 35,883 $ 12,349
Short-term investments ......................... 12,313 13,975
Accounts receivable, net of allowance
for doubtful accounts of $2,364 and $1,885 .. 26,823 27,689
Inventories .................................... 20,650 22,086
Deferred tax asset ............................. -- 1,490
Income tax refunds receivable .................. -- 18,367
Other current assets ........................... 686 1,547
---------- ----------
Total current assets ........................ 96,355 97,503
Property and equipment, net ....................... 7,415 9,691
Other assets ...................................... 707 473
---------- ----------
$ 104,477 $ 107,667
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................... $ 10,836 $ 12,446
Accrued liabilities ............................ 11,465 14,585
Accrued taxes payable .......................... 65 234
---------- ----------
Total current liabilities ................... 22,366 27,265
---------- ----------
Stockholders' equity:
Common stock, $.01 par value; 35,000 shares
authorized, 14,418 and 14,418 shares issued . 144 144
Treasury stock, at cost (740 and 339 shares) ... (3,520) (4,600)
Additional paid-in capital ..................... 88,916 88,916
Retained earnings .............................. (3,429) (4,058)
---------- ----------
Total stockholders' equity .................. 82,111 80,402
---------- ----------
$ 104,477 $ 107,667
========== ==========
The accompanying notes are an integral part of these financial statements.
CIDCO INCORPORATED
STATEMENTS OF OPERATIONS
(in thousands, except per share data; unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------ --------------------
1999 1998 1999 1998
-------- --------- --------- ---------
Sales ............................... $ 36,862 $ 31,338 $ 131,165 $ 144,078
Cost of sales ....................... 26,196 34,819 95,742 119,865
-------- --------- --------- ---------
Gross margin ........................ 10,666 (3,481) 35,423 24,213
-------- --------- --------- ---------
Operating expenses:
Research and development ........ 2,459 2,200 7,037 9,008
Selling and marketing ........... 6,847 11,630 20,772 45,044
General and administrative ...... 1,319 1,842 4,377 7,377
Restructuring ................... -- 17,186 -- 19,858
-------- --------- --------- ---------
10,625 32,858 32,186 81,287
-------- --------- --------- ---------
Income (loss) from operations ....... 41 (36,339) 3,237 (57,074)
Other income, net ................... 473 1,006 867 3,438
-------- --------- --------- ---------
Income (loss) before income taxes ... 514 (35,333) 4,104 (53,636)
Provision(benefit) for income taxes . -- -- -- (6,955)
-------- --------- --------- ---------
Net income (loss) ................... $ 514 $ (35,333) $ 4,104 $ (46,681)
======== ========= ========= =========
Earnings (loss) per share - Basic ... $ 0.04 $ (2.51) $ 0.30 $ (3.33)
======== ========= ========= =========
Earnings (loss) per share - Diluted . $ 0.03 $ (2.51) $ 0.28 $ (3.33)
======== ========= ========= =========
Common shares outstanding ........... 13,553 14,077 13,574 14,038
======== ========= ========= =========
Common shares assuming dilution ..... 14,870 14,077 14,568 14,038
======== ========= ========= =========
The accompanying notes are an integral part of these financial statements.
CIDCO INCORPORATED
STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
Nine months ended
September 30,
--------------------
1999 1998
--------- ---------
Cash flows provided by (used in) operating activities:
Net income (loss) .................................. $ 4,104 $ (46,681)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ................... 4,187 2,238
Equity in losses of affiliate ................... -- 1,605
Deferred tax asset .............................. 1,490 (7,199)
Changes in assets and liabilities:
Accounts receivable ........................... 866 20,103
Inventories ................................... 1,436 (8,103)
Income tax refunds receivable ................. 18,367 --
Other current assets .......................... 861 410
Other assets .................................. (234) (1,123)
Accounts payable .............................. (1,610) (13,227)
Accrued liabilities ........................... (3,120) 7,455
Accrued taxes payable ......................... (169) --
--------- ---------
Net cash provided by (used in)
operating activities ..................... 26,178 (44,522)
--------- ---------
Cash flows provided by (used in) investing activities:
Acquisition of property and equipment .............. (1,911) (5,322)
Sale of short-term investments, net ................ 1,574 10,454
--------- ---------
Net cash provided by (used in)
investing activities ..................... (337) 5,132
--------- ---------
Cash flows provided by (used in) financing activities:
Issuance of Common Stock ........................... 847 865
Purchase of treasury stock ......................... (3,154) --
--------- ---------
Net cash provided by (used in)
financing activities ..................... (2,307) 865
--------- ---------
Net increase (decrease) in cash and cash equivalents .. 23,534 (38,525)
Cash and cash equivalents at beginning of period ...... 12,349 48,253
--------- ---------
Cash and cash equivalents at end of period ............ $ 35,883 $ 9,728
========= =========
Supplemental disclosure of cash flow information:
Cash paid for income taxes ......................... $ -- $ 1,855
========= =========
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying financial information is unaudited, but, in the opinion
of management, reflects all adjustments (which include only normal recurring
adjustments) necessary to present fairly the Company's financial position,
operating results and cash flows for those periods presented. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The financial information should be read in conjunction
with the audited financial statements and notes thereto for the year ended
December 31, 1998 included in the Company's most recent Annual Report on Form
10-K filed with the Securities and Exchange Commission. Results for the interim
period are not necessarily indicative of results for the entire year.
Note 2. Inventories
Inventories are stated at the lower of cost or market, cost being
determined using the standard cost method (which approximates first in, first
out). The Company's inventories consist of finished goods and raw materials
purchased for the manufacture of finished goods.
The components of inventory are as follows (in thousands):
Sep. 30, 1999 Dec. 31, 1998
------------- -------------
Inventories, net of reserves:
Finished Goods ............................. $ 16,237 $ 14,005
Raw Materials (1) .......................... 4,413 8,081
---------- ----------
$ 20,650 $ 22,086
========== ==========
(1) A reserve of $2,180 and 3,935 (in thousands) related to i-Phone raw
materials has been included in restructuring as of September 30, 1999 and
December 31,1998, respectively. See Note 3.
Note 3. Restructuring
The Company incurred a pretax restructuring charge of $19.9 million in
1998 due to implementation of several streamlining programs, including combining
certain marketing and operations functions, restructuring research and
development activities and discontinuing certain products, resulting in asset
write-downs, lease termination costs and accrued employee costs. No additional
restructuring costs have been incurred in 1999.
The following table lists the components of the restructuring accrual for
the quarter ended September 30, 1999:
Employee Asset
Costs Write-downs Leases Total
(in thousands): ------- ----------- ------- ---------
Balance at December 31, 1998 ..... $ 60 $ 3,935 $ (112) $ 3,883
Actual results for 1999 .......... (345) (1,755) 129 (1,971)
------- --------- ------- ---------
Balance at September 30, 1999 .... $ (285) $ 2,180 $ 17 $ 1,912
======= ========= ======= =========
Note 4. Earnings Per Share
Basic Earnings Per Share ("EPS") is computed by dividing net income
available to common stockholders (numerator) by the weighted average number of
common shares outstanding (denominator) during the period. Basic EPS excludes
the dilutive effect of stock options. Diluted EPS gives effect to all dilutive
potential common shares outstanding during a period. In computing diluted EPS,
the average stock price for the period is used in determining the number of
shares assumed to be purchased from exercise of stock options.
The following table is a reconciliation of the numerators and
denominators of the basic and diluted EPS:
Three Months ended Nine Months ended
September 30, September 30,
------------------ ------------------
1999 1999 1999 1998
-------- -------- -------- --------
Net income (loss) used to compute
earnings per commonshare ......... $ 514 $(35,333) $ 4,104 $(46,681)
======== ======== ======== ========
Denominator used to compute basic
earnings (loss) per common share . 13,553 14,077 13,574 14,038
Shares issuable on exercise of
options(1) ....................... 1,317 -- 994 --
-------- -------- -------- --------
Denominator used to compute diluted
earnings (loss) per common share . 14,870 14,077 14,568 14,038
======== ======== ======== ========
Earnings (loss) per share - Basic ..... $ 0.04 $ (2.51) $ 0.30 $ (3.33)
======== ======== ======== ========
Earnings (loss) per share - Diluted ... $ 0.03 $ (2.51) $ 0.28 $ (3.33)
======== ======== ======== ========
(1) Stock options to purchase 274,084 shares of common stock priced at $12.43 to
$24.95 per share were excluded because their inclusion would be anti-dilutive
for the quarter ended September 30, 1999. Stock options outstanding as of
September 30, 1998 were excluded because any stock option inclusion would be
anti-dilutive.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following information should be read in conjunction with the interim
financial statements and the notes thereto in Part I, Item 1 of this Quarterly
Report.
Historical Background
CIDCO Incorporated (the "Company"), a Delaware corporation, was
incorporated in July 1988 to design, develop and market subscriber telephone
equipment that would support Caller ID, Caller ID on Call Waiting and other
intelligent network services (individually or collectively "Services") then
being introduced by Regional Bell Operating Companies ("RBOCs") and independent
telephone operating companies, both domestic and international (collectively
with RBOCs, "Telcos"). The Company began operations in 1989, initially funding
its business with a capital investment made by its founders. Prior to its
initial public offering, the Company financed its growth principally through
internally generated funds and short-term borrowings. In March 1994, the Company
completed its initial public offering of Common Stock and had two subsequent
public offerings in 1994 resulting in capital infusions to the Company totaling
approximately $59.4 million.
Historically, the Company's primary sales and distribution channels have
been direct marketing relationships with certain Telcos ("Direct Marketing"),
fulfillment of Telco generated orders ("Fulfillment"), wholesale shipments
directly to Telcos ("Direct to Telco"), and, to a lesser extent, international
accounts, retail stores ("Retail"), and original equipment manufacturing ("OEM")
customers. Direct Marketing programs are sales campaigns run by the Company
involving the use of consumer mailings and telemarketing to sell Services for
the Telcos which utilize the Company's products or to sell the Company's
products directly to the consumer. As part of these programs the Company, acting
as the Telco's "agent," generates an order for Network Services, such as Caller
ID, and then ships an adjunct product or a phone product to each customer
"acquired" through the campaign. Fulfillment sales occur when the Company
receives an order from a Telco and ships the requested product directly to the
customer. In the case of Fulfillment sales, the Telcos generate orders by
performing the marketing activities themselves rather than retaining the Company
to perform such services, as in Direct Marketing programs. Direct Marketing
sales totaled 32%, 49%, and 25% of sales in 1998, 1997 and 1996, respectively.
Fulfillment sales accounted for 34%, 35%, and 43% of sales in 1998, 1997 and
1996, respectively. Sales through Direct Marketing Service and Fulfillment
channels for the quarter ended September 30, 1999 were 37% and 14% of total
sales, respectively, and for the nine months ended September 30, 1999 were 59%
and 25% of total sales, respectively.
Forward-looking statements
This Report contains forward-looking statements, which reflect the
Company's current views with respect to future events, which may impact the
Company's results of operations and financial condition. In this report, the
words "anticipates," "believes," "expects," "intends," "future" and similar
expressions identify forward-looking statements. These forward-looking
statements are subject to risks and uncertainties and other factors, including
those set forth below under the caption "Factors Which May Affect Future
Results," which could cause actual future results to differ materially from
historical results or those described in the forward-looking statements. The
forward-looking statements contained in this Report should be considered in
light of these factors. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof.
Results of Operations
The following table sets forth for the periods indicated the percentage
of sales represented by certain line items in the Company's Statement of
Operations:
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
----- ----- ----- -----
Sales ................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales ......................... 71.1 111.1 73.0 83.2
----- ----- ----- -----
Gross margin .......................... 28.9 (11.1) 27.0 16.8
----- ----- ----- -----
Operating expenses:
Research and development .......... 6.7 7.0 5.4 6.3
Selling and marketing ............. 18.5 37.1 15.8 31.3
General and administrative ........ 3.6 5.9 3.3 5.1
Restructuring ..................... -- 54.8 -- 13.8
----- ----- ----- -----
28.8 104.8 24.5 56.5
----- ----- ----- -----
Income (loss) from operations ......... 0.1 (115.9) 2.5 (39.7)
Other income, net ................. 1.3 3.2 0.6 2.4
----- ----- ----- -----
Income (loss) before income taxes ..... 1.4 (112.7) 3.1 (37.3)
Provision (benefit) for income taxes .. 0.0 0.0 0.0 (4.8)
----- ----- ----- -----
Net income (loss) ..................... 1.4% (112.7)% 3.1% (32.5)%
===== ===== ===== =====
Sales
Sales are recognized upon shipment of the product to the customer less
reserves for anticipated returns or, in the case of Direct Marketing,
non-retention of certain Services provided by the Telcos, and customer credit
worthiness. Sales increased 17.6% to $36.9 million in the third quarter of 1999
from $31.3 million in the third quarter of 1998. This increase in sales was
mainly due to the increase in wholesale channel sales of both the Company's new
Internet appliance, the MailStation(TM)1, and the Company's CL980 cordless
phone, partially offset by decreased adjunct and corded phone product sales from
both Direct Marketing and Fulfillment programs. Sales for the third quarter of
1999 were negatively impacted by two natural disasters. First, Hurricane Floyd
caused the Company's telemarketing vendors to close their offices during a
critical period for a large eastern seaboard program for the quarter and
resulted in a non-receptive customer base. Then, the earthquake in Taiwan caused
a manufacturing delay in a cordless phone product for which the Company had
customer purchase orders specifying delivery during the quarter. In the first
nine months of 1999, sales decreased 9.0% to $131.1 million from $144.1 million
in the first nine months of 1998. This decrease was primarily due to the
decrease in adjunct product sales, partially offset by the increase in sales of
cordless phone products and the MailStation. Adjunct product sales decreased to
43% of total dollar sales volume in the first nine months of 1999 from 64% in
the first nine months of 1998, due to both a 21% decrease in average selling
prices and a 22% reduction in units sold. During the same periods phone sales
increased to 52% of total dollar sales volume from 35% due to a 108% increase in
the number of units sold and a 72% increase in average selling prices.
Gross margin
Cost of sales includes the cost of finished goods purchased from the
Company's offshore contract manufacturers, costs associated with procuring and
warehousing the Company's inventory and royalties payable on licensed technology
used in the Company's products. Gross margin as a percentage of sales increased
to 29% in the third quarter of 1999, from (11)% in the third quarter of 1998.
For the nine-month periods ended September 30, 1999 and 1998, gross margin as a
percentage of sales increased to 27% from 17%, respectively. These increases
were partially due to one-time charges absent in 1999 for obsolete inventory of
$9.3 million written off in 1998. Excluding one-time charges, gross margins for
the quarters ended September 30, 1999 and 1998 were 29% and 19%, respectively.
This increase was due mainly to product cost reductions as well as higher margin
cordless Network Feature phone sales. Excluding one-time charges, gross margins
for the nine-month periods ended September 30, 1999 and 1998 were 27% and 26%,
respectively. The Company expects gross margins to vary in the future due to
changes in sales mix by distribution channel and product mix. For the remainder
of 1999, the Company believes gross margins will range between 20% and 30%.
Research and development expenses
Research and development expenses represent salaries for personnel,
associated benefits and tooling and supplies for research and development
activities. The Company's policy is to expense all research and development
expenditures as incurred except for certain investments for tooling. Research
and development expenses increased to $2.5 million in the quarter ended
September 30, 1999 from $2.2 million in the third quarter of 1998. This increase
was primarily due to increased project spending on new cordless telephone
products. Research and development expenses decreased to $7.0 million in the
nine-month period ending September 30, 1999 from $9.0 million in the first nine
months of 1998. This decrease primarily resulted from reduced headcount and
decreased spending on iPhone(R)2-related development projects due to the
discontinuance of the Company's Internet Solutions Division as well as overall
expense reductions related to the restructuring initiated in the third quarter
of 1998. Research and development expenses as a percentage of sales decreased to
6.7% in the quarter ended September 30, 1999 from 7.0% in the comparable period
of 1998 and decreased to 5.4% in the first nine months of 1999 from 6.3% in the
comparable period of 1998. The Company expects that research and development
expenses will remain at approximately the same level in absolute dollars during
the remainder of 1999.
Selling and marketing expenses
Selling and marketing expenses represent personnel costs, telephone and
electronic data exchange expenses, promotional costs and travel expenses.
Selling and marketing expenses decreased to $6.8 million in the quarter ended
September 30, 1999, from $11.6 million in the comparable period of 1998 and
decreased to $20.8 million in the nine months ended September 30, 1999 from
$45.0 million in the comparable period of 1998. As a percentage of sales,
selling and marketing expenses decreased to 18.5% in the quarter ended September
30, 1999, from 37.1% in the same period of 1998. In the nine months ended
September 30, 1999, selling and marketing expenses decreased to 15.8% from 31.3%
of sales. These decreases were due to decreased external marketing costs for the
Company's Direct Marketing programs. The Company expects that selling and
marketing expenses may increase slightly as a percentage of sales for the
remainder of 1999 based on the increased volume associated with direct marketing
activities and Direct Marketing programs.
General and administrative expenses
General and administrative expenses represent primarily salaries,
benefits and other expenses associated with the finance and administrative
functions of the Company. General and administrative expenses decreased to $1.3
million in the quarter ended September 30, 1999 from $1.8 million in the
comparable period of 1998 and decreased to $4.4 million in the nine months ended
September 30, 1999 from $7.4 million in the comparable period of 1998 as a
result of decreased headcount and related personnel expenses. As a percentage of
sales, general and administrative expenses decreased to 3.6% in the quarter
ended September 30, 1999 from 5.9% in the comparable period of 1998. In the nine
months ended September 30, 1999, general and administrative expenses decreased
to 3.3% from 5.1% as percentages of sales. The Company believes that general and
administrative expenditures will remain relatively consistent for the remainder
of 1999, when compared to the first nine months of 1999.
Restructuring
The Company incurred no additional restructuring charges in the
nine-month period ending September 30, 1999 as compared to $19.9 million
incurred in the nine-month period ending September 30, 1998. The Company expects
no further restructuring charges in 1999.
Provision (benefit) for income taxes
The Company recorded no tax provision in the nine months ended September
30, 1999 due to a loss carry-forward from 1998. During the nine months ended
September 30, 1998, the benefit for income taxes reflects an effective tax rate
of 13%.
Liquidity and capital resources
The Company's cash and cash equivalents increased $23.5 million during
the nine months ended September 30, 1999 primarily from cash generated from
operations of $26.2 million, the sale of short-term investments of $1.5 million
and the proceeds from the issuance of common stock of $0.8 million, partially
offset by acquisition of treasury stock of $3.2 million and acquisition of
property and equipment of $1.9 million. Cash generated by operations of $26.2
million resulted primarily from the receipt of income tax refunds of $18.4
million, depreciation and amortization of $4.2 million, net income of $4.1
million, decreased deferred tax asset of $1.5 million, decreased inventories of
$1.4 million, decreased accounts receivable of $0.9 million and decreased other
assets of $0.6 million, partially offset by decreased accrued liabilities and
income taxes payable of $3.3 million and decreased accounts payable of $1.6
million.
The Company had working capital of $74.0 million as of September 30,
1999, as compared to $70.2 million at December 31, 1998. The Company's current
ratio increased to 4.3 to 1, as of September 30, 1999, from 3.6 to 1, as of
December 31, 1998. The average daily sales outstanding rate decreased to 65 days
from 80 days in the third quarter of 1999 over the last quarter of 1998.
The Company has a line of credit for up to $15 million. Borrowings under
the line bear interest at the bank's base rate and the interest is payable
monthly. The bank's base rate was 8.25% per annum as of September 30, 1999.
Borrowings under the line are secured by substantially all of the company's
assets. The line is primarily used as security for letters of credit used to
purchase inventory from international suppliers. As of September 30, 1999, the
Company had not borrowed any funds under the line. Letters of credit secured by
this line totaled $8.9 million as of September 30, 1999.
On January 27, 1999, the Company announced plans to purchase up to two
million shares of its outstanding Common Stock. As of September 30, 1999, the
Company had repurchased 713,000 shares at an aggregate purchase price of $3.1
million.
The Company plans to continue to invest in its infrastructure, including
information systems, to gain efficiencies and meet the demands of its markets
and customers. The Company believes its remaining 1999 capital expenditures will
be approximately $1.0 million. These capital expenditures are expected to be
funded from available working capital. The planned expenditure level is subject
to adjustment as changing economic conditions necessitate. The Company believes
its current cash, cash equivalents, short-term investments and borrowing
capacity will satisfy the Company's working capital and capital expenditure
requirements for the next twelve months.
Factors That May Affect Future Results
Dependence on Telco Services and Maturation of Market
Approximately 43%, 65% and 84% of the Company's revenues during the first
nine months of 1999 and the years 1998 and 1997, respectively, came from the
Company's sales of Network Feature adjuncts and the balance from Network Feature
phones. The size of the overall market for Network Feature products and Services
is a function of the total number of potential subscribers with Network
Feature-enabled telephone lines and the rate of adoption of Network Feature
Services, or the "penetration rate," among those subscribers. Customer adoption
of Network Feature Services has been in the past, and likely will be in the
future, dependent on a variety of factors, including the rate at which Telcos
from time-to-time elect to promote Network Feature Services, the perceived value
of the Services to end users, including the extent to which other end users have
also adopted Network Feature Services, and the end user cost for the Services.
There can be no assurances that Telcos will continue to promote Network Feature
Services, that one or more Network Feature Services will gain market acceptance,
or that in areas where the Services are accepted, those markets will not become
saturated. In addition, even if peak market penetration for Network Feature
Service has not been achieved for the entire United States market, one or more
regional markets may become saturated. Further, the market for Network Feature
adjunct products may be eroded as Network Feature functionality is designed into
competitively priced phone products as a standard feature. While this adjunct
market decline may increase the market for the Company's Network Feature phones,
this could increase the Company's dependence upon growth of this product line
and there is no assurance that the Company will not see increased competition in
this arena, which could drive down margins and sales. Declines in demand for or
revenues from Network Feature Services, whether due to reduced promotion of such
Services by Telcos, competition, market saturation, price reduction,
technological change or otherwise, could have a material adverse affect on the
Company's business, operating results or financial condition. In addition, as
penetration rates for adoption of Network Feature Services increase towards
projected saturation levels, the expenses, or "cost per order," the Company must
incur in its Direct Marketing arrangements to obtain incremental end user
adoption of Network Feature Services increases, which may result in unfavorable
pressures on the Company's profitability.
Dependence on Telcos; Concentrated Customer Base
A significant portion of the Company's revenues is derived from a small
number of Telcos. During the first nine months of 1999 and the years 1998 and
1997, respectively, the percentage of revenue derived by the Company from its
significant (greater than 10% of total sales) customers was 74% (three
customers), 62% (four customers) and 77% (four customers). There can be no
assurance that the Company will retain its current Telco customers or that it
will be able to attract additional customers. The Company generally does not
enter into long term contracts with its Telco or other customers where on-going
minimum purchases are required. Moreover, the arrangements are typically both
nonexclusive and terminable at will following a specified notice period,
generally 20 to 60 days. In addition, these Telco customers may have significant
leverage over the Company and may try to obtain terms relatively favorable to
the customer and/or subsequently change the terms, including pricing, on which
the Company and such customers do business. If the Company is forced to accept
such terms and/or change the terms, including pricing, on which it does
business, the Company's operating margins may decline and such decline may have
a material adverse effect on the Company's business, results of operations or
financial condition.
The Company's sales and operating results are substantially dependent on
the extent of, and the timing of, this relatively small number of Telcos'
respective decisions to implement and from time-to-time promote Caller ID,
Caller ID on Call Waiting and other Network Services on a system-wide or
regional basis. The extent to which the Telcos determine to implement and/or
from time-to-time promote Network Services may be affected by a wide variety of
factors, including regulatory approvals, technical requirements, budgetary
constraints at the Telcos, consolidation among Telcos, market saturation for the
Services, the profitability of the Services to the Telcos, market acceptance for
the Services and other factors. The Company typically has little control over
any of these factors. There can be no assurances that the Telcos will continue
to implement and/or promote Network Feature Services, or that the Telcos will
select the Company's product and program offerings. Moreover, the Company
believes that certain Telcos have begun to perform for themselves the customer
acquisition services currently undertaken by the Company through its Direct
Marketing programs, rather than through third parties such as the Company. The
continuation of this trend among the Telcos could have a material adverse affect
on the Company's business, results of operations and financial condition. The
Company operates with little or no backlog and its quarterly results are
substantially dependent on the Telcos' implementation and/or promotion of
Services on a system wide or regional basis during each quarter. The Company's
operating expenses are based on anticipated sales levels, and a high percentage
of such expenses are relatively fixed. As a result, to the extent that the
Telcos delay the implementation and/or promotion of these Services which were
anticipated for a particular quarter, the Company's sales and operating results
in that quarter may be materially and adversely affected.
New Product Introduction; Technological Change
The telecommunications industry is subject to rapid technological change,
changing customer requirements, frequent new product introductions and changing
industry standards, which may render existing products and Services, obsolete.
The Company's future success will depend in large part on its ability to timely
develop and introduce new products and services which keep pace with, and
correctly anticipate, these changes and which meet new, evolving market
standards and changing customer requirements, as well as its ability to enhance
and improve existing products and services. Product introductions and short
product life cycles necessitate high levels of expenditure for research and
development. There can be no assurance that the Company's existing markets will
not be eroded or that the Company will be able to correctly anticipate and/or
timely develop and introduce products and services which meet the requirements
of the changing marketplace or which achieve market acceptance. If the Company
is unable to develop and introduce products and services which timely meet the
changing requirements of the marketplace and achieve market acceptance, the
Company's business, results of operations or financial condition may be
materially and adversely affected.
In particular, the Company is seeking to expand its product offerings
into a new business area, Internet/e-mail appliances, and expects to devote a
significant portion of its research and development resources on enhancing and
further developing its MailStation(TM) product line, "Internet appliances" which
allow electronic messaging via an easy-to-use device. These are significantly
new areas for the Company and its existing research and development as well as
sales and marketing personnel. There can be no assurances that the Company will
be successful in timely developing such products or that, once developed, there
will be a significant market for such products. Moreover, there can be no
assurances that the Company's existing personnel will have the skills necessary
to timely develop, market and sell products for this market or that, if it
becomes necessary to do so, the Company will be able to hire the necessary
skilled personnel to develop, market and/or sell products in these new areas.
Significant undetected errors or delays in new products or releases may
affect market acceptance of the Company's products and could have a material
adverse effect on the Company's business, results of operations or financial
condition. There can be no assurances that, despite testing by the Company or
its customers, errors will not be found in new products or releases after
commencement of commercial shipments, resulting in loss of market share or
failure to achieve market acceptance. Any such occurrences could have a material
adverse effect on the Company's business, results of operations or financial
condition. Further, if the Company were to experience delays in the
commercialization and introduction of new or enhanced products, if customers
were to experience significant problems with products or if customers were
dissatisfied with product functionality or performance, this could have a
material adverse effect on the Company's business, results of operations or
financial condition.
Fluctuations in Quarterly Revenues and Operating Results
The Company has experienced in the past, and may experience in the
future, significant fluctuations in sales and operating results from quarter to
quarter as a result of a variety of factors, including the timing of orders for
the Company's products from Telcos and other customers; the success of the
Company's own direct marketing programs, in particular, deriving adequate sales
volumes while controlling related costs; the addition or loss of distribution
channels or outlets; the impact on adoption rates of changes in monthly end-user
charges for Services; the timing and market acceptance of new product
introductions by the Company or its competitors; increases in the cost of
acquiring end-user customers for Services and the resulting effects on operating
expenses; technical difficulties with Telco Networks; changes in the Company's
product mix or sales mix by distribution channel that may affect sales prices,
margins or both; technological difficulties and resource constraints encountered
in developing, testing and introducing new products; uncertainties involved in
the Company's entry into markets for new Services; disruption in sources of
supply, manufacturing and product delivery; changes in material costs;
regulatory changes; general economic conditions; the effect on any part of the
Company's operation of naturally occurring phenomena, such as earthquakes;
competitive pressures, including reductions in average selling prices and
resulting erosions of margins; and other factors. Accordingly, the Company's
quarterly results are difficult to predict until the end of each particular
quarter, and delays in product delivery or closing of expected sales near the
end of a quarter can cause quarterly revenues and net income to fall
significantly short of anticipated levels. Because of these factors, the Company
believes that period-to-period comparisons of its results of operations are not
necessarily meaningful and that such comparisons should not be relied upon as
indications of future performance. Due to all of the foregoing factors, it is
likely that in some future quarters the Company's operating results will be
below the expectations of public market analysts and investors. In such event,
the price of the Company's Common Stock would likely be materially adversely
affected.
Need to Develop Alternative Distribution Channels
Historically, the Company's Telco customers have been the primary
distribution channel for the Company's products. However, the Company is seeking
to diversify its distribution channels toward direct-to-end-user, retail and
other alternate distribution channels to the extent such channels do not
conflict with current Telco partnerships, with the goals of broadening the
Company's market opportunities and adding predictability to the Company's
quarter-by-quarter revenues. In addition, the Company is considering alternative
channels for the marketing and sale of its new MailStation product. Moving into
these new channels may involve a number of risks, including, among other things,
the establishment of new channel relationships and presence, the cost of
creating brand awareness and end-user demand in the new channels, the viability
of the Company's product offerings in the new channels and managing conflicts
among different channels offering the Company's products. There can be no
assurance that the Company will be successful in identifying and exploiting
alternate distribution channels or in addressing any one or more of these risks.
If the Company is not successful, it may lose significant sales opportunities
and will continue to be substantially dependent upon the Telco channel for sales
of its products.
Risks Related to Contract Manufacturing; Limited Sources of Supply
The Company's products are manufactured for the Company by third parties
that are primarily located in Malaysia, China and Thailand. The use of third
parties to manufacture products involves a number of risks, including limited
control over production facilities and schedules and the management of supply
chains for the manufactured products. Moreover, reliance on contract
manufacturers in foreign countries subjects the Company to risks of political
instability, financial instability, expropriation, currency controls and
exchange fluctuations, Year 2000 problems and changes in tax laws, tariffs and
rules. See "Risks Relating to International Sales." Many of the key components
used in the Company's products are available either only from single sources or,
even if potentially available from multiple sources, involve relatively long
lead times to manufacture, such that the Company cannot quickly obtain
additional supply without incurring significant incremental costs. In general,
the Company does not have long-term supply contracts with its suppliers and
orders parts on a purchase order basis. The Company's inability to obtain
sufficient quantities of components required, or to develop alternative
manufacturing capability if and as required in the future, could result in
delays or reductions in product shipments that could materially and adversely
affect the Company's business, results of operations and financial condition.
Dependence on Key Personnel; Hiring and Retention of Employees
The Company's continued growth and success depend to a significant extent
on the continued services of its senior management and other key employees and
its ability to attract and retain highly skilled technical, managerial, sales
and marketing personnel. Competition for such personnel is intense. There can be
no assurance that the Company will be successful in continuously recruiting new
personnel or in retaining existing personnel. None of the Company's employees is
subject to a long-term employment agreement. The loss of one or more key
employees or the Company's inability to attract additional qualified employees
or retain other employees could have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, the
Company may experience increased compensation costs in order to attract and
retain skilled employees.
Risks Relating to International Sales
The Company has had relatively limited international sales to date.
However, the Company believes that international sales, particularly in Latin
America, Asia-Pacific and Europe, may represent an increasing percentage of the
Company's sales in the future. The Company's future success will depend in part
on its ability to compete in Latin America, in the Asia-Pacific region, and in
Europe, and this will depend on the continuation of favorable trading
relationships between the region and the United States. The Company's entry into
international markets will likely require significant management attention and
may require significant engineering efforts to adapt the Company's products to
such countries' telephone systems. Moreover, the rate of customer acceptance of
Network Feature Services in areas outside of the United States is highly
uncertain. There can be no assurance that the Company's Network Feature products
will gain meaningful market penetration in target foreign jurisdictions, whether
due to local consumer preferences, local regulatory requirements, technological
constraints in the local Networks, the extent to which the local Telcos
determine to promote Network Feature Services, or other factors. Dependence on
revenues from international sales involves a number of inherent risks, including
new or different regulations, economic slowdown and/or downturn in the general
economy in one or more local markets, international currency fluctuations,
general strikes or other disruptions in working conditions, political
instability, trade restrictions, changes in tariffs, the difficulties associated
with staffing and managing international operations, generally longer
receivables collection periods, unexpected changes in or impositions of
legislative or regulatory requirements, reduced protection for intellectual
property rights in some countries, potentially adverse taxes, delays resulting
from difficulty in obtaining export licenses for certain technology and other
trade barriers. International sales will also be impacted by the specific
economic conditions in each country.
Management of Infrastructure
The Company's future success will require, among other things, that the
Company continue to improve its operating and information systems. In
particular, the Company must constantly seek to improve its order entry and
tracking and product fulfillment service capabilities and systems in order to
retain and/or obtain Telco customers. The failure of the Company to successfully
manage and improve its operating and information systems may adversely affect
both the Company's ability to obtain and/or retain its Telco customers and
accordingly, could have a material adverse effect on the Company's business,
results of operations or financial condition.
Competition
The telecommunications industry is an intensely competitive industry with
several large vendors that develop and market Network Feature products. Certain
of these vendors have significantly more financial and technical resources than
the Company. The Company's competitors include in-house divisions of the
Company's current and potential customers, as well as companies offering
specific services and large firms. In addition to U.S. companies, competitors
for the Company's phone products include both large Asian and European consumer
electronics companies and smaller Asian and European manufacturers. If the
Company's existing customers perform directly the customer acquisition services
currently undertaken by the Company through its Direct Marketing programs, or if
potential customers retain or increase internal capabilities to provide such
services, the Company's business, results of operations and financial condition
could be adversely affected. The introduction of new competitive products into
one or more of the Company's various markets could have a material adverse
effect on the Company's business, results of operations or financial condition.
Limited Protection of Intellectual Property;
Risk of Third-Party Claims of Infringement
The Company has patent protection on certain aspects of its existing
technology and also relies on trade secret protection, copyrights, trademarks
and contractual provisions to protect its proprietary rights. There can be no
assurance that the Company's protective measures will be adequate to protect the
Company's proprietary rights, that others have not or will not independently
develop or otherwise acquire equivalent or superior technology, or that the
Company will not be required to obtain royalty-bearing licenses to use other
intellectual property in order to utilize the inventions embodied in its
patents. There also can be no assurance that any patents will be issued pursuant
to the Company's current or future patent applications or that patents issued
pursuant to such applications or any patents the Company currently owns will not
be invalidated, circumvented or challenged. Moreover, there can be no assurance
that the rights granted under any such patents will provide competitive
advantages to the Company or be adequate to safeguard and maintain the Company's
proprietary rights. In addition, the laws of certain countries in which the
Company's products may from time-to-time be sold may not protect intellectual
property rights to the same extent as the laws of the United States.
Frequent claims and litigation involving patent and other intellectual
property rights characterize the telecommunications industry, like many
technology-based industries. The Company from time to time may be contacted by
third parties claiming that the Company may be infringing patents or other
proprietary rights of third parties. The Company has in the past and may in the
future have to seek a license under such patents or proprietary rights, or
redesign or modify their products and processes in order to avoid infringement
of such rights. There can be no assurance that such a license would be available
on acceptable terms, if at all, or that the Company could so avoid infringement
of such patents or proprietary rights, in which case the Company's business,
financial condition and results of operations could be materially and adversely
affected. Additionally, litigation may be necessary to protect the Company's
proprietary rights. Any claims or litigation involving the Company's owned or
licensed patents or other intellectual property rights may be time consuming and
costly, or cause product shipment delays, either of which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Possible Volatility of Stock Price
The market price of the Company's Common Stock has experienced
significant fluctuations and may continue to fluctuate significantly. The market
price of the Common Stock may be significantly affected by factors such as the
announcement of new products or product enhancements by the Company or its
competitors, technological innovation by the Company or its competitors,
quarterly variations in the Company's or its competitors' products and services,
changes in revenue and revenue growth rates for the Company as a whole or for
specific geographic areas, products or product categories, changes in earnings
estimates by market analysts, speculation in the press or analyst community and
general market conditions or market conditions specific to the technology
industry or the telecommunications industry in particular. The stock prices for
many companies in the technology sector have experienced wide fluctuations that
often have been unrelated to their operating performance. Such fluctuations may
adversely affect the market price of the Company's Common Stock.
Year 2000 Compliance
The information provided below constitutes a "Year 2000 Readiness
Disclosure" for purposes of the Year 2000 Information and Readiness Disclosure
Act.
The Year 2000 problem arises from the use of a two-digit field to
identify years in computer programs (for example, 98=1998), and the assumption
of a single century, namely the 1900s. A program created with this assumption
may read or attempt to read "00" as the year 1900. If computer or information
systems do not correctly recognize date information when the year changes to
2000, there could be an adverse impact to the operations of a company who is not
sufficiently prepared. To minimize the possibility and extent of such an impact
to the Company's operation, the Company has put into place a formal Year 2000
Compliance Project that focuses on four key readiness areas: (1) product
readiness, addressing the Company's product functionality; (2) internal
infrastructure readiness, addressing internal information systems and
non-information technology systems; (3) supplier readiness, addressing the
preparedness of our supplier base; and (4) customer readiness; addressing the
preparedness of our customer base. The Company has appointed a Year 2000
Compliance Officer, and for each readiness area, a task force has over the last
several quarters been systematically performing company-wide risk assessment and
contingency planning, conducting testing and remediation, and communicating with
employees, suppliers, customers and third-party business partners to uncover and
resolve problem areas related to the Year 2000 problem. Below are overviews of
each readiness area and the Company's progress thereon for becoming ready for
the Year 2000.
Product Readiness
The Company has completed its review of Year 2000 issues with respect to
its product line. The Company's telephones, telephone adjuncts and accessories,
and other products, with the exception of one product, do not calculate dates or
rely upon software that calculates dates. Any date information that is displayed
on these products is provided by the Telco Service provider over the Telco's
Network, and only month and day information is sent over the Network and
displayed by the products. Additionally, the user can set the date information
for two of the Company's current products. In other words, in all but one of the
Company's products simply display the date information that the Telco provides,
or in some cases, the date information that a user inputs. Accordingly, Year
2000 issues are not relevant to the functionality of these products. For the one
product that calculates dates, the MailStation, dates are calculated internally
solely for the purpose of time stamping messages sent and received The related
software will, under normal use, record and process calendar dates falling on or
after January 1, 2000 with the same functionality, data integrity and
performance as the software records and processes calendar dates on or before
December 31, 1999. In any future products developed by or for the Company that
may calculate or utilize date information, the Company will take steps to assure
Year 2000 compliance.
Internal Infrastructure Readiness
Remediation of internal information systems, hardware and software is
essentially complete. The Company is currently executing its testing protocol to
verify that all systems are and remain compliant. The Company is in the process
of completing a few final upgrades for embedded systems, facilities and other
operations. The vast majority of systems are now compliant and the Company
expects all systems to be compliant by November 30, 1999. Testing will continue
through the remainder of the year to verify that systems are and remain
compliant.
Supplier Readiness
This program is focused on minimizing the risk associated with suppliers
in two areas: (1) a supplier's ability to continue providing products and
services, and (2) the Year 2000 compliance of suppliers in their internal
operations. The Company has contacted all its material suppliers. The Company
has received responses from the vast majority (94%) of its preferred suppliers.
The Company informed its suppliers that it would reevaluate its business
relationship with any supplier who either fails to respond or cooperate with
this project, or who fails to certify as to Year 2000 compliance. The majority
(approximately 80%) of the supplier base has provided written assurances that
they are compliant. Non-responsive or non-compliant suppliers who are not
mission critical have been placed on "hold," and the company continues to work
with and seek alternatives to certain mission critical suppliers who have not
certified that they are compliant.
Customer Readiness
This program is focused on minimizing the risk associated with our
customers in two areas: (1) a customer's ability to continue ordering and
utilizing the Company's products and services, and (2) the Year 2000 compliance
of customers in their internal operations, especially with respect to Electronic
Data Interchange ("EDI") with the Company. The Company has contacted all its
significant customers, has received responses from most of its customers and
anticipates that the majority of customers will respond and provide the Company
with the requested information. The Company is conducting joint testing of EDI
processes and interfaces with its principal customers who have agreed to such
testing. Customer issues that potentially affect the Company's sales of products
and services are targeted to be resolved by November 30, 1999.
Risk Factors, Costs, Remediation and Contingency Planning
The Company's overall Year 2000 project is currently in the compliance
verification-testing phase. The Company believes that its greatest potential
risks are associated with the systems of the Company's suppliers, and
secondarily, problems associated with the Company's infrastructure needs. For
example, it is possible that infrastructure service providers (e.g., electricity
and/or water providers) may, despite assurances, be unable to deliver services
without interruption to the Company's headquarter facilities and/or to the
Company's overseas manufacturers. For example, reports indicate that China may
suffer electricity outages for failure to adequately prepare for the year 2000.
The Company utilizes contract manufacturers in Malaysia, China and Thailand and
believes it has sufficient product inventory to accommodate a short-term
infrastructure failure in its manufacturer base. Additionally, it is possible
that one or more of the Company's Telco customers may choose to defer the
commencement of programs that they would ordinarily start in the last quarter of
1999 or the first quarter of 2000 to avoid Year 2000 issues that may arise with
respect to Network Services. Such a decision could have a detrimental impact
upon the Company's revenue for those quarters.
With respect to suppliers and information systems, the Company has
essentially completed its remediation and contingency planning, but cannot
predict whether significant problems will yet be identified. However, based on
the status of the assessments made and remediation plans developed and
implemented to date, the Company currently does not believe that problems
identified will pose significant issues, or that direct costs associated with
such issues will exceed $1,000,000; this does not include costs associated with
a shutdown of infrastructure services as described in the prior paragraph, which
the Company believes would most likely constitute the worst case scenario.
The Company may yet discover additional Year 2000 problems, may not be
able to develop, implement, or test remediation or contingency plans in time, or
may find that the costs of these activities exceed current expectations. In many
cases, the Company will be in a position of relying on assurances from suppliers
and infrastructure service providers that new and upgraded information systems
and other products will be Year 2000 compliant. The Company is testing such
third-party products and services, but cannot be sure that its tests will be
adequate or that, if problems are identified, they will be addressed by the
supplier in a timely and satisfactory way. Because the Company uses a variety of
information systems and has additional systems embedded in its operations and
infrastructure, it cannot be sure that all of its systems will work together in
a Year 2000-compliant fashion. Furthermore, the Company cannot be sure that it
will not suffer business interruptions, either because of its own Year 2000
problems or those of its customers or suppliers whose Year 2000 problems may
make it difficult or impossible for them to fulfill their commitments to the
Company.
Item 3 Quantitative and Qualitative Disclosure About Market Risk
Management believes that the market risk associated with the Company's
market risk sensitive instruments as of September 30, 1999 is not material, and
therefore, disclosure is not required.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
On April 1, 1999, the Company filed a complaint against Active Voice
Corporation in U.S. District Court primarily seeking a Declaratory Judgment of
non-infringement and invalidity of U.S. Patent No. 5,327,493 involving detection
of tones, and secondarily for patent misuse and unfair competition. Active Voice
counter-claimed for infringement of U.S. Patent No. 5,327,493, and the Company
amended its complaint to include infringement by Active Voice of the Company's
U.S. Patent No. 4,366,348 involving Caller ID technology. The case is in the
discovery stage. The Company's Management believes that it will prevail in any
litigation, and that the costs and risks of this litigation are not material to
its operations.
In the ordinary course of business, the Company may be involved in other
legal proceedings. As of the date hereof, the Company is not a party to any
other pending legal proceedings that it believes will materially affect its
financial condition or results of operations.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Index to Exhibits at page 21 below.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the three months ended
September 30, 1999.
SIGNATURES
Pursuant to the requirements 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.
CIDCO INCORPORATED
November 12, 1999 By:/s/Paul G. Locklin
Date Paul G. Locklin
President and Chief Executive Officer
Chairman of the Board of Directors
November 12, 1999 /s/Richard D. Kent
Date Richard D. Kent
Chief Financial Officer, Chief Operations
Officer, Chief Accounting Officer and
Corporate Secretary
CIDCO INCORPORATED
Index to Exhibits
Exhibits Page
3.1 Amended and Restated Certificate of Incorporation. (1) ......... --
3.2 Second Amended and Restated By-laws of CIDCO Incorporated
dated January 26, 1999. (6) ................................. --
4.1 Amended and Restated Loan and Security Agreement dated March 29,
1999 between Registrant and Comerica Bank-California. (7) ... --
4.2 Rights Agreement dated as of January 27, 1997, between the
Registrant and United States Trust Company of New York, as
Rights Agent. (3) ........................................... --
10.4 Patent License Agreement dated as of May 1, 1989 between the
Registrant and American Telephone and Telegraph Company. (1) --
10.5 Form of Indemnification Agreement. (1) ......................... --
10.17 Sublease dated Nov. 18, 1994, between Thoits Bros. and the
Registrant for 180 Cochrane Circle. (2) ..................... --
10.18 Lease dated Nov. 1, 1994, between Thoits Bros., Inc. and the
Registrant for 105 Cochrane Circle, Units A, B, C, D,
and E. (2) .................................................. --
10.20 Registrant's 1994 Directors' Stock Option Plan. (2) ............ --
10.21 Registrant's 1994 Employee Stock Purchase Plan. (2) ............ --
10.24 Employment Agreement dated June 28, 1996 between Registrant
and Ian Laing. (4) .......................................... --
10.30 Registrant's Second Amended and Restated 1993 Stock Option
Plan. (5) ................................................... --
10.31 Registrant's Amended and Restated 1998 Stock Option Plan. (5) .. --
10.32 Employment Agreement dated June 1, 1998 between Registrant
and Richard D. Kent. (5) .................................... --
10.33 Employment Termination Agreement dated Nov. 12, 1998 between
Registrant and Daniel L. Eilers. (5) ........................ --
10.34 Employment Agreement dated Nov. 12, 1998 between Registrant
and Paul G. Locklin. (6) .................................... --
10.35 Employment Agreement dated Sept. 30, 1994 between Registrant
and Timothy J. Dooley. (6) .................................. --
10.39 Employment Agreement dated June 5, 1998 between Registrant
and William A. Sole. (7) .................................... --
- -----------------------------------
(1) Incorporated herein by reference to the Company's registration statement on
Form S-1, File No. 33-74114.
(2) Incorporated herein by reference to the Company's Form 10-K for the year
ended December 31, 1994.
(3) Incorporated herein by reference to the Company's Form 10-Q for the quarter
ended March 31, 1997.
(4) Incorporated herein by reference to the Company's Form 10-Q for the quarter
ended June 30, 1997.
(5) Incorporated herein by reference to the Company's Form 10-Q for the quarter
ended September 30, 1998.
(6) Incorporated herein by reference to the Company's Form 10-K for the year
ended December 31, 1998.
(7) Incorporated herein by reference to the Company's Form 10-Q for the quarter
ended March 31, 1999.
Footnotes
1 MailStation is a trademark of CIDCO Incorporated.
2 iPhone is a registered trademark of InfoGear Technology Corporation.
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