<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
Amendment No. 2 to
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
COMMISSION FILE NO. 0-24308
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2162982
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
44084 RIVERSIDE PARKWAY
LANSDOWNE BUSINESS CENTER
LEESBURG, VIRGINIA 22075
(703) 729-6400
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each
exchange on which registered
None Not applicable
Securities registered pursuant to section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
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. [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
495 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of March 13, 1997, was approximately $153,044,650 based on the
sale price of the Common Stock on March 13, 1997, of $16.75 as reported by the
NASDAQ National Market System. As of March 13, 1997, the registrant had
outstanding 15,146,522 shares of its Common Stock, par value $.01 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held on May 15, 1997 are incorporated herein by reference in Part III, Items 10,
11, 12 and 13.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual Report on
Form 10-K:
1. Consolidated Financial Statements:
The consolidated financial statements filed as a part of this report
are listed in the "Index to Consolidated Financial Statements and
Financial Statement Schedule" at Item 8.
2. Consolidated Financial Statement Schedule:
The consolidated financial statement schedule filed as part of this
report is listed in the "Index to Consolidated Financial Statements and
Financial Statement Schedule" at Item 8.
Schedules other than those listed on the accompanying Index to
Consolidated Financial Statements and Financial Statement Schedule are
omitted for the reason that they are either not required, not
applicable, or the required information is included in the consolidated
financial statements or notes thereto.
(b) REPORTS ON FORM 8-K None.
(c) Exhibits:
The following is a list of exhibits required by Item 601 of Regulation
S-K filed as part of this report. Where so indicated by footnote,
exhibits which were previously filed are incorporated by reference.
Exhibits incorporated by reference, the location of the exhibit in the
previous filing is indicated in parentheses. All other exhibits are
being filed with this report.
Exhibit No. Description
----------- -----------
3(i) - Certificate of Incorporation of the Company, as amended by a
Certificate of Amendment.(3) (Exhibit 3.1(i))
3(ii) - By-laws of the Company as amended.(5)(Exhibit 3(ii))
4.1 - Specimen stock certificate representing the Common Stock.(3)
(Exhibit 4.1)
10.1 - Administrative Services Agreement dated as of December 1, 1993,
between the Company and Safeguard Scientifics, Inc.(3)
(Exhibit 10.1)
10.2 - Asset Purchase Agreement dated as of March 18, 1987 between
COMSAT Telesystems, Inc. and the Company.(1)(Exhibit 10.2)
*10.3 - 1982 Stock Option Plan.(1)(Exhibit 10.3)
*10.4 - 1993 Equity Compensation Plan, as amended and
restated.(6)(Exhibit 10.4)
*10.4.1 - Stock Ownership Plan.(5)(Exhibit 10.4.1)
10.4.2 Compensation Plan for Outside Directors.
*10.5 - Form of Non-Qualified Stock Option Agreement of the Company for
Employees.(2)(Exhibit 10.5)
*10.6 - Form of Non-Qualified Stock Option Agreement of the Company for
Directors.(2)(Exhibit 10.6)
*10.7 - Form of Incentive Stock Option Agreement of the Company for
Employees.(2)(Exhibit 10.7)
10.8 - Lease dated as of February 1, 1980, as amended, between LE-AX
Corp. and the Company, for the property at 60 Commerce Drive,
Hauppauge, New York.(1)(Exhibit 10.8)
2
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(c) Exhibits (continued):
10.9.1 - Lease dated as of July 31, 1992 between Linpro Lansdowne Two
Limited Partnership and the Company, for the property at 44084
Riverside Parkway, Leesburg, Virginia.(1)(Exhibit 10.9.1)
10.9.2 - Sublease dated as of August 1993 between G.D. Searle & Co.
and the Company, for the property at 44084 Riverside Parkway,
Leesburg, Virginia.(1)(Exhibit 10.9.2)
10.9.3 Lease dated August 9, 1996 by and between Opus East,, L.L.C.,
Landlord, and the Company for the premises located in Loudon
County, Virginia known as University Center.(6)(Exhibit 10.9.3)
10.10 - Lease dated as of October 15, 1990 between Kibswell Holdings
Limited and the Company, for the property at Unit B The Quadrant,
Barton Lane, Abingdon, England.(1)(Exchange 10.10)
10.11 - Tax Agreement dated January 1, 1983 between Safeguard
Scientifics, Inc. and the Company.(1)(Exhibit 10.11)
*10.12 - Severance and Non-Competition Agreement dated as of February
10, 1994 between Daniel McGinnis and the Company.(1)(Exhibit
10.12)
10.13 - Form of Demand Promissory Note of Safeguard Scientifics, Inc.,
dated April 2, 1993, payable to the Company, as amended by letter
Agreement dated January 12, 1994.(1)(Exhibit 10.13)
10.14 - Form of Promissory Note of the Company payable to Safeguard
Scientifics, Inc. with respect to the redemption of redeemable
convertible preferred stock.(3)(Exhibit 10.14)
10.15 - Supply and License Agreement dated February 7, 1992, between
the Company and TRT Telecommunications Radioelectriques et
Telephoniques.(1)(Exhibit 10.15)
10.16 - International Distribution Agreement dated as of January 2,
1992 between the Company and Cohpac Communications Systems Pty
Limited.(1)(Exhibit 10.16)
10.17 - North America Value Added Reseller Agreement dated as of
December 7, 1992 between the Company and Wandel & Goltermann
Inc.(1)(Exhibit 10.17)
*10.18 - Management Incentive Compensation Plan, as adopted by the
Company.(2)(Exhibit 10.18)
10.19 - License Agreement, effective as of June 1, 1994, between the
Company and Systems Technology Associates, Inc. (3)(Exhibit
10.19)
10.20 - Value Added Reseller Agreement dated December 31, 1992 as
amended June 13, 1995 between the Company and Nokia
Telecommunications Oy.(5)(Exhibit 10.21)**
10.21 Memorandum of Understanding dated February 27, 1997 between the
Company and Nokia Telecommunications Oy.**
11.0 - Computation of net income per share.(6)(Exhibit XI)
3
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(c) Exhibits (continued):
21.0 - Subsidiaries of registrant.(6)(Exhibit 21.0)
23.0 - Consent of KPMG Peat Marwick LLP.(6)(Exhibit 23.0)
27.0 - Financial Data Schedule.(6)(Exhibit 27.0)
- ----------------
(1)Filed on March 31, 1994 as an exhibit to the Company's Registration
Statement on Form S-1 (No.33-77160) and incorporated by reference.
(2)Filed on May 24, 1994 as an exhibit to the Company's Registration Statement
on Form S-1 Amendment #1 (No.33-77160) and incorporated by reference.
(3)Filed on June 10, 1994 as an exhibit to the Company's Registration Statement
on Form S-1 Amendment #2 (No.33-77160) and incorporated by reference.
(4)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated by reference.
(5)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and incorporated by reference.
(6)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated by reference.
* Management contract or compensatory plan or arrangement.
** Confidential portions of the exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
4
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this to be signed on its
behalf by the undersigned, thereunto duly authorized.
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
By: /s/ Daniel L. McGinnis
---------------------------
Daniel L. McGinnis
Chief Executive Officer
Date: December 10, 1998
5
<PAGE> 6
EXHIBIT INDEX
The following is a list of exhibits required by Item 601 of Regulation S-K filed
as part of this Report. Where so indicated by footnote, exhibits which were
previously filed are incorporated by reference. For exhibits incorporated by
reference, the location of the exhibit in the previous filing is indicated in
parentheses. The page numbers listed refer to the page numbers where such
exhibits are located using the sequential numbering system specified by Rule
0-3.
Exhibit No. Description
----------- -----------
3(i) - Certificate of Incorporation of the Company, as amended by a
Certificate of Amendment.(3) (Exhibit 3.1(i))
3(ii) - By-laws of the Company as amended.
4.1 - Specimen stock certificate representing the Common
Stock.(3)(Exhibit 4.1)
10.1 - Administrative Services Agreement dated as of December 1, 1993,
between the Company and Safeguard Scientifics, Inc.(3)(Exhibit
10.1)
10.2 - Asset Purchase Agreement dated as of March 18, 1987 between COMSAT
Telesystems, Inc. and the Company.(1)(Exhibit 10.2)
*10.3 - 1982 Stock Option Plan.(1)(Exhibit 10.3)
*10.4 - 1993 Equity Compensation Plan, as amended and
restated.(6)(Exhibit 10.4)
*10.4.1 Stock Ownership Plan.(5)(Exhibit 10.4.1)
10.4.2 Compensation Plan for Outside Directors.
*10.5 - Form of Non-Qualified Stock Option Agreement of the Company for
Employees.(2)(Exhibit 10.5)
*10.6 - Form of Non-Qualified Stock Option Agreement of the Company for
Directors.(2)(Exhibit 10.6)
*10.7 - Form of Incentive Stock Option Agreement of the Company for
Employees.(2)(Exhibit 10.7)
10.8 - Lease dated as of February 1, 1980, as amended, between LE-AX
Corp. and the Company, for the property at 60 Commerce Drive,
Hauppauge, New York.(1)(Exhibit 10.8)
10.9.1 - Lease dated as of July 31, 1992 between Linpro Lansdowne Two
Limited Partnership and the Company, for the property at 44084
Riverside Parkway, Leesburg, Virginia.(1)(Exhibit 10.9.1)
10.9.2 - Sublease dated as of August 1993 between G.D. Searle &
Co. and the Company, for the property at 44084 Riverside
Parkway, Leesburg, Virginia.(1)(Exhibit 10.9.2)
10.9.3 Lease dated August 9, 1996 by and between Opus East,, L.L.C.,
Landlord, and the Company, for the premises located in Loudon
County, Virginia known as University Center.(6)(Exhibit 10.9.3)
10.10 - Lease dated as of October 15, 1990 between Kibswell Holdings
Limited and the Company, for the property at Unit B The Quadrant,
Barton Lane, Abingdon, England.(1)(Exchange 10.10)
10.11 - Tax Agreement dated January 1, 1983 between Safeguard
Scientifics, Inc. and the Company.(1)(Exhibit 10.11)
*10.12 - Severance and Non-Competition Agreement dated as of February 10,
1994 between Daniel McGinnis and the Company.(1)(Exhibit 10.12)
6
<PAGE> 7
10.13 - Form of Demand Promissory Note of Safeguard Scientifics, Inc.,
dated April 2, 1993, payable to the Company, as amended by letter
Agreement dated January 12, 1994.(1)(Exhibit 10.13)
10.14 - Form of Promissory Note of the Company payable to Safeguard
Scientifics, Inc. with respect to the redemption of redeemable
convertible preferred stock.(3)(Exhibit 10.14)
10.15 - Supply and License Agreement dated February 7, 1992, between the
Company and TRT Telecommunications Radioelectriques et
Telephoniques.(1)(Exhibit 10.15)
10.16 - International Distribution Agreement dated as of January 2, 1992
between the Company and Cohpac Communications Systems Pty
Limited.(1)(Exhibit 10.16)
10.17 - North America Value Added Reseller Agreement dated as of
December 7, 1992 between the Company and Wandel & Goltermann
Inc.(1)(Exhibit 10.17)
*10.18 - Management Incentive Compensation Plan, as adopted by the
Company.(2)(Exhibit 10.18)
10.19 - License Agreement, effective as of June 1, 1994, between the
Company and Systems Technology Associates, Inc. (3)(Exhibit 10.19)
10.20 - Value Added Reseller Agreement dated December 31, 1992 as amended
June 13, 1995 between the Company and Nokia Telecommunications Oy.
(5)(Exhibit 10.21)**
10.21 - Memorandum of Understanding dated February 27, 1997 between the
Company and Nokia Telecommunications Oy.**
11.0 - Computation of net income per share.(6)(Exhibit XI)
21.0 - Subsidiaries of registrant.(6)(Exhibit 21.0)
23.0 - Consent of KPMG Peat Marwick LLP.(6)(Exhibit 23.0)
27.0 - Financial Data Schedule.(6)(Exhibit 27.0)
- ----------------
(1)Filed on March 31, 1994 as an exhibit to the Company's Registration
Statement on Form S-1 (No.33-77160) and incorporated by reference.
(2)Filed on May 24, 1994 as an exhibit to the Company's Registration Statement
on Form S-1 Amendment #1 (No.33-77160) and incorporated by reference.
(3)Filed on June 10, 1994 as an exhibit to the Company's Registration Statement
on Form S-1 Amendment #2 (No.33-77160) and incorporated by reference.
(4)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated by reference.
(5)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and incorporated by reference.
(6)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated by reference.
* Management contract or compensatory plan or arrangement.
** Confidential portions of the exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
7
<PAGE> 1
EXHIBIT 10.4.2
COMPENSATION PLAN FOR OUTSIDE DIRECTORS
Directors are elected annually and hold office until their successors are
elected and have qualified or until their earlier resignation or removal. In
1996, each director who was not an employee of the Company or Safeguard received
an annual cash retainer of $6,000 and $500 for each Board meeting attended.
Directors also were reimbursed for out-of-pocket expenses incurred in
connection with attendance at meetings or other Company business.
<PAGE> 1
EXHIBIT 10.21
MEMORANDUM OF UNDERSTANDING DATED FEBRUARY 27, 1997 BETWEEN THE COMPANY
AND NOKIA TELECOMMUNICATIONS OY
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED PORTIONS ARE MARKED WITH AN *.
8
<PAGE> 2
[COHERENT LOGO] NTEC0297
MEMORANDUM OF UNDERSTANDING
- ----------------------------------------
TABLE 1 - NOKIA PRICING
- ----------------------------------------
CHANNEL CHANNEL
PRICE $ VOLUMES
- ----------------------------------------
1997 * *
1998 * *
1999 * *
- ----------------------------------------
Based upon the estimated volumes as specified in Table 1 Coherent agrees to the
above pricing to be effective immediately. In addition to this the following
items were agreed in principal and will be finalised in an amendment to
Agreement No. H7810/92 no later than April 4th 1997.
1. Coherent has received Nokias best estimate to purchase the volume
requirements for 1997, 1998 and 1999, a total of * channels.
2. The Products to be supplied are the NIEC, IDEC2X and/or EC2X.
3. The NIEC will be supplied with no further modifications to the
specification, until * .
The EC2X will be released to Production * for shipments expected * . In
accordance with the PDA all * Beta units will be shipped * for which
payment shall be made in full.
4. The IDEC2X Product Specification will be the same as that for the NIEC but
with the EC5 ASICs replaced by the HDRP and the additional feature
specification as described in Attachment A. If the future software and
hardware options are required by Nokia then these are to be agreed and the
relevant prices for these additional features will be agreed.
An NRE charge of * is payable for the development of the IDEC2X, payable
in three installments in accordance with the following milestones:
Signing of the PDA - not later than end of April 4th 1997
Delivery of * Beta units * at a cost of * per unit.
Delivery of first Production Units * .
9
<PAGE> 3
[COHERENT LOGO] NTEC0297
5. Both parties agree to include a statement in the amendment to Agreement
No. H7810/92 to the effect that based upon the volume requirements
contained herein, Nokia will not source an alternative product for the
applications for which Coherent are already supplying Product.
6. Delivery Times - Agreement No. H7810/92
Clause 2.7.2
Each month Nokia will provide a forecast for * with an Authorisation to
Manufacture covering * . This commitment to deliver is based upon the
following:
* weeks firm
* weeks * of the volume can be rescheduled up to *
* weeks * of the volume can be rescheduled up to *
This clause replaces 2.8.1.
7. Payment Terms
Payment terms as specified in Nokia's Netting Payment System will become
affective during 1997. Payments will be made within * maximum. Until such
change the current payment terms will remain effective.
For new orders the invoicing shall be as follows to reflect the charge for
a Software Licence:
Hardware Software Licence (ILS-NIEC)
-------- ---------------------------
NIEC and IDEX2X *
EC2X *
ILS-NIECx is a Software Fee and Licence to use. Each order for Hardware
must be accompanied by an order for an equal number of Software Licences
which will be invoiced at the same time.
10
<PAGE> 4
[COHERENT LOGO] NTEC0297
MEMORANDUM OF UNDERSTANDING FOR PROPOSED AMENDMENTS TO AGREEMENT NO.
H7810/92
In Witness Whereof, the Parties have agreed these minutes and both parties
do hereby sign in Espoo on 26th February, 1997.
SIGNED FOR AND ON BEHALF OF SIGNED FOR AND ON BEHALF OF
NOKIA TELECOMMUNICATIONS OY COHERENT COMMUNICATIONS
SYSTEMS CORPORATION
/s/_____________________________ /s/_____________________________
Erkki Sipila Miles Pratt
/s/_____________________________ /s/_____________________________
Vesa Sarkikangas Simon Taylor
11
<PAGE> 5
ATTACHMENT A NIECO297
DIFFERENCE/NEW FEATURE COMMENTS
- ---------------------- --------
* The * to be used for echo cancellation on
the EC2X/IDEC2X is intended to have * that
will eliminate the need for * that was used
on the NIEC. However, * will still be
provided so that * may be replaced.
PERFORMANCE MONITORING PERFORMANCE MONITORING
(new features)
* The EC2X/IDEC2X shall provide * of the
circuit on a * basis under
Motherboard/EC2X/IDE2X communications
interface command.
* The EC2X/IDEC2X shall provide * of the
circuit on a * basis under
Motherboard/EC2X/IDE2X communications
interface command.
* The EC2X/IDEC2X shall provide * of the
circuit * on a * basis under
Motherboard/EC2X/IDE2X communications
interface command.
* The EC2X/IDEC2X shall provide * of the
circuit * on a * basis under
Motherboard/EC2X/IDE2X communications
interface command.
Note: * provides the "hooks" for providing
* .
* The EC2X/IDEC2X shall report * on a *
basis under Motherboard/EC2X/IDEC2X
communications interface command.
*
(New future software and
Hardware option)
The IDEC2X shall provide for the facility
for * implementation as a future software
and hardware option. The * implementation
platform (hardware) shall support a total *
of * .
*
(New future software option)
The EC2X shall provide for the facility for
* implementation as a future software
option.
