SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
Commission file number 0-20008
VTEL CORPORATION
A DELAWARE CORPORATION IRS EMPLOYER ID NO. 74-2415696
108 WILD BASIN ROAD
AUSTIN, TEXAS 78746
(512) 314-2700
The registrant 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
has been subject to such filing requirements for the past 90 days.
At August 1, 1996 the registrant had outstanding 14,301,999 shares of its Common
Stock, $0.01 par value.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VTEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31,
1996 1995
(UNAUDITED)
ASSETS
Current assets:
Cash and equivalents $ 1,860,000 $ 2,910,000
Short-term investments 53,542,000 59,984,000
Accounts receivable, net of allowance
for doubtful accounts of $262,000 and
$185,000 at June 30, 1996 and
December 31, 1995 22,829,000 18,875,000
Inventories 12,381,000 9,731,000
Prepaid expenses and other current assets 1,477,000 1,041,000
------------ ------------
Total current assets 92,089,000 92,541,000
Property and equipment, net 13,222,000 9,650,000
Intangible assets, net 13,808,000 14,285,000
Other assets 1,576,000 1,832,000
------------ ------------
$120,695,000 $118,308,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,934,000 $ 5,150,000
Accrued compensation and benefits 1,605,000 1,752,000
Accrued warranty expense 843,000 1,061,000
Other accrued liabilities 1,559,000 1,351,000
Research and development advance 906,000 906,000
Deferred revenue 4,032,000 4,250,000
------------ ------------
Total current liabilities 20,879,000 14,470,000
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000
authorized; none issued or outstanding
Common stock, $.01 par value; 25,000,000
authorized; 14,282,000 and 13,766,000
issued and outstanding at June 30, 1996
and December 31, 1995 143,000 138,000
Additional paid-in capital 124,107,000 123,712,000
Accumulated deficit (24,471,000) (20,169,000)
Cumulative translation adjustment 37,000 157,000
------------ ------------
Total stockholders' equity 99,816,000 103,838,000
------------ ------------
$120,695,000 $118,308,000
============ ============
The accompanying notes are an integral part
of these condensed consolidated financial statements.
2
VTEL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
Revenues $24,292,000 $18,310,000 $47,223,000 $33,499,000
Cost of sales 14,459,000 8,519,000 28,081,000 15,725,000
----------- ----------- ----------- -----------
Gross margin 9,833,000 9,791,000 19,142,000 17,774,000
----------- ----------- ----------- -----------
Selling general and administrative 8,941,000 5,776,000 17,368,000 11,121,000
Research and development 3,790,000 2,838,000 7,446,000 5,505,000
Amortization of intangible assets 240,000 -- 480,000 --
----------- ----------- ----------- -----------
Total operating expenses 12,971,000 8,614,000 25,294,000 16,626,000
----------- ----------- ----------- -----------
Income (loss) from operations (3,138,000) 1,177,000 (6,152,000) 1,148,000
----------- ----------- ----------- -----------
Other income, net 810,000 245,000 1,850,000 746,000
----------- ----------- ----------- -----------
Net income (loss) before provision for income taxes (2,328,000) 1,422,000 (4,302,000) 1,894,000
Provision for income taxes -- (37,000) -- (55,000)
----------- ----------- ----------- -----------
Net income (loss) $(2,328,000) $ 1,385,000 $(4,302,000) $ 1,839,000
=========== =========== =========== ===========
Net income (loss) per share $ (0.16) $ 0.13 $ (0.30) $ 0.17
=========== =========== =========== ===========
Weighted average shares outstanding 14,246,000 11,073,000 14,228,000 11,047,000
=========== =========== =========== ===========
The accompanying notes are an integral part
of these condensed consolidated financial statements.
3
VTEL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE
SIX MONTHS ENDED
JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(4,302,000) $ 1,839,000
Adjustments to reconcile net income (loss)
to net cash from operations:
Depreciation and amortization 3,539,000 1,410,000
Provision for doubtful accounts 108,000 6,000
Amortization of unearned compensation -- 11,000
Amortization of deferred gain (48,000) (49,000)
Foreign currency translation gain (176,000) (83,000)
(Increase) in accounts receivable (4,062,000) (4,362,000)
(Increase) in inventories (2,650,000) (470,000)
(Increase) in prepaid expenses and other
current assets (395,000) (356,000)
Increase in accounts payable 6,784,000 2,673,000
(Decrease) in accrued expenses (109,000) (222,000)
(Decrease) in research and development advance -- (190,000)
Increase (decrease) in deferred revenues (218,000) 92,000
----------- -----------
Net cash provided by (used in) operating
activities (1,529,000) 299,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net short-term investments activity 6,442,000 1,257,000
Net purchase of property and equipment (6,631,000) (3,873,000)
(Increase) decrease in other assets 256,000 (774,000)
----------- -----------
Net cash provided by (used in)
investing activities 67,000 (3,390,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease
obligations -- (3,000)
Net proceeds from issuance of stock 356,000 1,086,000
----------- -----------
Net cash provided by financing activities 356,000 1,083,000
----------- -----------
Effect of translation exchange rates on cash 56,000 124,000
----------- -----------
Net decrease in cash and equivalents (1,050,000) (1,884,000)
Cash and equivalents at beginning of period 2,910,000 4,185,000
----------- -----------
Cash and equivalents at end of period $ 1,860,000 $ 2,301,000
=========== ===========
The accompanying notes are an integral part
of these condensed consolidated financial statements.
4
VTEL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
VTEL Corporation (the "Company") designs, manufactures, markets, services and
supports integrated, multi-media videoconferencing systems which operate
over private and switched digital communication networks. The Company
distributes its systems to a domestic and international marketplace primarily
through third parties.
The Company's systems integrate traditional video and audio conferencing
with additional functions including the sharing of PC software applications
and the transmission of high-resolution images and facsimile. Through the
use of the Company's multi-media conferencing systems, users are able to
replicate more closely the impact and effectiveness of face-to-face meetings.
The Company's headquarters and production facilities are in Austin, Texas.
NOTE 1 - GENERAL AND BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission and accordingly, do not include all information and
footnotes required under generally accepted accounting principles for
complete financial statements. In the opinion of management, these interim
financial statements contain all adjustments, consisting of only normal,
recurring adjustments, necessary for a fair presentation of the financial
position of the Company as of June 30, 1996 and the results of the Company's
operations and its cash flows for the three and six month periods ended June
30, 1996. The results for interim periods are not necessarily indicative of
results for a full fiscal year. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements (including the notes thereto) contained in the Company's
1995 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 1996.
NOTE 2 - INVENTORIES
Inventories consist of the following:
JUNE 30, DECEMBER 31,
1996 1995
Raw materials $ 6,129,000 $6,074,000
Work in process 685,000 161,000
Finished goods 4,933,000 2,895,000
Finished goods held for evaluation 634,000 601,000
----------- ----------
$ 12,381,000 $9,731,000
=========== ==========
Finished goods held for evaluation consists of completed multi-media
communication systems used for demonstration and evaluation purposes, which
are generally sold during the next 12 months.
NOTE 3 - NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares and common share equivalents
outstanding (if dilutive) during each period.
5
NOTE 4 - CHANGE IN FISCAL YEAR
On May 23, 1996, the Company's Board of Directors approved a change in the
Company's fiscal year end from December 31 to July 31. The transition period
resulting from the change in fiscal year will be reported on the Company's
Annual Report on Form 10-K for the transition period ended July 31, 1996.
NOTE 5 - RESTRUCTURING CHARGE
Subsequent to June 30, 1996, the Company finalized its plan to realign its
resources into Customer Business Units. These Business Units will provide
the framework for moving decision making closer to the customer and for
responding to customer requirements quickly. The realignment of resources
will result in the Company recording a charge subsequent to June 30, 1996 of
approximately $750,000 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 Customer Business Unit
model.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion in this document contains trend analysis and other forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Actual results could differ materially from those projected in the
forward-looking statements throughout this document.
The following review of the Company's financial position and results of
operations for the three and six month periods ended June 30, 1996 and 1995
should be read in conjunction with the Company's 1995 Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 30, 1996.
RESULTS OF OPERATIONS
The following table sets forth for the fiscal periods indicated the
percentage of revenues represented by certain items in the Company's
Condensed Consolidated Statement of Operations:
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
Revenues 100% 100% 100% 100%
Gross margin 41 53 41 53
Selling, general and administrative 37 32 37 33
Research and development 16 15 16 16
Total operating expenses 53 47 54 50
Other income, net 3 1 4 2
Net income (loss) (10)% 8% (9)% 5%
6
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Revenues. Revenues for the second quarter of 1996 increased by $5,982,000,
or 33%, from $18,310,000 in the second quarter of 1995 to $24,292,000 in the
second quarter of 1996. Revenues for the six months ended June 30, 1996
increased by $13,724,000, or 41%, from $33,499,000 for the six months ended
June 30, 1995 to $47,223,000 for the six months ended June 30, 1996.
The increases in revenues for the three and six months ended June 30, 1996 as
compared to the three and six months ended June 30, 1995 is primarily due to
additional videoconferencing-related revenues generated by the
Company's systems integration and service operations which were acquired in
the fourth quarter of 1995.
The following table summarizes the Company's group system unit sales
activity:
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
Large group conferencing systems 403 296 757 577
Small group conferencing systems 27 117 55 209
Multipoint control units 24 33 47 61
----- ---- ----- -----
Total units 454 446 859 847
===== ==== ===== =====
The increase in sales of the Company's large group conferencing systems
during the three and six months ended June 30, 1996 in comparison with the
three and six months ended June 30, 1995 is due to the introduction of the
MediaMax-based Leadership Conferencing systems during the fourth quarter of
1995 and the Lynx-based Team Conferencing Model 2000 systems during the first
quarter of 1996. Sales of these two new products represented approximately
84% and 65%, respectively, of large group conferencing revenues for the three
and six months ended June 30, 1996. The decrease in sales of the Company's
small group conferencing systems during the three and six months ended June
30, 1996 in comparison with the three and six months ended June 30, 1995 is
due to the reduction of sales of the S-Max-based conferencing systems due to
more competitive products being released by the Company's competitors. The
Company's announcement in late June 1996 of the Lynx-based Team Conferencing
Model 1000 system is positioned to regain market presence in the small group
system segment.
The average selling price for a group system sold in the second quarter of
1996 was $37,000 compared to $41,000 in the second quarter of 1995. The
decrease in the average selling price is primarily attributable to the
increase in shipments during the second quarter of 1996 of the Lynx-based
Team Conferencing systems which generally carry a lower average selling price
than the Company's MediaMax-based products.
Desktop system products represented approximately 3% and 1%, respectively, of
product sales for the three months ended June 30, 1996 and 1995 and 4% and
1%, respectively, of product sales for the six months ended June 30, 1996 and
1995.
7
International sales contributed approximately 16% and 17%, respectively, of
product revenues for the second quarter of 1996 and 1995 and 17% and 19%,
respectively, of product revenues for the six months ended June 30, 1996 and
1995.
While the Company strives for consistent revenue growth,there can be no
assurance that consistent revenue growth or profitability can be
achieved. The Company's expense levels are based, in part, on its
expectations as to future revenue levels, which are difficult to
predict, partly due to the Company's strategy of distributing its
products through resellers. Historically, a significant portion of the
Company's shipments have been made in the last month of each quarter. As a
result, a shortfall in revenue compared to expectations may not evidence
itself until late in the quarter. If revenue levels are below
expectations, operating results may be materially and adversely affected. In
addition, the Company's quarterly and annual results may fluctuate as
a result of many factors, including price reductions, delays in the
introduction of new products, delays in purchase decisions due to new product
announcements by the Company or its competitors, cancellations or delays of
orders, interruptions or delays in supplies of key components, changes in
reseller base, customer base, business or product mix and seasonal patterns
and other shifts of capital spending by customers.
Gross margin. Gross margin as a percentage of total revenue was 41% for the
three and six months ended June 30, 1996 compared to 53% for the three and
six months ended June 30, 1995. A portion of the decrease in gross margin
results from a shift in the sales mix such that product revenues represented
a smaller percentage of total revenues for the three and six months ended
June 30, 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 systems integration and service operations
carry a lower gross margin percentage than its product revenues such that the
Company's overall gross margin is lower. 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 second
quarter of 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 increased inventory reserves during the second quarter of 1996 to
reserve for potential inventory issues related to its product transitions.
The increase in inventory reserves had the effect of lowering the Company's
gross margins in the second quarter of 1996.
As discussed above, the Company anticipates that product gross margins
will continue to be lower than those generated in 1995. The
Company expects that overall price competitiveness in the industry
will continue to become more intense as users of videoconferencing systems
attempt to balance performance, functionality and cost. The Company's gross
margin is subject to fluctuation based on pricing, production costs and sales
mix.
Selling, general and administrative. Selling, general and administrative
expenses increased by $3,165,000, or 55%, from $5,776,000 in the second
quarter of 1995 to $8,941,000 in the second quarter of 1996. Selling, general
and administrative expenses increased by $6,247,000, or 56%, from $11,121,000
for the six months ended June 30, 1995 to $17,368,000 for the six months
ended June 30, 1996. Selling, general and administrative expenses as a
percentage of revenues were 37% and 32% for the three months ended June 30,
1996 and 1995, respectively, and were 37% and 33% for the six months ended
June 30, 1996 and 1995, respectively.
8
The increase in selling, general and administrative expenses is due to growth
in the Company's revenues and operating activities and due to the incremental
selling, general and administrative expenses incurred during the three and
six months ended June 30, 1996 which relate to the Company's systems
integration and service operations which were acquired in the fourth quarter
of 1995.
Research and development. Research and development expenses increased by
$952,000, or 34%, from $2,838,000 in the second quarter of 1995 to $3,790,000
in the second quarter of 1996. Research and development expenses increased by
$1,940,000, or 35%, from $5,505,000 for the six months ended June 30, 1995 to
$7,446,000 for the six months ended June 30, 1996. Research and development
expenses as a percentage of revenues were 16% and 15% for the three months
ended June 30, 1996 and 1995, respectively, and were 16% and 16% for the six
months ended June 30, 1996 and 1995, respectively.
Research and development expenses increased during the three and six months
ended June 30, 1996 in comparison with the same periods in 1995 primarily due
to the Company's efforts related to the development of its new products which
were introduced in the fourth quarter of 1995 and the first and second
quarters of 1996. Additionally, the increase in research and development
expenses resulted from the reassignment during 1995 of Company research and
development personnel who had been involved with the Intel joint development
projects to the Company's other projects.
Although the percentage of revenues invested by the Company in research and
development may vary from period to period, the Company is committed to
investing in its research and development programs. All of the Company's
research and development costs and internal software development costs have
been expensed as incurred.
During the third quarter of 1993, the Company entered into a Development and
License Agreement ("Development Agreement") with Intel Corporation ("Intel").
As a part of this Development Agreement, Intel agreed to advance the Company
$3 million of funds in order to enable the Company to jointly research and
develop videoconferencing products with Intel. Of the $3 million advance,
$906,000 remains at March 31, 1996 for future development projects. As of
June 30, 1996, the Company had no research and development activities in
process or planned related to the Development Agreement.
Consistent with many companies in the technology industry, the Company's
business model is characterized by a very high degree of operating leverage.
The Company's expense levels are based, in significant part, on the Company's
expectations as to future revenues and are therefore relatively fixed in the
short term. If revenue levels fall below expectations, net income is likely
to be disproportionately adversely affected. There can be no assurance that
the Company will be able to increase or even maintain its current level of
revenues on a quarterly or annual basis in the future. Due to all of the
foregoing factors, it is possible that in one or more future quarters the
Company's operating results will be below the expectations of public
securities market analysts. In such event, the price of the Company's Common
Stock would likely be materially adversely affected.
Subsequent to June 30, 1996, the Company finalized its plan to realign its
resources into Customer Business Units. These Customer Business Units will
provide the framework for moving decision making closer to the customer and
for responding to customer requirements quickly. The realignment of resources
will result in the Company recording a charge subsequent to June 30, 1996 of
approximately $750,000 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 Customer Business Unit
model.
9
Other income, net. Other income, net increased by $565,000, or 231%, from
$245,000 in the second quarter of 1995 to $810,000 in the second quarter of
1996. Other income, net increased by $1,104,000, or 148%, from $746,000 for
the six months ended June 30, 1995 to $1,850,000 for the six months ended
June 30, 1996. The increase in other income, net is primarily attributable
to interest income earned during the three and six months ended June 30, 1996
on the Company's cash and investment balances. This increase was a result of
the completion of a secondary offering in the fourth quarter of 1995, which
netted approximately $57,000,000 to the Company.
Net income (loss). The Company generated a net loss of $2,328,000, or $.16
per share, during the second quarter of 1996 compared to net income of
$1,385,000, or $.13 per share, during the second quarter of 1995. The Company
generated a net loss of $4,302,000, or $.30 per share, during the six months
ended June 30, 1996 compared to net income of 1,839,000, or $.17 per share,
during the six months ended June 30, 1995.
The net loss incurred during the three and six months ended June 30, 1996 was
the result of lower gross margins generated by the Company and incremental
operating expenses related to the growth in the Company's operations,
revenues and systems integration and service operations, which were acquired
in the fourth quarter of 1995. The net income in the three and six months
ended June 30, 1995 was the result of revenues increasing at a faster rate
than operating expenses and of higher gross margins generated by the Company.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting and Disclosure of Stock-Based Compensation." SFAS No. 123
introduces a fair-value based method of accounting for stock-based
compensation. It encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options, and other equity
instruments to employees based on their estimated fair market value on the
date of grant. Companies that choose not to adopt the new rules will
continue to apply the existing accounting rules contained in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
If the fair value accounting rules are not adopted, SFAS No. 123 requires the
disclosure of pro forma net income and earnings per share as if the new
method had been adopted. SFAS No. 123 is effective for fiscal years
beginning after December 15, 1995. The Company has elected not to
adopt the new fair value accounting rules provided by SFAS No. 123. As
such, SFAS No. 123 will not have any effect on the Company's financial
position or results of operations.
On May 23, 1996, the Company's Board of Directors approved a change in the
Company's fiscal year end from December 31 to July 31. The transition period
resulting from the change in fiscal year will be reported on the Company's
Annual Report on Form 10-K for the transition period ended July 31, 1996.
Improvement in the Company's financial performance will depend on the
Company's ability to continue to significantly increase revenues through
growth in the Company's distribution channels and the successful introduction
of its new products, to generate improving gross margins and to control the
growth of operating expenses. There can be no assurances that the Company
will be successful in achieving these objectives.
10
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had working capital of $71,210,000, including
$55,402,000 in cash, cash equivalents and short-term investments. The primary
uses of cash during the six months ended June 30, 1996 and 1995 were to
purchase property and equipment and leasehold improvements and to fund
working capital needs required to support the Company's growth. Cash used in
operating activities was $1,529,000 for the six months ended June 30, 1996,
primarily due to an increase in accounts receivable and inventories,
partially offset by an increase in accounts payable. Cash provided by
operating activities was $299,000 for the six months ended June 30, 1995 and
was primarily the result of the net income generated by the Company during
the period.
Cash flows from investing activities were the result of capital expenditures
of $6,631,000 and $3,873,000 for the six months ended June 30, 1996 and 1995,
respectively. The increase in capital expenditures is primarily related to
increases in demonstration and support videoconferencing systems acquired
during the period. Cash was provided by investing activities related to
short-term investments as such investments are periodically utilized to
provide cash needed to support the Company's growth.
Cash flows from financing activities were the result of stock issuances
generating $356,000 and $1,086,000 for the six months ended June 30, 1996 and
1995, respectively, which relate to stock sold under the Company's Employee
Stock Purchase Plan (the "Purchase Plan"). Fluctuations in purchases of
stock under the Purchase Plan are attributable to changes in the Company's
stock price.
At June 30, 1996, the Company had a $10,000,000 revolving line of credit
available with a financial institution. No amounts have been drawn or are
outstanding under the line of credit. The Company's principal sources of
liquidity at June 30, 1996 consist of $55,402,000 of cash, cash equivalents
and short-term investments and amounts available under the Company's
revolving line of credit. The Company believes that existing cash and cash
equivalent balances, short-term investments and cash generated from product
sales and its revolving line of credit will be sufficient to meet the
Company's cash and capital requirements for at least the next 12 months.
GENERAL
The markets for the Company's products are characterized by a highly
competitive and rapidly changing environment in which operating results are
subject to the effects of frequent product introductions, manufacturing
technology innovations and rapid fluctuations in product demand. While the
Company attempts to identify and respond to these changes as soon as
possible, prediction of and reaction to such events will be an ongoing
challenge and may result in revenue shortfalls during certain periods of
time.
11
The Company's future results of operations and financial condition could be
impacted by the following factors, among others: trends in the
videoconferencing market, introduction of new products by competitors,
increased competition due to the entrance of other companies into the
videoconferencing market - especially more established companies with greater
resources than those of the Company, delay in the introduction of higher
performance products, market acceptance of new products introduced by the
Company, price competition, interruption of the supply of low-cost products
from third-party manufacturers, changes in general economic conditions in any
of the countries in which the Company does business, adverse legal
disputes and delays in purchases relating to federal government
procurement.
Due to the factors noted above and elsewhere in Management's Discussion and
Analysis of Financial Condition and Results of Operations, the Company's
past earnings and stock price has been, and future earnings and stock
price potentially may be subject to significant volatility,
particularly on a quarterly basis. Past financial performance should not be
considered a reliable indicator of future performance, and investors are
cautioned in using historical trends to anticipate results or trends in
future periods. Any shortfall in revenue or earnings from the levels
anticipated by securities analysts could have an immediate and significant
effect on the trading price of the Company's Common Stock in any given
period. Also, the Company participates in a highly dynamic industry which
often contributes to the volatility of the Company's Common Stock price.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was duly convened on May 23, 1996. At the
meeting, the following nominees were elected directors by the stockholders by
the following vote:
NOMINEE FOR WITHHELD BROKER NON-VOTES
F.H. (Dick) Moeller 12,929,084 121,015 -
Max D. Hopper 12,924,286 125,813 -
John V. Jaggers 12,926,111 123,988 -
Eric L. Jones 12,928,236 121,863 -
Gordon H. Matthews 12,923,686 126,413 -
The stockholders voted to approve the proposal to adopt the VTEL Corporation
1996 Stock Option Plan by the following vote:
FOR AGAINST ABSTAIN BROKER NON-VOTES
10,679,902 1,258,406 100,067 1,011,724
12
The stockholders ratified the Board of Directors' appointment of Price
Waterhouse, independent accountants, as the Company's independent auditors
for the year ending December 31, 1996 by the following vote:
FOR AGAINST ABSTAIN BROKER NON-VOTES
12,941,461 69,928 38,710 -
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The following Reports on Form 8-K have been filed:
ITEM REPORTED DATE FILED
Change in Fiscal Year May 23, 1996
Adoption of Rights Plan and July 15, 1996
Amendment of Bylaws
* * *
13
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.
VTEL CORPORATION
August 9, 1996 By: /s/ Rodney S. Bond
--------------------------
Rodney S. Bond
Vice President-Finance
(Chief Financial Officer
and Principal Accounting Officer)
14
5
3-MOS
JUL-31-1996
APR-01-1996
JUN-30-1996
1,860,000
53,542,000
23,091,000
(262,000)
12,381,000
92,089,000
22,707,000
(9,485,000)
120,695,000
20,879,000
0
0
0
143,000
124,107,000
120,695,000
24,292,000
24,292,000
(14,459,000)
(12,971,000)
810,000
0
0
(2,328,000)
0
(2,328,000)
0
0
0
(2,328,000)
(.16)
(.16)
