Use these links to rapidly review the document ALLIANCE DATA SYSTEMS CORPORATION INDEX
UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
For the Quarterly Period Ended June 30, 2004
OR
For the transition period from to
Commission File Number: 001-15749
ALLIANCE DATA SYSTEMS CORPORATION (Exact Name of Registrant as Specified in its Charter)
Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o
As of July 30, 2004, 80,856,567 shares of the registrant's common stock, par value $0.01 per share, were outstanding.
ALLIANCE DATA SYSTEMS CORPORATION INDEX
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PART I
Item 1. Financial Statements
ALLIANCE DATA SYSTEMS CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)
See accompanying notes to unaudited condensed consolidated financial statements.
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ALLIANCE DATA SYSTEMS CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
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ALLIANCE DATA SYSTEMS CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
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ALLIANCE DATA SYSTEMS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements included herein have been prepared by Alliance Data Systems Corporation ("ADSC" or, including its wholly owned subsidiaries, the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2003.
The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
For purposes of comparability, certain prior period amounts have been reclassified to conform with the current year presentation. Such reclassifications have no impact on previously reported net income.
2. SHARES USED IN COMPUTING NET INCOME PER SHARE
The computation of the number of shares used in calculating basic and diluted net income per share is as follows:
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3. INTANGIBLE ASSETS
Intangible assets consist of the following:
4. DEBT
Debt consists of the following:
The Company amended its Credit Facility (364-Day) by and among the Company, the guarantors from time to time party thereto, the banks from time to time party thereto, and Harris Trust and Savings Bank, as Administrative Agent, as of April 8, 2004, to extend for an additional 364 days the terms of the previous Credit Facility (364-Day) dated as of April 10, 2003, by and among the same parties. As of June 30, 2004, no amounts have been drawn against the Credit Facility (364-Day).
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Certificates of deposit during the six months ended June 30, 2004 decreased as a result of normal seasonal trends and the sale of receivables to the securitization trusts.
As of June 30, 2004, the certificates of deposit had effective annual fixed rates ranging from 1.6% to 3.3%, and the credit facilities had an average interest rate of 3.1%.
5. DEFERRED REVENUE
A reconciliation of deferred revenue for the AIR MILES® Reward Program is as follows (in thousands):
6. INCOME TAXES
For the three and six months ended June 30, 2004, the Company has utilized an effective tax rate of 37.7% to calculate its provision for income taxes. In accordance with Accounting Principles Board ("APB") Opinion No. 28, Interim Financial Reporting, this effective tax rate is the Company's expected annual effective tax rate for calendar year 2004 based on all known variables.
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7. COMPREHENSIVE INCOME
The components of comprehensive income, net of tax effect, are as follows:
8. SEGMENT INFORMATION
Consistent with prior periods, the Company classifies its businesses into three segments: Transaction Services, Credit Services and Marketing Services.
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9. STOCK COMPENSATION
At June 30, 2004, the Company had three stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations. No stock-based employee compensation cost is reflected in net income for stock options, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and net income per share if the
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Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation.
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10. RESTATEMENT
Subsequent to the issuance of its condensed consolidated financial statements for the three months and six months ended June 30, 2003, the Company determined that the translation of the Company's Canadian subsidiary's financial statements was not in accordance with SFAS No. 52, "Foreign Currency Translation". The Company had been using historical exchange rates in the translation of deferred revenue and goodwill instead of the correct current period exchange rates. As a result, the financial statements presented for three months and six months ended June 30, 2003, have been restated. A summary of the significant effects of the restatement is as follows:
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto presented in this quarterly report and the notes thereto included in our Annual Report filed on Form 10-K for the year ended December 31, 2003.
The accompanying management's discussion and analysis of financial condition and results of operations gives effect to the restatement of the results of operations for the three and six months ended June 30, 2003 as discussed in Note 10 to the unaudited condensed consolidated financial statements.
Year to Date in Review Highlights
Our year to date 2004 results of operations were largely impacted by new and renewed agreements with significant clients and two capital market transactions. During the first six months of 2004, we signed or renewed agreements with several significant clients and sponsors:
Additionally, in the first six months of 2004, we completed two significant capital market transactions:
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2003.
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Use of Non-GAAP Financial Measures
EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus depreciation and amortization, fair value loss on interest rate derivative, interest expense, other debt-related expenses and provision for income taxes. Operating EBITDA is a non-GAAP financial measure equal to EBITDA adjusted for the changes in deferred revenue and the change in redemption settlement assets. We have presented EBITDA and operating EBITDA because we use them to monitor compliance with the financial covenants in our credit agreements, such as debt-to-operating EBITDA and operating EBITDA to interest expense ratios. We also use EBITDA and operating EBITDA as an integral part of our internal reporting to measure the performance of our reportable segments and to evaluate the performance of our senior management. Therefore, we believe that EBITDA and operating EBITDA provide useful information to our investors regarding our performance and overall results of operations. We also present EBITDA margin, which is EBITDA divided by revenue. EBITDA and operating EBITDA are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either operating income or net income as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. In addition, EBITDA and operating EBITDA are not intended to represent funds available for dividends, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The EBITDA and operating EBITDA measures presented in this Form 10-Q may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements. The following sets forth a reconciliation of net income to EBITDA and operating EBITDA:
Note: Operating EBITDA is affected by fluctuations in foreign exchange rates and transfers of cash to redemption settlement assets.
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Results of Operations
Three months ended June 30, 2003 compared to the three months ended June 30, 2004
Revenue. Total revenue increased $49.4 million, or 19.7%, to $300.5 million for the three months ended June 30, 2004 from $251.0 million for the comparable period in 2003. The increase was due to a 12.7% increase in Transaction Services revenue, a 24.5% increase in Credit Services revenue and an 18.9% increase in Marketing Services revenue as follows:
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clients. Additional growth in transaction services revenue came from an increase in core transactions processed of 32.1% as our petroleum clients experienced higher transaction volume due to higher gas prices. Higher gas prices drive more frequent visits by consumers to our petroleum clients.
Operating Expenses. Total operating expenses, excluding depreciation and amortization, increased $33.9 million, or 17.2%, to $231.5 million during the three months ended June 30, 2004 from $197.6 million during the comparable period in 2003. Total EBITDA margin increased to 23.0% for the three months ended June 30, 2004 from 21.3% for the comparable period in 2003, primarily due to increased margins for Transaction Services and Credit Services, partially offset by a decreased margin for Marketing Services.
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Operating Income. Operating income increased $12.0 million, or 34.2%, to $47.0 million for the three months ended June 30, 2004 from $35.0 million during the comparable period in 2003. Operating income increased due to the revenue and expense factors discussed above.
Interest Expense. Interest expense decreased $5.4 million, or 76.1%, to $1.7 million for the three months ended June 30, 2004 from $7.1 million for the comparable period in 2003 as interest expense in 2003 was impacted by a loss on the termination of a cross currency interest rate swap. The interest rate swap was terminated with the refinancing of the prior credit facilities and repayment of the associated term debt.
Taxes. Income tax expense increased $8.3 million to $17.0 million for the three months ended June 30, 2004 from $8.7 million in 2003 due to an increase in income before income taxes. Our effective tax rate of 37.7% in 2004 improved from the 38.2% effective rate in 2003.
Six months ended June 30, 2003 compared to the six months ended June 30, 2004
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Revenue. Total revenue increased $121.6 million, or 24.8%, to $612.9 million for the six months ended June 30, 2004 from $491.2 million for the comparable period in 2003. The increase was due to a 16.2% increase in Transaction Services revenue, a 27.5% increase in Credit Services revenue and a 26.0% increase in Marketing Services revenue as follows:
Operating Expenses. Total operating expenses, excluding depreciation and amortization, increased $70.2 million, or 17.8%, to $465.0 million during the six months ended June 30, 2004 from $394.8 million during the comparable period in 2003. Total EBITDA margin increased to 24.1% for the six months ended June 30, 2004 from 19.6% for the comparable period in 2003, primarily due to increased margins for Transaction Services, Credit Services and Marketing Services.
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Operating Income. Operating income increased $41.9 million, or 69.1%, to $102.5 million for the six months ended June 30, 2004 from $60.6 million during the comparable period in 2003. Operating income increased due to the revenue and expense factors discussed above.
Interest Expense. Interest expense decreased $6.9 million, or 59.0%, to $4.8 million for the six months ended June 30, 2004 from $11.7 million for the comparable period in 2003 as interest expense in 2003 was impacted by a loss on the termination of a cross currency interest rate swap. The interest rate swap was terminated with the refinancing of the prior credit facilities and repayment of the associated term debt
Other Debt-Related Expenses. During the six months ended June 30, 2003, we wrote off $4.3 million of debt issuance costs related to the refinancing of our prior credit facilities and repayment of a subordinated note.
Taxes. Income tax expense increased $20.2 million to $36.5 million for the six months ended June 30, 2004 from $16.3 million in 2003 due to an increase in income before income taxes. Our effective tax rate of 37.7% in 2004 improved from the 38.2% effective rate in 2003.
Asset Quality
Our delinquency and net charge-off rates reflect, among other factors, the credit risk of credit card receivables, the average age of our various credit card account portfolios, the success of our collection and recovery efforts, and general economic conditions. The average age of our credit card portfolio affects the stability of delinquency and loss rates of the portfolio. We continue to focus our resources on refining our credit underwriting standards for new accounts and on collections and post charge-off recovery efforts to minimize net losses. The vintage of a portfolio is a significant indicator of the quality of credit card receivables. At June 30, 2004, 45.5% of securitized accounts with balances and 40.2% of securitized receivables were less than 24 months old. These vintages are consistent with our historical trends.
Delinquencies. A credit card account is contractually delinquent if we do not receive the minimum payment by the specified due date on the cardholder's statement. It is our policy to continue to accrue interest and fee income on all credit card accounts, except in limited circumstances, until the account balance and all related interest and other fees are charged off or paid after 90 days. When an account becomes delinquent, we print a message on the cardholder's billing statement requesting payment. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account rolling to a more delinquent status. The collection system then recommends a collection strategy for the past due account based on the collection score and account balance and dictates the contact schedule and collections priority for the account. If we are unable to make a collection after exhausting all in-house efforts, we engage collection agencies and outside attorneys to continue those efforts.
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The following tables reflect statistics for our securitization trust as reported to the trustee for compliance reporting. Management also uses core receivables to manage and analyze the portfolios. Core receivables are defined as securitized receivables less those receivables whereby we do not assume any risk of loss. These losses are passed on to the respective client.
The following table presents the delinquency trends of our securitized credit card portfolio:
Net Charge-Offs. Net charge-offs comprise the principal amount of losses from cardholders unwilling or unable to pay their account balances, as well as bankrupt and deceased cardholders, less current period recoveries. Net charge-offs exclude accrued finance charges and fees. The following table presents our net charge-offs for the periods indicated on a securitized basis. Average credit card portfolio outstanding represents the average balance of the securitized receivables at the beginning of each month in the period indicated.
Liquidity and Capital Resources
Operating Activities. We have historically generated cash flow from operating activities, as detailed in the table below, although that amount may vary based on fluctuations in working capital and the timing of merchant settlement activity.
We generated cash flow from operating activities before change in merchant settlement activity of $179.3 million for the six months ended June 30, 2004 compared to $48.6 million for the comparable period in 2003. The increase in operating cash flows before change in merchant settlement activity is related primarily to the proceeds from the sale of credit card receivable portfolios to our securitization trusts as well as improved operating results for the six months ended June 30, 2004, in addition to working capital movements. Merchant settlement activity fluctuates significantly depending on the day in which the quarter ends. We utilize our cash flow from operations for ongoing business operations, acquisitions and capital expenditures.
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Investing Activities. We had cash provided by investing activities of $55.1 million for the six months ended June 30, 2004 compared to net cash used of $23.7 million for the comparable period in 2003. Significant components of investing activities are as follows:
Financing Activities. Net cash used in financing activities was $164.5 million for the six months ended June 30, 2004 compared to $18.4 million of net cash provided in the comparable period in 2003. Our financing activities during the six months ended June 30, 2004 relate primarily to borrowings and repayments under our revolving credit facilities. Financing activities during the six months ended June 30, 2003 were impacted by the proceeds from a public offering of common stock.
Liquidity Sources. In addition to cash generated from operating activities, we have four main sources of liquidity: securitization program, certificates of deposit issued by World Financial Network National Bank, our credit facilities and issuances of equity securities. We believe that internally generated funds and existing sources of liquidity are sufficient to meet current and anticipated financing requirements during the next 12 months.
Securitization Program and Off-Balance Sheet Transactions. Since January 1996, we have sold, sometimes through WFN Credit Company, LLC and WFN Funding Company II, LLC, substantially all of the credit card receivables owned by our credit card bank, World Financial Network National Bank, to World Financial Network Credit Card Master Trust, World Financial Network Credit Card Master Note Trust, World Financial Network Credit Card Master Trust II and World Financial Network Credit Card Master Trust III, which we refer to as the WFN Trusts, as part of our securitization program. This securitization program is the primary vehicle through which we finance our private label credit card receivables.
As public notes approach maturity, the notes will enter a controlled accumulation period, which typically lasts three months. During the controlled accumulation period, we will either need to arrange
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an additional private conduit facility or use our own balance sheet to finance the controlled accumulation until such time as we can issue a new public series in the public markets.
In May 2004, the WFN Trusts issued $390.0 million of Class A Series 2004-A asset backed notes that have an interest rate not to exceed one-month LIBOR plus 0.18% per year and that will mature in May 2009, $42.5 million of Class B Series 2004-A asset backed notes that have an interest rate not to exceed one-month LIBOR plus 0.50% per year and that will mature in May 2009 and $67.5 million of Class C Series 2004-A asset backed notes that have an interest rate not to exceed one-month LIBOR plus 1.00% per year and that will mature in May 2009.
The notes are rated AAA through BBB, or its equivalent, by each of Standard and Poor's, Moody's and Fitch. The WFN Trusts entered into interest rate swaps that effectively fix the interest rates on the notes starting at 5.9% and averaging 4.7% over the term of the interest rate swap.
As of June 30, 2004, the WFN Trusts had over $3.0 billion of securitized credit card receivables. Securitizations require credit enhancements in the form of cash, spread deposits and additional receivables. The credit enhancement is principally based on the outstanding balances of the series issued by the WFN Trusts and by the performance of the private label credit cards in the securitization trust. During the period from November to January, the WFN Trusts are required to maintain a credit enhancement level of 6% of securitized credit card receivables. Certain of the WFN Trusts are required to maintain a level of between 4% and 7% for the remainder of the year. Accordingly, at December 31, the WFN Trusts typically have their highest balance of credit enhancement assets. We intend to utilize our securitization program for the foreseeable future.
If World Financial Network National Bank were not able to regularly securitize the receivables it originates, our ability to grow or even maintain our credit services business would be materially impaired as we would be severely limited in our financing ability. World Financial Network National Bank's ability to effect securitization transactions is impacted by the following factors, some of which are beyond our control:
We believe that the conditions to securitize private label receivables are favorable for us. We plan to continue using our securitization program as our primary financing vehicle.
Once World Financial Network National Bank securitizes receivables, the agreement governing the transaction contains covenants that address the receivables' performance and the continued solvency of the retailer where the underlying sales were generated. In the event one of those or other similar covenants is breached, an early amortization event could be declared, in which case the trustee for the securitization trust would retain World Financial Network National Bank's interest in the related receivables, along with the excess interest income that would normally be paid to World Financial Network National Bank, until such time as the securitization investors are fully repaid. The occurrence of an early amortization event would significantly limit, or even negate, our ability to securitize additional receivables. There have been no early amortization events as of June 30, 2004.
Certificates of Deposit. We utilize certificates of deposit to finance the operating activities of our credit card bank subsidiary, World Financial Network National Bank, and to fund securitization enhancement requirements. World Financial Network National Bank issues certificates of deposit in denominations of $100,000 in various maturities ranging between three months and two years and with
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effective annual fixed rates ranging from 1.6% to 3.3%. As of June 30, 2004, we had $51.5 million of certificates of deposit outstanding. Certificates of deposit during the six months ended June 30, 2004 decreased as a result of normal seasonal trends and the sale of receivables to the securitization trusts. Certificate of deposit borrowings are subject to regulatory capital requirements.
Credit Facilities. On April 10, 2003, we entered into three new credit facilities to replace our prior credit facilities. The first facility provides for a $150.0 million revolving commitment and matures in April 2006. The second facility is a 364 day facility and provides for an additional $150.0 million revolving commitment that would have matured in April 2004. The third facility provides for a $100.0 million revolving commitment to Loyalty Management Group Canada Inc., a wholly owned Canadian subsidiary, and matures in April 2006. The covenants contained in the three credit facilities are substantially identical. We are in compliance with our covenants.
We amended our Credit Facility (364-Day) by and among us, the guarantors from time to time party thereto, the banks from time to time party thereto, and Harris Trust and Savings Bank, as Administrative Agent, as of April 8, 2004, to extend for an additional 364 days the terms of the previous Credit Facility (364-Day) dated as of April 10, 2003, by and among the same parties. As of June 30, 2004, no amounts have been drawn against the Credit Facility (364-Day).
Advances under the credit facilities are in the form of either base rate loans or eurodollar loans. The interest rate on base rate loans fluctuates based upon the higher of (1) the interest rate announced by the administrative agent as its "prime rate" and (2) the Federal funds rate plus 0.5%, in each case with no additional margin. The interest rate on eurodollar loans fluctuates based upon the rate at which eurodollar deposits in the London interbank market are quoted plus a margin of 1.0% to 1.5% based upon the ratio of total debt under the credit facilities to consolidated Operating EBITDA, as each term is defined in the credit facilities. The credit facilities are secured by pledges of stock of certain of our subsidiaries and pledges of certain intercompany promissory notes.
At June 30, 2004, we had borrowings of $149.2 million outstanding under these credit facilities (with an average interest rate of 3.1%), we issued no letters of credit, and we had available unused borrowing capacity of approximately $250.8 million. The credit facilities limit our aggregate outstanding letters of credit to $50.0 million. We can obtain an increase in the total commitment under the credit facilities of up to $50.0 million if we are not in default under the credit facilities, one or more lenders agrees to increase its commitment and the administrative agent consents.
We utilize our credit facilities and excess cash flows from operations to support our acquisition strategy and to fund working capital and capital expenditures.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
There has been no material change from our Annual Report on Form 10-K for the year ended December 31, 2003 related to our exposure to market risk from off-balance sheet risk, interest rate risk, credit risk, and redemption reward risk.
Foreign Currency Exchange Risk. We are exposed to fluctuations in the exchange rate between the U.S. and the Canadian dollar through our significant Canadian operations. We do not hedge our net investment exposure in our Canadian subsidiary.
Item 4. Controls and Procedures
Evaluation
As of June 30, 2004, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2004, our disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
There have been no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
This Form 10-Q and the documents incorporated by reference herein contain 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. Such statements may use words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management's beliefs and assumptions, using information currently available to us. Although we believe that the expectations reflected in the forward-looking statements are reasonable, these forward-looking statements are subject to risks, uncertainties and assumptions, including those discussed in the "Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2003.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements contained in this quarterly report reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
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PART II
Item 1. Legal Proceedings.
From time to time, we are involved in various claims and lawsuits arising in the ordinary course of our business that we believe will not have a material adverse affect on our business or financial condition, including claims and lawsuits alleging breaches of contractual obligations.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchase of Equity Securities.
We do not currently have a common stock repurchase program in place. However, the administrator of our 401(k) and Retirement Savings Plan purchased shares of our common stock for the benefit of the employees who participated in that portion of the plan during the second quarter of 2004. The following table presents information with respect to those purchases of our common stock made during the three months ended June 30, 2004:
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
On June 8, 2004, the annual meeting of stockholders was held in Dallas, Texas for our stockholders of record on April 14, 2004. Each of Lawrence M. Benveniste, D. Keith Cobb and Kenneth R. Jensen was elected by a plurality of votes as Class I directors to serve until the annual meeting of stockholders in 2007 and until their successors are duly elected and qualified. Dr. Benveniste received 73,039,630 votes for and 4,428,557 votes withheld/against. Mr. Cobb received 72,871,734 votes for and 4,596,453 votes withheld/against. Mr. Jensen received 70,899,050 votes for and 6,569,137 votes withheld/against.
Item 5. Other Information.
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Item 6. Exhibits and Reports on Form 8-K.
EXHIBIT INDEX
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On July 21, 2004, we furnished to the SEC a Current Report on Form 8-K, dated July 21, 2004. The Current Report on Form 8-K relates to our earnings for the second quarter of 2004.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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