-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, FVMu7MEJDcy9FSvGB51fk34XLUI3JAIxsCBptw9mzJeevwj5wBU8L0FfysZ5ImzN KnslbynGGV5IYFGF0+wF3A== 0000701811-94-000019.txt : 19940812 0000701811-94-000019.hdr.sgml : 19940812 ACCESSION NUMBER: 0000701811-94-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MENTOR GRAPHICS CORP CENTRAL INDEX KEY: 0000701811 STANDARD INDUSTRIAL CLASSIFICATION: 7373 IRS NUMBER: 930786033 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13442 FILM NUMBER: 94543043 BUSINESS ADDRESS: STREET 1: 8005 SW BOECKMAN RD CITY: WILSONVILLE STATE: OR ZIP: 97070 BUSINESS PHONE: 5036857000 10-Q 1 QUARTERLY REPORT Page 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended June 30, 1994. Commission File No. 0-13442 MENTOR GRAPHICS CORPORATION (Exact name of registrant as specified in its charter) Oregon 93-0786033 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (503) 685-7000 NO CHANGE Former name, and former fiscal year, if changed since last report 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 Number of shares of common stock, no par value, outstanding as of August 1, 1994: 48,525,837 MENTOR GRAPHICS CORPORATION Index to Form 10Q PART I FINANCIAL INFORMATION Page Number Item 1. Financial Statements Consolidated Statements of Operations for the three 3 months ended June 30, 1994 and 1993 Consolidated Statements of Operations for the six 4 months ended June 30, 1994 and 1993 Consolidated Balance Sheets as of June 30, 1994 5 and December 31, 1993 Consolidated Statements of Cash Flows for the 6 six months ended June 30, 1994 and 1993 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8-12 PART II OTHER INFORMATION Item 4. Submission of matters to a Vote of Security Holders 13-14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 14 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Mentor Graphics Corporation Consolidated Statements of Operations (In thousands, except net income per share) (Unaudited) Three Months Ended June 30, 1994 1993 Revenues: System and software $ 43,485 $ 51,427 Service and support 38,045 36,989 Total revenues 81,530 88,416 Cost of revenues: System and software 8,819 13,412 Service and support 17,010 18,790 Total cost of revenues 25,829 32,202 Gross margin 55,701 56,214 Expenses: Research and development (note 3) 17,032 20,043 Marketing, general and administration 34,241 35,538 Total expenses 51,273 55,581 Operating income 4,428 633 Other income (expense), net 331 (271) Income before income taxes 4,759 362 Provision for income taxes 960 72 Net income $ 3,799 $ 290 Net income per common and common equivalent share $ .08 $ .01 Weighted average number of common and common equivalent shares outstanding 49,601 47,308 See accompanying notes to unaudited consolidated financial statements. Mentor Graphics Corporation Consolidated Statements of Operations (In thousands, except net income (loss) per share) (Unaudited) Six Months Ended June 30, 1994 1993 Revenues: System and software $ 92,324 $ 100,269 Service and support 73,657 70,786 Total revenues 165,981 171,055 Cost of revenues: System and software 19,116 27,457 Service and support 33,245 35,013 Total cost of revenues 52,361 62,470 Gross margin 113,620 108,585 Expenses: Research and development (note 3) 35,576 39,081 Marketing, general and administration 69,442 72,188 Total expenses 105,018 111,269 Operating income (loss) 8,602 (2,684) Other income (expense), net 889 (524) Income (loss) before income taxes 9,491 (3,208) Provision for income taxes 1,900 800 Net income (loss) $ 7,591 $ (4,008) Net income (loss) per common and common equivalent share $ .15 $ (.09) Weighted average number of common and common equivalent shares outstanding 49,571 45,983 See accompanying notes to unaudited consolidated financial statements. Mentor Graphics Corporation Consolidated Balance Sheets (In thousands) As Of As Of June 30, 1994 December 31,1993 (Unaudited) Assets Current assets: Cash and cash equivalents $ 110,156 $ 95,958 Short-term investments 7,087 13,610 Trade accounts receivable, net 80,962 72,655 Other receivables 4,054 4,167 Inventory 677 2,299 Prepaid expenses and other (note 2) 10,980 9,399 Total current assets 213,916 198,088 Property, plant and equipment, net 101,522 104,912 Cash and investments, long-term 30,000 30,000 Other assets (note 3) 23,909 20,584 Total $ 369,347 $ 353,584 Liabilities & Stockholders' Equity Current liabilities: Short-term borrowings $ 7,485 $ 6,364 Accounts payable 8,800 10,637 Income taxes payable 11,191 9,974 Accrued and other liabilities 53,005 57,139 Deferred revenue 16,788 17,638 Total current liabilities 97,269 101,752 Long-term debt 54,310 54,321 Other long-term deferrals 2,794 1,800 Total liabilities 154,373 157,873 Stockholders' equity: Common stock 250,013 243,951 Accumulated deficit (47,288) (55,779) Foreign currency translation adjustment 12,249 7,539 Total stockholders' equity 214,974 195,711 Total $ 369,347 $ 353,584 See accompanying notes to unaudited consolidated financial statements. Mentor Graphics Corporation Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended June 30, 1994 1993 Operating Cash Flows: Net income (loss) $ 7,591 $ (4,008) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization of property, plant & equipment 12,515 13,774 Deferred taxes (21) 36 Amortization of other assets 3,694 3,977 Changes in operating assets and liabilities: Trade accounts receivable (5,178) (2,580) Inventory 223 4,342 Prepaid expenses and other assets (3,415) 2,121 Accounts payable (3,360) (1,804) Accrued liabilities (5,002) (7,261) Other liabilities and deferrals 646 2,001 Net cash provided by operating activities 7,693 10,598 Investing Cash Flows: Maturities of short-term investments 6,523 18,793 Purchases of property and equipment (6,456) (15,807) Development of corporate facilities -- (355) Capitalization of software development costs (3,073) (2,394) Net cash provided (used) by investing activities (3,006) 237 Financing Cash Flows: Proceeds from issuance of common stock 6,062 4,499 Increase (decrease) in short-term borrowings 837 (192) Repayment of long-term debt (11) (1,148) Dividends paid to stockholders -- (5,508) Net cash provided (used) by financing activities 6,888 (2,349) Effect of exchange rate changes on cash and cash equivalents 2,623 1,532 Net change in cash and cash equivalents 14,198 10,018 Cash and cash equivalents at beginning of period 95,958 72,012 Cash and cash equivalents at end of period $ 110,156 $ 82,030 See accompanying notes to unaudited consolidated financial statements. MENTOR GRAPHICS CORPORATION Notes to Consolidated Financial Statements (Unaudited) (1) General - The accompanying financial statements have been prepared in conformity with generally accepted accounting principles. However, 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. In the opinion of management, the statements include all adjustments necessary for a fair presentation of the results of the interim periods presented. Certain reclassifications have been made in the accompanying financial statements for 1993 to conform with the 1994 presentation. (2) Change in Accounting Principle, Accounting for Certain Investments in Debt and Equity Securities- In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Statement No. 115 requires reporting of investments as either held to maturity, trading or available for sale. The Company owns common stock and common stock warrants of an independent public company with an original carrying cost of $0 and a market value of $900 as of June 30, 1994. Under Statement No. 115, the securities have been classified as held for sale, which required the difference between original carrying cost and market value to be recognized which is included on the consolidated balance sheet in prepaid and other assets, and as a reduction of the same amount in accumulated deficit. No other investments owned by the Company are expected to be materially impacted by provisions of this Statement as the underlying carrying values approximate market. (3) Capitalization of Software Development Costs - During the first six months of 1994 and 1993, $3,073 and $2,394 of new product development costs were capitalized and included in other assets on the consolidated balance sheets, respectively. Amortization of previously capitalized software development costs amounted to $3,487 and $3,448 for the six months ended June 30, 1994 and 1993, respectively, and is included in system and software cost of revenues on the consolidated statements of operations. (4) Supplemental Disclosures of Cash Flow Information - The following provides additional information concerning cash flow activities: Six Months Ended June 30, 1994 1993 Interest paid $ 1,053 $ 2,572 Income taxes paid, net of refunds $ 1,147 $ 53 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition (All numerical references are in thousands, except for dividend payment amount and percentages) RESULTS OF OPERATIONS REVENUES AND GROSS MARGINS System and Software System and software revenues for the quarter ended June 30, 1994, totaled $43,485, a decrease of $7,942 or 15% from the second quarter of 1993. For the first six months of 1994, system and software revenues declined $7,945 or 8% from the same period a year ago. Second quarter system and software gross margins increased to 80% in 1994 compared to 74% in the same period of 1993. For the first six months of 1994, system and software gross margins improved to 79%, up from 73% in the same period of 1993. During the first half of 1994 system and software revenues were flat for the international regions compared to the same period last year while North America experienced a 15% reduction for the same periods. Revenues for the past three years have been negatively impacted by a poor international economy. Japan realized improvement over the first half of last year, offset by reduced sales in the Pacific Rim. From December 31, 1993 to June 30, 1994, the U.S. dollar weakened approximately 12% against the Japanese yen, resulting in higher U.S. dollar revenue from Japanese yen based sales. Exclusive of currency exchange rate changes, the Japanese economy continues to reflect weakness. While difficult to predict, the Company's revenues may continue to be negatively impacted by the economic recession in Japan for the next several quarters. In addition, the North American sales force executed a reorganization during the first quarter of 1994 which resulted in reduced productivity in the region. The goal of the reorganization was to streamline operations by reducing two layers of management and better align the sales team with their respective territories. Historically the Company experiences improved order activity and revenue levels in the second and fourth quarters while the first and third quarters are slower. Japan usually has posted stronger third quarter order activity which somewhat offset an otherwise seasonally slow quarter for the Company. Due to continued weakness in the Japanese economy and reduced third quarter order levels in other regions, the results of the Company's third quarter system and software revenue may be consistent with historical seasonality. System and software revenue levels are dependent on order activity, as such sustained revenue performance for the next quarter is not guaranteed. While the software component of system and software revenue was comparable for the first halves of 1994 and 1993, the level of hardware sales continues to decline. The Company continues to experience some hardware sales to meet customer requests. In the first half of 1994, the hardware component of system and software revenue declined to 9% from 17% for the same period last year. This mix shift resulted in improved gross margins as software gross margins are much higher compared to hardware gross margins. The Company expects the decline of hardware revenue to continue as the year progresses which should benefit gross margins. Gross margins are significantly impacted by levels of third party software content for which royalties are paid, and amortization of previously capitalized software development costs. Amortization of previously capitalized software development costs to system and software cost of revenues was $1,477 and $3,487 for the second quarter and first half of 1994, respectively, compared to $1,920 and $3,448 for the same periods a year ago. Amortization levels have declined in the second quarter as several capitalized projects became fully amortized. Levels of third party software content in future revenues are difficult to predict as they are based on customer demand for non-Company owned software, which has historically varied from quarter to quarter. Service and Support Service and support revenues for the second quarter of 1994 were $38,045, an increase of 3% from the comparable quarter of 1993. For the first six months of 1994, service and support revenues totaled $73,657, an increase of 4% from the same period of 1993. The increase in service and support revenues is attributable to growth in the Company's installed customer base, and continued success of the Company's software support programs. These positive factors were offset by a reduction in hardware support revenues as many customers contracted directly with primary providers of hardware service. Renewal of annual software maintenance contracts was seasonally slow during the first quarter of 1994, as it also was in the comparable period of 1993. Renewals rebounded in the second quarter of 1994 consistent with historical service and support revenue trends. Company accounting policy dictates that revenue on renewal of maintenance contracts is recognized only when customer purchase orders are received and services are delivered, which results in the first versus second quarter revenue trend described above. Service and support gross margins were 55% and 49% for the quarters ended June 30, 1994 and 1993, respectively, and 55% and 51% for the first six months of 1994 and 1993, respectively. The increase in service and support gross margins is primarily attributable to the mix shift in revenues towards higher gross margin software support and away from lower gross margin hardware support. In the first half of 1994, the hardware component of service and support revenue declined from 6% to 2% compared to the same period last year. Professional service revenue increased 6% in the first half of 1994 compared to the same period of 1993. The expected trend for professional services is an increase in revenue levels over time as the business develops. A first quarter 1994 reorganization of the professional service team worldwide negatively impacted the progress of professional service revenues. Operating Expenses Gross research and development (R&D) expenses were $19,232 and $38,649 for the second quarter and first six months of 1994, respectively, compared to $21,074 and $41,475 for the same periods of 1993, respectively. During the second quarter and first six months of 1994, the Company capitalized R&D costs of $2,200 and $3,073, respectively, compared to $1,031 and $2,394 for the same periods of 1993, respectively. Net R&D costs were $17,032 for the quarter ended June 30, 1994, compared to $20,043 for the same period of 1993. For the first six months of 1994 and 1993, net R&D costs were $35,576 and $39,081, respectively. Lower gross R&D expenses are attributable to lower headcount due to attrition and some planned reductions in force. The Company closed an Integrated Circuit Division R&D site during the first quarter of 1994, consolidating activities with other pre-existing locations. Expense reductions for R&D should continue as the Company further executes against its fourth quarter 1993 plan for restructuring. See restructuring costs discussion below. During the second quarter and the first six months of 1994, marketing, general and administration expenses (MG&A) were $34,241 and $69,442, respectively, compared to $35,538 and $72,188 for the same periods of 1993, respectively. The reduction of MG&A expenses is attributable primarily to lower headcount. Expense reductions for MG&A should continue as the Company further executes against its fourth quarter 1993 plan for restructuring. RESTRUCTURING COSTS Implementation of the Company's restructuring plan approved by management in December, 1993, proceeded as originally anticipated during the first half of 1994. There have been no material changes in the primary elements of the restructure accrual of $24,800, which was recorded in 1993. Costs to be incurred in executing the restructuring plan consist primarily of direct costs associated with severance and relocation of employees, facilities closures, and write-offs of excess equipment and intangible software technology assets related to discontinued product development activities. Management continues to estimate that implementation of the restructuring plan should reduce expenses by approximately $10,000 in 1994. These savings may be partially offset by increased expenditures in other areas. When all elements of the restructuring plan have been fully implemented, the Company expects future expenses may be reduced even further. Approximately $21,000 of the 1993 restructuring charge should result in cash outflows during 1994. For the first half, restructure-related cash outflows were approximately $5,000. For the third quarter of 1994, disbursements are anticipated to be near $5,000, with the balance of $11,000 scheduled for the fourth quarter of the 1994. Approximately $4,000, primarily related to facilities closures and employee relocation, is expected to be disbursed after 1994. Other Income (Expense) During the second quarter and the first six months of 1994, other income was $331 and $889, compared to other expense of $271 and $524 for the same periods of 1993, respectively. Interest income from investments was $990 and $2,082 for the second quarter and first half of 1994, respectively, compared to $971 and $2,178 for the same periods of 1993. During the second quarter and first half of 1994, interest expense amounted to $869 and $1,504, respectively, down from $976 and $2,600 for the comparable periods in 1993. The reduction in interest expense is attributable to lower average debt outstanding during the comparable periods. Provision for Income Taxes The provision for income taxes amounted to $960 for the quarter ended June 30, 1994, as compared to $72 for the same period in 1993. For the first six months of 1994, the provision for income taxes was $1,900 compared to $800 for the same period a year ago. The Company's income tax position for each year combines the effects of available tax benefits in certain countries where the Company does business, benefits from available net operating loss carrybacks, and tax expense for subsidiaries with pre-tax income. As such, the Company's income tax position and resultant effective tax rate is uncertain for the remainder of 1994. Effects of Foreign Currency Fluctuations The Company experienced a foreign currency transaction gain of $38 and loss of $53 during the second quarter and first half of 1994, respectively, compared to a net gain of $264 and $405 during the same periods a year ago. These amounts are comprised of realized gains and losses on cash transactions involving various foreign currencies, and unrealized gains and losses related to foreign currency receivables and payables resulting from exchange rate fluctuations between the various currencies in which the Company operates. Foreign currency gains and losses are included as a component of other income. The "foreign currency translation adjustment", as reported in the equity section of the consolidated balance sheet at June 30, 1994, increased to $12,249 from $7,539 at the end of 1993. This reflects the increase in the value of net assets denominated in foreign currencies against the U.S. dollar since year-end 1993. From December 31, 1993 to June 30, 1994, the U.S. dollar weakened approximately 12% against the Japanese yen. In addition, the U.S. dollar weakened approximately 6% against the European currencies during the first half of 1994. Generally, a weakening of the U.S. dollar makes the Company's products less expensive in foreign markets, which has a positive impact on the Company's revenues over time. In addition, a weakening U.S. dollar results in higher reported revenues and operating expenses due to translation of local currency activity to U.S. dollars for consolidated financial reporting. The Company generally realizes approximately half of its revenue outside the United States and expects this to continue in the future. As such, the Company's business and operating results may be impacted by the effects of future foreign currency fluctuations. LIQUIDITY AND CAPITAL RESOURCES Cash and Investments Total cash and investments at June 30, 1994 were $147,243 compared to $139,568 at the end of 1993. Cash provided by operations was $7,693 for the first six months of 1994 compared to $10,598 during the same period of 1993. Cash provided by operations was negatively impacted by late quarter shipments and a large software and services contract, resulting in an increase in trade receivable balances of $8,307. In addition, there was an increase in long-term receivables of $2,379 for the long-term portion of the same large software and services contract, classified in other assets. Also, accrued liabilities decreased $5,002 in the first half of 1994 due primarily to restructure-related cash outflows. Cash and short-term investments for the six months ended June 30, 1994 were positively impacted by proceeds from the issuance of common stock of $6,062 as a result of increased employee option exercises due to an improved average stock price during the first quarter, offset by investment in property, plant and equipment of $6,456. Inventory Inventory levels at June 30, 1994 totaled $677, down $1,622 since December 31, 1993. The reduction in inventory reflects the Company's shift towards a software-only business model resulting in the reclassification of demonstration equipment to property, plant and equipment. In 1994 it is anticipated that the hardware business will be immaterial to the Company's operations and as a result demonstration equipment will not be promoted for sale as it was in prior years. The remaining balance in inventory primarily consists of documentation and CD ROM media for software updates. Inventory is expected to be at approximately current levels for the balance of 1994. For any remaining hardware requests from customers, the Company will use a drop ship approach, shipping directly from the hardware vendor to the customer. Other Assets Other assets increased to $23,909 at June 30, 1994 from $20,584 at year-end 1993. Net capitalized software development costs decreased by $414 as capitalization and amortization were $3,073 and $3,487, respectively, during the first half of 1994. Long- term receivables increased by $2,379 as a result of a long-term customer contract calling for software products and professional services. Capital Resources Total capital expenditures decreased to $6,456 through June 30, 1994, compared to $16,162 for the same period of 1993. The decrease in capital expenditures is a result of completing a planned transition of the Company's R&D equipment to a more complete UNIX-based operating system environment in 1993. Future capital expenditure plans include maintaining a state of the art development environment, maintaining updated sales demonstration equipment, and implementing a new global information system which should begin in the fourth quarter of this year. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The 1994 Annual Meeting of Shareholders of Company was held pursuant to notice at 5:00 p.m. Pacific time on Tuesday, April 26, 1994 at Company's offices in Wilsonville, Oregon. There were present at the meeting, in person or represented by proxy, the holders of 41,200,762 shares of the outstanding common stock, which represented approximately 85.8% of the outstanding shares. Voting information set forth below was provided by First Interstate Bank of Oregon, N.N., as Inspector of Election. The matters voted on at the meeting and the votes cast are as follows: Issue One-Election of Nominees for Directors. The nominees for directors listed below and presented to the meeting were elected directors of the Company upon each receiving the affirmative vote of the holders of approximately 99.6% of those shares represented at the meeting, to serve until the next annual meeting of the shareholders and until their successors shall have been elected and qualified. FOR WITHHOLD Walden C. Rhines 41,135,397 65,365 Marsha B. Congdon 41,089,860 110,902 David R. Hathaway 41,127,722 73,040 Fontaine K. Richardson 41,111,461 89,301 Jon A. Shirley 41,122,651 75,081 David N. Strohm 41,126,992 73,770 Issue Two-Amendment of the Company's 1982 Stock Option Plan. The shareholders approved certain amendments to the Company's 1982 Stock Option Plan by the affirmative vote of the holders of approximately 55.7% of those shares represented at the meeting. BROKER FOR AGAINST ABSTAIN NONVOTES 22,955,025 10,999,624 150,754 7,095,359 Issue Three-Amendment of the Company's 1987 Stock Option Plan. The shareholders approved certain amendments to the Company's 1987 Stock Option Plan by the affirmative vote of the holders of approximately 52% of those shares represented at the meeting. BROKER FOR AGAINST ABSTAIN NONVOTES 21,461,438 11,142,581 174,064 8,422,679 Issue Four-Ratification of KPMG Peat Marwick. The shareholders ratified the engagement of KPMG Peat Marwick as independent auditors of the Company by the affirmative vote of the holders of approximately 99.6% of those shares represented at the meeting. BROKER FOR AGAINST ABSTAIN NONVOTES 41,047,482 77,419 75,419 NONE Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: none. (b) No reports were filed on Form 8-K during the quarter for which this report is filed. 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, on August 11, 1994. MENTOR GRAPHICS CORPORATION (Registrant) R. Douglas Norby R. Douglas Norby Senior Vice President, and Chief Financial Officer James J. Luttenbacher James J. Luttenbacher Corporate Controller, and Chief Accounting Officer VIA ELECTRONIC TRANSMISSION August 11, 1993 Securities and Exchange Commission 450 Fifth Street NW Judiciary Plaza Washington, DC 20549 Attention: Division of Corporate Finance Re: Mentor Graphics Corporation File No. 0-13442 On behalf of Mentor Graphics Corporation (Company), I enclose for filing the Company's Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-Q for the quarter ended June 30, 1994. Please inform me of receipt of the enclosed material via the Company's MCI mail address, 313-4100. Sincerely yours, MENTOR GRAPHICS CORPORATION Frank S. Delia Frank S. Delia Vice President and Chief Administrative Officer -----END PRIVACY-ENHANCED MESSAGE-----