ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
ALPNET, Inc. ("ALPNET" or the "Company") is a United States multinational corporation which was incorporated in the State of Utah in 1980. The Company provides services and solutions in the multilingual information management services sector to businesses engaged in international trade. ALPNET is one of the largest dedicated suppliers of such services and solutions in the world.
The Company was originally established to develop and market foreign language translation software and is regarded as a pioneer in the field of multilingual software development. The acquisition of several leading translation service providers in 1987 and 1988 established the Company's international presence. The Company further expanded into foreign markets in 1994 through the formation of additional foreign subsidiaries and branches. As of December 31, 1999, the Company has wholly-owned foreign subsidiaries or branches in the following countries: Canada, Brazil, United Kingdom, the Republic of Ireland, Germany, France, Spain, the Netherlands, Sweden, Singapore, Korea, China, Japan and Thailand.
During 1999, the Company embarked on a strategic repositioning to evolve its current service offering into an Internet-based Application Service Provider ("ASP") which will rent multilingual information management software applications via the Internet. The Company will also utilize this new ASP business model to more effectively deliver its value-add information consultancy and language technology integration services. Two strategic acquisitions were completed during 1999 that form an integral part of this strategic repositioning.
On June 30, 1999, the Company acquired EP Electronic Publishing Partners GmbH ("EP"), a German corporation which designs and develops custom built computer software systems for document, information, knowledge and translation management. The technology and expertise obtained through this acquisition provides the Company with a network-centric multilingual information management system.
On July 30, 1999, the Company acquired Technical Publishing Services B.V. ("TPS"), a Dutch corporation providing information management consulting, systems integration services and high-end SGML (Standard Generalized Markup Language) and XML (eXtensible Markup Language) publishing solutions to international clients.
Further financial information about the acquisitions is provided in note 3 to the Consolidated Financial Statements.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENT
The Company operates in one business segment: multilingual information management services.
(c) NARRATIVE DESCRIPTION OF BUSINESS
GENERAL
The Company's existing service offering provides a full range of language services and solutions specifically tailored to clients engaged in international business. Among the services the Company offers are localization, documentation, translation, information consultancy and language technology integration.
Localization is primarily offered to clients in the information technology (IT) market and encompasses a complete linguistic, technical and cultural adaptation of products for foreign language markets. Localization services include glossary development, translation, content creation and adaption, desktop publishing, electronic and web publishing, graphics, multimedia, creative tasks, and a complete range of engineering and software testing activities.
Documentation services are offered to a wide range of industrial clients in the automotive, consumer electronics, telecommunication, financial services, manufacturing, and other industries. The Company provides a complete service for companies that produce printed and electronic documentation and training materials. Documentation services include translation, glossary development, electronic publishing, graphics and web publishing.
Translation services are offered to diverse clients from all industries. Such services may include the translation of text in a brochure, memorandum, sales presentation, letter, magazine or any other text. ALPNET performs translation services through its entire network in 15 countries.
Information consultancy services include information development and content creation. Such services include information analysis and development of information strategies. Clients can significantly increase efficiency and reduce costs by applying controlled language authoring tools, creating information using SGML or XML, implementing document management systems, and by following established industry standards.
Language technology integration services include benchmarking and evaluation of language tools, workflow definition and customization, process optimization, controlled language definition, training, terminology management, tools integration, database development and other language services such as the utilization of translation memories, machine translation, and the definition of production and quality assurance procedures.
CHANGE IN BUSINESS MODEL
The Company's position as a leading supplier of multilingual information management services for almost 20 years has provided it with substantial experience in managing linguistic resources spanning people, linguistic data and technology. The Company currently offers its services on a project by project basis according to the specific needs of the client. This project-based approach makes client demand and resource planning difficult to predict which can lead to fluctuating revenue and operating results. However, the globalization of business and rapid growth of the Internet has intensified the need for clients to implement effective multilingual information strategies to support their Internet and eCommerce business models. Product life cycles and time-to-market are shortening in many industries and businesses need to manage information in Internet time while substantially reducing localization costs. A project-based approach is too slow and costly in this new business environment.
The Company has recognized that a key business problem faced by its clients is the absence of a cost-effective information management platform that exploits the systematic use and reuse of information. Information reuse is essential in translating and managing content in multiple languages. Poor reuse compromises information quality and value and increases the cost of doing business globally. The Company proposes to solve this business problem for its existing and future clients by repositioning itself as an Internet-based ASP. Through an Internet-based system called ALPNETXchange, the Company will host integrated Web-based software applications that will enable clients to create, localize, manage, warehouse, reuse and distribute information tailored for global and local needs. The Company will host dedicated client data servers allowing clients to integrate multilingual information management capabilities directly into their own business processes. The Company's new ASP business model is expected to transform multilingual business information into a globally reusable asset.
ALPNETXCHANGE
ALPNETXchange is a natural extension of the enterprise information system that the Company started designing and developing during 1999. Originally conceived for internal use, and previously called ALPNET Planet, the enterprise information system automates all workflow processes throughout the Company's operations. ALPNETXchange also includes an extranet portal through which clients can transact business with ALPNET and access their multilingual information stored and managed on ALPNET servers. The most valuable part of the ALPNETXchange system is a knowledge management component which centralizes and leverages all translation memories, terminology databases and localization know-how. This component provides the critical function of information reuse.
The acquisition of EP accelerated the development of the knowledge management component. EP has developed a network-centric multilingual information software system for the translation division of the Commission of the European Community. The system currently supports 600 users working with 18 million linguistic segments and a throughput of approximately one million pages per year in multiple languages. The EP system is a substantial foundation for the knowledge management component of the ALPNETXchange system. It is being further developed and enhanced under a joint technology development agreement with Sun Microsystems.
The acquisition of TPS enhances the Company's expertise in key areas of information management. The new ASP business model requires a rapid proliferation and training of consulting skills throughout the Company. Skills ranging from SGML / XML implementation, integration of workflow, content creation, content management and multilingual information systems are the core competency of TPS. XML is critical to information reuse and is the optimum platform for the delivery of eCommerce content.
Both of these strategic acquisitions provide the Company with additional key skills and technology which complement the Company's existing core linguistic competencies. With this base, the Company is positioned to transition to the new ASP business model. The Company's plan provides for a controlled transition which will retain existing clients and revenue while building its ASP capability. Many of the Company's existing clients are expected to migrate to the new ASP business model.
MARKET
The market for multilingual information management services has been growing in recent years in line with the growth of global business. Political, economic and technological changes have created and expanded opportunities for significant increases in international trade. A single world market is emerging where it is possible for companies to reach their clients around the world in just seconds, regardless of distances, borders and barriers.
As borders disappear, the need to localize domestic products for foreign markets is increasing rapidly. Globalization is opening up an era of multilingual information management. Traditionally, products and documentation are first completed for the home market and then companies face the painful hurdle of localization before shipping the products to their foreign customers. Increased competition is forcing companies to reduce time-to-market and cut costs. As a result, information must be enabled for global markets so that the localization process is easier to manage. The keys to reduced time to market and lower costs are standardization and integration. If information is standardized in a universal format such as SGML or XML, it can be stored in a central repository and it is then possible to integrate the processes of information development, translation, distribution and consumption as information is needed.
Outsourcing of non-core business activities such as translation, localization and related services is a general trend as many companies critically question the rationale for maintaining in-house information management capabilities. Estimates of the current size of the outsourced localization and translation market worldwide vary, but are consistently projected as several billion dollars. The Company's target markets are characterized as being global and information intensive. The current client base spans several vertical industry sectors including automotive, information technology, telecommunications, business-to-business services, Internet, healthcare, pharmaceutical, financial services, and consumer electronics. New horizontal market sectors will also be targeted for the Company's services including human resource management, help desk, corporate administration, marketing and corporate communications. Each of these sectors has the potential for significant volumes of globally reusable information assets.
The growth of the Internet and the rapid emergence of eCommerce is having a dramatic effect on the size of the market. As the Web grows, the demand for multilingual information management services is expected to increase significantly and may exceed supply. There has been a significant increase in the non-English speaking Web user population across the world. These users have a natural preference for localized content in both language and culture. Business users on the Web are significantly more likely to purchase when addressed in their own language and the majority of users who encounter a non-native language site either leave or look for a translated version. It is predicted that a majority of Web users will soon be non-English speakers which will be reflected in the increasing volume of multilingual Web content. This market growth is the catalyst for the Company's strategic repositioning which will offer clients the accessibility and convenience of an ASP model.
MARKETING
In marketing the Company's existing services and solutions, the Company believes it has some very strong selling points:
GLOBAL REACH AND SIZE OF OPERATIONS. The Company is one of the largest providers in its industry sector with operations in all the economically significant markets.
COMMAND OF TECHNOLOGY. The Company utilizes state-of-the-art technology in all areas of its activity, from authoring tools to document management, translation technology and information management. The Company's in-house technical specialists are experts in customizing and deploying tools for specific applications.
PROCESS SPECIALIZATION. ALPNET is very process oriented. The implementation of Total Quality Management and standard processes throughout the Company facilitate performance measurement and improvement of services.
MANAGEMENT DEPTH AND EXPERIENCE. ALPNET was an early consolidator in the industry and has much more management experience than many of its newer competitors. The management team has the right mix of language industry experience and international business skills.
INNOVATIVE STRENGTH. The Company has been an innovator in the industry for many years. It was the first company to develop translation memory technology and the first to establish a global translation network. ALPNET is one of the first global providers to focus on new solutions like language technology integration and information consultancy services.
During 1999, the Company has enhanced its existing market position by expanding and strengthening its corporate marketing function. A dedicated eCommerce marketing group has been created to target Fortune 1000 clients in the critical market segments. Several new marketing initiatives have been launched during the year. Partnerships and alliances are being forged with eBusinesses, Web architects, online business-to-business service providers, content management and information solution companies. These alliances will allow the Company to offer its multilingual services in partnership with those service providers who are driving the growth of the Web. Promotional activity has been increased with the appointment of an international public relations firm which will raise the Company's profile in key industries. A new advertising company has been engaged to implement a worldwide corporate branding program. Marketing activity is expected to intensify throughout the coming year in support of the launch of ALPNETXchange and the Company's new ASP business model.
MAJOR CLIENT
Sales to a single client in the computer industry accounted for 4%, 5% and 11% of total revenues in 1999, 1998 and 1997, respectively. Relations with this client are satisfactory and management believes a significant portion of 2000 revenues will also be attributable to this client. No other client accounted for more than 10% of revenues in any year.
COMPETITION
The Company has traditionally competed with companies focused mainly on the information translation needs at the end of the information creation and management process. Competition in this area is widely diverse. At one end of the spectrum are small, single-site agencies with a generalist approach that offer services normally limited to translation. At the other end of the spectrum are a few large, multi-site companies that offer turnkey services (more than translation only) and that often focus on providing "solutions" for specific industries. Between these extremes, are all kinds of mixed forms.
The industry has been highly fragmented and often referred to as a "cottage industry." In the last five years, however, there has been significant consolidation with many mid-sized translation companies being acquired by large companies in various industries. A number of new companies, perceiving the huge market opportunity, have also entered the market. In addition to the Company, a top-tier of industry players has emerged including LionBridge, Berlitz, Bowne, Lernout & Hauspie, and Xerox. Despite these recent trends, all of the major companies within the industry have a relatively small market share with no one dominant provider. The Company differentiates itself from its competition through its proprietary technology, established global presence and existing client base.
PROPRIETARY TECHNOLOGY. The Company has developed proprietary technology and has been a recognized technology innovator in the industry since incorporation. The basis of the Company's current and future service offering is its proprietary technology which represents hundreds of man-years of development and contains unique functional capabilities. This technology forms a substantial barrier to entry that could only be overcome by a comparable investment. Key technology owned by the Company includes existing translation and multilingual information management software in addition to the ALPNETXchange workflow and Internet portal currently under development.
ESTABLISHED GLOBAL PRESENCE. The Company was the first to create a global translation network in key countries throughout the world. This global presence is organized into regionally-focused sales and operations divisions allowing the Company to leverage direct access to native-speaker localization expertise. Centrally focused competitors often rely on non-native resources. Creating a global presence requires significant investment and the successful integration of previously disparate operations is difficult and time consuming.
ESTABLISHED CLIENT BASE. Revenue generating relationships with thousands of clients have been established by the Company over many years. The Company has built strong relationships with numerous Fortune 500 clients and industry leaders. These relationships represent a significant penetration of key market segments. This base represents a significant barrier to entry, especially for new entrants to the industry.
DEVELOPMENT AND CLIENT SUPPORT
During 1999, the Company capitalized approximately $1.5 million on the development of ALPNETXchange as discussed in note 5 to the Consolidated Financial Statements. The acquisition of EP has provided the Company with additional functional technology. Where appropriate, the Company plans to develop technology in cooperation with strategic partners. An agreement has been signed with Sun Microsystems for the joint development of language translation management computing infrastructure technology. The Company has also initiated a Community Source Program to accelerate the development of multilingual information management technology. During 1999, 1998 and 1997, the Company expensed approximately $99,000, $730,000, and $391,000, respectively, on technology development and support activities.
EMPLOYEES
As of December 31, 1999, the Company employed 643 persons. The Company requires sales, project management, language services production, technical support, and consultancy services personnel in order to obtain, manage and produce major multilingual information projects. The Company is dependent upon an adequate supply of skilled professionals in each of these primary disciplines to meet the requirements of its clients and prospective clients. The Company has already successfully hired additional employees with the leading edge skills and experience required to implement the new ASP business model. Further recruitment is planned throughout the transitional period and the ability to attract and retain the best professional staff is a key corporate goal. A dedicated human resources function, organized on a regional basis, maintains global employee policies and supports recruitment, training and career management. Employees of TPS in the Netherlands are represented by a labor union and there is a works council in Germany. The Company believes relationships with its employees to be good.
Due to the nature of its business, the Company also retains, on an as-needed basis, a supply chain consisting of a large number of translators and other service professionals who are independent contractors.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Financial information concerning the Company's foreign and domestic operations is presented in note 2 to the Consolidated Financial Statements included in Item 8 of this Form 10-K and is incorporated herein by reference.
ITEM 2:
ITEM 2: PROPERTIES
ALPNET's corporate headquarters are located in Salt Lake City, Utah. Customer service and production facilities used by the Company as of December 31, 1999, all of which are leased, are listed below.
ITEM 3:
ITEM 3: LEGAL PROCEEDINGS
AXEL HOFSTADT, ET AL., VS. WELLSHIRE SECURITIES, INC., ET AL., pending in the United States District Court for the District of Utah, Central Division, as Case No. 2:96 CV 0327B. The Company was one of 18 named defendants. On December 7, 1999, ALPNET was dismissed from the action, with prejudice.
CHRISTA WENNEMANN, ET AL., VS. DOUGLAS E. BROWN, ET AL., pending in the United States District Court for the District of Utah, Northern Division, as Case No. 94 C 967G. The Company was one of 19 named defendants. On December 7, 1999, ALPNET was dismissed from the action, with prejudice.
FUCHS, ET AL., VS. WELLSHIRE SECURITIES, INC., ET AL., pending in the United States District Court for the district of Utah, Northern Division, as Case No. 96-CV589. The Company was one of 19 named defendants. On December 7, 1999, ALPNET was dismissed from the action, with prejudice.
ITEM 4:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the quarter ended December 31, 1999.
PART II
ITEM 5:
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ALPNET's Common Stock trades on The Nasdaq Stock Market under the symbol AILP. The following table shows the range of high and low trading prices as reported by The Nasdaq Stock Market for the years 1998 and 1999:
As of March 10, 2000, there were 397 shareholders of record; however, the Company estimates the actual number of beneficial owners approximates 14,000. No dividends have been declared on the Company's Common Stock. The Company is currently prohibited from paying dividends under Utah corporate law.
ITEM 6:
ITEM 6: SELECTED FINANCIAL DATA
The following selected financial data are derived from the Consolidated Financial Statements of the Company. The data should be read in conjunction with the Consolidated Financial Statements, related notes and other financial information included therein.
FINANCIAL SUMMARY
A majority of the Company's operations are located in foreign countries. Accordingly, the Company is affected by foreign currency exchange rate fluctuations as described in detail in Item 7A, "Foreign Exchange Risk".
(1) Includes restructuring expense of $1,291,000.
SELECTED QUARTERLY FINANCIAL DATA
The following table shows selected quarterly financial data for 1998 and 1999 as previously reported in the quarterly reports on Form 10-Q.
(1) Includes restructuring expense of $1,291,000
ITEM 7:
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and notes thereto.
RESULTS OF OPERATIONS
The following paragraphs discuss 1999 results as compared with 1998, and 1998 results as compared with 1997. The Company reported net income of $716,000 in 1999 compared to a net loss of $818,000 in 1998 and net income of $1,588,000 in 1997. Included in the net loss for 1998 is $1,291,000 of restructuring expense, as discussed more fully in note 4 to the Consolidated Financial Statements.
Sales of services were $51.5 million for 1999 compared to $48.5 million for 1998 and $40.8 million for 1997. The $3.0 million increase in sales for 1999 follows the $7.7 million increase in sales for 1998.
1999 has been a year of transition and investment for the Company. In late 1998, the Company implemented a fundamental reorganization of the Company's structure and operations. The reorganization was successfully completed in early 1999 and stabilized the operations of the Company in anticipation of the strategic acquisitions of EP and TPS at the end of June and July 1999, respectively. For the first three quarters of 1999, the Company reported profitable operations. In the fourth quarter, the Company incurred additional operating costs in connection with the commencement of the implementation of its new Internet-based ASP business model and the integration of the 1999 acquisitions into existing operations. These additional costs, together with a revenue shortfall arising out of delays in some business opportunities due to year 2000 concerns on the part of some clients and the impact of weak European currencies, contributed to a net loss in the fourth quarter.
In 1998 compared with 1997, sales growth occurred in the first half of the year and the Company reported net income for both the first and second quarters. In the second half of 1998, losses were incurred as the entire industry experienced adverse operating conditions resulting from volatile global trading economic conditions and market changes. These adverse conditions led to management's reorganization of the Company.
IMPACT OF THE NEW BUSINESS MODEL
The transition to the new Internet-based ASP business model will have a significant impact on the operating results of the Company. The necessary investment in the technical infrastructure, human resources, branding and marketing support required to build the ASP capability will involve significant operating expenditures that will run in excess of revenue. As a result, the Company expects to report operating losses throughout the year 2000. Historical trends in revenue and expense will become less comparable as the Company establishes a new revenue base and cost structure. The investments which are planned for the year 2000 are expected to position the Company for accelerated growth and profitability in future years.
SALES OF SERVICES BY GEOGRAPHIC SEGMENT
Sales in 1999 increased by $3.0 million compared with 1998. The general downturn in revenue experienced in the second half of 1998 continued into 1999. The Company has also eliminated a substantial amount of low-margin translation revenue, mainly in the UK, which is reflected in year-to-year revenue comparisons. Acquisitions during the year accounted for approximately $3.3 million of incremental revenue.
The value of revenues and costs reported in US dollars have been impacted significantly in 1999 by the effects of fluctuations in foreign currencies against the US dollar. However, the impact on net income has not been significant. This is described in more detail in Item 7A
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN EXCHANGE RISK
The Company serves its customers from more than 21 wholly-owned offices in 15 countries. The majority of the Company's operations are located outside the US, and consequently, the Company is exposed to fluctuations of the dollar against the foreign currencies of those countries in which the Company has a substantial presence. For all of the Company's foreign subsidiaries, the functional currency has been determined to be the local currency. Accordingly, assets and liabilities are translated at year-end exchange rates, and operating statement items are translated at weighted-average exchange rates prevailing during the years presented. The principal currencies to which the Company is exposed are the Canadian dollar, the British Pound, the German Mark and the Dutch Guilder. The Singapore dollar is closely tied to the US dollar and therefore has low exchange risk.
Fluctuations against the US dollar can produce significant differences in the reported value of revenues and expenses.
The following table shows a comparison of sales of services in each of the Company's significant geographic segments for 1999, 1998 and 1997, along with the effect of foreign currency exchange rate fluctuations on sales between years.
The revenue mix of the Company's operations and the effect of foreign currency exchange rate fluctuations on costs and expenses mitigate the consolidated net income impact. For revenues in the US which are produced outside of the US, any weakening of the US dollar against a particular country's currency reduces the amount of net income reported in US dollars. Conversely, the same weakening of the dollar generates an offsetting increase in the dollar value of profits arising from revenues sold and produced within that country. This natural currency effect reduces the net foreign exchange risk to the Company.
The Company has not historically experienced significant differences in net income as a result of fluctuations in foreign currencies. The Company does not currently use any financial instruments to manage or hedge foreign exchange risk either for trading or other purposes. The revenue mix and currency trends are monitored on an ongoing basis to identify any changes that might significantly affect the Company's net results.
The translation of foreign denominated assets and liabilities at year-end exchange rates results in an unrealized foreign currency translation adjustment recorded as a separate component of shareholders' equity. The 1999 foreign currency adjustment to shareholders' equity was negative $733,000 compared to a positive $283,000 in 1998. As of December 31, 1999, the cumulative net effect to the Company of the equity adjustment from movements in foreign currency exchange rates was a reduction of $2.5 million in shareholders' equity. A substantial portion of the cumulative foreign currency adjustment relates to changes in the carrying value of goodwill, of which a significant amount is denominated in foreign currencies.
INTEREST RATE RISK
The Company obtains part of its working capital requirements from credit facilities with various banks which provide for interest at variable rates linked to base interest rates. If base interest rates increase, the Company is potentially exposed to higher interest expense. This would be partially offset by higher interest income on cash balances.
The majority of the Company's credit facilities are denominated in foreign currencies and any increases in the respective interest rates will normally be compensated through correspondingly weakened exchange rates translating the increased interest expense reported into fewer US dollars. If US base rates increase, the increase in US interest expense will again normally be reduced by the consequent strengthening of the dollar reducing the reported interest expense on the foreign denominated debt. Thus, any unilateral changes in the interest rates in any of the countries where the Company has a significant amount of debt will be compensated through natural exchange rate adjustments such that there is no material impact on the level of net interest expense reported. If all or a majority of the interest rates increase in the countries in which the Company has significant amounts of debt, there would be a risk of increase in the amount of interest expense reported. In the opinion of management, such a general increase is unlikely.
ITEM 8:
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ALPNET, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ALPNET, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
SEE ACCOMPANYING NOTES.
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
SEE ACCOMPANYING NOTES.
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
SEE ACCOMPANYING NOTES.
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
ALPNET, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
Supplemental Disclosure of Cash Flow Information:
The Company purchased all of the capital stock of EP and TPS (as described in note 3). In conjunction with the acquisitions, liabilities were assumed as follows:
SEE ACCOMPANYING NOTES.
ALPNET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
ALPNET, Inc. (the "Company") is a United States multinational corporation. The Company provides services and solutions in the multilingual information management services sector to businesses engaged in international trade. These services include localization, documentation, translation, information consultancy, and language technology integration. The principal markets for the Company's services are North America, Europe, and Asia. The Company has commenced a strategic repositioning to evolve its current service offering into an Internet-based Application Service Provider ("ASP") which will host multilingual information management services via the Internet.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of ALPNET, Inc. and its wholly-owned subsidiaries or branches located in the United States, Canada, Brazil, United Kingdom, Republic of Ireland, Germany, France, Spain, the Netherlands, Sweden, Singapore, Korea, China, Japan and Thailand. Significant intercompany accounts and transactions have been eliminated in consolidation.
For all of the Company's foreign subsidiaries, the functional currency has been determined to be the local currency. Accordingly, assets and liabilities are translated at year-end exchange rates, and operating statement items are translated at average exchange rates prevailing during the year. The resultant cumulative translation adjustments to the assets and liabilities are recorded as a separate component of shareholders' equity. Exchange adjustments resulting from foreign currency transactions are included in the determination of net income.
In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows from the Company's foreign subsidiaries are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers cash equivalents to be all highly liquid investments with a maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements are recorded at cost. Depreciation and amortization are calculated using the straight-line method over estimated useful lives of 3 to 5 years for equipment, 5 to 25 years for office facilities and leasehold improvements.
GOODWILL
Goodwill consists of the excess of the purchase price over the fair value of net assets of purchased subsidiaries and is amortized on the straight-line method over 12 to 25 years. Annually and upon significant changes, the Company reviews goodwill for impairment. In determining whether an impairment should be recognized, the Company compares undiscounted projected income over the remaining amortization period to the unamortized balance of goodwill for each acquired subsidiary. No impairments have been recorded for any of the years presented.
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SOFTWARE
Purchased software is recorded at cost. The Company capitalized certain of the costs of developed software for internal use in accordance with Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software. Amortization of software is provided on a straight line basis over useful lives ranging from two to six years.
REVENUE RECOGNITION
Revenue from sales of services is recognized as work is performed on either the completed-contract or percentage-of-completion method, depending on the terms of the purchase order or contract. The completed-contract method is applied to purchase orders for short-term projects (generally one or two months). The percentage-of-completion method is used for longer-term contracts (generally three or more months) with defined specifications and deliverables. Revenue is recognized according to management's assessment of the progress of completion. Anticipated losses, if any, are recognized in the period in which determined. Work-in-process represents costs on uncomplete projects as well as revenues earned in excess of amounts billed.
STOCK OPTIONS
The Company accounts for stock options using the intrinsic value method and provides pro forma footnote disclosure of the impact of using the fair value method.
INCOME (LOSS) PER SHARE
The Company presents basic and diluted income (loss) per share on the face of the consolidated statements of income. Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the accounting period excluding any dilutive effects of options and convertible securities. Diluted income per share includes the potential dilution as a result of exercising stock options and convertible securities.
COMPREHENSIVE INCOME
The Company presents comprehensive income in the shareholders' equity section of the consolidated balance sheet. Accumulated other comprehensive income is entirely accumulated foreign currency translation adjustments.
SEGMENT DATA
The Company operates in one business segment: multilingual information management services. Within this segment, the Company also evaluates its performance by significant geographic regions: North America, Europe and Asia.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1999 presentation.
RECENT ACCOUNTING PRONOUNCEMENTS
In the third quarter of 1999, the Company adopted FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This requires the Company to record all derivative instruments as assets or liabilities, measured at fair value. The adoption of this statement had no material affect on the financial statements of the Company.
In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," ("SAB 101"). The bulletin summarizes the views of the staff on applying generally accepted accounting principles to revenue recognition. SAB 101 expresses the opinion that revenue is earned when four criteria are met; persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the sales price to the buyer is fixed or determinable; and collectibility is reasonably assured. The Company believes that its existing revenue recognition policies are in conformity with SAB 101.
2. GEOGRAPHICAL AND SEGMENT DATA
The following selected financial data summarizes the Company's domestic and foreign operations for financial reporting purposes. Allocations of corporate and country overheads to domestic and foreign operations are based upon the Company's policies for financial reporting consistently applied during the periods. Intercompany sales are normally billed on a margin-sharing basis. All intercompany sales are eliminated in determining the totals.
Net external sales and total identifiable assets in the UK, Germany, Canada, and the US are as follows:
Sales to a single client in the computer industry accounted for 4%, 5%, and 11% of total revenues in 1999, 1998 and 1997, respectively. No other client accounted for more than 10% of revenues in any year.
3. ACQUISITIONS
On June 30, 1999, the Company acquired the entire outstanding share capital of EP Electronic Publishing Partners GmbH ("EP"), a German corporation based in Nuremberg, Germany. The acquisition cost of approximately $1,007,000 was paid as follows:
The acquisition is accounted for using the purchase method. The purchase price was allocated to software ($630,000) and goodwill ($377,000) which are being amortized on the straight-line method over 6 and 12 years, respectively.
On July 30, 1999, the company acquired the entire outstanding share capital of Technical Publishing Services B.V. ("TPS"), formerly Stork TPS, a Dutch corporation based in Hengelo, the Netherlands. The acquisition cost of approximately $6,392,000 was paid as follows:
The acquisition is accounted for using the purchase method and the purchase price was allocated entirely to goodwill which is being amortized on the straight-line method over 12 years. The stock purchase agreement also provides that additional shares of ALPNET common stock (up to a maximum of 1,800,000 shares) will be issued if the Company's share price is less than $2.50 on July 30, 2000 on the basis of 12,000 additional shares per $0.01 shortfall below $2.50.
The results of operations at EP and TPS have been included in the consolidated results of operations since July 1 and August 1, 1999, respectively.
PRO FORMA FINANCIAL INFORMATION
The following table shows the effect of acquisitions on the consolidated financial statements of the Company on a pro forma basis, as if the acquisitions had taken place on January 1, 1998.
4. RESTRUCTURING
In response to volatile global market conditions, the Company implemented a reorganization of the Company's structure and operations in November 1998. The reorganization plan included the centralization of production operations, elimination of production capacity including personnel, facilities and other support costs and reorganization of the sales function.
The total restructuring costs of $1,291,000, charged against income in 1998, comprised planned employee termination costs and lease cancellation costs in four principal areas:
The operations in the USA and Belgium relate to offices established by the Company and consequently have no related goodwill. The European restructuring relates primarily to operations in the U.K. and Spain. These operations were acquired by the Company in 1988 as part of the purchase of Interlingua Group Ltd., a group of translation companies that also included operations in Asia. The future prospects of both of the restructured businesses have been enhanced by these actions. Management has reviewed the future projected revenue from these businesses and concluded that there is no impairment of goodwill.
The restructuring costs summarized above represent costs paid during 1998 and 1999, and accrued at December 31, 1999.
Employee termination costs are payable according to the relevant local law which often provides for payments to be made over a number of months. Lease cancellation costs represent the full cost of terminating leases according to the terms of the lease contracts less expected sub-lease income, if any.
5. SOFTWARE
The Company has capitalized certain costs in connection with developed software for internal use. No amortization has been recorded as the software is not ready for use as of December 31, 1999. The software is expected to be ready for use in the third quarter of 2000.
6. BORROWINGS
CREDIT FACILITIES WITH BANKS
Credit facilities with banks consisted of the following at December 31:
All of the Company's credit facilities have variable interest rates. The interest percentages shown are the actual rates at December 31, 1999. The weighted average interest rate on notes payable to banks was 7.95% at December 31, 1999 and 8.4% at December 31, 1998. Most of the Company's credit facilities are subject to annual renewals and the Company expects them to be renewed on substantially the same terms as currently exist. Occasionally, amounts borrowed under credit facilities are allowed to exceed maximum limits for short periods of time. Due to the short-term nature of these notes, their carrying values at December 31, 1999 approximate their fair values.
The credit facility with the US financial institution is collateralized by US-based accounts receivable, has a maximum limit of $1,000,000 at December 31, 1999, and is limited to 80% of US accounts receivable. Subsequent to year-end this facility was replaced by a line of credit with another US bank. The new credit line has a maximum limit of $2,000,000, and is limited to 80% of US accounts receivable. A leasing facility of $2,000,000 is also available under this banking relationship.
The credit facility with the Canadian bank is collateralized by the accounts receivable of the Canadian subsidiary and is guaranteed by the Company. There is a maximum limit of Canadian $2,500,000 (approximately $1,730,000) at December 31, 1999, and intercompany debts have been subordinated to the bank.
The credit facilities with the UK bank as of December 31, 1999 are provided under an invoice factoring agreement, replacing the credit facility in 1998. There is a maximum limit of 80% of UK receivables (approximately $1,376,000) at December 31, 1999.
The secured credit facility with a German bank is collateralized by the accounts receivable of the German subsidiaries and DM 400,000 (approximately $200,000) is guaranteed by the Company. There is a maximum limit of DM 1.2 million (approximately $620,000) at December 31, 1999. Intercompany debts have been subordinated to the bank. The unsecured credit facility with another German bank has a maximum limit of DM 200,000 (approximately $100,000) at December 31, 1999.
The credit facility with the Spanish bank is guaranteed by the UK subsidiary and has a maximum limit of PTS 9.2 million (approximately $56,000) at December 31, 1999.
The credit facility with a Netherlands Bank had a maximum limit of Guilders 75,000 (approximately $40,000) including office lease guarantees, as of December 31, 1998. It was paid off in full during the year.
As of December 31, 1999, the Company had unused amounts under these credit facilities of approximately $928,000.
6. BORROWINGS (CONTINUED)
RELATED PARTY DEBT
Related party debt consists of the following at December 31, 1999 (thousands of dollars):
The convertible notes to former shareholders of EP were issued on completion of the acquisition (as described in note 3). These notes bear an interest rate of 8 percent and are repayable in three equal installments due 36, 48 and 60 months from the date of the notes, June 30, 1999. The outstanding principal may be converted, at the option of the lender, into restricted shares of the Company's common stock at any time after June 30, 2000. The beginning conversion price is $1.78 (based on the average market value of the Company's stock for the five trading days prior to the note date, June 30, 1999) and increases by 10 percent per year beginning June 30, 2001. The Company has the right to repay the outstanding principal of the notes at any time without penalty.
The note to the former shareholder of TPS was issued on completion of the acquisition (as described in note 3), has a principal of Dutch Guilders DFL 1.7 million (approximately $790,000), and is repayable on July 30, 2000 together with interest at 5%.
During 1999, the Company issued approximately $1.8 million of convertible notes to private investors, $490,000 of which were issued to related parties. These notes have a variable interest rate of US prime plus 2% (10.25% as of December 31, 1999), and are repayable in three equal installments due 36, 48 and 60 months from the date of issuance. The outstanding principal is convertible, at the option of the lender, into restricted shares of the Company's common stock at any time after issuance. The conversion price is the average market value of the Company's stock for the five trading days prior to issuance of the note. The conversion price of the notes ranges from $1.72 to $2.73. The Company has the right to prepay the notes at any time prior to maturity, upon 30 days' notice.
The aggregate maturities of long-term related party debt as of December 31, 1999 were as follows:
6. BORROWINGS (CONTINUED)
LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
The convertible notes were issued on identical terms to the notes issued to related parties, as described above. The Company has issued an additional $300,000 of convertible notes subsequent to December 31, 1999 with conversion prices between $4.56 and $5.30.
The aggregate maturities of long-term debt as of December 31, 1999 were as follows:
Based on a discounted cash flow analysis, the carrying values of long-term debt at December 31, 1999 approximate fair values.
At December 31, 1999 and 1998, the gross amount of equipment recorded under capital leases was $724,000 and $897,000, respectively. Accumulated amortization on these assets at December 31, 1999 and 1998 was $445,000 and $335,000, respectively.
7. CAPITAL STOCK
EQUITY TRANSACTIONS
In 1995, the Company issued 87,339 shares of series D Convertible Preferred Stock to a shareholder and director, in exchange for the cancellation of a 300,000 Swiss franc (approximately $243,000) note payable. The series D Preferred Stock is convertible at the option of the holder into nine shares of the Company's Common Stock, has voting rights as if the shares were already converted, and features a 10% non-cumulative dividend subject to the discretion of the Board of Directors.
In March 1997, the Company issued 652,035 shares of Common Stock upon conversion of 47,647 shares of series B Convertible Preferred Stock and 56,566 shares of series C Convertible Preferred Stock. In December 1997, the Company issued 4,749,219 shares of Common Stock upon conversion of 527,691 shares of series C Convertible Preferred Stock. As of December 31, 1999, only shares of series D Convertible Preferred Stock remain outstanding.
In 1994, the Company entered into a "financial monitoring agreement" with its largest shareholder which required the Company, among other things, to obtain prior approval for major financing transactions, significant asset purchases or sale of a major portion of the Company's assets. Subsequent to December 31, 1999, the conditions attached to this agreement were met and the Company has been released from the obligations under this agreement.
During 1999, the Company issued 3,049,518 shares of common stock in connection with acquisitions. The Company is currently prohibited from paying dividends under Utah corporate law.
INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted income (loss) per share.
7. CAPITAL STOCK (CONTINUED)
STOCK OPTIONS
As of December 31, 1999, the Company had two stock option plans: a non-statutory stock option plan and an executive stock option plan. At December 31, 1999, a total of 5,102,323 shares of the Company's authorized Common Stock were reserved for ultimate issuance under the two plans (the "Option Plans"), of which 1,662,897 shares have been issued. The Company has granted non-qualified stock options to employees, officers and independent members of the Board of Directors under the Option Plans.
The exercise terms of the options granted under the non-statutory stock option plan provide that the options expire six years after date of grant and cannot be exercised during the first year. The options vest 20% per year over a five year period. The exercise terms of the options granted under the executive stock option plan generally provide for vesting over the period from June 1998 through June 2000. All unexercised options under this plan expire on September 1, 2000 or when the employee terminates employment with the Company, if sooner.
The Company has elected to continue to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations in accounting for its Option Plans. The alternative fair value method of accounting prescribed by Financial Accounting Standard No. 123, "Accounting for Stock- Based Compensation" ("FAS 123"), requires the use of option valuation models that were not developed for use in valuing employee stock options, as discussed below. Accordingly, under APB 25, no compensation expense has been recognized for stock option grants because the exercise price of stock options equals or exceeds the market price of the Company's Common Stock on the date of grant.
If the Company had elected to account for options granted in 1999, 1998 and 1997 based on their fair value, as prescribed by FAS 123, net income and income per share would have been adjusted to the pro forma amounts shown in the table below. All income per share amounts have been restated as required to comply with FAS 128.
The fair value of each stock option grant was determined using the Black-Scholes option pricing model and the following assumptions: expected stock price volatility of .8 to 1.0, risk-free interest rate of 6%, weighted average expected option lives ranging from three to four years, and no dividends. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value, in management's opinion the existing models do not necessarily provide a reliable single measure of the fair value of stock options. The method of accounting for stock options as defined by FAS 123 has not been applied to options granted prior to January 1, 1996, and therefore the resulting pro forma compensation cost may not be representative of that to be expected in future years.
7. CAPITAL STOCK (CONTINUED)
The following table is a summary of activity for the Company's Option Plans for the years ended December 31:
The following table summarizes information about stock options outstanding at December 31, 1999:
8. INCOME TAXES
The Company files a consolidated US Federal income tax return which includes all domestic operations. Tax returns for states within the US and for foreign subsidiaries are filed in accordance with applicable laws. The following summarizes for income tax purposes, the domestic and foreign components of income (loss) before income taxes for the year ended December 31:
Income tax expense, including the effect of net operating loss carryforwards, consisted of the following for the year ended December 31:
8. INCOME TAXES (CONTINUED)
Income tax expense varied from the expected statutory domestic federal income tax amount as follows for the year ended December 31:
The approximate tax effect of the temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows for the year ended December 31:
Due to prior years' operating losses, the Company and certain of its subsidiaries have net operating loss carryforwards available to offset future taxable income in the various countries in which the Company operates. The US parent company has no net operating loss carryforwards for state income tax purposes. The Company has approximately $150,000 of general business tax credit carryforwards available to offset future US federal income taxes which expire in 2000 through 2001. The valuation allowance has been adjusted for net operating losses generated and utilized in each of the three years.
The following table summarizes by geographic region the significant available operating loss carryforwards and the related expiration dates.
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
All of the Company's office space and various equipment is rented under leases which are classified as operating leases. These leases have remaining terms of up to 15 years. Certain of the leases for office space contain renewal options and adjustment clauses based on consumer price indices. Total rental expense for all operating leases was approximately $2.4 million in 1999, $2.4 million in 1998, and $2.2 million in 1997. Certain office space was subleased pursuant to a contract expiring in 1999. Total sublease rental income was approximately $54,000 in 1999, $79,000 in 1998, and $96,000 in 1997.
At December 31, 1999, future minimum payments under non-cancelable operating leases with initial terms of one year or more, are as follows:
EMPLOYEE BENEFIT PLANS
ALPNET, Inc. has a contributory profit sharing plan ("Plan") which is designed to meet the requirements for qualification under Section 401(k) of the US Internal Revenue Code. Under this provision, contributions by US employees are excluded from their taxable income. The Plan provides retirement benefits for US employees meeting certain eligibility requirements.
Certain of the Company's subsidiaries have defined contribution plans which cover substantially all of their employees. Contributions are based upon percentages of participating employees' compensation.
The cost of all of these plans was approximately $277,000 in 1999, $180,000 in 1998, and $109,000 in 1997.
CONTINGENT LIABILITIES
The Company has committed to purchase approximately $1.4 million of equipment and related software during 2000.
10. RELATED PARTY TRANSACTIONS
As of December 31, 1999, the Company has a $21,000 unsecured promissory note receivable, bearing interest at prime plus 3%, from an officer and director of the Company. The note balance was $34,000 at December 31, 1998 and $44,700 at December 31, 1997.
Sales of services include approximately $325,000 to companies controlled by Stork N.V., former owner of TPS and significant shareholder of the Company. The balance receivable from related companies amounted to approximately $140,000 as of December 31, 1999. The Company also paid approximately $80,000 for a lease on facilities to a subsidiary of Stork N.V.
11. VALUATION AND QUALIFYING ACCOUNTS
The following table sets out the activity in the Company's allowance for doubtful receivables:
Additions represent amounts charged to costs and expenses for doubtful receivables. Deductions represent the write-off of specific accounts receivable.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders ALPNET, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of ALPNET, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of ALPNET Canada Inc., a subsidiary of ALPNET, Inc., which statements reflect total assets constituting 12% as of December 31, 1999 and 19% as of December 31, 1998, and total revenues constituting 17% in 1999, 18% in 1998 and 15% in 1997 of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for ALPNET Canada Inc., is based solely on the report of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the United States.. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ALPNET, Inc. and subsidiaries at December 31, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Salt Lake City, Utah March 10, 2000
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of ALPNET Canada, Inc.
We have audited the balance sheets of ALPNET Canada, Inc. as at December 31, 1999 and 1998 and the statements of earnings, deficit and cash flows for each of the years ended December 31, 1999 and 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the years ended December 31, 1999 and 1998 in accordance with generally accepted accounting principles.
\s\ RICHTER, USHER & VINEBERG
Chartered Accountants
Montreal, Quebec March 3, 2000
REPORT OF INDEPENDENT AUDITORS
To the Shareholder of ALPNET Canada Inc.
We have audited the balance sheets of ALPNET Canada Inc. as at December 31, 1997 and 1996 and the statements of earnings, deficit and changes in financial position for each of the years ended December 31, 1997, 1996 and 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 1997 and 1996 and the results of its operations and the changes in its financial position for each of the years in the three year period ended December 31, 1997 in accordance with generally accepted accounting principles.
\s\ FRIEDMAN & FRIEDMAN
Chartered Accountants
Montreal, Quebec February 13, 1998
ITEM 9:
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10:
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information with respect to directors required by Item 10 of Form 10-K is presented in the section titled "Information About Directors and Nominees for Director" in the Company's definitive Proxy Statement dated April 10, 2000 and is incorporated herein by reference. The information with respect to Executive Officers is presented in the section titled "Information About Directors and Nominees for Director in the Company's definitive Proxy Statement dated April 10, 2000 and is incorporated herein by reference. The information with respect to other significant employees is presented in the section titled "Certain Significant Employees" in the Company's definitive Proxy Statement dated April 10, 2000 and is incorporated herein by reference.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
Information required by Item 11 of Form 10-K is presented in the sections titled "Compensation of Directors," "Executive Compensation and Related Information" and "Compensation Pursuant to Plans" in the Company's definitive Proxy Statement dated April 10, 2000 and is incorporated herein by reference.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 of Form 10-K is presented in the sections titled "Principal Shareholders" and "Information About Directors and Nominees for Director" in the Company's definitive Proxy Statement dated April 10, 2000 and is incorporated herein by reference.
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 of Form 10-K is presented in the section titled "Certain Relationships and Related Transactions" in the Company's definitive Proxy Statement dated April 10, 2000 and is incorporated herein by reference.
PART IV
ITEM 14:
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS:
The financial statements are included in Item 8, Financial Statements and Supplementary Data, as listed in the following index:
(2) FINANCIAL STATEMENT SCHEDULES:
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions and therefore have been omitted, or are not presented because the information required is included in the financial statements or notes thereto.
(3) LISTING OF EXHIBITS:
(b) EXHIBITS:
The response to this portion of Item 14 is submitted as a separate section of this report. See Item 14(a)(3) above.
(c) FINANCIAL STATEMENT SCHEDULES:
The response to this portion of Item 14 is submitted as a separate section of this report. See Item 14(a)(2) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ALPNET, INC.
By: -------------------------------------- Jaap van der Meer, President and CEO
Date: --------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.