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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number: 0-28132
LANVISION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1455414
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5481 Creek Road
Cincinnati, Ohio 45242-4001
(Address of principal executive offices) (Zip Code)
(513) 794-7100
(Registrant's telephone number, including area code)
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 [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Number of shares of Registrant's Common Stock ($.01 par value per
share) issued and outstanding, as of October 31, 2003: 9,012,732.
1
TABLE OF CONTENTS
Page
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements....................................................... 3
Condensed Consolidated Balance Sheets at October 31, 2003 and January 31, 2003.................... 3
Condensed Consolidated Statements of Operations for the three and nine months ended October 31,
2003 and 2002..................................................................................... 5
Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2003 and
2002.............................................................................................. 6
Notes to Condensed Consolidated Financial Statements.............................................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............. 12
Item 4. Controls and Procedures........................................................................... 22
Part II. OTHER INFORMATION
Item 1. Legal Proceedings................................................................................. 23
Item 3. Defaults on Senior Securities..................................................................... 23
Item 6. Exhibits and Reports on Form 8-K.................................................................. 24
Signatures........................................................................................ 25
2
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
(Unaudited) (Audited)
October 31, January 31,
2003 2003
---- ----
Current assets:
Cash and cash equivalents (restricted by long-term debt agreement) $ 4,750,839 $ 7,242,230
Accounts receivable, net of allowance for doubtful
accounts of $400,000, respectively 2,833,755 1,499,767
Contract receivables 2,106,118 3,074,596
Prepaid expenses related to unrecognized revenue 31,166 79,214
Other 403,540 246,966
-------------- -------------
Total current assets 10,125,418 12,142,773
Property and equipment:
Computer equipment 2,484,920 2,351,203
Computer software 789,351 743,204
Office furniture, fixtures and equipment 1,161,551 1,153,934
Leasehold improvements 157,492 153,549
-------------- -------------
4,593,314 4,401,890
Accumulated depreciation and amortization (3,542,926) (3,137,943)
-------------- -------------
1,050,388 1,263,947
Capitalized software development costs, net of accumulated
amortization of $2,475,228 and $2,100,228, respectively 1,614,701 1,389,701
Installment receivables 433,339 433,339
Other 38,050 107,316
-------------- -------------
$ 13,261,896 $ 15,337,076
============== =============
See Notes to Condensed Consolidated Financial Statements.
3
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity
(Unaudited) (Audited)
October 31, January 31,
2003 2003
---- ----
Current liabilities:
Accounts payable $ 338,131 $ 721,402
Accrued compensation 285,551 308,658
Accrued other expenses 506,081 1,392,157
Deferred revenues 1,899,460 2,220,383
Current portion of capitalized leases 216,571 206,051
Current portion of long-term debt 1,500,000 2,000,000
Accrued interest on long-term debt 4,237,982 -
------------- --------------
Total current liabilities 8,983,776 6,848,651
Capitalized leases 224,551 388,320
Long-term debt - 1,000,000
Long-term accrued interest on long-term debt - 3,133,369
Convertible redeemable preferred stock, $.01 par value per share
5,000,000 shares authorized - -
Stockholders' equity:
Common stock, $.01 par value per share, 25,000,000 shares
authorized, 9,012,732 and 8,959,004 shares issued, respectively 90,127 89,590
Capital in excess of par value 34,902,476 34,835,639
Accumulated (deficit) (30,939,034) (30,958,493)
------------- --------------
Total stockholders' equity 4,053,569 3,966,736
------------- --------------
$ 13,261,896 $ 15,337,076
============= ==============
See Notes to Condensed Consolidated Financial Statements.
4
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended October 31,
(Unaudited)
Three Months Nine Months
------------- -----------
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Systems sales $1,301,596 $1,274,820 $2,814,055 $3,947,325
Services, maintenance and support 1,871,538 1,634,525 5,071,091 4,880,297
Application-hosting services 493,520 299,246 1,368,080 686,376
---------- ---------- ---------- ----------
Total revenues 3,666,654 3,208,591 9,253,226 9,513,998
Operating expenses:
Cost of systems sales 267,703 260,934 1,173,473 904,838
Cost of services, maintenance and support 749,208 660,790 2,079,625 2,198,711
Cost of application-hosting services 240,563 195,184 670,059 337,513
Selling, general and administrative 914,128 822,764 2,392,369 2,572,838
Product research and development 509,923 517,455 1,554,029 1,567,288
---------- ---------- ---------- ----------
Total operating expenses 2,681,525 2,457,127 7,869,555 7,581,188
---------- ---------- ---------- ----------
Operating income 985,129 751,464 1,383,671 1,932,810
Other income (expense):
Interest income 10,851 32,725 47,201 90,477
Interest expense (494,325) (518,750) (1,391,413) (1,470,947)
---------- ---------- ---------- ----------
Earnings before income taxes 501,655 265,439 39,459 552,340
Income taxes (20,000) (13,000) (20,000) -
---------- ---------- ---------- ----------
Net earnings $ 481,655 $ 252,439 $ 19,459 $ 552,340
========== ========== ========== ==========
Basic net earnings per common share $ .05 $ .03 $ .00 $ .06
========== ========== ========== ==========
Diluted net earnings per common share $ .05 $ .03 $ .00 $ .06
========== ========== ========== ==========
Number of shares used in per common share
computations:
Basic 9,011,131 8,945,338 8,989,303 8,929,250
========== ========== ========== ==========
Diluted 9,219,150 9,174,550 9,195,854 9,197,401
========== ========== ========== ==========
See Notes to Condensed Consolidated Financial Statements.
5
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended October 31,
(Unaudited)
2003 2002
---- ----
Operating activities:
Net earnings $ 19,459 $ 552,340
Adjustments to reconcile net earnings to net cash
(used for) provided by operating activities:
Depreciation and amortization 779,983 536,159
Increase in long-term accrued interest 1,104,613 527,021
Cash (used for) provided by assets and liabilities:
Accounts and contract receivables (365,510) (1,652,872)
Other current assets (108,526) 40,889
Accounts payable and accrued expenses (1,292,454) 128,351
Deferred revenues (320,923) 567,233
----------- -----------
Net cash (used for) provided by operating activities (183,358) 699,121
----------- -----------
Investing activities:
Purchases of property and equipment (191,424) (422,572)
Capitalization of software development costs (600,000) (450,000)
Other 69,266 37,652
----------- -----------
Net cash (used for) investing activities (722,158) (834,920)
----------- -----------
Financing activities:
Repayment of long-term debt (1,500,000) (1,500,000)
Payment of capitalized leases (153,249) (21,539)
Exercise of stock options and employees stock purchase plan 67,374 38,412
----------- -----------
Net cash (used for) financing activities (1,585,875) (1,483,127)
=========== ===========
(Decrease) in cash and cash equivalents (2,491,391) (1,618,926)
Cash and cash equivalents at beginning of period 7,242,230 7,865,053
----------- -----------
Cash and cash equivalents at end of period $ 4,750,839 $ 6,246,127
=========== ===========
Supplemental cash flow disclosures:
Interest paid $ 254,005 $ 909,333
=========== ===========
Capital lease obligations incurred $ - $ 654,130
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
6
LANVISION SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared by the Company without audit, in accordance with accounting principles
generally accepted in the United States for interim financial information,
pursuant to the rules and regulations applicable to quarterly reports on Form
10-Q of the U. S. Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the Condensed Consolidated Financial
Statements have been included. These Condensed Consolidated Financial Statements
should be read in conjunction with the financial statements and notes thereto
included in the most recent LanVision Systems, Inc. Annual Report on Form 10-K,
Commission File Number 0-28132. Operating results for the three or nine months
ended October 31, 2003, are not necessarily indicative of the results that may
be expected for the fiscal year ending January 31, 2004.
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Company's significant accounting policies is presented
beginning on page 34 of its 2002 Annual Report to Stockholders on Form 10-K.
Users of financial information for interim periods are encouraged to refer to
the footnotes contained in the Annual Report to Stockholders when reviewing
interim financial results. There has been no material change in the accounting
policies followed by the Company during fiscal year 2003.
Note 3 - CHANGES IN BALANCE SHEET ACCOUNT BALANCES
The $2,491,391 decrease in cash and cash equivalents results primarily from the
payment of $1,653,249 in long-term debt and capitalized leases and $600,000 in
capitalized software development costs during the first nine months of the
fiscal year.
The increase in accounts receivable is due to the timing of recent large sales
through a reseller.
The decrease in contract receivables is due to invoicing of contracts with
deferred payment provisions and the write off of contract receivables relating
to certain end users that have ceased implementation of their contracted systems
licensed through a reseller.
Other current assets consist of software and hardware awaiting installation
(related to unrecognized revenue) and prepaid expenses, including commissions.
7
The decrease in property and equipment, net, is primarily the result of the
acquisition of replacement equipment and software necessary to support current
customers, offset by normal depreciation and amortization.
The decrease in accounts payable results primarily from the payment of invoices
for hardware sales to new customers recorded in late January 2003.
The decrease in accrued compensation results primarily from the decrease in the
accrual for quarterly bonuses payable under the employee bonus plans.
The decrease in accrued other expenses relates to the settlement of certain
accrued obligations relating to contract receivables where certain end users
that have ceased implementation of their systems licensed through a reseller.
The decrease in deferred revenues results from the recognition of revenue
related to billings to customers recorded prior to revenue recognition.
The increase in accrued interest on long-term debt results from the normal
increase in the deferred interest payable under the loan. The long-term accrued
interest has been classified as a current liability as the amount is due and
payable in July 2004. See also long-term debt Note 6.
Note 4 - STOCK OPTIONS
During the first nine months of the current fiscal year, the Company granted
47,500 options under all Stock Option Plans. During the same period, 3,834
options were forfeited under all plans and 35,667 options were exercised under
all plans during the first nine months.
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, establishes a fair value method of financial accounting and
reporting for stock-based compensation plans. LanVision elected to continue to
account for stock options under the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and, accordingly, has adopted the disclosure only provisions of
Statement 123. At October 31, 2003, LanVision had three stock-based compensation
plans, which are more fully disclosed in Note 7 of the Notes to Consolidated
Financial Statements in the Form 10-K for the fiscal year ended January 31,
2003. No stock-based compensation cost is reflected in the net earnings, as all
options granted under the plans had exercise prices equal to the fair market
value of the underlying common stock on the date of grant. The following table
illustrates the effect on net earnings and earnings per share as if LanVision
had applied the fair value recognition provisions of Statement of Financial
Accounting Standards No. 123, to stock-based employee compensation.
8
Three Months Nine Months
--------------------------- ----------------------
2003 2002 2003 2002
---- ---- ---- ----
Net earnings, as reported $ 481,655 252,439 $ 19,459 $ 552,340
Deduct: Total stock based
compensation expense determined under
the fair value based methods for all
awards, net of tax related effects (12,139) (54) (13,143) (24,273)
---------- ---------- --------- ---------
Pro forma net earnings $ 469,516 $ 252,385 $ 6,316 $ 528,067
========== ========== ========= =========
Earnings per share
Basic - as reported $ 0.05 $ 0.03 $ 0.00 $ 0.06
========== ========== ========= =========
Basic - pro forma $ 0.05 $ 0.03 $ 0.00 $ 0.06
========== ========== ========= =========
Earnings per share
Diluted - as reported $ 0.05 $ 0.03 $ 0.00 $ 0.06
========== ========== ========= =========
Diluted - pro forma $ 0.05 $ 0.03 $ 0.00 $ 0.06
========== ========== ========= =========
The assumptions used to calculate the fair value of options granted are
evaluated and revised, as necessary, to reflect current market conditions and
prior experience.
Note 5 - EARNINGS PER SHARE
The basic net earnings per common share is calculated using the weighted average
number of common shares outstanding during the period.
The 2003 diluted net earnings per common share calculation, is based on the
weighted average number of common shares outstanding adjusted for the dilutive
effect of the common stock equivalents (stock options and the employee stock
purchase plan) of 208,019 shares in the third quarter and 206,551 shares in the
first nine months of 2003. The Company had approximately 177,775 option shares
outstanding at October 31, 2003 that were not included in the diluted net
earnings per share calculations as the inclusion thereof would be antidilutive.
The 2002 diluted net income per common share calculation, is based on the
weighted average number of common shares outstanding adjusted for the dilutive
effect of the common stock equivalents (stock options and the employee stock
purchase plan) of 229,212 shares in the third quarter and 268,151 shares in the
first nine months of 2002. The Company had approximately 174,775 option shares
outstanding at October 31, 2002 that were not included in the diluted net
earnings per share calculations as the inclusion thereof would be antidilutive.
Note 6 - CONTRACTUAL OBLIGATIONS
The following table details the remaining obligations, by fiscal year, as of the
end of the quarter for, the capitalized leases, long-term debt, accrued interest
on the long-term debt and the operating leases.
9
2003 2004 2005 2006 2007
---- ---- ---- ---- ----
Capitalized leases $ 59,974 $ 239,895 $ 173,234 $ - $ -
Long-term debt 500,000 1,000,000 - - -
Accrued interest, assuming
no Warrant value (see below) - 5,238,618 - - -
Operating leases 73,221 86,158 10,077 5,690 -
---------- ---------- ---------- ---------- ------
Total $ 633,195 $6,564,671 $ 183,311 $ 5,690 $ -
========== ========== ========== ========== ======
Capitalized Leases
During fiscal year 2002, LanVision acquired computer equipment and related
software for a new application-hosting services data center, which are accounted
for as capitalized leases. The amount of the leased assets by category is
computer equipment $372,705; computer software $196,799; and prepaid maintenance
and expenses $84,626, for a total of $654,130 in new assets. The leases are
payable monthly in installments of $19,991, through August 2005 and an
additional amount of $8,323, through December 2005. The present value of the
future lease payments upon lease inception was $654,130 using the interest rates
implicit in the lease agreements at the inception of the leases.
Long-term Debt
The long-term debt of $1,500,000 and the accrued interest on the long-term debt
of $4,237,982, is secured by all of the assets of LanVision and the loan
agreement, as amended, restricts LanVision from incurring additional
indebtedness for borrowed money, including capitalized leases, limits certain
investments, restricts substantial asset sales, capital expenditures, cash
dividends, stock repurchases, and mergers and consolidations with unaffiliated
entities without lender consent. In addition, LanVision is required to meet
certain financial covenants, including minimum levels of revenues, earnings, and
net worth. In addition, the loan agreement requires LanVision to maintain a
minimum cash balance of $3,800,000, through the maturity of the loan in July
2004. LanVision complied with all of the provisions of the loan agreement during
the quarter. LanVision believes that it will be able to comply with all of its
covenants for the remainder of fiscal year 2003, and the likelihood of
defaulting on the debt covenants is not likely absent any material adverse
events that may affect the Company, the healthcare industry or our market. In
the past, LanVision has requested, and the lender has granted, waivers of
certain debt covenants. However, our expectations of future operating results
and continued compliance with the debt covenants cannot be assured and the
lenders' actions are not controllable by us. If the projections of future
operating results are not achieved and the debt is placed in default, LanVision
would experience a material adverse impact on the reported financial position
and results of operations.
10
In connection with the issuance of the long-term debt, LanVision issued Warrants
to purchase 750,000 shares of Common Stock of LanVision at $3.87 per share at
any time through July 16, 2008. The Warrants are subject to customary
antidilution and registration rights provisions.
Under the terms of the long-term debt agreement, LanVision has guaranteed the
lender that the increase in the market value of the stock underlying the
Warrants, at the time of loan maturity, over the exercise price plus the 12%
interest paid on the loan will yield the lender a 25% compound annual return. If
the yield from the Warrants plus interest paid does not provide the lender with
the 25% guaranteed compound annual return, LanVision is required to pay the
additional amount in cash at the time of maturity. Accordingly, LanVision is
accruing interest on the loan at a 25% compound interest rate, regardless of the
market value of the stock and the inherent value of the Warrants. Assuming that
the Warrants have no value, the maximum amount of the accrued and unpaid
interest at maturity in July 2004 will be $5,238,618.
In accordance with U. S. Generally Accepted Accounting Principles (GAAP), the
accrued and unpaid interest payable on the debt, which is due and payable in
July 2004, is classified as a current liability notwithstanding the fact that
LanVision intends to refinance some or all of this liability with a new loan.
However, because LanVision has not negotiated such refinancing and not entered
into a refinancing agreement as of the balance sheet date, the liability for the
accrued interest on the long-term debt, as required by GAAP, is classified as a
current liability.
The Company has received a nonbinding expression of interest to refinance our
existing debt, in July 2004, at an attractive interest rate. The Company is
continuing to seek additional sources to refinance this debt with the ultimate
goal of retiring it completely, as quickly as practicable.
Warranties and Indemnities
LanVision provides for the estimated cost of the product warranties at the time
revenue is recognized. Should products fail to meet certain performance
standards for an initial warranty period, LanVision's estimated warranty
liability might need to be increased. LanVision bases its warranty estimates on
the nature of any performance complaint, the effort necessary to resolve the
issue, customer requirements and any potential concessions, which may be
required to be granted to a customer, which result from performance issues. Some
LanVision software license agreements and the ASPeN(SM) application-hosting
services guarantees specific "up-time" and "response time" performance
standards, which, if not met may result in software license revenue refunds or
reduced application-hosting revenues as a penalty for the month in which the
standards are not met for application-hosting customers. LanVision's standard
agreements with its customers also usually include provisions to indemnify them
from and against third party claims, liabilities, damages, and expenses arising
out of LanVision's operation of its business or any negligent act or omission of
LanVision. To date, LanVision has always maintained the performance standards
and has not been required to make any material penalty payments to customers or
indemnify any customers for any material third party claims. Each contract is
reviewed quarterly with the appropriate LanVision Client Manager to determine
the need for a reserve based upon the most currently available information as to
the status of the contract, the customer comments, if any, and the status of any
open or unresolved issues with the customer.
11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In addition to historical information contained herein, this Discussion and
Analysis, as well as other Items in this Form 10-Q, contains forward-looking
statements. The forward-looking statements contained herein are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements, included
herein. These risks and uncertainties include, but are not limited to, the
Company's ability to refinance the long-term debt and deferred interest at
maturity, the impact of competitive products and pricing, product demand and
market acceptance, new product development, key strategic alliances with vendors
that resell LanVision products, the ability of the Company to control costs,
availability of products obtained from third party vendors, the healthcare
regulatory environment, healthcare information systems budgets, availability of
healthcare information systems trained personnel for implementation of new
systems, as well as maintenance of legacy systems, fluctuations in operating
results and other risks detailed from time to time in the LanVision Systems,
Inc. filings with the Securities and Exchange Commission. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. The Company undertakes no
obligation to publicly release the results of any revision to these
forward-looking statements, which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
LanVision's discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires LanVision
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent
liabilities. On an on-going basis, LanVision evaluates its estimates, including
those related to product revenues, bad debts, capitalized software development
costs, income taxes, warranty obligations, support contracts, contingencies, and
litigation. LanVision bases its estimates on historical experience and on
various other assumptions that LanVision believes are reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities and revenue recognition. Actual
results may differ from these estimates under different assumptions or
conditions.
Current Regulatory Matters
The U. S. Department of Health and Human Services (HSS) has asked the Institute
of Medicine to design a standardized model of an electronic health record, in a
move that may help spur nationwide acceptance of Electronic Medical Records. The
tentative date for the completed design is 2004. The impact of such change, if
implemented by HSS, on current LanVision products and services is unknown at
this time. However, LanVision believes that its software and systems are
sufficiently flexible to accommodate changing regulatory requirements.
12
RESULTS OF OPERATIONS
GENERAL
LanVision Systems, Inc. (LanVision(TM) or the Company) is a leading supplier to
the healthcare industry of workflow and document imaging-based tools,
applications and services assisting strategic business partners, healthcare
organizations and customers to create and improve operational efficiencies
through business process re-engineering and automating labor-intensive and
demanding paper environments. The Company's workflow-based services offer
solutions to specific healthcare business processes within the revenue cycle,
such as remote coding, abstracting and chart completion, remote physician order
processing, pre-admission registration scanning, insurance verification,
secondary billing services, explanation of benefits processing and release of
information processing. All solutions are available to license or via an
application service provider (ASP) model to match customers' capital or
operating budget needs.
LanVision's products and services create an integrated repository of historical
health information that is complementary and can be seamlessly "bolted on" to
existing clinical, financial and management information systems, providing
convenient electronic access to all forms of patient information from any
location, including web-browser based access via the Intranet/Internet. These
integrated systems allow providers and administrators to improve dramatically
the availability of patient information while decreasing direct costs associated
with document retrieval, workflow processing, completion, retention and
archiving.
LanVision's Web based applications leverage the availability of the Internet and
Intranets to allow authenticated users, such as physicians, nurses,
administrative and financial personnel, and payers with access to patient
healthcare information that exists in disparate systems across the continuum of
care. LanVision's software application products and services use document
imaging and advanced workflow tools to ensure users can electronically access
both "structured" and "unstructured" patient data and all the various forms of
clinical and financial healthcare information from a single permanent and secure
repository, including clinician's handwritten notes, lab reports, photographs,
insurance cards, etc. LanVision's workflow solutions offer value to all of the
constituents in the healthcare delivery process by enabling them to
simultaneously access and utilize LanVision's accessANYware(TM) a
technologically advanced medical record workflow solution and health information
repository to process the information, on a real-time basis, from virtually any
location, including the physician's desktop, using Web-based technology. Web
access to the entire medical record repository improves physician and
administrative personnel productivity, allows for multiple simultaneous access
to the records necessary to review and complete, using completionANYware(TM),
the information necessary to process claims for payment, using
codingANYware(TM), and reduces administrative costs such as filing, storage,
retrieval, using accessANYware and releaseANYware(TM) and reduces the cost of
maintaining medical records and reduces clinical costs, such as redundant
diagnostic testing.
Throughout the current fiscal year, LanVision has introduced several new
workflow products that positively impact the revenue cycle, including the
following:
13
- ORDERS MANAGEMENT WORKFLOW(TM), automated solution that reduces the
paper chase by capturing and routing "off-network" physician orders
and other documents directly from the physician's office to the
scheduler's desktop.
- FINANCIAL SCREENING WORKFLOW(TM), provides verification of patient's
financial responsibilities and allows enterprise wide on-line access
to important documents required in the financial decision process.
- EOB 835 PROCESSING(TM), automates the capture and extraction of vital
Explanation of Benefit data from existing printed invoices, forms and
other documents, and validates the information to create an ASCII file
for export to billing systems.
- INSURANCE VERIFICATION WORKFLOW(TM), automatically scans insurance
cards to capture payor information at the point of registration and
establishes workflow routes for timely verification of benefits,
insuring timely payment of bills.
- ACCESSANYWARE - PATIENT FINANCIAL SERVICES EDITION, provides
enterprise wide on-line access to non-medical record documents
including EOB's, Remittance Advice, Policies and Procedures and other
Patient Financial Services documents within the heath care enterprise.
LanVision's solutions integrate a document imaging platform, application
workflow suites, and image and Web-enabling tools that allow for the seamless
merger of "back office" functionality with existing Clinical Information Systems
at the desktop. LanVision offers a document imaging/management infrastructure
(Foundation Suite) that is built for high volume transaction processing and is
specifically designed for the healthcare industry. In addition to providing
access to information not previously available at the desktop, LanVision's
applications fulfill the administrative and legal needs of the Medical Records
and Patient Financial Services departments. Furthermore, these systems have been
specifically designed to integrate with any Clinical Information System. For
example, LanVision has integrated its products with selected systems from IDX
Information Systems Corporation, Cerner Corporation and Siemens Medical
Solutions Health Services Corporation applications. By offering electronic
access to all the patient information components of the medical record, this
integration completes one of the most difficult tasks necessary to provide a
true Electronic Health Record (EHR). LanVision's systems deliver on-line
enterprisewide access to fully updated patient information, which historically
was maintained on a variety of media, including paper, magnetic disk, optical
disk, and microfilm.
Historically, LanVision has derived most of its revenues from systems sales and
professional services involving the licensing, either directly or through
remarketing partners, of its Medical Record Workflow solutions to Integrated
Healthcare Delivery Networks (IDN). In a typical transaction, LanVision, or its
remarketing partners, enter into a perpetual or term license or fee-
14
for-service agreement for LanVision's software application suite and may license
or sell other third-party software and hardware components to the IDN.
Additionally, LanVision, or its remarketing partners provide professional
services, including implementation, training, and product support.
With respect to systems sales, LanVision earns its highest margins on
proprietary LanVision software or application-hosting services and the lowest
margins on third-party hardware. Systems sales to customers may include
different configurations of software hardware and professional services,
resulting in varying margins among contracts. The margins on professional
services revenues fluctuate based upon the negotiated terms of the agreement
with each customer and LanVision's ability to fully utilize its professional
services, maintenance, and support services staff.
Beginning in 1998, LanVision began offering customers the ability to obtain its
workflow solutions on an application-hosting basis as an Application Service
Provider. LanVision established a hosting data center and installed LanVision's
suite of workflow products, called ASPeN(SM) (Application Service Provider
eHealth Network) within the hosting data center. Under this arrangement,
customers electronically capture information and securely transmit the data to
the hosting data center. The ASPeN services store and manage the data using
LanVision's suite of applications, and customers can view, print, fax, and
process the information from anywhere using the LanVision Web-based
applications. LanVision charges and recognizes revenue for these ASPeN services
on a per transaction or subscription basis as information is captured, stored,
retrieved and processed.
In February 2000, LanVision sold its application-hosting data center.
Simultaneously therewith, LanVision entered into an annual service agreement
with the buyer. Under the terms of this service agreement, LanVision continued
to use this data center through January 2003. In August 2002, LanVision
established a new application-hosting data center in order to provide the
capacity for all of its ASPeN services clients and into which it has
consolidated its existing ASPeN application-hosting services. Approximately
$964,000 in new hardware and third-party software was leased or purchased, in
fiscal year 2002 and 2003, for the new application-hosting data center.
The decision by a healthcare provider to replace, substantially modify, or
upgrade its information systems is a strategic decision and often involves a
large capital commitment requiring an extended approval process. Since
inception, LanVision has experienced extended sales cycles, which has adversely
affected revenues. It is not uncommon for sales cycles to take six to eighteen
months from initial contact to the execution of an agreement. As a result, the
sales cycles can cause significant variations in quarter-to-quarter operating
results. These agreements cover the entire implementation and maintenance of the
system and specify the installation schedule, which typically takes place in one
or more phases. The licensing agreements generally provide for the licensing of
LanVision's proprietary software and third-party software with a perpetual or
term license fee that is adjusted depending on the number of concurrent users or
workstations using the software. Third-party hardware is sold outright, with a
one-time fee charged for installation and training. Site-specific customization,
interfaces with existing
15
customer systems and other consulting services are sold on a fixed fee or a time
and materials basis. Alternatively, with LanVision's ASPeN services solution,
the application-hosting services agreements generally provide for utilizing
LanVision's software and third-party software on a fee per transaction or
subscription basis.
ASPeN services was designed to overcome obstacles in the buying decision such as
large capital commitment, length of implementation, and the scarcity of time for
Healthcare Information Systems personnel to implement new systems. LanVision
believes that Integrated Delivery Networks will begin to look for this type of
ASP application because of the ease of implementation and lower entry-level
costs. LanVision believes its business model is especially well suited for the
ambulatory marketplace and is actively pursuing remarketing agreements, in
addition to those discussed below, with other Healthcare Information Systems
providers to distribute LanVision's workflow solutions.
LanVision's quarterly operating results have varied in the past and may continue
to do so in the future because of various reasons including: demand for
LanVision's products and services, long sales cycles, and extended installation
and implementation cycles based on customer's schedules. Sales are often delayed
because of customers' budgets and competing capital expenditure needs as well as
personnel resource constraints within an integrated delivery network.
Delays in anticipated sales or installations may have a significant impact on
LanVision's quarterly revenues and operating results, because substantial
portions of the operating expenses are relatively fixed.
UNEVEN PATTERNS OF QUARTERLY OPERATING RESULTS
The Company's revenues from systems sales have varied, and may continue to vary,
significantly from quarter-to-quarter because of the volume and timing of
systems sales and delivery. Professional services revenues also fluctuate from
quarter to quarter because of the timing of the installation of software and
hardware, project management and customized programming. Revenues from
maintenance services do not fluctuate significantly from quarter to quarter, but
have been increasing as the number of customers increase. Revenues from ASP
application-hosting services operations are expected to increase over time, as
more hospitals outsource services to LanVision's ASP Division, or its
remarketing partners begin to utilize the software, and existing customers
increase the volume of documents stored on the systems, and the number of
retrievals increase.
The Company's revenues and operating results may vary significantly from
quarter-to-quarter because of a number of other factors, many of which are
outside the Company's control. These factors include the relatively high
purchase price of a system, unpredictability in the number and timing of systems
sales, length of the sales cycle, delays in the installation process and changes
in the customer's financial condition or budget and the sales activities of the
remarketing partners. As a result, period-to-period comparisons may not be
meaningful with respect to the past
16
operations of the Company nor are they necessarily indicative of the future
operations of the Company.
REVENUES
Revenues for the third fiscal quarter ended October 31, 2003, were $3,666,654,
compared with $3,208,591 reported in the comparable quarter of 2002. The
increase was primarily a result of increased services, maintenance and support
as new systems were installed and increased application-hosting revenues from
new customers.
Revenues for the first nine months ended October 31, 2003, were $9,253,226,
compared with $9,513,998 reported in the comparable period of 2002. The decrease
was primarily a result of a decline in system sales "software licensing
revenues" when compared to the comparable prior period which was offset to some
extent by the almost 100% increase in application-hosting revenues from new
customers.
Traditionally, the first two quarters are the most challenging because of the
seasonality of software licensing revenues, which the Company has experienced in
the past, with a greater portion of the annual revenues recorded in the later
two quarters. However, fiscal year 2002 had uncharacteristically robust revenues
in the first two quarters, which accounts for the comparable decrease in system
sales in 2003. The decrease in software licensing revenues in the first nine
months of 2003 were partially offset by the almost 100% increases in
application-hosting services revenues from new customers. The increase in the
ASPeN application-hosting revenues during the first and second quarters of 2003
resulted from adding two new clients in the third quarter of fiscal year 2002.
OPERATING EXPENSES
Cost of Systems Sales
The cost of systems sales includes amortization of capitalized software
development costs on a straight-line basis, royalties and the cost of third
party software and hardware. Cost of systems sales as a percentage of systems
sales may vary from period to period depending on the mix of hardware and
software of the systems or add-on sales delivered. The cost of systems sales as
a percentage of systems sales for the third quarter of fiscal years 2003 and
2002 were 21% and 20%, respectively and for the first nine months of fiscal
years 2003 and 2002 were 42% and 23%, respectively. The higher percentage of
cost of sales reflects a greater volume of hardware sold during the current nine
month period compared to the comparable prior period, which had lower hardware
and significantly higher software licensing revenues.
17
Cost of Services, Maintenance and Support
The cost of services, maintenance and support includes compensation and benefits
for support and professional services personnel and the cost of third party
maintenance contracts. As a percentage of services, maintenance and support
revenues, the cost of such services, maintenance and support was 40% and 40% for
the third quarter and 41% and 45% for the first nine months, respectively, of
fiscal year 2003 and 2002. The Company's support margins are highest on
LanVision's proprietary software. Accordingly, margins improve as more customers
are added.
Cost of Application-hosting services
The cost of application-hosting services includes compensation, benefits, and
the cost of running the hosting center, including depreciation. As a percentage
of application-hosting services revenues, the cost of application-hosting was
49% and 65% for the third quarter and 49% and 49% for the first nine months,
respectively, of fiscal year 2003 and 2002. The increase in the total costs
during both the third quarter and the first nine months, on a comparative basis,
reflects the addition of the new data center, which opened in August 2002 in
order to provide the capacity necessary for new clients. Prior thereto, the
Company used an outsourced data center and incurred expenses only for the
outsourcing data center resources it used, which were directly related to the
application-hosting services revenues generated by the ASPeN Division. As the
application-hosting revenues increase, the relative cost, as a percentage of
revenues, declines.
Selling, General and Administrative
Selling, General and Administrative expenses consist primarily of compensation
and related benefits and reimbursable travel and living expenses related to the
Company's sales, marketing and administrative personnel; advertising and
marketing expenses, including trade shows and similar type sales and marketing
expenses; and general corporate expenses, including occupancy costs. During the
third quarter of fiscal year 2003, Selling, General and Administrative expenses
decreased when compared with the comparable prior quarter primarily because of a
reduction in legal expenses in conjunction with the settlement of certain
litigation initiated by LanVision to defend its intellectual property. Demand
for Medical Record Workflow (MRW) technologies and healthcare information access
systems is growing and the frequency of requests for proposals received is
increasing. Accordingly, the Company has increased its direct sales force to
take advantage of current market opportunities. During the first nine months of
fiscal year 2003, Selling, General and Administrative expenses were $2,392,369
compared with $2,572,838 in the comparable prior period. The net decrease is
primarily the result of the litigation expense reduction and a settlement,
recorded in the second quarter.
Product Research and Development
Product research and development expenses consist primarily of compensation and
related benefits; the use of independent contractors for specific development
projects; and an allocated portion of general overhead costs, including
occupancy. During the third quarter, research and development expenses were
$509,923 compared with $517,455 in the comparable prior quarter.
18
During the nine months, research and development expenses were $1,554,029
compared with $1,567,288 in the comparable prior period. The decrease during the
quarter is due to increased capitalized software and use of fewer outside
contractors when compared to the prior comparable periods. The Company monitors
closely and augments its Research and Development staff, as necessary, with
outside contractors to assist with the development and testing of new products.
The Company capitalized, in accordance with Statement of Financial Accounting
Standards No. 86, $600,000 and $450,000 of product research and development
costs in the first nine months of fiscal years 2003 and 2002, respectively.
Operating income
The operating income for the third quarter of fiscal year 2003 was $985,129
compared with operating income of $751,464 in the third quarter of fiscal year
2002. The net increase is primarily the result of an increase in revenues,
offset by an increase in expenses.
The operating income for the first nine months of fiscal year 2003 was
$1,338,671 compared with operating income of $1,932,810 in the first nine months
of 2002. The decrease results primarily from a decrease in system sales software
licensing revenues during the first two quarters, offset by increased services
and application-hosting revenues during the first nine months.
Interest income consists primarily of interest on invested cash. The decreases
in interest income results from lower cash balances available for investment and
lower rates.
Interest expense relates primarily to the long-term debt and includes the
interest expense on the capitalized leases.
Net earnings
The net earnings for the third quarter of fiscal year 2003 was $481,655 or $.05
per share compared with net earnings of $252,439 or $.03 per share in the third
quarter of fiscal year 2002. The increase is the result of primarily higher
revenues as noted above.
The net earnings for the first nine months of fiscal year 2003 was $19,459 or
$.00 per share compared with net earnings of $552,340 or $.06 per share in the
first nine months of fiscal year 2002. This decrease is the result of primarily
lower revenues and higher costs as noted above.
Management continues to believe that the healthcare document imaging and
workflow market is going to be a significant market and continues to make, the
investments in the talent and technology necessary to establish the Company as a
leader in this marketplace. The Company continues to believe that it is well
positioned to experience significant revenue growth primarily through third
party distributors and remarketing partners.
Since commencing operations in 1989, the Company has incurred operating losses.
Although the Company achieved profitability in fiscal years 1992, 1993, 2000,
2001, and 2002, the Company
19
incurred a net loss in fiscal years 1994 through 1999. In view of the Company's
prior operating history, there can be no assurance that the Company will be able
to achieve consistent profitability on a quarterly or annual basis or that it
will be able to sustain or increase its revenue growth in future periods. Based
upon the expenses associated with current and planned staffing levels, continued
profitability is dependent upon increasing revenues.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
During the last five fiscal years, LanVision has funded its operations, working
capital needs, and capital expenditures primarily from a combination of cash
generated by operations, and a $6,000,000 loan. LanVision's liquidity is
dependent upon numerous factors including the timing and amount of revenues and
collection of contractual amounts from customers, amounts invested in research
and development and capital expenditures, and the level of operating expenses.
LanVision's customers typically have been well-established hospitals or medical
facilities or major Healthcare Information Systems companies that resell
LanVision's products, which have good credit histories and payments are received
within normal periods for the industry. However, some healthcare organizations
have experienced significant operating losses because of limits on third-party
reimbursements from insurance companies and governmental entities. Agreements
with customers often involve significant amounts and contract terms typically
require customers to make progress payments.
LanVision has no significant obligations for capital resources, other than as
noted in note 6 to the financial statements included herein. The Company has
received a nonbinding expression of interest to refinance our existing debt, in
July 2004, at an attractive interest rate. The Company is continuing to seek
additional sources to refinance this debt with the ultimate goal of retiring it
completely, as quickly as practicable.
Although LanVision achieved its revenue goals in fiscal year 2002, LanVision's
revenues were less than its internal plans in the first three quarters of the
current fiscal year. However, over the last three fiscal years, LanVision has
expended significant amounts for capital expenditures, product research and
development, sales, support and consulting expenses. This resulted in
significant net cash outlays over the last three fiscal years. Although
LanVision has reduced staffing levels and related expenses, increased revenues
and improved operating performance, LanVision's expenses will continue to
increase. Accordingly, to continue to achieve increasing profitability, and
positive cash flow, it is necessary for LanVision to increase revenues or reduce
expenses. LanVision believes that the requirement for healthcare organizations
to become HIPAA compliant, and the signing of the IDX Information Systems
Corporation Remarketing Agreement and the 3M Marketing and Referral Agreement
should offer significant opportunities to increase revenues. LanVision believes
that market opportunities are such that LanVision
20
should be able to increase its revenues. However, there can be no assurance
LanVision will be able to do so.
At October 31, 2003, LanVision had cash and cash equivalents of $4,750,839. Cash
equivalents consist primarily of short-term commercial. Under the terms of its
loan agreement, as amended, LanVision has agreed to maintain a minimum cash and
cash equivalent balance of $3,800,000, which will be maintained through the
maturity of the loan in July 2004. During the remainder of fiscal year 2003,
$500,000 of long-term debt is required to be repaid to the lender. See also Note
6 to the financial statements regarding the accrued and unpaid interest, which
will approximate $5,200,000 and is required to be paid to the lender in July
2004. LanVision intends to refinance all, or a portion, of the unpaid interest
payable in July 2004.
LanVision has carefully monitored operating expenses during the last four fiscal
years, and, based upon current revenue and expense projections, believes it will
be able to achieve positive operating results in fiscal year 2003.
Notwithstanding the increases in fiscal year 2001 and 2002 revenues and
operating profit, for the near future LanVision will need to assess continually
its revenue prospects compared to its then current expenditure levels. If it
does not appear likely that revenues will increase, it may be necessary to
reduce operating expenses or raise cash through additional borrowings, the sale
of assets, or other equity financing. Certain of these actions will require
lender approval. However, there can be no assurance LanVision will be successful
in any of these efforts. If it is necessary to reduce significantly operating
expenses, this could have an adverse effect on future operating performance.
LanVision believes that its present cash position, combined with cash generation
anticipated from operations, will be sufficient to meet anticipated cash
requirements during fiscal year 2003.
To date, inflation has not had a material impact on LanVision's revenues or
expenses. In addition, LanVision does not have any significant market risk
exposure at October 31, 2003.
SIGNED AGREEMENTS - BACKLOG
LanVision, or its remarketing partners, enter into master agreements with their
customers to specify the scope of the system to be installed and services to be
provided, the agreed upon aggregate price and the timetable for implementation.
The master agreement typically provides that the Company, or its remarketing
partner, will deliver the system in phases pursuant to the customer's purchase
orders, thereby allowing the customer flexibility in the timing of its receipt
of systems and to make adjustments that may arise based upon changes in
technology or changes in customer needs. The master agreement also allows the
customer to request additional components as the installation progresses, which
additions are then separately negotiated as to price and terms. Historically,
customers have ultimately purchased systems and services in addition to those
originally contemplated by the master agreement. Although there can be no
assurance that customers will continue in the future to expand their systems and
purchase additional licenses and services,
21
LanVision believes, based on its past experience, that its customers will expand
their existing systems.
At October 31, 2003, LanVision has master agreements, purchase orders or royalty
reports from remarketing partners for systems and related services (excluding
support and maintenance, and transaction-based revenues for the
application-hosting services) which have not been delivered, installed and
accepted which, if fully performed, will generate future revenues of
approximately $2,780,000. The related products and services are expected to be
delivered over the next two to three years. Furthermore, LanVision has entered
into application-hosting agreements, which are expected to generate revenues in
excess of $4,000,000 over the remaining terms of the agreements.
LanVision's master agreements also generally provide for an initial maintenance
period and give the customer the right to subscribe for maintenance and support
services on a monthly, quarterly, or annual basis. Maintenance and support
revenues for fiscal years 2002, 2001 and 2000 were approximately $4,176,000,
$4,032,000 and $3,678,000, respectively. Maintenance and support revenues are
expected to increase in 2003. At October 31, 2003, LanVision had Maintenance
Agreements, purchase orders or royalty reports from customers or remarketing
partners for maintenance, which if fully performed, will generate future
revenues of approximately $1,026,000, through their respective renewal dates in
fiscal year 2003 and 2004.
The commencement of revenue recognition varies depending on the size and
complexity of the system; the implementation schedule requested by the customer
and usage by customers of the application-hosting services. Therefore, LanVision
is unable to predict accurately the revenue it expects to achieve in any
particular period. LanVision's master agreements generally provide that the
customer may terminate its agreement upon a material breach by LanVision, or may
delay certain aspects of the installation. There can be no assurance that a
customer will not cancel all or any portion of master agreement or delay
installations. A termination or installation delay of one or more phases of an
agreement, or the failure of LanVision to procure additional agreements, could
have a material adverse effect on LanVision's business, financial condition, and
results of operations.
Item 4. Controls and Procedures
LanVision maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in LanVision's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to LanVision's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-15(e). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
22
As of the end of the period covered by this report, an evaluation was performed
under the supervision and with the participation of LanVision's senior
management, including the Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of LanVision's disclosure
controls and procedures. Based on that evaluation, LanVision's management,
including the Chief Executive and Chief Financial Officer, concluded that
LanVision's disclosure controls and procedures were effective as of the end of
the period covered by this report. There have been no significant changes in
LanVision's internal control or in the other controls that could significantly
affect internal controls subsequent to the date LanVision completed its
evaluation. Therefore, no corrective actions were taken.
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
LanVision is a party to various legal proceedings and claims that arise in the
ordinary course of business from time to time. LanVision is not aware of any
legal matters that will have a material adverse effect on LanVision's
consolidated results of operations or consolidated financial position.
Item 3. DEFAULTS ON SENIOR SECURITIES
The Company is not in default under its existing Loan Agreement.
23
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation of LanVision Systems, Inc. (*)
3.2 Bylaws of LanVision Systems, Inc. (*)
11 Computation of Earnings Per Common Share
31.1 Certification Chief Executive Officer Pursuant to Section
302 of the Sarbanes - Oxley Act of 2002
31.2 Certification Chief Financial Officer Pursuant to Section
302 of the Sarbanes - Oxley Act of 2002
32.1 Certification by Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification by Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(*) Incorporated by reference.
(b) Reports on Form 8-K
On December 10, 2003, the Company furnished a Form 8-K, reporting pursuant to
Item 12, the third fiscal quarter end October 31, 2003 Results of Operations.
24
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.
LANVISION SYSTEMS, INC.
DATE: December 10, 2003 By: /s/ J. BRIAN PATSY
------------------------------
J. Brian Patsy
Chief Executive Officer and
President
DATE: December 10, 2003 By: /s/ PAUL W. BRIDGE, JR.
------------------------------
Paul W. Bridge, Jr.
Chief Financial Officer and
Treasurer
25
INDEX TO EXHIBITS
Exhibit No. Exhibit
- -----------
3.1 Certificate of Incorporation of LanVision Systems, Inc.
Previously filed with the Commission and incorporated herein
by reference from, the Registrant's Registration Statement
on Form S-1, File Number 333-01494, as filed with the
Commission on April 15, 1996.
3.2 Bylaws of LanVision Systems, Inc.
Previously filed with the Commission and incorporated herein
by reference from, the Registrant's Registration Statement
on Form S-1, File Number 333-01494, as filed with the
Commission on April 15, 1996.
11 Computation of Earnings Per Common Share ***
31.1 Certification Chief Executive Officer Pursuant to Section ***
302 of the Sarbanes - Oxley Act of 2002
31.2 Certification Chief Financial Officer Pursuant to Section ***
302 of the Sarbanes - Oxley Act of 2002
32.1 Certification by Chief Executive Officer pursuant to 18 ***
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification by Chief Financial Officer pursuant to 18 ***
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
*** Included herein
26