Iteris, Inc. (ITI) 2000年年度報告「AMEX」.pdf

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1、-UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 -FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934(Mark One)x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal yea

2、r ended March 31,2000 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 000-10605 ODETICS,INC.(Exact Name of Registrant as Specified in Its Charter)-Delaware 95-2588496 (State or Other Jurisdictio

3、n (I.R.S.Employer of Incorporation or Organization)Identification No.)1515 South Manchester Avenue,Anaheim,California 92802 (Address of Principal Executive Offices)(Zip Code)Registrants Telephone Number,Including Area Code:(714)774-5000 -Securities registered pursuant to Section 12(b)of the Act:None

4、 Securities registered pursuant to Section 12(g)of the Act:Class A common stock,$.10 par value Class B common stock,$.10 par value (Title of Class)Indicate by check mark whether the registrant:(1)has filed all reportsrequired to be filed by Section 13 or 15(d)of the Securities Exchange Act of1934 du

5、ring the preceding 12 months(or for such shorter period that theregistrant was required to file such reports),and(2)has been subject to suchfiling requirements for the past 90 days.Yes x No _ Indicate by a check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not con

6、tained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K _ Based on the closing sale price on Nasdaq National Market on June 26,2000,the aggregat

7、e market value of the voting stock held by nonaffiliates of theregistrant was$91,597,073.For the purposes of this calculation,shares ownedby officers,directors and 10%stockholders known to the registrant have beendeemed to be owned by affiliates.This determination of affiliate status is notnecessari

8、ly a conclusive determination for other purposes.Odetics has two classes of common stock outstanding,the Class A commonstock and the Class B common stock.The rights,preferences and privileges ofeach class of common stock are identical in all respects,except for votingrights.Each share of Class A com

9、mon stock entitles its holder to one-tenth ofone vote per share and each share of Class B common stock entitles its holder toone vote per share.As of June 26,2000,there were 8,204,351 shares of Class Acommon stock and 1,051,541 shares of Class B common stock outstanding.Unlessotherwise indicated,all

10、 references to common stock shall collectively refer tothe Class A common stock and the Class B common stock DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates certain information by reference from theregistrants definitive proxy statement for the annual meeting of thestockholders scheduled t

11、o be held on September 8,2000.-ODETICS,INC.FORM 10-K ANNUAL REPORT TABLE OF CONTENTS Page -PART IITEM 1.BUSINESS.1ITEM 2.PROPERTIES.20ITEM 3.LEGAL PROCEEDINGS.20ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.20 PART IIITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MA

12、TTERS.21ITEM 6.SELECTED FINANCIAL DATA.23ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.25ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.31ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.32ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACC

13、OUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.32 PART IIIITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.32ITEM 11.EXECUTIVE COMPENSATION.32ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.32ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.32 PART IVITEM 14.E

14、XHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K.33 i Note:When used in this Annual Report on Form 10-K and the informationincorporated herein by reference,the words expect(s),feel(s),believe(s),will,may,anticipate(s),and similar expressions areintended to identify forward-looking state

15、ment.Such statements are subject tocertain risks and uncertainties which could cause actual results to differmaterially from those projected.You should not place undue reliance on theseforward-looking statements that speak only as of the date hereof.We undertakeno obligation to republish revised for

16、ward-looking statements to reflect eventsor circumstances after the date hereof or to reflect the occurrence ofunanticipated events.We encourage you to carefully review and consider thevarious disclosures made by us which describe certain factors which affect ourbusiness,including the risk factors s

17、et forth at the end of Part I,Item 1 ofthis report and in Part II,Item 7.Managements Discussion and Analysis ofFinancial Condition and Results of Operations.PART IITEM 1.BUSINESSGeneral Odetics,Inc.was founded in 1969 to supply digital recorders for use inthe United States space program.We pioneered

18、 new designs and standards fordigital magnetic tape recorders offering high reliability and enhancedperformance in the adverse environment attendant to space flight.In the 1970s,we broadened our information automation product line to include time-lapsevideocassette recorders for commercial and indus

19、trial security and surveillanceapplications,and entered the business of manufacturing telecom networksynchronization products.Through our Gyyr division,we became a leadingsupplier of time-lapse videotape cassette recorders,digital image processingmodules and related products used in security and sur

20、veillance systems.Weincorporated our Gyyr division in 1997,forming a wholly-owned subsidiary,Gyyr,Inc.In October 1997,we expanded Gyyr by acquiring Intelligent Controls Inc.,a manufacturer of access control products specializing in PC based,remote siteand fiber optic communications.In December 1999,

21、we acquired the SecurityProducts Division of Digital Systems Processing,Inc.,which expanded ourproduct line to include digital time-lapse recording based on hard disk drivetechnology.We manufactured telecom synchronization products in our Communicationsdivision beginning in the late 1970s.We incorpo

22、rated our Communicationsdivision in fiscal 1999 as our wholly-owned subsidiary,Zyfer,Inc.,as part ofour business expansion to develop products for secured communications over theInternet.Leveraging our expertise in video image processing,we entered into theintelligent transportation system(ITS)busin

23、ess with the introduction of avideo-based vehicle detection system in 1993.In June 1997,we acquired certainassets comprising the Transportation Systems business from RockwellInternational,creating our ITS division,which expanded our offerings toinclude advanced traffic management systems and advance

24、d traveler informationsystems.We incorporated our ITS division in 1998 as Odetics ITS,Inc.InOctober 1998,we broadened our systems offerings by acquiring Meyer,MohaddesAssociates,Inc.,which currently operates as a subsidiary of Odetics ITS.InJanuary 2000,we reincorporated Odetics ITS in Delaware and

25、changed its name toIteris,Inc.1 In the early 1980s,we set out to develop the technical expertise to applyautomation to new commercial applications and established our Odetics Broadcastdivision.We incorporated our Odetics Broadcast division in 1999 as Broadcast,Inc.Broadcast develops and manufactures

26、 broadcast automation control systemsand pioneered the use of video tape libraries in broadcast television stationsand satellite uplink operations.The success of our video tape libraries led usto pursue new applications for information automation technologies.In 1991,weintroduced an automated tape h

27、andling subsystem for integration into tapelibraries designed for midrange computers and client/server networks.InJanuary 1993,we formed a separate subsidiary,ATL Products,Inc.,to pursue themarket for automated tape libraries.In March 1997,ATL completed an initialpublic offering of 1,650,000 shares

28、of its Class A common stock.We distributedour remaining 82.9%interest in ATL to our stockholders in a tax-freedistribution in October 1997.Today,Odetics serves as an incubator of high technology companies,eachwith its own marketplace,customers and products.These operations share acommon corporate ov

29、erhead for support for facilities,human resources,benefitsand certain accounting,finance and executive management services.We arepursuing our incubator business strategy to nurture and develop each of theseoperations with the ultimate goal of achieving a tax-free spin-off of eachentity to our stockh

30、olders.In October 1999,we received a determination letterfrom the Internal Revenue Service to confirm the tax-free status of our proposedspin-off of Gyyr,Broadcast and Iteris.To date,we have not spun-off any ofthe entities for which we have received determination letters.Subject tofavorable market c

31、onditions,it is still our intention to move forward with theproposed spin-offs.We currently define our business segments as video products,telecomproducts and ITS.Our video products segment includes our Broadcast subsidiaryand our Gyyr subsidiary.Our telecom products segment includes our Zyfersubsid

32、iary and our Mariner Networks subsidiary.Our ITS segment consists of ourIteris subsidiary.For more information concerning our business segments,please see Note 13 of Notes to Consolidated Financial Statements.Video Products Broadcast,Inc.Broadcast develops systems to automate the storage and schedul

33、ing ofcommercials,news stories and other television programming recorded on videotapeand video server storage systems.We believe that enhanced operationalefficiencies are a principal factor underlying the automation of broadcasttelevision stations and satellite uplink operations as the industry tran

34、sitionsto digital television.Broadcast is developing proprietary software solutionsfor broadband video content management and delivery to serve broadcast and cableoperations as well as broadband Internet.The earliest commercial success for Broadcast came from the manufacture ofvideo tape libraries.T

35、he video tape library market has experienced a trendtoward smaller libraries,coupled with digital hard disk recording devices.Toaddress this market,we introduced the TCS45 tape library,which incorporateshighly integrated caching systems.The TCS45 can be coupled with hard driverecorders available fro

36、m several recognized suppliers to the broadcastcommunity.As 2 a result of the industrys transition to digital television and high definitioncontent origination,we continue to see strong demand for tape libraries.Weoffer software to form powerful integrated systems,including our AIRO(TM)andMicrostati

37、on(TM)automation products.Our Roswell(TM)facility management systemis designed for enterprise automation of operations at television broadcastfacilities.Multi-channel presentation systems,which integrate the completeline of our hardware with commonly available broadcast quality video diskrecorders,a

38、re quickly becoming the core business of Broadcast.Broadcast isfocused on video asset management including desktop video browsing using anetwork PC architecture,which can be extended to wide area network applicationsand Internet applications.Sales,Marketing and Principal Customers.Broadcast sells di

39、rectly tobroadcast television stations,satellite uplink operations,and other broadcasttelevision and cable television system operators.The sales and marketingmanagement for Broadcast is located at our principal facilities in Anaheim,California.Broadcast maintains a dedicated field sales force of fiv

40、e personsoperating in five U.S.sales regions and Canada,and a sales manager for LatinAmerica.The European sales and marketing activities for Broadcast areconducted and managed by Odetics Europe Limited,a wholly-owned United Kingdomsubsidiary of Odetics.Odetics Asia Pacific Pte.Ltd.,Odetics wholly-ow

41、nedsubsidiary located in Singapore,conducts Asian sales and marketing activitiesfor Broadcast.Broadcast also utilizes additional independent representativeorganizations to promote its products in various other foreign markets.The customers of Broadcast include major television networks such as Fox,t

42、he Canadian Broadcasting Corporation,CNBC,Euronews,Televisa,MeasatBroadcast Network Systems,NBC,the PBS Network,Group W SatelliteCommunications(for the Arts&Entertainment Network and the Discovery Channel),Asia Broadcast Centre,Univision and over 100 independent and network-affiliatedtelevision stat

43、ions.Broadcast currently has systems installed in over 40countries.Manufacturing and Materials.Broadcast maintains a dedicated manufacturingoperation located within our Anaheim,California facilities.Our AIRO productsare serviced primarily in a facility located in Austin,Texas.At our Anaheimfacility,

44、Broadcast maintains infrastructure to support production and inventorycontrol,purchasing,quality assurance,manufacturing and engineering.Broadcast purchases video servers from Grass Valley Group,Leitch andPinnacle Systems and video switching,conversion and monitoring equipment fromGrass Valley Group

45、 and Leitch for installation in our automated video managementsystems.Broadcast also purchases cabinets and other fabricated parts andcomponents from other third party suppliers.Gyyr,Inc.Gyyr produces analog and digital video products and access control systemsthat meet the security and surveillance

46、 needs for a variety of markets includingbanking,commercial/industrial and retail.Gyyrs time-lapse VCRs are installedin automated teller machines and retail point of sale systems to recordtransaction information in an effort to deter and address incidents of theft andother crimes.Gyyrs access contro

47、l systems offer managed access and monitoringof public,private and high security facilities.Customer demand for moresophisticated capabilities and 3 integration due to digital technology has also contributed to the recent growthin the market for Gyyrs products.Gyyrs strategy is to provide completeso

48、ftware-based system integration of digital security devices over the Internet.Recent additions to Gyyrs product offerings include network and Internet-basedvideo and device control,intelligent dome cameras,video multiplexing anddigital recording.In December 1999,we expanded our product line to inclu

49、de theDVMS family of digital time-lapse recorders based on hard disk drivearchitecture.This product line expansion was the result of our acquisition ofthe Security Products Division of Digital Systems Processing,Inc.We sell ourproducts as individual devices as well as components of fully-integrated

50、networksecurity control systems.Sales,Marketing and Principal Customers.Gyyr markets and sells itsproducts through three established channels:OEMs,independent distributors andsystem integrators.Gyyr personnel located at our principal facilities andsales offices throughout the world oversee approxima

51、tely 1,000 of these channelpartners.Gyyr has a business development and service organization located atour Odetics Europe Limited subsidiary.Through January 2000,Odetics EuropeLimited assisted Gyyr with management in the development of European,MiddleEast and African markets.Commencing in January 20

52、00,Gyyr formed Gyyr EuropeLimited to succeed Odetics Europe Limited in its support services.ThroughSeptember 1999,Gyyr utilized Odetics Asia Pacific Pte.Ltd.to assist insales to the Asian markets.Commencing in October 1999,Gyyr consolidated itsAsian sales and marketing activities into its Anaheim,Ca

53、lifornia facilities.Gyyrs principal customers include major security equipment companies such asDiebold,Inc.,ADT Security Systems,Inc.,Honeywell,Inc.,Mosler,Inc.,Hamilton Safe and ADI.Manufacturing and Materials.Gyyr maintains a dedicated manufacturing arealocated within our principal facilities in

54、Anaheim,California.Gyyr primarilyuses continuous demand flow techniques in its assembly lines.Gyyr maintainsinfrastructure to support production and inventory control,purchasing,qualityassurance and manufacturing engineering.Gyyr purchases VCRs modified to our specifications exclusively throughNisse

55、i Sangyo America,the United States distribution affiliate of Hitachi,Ltd.,into which we incorporate certain value-added features.As a result ofits reliance on Hitachi,Ltd,Gyyr is vulnerable to Hitachis actions,whichmight necessitate changes in the design or manufacturing of Gyyrs products.While othe

56、r suppliers are available who can manufacture VCRs suitable for use inGyyrs products,we would be required to make changes in our product design ormanufacturing methods to accommodate other VCRs,and Gyyr could experiencedelays or interruptions in supply while these changes are incorporated or a newsu

57、pplier is procured.Telecom Products Zyfer,Inc.We incorporated our Communications division in 1999 as Zyfer,Inc.Zyferdevelops and manufactures telecom network synchronization products and providesservice support for space borne digital data recorders.Our telecom networksynchronization products synchr

58、onize communications for data security,timingnetworks and wireless communications systems.These products are based on GPSand oscillator technologies and are sold for new applications in 4 wireless networks and satellite communications for both commercial andgovernment customers.Significant customers

59、 of Zyfer include LGIC of Korea,andthe U.S.government.See Risk Factors-Our Operating Results Have BeenAdversely Affected by the Asian Economic Crisis.Zyfer has developed a new class of encryption products for securingenterprise wide communications.These products provide transparent security tousers

60、and system administrators.Transparency results from the elimination oftraditional key exchange and key management requirements and from our ability toencrypt and decrypt at high data rates.Zyfer also provides service support for space borne digital data recordersthat are used in manned and unmanned

61、space vehicles to store data gathered byonboard sensors prior to transmission of the data to ground receiving stations.These recorders are employed in satellite programs for space research,earthresource and environmental observation and weather monitoring,as well as globalsurveillance and classified

62、 government programs.Sales,Marketing and Principal Customers.Zyfer conducts its selling andmarketing activities worldwide directly from our principal facilities inAnaheim,California.Zyfer sells its telecom synchronization products primarilythrough manufacturers representatives.Manufacturing and Mate

63、rials.Zyfer manufactures its telecomsynchronization products to best commercial practices and is ISO certified.Most of the manufacturing processes consist of final assembly and test.Weoutsource board assembly and some preliminary fabrication processes.Mariner Networks,Inc.Mariner Networks,Inc.has de

64、veloped and will manufacture a family ofbroadband integrated access devices that enable branch offices to costeffectively combine their separate voice,video and data networks onto a singlewide area transport network.The Dexter(R)product family provides wire speedtransport of most data traffic types.

65、Mariner Networks products include ATMsubsystems,Frame Relay-to-ATM networking components and systems,and ATM widearea network access concentrators for handling intranet,data,voice and videotraffic.Sales,Marketing and Principal Customers.Mariner Networks sells itsproducts through OEMs and resellers i

66、n North America and in Europe.MarinerNetworks maintains sales offices at our facilities in the United States inAnaheim,California and at Odetics Europe Limited in the United Kingdom.Manufacturing and Materials.Mariner Networks manufacturing processes areISO 9000 certified and consist primarily of fi

67、nal assembly and test.MarinerNetworks currently outsources circuit board assembly and some fabricationprocesses.ITS Products Iteris,Inc.Iteris,Inc.designs,develops,markets and implements software basedsolutions that improve the safety and efficiency of vehicle transportation.Using its proprietary so

68、ftware and 5 ITS industry expertise,Iteris provides video sensor systems and transportationmanagement and traveler information systems for the ITS industry.The ITSindustry is comprised of companies applying a variety of technologies to enablethe safe and efficient movement of people and goods.Iteris

69、 uses its outdoorimage recognition software expertise to develop proprietary algorithms for videosensor systems that improve vehicle safety and the flow of traffic.Ourknowledge of the ITS industry enables Iteris to design and implementtransportation solutions that help public agencies reduce traffic

70、 congestion andprovide greater access to traveler information.Iteris proprietary image recognition systems include AutoVue and Vantage.AutoVue is a small windshield mounted sensor that utilizes proprietary softwareto detect and warn drivers of unintended lane departures.Through new softwaredevelopme

71、nt,Iteris is expanding the AutoVue platform to incorporate additionalsafety and convenience features.Vantage is a video vehicle sensing system thatdetects the presence of vehicles at signalized intersections enabling a moreefficient allocation of green signal time.Iteris,Inc.designs,develops and imp

72、lements software based systems thatintegrate sensors,video surveillance,computers and advanced communicationsequipment enabling public agencies to monitor,control and direct traffic flow,assist in the quick dispatch of emergency crews and distribute real-timeinformation about traffic conditions and

73、alternative routes.Sales,Marketing and Principal Customers.Iteris markets and sells itstransportation management systems and services directly to government agenciespursuant to negotiated contracts which involve competitive bidding and specificqualification requirements.Sales of Iteris systems gener

74、ally involve longlead times and require extensive specification development,evaluation and pricenegotiations.Iteris sells its Vantage vehicle detection systems primarily throughindirect sales channels comprised of independent dealers in the United Statesand Canada who sell integrated solutions and r

75、elated products to the trafficintersection market.The independent dealers for Iteris are primarilyresponsible for sales,installation and support of Vantage systems.Thesedealers maintain an inventory of demonstration traffic products including theVantage vehicle detection systems and sell directly to

76、 government agencies andinstallation contractors.These dealers often have long-term arrangements withthe government agencies in their territory for the supply of various productsfor the construction and renovation of traffic intersections.Iteris holdstechnical training classes for our dealers and ma

77、intains a full-time staff ofcustomer support technicians to provide technical assistance when needed.The marketing strategy for AutoVue is to establish it as the leadingplatform for in vehicle video sensing for trucks and passenger cars.AutoVue issold directly by Iteris to vehicle manufacturers.Iter

78、is currently has a directsales force of three product managers,and intends to expand its sales force inthe future to include engineers and product managers who will be responsible forsales and customer service to specific vehicle manufacturers.Since its targetcustomer base is well known,Iteris curre

79、ntly does not plan to engage in largescale marketing campaigns.6 Manufacturing and Materials.Iteris designs,assembles and tests thecomponents of its Vantage systems in approximately 5,000 square feet of space atour Anaheim facility.Production equipment consists of assembly lines and testapparatus fo

80、r final assembly and testing of the manufactured product.Production volume is based upon quarterly forecasts that Iteris readjusts on amonthly basis to control inventory.Iteris subcontracts the manufacture of itsAutoVue systems to two manufacturers.We anticipate these manufacturers will beable to pr

81、oduce unit volume sufficient to support sales to heavy truckmanufacturers.Iteris intends to engage additional manufacturers with expertisein high volume production to produce higher volumes for light and medium trucksand passenger cars.Iteris does not manufacture any of the hardware used in thetrans

82、portation management and traveler information systems that it designs andimplements.The production facility for Iteris is ISO 9001 certified.Customer Support and Services Each of our business units is responsible for its own customer support andservice organizations.We provide warranty service for e

83、ach of our productlines,as well as follow-up service and support,for which we typically chargeseparately.We also offer separate software maintenance agreements to ourcustomers.We view customer support services as a critical competitive factoras well as a revenue source.Backlog Our backlog of unfulfi

84、lled firm orders was approximately$27.3 million asof March 31,2000 and approximately$22.0 million as of March 31,1999.Approximately 82%of our backlog at March 31,1999 was recognized as revenues infiscal 2000,and approximately 68%of our backlog at March 31,2000 is expectedto be recognized as revenues

85、 in fiscal 2001.Pursuant to the customary terms ofour agreements with government contractors and other customers,customers cangenerally cancel or reschedule orders with little or no penalties.Lead timesfor the release of purchase orders depend upon the scheduling and forecastingpractices of our indi

86、vidual customers,which also can affect the timing of theconversion of our backlog into revenues.For these reasons,among others,ourbacklog at a particular date may not be indicative of our future revenues.Product Development Each of our business units directs and staffs its own product developmentact

87、ivities.Our businesses require substantial ongoing research and developmentexpenditures and other product development activities.Our company-sponsoredresearch and development costs and expenses were approximately$9.3 million infiscal 1998,$11.2 million in fiscal 1999 and$16.9 in fiscal 2000.We expec

88、tto continue to pursue significant product development programs and incursignificant research and development expenditures in each of our business units.Competition Our business units generally face significant competition in each of theirrespective markets.Increased competition may result in price

89、reductions,reduced gross margins and loss of market share,any of which could have amaterial adverse effect on our business,financial condition and results ofoperations.7 Broadcasts primary competitors include Sony,Panasonic,Louth and Pro-bel.Sony and Panasonic are large,international suppliers of ex

90、tensive professionalquality products,including video tape libraries,for the broadcast televisionmarket.Louth and Probel principally provide automation control for videolibraries and disk recorders.Broadcasts systems compete primarily in thearena of facility management and enterprise wide automation.

91、We believe thatthe capability of our systems to integrate the broadcast station businesssystems acquisition processes,storage devices and presentation devices under arelational data base management system represents a unique and differentiablecapability.As Gyyr expands its product base from time-lap

92、se VCRs to providingintegrated security systems in CCTV and electronic access control,it willcompete with a broader set of companies.Major Japanese competitors in Gyyrslegacy tape-based time-lapse VCR business include Panasonic,Toshiba,Sony,Sanyo,Mitsubishi and JVC.Gyyr also competes with large syst

93、ems suppliersincluding Sensormatic,Honeywell,Pelco,Ultrak,Ademco and Vicon.In the saleof access control systems,Gyyr principally competes with Casi-Rusco,Checkpoint,Cardkey and Lenel.Gyyr generally competes based upon its strengthin the integration of its various component products into systems that

94、 providecomplete solutions through the use of advanced software and networkingtechnologies.Zyfers primary competition for network synchronization products is Datum,Inc.and TrueTime Inc.Zyfer anticipates that its competition for encryptionproducts for secured communications will include Zyling Corpor

95、ation,RainbowTechnologies,Inc.and Redcreek Communications Inc.For its integrated access devices,Mariner Networks principal competitionincludes networking vendors Vina Technologies,Sonoma Systems and AcceleratedNetworks.While we believe that AutoVue is the only commercially-available lanedeparture wa

96、rning system,potential competitors including Delphi AutomotiveSystems Corporation domestically and NEC Corporation and Hitachi Ltd.in Japanand Robert Bosch Gmbh in Europe are currently developing video sensor technologyfor the vehicle industry that could be used for lane departure warning systems.In

97、 the market for our Vantage vehicle detection systems,we compete with bothmanufacturers of above ground video camera detection systems,such asEconolite Control Products,Inc.and the Peek Traffic Systems division of ThermoElectron Corporation,and other non-intrusive detection devices includingmicrowav

98、e,infrared,ultrasonic and magnetic detectors,as well as manufacturersand installers of in-pavement inductive loop products.The transportation management and traveler information systems market ishighly fragmented and is subject to evolving national and regional quality andsafety standards.Iteris com

99、petitors vary in number,scope and breadth of theproducts and services they offer.Iteris competitors in advancedtransportation management and traveler information systems include corporationssuch as TRW,Inc.,Transcore,Lockheed Martin Corporation,PB Farradyne Inc.,Kimley-Horn and Associates,Inc.and Na

100、tional Engineering Technology,Inc.Iteris competitors in transportation engineering,planning and design includemajor firms such as Parsons Brinkerhoff,Inc.and Parsons Transportation GroupInc.,as well as many regional engineering firms.8 In general,the markets for the products and services offered by

101、ourbusinesses are highly competitive and are characterized by rapidly changingtechnology and evolving standards.We believe that our ability to competeeffectively in our target markets depends on a number of factors,including thesuccess and timing of our new product development,the compatibility of o

102、urproducts with a broad range of computing systems,product quality andperformance,reliability,functionality,price,and service and technicalsupport.Many of our current and prospective competitors have longer operatinghistories,greater name recognition,access to larger customer bases andsignificantly

103、greater financial,technical,manufacturing,distribution andmarketing resources than us.As a result,they may be able to adapt morequickly to new or emerging standards or technologies or to devote greaterresources to the promotion and sale of their products.It is also possible thatnew competitors or al

104、liances among competitors could emerge and rapidly acquiresignificant market share.Our failure to provide services and develop andmarket products that compete successfully with those of other suppliers andconsultants in our target markets would have a material adverse effect on ourbusiness,financial

105、 condition and results of operations.Intellectual Property and Proprietary Rights Our ability to compete effectively depends in part on our ability todevelop and maintain the proprietary aspects of our technology.Our policy isto obtain appropriate proprietary rights protection for any potentiallysig

106、nificant new technology acquired or developed each of our business units.Wecurrently hold a number of United States and foreign patents and trademarks,which will expire at various dates commencing in 2004.We also have pending anumber of United States and foreign patent applications relating to certa

107、in ofour products;however,we cannot be certain that any patents will be grantedpursuant to these applications.In addition to patent laws,we rely on copyright and trade secret laws toprotect our proprietary rights.We attempt to protect our trade secrets andother proprietary information through agreem

108、ents with customers and suppliers,proprietary information agreements with our employees and consultants,and othersimilar measures.We cannot be certain that we will be successful in protectingour proprietary rights.While we believe our patents,patent applications,software and other proprietary know-h

109、ow have value,changing technology makesour future success dependent principally upon our employees technicalcompetence and creative skills for continuing innovation.Litigation has been necessary in the past and may be necessary in thefuture to enforce our proprietary rights,to determine the validity

110、 and scope ofthe proprietary rights of others,or to defend us against claims of infringementor invalidity by others.An adverse outcome in such litigation or similarproceedings could subject us to significant liabilities to third parties,require disputed rights to be licensed from others or require u

111、s to ceasemarketing or using certain products,any of which could have a material adverseeffect on our business,financial condition and results of operations.Inaddition,the cost of addressing any intellectual property litigation claim,both in legal fees and expenses,as well as from the diversion of m

112、anagementsresources,regardless of whether the claim is valid,could be significant andcould have a material adverse effect on our business,financial condition andresults of operations.9 Employees We refer to our employees as associates.As of June 23,2000,we employed569 associates,including 113 associ

113、ates in general management,administrationand finance;82 associates in sales and marketing;196 associates in productdevelopment;124 associates in operations,manufacturing and quality;and 54associates in customer service.None of our associates are represented by alabor union and we have not experience

114、d a work stoppage.We provide centralized support for human resources management for each ofour business units and subsidiaries.These services include recruiting,administration and outplacement.Government Regulation Our manufacturing operations are subject to various federal,state andlocal laws,inclu

115、ding those restricting the discharge of materials into theenvironment.We are not involved in any pending or threatened proceedings whichwould require curtailment of our operations because of such regulations.Wecontinue to expend funds in connection with our compliance with applicableenvironmental re

116、gulations.These expenditures have not,however,beensignificant in the past,and we do not expect any significant expenditures inthe near future.From time to time,a portion of our work relating to digital data recordersmay constitute classified United States government information or may be used inclas

117、sified programs of the United States Government.For this purpose,wepossess certain relevant security clearances.Our affected facilities andoperations are also subject to security regulations of the United StatesGovernment.We believe we are currently in full compliance with theseregulations.RISK FACT

118、ORS Our business is subject to a number of risks,some of which are discussedbelow.Other risks are presented elsewhere in this report.You should considerthe following risks carefully in addition to the other information contained inthis report before purchasing the shares of our common stock.If any o

119、f thefollowing risks actually occur,they could seriously harm our business,financial condition or results of operations.In such case,the trading priceof our common stock could decline,and you may lose all or part of yourinvestment.Our Quarterly Operating Results Fluctuate as a Result of Many Factors

120、.Ourquarterly operating results have fluctuated and are likely to continue tofluctuate due to a number of factors,many of which are not within our control.Factors that could affect our revenues include the following:.our significant investment in research and development for our subsidiaries and div

121、isions;.our ability to develop,introduce,market and gain market acceptance of new products applications and product enhancements in a timely manner;10 .the size and timing of significant customer orders;.the introduction of new products by competitors;.the availability of components used in the manu

122、facture of our products;.our ability to control costs;.changes in our pricing policies and the pricing policies by our suppliers and competitors,as well as increased price competition in general;.the long lead times associated with government contracts or required by vehicle manufacturers;.our succe

123、ss in expanding and implementing our sales and marketing programs;.technological changes in our target markets;.our relatively small level of backlog at any given time;.the mix of sales among our divisions;.deferrals of customer orders in anticipation of new products,applications or product enhancem

124、ents;.the Asian economic crisis and instability;.currency fluctuations and our ability to get currency out of certain foreign countries;and .general economic and market conditions.In addition,our sales in any quarter may consist of a relatively smallnumber of large customer orders.As a result,the ti

125、ming of a small number oforders may impact our quarter to quarter results.The loss of or a substantialreduction in orders from any significant customer could seriously harm ourbusiness,financial condition and results of operations.Because of the factors listed above and other risks discussed in this

126、report,our future operating results could be below the expectations ofsecurities analysts and/or investors.If that happens,the trading price of ourcommon stock could be adversely affected.We Have Experienced Substantial Losses and Expect Future Losses.We haveexperienced substantial operating losses

127、of$38.7 million for the year endedMarch 31,2000 and$18.3 million for the year ended March 31,1999.We may notbe able to achieve profitability on a quarterly or annual basis in the future.Most of our expenses are fixed in advance,and we generally are unable to reduceour expenses significantly in the s

128、hort-term to compensate for any unexpecteddelay or decrease in anticipated revenues.In addition,in order to implementour incubator strategy successfully,we expect to continue to make significantinvestments in each of 11 our business units.As a result,we may continue to experience losses whichcould c

129、ause the market price of our common stock to decline.Our Incubator Strategy is Expensive and May Not Be Successful.We haveinitiated a business strategy called our incubator strategy which is expensiveand highly risky.The goal of this strategy is to nurture and develop companiesthat can be spun-off t

130、o our stockholders.This strategy has in the pastrequired us to make significant investments in our business units,both forresearch and development,and also to develop a separate infrastructure for eachof our divisions,sufficient to allow the division to function as an independentpublic company.We ex

131、pect to continue to invest heavily in the development ofour divisions with the goal of conducting additional public offerings.We maynot recognize the benefits of this investment for a significant period of time,if at all.Our ability to complete an initial public offering of any of ourdivisions and/o

132、r spin-off our interest to our stockholders will depend upon manyfactors,including:.the overall performance and results of operations of the particular businesa unit;.the potential market for our business unit;.our ability to assemble and retain a broad,qualified management team for the business uni

133、t;.our financial position and cash requirements;.the business units customer base and product line;.the current tax treatment of spin-off transactions and our ability to obtain favorable determination letters from the Internal Revenue Service;and .general economic and market conditions,including the

134、 receptivity of the stock markets to initial public offerings.We may not be able to complete a successful initial public offering orspin-off of any of our divisions in the near future,or at all.During fiscal2000,we attempted to complete the initial public offering of Iteris.Weaborted the offering du

135、e to adverse market conditions.Even if we do completeadditional public offerings,we may decide not to spin-off a particular businessunit,or to delay the spin-off until a later date.We Must Keep Pace with Rapid Technological Change to Remain Competitive.Our target markets are in general characterized

136、 by the following factors:.rapid technological advances;.downward price pressure in the marketplace as technologies mature;.changes in customer requirements;.frequent new product introductions and enhancements;and 12 .evolving industry standards and changes in the regulatory environment.We believe t

137、hat we must continue to make substantial investments to supportongoing research and development in order to remain competitive.In particular,we will need to modify certain of our products to accommodate the anticipateddeployment of digital television and the corresponding phase-out of analogtransmis

138、sions.We will also have to continue to develop and introduce newproducts that incorporate the latest technological advancements in hardware,storage media,operating system software and applications software in responseto evolving customer requirements.Our recent shift towards providing moresoftware s

139、olutions may create additional challenges for us,particularly inBroadcast.Our business and results of operations could be adversely affectedif we do not anticipate or respond adequately to technological developments orchanging customer requirements.Our Future Success Depends on the Successful Develo

140、pment and MarketAcceptance of New Products.We believe our revenue growth and future operatingresults will depend on our ability to complete development of new products andenhancements,achieve broad market acceptance of these products andenhancements,and reduce our product costs.We may not be able to

141、 introduce anynew products or any enhancements to our existing products on a timely basis,orat all.In addition,the introduction of any new products could adverselyaffect the sales of our certain of our existing products.Our future success will also depend in part on the success of severalrecently in

142、troduced products including:.Roswell,our automated facility management system for broadcast television stations;.Bowser,our visual asset manager;.MicroStation,our integrated disk recorder and automation system;.Vortex,our high performance dome product;.Digi Scan Pro,our advanced digital multiplexer;

143、.DVMS,our family of digital time-lapse recorders;.Vantage One and Vantage Edge,our single camera traffic detection systems;.AutoVue,our lane departure warning system;and .Dexter,our networking access device.Market acceptance of our new products depends upon many factors,includingour ability to resol

144、ve technical challenges in a timely and cost-effectivemanner,the perceived advantages of our new products over traditional productsand the marketing capabilities of our independent distributors and strategicpartners.Our business and results of operations could be seriously harmed byany significant d

145、elays in our new product development.We have experienceddelays in the past in the introduction of new products,particularly with ourRoswell system.Certain of 13 our new products could contain undetected design faults and software errors orbugs when first released by us,despite our testing.We may not

146、 discover thesefaults or errors until after a product has been installed and used by ourcustomers.Any faults or errors in our existing products or in our new productsmay cause delays in product introduction and shipments,require designmodifications or harm customer relationships,any of which could a

147、dverselyaffect our business and competitive position.We currently anticipate that we will outsource the manufacture of ourAutoVue product line to a single manufacturer.This manufacturer may not beable to produce sufficient quantities of this product in a timely manner or at areasonable cost,which co

148、uld materially and adversely affect our ability tolaunch or gain market acceptance of AutoVue.We May Need Additional Capital in the Future and May Not Be Able to SecureAdequate Funds on Terms Acceptable to Us.We raised approximately$7.3 millionin a private placement of Odetics Class A common stock i

149、n December 1998 andapproximately$2.0 million in March 1999.We raised$5.0 million through thesale of an option on our principal Anaheim facility in July 1999.In addition,we raised$3.75 million through the issuance of debt to Daimler ChryslerVentures,which is convertible into 2.5%of the equity securit

150、ies of Iteris.Wemay need to raise additional capital in the near future,either throughadditional bank borrowings or other debt or equity financings.Our capitalrequirements will depend on many factors,including:.market acceptance of our products;.increased research and development funding,and require

151、d investments in our divisions;.increased sales and marketing expenses;.potential acquisitions of businesses and product lines;and additional working capital needs.If our capital requirements are materially different from those currentlyplanned,we may need additional capital sooner than anticipated.

152、If additionalfunds are raised through the issuance of equity securities,the percentageownership of our stockholders will be reduced and such securities may haverights,preferences and privileges senior to our common stock.Additionalfinancing may not be available on favorable terms or at all.If adequa

153、te fundsare not available or are not available on acceptable terms,we may be unable todevelop or enhance our products,expand our sales and marketing programs,takeadvantage of future opportunities or respond to competitive pressures.We Have Significant International Sales and Are Subject to Risks Ass

154、ociatedwith Operating in International Markets.International product salesrepresented approximately 19%of our total net sales and contract revenues forthe fiscal year ended March 31,2000,approximately 27%for the fiscal yearended March 31,1999 and approximately 34%for the fiscal year ended March 31,1

155、998.International business operations are subject to inherent risks,including,among others:14 .unexpected changes in regulatory requirements,tariffs and other trade barriers;.longer accounts receivable payment cycles;.difficulties in managing and staffing international operations;.potentially advers

156、e tax consequences;.the burdens of compliance with a wide variety of foreign laws;.reduced protection for intellectual property rights in some countries;.currency fluctuations and restrictions;and .political and economic instability.We believe that international sales will continue to represent asig

157、nificant portion of our revenues,and that continued growth and profitabilitymay require further expansion of our international operations.Ourinternational sales are currently denominated primarily in U.S.dollars.As aresult,an increase in the relative value of the dollar could make our productsmore e

158、xpensive and potentially less price competitive in international markets.We do not engage in any transactions as a hedge against risks of loss due toforeign currency fluctuations.Any of these factors may adversely effect our future international salesand,consequently,on our business and operating re

159、sults.Furthermore,as weincrease our international sales,our total revenues may also be affected to agreater extent by seasonal fluctuations resulting from lower sales thattypically occur during the summer months in Europe and other parts of the world.Our Operating Results Have Been Adversely Affecte

160、d by the Asian EconomicCrisis.Our telecommunications products are sold principally to LGIC of Korea.As a result of economic instability in Asia,particularly in Korea,our sales inthis region declined over 60%in fiscal year 1999 as compared to fiscal 1998.While sales to LGIC in fiscal 2000 increased,t

161、he aggregate sales to LGIC infiscal 2000 were still significantly below fiscal 1998 sales.It is possiblethat these sales could be further impacted by the currency devaluations andrelated economic problems in this region,and sales in this region couldcontinue to decline.We Need to Manage Growth and t

162、he Integration of Our Acquisitions.Over thepast three years,we have significantly expanded our operations and made severalsubstantial acquisitions of diverse businesses,including Intelligent Controls,Inc.,International Media Integration Services,Ltd.,Meyer Mohaddes Associates,Inc.,Viggen Corporation

163、,certain assets of the Transportation Systems businessof Rockwell International,and the Security Products Division of Digital SystemsProcessing,Inc.A key element of our business strategy involves expansionthrough the acquisition of complementary businesses,products and technologies.Acquisitions may

164、require significant capital infusions and,in general,acquisitions also involve a number of special risks,including:15 .potential disruption of our ongoing business and the diversion of our resources and managements attention;.the failure to retain or integrate key acquired personnel;.the challenge o

165、f assimilating diverse business cultures;.increased costs to improve managerial,operational,financial and administrative systems and to eliminate duplicative services;.the incurrence of unforeseen obligations or liabilities;.potential impairment of relationships with employees or customers as a resu

166、lt of changes in management;and .increased interest expense and amortization of acquired intangible assets.Our competitors are also soliciting potential acquisition candidates,whichcould both increase the price of any acquisition targets and decrease the numberof attractive companies available for a

167、cquisition.Acquisitions,combined with the expansion of our business divisions andrecent growth has placed and is expected to continue to place a significantstrain on our resources.To accommodate this growth,we anticipate that we willbe required to implement a variety of new and upgraded operational

168、and financialsystems,procedures and controls,including the improvement of our accountingand other internal management systems.All of these updates will requiresubstantial management effort.Our failure to manage growth and integrate ouracquisitions successfully could adversely affect our business,fin

169、ancialcondition and results of operations.We Depend on Government Contracts and Subcontracts and Face AdditionalRisks Related to Fixed Price Contracts.A significant portion of the sales byIteris,a portion of our sales by Zyfer were derived from contracts withgovernmental agencies,either as a general

170、 contractor,subcontractor orsupplier.Government contracts represented approximately 23%of our total netsales and contract revenues for the year ended March 31,2000.We expectrevenue from government contracts will continue to increase in the near future.Government business is,in general,subject to spe

171、cial risks and challenges,including:.long purchase cycles;.competitive bidding and qualification requirements;.performance bond requirements;.delays in funding,budgetary constraints and cut-backs;.milestone requirements,and liquidated damage provisions for failure to meet contract milestones.16 In a

172、ddition,a large number of our government contracts are fixed pricecontracts.As a result,we may not be able to recover for any cost overruns.These fixed price contracts require us to estimate the total project cost basedon preliminary projections of the projects requirements.The financialviability of

173、 any given project depends in large part on our ability to estimatethese costs accurately and complete the project on a timely basis.In the eventour costs on these projects exceed the fixed contractual amount,we will berequired to bear the excess costs.These additional costs adversely affect ourfina

174、ncial condition and results of operations.Moreover,certain of ourgovernment contracts are subject to termination or renegotiation at theconvenience of the government,which could result in a large decline in our netsales in any given quarter.Our inability to address any of the foregoingconcerns or th

175、e loss or renegotiation of any material government contract couldseriously harm our business,financial condition and results of operations.The Markets in Which We Operate Are Highly Competitive and Have Many MoreEstablished Competitors.We compete with numerous other companies in our targetmarkets an

176、d we expect such competition to increase due to technologicaladvancements,industry consolidations and reduced barriers to entry.Increasedcompetition is likely to result in price reductions,reduced gross margins andloss of market share,any of which could seriously harm our business,financialcondition

177、 and results of operations.Many of our competitors have far greatername recognition and greater financial,technological,marketing and customerservice resources than we do.This may allow them to respond more quickly tonew or emerging technologies and changes in customer requirements.It may alsoallow

178、them to devote greater resources to the development,promotion,sale andsupport of their products than we can.Recent consolidations of end users,distributors and manufacturers in our target markets have exacerbated thisproblem.As a result of the foregoing factors,we may not be able to competeeffective

179、ly in our target markets and competitive pressures could adverselyaffect our business,financial condition and results of operations.We Cannot Be Certain of Our Ability to Attract and Retain Key Personnel andWe Do Not Have Employment Agreements with Any Key Personnel.Due to thespecialized nature of o

180、ur business,we are highly dependent on the continuedservice of our executive officers and other key management,engineering andtechnical personnel,particularly Joel Slutzky,our Chief Executive Officer andChairman of the Board,and Gregory A.Miner,our Chief Operating Officer andChief Financial Officer.

181、We do not have any employment contracts with any ofour officers or key employees.The loss of any of these persons would seriouslyharm our development and marketing efforts,and would adversely affect ourbusiness.Our success will also depend in large part upon our ability tocontinue to attract,retain

182、and motivate qualified engineering and other highlyskilled technical personnel.Competition for employees,particularlydevelopment engineers,is intense.We may not be able to continue to attractand retain sufficient numbers of such highly skilled employees.Our inabilityto attract and retain additional

183、key employees or the loss of one or more of ourcurrent key employees could adversely affect upon our business,financialcondition and results of operations.We May Not be Able to Adequately Protect or Enforce Our IntellectualProperty Rights.If we are not able to adequately protect or enforce thepropri

184、etary aspects of our technology,competitors could be able to access ourproprietary technology and our business,financial condition and results ofoperations will likely be seriously harmed.We currently 17 attempt to protect our technology through a combination of patent,copyright,trademark and trade

185、secret laws,employee and third party nondisclosureagreements and similar means.Despite our efforts,other parties may attempt todisclose,obtain or use our technologies or solutions.Our competitors may alsobe able to independently develop products that are substantially equivalent orsuperior to our pr

186、oducts or design around our patents.In addition,the laws ofsome foreign countries do not protect our proprietary rights as fully as do thelaws of the United States.As a result,we may not be able to protect ourproprietary rights adequately in the United States or abroad.We have engaged in litigation

187、in the past and litigation may be necessaryin the future to enforce our intellectual property rights or to determine thevalidity and scope of the proprietary rights of others.Litigation may also benecessary to defend against claims of infringement or invalidity by others.Anadverse outcome in litigat

188、ion or any similar proceedings could subject us tosignificant liabilities to third parties,require us to license disputed rightsfrom others or require us to cease marketing or using certain products ortechnologies.We may not be able to obtain any licenses on terms acceptable tous,or at all.Any of th

189、ese results could adversely affect on our business,financial condition and results of operations.In addition,the cost ofaddressing any intellectual property litigation claim,both in legal fees andexpenses,and the diversion of management resources,regardless of whether theclaim is valid,could be sign

190、ificant and could seriously harm our business,financial condition and results of operations.The Trading Price of Our Common Stock Is Volatile.The trading price ofour common stock has been subject to wide fluctuations in the past.We may notbe able to increase or sustain the current market price of ou

191、r common stock inthe future.The market price of our common stock could continue to fluctuate inthe future in response to various factors,including,but not limited to:.quarterly variations in operating results;.shortages announced by suppliers;.announcements of technological innovations or new produc

192、ts;.acquisitions or businesses,products or technologies;.changes in pending litigation;.our ability to spin-off any division;.applications or product enhancements by us or by our competitors;and .changes in financial estimates by securities analysts.The stock market in general has recently experienc

193、ed volatility which hasparticularly affected the market prices of equity securities of many hightechnology companies.This volatility has often been unrelated to the operatingperformance of these companies.These broad market fluctuations may adverselyaffect the market price of our common stock.18 We

194、Are Controlled by Certain of Our Officers and Directors.As of March31,2000,our officers and directors beneficially owned approximately 29%of thetotal combined voting power of the outstanding shares of our Class A commonstock and Class B common stock.As a result of their stock ownership,ourmanagement

195、 will be able to significantly influence the election of our directorsand the outcome of corporate actions requiring stockholder approval,such asmergers and acquisitions,regardless of how our other stockholders may vote.This concentration of voting control may have a significant effect in delaying,d

196、eferring or preventing a change in our management or change in control and mayadversely affect the voting or other rights of other holders of common stock.Our Stock Structure and Certain Anti-Takeover Provisions May Effect thePrice of Our Common Stock.Certain provisions of our certificate ofincorpor

197、ation and our stockholder rights plan could make it difficult for athird party to acquire us,even though an acquisition might be beneficial to ourstockholders.These provisions could limit the price that investors might bewilling to pay in the future for shares of our common stock.Our Class A commons

198、tock entitles the holder to one-tenth of one vote per share and our Class Bcommon stock entitles the holder to one vote per share.In addition,holders ofthe Class B common stock are presently entitled to elect six of our ninedirectors.The disparity in the voting rights between our common stock,as wel

199、las our insiders significant ownership of the Class B common stock,coulddiscourage a proxy contest or make it more difficult for a third party to effecta change in our management and control.In addition,our Board of Directors isauthorized to issue,without stockholder approval,up to 2,000,000 shares

200、ofpreferred stock with voting,conversion and other rights and preferencessuperior to those of our common stock,as well as additional shares of Class Bcommon stock.Our future issuance of preferred stock or Class B common stockcould be used to discourage an unsolicited acquisition proposal.In March 19

201、98,we adopted a stockholder rights plan and declared a dividendof preferred stock purchase rights to our stockholders.In the event a thirdparty acquires more than 15%of the outstanding voting control of our company or15%of our outstanding common stock,the holders of these rights will be able topurch

202、ase the junior participating preferred stock at a substantial discount offof the then current market price.The exercise of these rights and purchase ofa significant amount of stock at below market prices could cause substantialdilution to a particular acquiror and discourage the acquiror from pursui

203、ng ourcompany.The mere existence of the stockholder rights plan often delays ormakes a merger,tender offer or proxy contest more difficult.We Do Not Pay Cash Dividends.We have never paid cash dividends on ourcommon stock and do not anticipate paying any cash dividends on either class ofour common st

204、ock in the foreseeable future.We May Be Subject to Additional Risks.The risks and uncertaintiesdescribed above are not the only ones facing our company.Additional risks anduncertainties not presently known to us or that we currently deem immaterial mayalso adversely affect our business operations.19

205、 ITEM 2.PROPERTIES.Our headquarters and principal operations are located in Anaheim,California.In 1984,we purchased and renovated a three building complexcontaining approximately 257,900 square feet situated on approximately 14 acresadjacent to the Interstate 5 freeway,one block from Disneyland.Our

206、facilitieshouse our corporate and administrative offices(approximately 43,600 dedicatedsquare feet),as well as the operations of Gyyr and Broadcast,(approximately113,400 dedicated square feet),Zyfer(approximately 56,300 dedicated squarefeet),Mariner Networks(approximately 20,600 dedicated square fee

207、t)and Iteris(approximately 24,000 dedicated square feet).Zyfer leases approximately 4,500 square feet of space in a manufacturingfacility located in El Paso,Texas.Broadcast leases approximately 5,000 squarefeet in Austin,Texas primarily for service and sales support.Odetics EuropeLimiteds offices ar

208、e located in leased space near London,England.OdeticsAsia Pacific Pte.Ltd.offices are located in leased space in Singapore.Iterisleases seven office suites representing an aggregate of approximately 25,000square feet within the United States for its support staff and developmentteams.We currently op

209、erate a single shift in each of our manufacturing andassembly facilities,and we believe that our facilities are adequate for ourcurrent needs and for possible future growth.We may,however,elect to expandor relocate its offices and facilities in the future.ITEM 3.LEGAL PROCEEDINGS.We brought an actio

210、n against Storage Technology Corporation,commonly knownas StorageTek,in the Eastern District Court of Virginia alleging thatStorageTek had infringed our patent covering robotics tape cassette handlingsystems(United States Patent No.4,779,151).StorageTek counterclaimedalleging that we infringed sever

211、al of StorageTeks patents.Prior to trial,thecourt dismissed two of the infringement claims against us and the third claimwas dismissed upon resolution between the parties.In October 1999,we enteredinto a settlement agreement with StorageTek pursuant to which we granted them anon-exclusive license of

212、 this patent and released StorageTek from pastinfringement and all claims to civil actions.In exchange for settlement,wereceived total consideration of$100 million,of which$80 million was paidduring the fiscal year ended March 31,2000,and$10 million was to be paid ineach of fiscal years ending March

213、 31,2001 and 2002.The initial cash paymentof$80 million resulted in cash proceeds to us,net of expenses and fees,ofapproximately$38.4 million.In June 2000,we amended the settlement agreementwith StorageTek to provide for the acceleration of the$10 million payments.Under the terms of the amendment,St

214、orageTek paid us$17.8 million immediatelyin full settlement of the$20 million otherwise due to us to complete thesettlement.ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.None.20 PART IIITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.Our Class A common stock a

215、nd Class B common stock are traded on the NasdaqNational Market under the symbols ODETA and ODETB,respectively.Thefollowing table sets forth for the fiscal periods indicated the high and lowsales prices for the Class A common stock and Class B common stock as reportedby the Nasdaq National Market:Cl

216、ass A Class B Common Stock Common Stock -High Low High Low -Fiscal Year Ended March 31,1999 First Quarter.$17 1/8$8 3/8$17$9 Second Quarter.13 5/8 4 5/8 14 1/4 5 Third Quarter.8 3/4 4 1/16 9 5/8 4 Fourth Quarter.10 5/8 7 1/16 10 3/4 7 3/8 Fiscal Year Ended March 31,2000 First Quarter.10 1/4 7 5/8 10

217、 5/8 8 1/4 Second Quarter.13 9 1/8 12 1/8 9 1/8 Third Quarter.15 1/2 10 1/8 15 5/8 10 3/8 Fourth Quarter.29 7/16 12 29 5/8 13 Fiscal Year Ending March 31,2001 First Quarter(through June 26,2000).15 8 7/8 14 1/2 10 As of June 26,2000,we had 627 holders of record of Class A common stockand 141 holders

218、 of record of Class B common stock according to informationfurnished by our transfer agent.Dividend Policy Pursuant to the terms of our Loan and Security Agreement with our lender,we are prohibited from paying any dividends on our common stock without ourlenders consent.We have never paid or declare

219、d cash dividends on either classof our common stock,and have no current plans to pay such dividends in theforeseeable future.We currently intend to retain any earnings for workingcapital and general corporate purposes.The payment of any future dividendswill be at the discretion of our Board of Direc

220、tors,and will depend upon anumber of factors,including,but not limited to,future earnings,the successof our business,activities,our capital requirements,our general financialcondition and future prospects,general business conditions,the consent of ourlender and such other factors as the Board may de

221、em relevant.21 Recent Sales of Unregistered Securities During the last fiscal year,we have sold and issued the followingunregistered securities:In October,1998,Iteris acquired Meyer,Mohaddes Associates,Inc.inexchange for 55,245 shares of our Class A common stock.Pursuant to the termsof the merger ag

222、reement,we issued an aggregate of 46,726 additional shares ofour Class A Common Stock in fiscal 1999 and an additional 20,181 shares of ourClass A Common Stock in April 2000 to the four former shareholders of Meyer,Mohaddes as a penalty for not completing the initial public offering of Iteris.The sa

223、le and issuance of securities set forth above were deemed to beexempt from registration under the Securities Act by virtue of Section 4(2)thereof.The recipients of the securities in each of the transactions set forthin above represented their intention to acquire such securities for investmentonly a

224、nd not with a view to or for sale in connection with any distributionthereof,and appropriate legends were affixed to the share certificates andinstruments used in such transactions.Except as indicated above,there were nounderwriters,brokers or finders employed in connection with any of theforegoing

225、transactions.22 ITEM 6.SELECTED FINANCIAL DATA.The following selected consolidated financial data with respect to ourconsolidated statement of operations for each of the five fiscal years in theperiod ended March 31,2000 and the consolidated balance sheet data at March 31,1996,1997,1998,1999 and 200

226、0 are derived from our audited consolidatedfinancial statements.The consolidated financial statements for the fiscalyears ended March 31,1996 and 1997 and our consolidated balance sheet at March31,1996,1997 and 1998 are not included in this report.The followinginformation should be read in conjuncti

227、on with Managements Discussion andAnalysis of Financial Condition and Results of Operations and with ourconsolidated financial statements and the related notes thereto includedelsewhere in this report.Fiscal Year Ended March 31,-1996 1997 1998 1999 2000 -(in thousands,except per share data)Consolida

228、ted Statement of Operations Data:Net sales.$65,056$71,748$79,552$70,042$62,041Contract revenues.10,161 9,032 10,284 13,331 18,666 -Total net sales and contract revenues.75,217 80,780 89,836 83,373 80,707 Cost of sales.44,535 48,507 55,227 49,816 50,883Cost of contract revenues.4,374 4,907 6,430 9,00

229、7 13,431Selling,general and administrative expense.15,620 19,831 26,010 31,670 38,173 Research and development expenses.5,242 7,734 9,271 11,191 16,888 In process research and development.-2,106 -Restructuring charge.-1,716 -Income(loss)from operations.5,446 (199)(10,924)(18,311)(38,668)Non-operatin

230、g income(expense)Royalty income.-38,437 Interest expense,net.(386)(183)(617)(1,807)(2,048)-Income(loss)before taxes.5,060 (382)(11,541)(20,118)(2,279)Income taxes(benefit).1,418 (181)(2,858)-Income(loss)from continuing operations.3,642 (201)(8,683)(20,118)(2,279)Income(loss)from discontinued operati

231、ons,net of income taxes.(1,189)3,931 2,089 -Net income(loss).$2,453$3,730$(6,594)$(20,118)$(2,279)=Diluted earnings(loss)per share(1):Continuing operations.$0.59$(0.03)$(1.26)$(2.57)$(0.25)Discontinued operations.(0.19)0.62 0.31 -Earnings(loss)per share.$0.40$0.59$(0.95)$(2.57)$(0.25)=Shares used in

232、 calculating diluted earnings(loss)per share.6,179 6,299 6,912 7,820 9,089 _(1)The earnings(loss)per share amounts prior to fiscal 1998 have been restated as required to comply with Statement of Financial Accounting Standards No.128 Earnings per Share.23 Fiscal Year Ended March 31,-1996 1997 1998 19

233、99 2000 -Consolidated Balance Sheet Data:(in thousands)Working capital.$20,610$21,903$19,996$15,216$12,855Total assets.73,013 85,805 88,790 81,355 81,850Long-term debt(less current portion).22,019 11,860 21,000 19,962 11,666Retained earnings(deficit).8,481 12,211 (3,795)(23,913)(26,192)Total stockho

234、lders equity.30,985 51,828 38,580 36,323 36,110 24 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Results of Operations The following table sets forth certain income statement data as apercentage of total net sales and contract revenues for the periods in

235、dicatedand should be read in conjunction with Managements Discussion and Analysis ofFinancial Condition and Results of Operations:As of March 31,-1998 1999 2000 -Net sales.88.6%84.0%76.9%Contract revenues.11.4 16.0 23.1 -Total net sales and contract revenues.100.0%100.0%100.0%Cost of sales.61.4 59.7

236、 63.0Cost of contract revenues.7.2 10.8 16.6Selling,general and administrative expenses.29.0 38.0 47.3Research and development expenses.10.3 13.4 20.9In process research and development.2.3 -Restructuring charge.1.9 -Loss from operations.(12.2)(22.0)(47.9)Non-operating income(expense)Royalty income.

237、-47.6 Interest expense,net.(0.7)(2.1)(2.5)-Loss before taxes.(12.9)(24.1)(2.8)Income taxes(benefit).(3.2)-Loss from continuing operations.(9.7)(24.1)(2.8)Income from discontinued operations,net of income taxes.2.4 -Net loss.(7.3)%(24.1)%(2.8)%-General.We define our business segments as video product

238、s,telecomproducts and ITS.The video products segment includes our wholly-ownedsubsidiaries,Broadcast,Inc.and Gyyr,Inc.The telecom products segmentincludes Zyfer,Inc.,our wholly-owned subsidiary(formerly known as ourCommunications division)that manufactures timing and synchronization products,and Mar

239、iner Networks,Inc.,our wholly-owned subsidiary.The ITS segmentincludes Odetics 93%owned subsidiary,Iteris,Inc.On October 31,1997,wecompleted the spin-off of our 82.9%interest in ATL Products,Inc.bydistributing our 8,005,000 shares of Class A common stock to our stockholders ofrecord on October 31,19

240、97.In connection with the spin-off,we restated ourfinancial statements to reflect continuing and discontinued operations.Discontinued operations reflect our interest in the operations of ATL for allperiods presented.All references to our subsidiaries in this report includethe prior business and resu

241、lts of operations of such subsidiaries as businessunits of Odetics prior to their incorporation.Net Sales and Contract Revenues.Net sales and contract revenues consist of(i)sales of products and services to commercial and municipal customers(netsales)and(ii)revenues derived from contracts with state

242、,county andmunicipal agencies for intelligent transportation systems projects(contractrevenues).Contract revenues also include revenue from contracts with agenciesof the United States Government and foreign entities for space-borne recorders 25 used for geographical information systems.Total net sal

243、es and contract revenuesdecreased 3.2%to$80.7 million for the fiscal year ended March 31,2000(fiscal 2000)compared to$83.4 million for the fiscal year ended March 31,1999(fiscal 1999),and decreased 7.2%in fiscal 1999 from$89.8 million forthe fiscal year ended March 31,1998(fiscal 1998).Net Sales.Net

244、 sales decreased 11.4%to$62.0 million in fiscal 2000compared to$70.0 million in fiscal 1999 as a result of declining sales inBroadcast,Mariner Networks and Gyyr.The decrease in Broadcast sales in fiscal2000 reflects delays in the delivery of our Roswell facility management system.We believe that the

245、 Roswell system represents key enabling software thatfacilitates the sale of Broadcast systems.The decline in Mariner Networkssales reflects the loss in August 1999 of IBM as a significant OEM customer ofits Fraim Product family.Gyyrs revenues declined 6.1%in fiscal 2000 comparedto fiscal 1999 prima

246、rily as a result of declining sales of its analog basedtime-lapse recorder product families.Gyyr has made substantial investments inexpanding its product line to include a broad family of integrated securitysolutions,including the acquisition of a line of digital time-lapse recorders.This product li

247、ne expansion was the result of our acquisition of the SecurityProducts Division of Digital Systems Processing,Inc.Contributions of revenuein fiscal 2000 from the expanded product offerings were not significant enoughto offset the declining revenues from analog-based time-lapse recorders.Net sales de

248、creased 12.0%to$70.0 million in fiscal 1999 compared to$79.6million in fiscal 1998 as a result of a 10.2%decrease in Gyyrs sales and a58.6%decrease in Zyphers sales.The decrease in Gyyrs sales reflects reducedpurchases by certain of its OEM customers who sell to the banking industrysegment of the el

249、ectronic security market.This market segment has undergonesubstantial consolidation in the current fiscal year that has negativelyimpacted demand for certain of our products including video multiplexers andtime-lapse video tape decks.The decrease in sales in our telecom productssegment reflects a de

250、crease in sales by Zyfer of timing and synchronizationproducts to LGIC of Korea,a significant customer.The decline in sales to thiscustomer largely reflects adverse economic conditions in Asia.Sales by Iterisincreased 360.0%in fiscal 1999 compared to fiscal 1998 partially offsetting thedecline in sa

251、les of Gyyr and Zyfer.The increase in Iteris sales was primarilythe result of increasing market acceptance of our Vantage line of video-basedtraffic intersection control systems.We also experienced a 140%increase inMariner Networks sales in fiscal 1999 compared to fiscal 1998 primarily due toincreas

252、ed sales of network interface products.Sales of Mariner Networksproducts represented 2.0%of our total net sales and contract revenues in fiscal1998 compared to 6.0%in fiscal 1999.During fiscal 1999,Broadcast sales wererelatively flat compared to fiscal 1998.Contract Revenues.Contract revenues increa

253、sed 40.0%to$18.7 million infiscal 2000 compared to$13.3 million in fiscal 1999,and increased 29.6%infiscal 1999 from$10.3 million in fiscal 1998.The growth in contract revenuesin fiscal 2000 compared to fiscal 1999 primarily reflects increased contractvolume in our Iteris subsidiary.During fiscal 19

254、99,Iteris completed theacquisition of Meyer Mohaddes Associates,Inc.and the assets of ViggenCorporation.In fiscal 2000 compared to fiscal 1999,Iteris experienced a 59%growth in contract revenues in Meyer Mohaddes Associates Inc.,a 34%growth incontact revenues related to its acquisition of Viggens as

255、sets,and a 37%growthin its base business of contracts.26 Approximately one-half of the increase in contract revenues in fiscal 1999compared to fiscal 1998 resulted from the acquisition of Meyer Mohaddes.Thebalance of the increase in contract revenues in fiscal 1999 represents overallincreased contra

256、ct volume in Iteris.The increases in Iteris contract revenuesin both fiscal 2000 and fiscal 1999 were offset by continued declines incontract revenues derived from the sale of space-borne recorders and relatedservice and equipment to agencies of the United States Government.We havefocused our recent

257、 contract procurement efforts on commercial markets and themarkets for Iteris products and services.Gross Profit.Total gross profit as a percent of net sales and contractrevenues decreased to 20.3%in fiscal 2000,compared to 29.4%in fiscal 1999,and 31.4%in fiscal 1998.Gross profit as a percent of net

258、 sales decreased to18.0%in fiscal 2000 compared to 28.9%in fiscal 1999.The decrease in grossprofit as a percent of net sales reflects lower sales levels and higherunabsorbed manufacturing costs in Video Products and Telecom Products.Grossprofit performance in fiscal 2000 was negatively impacted by p

259、ricing concessionsto certain customers in our Broadcast business.During fiscal 2000 gross profitwas impaired due to our adjustments to inventory reserves and capitalizedsoftware related to certain discontinued products and product options in ourMariner Networks,Broadcast and Gyyr businesses.As a res

260、ult of increasingsales volume,we experienced improved gross profit performance during fiscal2000 on sales of Vantage Product by our Iteris subsidiary.Gross profit as a percent of contract revenues decreased to 28.0%in fiscal2000 compared to 32.4%in fiscal 1999.Contract revenue derived from our Iteri

261、ssubsidiary comprised 83.5%of total contract revenue in fiscal 2000 compared to64.9%of total contract revenue in fiscal 1999.Gross profit earned on Iteriscontracts activity is generally lower than gross profit historically earned byOdetics on other government contract activities.The decrease in gros

262、s profit in fiscal 1999 compared to fiscal 1998reflects decreased gross profit performance in Broadcast and Zyfer.Thedecrease in gross profit in Broadcast resulted from an unfavorable sales mix oflow margin product sales in the fourth quarter of fiscal 1999,in addition to anincrease in charges for w

263、arranty liabilities that are included in cost of sales.Gross profit in Zyfer decreased from 46.5%of sales in fiscal 1998 to 36.7%ofsales in fiscal 1999,as a result of the decline in sales to LGIC of Korea.Selling,General and Administrative Expense.Selling,general andadministrative expense increased

264、20.5%to$38.2 million(or 47.2%of total netsales and contract revenues)in fiscal 2000 compared to$31.7 million(or 38.0%of total net sales and contract revenues)in fiscal 1999,and increased 21.8%infiscal 1999 compared to$26.0 million(or 29.0%of total net sales and contractrevenues)in fiscal 1998.During

265、 fiscal 2000,we increased expenditures forsales and marketing and general and administrative expenses in Mariner Networks,Iteris and Broadcast.Concurrent with the completion of development of MarinerNetworks Dexter product and its progression to beta testing,we began buildingadditional sales and mar

266、keting and administrative functions to supportanticipated revenue growth.During fiscal 2000,we attempted to execute apublic offering of Iteris.As a result of the volatility of the public equitymarkets,we aborted the planned initial public offering and in May 2000,withdrew the Registration Statement

267、on Form S-1.In preparation for the initialpublic offering of Iteris,we 27 increased expenditures for sales and marketing and general and administrativeexpenses to enable Iteris to execute on its aggressive growth plans and tofunction as an independent public company.As part of the process of filing

268、aRegistration Statement on Form S-1 for Iteris with the Securities and ExchangeCommission,we adjusted the amortization periods for goodwill that arose uponthe acquisition of the assets of the Transportation Systems business ofRockwell,and Meyer,Mohaddes Associates,Inc.The effect of the adjustment wa

269、san incremental charge to amortization expense of$887,000 during fiscal 2000.Iteris also experienced increased sales and marketing,and general andadministrative expenses as a result of its acquisitions of Meyer MohaddesAssociates in October 1998,and of certain assets of Viggen Corporation inJanuary

270、19,1999.The increase in selling,general and administrative expense infiscal 2000 also reflects charges of approximately$500,000 for adjustment tothe allowance for doubtful accounts in Broadcast.During fiscal 1999,we increased sales and marketing expenditures$3.9million or 20.7%over fiscal 1998 level

271、s.Sales and marketing expense increasedin our Iteris,Gyyr,Broadcast and Mariner Networks businesses in fiscal 1999.Approximately$514,000 of the increase in fiscal 1999 was attributable to MeyerMohaddes,which was acquired by Iteris in October 1998.The other increases inspending were incurred to suppo

272、rt planned growth in sales and market share andwere incurred principally in the areas of labor and benefits,sales commissions,advertising and promotions,and charges related to support increased presence ininternational markets,particularly Europe.These increases were partiallyoffset by decreased spe

273、nding in Zyfer,which enforced general spending cutbacksin response to the sharp reduction in sales in fiscal 1999 accompanying theAsian economic crisis.General and administrative expense increased$1.2million in fiscal 1999 compared to fiscal 1998 primarily as a result of thewrite off of deferred cos

274、ts associated with our delay in the initial publicoffering of Iteris,an increase in goodwill amortization as a result of theacquisitions of Meyer Mohaddes Associates and International Media IntegrationServices,and the administrative infrastructure that accompanied the acquisitionof Meyer Mohaddes As

275、sociates.Research and Development Expense.Research and development expenseincreased 50.9%to$16.9 million(or 20.9%of total net sales and contractrevenues)in fiscal 2000 compared to$11.2 million(or 13.4%of total net salesand contract revenues)in fiscal 1999,and increased 20.7%in fiscal 1999compared to

276、$9.3 million(or 10.3%of total net sales and contract revenues)infiscal 1998.For competitive reasons,we closely guard the confidentiality ofspecific development projects.During fiscal 1999,$2.8 million of developmentcosts for Roswell and$2.1 million of development costs for Dexter werecapitalized as

277、qualified software development costs.The increase in researchand development expense in fiscal 2000 also reflects increased expenditures byIteris,Broadcast and Mariner Networks.Iteris increased its developmentactivities 72.1%during fiscal 2000 to support its AutoVue product development.Broadcast con

278、tinued to aggressively develop its Roswell facility managementsystem and completed the development of its MicroStation product offering.Allsoftware development activities for Broadcast during fiscal 2000 were charged asresearch and development expense.Mariner Networks capitalized$300,000 ofsoftware

279、development costs in fiscal 2000,significantly expanded its productdevelopment team and increased research and development expenses 223.9%duringfiscal 2000 compared to fiscal 1999 to support the completion of its developmentschedule for Dexter in order to meet a targeted beta release of the product

280、inthe first quarter of fiscal 2001.Gyyr reduced its expenses for productdevelopment 28 27.6%in fiscal 2000 compared to fiscal 1999 in response to its efforts toreduce overall operating expenses and because it had completed severaldevelopment initiatives as of the end of fiscal 1999.The change in Zyf

281、ersproduct development expenses in fiscal 2000 compared to fiscal 1999 was notsignificant.The increase in research and development expense in fiscal 1999 compared tofiscal 1998 principally reflects increased product development activity in Gyyr,Mariner Networks and Zyfer.Most of these increases repr

282、esent engineering laborand related benefits,prototype material and consulting fees.Gyyr completed anaggressive product development schedule during fiscal 1999 intended to broadenits product family beyond time-lapse video recorders.During fiscal 1999,Gyyrintroduced its Vortex family of domes for faci

283、lity monitoring,expanded itsvideo multiplexer product line,and launched a new Internet based securityproduct called Tango.Mariner Networks added substantial investment in thedevelopment of Dexter,a broadband wide area access concentrator.MarinerNetworks also invested development resources in FRAIM,a

284、n extension to itsfamily of products offering Frame Relay to ATM communications.Zyfer alsoexperienced increased development costs related to its high performance G.P.S.based synchronization product.Restructuring Charge.In March 1998,we recorded a nonrecurring charge of$1.7 million.This charge reflec

285、ts severance costs related to retirement ofcertain of our founders and officers,and to a lesser extent,costs incurred toterminate a joint venture relationship in China.Royalty Income.In connection with the settlement of our action againstStorageTek,we received proceeds,net of expenses and fees,of ap

286、proximately$38.4 million in October 1999.Under our revised settlement agreement withStorageTek,we received an additional$17.8 million in June 2000 in fullsettlement of the amounts due to us.See Item 3.Legal Proceedings.Interest Expense,Net.Interest expense,net reflects the net of interestexpense and

287、 interest income as follows:Year Ended March 31,-1998 1999 2000 -Interest expense.$1,609$1,928$2,313 Interest income.992 121 265 -Interest expense,net.$617$1,807$2,048 =Interest expense increased 20.0%in fiscal 2000 compared to fiscal 1999,and decreased 19.8%in fiscal 1999 compared to fiscal 1998.In

288、terest expenseprimarily reflects interest charges on Odetics line of credit borrowings andmortgage interest.The increase in fiscal 2000 represents increased averageoutstanding borrowings on our line of credit to fund negative operating cashflow.Interest income in fiscal 2000 primarily related to int

289、erest earned oninvested cash received from our settlement with StorageTek.Interest income infiscal 1999 and 29 fiscal 1998 was derived primarily from a note receivable due from ATL Products,Inc.,our former subsidiary.ATL repaid in full the outstanding balance of itsnote receivable in July 1998.In-Pr

290、ocess Research and Development.In the fourth quarter of fiscal 1998,we completed the purchase price allocation related to our acquisition ofIntelligent Controls and determined that$2.1 million of the purchase price wasattributable to the value of research and development activities in process atthe

291、date of acquisition,constituting the development of an integrated buildingaccess and security system that Gyyr began selling in the latter part of fiscal1999 as the Access 202 product family.In accordance with the provisions ofFASB Statement No.2,Accounting for Research and Development Costs,werecor

292、ded a charge in fiscal 1998 for this in-process research and development.Subsequent to this acquisition,we incurred an additional$94,000 and$469,000of research and development expense in fiscal 1998 and 1999,respectively,related to this product development effort.Income Taxes.We have not provided in

293、come tax benefit for the lossesincurred in fiscal 2000 and 1999 due to the uncertainty as to the ultimaterealization of the benefit.We provided for a tax benefit from continuingoperations at an effective rate of(24.8)%in fiscal 1998.The tax benefitrecorded in 1998 was less than the statutory rate be

294、cause no benefit wasrecorded in connection with$2.1 million write-off of purchased research anddevelopment expenses associated with the acquisition of Intelligent Controls,areduction in the benefit of general business credits on total expense,andforeign losses recorded in Singapore for which no tax

295、benefit was recognized.Loss from Continuing Operations.In connection with the spin-off of our82.9%ownership interest in ATL on October 31,1997,we restated our financialstatements to present the results of operations of ATL as discontinuedoperations for all periods presented.Loss from continuing oper

296、ations reflectsour continuing operations including Gyyr,Broadcast,Zyfer,Mariner Networks andIteris.Liquidity and Capital Resources Odetics serves as an incubator of high technology companies,each with itsown marketplace,customers and products.The process of incubating companiesimplies a potentially

297、high investment of cash as each entity moves through itsdevelopment stage in preparation for an initial public offering or a strategicsale.We generally fund the cash flow requirements of each entity by seekinginvestors who have both strategic and financial interests directly in thesubsidiaries of Od

298、etics.We also fund our operations through the sale ofOdetics common stock and more traditional debt financing.During fiscal 2000,net cash provided by operating activities was$7.0million.Cash used to fund purchases of property plant and equipment was$2.2million,reflecting a decrease of 21.0%from fisc

299、al 1999.Net cash provided byoperating activities in fiscal 2000 included the receipt of$38.4 million fromour settlement of litigation with Storage Technology Corporation(StorageTek).In October 1999,we settled litigation with StorageTek in exchange forlicense fees payable to us of$100 million,$80 mil

300、lion of which was paid on thesettlement date.The initial 30 payment of$80 million resulted in cash proceeds to us,net of expenses andfees,of approximately$38.4 million.We used a portion of the proceeds toretire outstanding borrowings on our line of credit with Transamerica BusinessCredit,and to redu

301、ce trade accounts payable.We retained the balance of thesefunds to support our general working capital requirements.Under the terms ofthe original settlement agreement,we were to receive two additional payments of$10 million each in September 2000 and 2001.In June 2000,we amended the settlement agre

302、ement with StorageTek toprovide for the acceleration of the two$10 million payments.Under the termsof the amendment,StorageTek paid us$17.8 million immediately in fullsettlement of the$20 million otherwise payable to us to complete thesettlement.We recognized non-operating income in the amount of$17

303、.8 millionin the quarter ended June 30,2000,and used the cash proceeds to pay downborrowings on our line of credit and retained the balance of the cash to fundour general working capital requirements.We currently have a$17.0 million line of credit with Transamerica BusinessCredit providing for borro

304、wings at their prime rate plus 2.0%(11.0%at March31,2000).At March 31,2000,approximately$3.7 million of borrowings wereoutstanding under this line of credit.We anticipate that the cash flowavailable from our line of credit,proceeds from equity offerings of ourcommon stock and the stock of our subsid

305、iaries,and amounts received from thelitigation settlement,and,if necessary,the sale of certain assets,will besufficient for us to execute our current operating plans and meet ourobligations on a timely basis for at least the next twelve months.ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MA

306、RKET RISK.We are exposed to changes in interest rates primarily from our long-termdebt arrangements.Under our current policies,we do not use interest ratederivative instruments to manage our exposure to interest rate changes.The following table provides information about our debt obligations thatare

307、 sensitive to changes in interest rates.Expected maturity date March 31,-2001 2002 2003 2004 2005 Total Fair value -(dollars in thousands)Long-term debt:Fixed rate.$3,102$6,988$1,813$1,666$1,199$14,768$14,768 Average interest rate.8.67%8.87%9.18%9.36%9.36%9.02%Variable rate.$3,706 -$3,706$3,706 Aver

308、age interest rate.11.00%11.00%31 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.The financial statements and supplementary data required by Regulation S-Xare included in this Form 10-K commencing on page F-1.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOS

309、URE.Not applicable.PART IIIITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.(a)Identification of Directors.The information under the headingElection of Directors,appearing in our proxy statement,is incorporatedherein by reference.(b)Identification of Executive Officers.The information unde

310、r theheading Executive Compensation and Other Information,appearing in our proxystatement,is incorporated herein by reference.(c)Compliance with Section 16(a)of the Exchange Act.The informationunder the heading Executive Compensation and Other Information,appearing inour proxy statement,is incorpora

311、ted herein by reference.ITEM 11.EXECUTIVE COMPENSATION.The information under the heading Executive Compensation,appearing inour proxy statement,is incorporated herein by reference.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.The information under the heading Principal Stock

312、holders and Common StockOwnership of Certain Beneficial Owners and Management,appearing in our proxystatement,is incorporated herein by reference.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.The information under the heading Certain Transactions,appearing in ourproxy statement,is incorpora

313、ted herein by reference.32 PART IVITEM 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K.(a)Documents filed as part of this report:1.Financial Statements.The following financial statements ofOdetics are included in a separate section of this Annual Report on Form 10-Kcommencing on th

314、e pages referenced below:Page -Report of Independent Auditors.F-2 Consolidated Balance Sheets as of March 31,2000 and 1999.F-3 Consolidated Statements of Operations for the years ended March 31,2000,1999 and 1998.F-4 Consolidated Statements of Stockholders Equity for the years ended March 31,2000,19

315、99 and 1998.F-5 Consolidated Statements of Cash Flows for the years ended March 31,2000,1999 and 1998.F-6 Notes to Consolidated Financial Statements.F-7 2.Financial Statement Schedules.Schedule II-Valuation and Qualifying Accounts.S-1 All other schedules have been omitted because they are not requir

316、ed or therequired information is included in our consolidated financial statements andnotes thereto.3.Exhibits.3.1 Certificate of Incorporation of Odetics,as amended(incorporated by reference to Exhibit 19.2 to Odetics Quarterly Report on Form 10-Q for the quarter ended September 30,1987).3.2 Bylaws

317、 of Odetics,as amended(incorporated by reference to Exhibit 4.2 to Odetics Registration Statement on Form S-1(Reg.No.033-67932)as filed with the SEC on July 6,1993).4.1 Specimen of Class A Common Stock and Class B Common Stock certificates(incorporated by reference to Exhibit 4.3 to Amendment No.1 t

318、o Odetics Registration Statement on Form S-1(Reg.No.033-67932)as filed with the SEC on September 30,1993).4.2 Form of rights certificate for Odetics preferred stock purchase rights(incorporated by reference to Exhibit A of Exhibit 4 to Odetics Current Report on Form 8-K as filed with the SEC on May

319、1,1998).10.1 Profit Sharing Plan and Trust(incorporated by reference to Exhibit 10.3 to Odetics Amendment No.2 to the Registration Statement on Form S-8(Reg.No.002-98656)as filed with the SEC on May 5,1988).10.2 Form of Executive Deferral Plan between Odetics and certain employees of Odetics(incorpo

320、rated by reference to Exhibit 10.4 to Odetics Annual Report on Form 10-K for the year ended March 31,1988).10.3*Loan and Security Agreement dated December 28,1998 among Transamerica Business Credit Corporation,Odetics and the subsidiaries of Odetics,and Schedule to Loan Agreement (incorporated by re

321、ference to the same exhibit number in Odetics Annual Report on Form 10-K for the year ended March 31,1999).33 10.4*Amendment to Loan Agreement dated December 28,1998 among Transamerica Business Credit Corporation,Odetics and the subsidiaries of Odetics,and related Schedule to Loan Agreement dated De

322、cember 28,1998(incorporated by reference to the same exhibit number in Odetics Annual Report on Form 10-K for the year ended March 31,1999).10.5*Revolving Credit Note dated December 28,1998 payable to Transamerica Business Credit Corporation in the original principal amount of$17,000,000(incorporate

323、d by reference to the same exhibit number in Odetics Annual Report on Form 10-K for the year ended March 31,1999).10.6*Letter of Credit Agreement dated December 28,1998 among Transamerica Business Credit Corporation,Odetics and the subsidiaries of Odetics(incorporated by reference to the same exhibi

324、t number in Odetics Annual Report on Form 10-K for the year ended March 31,1999).10.7*Security Agreement in Copyrighted Works dated December 28,1998 between Transamerica Business Credit Corporation and Odetics (incorporated by reference to the same exhibit number in Odetics Annual Report on Form 10-

325、K for the year ended March 31,1999).10.8*Patent and Trademark Security Agreement dated December 28,1998 between Transamerica Business Credit Corporation and Odetics (incorporated by reference to the same exhibit number in Odetics Annual Report on Form 10-K for the year ended March 31,1999).10.9*Cros

326、s-Corporate Continuing Guaranty dated December 28,1998 among Transamerica Business Credit Corporation,Odetics and the subsidiaries of Odetics(incorporated by reference to the same exhibit number in Odetics Annual Report on Form 10-K for the year ended March 31,1999).10.10 Form of Indemnity Agreement

327、 entered into by Odetics and certain of its officers and directors(incorporated by reference to Exhibit 19.4 to Odetics Quarterly Report on Form 10-Q for the quarter ended September 30,1988).10.11 Schedule of officers and directors covered by Indemnity Agreement (incorporated by reference to Exhibit

328、 10.9.2 to Amendment No.1 to Odetics Registration Statement on Form S-1(Reg.No.033-67932)as filed with the SEC on July 6,1993).10.12 Amendment Nos.3 and 4 to the Profit Sharing Plan and Trust (incorporated by reference to Exhibits 4.3.1 and 4.3.2,respectively,to Amendment No.3 to Odetics Registratio

329、n Statement on Form S-3(Reg.No.002-86220)as filed with the SEC on June 13,1990).10.13 Separation and Distribution Agreement dated March 1,1997 between Odetics and ATL(incorporated by reference to Exhibit 10.13 to Odetics Annual Report on Form 10-K for the year ended March 31,1997)10.14 Tax Allocatio

330、n Agreement dated March 1,1997 between Odetics and ATL (incorporated by reference to Exhibit 10.14 to Odetics Annual Report on Form 10-K for the year ended March 31,1997).10.15 Services Agreement dated March 21,1997 between Odetics and ATL (incorporated by reference to Exhibit 10.15 to Odetics Annua

331、l Report on Form 10-K for the year ended March 31,1997).10.16 Promissory Note dated April 1,1997 between Odetics and ATL (incorporated by reference to Exhibit 10.16 to Odetics Annual Report on Form 10-K for the year ended March 31,1997).10.17 1997 Stock Incentive Plan of Odetics(incorporated by refe

332、rence to Exhibit 99.1 to Odetics Registration Statement on Form S-8(File No.333-44907)as filed with the SEC on January 26,1998).10.18 Form of Notice of Grant of Stock Option(incorporated by reference to Exhibit 99.2 to Odetics Registration Statement on Form S-8(File No.333-44907)as filed with the SE

333、C on January 26,1998)10.19 Form of Stock Option Agreement(incorporated by reference to Exhibit 99.3 to Odetics Registration Statement on Form S-8(File No.333-44907)as filed with the SEC on January 26,1998).10.20 Form of Addendum to Stock Option Agreement-Involuntary Termination Following Corporate Transaction/Change in Control(incorporated by reference to Exhibit 99.4 to Odetics Registration State