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Technology Stocks : ATC Communications ATCT -- Ignore unavailable to you. Want to Upgrade?

To: Northern Marlin who wrote (2597)	6/18/1998 6:35:00 AM
From: Northern Marlin	Read Replies (1) \| Respond to of 2636

To all, I copied the following e-mail and response from Scott Guffey: Subject: Mr. Guffey responds Date: Wed, Jun 17, 1998 23:45 EDT From: JMARTISEK Message-id: <1998061803453500.XAA22118@ladder01.news.aol.com> Question from Proxy Statement Date: 98-06-17 11:46:09 EDT From: GuffeyS@atct.com (Guffey, Scott (Irving)) To: JMARTISEK@aol.com Mr. Martisek - You have a valid question. I would respond by saying that we looked at IQI from both a strategic and financial standpoint. The strategic reasons for the merger are detailed in the Proxy's "Reasons for the Merger" section. As for the financial view, financial investors (such as money managers, mutual fund managers, venture capitalists, etc.) tend to look at what a potential investment's performance will look like going forward. Like we did, they ask themselves such questions as: 1. After you strip out: * one-time merger transaction costs ($1.14M in 1996 for Lexi, $1.342M in 1997 for InterServ) * S-corp. officer's salary which would not occur in a C-corp. like IQI and ATC are now ($2.417M in 1996), and * other non-recurring expenses ($0.81M in 1996, $0.443M in 1997, $0.123 in quarter ended 3/31/97) (all this is in IQI financials footnotes and summary on pp.29, 30 of the Proxy) would the company have been profitable on a net income basis? 2. Is the company profitable from an operating basis - i.e., before interest expense? IQI was to the tune of $4.018M for the latest twelve months ended 3/31/98, ATC was not. 3. Is the company producing sufficient cash flow (EBITDA) to: * support operations * cover current debt payments, and * potentially retire debt so that going forward it will be profitable from a net income basis? IQI's EBITDA for the latest twelve months was $11,430 (ATC's was negative -$1.829M, but improving). This cash flow can be used to retire debt, thus reducing the interest expense that recently has resulted in a net loss for IQI. All that being said, we expect IQI to be profitable from a net income basis going forward even with the current interest expense level. Regards, Scott Guffey ---------- From: JMARTISEK@aol.com Sent: Monday, June 15, 1998 9:31 PM To: GuffeyS@atct.com Subject: Question from Proxy Statement Mr. Guffey, I have received my copy of the proxy statement today. The statement is quite long and comprehensive. I have one question in regards to the statement. --In the conference call after the merger announcement, a question was asked by an analysis if IQI is "profitable." A response was made by a representative of ATCT that IQI is profitable at this time. On page 86 of the Proxy Statement, IQI reported a loss in the 3 months ending March 31, 1998 as well as FY97 and FY96. Where did I misunderstand? Did the representative of ATCT not understand the question or is there some additional information that is available that would help in under- standing this misstatement? As always, I appreciate your courtesy in responding to shareholder questions. Have a great day! John H. Martisek