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INVISION TECHNOLOGIES, INC.
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ON MARCH 24, 2004, INVISION SENT AN EMAIL TO ITS EMPLOYEES WITH THE FOLLOWING
TRANSCRIPT FROM AN EMPLOYEE MEETING HELD ON MARCH 15, 2004 ATTACHED:
INVISION TECHNOLOGIES INC.
MODERATOR: LAURA GRAVES
MARCH 15, 2004/12:00 P.M. CST
INVISION TECHNOLOGIES INC.
MARCH 15, 2004
12:00 P.M. EST
(Poor audio made transcription difficult.)
R. Van Ark ...Can't really hear very well. Secondly, we have about
150 people and some of them in classes phoned in on this
particular conference call that's on the deck here, so
many people out in the field, customer ops people and so
on have phoned into the conference call this morning as
well. To all of you, welcome, and thanks for coming. Our
address this morning will be done by Don Mattson, our
Chief Operating Officer, and I'll hand it over to Don.
D. Mattson Thank you. Good morning, everybody. Also, good morning to
most of you at Inovec and Quantum. For those of you in the
room here, we have a communications bridge open to the
other facilities; and as Roelof said, we've already talked
to Europe and the sales force and they are all aware.
As you might suspect, it's been a rather long, few days.
We've spent a lot of hours here; many of you have seen us
and wondered what was going on. I appreciate your patience
and the fact that you weren't bugging me saying, What's
happening, what's coming, who's doing what?" Yes, I know
there have been rumors and as you might suspect, we cannot
respond until, as Yogi Bearra used to say, "It ain't over
`til it's over." Having said that, it's not
totally over, but the important thing is that there is now
a signed agreement. The agreement was signed last night at
midnight and we received the permission to announce this
morning at 5:00 a.m., went out on the wire at 5:00 a.m.
Some of you have asked me, "Aren't you supposed to be
somewhere else?" The answer is yes, and the good news is,
for me anyway, I'll be going to Hawaii this afternoon to
participate in my daughter's wedding. Thank you ... for
getting this done.
I'd like to thank all of you for joining us with such
short notice and apologize. The communications is always
difficult, but to repeat, you understand that we've signed
an agreement late last night for InVision to join with
General Electric infrastructure business. This means that
GE agreed to acquire InVision in a cash transaction valued
at approximately $900 million or $50 per share. Those of
you that have looked on the Internet have probably seen
the stock is now in the, last I looked, $49.3.
This morning we wanted to pull everybody together and to
give you a few of the details and give you a chance to ask
any questions that you may have. We'll do our best to
answer, but having said that, there are a lot of things
that are still up in the air and happening, and we'll do
our best to let you know what's going on.
Anyway, why does this make sense for us? This is a logical
and an exciting move for InVision and it will make sure
that we are truly at the heart of the Homeland Security
industry moving forward. For this agreement, GE has
already built its own security business into a $1 billion
dollar organization. They've done this over the last 18
months. They are clearly dedicated to being an important
player in this consolidating field.
For the NDT side, our non-destructive testing and Yxlon,
GE is already a significant player in that business, and
due to anti-trust issues, they will not be able to bring
our NDT business into their organization. For this reason,
InVision will now begin a process working with ...
Management do divest the NDT business in Germany.
Back to the security business, becoming part of GE's
security business will result in a much more powerful
organization, which will enhance our chances to become the
major supplier of the full spectrum of security solutions
into the new areas of Homeland Security. GE has
world-leading customer relationships, distribution
channels and strengths in its brand name and reputation.
GE already possesses a strong portfolio of security
products and shares the same culture of products and
innovation. We've always said that the future solutions in
homeland security will be integrated solutions utilizing a
number of proven technologies.
InVision CT technology, Yxlon detraction and what we now
call the security group in Hamburg and Quantum's ...
resonance are complementary to GE's trace detection
technology. This will offer us better opportunity to
develop solutions for customers, which will result in
screening systems that are easier to use and more
effective than those available today. As you may recall,
GE purchased Ion Track, so Ion Track is the trace
detection brand name that they supply.
We believe that there will be other positive synergy,
which will emerge and which will offer the combined group,
a more successful future. Even as we enter this agreement,
for example, we are working to determine how we can offer
our major customers enhanced service offerings for the
full range of their maintenance needs.
Now, talking about the process and how the merger will go,
the merger will take a considerable period of time. It
could take most of the year to
work out. The good news at the end of this, many of you
who are stockholders is that GE will then be purchasing
your shares for a price of $50 each. Option holders, your
options will all 100% be vested and you will receive
payment for those. Until then, we all need to continue
with what we do so well. The plants are staying open and
the offices will run, and it's business as usual.
I'm going to steal a little bit of Roelof's thunder, I'm
sure he would like to tell you this because ....
(Speaker gets cut off.)
W Ladies and gentlemen, I appreciate that you're interested,
but if you could keep quiet, we're trying to hear some
tones for the phones here for your other fellow employees.
M Sorry, the people who have phoned in remotely, something
was wrong with the phone. We're back online again, can we
go to the next question?
D. Mattson For those of you offline, Quantum and Inovec, I will be
calling both Allan and Lowell and if a question that you
had wasn't asked, if you'd like an answer, I will be
talking to them and do my best to get an answer to you
over the next hour. Anyway, anybody else?
(Hard to hear speaker.)
W I have a question. ...you said that it was business as
usual....are employees still able to join the plan at this
point, ...
D. Mattson Michael ... said it best, it is business as usual on our
plan.
(Hard to hear speaker)
W ...
D. Mattson The question is on the ... in the open enrollment, can
people join. Only to the extent that the shares then are
allocated, we have a limit in total shares. We've been
here once before and we're going to have to look at how we
do that and to make it fair for everybody. You'll hear
more later. We'll work on that.
(Hard to hear speaker)
M On the ... are we going to retain some of that
...technology as ... process or ...?
D. Mattson The question is, the Yxlon company, what will we retain,
any of that business? I'll let Roelof tell you what he is
keeping.
R. Van Ark This is all new for everybody. Don, in a way, has answered
this in his speech. The Xylon security business will be
retained. So, the security business includes the
defraction business, which we are busy integrating with
the rest of the security, so that definitely remains with
the GE InVision group.
D. Mattson The question is how much longer will senior management
stay around. Sorry you can't get rid of me. Frankly, we
don't know what will happen long term. Again, as I said,
it's business as usual. We will continue to run the
business as we've been running it, and you won't see me
for nine days, but you'll see me back here.
M Nine or ninety?
D. Mattson Nine days and I'll be on e-mail and phone. But, no, in the
end, you don't know what happens and such; but again, they
bought us for what we've done and what we have, and we'll
build and continue to build the business and it will go
where it goes.
Does the money we have in the bank, and it's actually a
lot more than you'd think, does it stay within the
company? Almost $280 million and that does go with the
company. The $900 million is net return to the company, so
that money kind of goes with the deal.
R. Van Ark I'm not sure whether that answers your question exactly.
It goes with the deal, what happens to it afterwards is
obviously the new shareholders prerogative because each of
the ... Then afterwards, they will surely invest that
money into the future as well.
(Question cannot be heard.)
M ...
D. Mattson The question was, the easier question, when did GE
first come to us. They came to us through a bank in
December, maybe late November. I personally visited their
facility in late December, and we made the presentation to
them. It was just before Christmas. And as I said in my
prepared remarks, they came to us; we had not gone out
soliciting.
The second question is when and what will happen with
merit reviews. That was not tied to the receipt of the TSA
order. It's really tied to profitability of the
organization. One of the tough things that we have to do
as management sometimes is to hold off on such things, to
make sure that we are producing the profitability on the
bottom line, and rather than do other means of adjustment,
we held off on merit reviews. It's still paramount in our
minds; we know it's important to you and we'll keep you
posted when and if or as we are able to tell you what we
might do next. At this point, we've told senior management
within the organization, that it's our intention to,
again, run the process in July or late June.
M So, is that a no?
D. Mattson If the question is, are we going to process merit reviews
now because of the ... the answer is no.
(Cannot hear speaker)
M ...
D. Mattson Likely, I won't use the word ....
R. Van Ark ...most of you reporting to my organization like to go
back to what we discussed here before is .... Remember,
this is still a lean year. It hasn't changed. The TSA
order was part of our budget and, yes, we are very happy
that we have it and now that I'm an ...I wanted to thank
you again. I want to thank you people for that order
because if we didn't get that, we would have had real
problems within the organization. But that is part of our
budget and we needed that order and we're very proud and
very happy to have received it, as Don said, but we're
meeting our budget at the moment.
With that order, we can recall, and perhaps I've shown it
here in the line-ups review in the ... review. We're still
at that low, lean year volume. It means that that volume
is still going to be a lot less than last year's was. If
we have any further upsides, we as management will
definitely reconsider if we can do something earlier; but
that budget that we've got already incorporated the TSA
order. I just want you to understand that hasn't changed,
and sending the company to another shareholder doesn't
change that either.
We are still running this business and we have to make
that bottom line happen; and we all need to ... one
together and I thank you for that. But we're going to make
it happen and while I'm at it, we need to now insure get
those machines out of the store, we've got lots to do this
quarter; it's business as usual. When I spoke to a lot of
people in the factory this morning, I was fortunate enough
to get the feeling that there already people there that
are behind getting those machines out with us, and we need
to get them out, so that we can make this year a good one.
As management sees that develop, they're going to make the
right decisions for us. You are central to our
organization, we definitely will make the right decision
as soon as we can, as soon as we can see that we might be
achieving better than what our budget is at the moment.
M Part of the pricing on this transaction is predicated on a
certain level of performance, which is reflected in our
budgets for right now. So the TSA order is really going to
be part of that commitment. We've still got to continue to
run this company as effectively as we ever had. Any
change, any material change in our performance could be an
undoing factor that we all want to work to make sure it
doesn't happen. So, just to echo what Roelof has said, is
that we have to run this business as we have been running
it and look forward to a very bright future.
(Hard to hear speaker)
M First of all, congratulations .... Two questions, what
does GE see as cost savings ....
D. Mattson First question, what does GE see as the cost savings? In a
deal like this, there's always synergy and there are lots
of different ways that money can be saved, supply base, if
we can buy from the same suppliers and get better prices.
At this point, I can't tell you, I can't give you any
specifics because there aren't any. Going forward, we're
just going to have to go into this as they come in, the
integration team, work with us.
The second one was when will the deal close. What we said
in our announcement, it could take nine months, but it
could also take a lot less than that. A lot depends on
what regulatory reviews are signaled or required and it
depends how much they come in. An element of it, I know
there will be more in writing over the next week or so
that we'll be sharing with you.
There needs to be a shareholder meeting and the
shareholders must approve this deal and likely, that
meeting will not happen for at least two months, I would
guess, in
early June. After that we don't know, again, it depends on
how much digging the SEC does or others.
The question is, how do we relate with the medical
division. It's a different business organization for GE. I
don't know how easy it is to have two businesses work; but
there is a development laboratory and a research center
that is being set up and, we'll be able to participate
through that with knowledge and understanding in what is
done. But the medical end is a different organization and
different division and a few steps removed from us. As
best I know, there's no regular routine tie between the
two organizations.
(Cannot hear speaker)
M ...
D. Mattson The question is when will integration teams start and how
much information do we give them? It will start fairly
quickly. There will be some people in here, we don't know
exactly when, but I wouldn't be surprised if we won't
have, at least, an individual or two here next week.
What do we tell them? We tell them everything at this
point. There's nothing that we withhold. We are they and
such...the deal is closed. There are some limitations as
to what they can do. They cannot drive our business, they
cannot call on our customers; they cannot get involved in
company/customer relationships and such; but internally,
in the beginning, it will be understanding what we do, how
we do. So far they've just heard mostly from myself, more
recently Roelof and I participated in a Q&A session in the
city, and they asked us a lot of questions, but now they
want to see did we really know what we were talking about.
What else?
(Cannot hear question)
M ...are there any other major keys or goals ...
M As Ross said, we need to continue to drive our business as
budgeted. Is there anything they are looking for?
Obviously, we can't go out and commit large sums of money
without their approval; but it doesn't mean we might not
go and try or pass some things onto them. But the main
thing is that we need to deliver our budget and can keep
working on all of the projects and tasks as outlined to
you previously.
M There are, in fact, some minor operating covenants in the
merger agreement, which we will communicate to you as is
appropriate; but the idea is just basically continue to
run the business as we're running it right now. That means
we don't go out and acquire a $500 million company during
this period of time, but other than that, it's business as
usual.
R. Van Ark What effects us all is what we need to do on a day to day
basis. They are as interested as we are, that our company
is profitable, runs well, that we have the TSA order; that
we supply the equipment; that we get more international
business; that we certify more machines; that we do the
things that we have planned to do. We had a very busy
schedule lined up for the year 2004. We're going to
continue with that very busy schedule and they've all ...
participate here and ... on that. There have been no areas
that they really told us that they do not want us to
continue.
They are looking forward to the successes that we have set
ourselves for the year, and they want us to continue to
succeed in exactly that direction. So, we have a lot of
targets and many of them are happening in the next few
months and they want us to achieve those in the next
months as well. We continue and we must achieve again,
things like certifications, testing, deliveries on time,
quarterly reports or quarterly achievements, we need all
of those. So, we look forward to doing that together in
this year.
D. Mattson Any more?
(Cannot hear question)
M ...
D Mattson The question is how much does the TSA know about the
acquisition and did they give their approval? They know
about it. One, we have no requirement to go them to get
approval for it. We have informed them of what we were
doing, but they were not an early informant. We were not
able to tell a lot of this, but our expectation is that it
should be business as usual.
I remember that Norman and Ed back after 9-11, started
talking about General Electric being a player in this
area, so I know at least at this level, a strong interest
in having General Electric be a participant. We don't know
of any problems and don't expect any. Anything else?
We'll close with this. I'll let Roelof say a couple more
words and Ross and Michael, if you have something. Again,
we appreciate your patience as we move forward, the
process we will make as smooth as we can. We will keep you
informed as we go forward and just let you know what's
happening. The integration team will work through me and
so, I will be a major participant in the go-forward plan.
Roelof, Ross.
R. Mulholland I just want to say that GE is clearly a superior company
in global economy, and they bought a superior company; and
that means they're impressed with the technology and the
people of Inovec, the technology and the technology
development capabilities of Quantum, as well as ...
efficient. You guys are the best and that's why they
bought us, and I think we're going to have a very exciting
future with them going forward here.
R. Van Ark We have a very strong partner in GE. We should look
forward to a more expanded possibility view of this market
of security. The market is definitely growing. We would
have had big hurdles in the way as a smaller organization
to get really deep into that business worldwide. We must
seize the opportunities that are being opened up for us
and the best way that we can prove to our new partners
that we can do is to perform. We know how well you people
have performed in the past, and I'm convinced that
together we are going to perform again in the future. I
can promise you, as we perform, they're going to like the
way that we perform and they're going to support us. We
could use their support to make more business for us and
more successes for us in the future.
So, I really look forward to all of you is get ... to this
order to get those ... machines out before the end of the
month for the TSA. We need them and let's make and
continue to make this business a success for us all, even
with our new shareholder. With that, I'll thank you all
for attending and Michael will have the last words.
Michael Let's look at the practical side for a minute. Your
benefits remain the same. You all know that we have open
enrollment coming up in the month of May, April/May. So,
you will all need to participate in open enrollment just
as if we go forward. Your 401(k) plan and the matching
still continues just the way it is. When we work with the
integration team, they will decide whether we keep our
benefits, or we roll into somebody else's benefits. That
will be decided down the road, but in the meantime, so
nobody makes a mistake of saying something else is going
to happen, we will do our normal open enrollment.
We still participate in the ESP, we still participate in
the 401(k) and I'll make the $0.02 pitch, remember the
401(k) people will be here tomorrow for individual and
small consultations. so if you want to figure out how to
use that and move
money around in it, tomorrow with Johnson and Dugan is a
good time to show up and you can check with Joy or Holly
if you hadn't already signed up. The benefits still go
forward. So we don't all have to rush our and make ear,
nose, throat, eye and physical appointments in the next
couple of weeks. Flex plans still goes through the year.
So, all of those benefits roll forward.
D. Mattson Last, I want to thank all of you, especially Quantum and
Inovec for calling in and not to forget you. I don't want
you to think that I didn't know you're also there. Sales
service engineers, you are a major, major part of this
organization going forward, and it is a strength of our
business and I want you to all know that you are a real
plus.
It was one of the things as we talked with GE and they
were most impressed with the way our field service
organization, the way our call center works, the way our
field service has been deployed. I thank all of you for
that. It's been a long, hard journey as we've been
building that organization; but you've done a great job
and I want to thank you and thank everybody and thank you
and we'll ... any questions, catch us as we walk around.
Thank you.
ADDITIONAL INFORMATION ABOUT THE PROPOSED MERGER AND WHERE YOU CAN FIND IT
In connection with the proposed merger, InVision intends to file a proxy
statement and other relevant materials with the Securities and Exchange
Commission ("SEC"). BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE
PROPOSED MERGER, STOCKHOLDERS OF INVISION ARE URGED TO READ THE PROXY STATEMENT
AND OTHER RELEVANT MATERIALS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED MERGER. The proxy statement and other relevant materials, and
any other documents filed by InVision with the SEC, may be obtained free of
charge at the SEC's website at www.sec.gov. In addition, stockholders of
InVision may obtain free copies of the documents filed with the SEC by
contacting InVision Investor Relations at (510) 739-2511 or InVision
Technologies, Inc., 7151 Gateway Boulevard, Newark, CA 94560. You may also read
and copy any reports, statements and other information filed by InVision with
the SEC at the SEC public reference room at 450 Fifth Street, N.W. Room 1200,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's
website for further information on its public reference room.
InVision and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from the InVision stockholders in
favor of the proposed Merger. Certain executive officers and directors of
InVision have interests in the merger that may differ from the interests of
stockholders generally, including acceleration of vesting of stock options and
continuation of director and officer insurance and indemnification. These
interests will be described in the proxy statement when it becomes available.
InVision and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from the InVision stockholders in
favor of the proposed Merger. Certain executive officers and directors of
InVision have interests in the merger that may differ from the interests of
stockholders generally, including acceleration of vesting of stock options and
continuation of director and officer insurance and indemnification. These
interests will be described in the proxy statement when it becomes available.
--------------------------------------