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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 000-24134
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INTEGRITY INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 63-0952549
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1000 Cody Road
Mobile, Alabama 36695
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(Address of principal executive offices, zip code)
(334) 633-9000
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 9, 2001
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Class A Common Stock, $0.01 par value 2,184,000
Class B Common Stock, $0.01 par value 3,435,000
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PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGRITY INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
Mar 31, 2001 Dec 31, 2000
------------ ------------
ASSETS (Unaudited)
-----------
Current Assets
Cash $ 4,377 $ 801
Trade receivables, less allowance for returns and
doubtful accounts of $1,647 and $1,241 7,939 5,929
Other receivables 354 561
Inventories 3,664 3,961
Other current assets 2,992 3,212
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Total current assets 19,326 14,464
Property and equipment, net of accumulated depreciation
of $4,661 and $4,519 3,908 3,950
Product masters, net of accumulated amortization
of $12,256 and $16,604 4,709 5,626
Other assets 3,707 3,192
--------- ---------
Total assets $ 31,650 $ 27,232
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt 2,311 $ 2,188
Accounts payable and accrued expenses 2,568 3,090
Royalties payable 6,844 2,920
Other current liabilities 786 479
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Total current liabilities 12,509 8,677
Long-term debt 1,159 1,846
Other long-term liabilities 9 7
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Total liabilities 13,677 10,530
Commitments and contingencies 0 0
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Minority interest 799 746
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Stockholders' Equity
Preferred stock, $.01 par value; 500,000 shares authorized;
None issued and outstanding 0 0
Class A common stock, $.01 par value; 7,500,000 shares authorized;
2,184,000 shares issued and outstanding 22 22
Class B common stock, $.01 par value, 10,500,000 shares
authorized; 3,435,000 shares issued and outstanding 34 34
Additional paid-in capital 13,857 13,857
Unearned stock option compensation (259) (272)
Retained earnings 3,759 2,450
Equity adjustments from foreign currency translation (239) (135)
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Total stockholders' equity 17,174 15,956
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Total liabilities and stockholders' equity $ 31,650 $ 27,232
========= =========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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INTEGRITY INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended March 31
2001 2000
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Net sales $ 20,894 $ 13,897
Cost of sales 12,620 7,349
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Gross profit 8,274 6,548
Marketing and fulfillment expenses 3,503 3,302
General and administrative expenses 3,155 2,668
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Income from operations 1,616 578
Other expenses
Interest expense, net 156 262
Other expenses 33 16
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Income before minority interest and taxes 1,427 300
Provision for income taxes 81 113
Minority interest, less applicable taxes 37 20
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Net income $ 1,309 $ 167
======== ========
Adjustments to determine comprehensive income
Foreign currency translation adjustments (104) 4
-------- --------
Comprehensive income $ 1,205 $ 171
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NET INCOME PER SHARE
Basic $ 0.23 $ 0.03
======== ========
Diluted $ 0.21 $ 0.03
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Weighted average number of shares outstanding
Basic 5,619 5,614
Diluted 6,151 6,023
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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INTEGRITY INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three months Ended March 31
2001 2000
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Cash flows from operating activities
Net income $ 1,309 $ 167
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 277 262
Amortization of product masters 1,703 1,353
Minority interest 37 20
Stock compensation 13 14
Changes in operating assets and liabilities
Trade receivables (2,010) (596)
Other receivables 207 (170)
Inventories 297 159
Other assets (353) 251
Accounts payable, royalties payable and accrued expenses 3,402 2,205
Other current and non current liabilities 206 (369)
Other 0 17
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Net cash provided by operating activities 5,088 3,313
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Cash flows from investing activities
Payments received on notes receivable 0 250
Purchases of property and equipment (100) (265)
Payments for product masters (787) (1,018)
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Net cash used in investing activities (887) (1,033)
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Cash flows from financing activities
Net (repayments) borrowings under line of credit 0 (1,748)
Principal payments of long-term debt (625) (625)
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Net cash used in financing activities (625) (2,373)
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Net (decrease) increase in cash 3,576 (93)
Cash, beginning of year 801 1,067
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Cash, end of period $ 4,377 $ 974
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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INTEGRITY INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001 AND MARCH 31, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES
Integrity Incorporated (the "Company") is engaged in the production,
creative content, distribution and publishing of music cassette tapes and
compact discs, print music and related products, sold to the public primarily
through retail sales outlets and direct to consumer marketing. A principal
direct to consumer marketing method of distribution is continuity programs
whereby subscribers receive products at regular intervals.
Integrity Music Europe Ltd. was formed in 1988; Integrity Music Pty.
Ltd. was formed in 1991; and Integrity Media Asia Pte. Ltd. was formed in 1995.
These wholly-owned subsidiaries of the Company serve to expand the Company's
presence in Western Europe, Australia and New Zealand, and Singapore,
respectively. Celebration Hymnal LLC was formed in 1997 with Word Entertainment,
for the purpose of producing and promoting The Celebration Hymnal. Word
Entertainment's interest in the joint venture is presented as a minority
interest in these financial statements, as the joint venture is controlled by
the Company.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements for the year ended December 31, 2000 contained in the
Company's Annual Report on Form 10-K. The unaudited condensed financial
information has been prepared in accordance with the Company's customary
accounting policies and practices. In the opinion of management, all
adjustments, consisting of normal recurring adjustments considered necessary for
a fair presentation of results for the interim period, have been included.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. Actual results could differ from those estimates.
Operating results for the quarter ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the
Company, its wholly-owned subsidiaries, which include Integrity Music Pty. Ltd.,
Integrity Music Europe, Ltd., Integrity Media Asia Pte. Ltd., and of the
Celebration Hymnal LLC. All significant intercompany accounts and transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Revenue is recognized at the time of shipment. Provisions are made
based on estimates derived from historical data for sales returns and allowances
in the period in which the related products are shipped. The full amount of the
returns allowance is shown, along with the allowance for doubtful accounts, as a
reduction of accounts receivable in the accompanying financial statements.
Generally, revenue derived from licensing the use of songs in the Company's song
catalogs is recognized as payments are received from licensees.
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MARKETING COSTS
The Company incurs marketing costs utilizing various media to generate
direct, retail and e-commerce sales to customers. Marketing expenditures that
benefit future periods are capitalized and charged to operations using the
straight-line method over a period of three months, which approximates the
period during which the related sales are expected to be realized. Other
marketing costs are expensed the first time advertising takes place. Prepaid
marketing costs, including artwork, printing and direct mail packages, are
included in assets in the accompanying financial statements. Marketing costs of
approximately $1.3 million and $1.2 million were expensed for the three months
ended March 31, 2001 and 2000, respectively.
FULFILLMENT COSTS
Fulfillment expenses are primarily comprised of distribution fees paid
to third party distributors of the Company's products that are based on a
percentage of sales. The services provided by the third party distributor
include sales, fulfillment and storage of the Company's product for the Retail
segment. Distribution fees represented approximately 80% of total fulfillment
expense for the three months ended March 31, 2001. Also included in fulfillment
expenses are fees paid to a third party service provider on a transaction basis
for data entry, generation of invoices, and cash processing.
Additionally, in the Direct to Consumer segment, the Company completes
the distribution and shipping function internally and includes a separate
surcharge to customers related to this service. These costs, which approximated
$333,000 and $286,000 for the three months ended March 31, 2001 and 2000,
respectively, are recorded as a component of Cost of Sales and the related
customer fee is recorded as a component of Net Sales.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates impairment of long-lived assets whenever events
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. If the sum of the expected future undiscounted cash flows is
less than the carrying amount of the asset, an impairment loss would be
recognized. Measurement of an impairment loss for long-lived assets would be
based on the fair value of the asset.
PRODUCT MASTERS
Product masters, which include sound and video recordings and print
masters, are amortized over their future estimated useful lives using a method
that reasonably relates to the amount of net revenue expected to be realized.
Management periodically reviews the product masters amortization rates and
adjusts the amortization rate based on management's estimates for future sales.
In conjunction with such analysis, any amounts that do not appear to be fully
recoverable are charged to expense during the period the loss becomes
estimatable. The costs of producing a product master include the cost of the
musical talent, the cost of the technical talent for engineering, directing and
mixing, costs for the use of the equipment to record and produce the master and
studio facility charges.
EARNINGS PER SHARE OF COMMON STOCK
Basic earnings per share is computed by dividing income available to
common stockholders by the weighted average of common shares outstanding for the
period. Diluted earnings per share is calculated by dividing income available to
common stockholders by the weighted average of common shares outstanding
assuming issuance of potential dilutive common shares related to options and
warrants.
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FOREIGN CURRENCIES
Assets and liabilities at foreign subsidiaries are recorded based on
their functional currencies. Amounts in foreign currencies are translated at the
applicable exchange rate at the balance sheet date using the exchange rate in
effect at the period end. Revenues and expenses of foreign subsidiaries are
translated using the average rates applicable during the reporting period. The
effects of foreign currency translation adjustments are included as a component
of stockholders' equity and comprehensive income.
NOTE 2 - LONG TERM DEBT
The Company's financing agreement in effect for the first quarter of
2001 included a revolving credit facility and a term loan that were payable
through August 2002. There was $874,000 and $874,000 outstanding under the
credit facility and $2.9 million and $3.6 million outstanding under the term
loan at March 31, 2001 and December 31, 2000, respectively. At the Company's
option, the loan carries an interest rate of the bank's base rate plus .75%, or
LIBOR plus 2%.
On April 25, 2001, the Company entered into a new $20 million,
five-year secured credit facility with LaSalle Bank N. A. The credit agreement
includes a $6 million line of credit and a $14 million term loan. Through this
new credit facility, the Company has refinanced its previous credit facility
with Bank Austria Creditanstalt.
NOTE 3 - SEGMENT INFORMATION
Summarized financial information concerning the Company's reportable
segments is shown in the following table, in thousands:
Three months ended March 31
2001 2000
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NET SALES
Direct to Consumer $ 11,063 $ 3,679
Retail 8,860 7,613
International 1,561 1,980
Other 2,442 2,163
Eliminations (3,032) (1,538)
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Consolidated $ 20,894 $ 13,897
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OPERATING PROFIT (BEFORE MINORITY INTEREST)
Direct to Consumer 2,136 552
Retail 1,337 1,522
International 198 294
Other (293) (400)
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Consolidated 3,378 1,968
General corporate expense (1,795) (1,406)
Interest expense, net (156) (262)
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Income before income taxes and minority interest $ 1,427 $ 300
======== ========
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Net sales increased $7.0 million or 50.3% to $20.9 million for the
three months ended March 31, 2001, as compared to $13.9 million for the three
months ended March 31, 2000. The increase in revenue is primarily attributable
to increased volume in the Direct to Consumer segment. Sales in the Direct to
Consumer segment increased $7.4 million or 200.7% to $11.1 million, compared to
$3.7 million in the same period in 2000. This increase was due primarily to the
sales of the "Songs 4 Worship" products both on television direct marketing and
in the new "Songs 4 Worship" continuity program. Most of the "Songs 4 Worship"
revenue in the first quarter was from sales to Time Life for its television
direct marketing continuity series. Though difficult to predict, management
anticipates that sales to Time Life for the "Songs 4 Worship" series will
decline from first quarter levels over the remainder of 2001.
Sales in the Retail segment increased $1.2 million or 16.4% to $8.9
million, compared to $7.6 million in the same period in 2000. This increase was
due primarily to the release of the third WoW Worship album, WoW Worship Green,
a collection of the best selling praise and worship songs, created in
partnership with Maranatha! and Vineyard. Sales of WoW Worship Green totaled
$1.6 million in the first quarter of 2001. The first WoW Worship album, WoW
Worship Blue, was released in the second quarter of 1999, and the second, WoW
Worship Orange, was released in the first quarter of 2000. Total WoW Worship
sales were $3.5 million for the first quarter of 2001 compared to $2.8 million
for the same period in 2000. Also contributing to the sales increase for the
Retail segment in the first quarter of 2001 was $894,000 in sales of "Songs 4
Worship" products released into the general market in the first quarter of 2001.
International sales decreased by 21.2% to $1.6 million, as compared to
$2.0 million in the same period in 2000 due to unfavorable changes in foreign
exchange rates in the first quarter of 2001 compared to the first quarter of
2000, and from increased competitive pressures in key foreign markets,
especially Asia. Management expects these competitive pressures to continue for
the remainder of 2001.
Sales in the Other segment increased by 15.5% to $2.5 million, as
compared to $2.2 million in the same period in 2000 due primarily to additional
copyright royalties generated from the increase in product sales and third party
use. New product sales in all segments totaled 1.2 million units or 38.8% of
total units sold for the three months ended March 31, 2001, as compared to 1.0
million units or 35.9% of total units sold for the same period in 2000. The
increase in new product sales as a percentage of total sales is due primarily to
the "Songs 4 Worship" and the WoW Worship Green releases discussed above.
Gross profit increased to $8.3 million or 39.6% of sales, as compared
to $6.5 million or 47.1% in the same period in 2000. Gross profit as a
percentage of sales decreased in the first quarter of 2001 compared to the same
period in 2000 mainly from the lower gross margin percentages for the WoW
Worship albums and the combined "Songs 4 Worship" sales. The gross profit
percentage in the Retail segment declined to 44.8% in 2001 from 49.6% in 2000
due primarily to increased sales of the WoW Worship albums and the retail sales
of the "Songs 4 Worship" albums released into the general market in the first
quarter of 2001. Because the WoW Worship albums were created in partnership with
two other record companies, the Company's gross margin is lower due to higher
royalties. The gross margins on the "Songs 4 Worship" sales are lower because
the Company sells the product at a wholesale price in the general retail market.
The gross margin percentage in the Direct to Consumer segment declined to 34.0%
for the first quarter of 2001, from 51.9% in the first quarter of 2000, due to
the wholesale pricing of the "Songs 4 Worship" sales to Time Life. The gross
profit percentage in the International segment increased slightly in the first
quarter of 2001 to 57.8% from 56.1% in 2000.
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The following table shows the gross margin by operating segment:
Three months ended March 31,
Gross margin 2001 2000
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Retail 44.8% 49.6%
Direct to Consumer 34.0% 51.9%
International 57.8% 56.1%
Other -7.8% -9.9%
Consolidated 39.6% 47.1%
The Other segment includes copyright revenues as well as certain
expenses that are not charged to specific segments. These expenses include
reductions in the carrying value of product masters as well as additions to the
Company's reserves for product returns, inventory obsolescence and bad debts.
Marketing and fulfillment expenses increased 6.1% to $3.5 million or
16.8% of net sales for the three months ended March 31, 2001, as compared to
$3.3 million or 23.8% of net sales for the same period in 2000. The increase in
marketing and fulfillment expenses is primarily attributable to increased
fulfillment costs in the Retail segment that now comprises 42.4% of consolidated
net sales. Additionally, fulfillment costs related to the WoW Worship albums are
at a higher rate than other products due to the joint marketing agreement
discussed above. The distribution and fulfillment for the Direct to Consumer
segment is handled with in-house personnel and the Company's own warehouse and
shipping facility. The Company contracts with a third party for some data
management, however, the customer service and actual fulfillment functions are
performed in-house. The primary reason for the decline of marketing and
fulfillment expenses as a percent of sales is that "Songs 4 Worship" sales to
Time Life in the Direct to Consumer segment and "Songs 4 Worship" sales in the
Retail segment bear no marketing or fulfillment expenses.
General and administrative expenses increased to $3.2 million or 15.1%
of net sales for the three months ended March 31, 2001, as compared to $2.7
million or 19.2% of net sales for same period in 2000. The decrease from the
2000 period as a percentage of sales is primarily attributable to greater sales
volume. The increase in general and administrative expenses is primarily
attributable to increases in employee costs and professional fees.
Operating profit in the Direct to Consumer segment grew 287.0% to $2.1
million for the three months ended March 31, 2001 from $552,000 for the same
period in 2000 due to the "Songs 4 Worship" sales mentioned previously and due
to lower marketing and fulfillment costs related to these sales. Operating
profit in the Retail segment declined 12.2% from $1.5 million in the first
quarter of 2000 to $1.3 million in the first quarter of 2001 due primarily to an
increase of $306,000 in marketing and fulfillment expenses related to the WoW
Worship albums and other CBA releases in the quarter. Operating profit in the
International segment decreased by 32.7% to $198,000 for the three months ended
March 31, 2001 from $294,000 for the same period in 2000 due to lower gross
margins generated from the sales decline explained previously. Operating loss in
the Other segment was $293,000 compared to a loss of $400,000 in the same period
in 2000, for a difference of $107,000, due to additional copyright income
generated as a result of increased product sales and third party use.
Interest expense decreased $106,000 to $156,000 or 0.7% of net sales
for the three month period ended March 31, 2001, as compared to $262,000 or 1.9%
of net sales for the same period in 2000. The decrease in the first three months
of 2001 was the result of lower average debt levels for the period. The average
interest rate for the three months ended March 31, 2001 and 2000 was 8.04% and
8.63%, respectively.
The Company recorded an income tax provision of $81,000 and $113,000
for the three months ended March 31, 2001 and 2000, respectively. The company
recorded a one-time tax benefit of $390,000 related to foreign tax credits for
the three months ended March 31, 2001. The Company's effective tax
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rate for the first quarter of 2001 was 5.7%. The Company's forecasted effective
tax rate for the year 2001 is 33%, as compared to 24% for the year 2000.
Net income for the three months ended March 31, 2001 increased by $1.1
million to $1.3 million, as compared to $167,000 for the same period in 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically and will continue to finance its
operations primarily through cash generated from operations and from borrowings
under a line of credit and term notes as needed. The Company's principal uses of
cash historically have been the production and recording of product masters to
build the Company's product master library and debt service. For the periods
ended March 31, 2001 and 2000, the Company had average daily borrowings under
the credit agreement of $4.4 million and $5.6 million at average rates of 8.04%
and 8.63%, respectively. At March 31, 2001, the Company had $5.1 million
available to borrow under this agreement.
On April 25, 2001, the Company entered into a new $20 million,
five-year secured credit facility with LaSalle Bank N. A. The credit agreement
includes a $6 million line of credit and a $14 million term loan. Through this
new credit facility, the Company has refinanced its previous credit facility
with Bank Austria Creditanstalt.
Cash generated from operations totaled $5.1 million and $3.3 million
for the three months ended March 31, 2001 and 2000, respectively. The increase
from 2000 to 2001 resulted primarily from increased earnings before depreciation
and amortization and the timing of payments for liabilities, principally
royalties.
Investing activities used $887,000 and $1.0 million during the three
months ended March 31, 2001 and 2000, respectively. This consisted, partially,
of capital expenditures for computer equipment and capital improvements to
existing buildings totaling $100,000 and $265,000 for the three months ended
March 31, 2001 and 2000, respectively. The investments in product masters for
the three months ended March 31, 2001 and 2000 totaled $787,000 and $1.0
million, respectively. The investment in product masters related to releases in
the first quarter and the continued development of other products by the
Company.
The Company made principal payments on its term loan of $625,000 and
$625,000 in the three months ended March 31, 2001 and 2000, respectively.
During the three month period ended March 31, 2001, the company did not
make any distributions to its 50% partner in the Celebration Hymnal LLC joint
venture, Word Entertainment.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this document including matters
discussed under the caption "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations," may constitute forward-looking
statements for purposes of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and as such may involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Integrity Incorporated to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements. The words "expect," "anticipate," "intend,"
"plan," "believe," "seek," "estimate," and similar expressions are intended to
identify such forward-looking statements. The Company's actual results may
differ materially from the results anticipated in these forward-looking
statements due to a variety of factors, including without limitation those
discussed in "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors" in the Company's Report on Form 10-K for
the fiscal year ended December 31, 2000. All written or oral forward-looking
statements attributable to the Company are expressly qualified in their entirety
by these
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cautionary statements. Any forward-looking statements represent management's
estimates only as of the date of this report and should not be relied upon as
representing estimates as of any subsequent date. While Integrity may elect to
update forward-looking statements at some point in the future, Integrity
specifically disclaims any obligation to do so, even if its estimates change.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Item 7A disclosure made in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
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PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
3(i) Certificate of Incorporation of the Registrant, as amended
(incorporated by reference from Exhibit 4(a) to the Registrant's
Registration Statement on Form S-8 (File No. 33-84584) filed on
September 29, 1994).
3(i).1 Certificate of Amendment to the Certificate of Incorporation of
the Registrant, dated July 21, 1995, (incorporated by reference
from Exhibit 3(i).1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995).
3(ii) Bylaws of the Registrant, as amended (incorporated by reference
from Exhibit 3(ii) to the Registrant's Registration Statement on
Form S-1 (File No. 33-78582), and amendments thereto, originally
filed on May 6, 1994).
4 Form of Class A Common Stock certificate of the Registrant
10.1 Credit Agreement dated April 25, 2001 by and between Integrity
Incorporated and LaSalle Bank National Association (The foregoing
is the subject of a request for confidential treatment).
10.2 Intellectual Property Security Agreement dated April 25, 2001 by
Integrity Incorporated in favor of LaSalle Bank National
Association.
10.3 Security and Pledge Agreement dated April 25, 2001 by Integrity
Incorporated in favor of LaSalle Bank National Association.
(B) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the quarter ended
March 31, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRITY INCORPORATED
Date: May 11, 2001 /s/ P. Michael Coleman
---------------------- ----------------------------------------------------
P. Michael Coleman
Chairman, President and Chief Executive Officer
Date: May 11, 2001 /s/ Donald S. Ellington
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Donald S. Ellington
Senior Vice President of Finance and Administration
(Principal Financial and Accounting Officer)
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