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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-5083
 XANSER CORPORATION
  Delaware
    
    74-1191271(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)2435 North Central Expressway
Richardson, Texas
    
    75080(Address of principal executive offices)
    
    (zip code)
   Title of each class
    
    Name of each exchange on which registeredCommon Stock, Without Par Value
8 3/4% Convertible Subordinated
Debentures due 2008
    
    New York Stock Exchange
New York Stock Exchange
 None
 o þ
 o þ
 þ o
 þ o
  o o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for the Registrants Common Equity and Related Stockholder MattersItem 6. Summary Historical Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosure About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresPART IIIPART IVItem 15.Exhibits and Financial Statement SchedulesSIGNATURESAmendment, Freeze and Termination AgreementAmendment, Freeze and Termination AgreementAmendment, Freeze and Termination AgreementList of SubsidiariesConsent of Grant Thornton LLPConsent of KPMG LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906    Table of Contents  
 PART I
 
 Item 1. Business
 GENERAL
      2




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OPERATING SEGMENTS
  TECHNICAL SERVICES
  Products and Services
 Ò
  3




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.
 Customers and Markets
    Safety, Environmental and Other Regulatory Matters
  4




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INFORMATION TECHNOLOGY AND GOVERNMENT SERVICES
  Healthcare Services
   e.g.,
  5




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Government Services
  ENVIRONMENTAL MATTERS
  EMPLOYEES
  6




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AVAILABLE INFORMATION
   RISK FACTORS
 
 Item 1A. Risk Factors.
  Weakness in the refining and chemical industries could adversely affect demand for our
technical services.
  Our information technology and government services group is affected by levels of expenditures
of federal, state and local governments and of health care organizations.
  Political conditions in foreign countries in which we operate could adversely affect us.
  
    
    risks of economic instability;
    
    potential adverse changes in taxation policies;
    
    disruptions from labor and political disturbances;
    
    adverse changes in tariffs or import or export restrictions;
    
    war or insurrections; and
    
    other adverse changes in the laws or regulations or the host country.
 7




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We may be adversely affected by fluctuations in foreign currency exchange rates and foreign
exchange restrictions.
  The competitive position of our technical services group depends in part on its ability to
protect its intellectual property.
  Our products and services are offered in highly competitive markets, which limits our profit
margins and our ability to increase market shares.
  Our recent acquisition of assets from Flowserve could present unforeseen integration
difficulties or costs.
  
    
    retention of key employees;
    
    conforming accounting systems and controls as well as other company
standards, procedures and controls;
    
    coordinating operations; and
    
    providing additional capital or personnel to support the acquired business.
  
 Item 2. Properties
   8




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##### Table of Contents



Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for the Registrants Common Equity and Related Stockholder Matters
  Quoted Stock Pricesfor XNRCalendar Year
    
    High
    
    Low2004:First Quarter
    
    $
    2.65
    
    
    $
    2.25Second Quarter
    
    
    2.77
    
    
    
    2.40Third Quarter
    
    
    2.55
    
    
    
    2.23Fourth Quarter
    
    
    3.10
    
    
    
    2.432005:First Quarter
    
    $
    3.65
    
    
    $
    2.72Second Quarter
    
    
    3.26
    
    
    
    1.80Third Quarter
    
    
    3.25
    
    
    
    2.26Fourth Quarter
    
    
    3.24
    
    
    
    2.822006:First Quarter
    
    $
    4.93
    
    
    $
    3.02(through March 25, 2006)
  9




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##### Table of Contents



Item 6. Summary Historical Financial Data
  Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Income Statement Data:Revenues
    
    $
    153,881
    
    
    $
    145,687
    
    
    $
    135,720
    
    
    $
    131,436
    
    
    $
    144,704Operating income (loss)
    
    $
    (891
    )
    
    $
    4,959
    
    
    $
    (3,367
    )
    
    $
    (4,207
    )
    
    $
    5,429Income (loss) from continuing
operations before income taxes
and cumulative effect of change
in accounting principle
    
    $
    (1,271
    )
    
    $
    4,144
    
    
    $
    (4,380
    )
    
    $
    (5,511
    )
    
    $
    9,349Income tax benefit (expense)
    
    
    (2,995
    )
    
    
    (1,748
    )
    
    
    (8,725
    ) (b)
    
    
    3,269
    
    
    
    13,039
    (c)Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle
    
    
    (4,266
    )
    
    
    2,396
    
    
    
    (13,105
    )
    
    
    (2,242
    )
    
    
    22,388Cumulative effect of change in
accounting principleadoption
of new accounting standard for
goodwill, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,269
    )
    
    
    Income (loss) from continuing
operations
    
    
    (4,266
    )
    
    
    2,396
    
    
    
    (13,105
    )
    
    
    (47,511
    )
    
    
    22,388Income from discontinued operations
- businesses distributed to common
Stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,337
    (a)Net income (loss)
    
    $
    (4,266
    )
    
    $
    2,396
    
    
    $
    (13,105
    )
    
    $
    (47,511
    )
    
    $
    25,725
 
 (a)
    
    As a result of the June 2001 Distribution of Kaneb Services LLC (See Note 1 to the
Consolidated Financial Statements), the Companys pipeline, terminaling and product
marketing businesses were reclassified as Discontinued operations  businesses distributed
to common stockholders.(b)
    
    Includes a $12.1 million non-cash deferred income tax expense resulting from a change
in the valuation allowance for deferred tax assets arising from prior year tax losses that
are available to offset future taxable income (see Note 3 to Consolidated Financial
Statements).(c)
    
    Includes $18.1 million in tax benefits resulting from recapitalization of a foreign
subsidiary. 10




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Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Per Share Data:Earnings (loss) per common share:Basic:Continuing operations:Before cumulative effect of
change in accounting
principle
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )
    
    $
    (0.07
    )
    
    $
    0.68Cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.38
    )
    
    
    (0.13
    )
    
    
    0.07
    
    
    
    (0.41
    )
    
    
    (1.45
    )
    
    
    0.68Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.10Earnings (loss) per common share
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )
    
    $
    (1.45
    )
    
    $
    0.78Diluted:Continuing operations:Before cumulative effect of
change in accounting
principle
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )
    
    $
    (0.07
    )
    
    $
    0.64Cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.38
    )
    
    
    0.07
    
    
    
    (0.41
    )
    
    
    (1.45
    )
    
    
    0.64Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.10Earnings (loss) per common share
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )
    
    $
    (1.45
    )
    
    $
    0.74
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Balance Sheet Data:Cash and cash equivalents
    
    $
    21,526
    
    
    $
    21,598
    
    
    $
    21,240
    
    
    $
    25,624
    
    
    $
    29,545Working capital
    
    
    57,154
    
    
    
    47,075
    
    
    
    44,103
    
    
    
    47,055
    
    
    
    71,789Total assets
    
    
    136,478
    
    
    
    111,920
    
    
    
    104,790
    
    
    
    127,647
    
    
    
    186,219Long-term debt, less current portion
    
    
    31,739
    
    
    
    17,498
    
    
    
    20,457
    
    
    
    28,409
    
    
    
    37,801Stockholders equity
    
    
    51,304
    
    
    
    55,890
    
    
    
    52,452
    
    
    
    61,549
    
    
    
    115,506
 11




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  OVERVIEW
    CONSOLIDATED RESULTS OF OPERATIONS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands, except per share amounts)Revenues
    
    $
    153,881
    
    
    $
    145,687
    
    
    $
    135,720Operating income (loss)
    
    $
    (891
    )
    
    $
    4,959
    
    
    $
    (3,367
    )Income (loss) before income taxes
    
    $
    (1,271
    )
    
    $
    4,144
    
    
    $
    (4,380
    )Net income (loss)
    
    $
    (4,266
    )
    
    $
    2,396
    
    
    $
    (13,105
    )Earnings (loss) per common share:Basic:
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )Diluted:
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )Capital expenditures (excluding acquisition)
    
    $
    4,215
    
    
    $
    4,533
    
    
    $
    3,311
  12




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.
    TECHNICAL SERVICES
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Revenues:United States
    
    $
    29,415
    
    
    $
    27,769
    
    
    $
    23,285Europe
    
    
    79,767
    
    
    
    73,069
    
    
    
    62,995Asia-Pacific
    
    
    22,639
    
    
    
    17,577
    
    
    
    14,738$
    131,821
    
    
    $
    118,415
    
    
    $
    101,018Operating income (loss):United States
    
    $
    509
    
    
    $
    (459
    )
    
    $
    (1,688
    )Europe
    
    
    9,646
    
    
    
    8,152
    
    
    
    7,756Asia-Pacific
    
    
    3,211
    
    
    
    2,480
    
    
    
    2,147Headquarters
    
    
    (3,252
    )
    
    
    (2,294
    )
    
    
    (1,878
    )$
    10,114
    
    
    $
    7,879
    
    
    $
    6,337Capital expenditures (excluding acquisition)
    
    $
    2,851
    
    
    $
    2,927
    
    
    $
    1,897
 13




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INFORMATION TECHNOLOGY AND GOVERNMENT SERVICES
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Revenues
    
    $
    22,060
    
    
    $
    27,272
    
    
    $
    34,702Operating income (loss)
    
    $
    (7,747
    )
    
    $
    342
    
    
    $
    (6,518
    )Capital expenditures
    
    $
    1,364
    
    
    $
    1,606
    
    
    $
    1,309
   14




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GENERAL AND ADMINISTRATIVE EXPENSE
   INTEREST EXPENSE
   INCOME TAXES
  15




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LIQUIDITY AND CAPITAL RESOURCES
      16




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Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 years(in thousands)Debt:Technical services credit facility
    
    $
    26,126
    
    
    $
    
    
    
    $
    
    
    
    $
    26,126
    
    
    $
    Parent company convertible
subordinated debentures
    
    
    5,000
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    31,126
    
    
    
    
    
    
    
    5,000
    
    
    
    26,126
    
    
    
    Capital leases
    
    
    1,091
    
    
    
    496
    
    
    
    592
    
    
    
    3
    
    
    
    Debt subtotal
    
    
    32,217
    
    
    
    496
    
    
    
    5,592
    
    
    
    26,129
    
    
    
    Interest on debt
    
    
    7,050
    
    
    
    1,955
    
    
    
    5,095
    
    
    
    
    
    
    
    Debt and interest total
    
    
    39,267
    
    
    
    2,451
    
    
    
    10,687
    
    
    
    26,129
    
    
    
    Other contractual commitments:Pension Plan contributions
    
    
    8,690
    
    
    
    790
    
    
    
    2,370
    
    
    
    1,580
    
    
    
    3,950Operating leases
    
    
    11,957
    
    
    
    4,185
    
    
    
    5,062
    
    
    
    2,710
    
    
    
    Total
    
    $
    59,914
    
    
    $
    7,426
    
    
    $
    18,119
    
    
    $
    30,419
    
    
    $
    3,950
  17




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OFF-BALANCE SHEET TRANSACTIONS
  INFLATION AND CHANGING PRICES
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
        18




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RECENT ACCOUNTING PRONOUNCEMENT
   19




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Item 7A. Quantitative and Qualitative Disclosure About Market Risk
 (i.e.
   
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures.
   
 PART III
  20




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PART IV
 
 Item 15.
Exhibits and Financial Statement Schedules
 BeginningPage(a) (1) Financial StatementsSet forth below are financial statements appearing in this report.Xanser Corporation and Subsidiaries Financial Statements:Reports of Independent Registered Public Accounting Firms
    
    F - 1Consolidated Statements of Operations  Three Years Ended
December 31, 2005, 2004 and 2003
    
    F - 3Consolidated Balance Sheets  December 31, 2005 and 2004
    
    F - 4Consolidated Statements of Cash Flows  Three Years Ended
December 31, 2005, 2004 and 2003
    
    F - 5Consolidated Statements of Changes in Stockholders
Equity  Three Years Ended December 31, 2005, 2004 and 2003
    
    F - 6Notes to Consolidated Financial Statements
    
    F - 7(a) (2) Financial Statement SchedulesSet forth are the financial statement schedules appearing in this report.Schedule I  Xanser Corporation (Parent Company) Condensed Financial Statements:Statements of Operations  Three Years Ended December 31, 2005, 2004 and 2003
    
    F - 28Balance Sheets  December 31, 2005 and 2004
    
    F - 29Statements of Cash Flows  Three Years Ended
December 31, 2005, 2004 and 2003
    
    F - 30Schedule II  Xanser Corporation Valuation and Qualifying Accounts Three Years Ended December 31, 2005, 2004 and 2003
    
    F - 31
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##### Table of Contents



(a) (3) List of Exhibits
 2.1
    
    Asset Purchase Agreement, dated December 31, 2005, among Flowserve US Inc., IPSCO (UK)
Limited, Flowserve Repair & Services B.V., Flowserve Management Company, Flowserve Belgium
N.V., Furmanite US GSG LLC, Furmanite GSG Limited, Furmanite GSG BVBA, Furmanite Worldwide,
Inc. and Furmanite GSG B.V., filed as Exhibit 2.1 of the exhibits to the Registrants Current
Report on Form 8-K filed on January 6, 2006, which exhibit is hereby incorporated by
reference.3.1
    
    Restated Certificate of Incorporation of the Registrant, dated September 26, 1979, filed as
Exhibit 3.1 of the exhibits to the Registrants Registration Statement on Form S-16, which
exhibit is hereby incorporated by reference.3.2
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant,
dated April 30, 1981, filed as Exhibit 3.2 of the exhibits to the Registrants Annual Report
on Form 10-K (Form 10-K) for the year ended December 31, 1981, which exhibit is hereby
incorporated by reference.3.3
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant,
dated May 28, 1985, filed as Exhibit 4.1 of the exhibits to the Registrants Quarterly Report
on Form 10-Q (Form 10-Q) for the quarter ended June 30, 1985, which exhibit is hereby
incorporated by reference.3.4
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant,
dated September 17, 1985, filed as Exhibit 4.1 of the exhibits to the Registrants Form 10-Q
for the quarter ended September 30, 1985, which exhibit is hereby incorporated by reference.3.5
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant,
dated July 10, 1990, filed as Exhibit 3.5 of the exhibits to the Registrants Form 10-K for
the year ended December 31, 1990, which exhibit is hereby incorporated by reference.3.6
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant,
dated September 21, 1990, filed as Exhibit 3.5 of the exhibits to the Registrants Form 10-Q
for the quarter ended September 30, 1990, which exhibit is hereby incorporated by reference.3.7
    
    Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant,
dated August 8, 2001, filed as Exhibit 3.1 to the Registrants Current Report on Form 8-K
filed on August 22, 2001, which exhibit is hereby incorporated by reference.3.8
    
    By-laws of the Registrant, as amended and restated March 10, 2005, which exhibit is hereby
incorporated by reference.4.1
    
    Certificate of Designation, Preferences and Rights related to the Registrants Series B
Junior Participating Preferred Stock, filed as Exhibit 4.2 to the Registrants 10-K for the
year ended December 31, 1998, which exhibit is incorporated herein by reference.4.2
    
    Indenture between Moran Energy Inc. (Moran) and First City National Bank of Houston (First
City), dated January 15, 1984, under which Moran issued the 8 3/4% Convertible Subordinated
Debentures due 2008, filed as Exhibit 4.1 to Morans Registration Statement on Form S-3 (SEC
File No. 2-81227), which exhibit is hereby incorporated by reference.4.3
    
    First Supplemental Indenture between the Registrant and First City, dated as of March 20,
1984, under which the Registrant assumed obligations under the Indenture listed as Exhibit 4.5
above, filed as Exhibit 4.7 of the Registrants Form 10-K for the year ended December 31,
1983, which exhibit is hereby incorporated by reference.
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10.1*
    
    Xanser Corporation (formerly Kaneb Services, Inc.) Savings Investment Plan, as amended,
filed as Exhibit 4.10 of the exhibits to the Registrants Registration Statement on Form S-8
(Form S-8) (S.E.C. File No. 33-41295) as Exhibit 4.1 to the exhibits of the Registrants
Form S-8 (S.E.C. File No. 333-14067), and as Exhibit 4.9 to the exhibits of the Registrants
Form S-8 (S.E.C. File No. 333-83968), which exhibits are hereby incorporated by reference.10.2*
    
    Xanser Corporation (formerly Kaneb Services, Inc.) 1994 Stock Incentive Plan, filed as
Exhibit 4.12 to the exhibits of the Registrants Form S-8 (S.E.C. File No. 33-54027), as
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on August 22, 2001, and as
Exhibit 10.1 to the exhibits of the Registrants Form 10-Q for the period ended June 30, 2003,
which exhibits are hereby incorporated by reference.10.3*
    
    Xanser Corporation (formerly Kaneb Services, Inc.) Deferred Stock Unit Plan, as amended,
filed as Exhibit 4.1 to the exhibits of the Registrants Form S-8 (S.E.C. File No. 333-08725)
as Exhibit 10.1 to the exhibits of the Registrants Current Report on Form 8-K (Form 8-K),
and as Exhibits 4.9 and 4.10 to the exhibits of the Registrants Form S-8 (S.E.C. File No.
333-83970), which exhibits are hereby incorporated by reference.10.4*
    
    Kaneb Services, Inc. 1996 Supplemental Deferred Compensation Plan, filed as Exhibit 4.1 to
the exhibits of the Registrants Form S-8 (S.E.C. File No. 333-08727), and as Exhibit 10.2 to
the Exhibits of the Registrants Form 8-K, which exhibits are hereby incorporated by
reference.10.5*
    
    Kaneb Services, Inc. $1.63 Director Stock Options, filed as Exhibit 4.1 to the exhibits of
the Registrants Form S-8 (S.E.C. File No. 33-58981), which exhibit is hereby incorporated by
reference.10.6*
    
    Kaneb Services, Inc. Directors Stock Options I, filed as Exhibit 4.1 to the exhibits of the
Registrants Form S-8 (S.E.C. File No. 333-14069), which exhibit is hereby incorporated by
reference.10.7*
    
    Kaneb Services, Inc. 1996 Directors Stock Incentive Plan, as amended, filed as Exhibit 4.1
to the exhibits of the Registrants Form S-8 (S.E.C. File No. 333-14071) and as Exhibit 4.1 to
the exhibits of the Registrants Form S-8 (S.E.C. File No. 333-22109), and as supplemented,
filed as Exhibit 4.2 to the Exhibits of the Registrants Form S-8 (S.E.C. File No. 333-60195),
and as Exhibit 10.1 to the Exhibits of the Registrants Form 8-K, which exhibits are hereby
incorporated by reference.10.8*
    
    Kaneb Services, Inc. Non-Employee Directors Deferred Stock Unit Plan, filed as Exhibit 4.1
to the exhibits of the Registrants Form S-8 (S.E.C. File No. 333-08723), and as Exhibit 10.3
to the Exhibits of the Registrants Form 8-K, which exhibits are hereby incorporated by
reference.10.9*
    
    Kaneb Services, Inc. 1994 Stock Option Agreements, filed as Exhibits 10.1, 10.2, 10.3 and
10.4 to the exhibits of the Registrants Form S-8 (S.E.C. File No. 333-34489), which exhibits
are hereby incorporated by reference.10.10*
    
    Form of Termination Agreement, filed as Exhibit 10.10 to the exhibits of the Registrants
Form 10-K for the year ended December 31, 1996, which exhibit is hereby incorporated by
reference.10.11*
    
    Form of Indemnification Agreement, filed as Exhibit 10.11 to the Registrants Form 10-K for
the year ended December 31, 1999, which exhibit is hereby incorporated by reference.10.12
    
    Amended and Restated Loan Agreement between Furmanite PLC, Bank of Scotland and certain
other Lenders, dated May 1, 1991, as amended, filed as Exhibit 10.8 of the exhibits to the
Registrants Form 10-K for the year ended December 31, 1994; Exhibit 10.12 of the exhibits to
the Registrants Form 10-K for the year ended December 31, 1996; Exhibit 10.12 of the
Registrants Form 10-K for the year ended December 31, 1997; and, Exhibit 10.13 of the
Registrants Form 10-K for the year ended December 31, 1999, which exhibits are hereby
incorporated by reference.
 23




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##### Table of Contents



10.13
    
    Second Amendment, dated as of December 31, 2005, to the Amended and Restated Loan Agreement
dated as of August 13, 2002 among Furmanite Limited, Furmanite Worldwide, Inc., the financial
institutions from time to time party thereto and Bank of Scotland, as Agent, filed as Exhibit
10.1 of the exhibits to the Registrants Current Report on Form 8-K filed on January 6, 2006,
which exhibit is hereby incorporated by reference.10.14*
    
    Amendment, Freeze and Termination Agreement to the Xanser Corporation Deferred Stock Unit
Plan, filed as Exhibit 10.14 to the Registrants Form 10-K for the year ended December 31,
2005, filed herewith.10.15*
    
    Amendment, Freeze and Termination Agreement to the Xanser Corporation 1996 Supplemental
Deferred Compensation Plan, filed as Exhibit 10.15 to the Registrants Form 10-K for the year
ended December 31, 2005, filed herewith.10.16*
    
    Amendment, Freeze and Termination Agreement to the Xanser Corporation Non-Employee
Directors Deferred Stock Unit Plan, filed as Exhibit 10.16 to the Registrants Form 10-K for
the year ended December 31, 2005, filed herewith.21
    
    List of subsidiaries of the Registrant, filed herewith.23.1
    
    Consent of Grant Thornton LLP, filed herewith.23.2
    
    Consent of KPMG LLP, filed herewith.31.1
    
    Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, dated as of March 30, 2006.31.2
    
    Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, dated as of March 30, 2006.32.1
    
    Certification of Chief Executive Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley
Act of 2002, dated as of March 30, 2006.32.2
    
    Certification of Chief Financial Officer, Pursuant to Section 906(a) of the Sarbanes-Oxley
Act of 2002, dated as of March 30, 2006.
 
 *
    
    Denotes management contracts. 24




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##### Table of Contents



F - 1




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##### Table of Contents

================================================================================

Report of Independent Registered Public Accounting Firm
 
    KPMG LLP 
 F - 2




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues:Services
    
    $
    146,975,000
    
    
    $
    138,697,000
    
    
    $
    120,790,000Products
    
    
    6,906,000
    
    
    
    6,990,000
    
    
    
    14,930,000Total revenues
    
    
    153,881,000
    
    
    
    145,687,000
    
    
    
    135,720,000Costs and expenses:Operating costs
    
    
    141,310,000
    
    
    
    129,058,000
    
    
    
    116,503,000Cost of products sold
    
    
    7,459,000
    
    
    
    4,856,000
    
    
    
    13,538,000Depreciation and amortization
    
    
    3,514,000
    
    
    
    3,552,000
    
    
    
    5,860,000General and administrative
    
    
    3,258,000
    
    
    
    3,262,000
    
    
    
    3,186,000Other
    
    
    (769,000
    )
    
    
    
    
    
    
    Total costs and expenses
    
    
    154,772,000
    
    
    
    140,728,000
    
    
    
    139,087,000Operating income (loss)
    
    
    (891,000
    )
    
    
    4,959,000
    
    
    
    (3,367,000
    )Interest income
    
    
    660,000
    
    
    
    174,000
    
    
    
    260,000Interest expense
    
    
    (1,040,000
    )
    
    
    (989,000
    )
    
    
    (1,273,000
    )Income (loss) before income taxes
    
    
    (1,271,000
    )
    
    
    4,144,000
    
    
    
    (4,380,000
    )Income tax expense
    
    
    (2,995,000
    )
    
    
    (1,748,000
    )
    
    
    (8,725,000
    )Net income (loss)
    
    $
    (4,266,000
    )
    
    $
    2,396,000
    
    
    $
    (13,105,000
    )Earnings
(loss) per common share  basic and diluted:
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )
  F - 3




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    21,526,000
    
    
    $
    21,598,000Accounts receivable, trade (net of allowance for doubtful
accounts of $1,493,000 in 2005 and $667,000 in 2004)
    
    
    50,396,000
    
    
    
    35,470,000Receivable from businesses distributed to common stockholders
    
    
    6,484,000
    
    
    
    6,699,000Inventories
    
    
    17,290,000
    
    
    
    9,131,000Prepaid expenses and other current assets
    
    
    5,513,000
    
    
    
    5,283,000Total current assets
    
    
    101,209,000
    
    
    
    78,181,000Property and equipment
    
    
    41,748,000
    
    
    
    46,571,000Less accumulated depreciation and amortization
    
    
    24,628,000
    
    
    
    32,933,000Net property and equipment
    
    
    17,120,000
    
    
    
    13,638,000Excess of cost over fair value of net assets of acquired businesses
    
    
    13,802,000
    
    
    
    13,802,000Deferred income taxes and other assets
    
    
    4,347,000
    
    
    
    6,299,000Total Assets
    
    $
    136,478,000
    
    
    $
    111,920,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    478,000
    
    
    $
    524,000Accounts payable
    
    
    14,672,000
    
    
    
    5,416,000Accrued expenses and other current liabilities
    
    
    21,673,000
    
    
    
    17,557,000Accrued income taxes
    
    
    7,232,000
    
    
    
    7,609,000Total current liabilities
    
    
    44,055,000
    
    
    
    31,106,000Long-term debt, less current portion:Technical services
    
    
    26,561,000
    
    
    
    12,250,000Information technology and government services
    
    
    178,000
    
    
    
    248,000Parent company
    
    
    5,000,000
    
    
    
    5,000,000Total long-term debt, less current portion
    
    
    31,739,000
    
    
    
    17,498,000Other liabilities
    
    
    9,380,000
    
    
    
    7,426,000Commitments and contingent liabilities (Note 9)Stockholders equity:Common stock, without par value. Authorized, 60,000,000 shares;
issued, 38,805,695 in 2005 and 37,353,755 shares in 2004
    
    
    4,507,000
    
    
    
    4,335,000Additional paid-in capital
    
    
    124,481,000
    
    
    
    126,550,000Treasury stock, at cost
    
    
    (20,028,000
    )
    
    
    (26,180,000
    )Retained earnings (accumulated deficit)
    
    
    (50,565,000
    )
    
    
    (46,299,000
    )Accumulated other comprehensive income (loss)
    
    
    (7,091,000
    )
    
    
    (2,516,000
    )Total stockholders equity
    
    
    51,304,000
    
    
    
    55,890,000Total liabilities and stockholders equity
    
    $
    136,478,000
    
    
    $
    111,920,000
  F - 4




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Operating activities:Net income (loss)
    
    $
    (4,266,000
    )
    
    $
    2,396,000
    
    
    $
    (13,105,000
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    3,514,000
    
    
    
    3,552,000
    
    
    
    4,272,000Provision for doubtful accounts
    
    
    1,050,000
    
    
    
    285,000
    
    
    
    979,000Gain on sale of assets
    
    
    (2,102,000
    )
    
    
    
    
    
    
    Other
non-cash expenses
    
    
    1,333,000
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (80,000
    )
    
    
    (1,061,000
    )
    
    
    7,863,000Write-down of software costs
    
    
    
    
    
    
    
    
    
    
    2,338,000Write-down of inventories
    
    
    
    
    
    
    206,000
    
    
    
    500,000Changes in operating assets and liabilities  net
of business acquisition:Accounts receivable
    
    
    309,000
    
    
    
    (3,853,000
    )
    
    
    3,327,000Inventories
    
    
    (1,513,000
    )
    
    
    (640,000
    )
    
    
    (773,000
    )Prepaid expenses and other
    
    
    234,000
    
    
    
    (1,101,000
    )
    
    
    1,079,000Accounts payable and accrued expenses
    
    
    2,036,000
    
    
    
    7,062,000
    
    
    
    (2,178,000
    )Other, net
    
    
    (92,000
    )
    
    
    (832,000
    )
    
    
    587,000Net cash provided by operating activities
    
    
    423,000
    
    
    
    6,014,000
    
    
    
    4,889,000Investing activities:Capital expenditures
    
    
    (4,215,000
    )
    
    
    (4,533,000
    )
    
    
    (3,311,000
    )Net assets of business acquired
    
    
    (18,793,000
    )
    
    
    
    
    
    
    Proceeds from sale of assets
    
    
    5,400,000
    
    
    
    
    
    
    
    Other, net
    
    
    (415,000
    )
    
    
    1,214,000
    
    
    
    1,363,000Net cash used in investing activities
    
    
    (18,023,000
    )
    
    
    (3,319,000
    )
    
    
    (1,948,000
    )Financing activities:Issuance of debt
    
    
    17,056,000
    
    
    
    1,836,000
    
    
    
    330,000Payments on debt
    
    
    (1,948,000
    )
    
    
    (5,421,000
    )
    
    
    (8,278,000
    )Common stock issued
    
    
    2,770,000
    
    
    
    78,000
    
    
    
    9,000(Increase) decrease in receivable from businesses
distributed to common stockholders
    
    
    215,000
    
    
    
    865,000
    
    
    
    (152,000
    )Net cash provided by financing activities
    
    
    18,093,000
    
    
    
    (2,642,000
    )
    
    
    (8,091,000
    )Effect of exchange rate changes on cash
    
    
    (565,000
    )
    
    
    305,000
    
    
    
    766,000Increase (decrease) in cash and cash equivalents
    
    
    (72,000
    )
    
    
    358,000
    
    
    
    (4,384,000
    )Cash and cash equivalents at beginning of year
    
    
    21,598,000
    
    
    
    21,240,000
    
    
    
    25,624,000Cash and cash equivalents at end of year
    
    $
    21,526,000
    
    
    $
    21,598,000
    
    
    $
    21,240,000Supplemental cash flow information:Cash paid for interest
    
    $
    987,000
    
    
    $
    952,000
    
    
    $
    1,534,000Cash paid for income taxes
    
    $
    1,953,000
    
    
    $
    2,546,000
    
    
    $
    1,899,000Estimated working capital adjustment
related to acquisition (Note 2)
    
    $
    1,407,000
    
    
    
    
    
    
    
    
  F - 5




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 Retained
    
    
    AccumulatedEarnings
    
    
    OtherCommon
    
    
    Additional
    
    
    Treasury
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    ComprehensiveStock
    
    
    Paid-In Capital
    
    
    Stock
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    Income (Loss)Balance at January 31, 2003
    
    $
    4,333,000
    
    
    $
    126,675,000
    
    
    $
    (26,390,000
    )
    
    $
    (35,590,000
    )
    
    $
    (7,479,000
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,105,000
    )
    
    
    
    
    
    $
    (13,105,000
    )Common stock issued
    
    
    
    
    
    
    (153,000
    )
    
    
    123,000
    
    
    
    
    
    
    
    
    
    
    
    Deferred stock units, vested
    
    
    
    
    
    
    39,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minimum pension liability
adjustment for subsidiary, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,147,000
    
    
    
    1,147,000Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,852,000
    
    
    
    2,852,000Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (9,106,000
    )Balance at December 31, 2003
    
    
    4,333,000
    
    
    
    126,561,000
    
    
    
    (26,267,000
    )
    
    
    (48,695,000
    )
    
    
    (3,480,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,396,000
    
    
    
    
    
    
    $
    2,396,000Common stock issued
    
    
    2,000
    
    
    
    (50,000
    )
    
    
    87,000
    
    
    
    
    
    
    
    
    
    
    
    Deferred stock units, vested
    
    
    
    
    
    
    39,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minimum pension liability
adjustment for subsidiary, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (445,000
    )
    
    
    (445,000
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,409,000
    
    
    
    1,409,000Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,360,000Balance at December 31, 2004
    
    
    4,335,000
    
    
    
    126,550,000
    
    
    
    (26,180,000
    )
    
    
    (46,299,000
    )
    
    
    (2,516,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,266,000
    )
    
    
    
    
    
    $
    (4,266,000
    )Common stock issued
    
    
    172,000
    
    
    
    507,000
    
    
    
    3,050,000
    
    
    
    
    
    
    
    
    
    
    
    Deferred stock units, distributed
    
    
    
    
    
    
    (2,576,000
    )
    
    
    3,102,000
    
    
    
    
    
    
    
    
    
    
    
    Minimum pension liability
adjustment for subsidiary, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,183,000
    )
    
    
    (1,183,000
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,392,000
    )
    
    
    (3,392,000
    )Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,841,000
    )Balance at December 31, 2005
    
    $
    4,507,000
    
    
    $
    124,481,000
    
    
    $
    (20,028,000
    )
    
    $
    (50,565,000
    )
    
    $
    (7,091,000
    )
  F - 6




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations and Basis of Presentation
    Cash and Cash Equivalents
  F - 7




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Allowance for Doubtful Accounts Receivable
   Allowance for doubtful accounts receivable at January 1, 2003
    
    $
    1,500,000Charged to costs and expenses
    
    
    979,000Charged to other accounts
    
    
    43,000Deductions
    
    
    (1,339,000
    )Allowance for doubtful accounts receivable at December 31, 2003
    
    
    1,183,000Charged to costs and expenses
    
    
    285,000Charged to other accounts
    
    
    17,000Deductions
    
    
    (818,000
    )Allowance for doubtful accounts receivable at December 31, 2004
    
    
    667,000Charged to costs and expenses
    
    
    1,050,000Deductions
    
    
    (224,000
    )Allowance for doubtful accounts receivable at December 31, 2005
    
    $
    1,493,000
 Inventories
  2005
    
    
    2004Raw materials and supplies
    
    $
    14,882,000
    
    
    $
    9,131,000Work-in-process
    
    
    1,422,000
    
    
    
    Finished goods
    
    
    986,000
    
    
    
    Total inventories
    
    $
    17,290,000
    
    
    $
    9,131,000
  Property and Equipment
  F - 8




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Capitalized Software
  Revenue Recognition
    Foreign Currency Translation
  Comprehensive Income
  F - 9




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Excess of Cost Over Fair Value of Net Assets of Acquired Businesses
  Stock Option Plans
     F - 10




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Year Ended December 31,2005
    
    
    2004
    
    
    2003Reported net income (loss)
    
    $
    (4,266,000
    )
    
    $
    2,396,000
    
    
    $
    (13,105,000
    )Stock-based employee compensation expense determined
under the fair value based method amortized on a
straight-line basis over the vesting period
    
    
    (506,000
    )
    
    
    (381,000
    )
    
    
    (138,000
    )Pro forma net income (loss)
    
    $
    (4,772,000
    )
    
    $
    2,015,000
    
    
    $
    (13,243,000
    )Earning (loss) per share:Basic  as reported
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )Basic  pro forma
    
    $
    (0.14
    )
    
    $
    0.06
    
    
    $
    (0.41
    )Diluted  as reported
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )Diluted  pro forma
    
    $
    (0.14
    )
    
    $
    0.06
    
    
    $
    (0.41
    )
 F - 11




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Change in Presentation
  Estimates
  2. ACQUISITION
    F - 12




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Borrowings
    
    $
    15,590,000Transaction costs
    
    
    3,203,000Estimated working capital adjustment
    
    
    (1,407,000
    )Fair value of net assets acquired
    
    $
    17,386,000Accounts receivable
    
    $
    14,878,000Inventories, net of valuation allowance
    
    
    6,646,000Other current assets
    
    
    464,000Property and equipment
    
    
    5,257,000Accounts payable
    
    
    (7,388,000
    )Accrued expenses
    
    
    (591,000
    )Long-term liabilities
    
    
    (1,880,000
    )Net assets acquired
    
    $
    17,386,000
   3. INCOME TAXES
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Domestic operations
    
    $
    (10,038,000
    )
    
    $
    (1,101,000
    )
    
    $
    (12,562,000
    )Foreign operations
    
    
    8,767,000
    
    
    
    5,245,000
    
    
    
    8,182,000Income (loss) before income taxes
    
    $
    (1,271,000
    )
    
    $
    4,144,000
    
    
    $
    (4,380,000
    )
 F - 13




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year EndedDecember 31,
    
    Federal
    
    
    Foreign
    
    
    State
    
    
    Total2005:Current
    
    $
    
    
    
    $
    3,057,000
    
    
    $
    18,000
    
    
    $
    3,075,000Deferred
    
    
    
    
    
    
    (80,000
    )
    
    
    
    
    
    
    (80,000
    )$
    
    
    
    $
    2,977,000
    
    
    $
    18,000
    
    
    $
    2,995,0002004:Current
    
    $
    
    
    
    $
    2,809,000
    
    
    $
    
    
    
    $
    2,809,000Deferred
    
    
    
    
    
    
    (1,061,000
    )
    
    
    
    
    
    
    (1,061,000
    )$
    
    
    
    $
    1,748,000
    
    
    $
    
    
    
    $
    1,748,0002003:Current
    
    $
    (1,704,000
    )
    
    $
    2,623,000
    
    
    $
    (57,000
    )
    
    $
    862,000Deferred
    
    
    8,616,000
    
    
    
    (1,530,000
    )
    
    
    777,000
    
    
    
    7,863,000$
    6,912,000
    
    
    $
    1,093,000
    
    
    $
    720,000
    
    
    $
    8,725,000
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Expected tax expense (benefit)
at statutory rates
    
    $
    (432,000
    )
    
    $
    1,409,000
    
    
    $
    (1,533,000
    )Increase (decrease) in taxes
resulting from:Change in valuation allowance
    
    
    4,291,000
    
    
    
    589,000
    
    
    
    12,112,000State income taxes, net
    
    
    (431,000
    )
    
    
    (102,000
    )
    
    
    (468,000
    )Foreign tax rate differences
    
    
    (136,000
    )
    
    
    (35,000
    )
    
    
    (1,689,000
    )Permanent differences
    
    
    (270,000
    )
    
    
    279,000
    
    
    
    219,000Resolution of state and foreign
tax issues
    
    
    (80,000
    )
    
    
    (387,000
    )
    
    
    Other
    
    
    53,000
    
    
    
    (5,000
    )
    
    
    84,000$
    2,995,000
    
    
    $
    1,748,000
    
    
    $
    8,725,000
 .
 F - 14




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2005
    
    
    2004Deferred tax assets:Net operating loss carryforwards
    
    $
    14,799,000
    
    
    $
    10,494,000Alternative minimum tax credit carryforwards
    
    
    2,504,000
    
    
    
    2,504,000State income net operating loss carryforwards
    
    
    1,480,000
    
    
    
    1,049,000Accrued liabilities
    
    
    960,000
    
    
    
    1,290,000Intangibles
    
    
    1,149,000
    
    
    
    1,293,000Foreign subsidiaries, primarily accrued liabilities
    
    
    2,202,000
    
    
    
    3,302,000Other
    
    
    407,000
    
    
    
    559,000Total gross deferred tax assets
    
    
    23,501,000
    
    
    
    20,491,000Deferred tax liabilities:Plant and equipment, principally due to differences in
depreciation
    
    
    (173,000
    )
    
    
    (354,000
    )Foreign deferred tax liabilities
    
    
    (206,000
    )
    
    
    (15,000
    )Net deferred tax asset before valuation allowance
    
    
    23,122,000
    
    
    
    20,122,000Less valuation allowance
    
    
    (21,126,000
    )
    
    
    (16,835,000
    )Net deferred tax asset
    
    $
    1,996,000
    
    
    $
    3,287,000
  4. RETIREMENT PLANS
    Year Ended December 31,2005
    
    
    2004
    
    
    2003Net periodic pension cost:Service cost
    
    $
    518,000
    
    
    $
    466,000
    
    
    $
    787,000Interest cost
    
    
    3,605,000
    
    
    
    3,461,000
    
    
    
    2,954,000Expected return on plan assets
    
    
    (3,896,000
    )
    
    
    (3,587,000
    )
    
    
    (2,946,000
    )Amortization of prior service cost
    
    
    (111,000
    )
    
    
    (112,000
    )
    
    
    16,000Recognized net loss
    
    
    709,000
    
    
    
    737,000
    
    
    
    768,000Net periodic pension cost
    
    $
    825,000
    
    
    $
    965,000
    
    
    $
    1,579,000
 F - 15




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2005
    
    
    2004Discount rate
    
    
    5.4
    %
    
    
    5.8
    %Expected long-term return on plan assets
    
    
    7.5
    %
    
    
    7.5
    %Rate of compensation increase
    
    
    3.4
    %
    
    
    3.3
    %
  December 31,2005
    
    
    2004Projected benefit obligation:Beginning of year
    
    $
    65,605,000
    
    
    $
    56,466,000Service cost
    
    
    518,000
    
    
    
    466,000Interest cost
    
    
    3,605,000
    
    
    
    3,461,000Participants contributions
    
    
    328,000
    
    
    
    374,000Actuarial loss
    
    
    5,665,000
    
    
    
    2,281,000Benefits paid
    
    
    (2,065,000
    )
    
    
    (1,726,000
    )Foreign currency translation adjustment and other
    
    
    (7,169,000
    )
    
    
    4,283,000End of year
    
    
    66,487,000
    
    
    
    65,605,000Fair value of plan assets:Beginning of year
    
    
    54,824,000
    
    
    
    46,822,000Actual gain on plan assets
    
    
    6,930,000
    
    
    
    5,045,000Employer contributions
    
    
    764,000
    
    
    
    920,000Participants contributions
    
    
    328,000
    
    
    
    374,000Benefits paid
    
    
    (2,065,000
    )
    
    
    (1,726,000
    )Foreign currency translation adjustment and other
    
    
    (5,798,000
    )
    
    
    3,389,000End of year
    
    
    54,983,000
    
    
    
    54,824,000Excess projected obligation over fair value at end of year
    
    
    (11,504,000
    )
    
    
    (10,781,000
    )Unrecognized net actuarial loss
    
    
    14,981,000
    
    
    
    14,803,000Unamortized prior service cost
    
    
    (1,149,000
    )
    
    
    (1,402,000
    )Net pension prepaid asset
    
    
    2,328,000
    
    
    
    2,620,000Additional minimum liability
    
    
    (10,477,000
    )
    
    
    (10,121,000
    )Net pension liability
    
    $
    (8,149,000
    )
    
    $
    (7,501,000
    )
   F - 16




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2005
    
    
    2004Equity securities
    
    
    55.4
    %
    
    
    57.3
    %Debt securities
    
    
    39.1
    %
    
    
    34.9
    %Real estate
    
    
    0.7
    %
    
    
    0.7
    %Cash and other
    
    
    4.8
    %
    
    
    7.1
    %100.0
    %
    
    
    100.0
    %
   Year ending December 31,2006
    
    $
    1,717,0002007
    
    
    1,803,0002008
    
    
    1,888,0002009
    
    
    2,060,0002010
    
    
    2,146,0002011-2015
    
    
    12,017,000
 5. PROPERTY AND EQUIPMENT
  EstimatedUsefulLife
    
    
    December 31,(Years)
    
    
    2005
    
    
    2004Technical services
    
    
    3  20
    
    
    $
    36,979,000
    
    
    $
    34,264,000Information technology and
government services
    
    
    3  7
    
    
    
    4,069,000
    
    
    
    8,402,000General corporate
    
    
    3  10
    
    
    
    700,000
    
    
    
    3,905,000Total property and equipment
    
    
    
    
    
    
    41,748,000
    
    
    
    46,571,000Less accumulated depreciation
and amortization
    
    
    
    
    
    
    24,628,000
    
    
    
    32,933,000Net property and equipment
    
    
    
    
    
    $
    17,120,000
    
    
    $
    13,638,000
  December 31,2005
    
    
    2004Equipment
    
    $
    2,834,000
    
    
    $
    2,920,000Less accumulated depreciation and amortization
    
    
    1,759,000
    
    
    
    1,473,000Net equipment acquired under capital leases
    
    $
    1,075,000
    
    
    $
    1,447,000
 F - 17




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6. LONG-TERM DEBT
  December 31,2005
    
    
    2004Technical services credit facility due in January 2010
    
    $
    26,126,000
    
    
    $
    11,532,000Capital leases
    
    
    1,091,000
    
    
    
    1,490,000Parent company 8.75% convertible subordinated
debentures due in 2008
    
    
    5,000,000
    
    
    
    5,000,000Total long-term debt
    
    
    32,217000
    
    
    
    18,022,000Less current portion
    
    
    478,000
    
    
    
    524,000Total long-term debt, less current portion
    
    $
    31,739,000
    
    
    $
    17,498,000
    F - 18




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. CAPITAL STOCK
  Common StockIssued
    
    
    Held in Treasury
    
    
    OutstandingBalance at January 1, 2003
    
    
    37,336,176
    
    
    
    5,784,456
    
    
    
    31,551,720Common shares issued
    
    
    
    
    
    
    (28,806
    )
    
    
    28,806Balance at December 31, 2003
    
    
    37,336,176
    
    
    
    5,755,650
    
    
    
    31,580,526Common shares issued
    
    
    17,579
    
    
    
    (19,149
    )
    
    
    36,728Balance at December 31, 2004
    
    
    37,353,755
    
    
    
    5,736,501
    
    
    
    31,617,254Common shares issued
    
    
    1,451,940
    
    
    
    (1,338,489
    )
    
    
    2,790,429Balance at December 31, 2005
    
    
    38,805,695
    
    
    
    4,398,012
    
    
    
    34,407,683
 Series B Preferred Stock
  Stock Option Plans
  F - 19




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  AverageAverage Price per
    
    
    RemainingRange of Exercise
    
    Options
    
    
    Outstanding
    
    
    Exercisable
    
    
    ContractualPrice
    
    Outstanding
    
    
    Exercisable
    
    
    Option
    
    
    Option
    
    
    Life (years)$0.82 - $1.23
    
    
    89,090
    
    
    
    89,090
    
    
    $
    0.99
    
    
    $
    0.99
    
    
    
    0.6$1.24 - $1.86
    
    
    178,649
    
    
    
    178,649
    
    
    $
    1.60
    
    
    $
    1.60
    
    
    
    3.7$1.87 - $2.81
    
    
    787,455
    
    
    
    787,455
    
    
    $
    2.37
    
    
    $
    2.37
    
    
    
    7.1$2.82 - $3.45
    
    
    556,500
    
    
    
    31,500
    
    
    $
    3.14
    
    
    $
    3.12
    
    
    
    5.01,611,694
    
    
    
    1,086,694
    
    
    $
    2.47
    
    
    $
    2.15
    
    
    
    6.1
  Average PriceShares
    
    
    per ShareOutstanding at January 1, 2003
    
    
    3,103,014
    
    
    $
    1.80Granted
    
    
    155,000
    
    
    $
    2.58Forfeited
    
    
    (249,303
    )
    
    $
    2.22Expired
    
    
    
    
    
    
    Outstanding at December 31, 2003
    
    
    3,008,711
    
    
    $
    1.80Granted
    
    
    725,161
    
    
    $
    2.50Exercised
    
    
    (17,579
    )
    
    $
    1.53Forfeited
    
    
    (382,119
    )
    
    $
    2.50Expired
    
    
    
    
    
    
    Outstanding at December 31, 2004
    
    
    3,334,174
    
    
    $
    1.87Granted
    
    
    605,000
    
    
    $
    3.06Exercised
    
    
    (2,088,741
    )
    
    $
    1.68Forfeited
    
    
    (238,739
    )
    
    $
    2.51Expired
    
    
    
    
    
    
    Outstanding at December 31, 2005
    
    
    1,611,694
    
    
    $
    2.47
 F - 20




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Deferred Stock Unit Plans
    F - 21




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. EARNINGS PER SHARE
  WeightedAverageNet
    
    
    Common
    
    
    Per-ShareIncome (loss)
    
    
    Shares
    
    
    AmountYear Ended December 31, 2005Basic EPS -Net loss
    
    $
    (4,266,000
    )
    
    
    32,911,000
    
    
    $
    (0.13
    )Effect of dilutive securities
    
    
    
    
    
    
    Diluted EPS -Net loss
    
    $
    (4,266,000
    )
    
    
    32,911,000
    
    
    $
    (0.13
    )Year Ended December 31, 2004Basic EPS -Net income
    
    $
    2,396,000
    
    
    
    32,035,000
    
    
    $
    0.07Effect of dilutive securities
    
    
    
    
    
    
    1,173,000Diluted EPS -Net income
    
    $
    2,396,000
    
    
    
    33,208,000
    
    
    $
    0.07Year Ended December 31, 2003Basic EPS -Net loss
    
    $
    (13,105,000
    )
    
    
    31,995,000
    
    
    $
    (0.41
    )Effect of dilutive securities
    
    
    
    
    
    
    Diluted EPS -Net loss
    
    $
    (13,105,000
    )
    
    
    31,995,000
    
    
    $
    (0.41
    )
  F - 22




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9. COMMITMENTS AND CONTINGENCIES
    Capital
    
    
    OperatingLeases
    
    
    Leases2006
    
    $
    550,000
    
    
    $
    5,056,0002007
    
    
    433,000
    
    
    
    3,442,0002008
    
    
    158,000
    
    
    
    1,741,0002009
    
    
    50,000
    
    
    
    1,062,0002010
    
    
    2,000
    
    
    
    706,000Thereafter
    
    
    
    
    
    
    2,336,000Total minimum lease payments
    
    
    1,193,000
    
    
    $
    14,343,000Less amounts representing interest
    
    
    102,000Present value of net minimum lease payments
    
    $
    1,091,000
  10. BUSINESS SEGMENT DATA
   F - 23




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Business segment revenues:Technical services
    
    $
    131,821,000
    
    
    $
    118,415,000
    
    
    $
    101,018,000Information technology and
government services
    
    
    22,060,000
    
    
    
    27,272,000
    
    
    
    34,702,000$
    153,881,000
    
    
    $
    145,687,000
    
    
    $
    135,720,000Technical services segment revenues:Under pressure services
    
    $
    51,089,000
    
    
    $
    50,308,000
    
    
    $
    41,875,000Turnaround services
    
    
    59,907,000
    
    
    
    56,212,000
    
    
    
    48,768,000Other services
    
    
    20,825,000
    
    
    
    11,895,000
    
    
    
    10,375,000$
    131,821,000
    
    
    $
    118,415,000
    
    
    $
    101,018,000Business segment profit (loss):Technical services
    
    $
    10,114,000
    
    
    $
    7,879,000
    
    
    $
    6,337,000Information technology and
government services
    
    
    (7,747,000
    )
    
    
    342,000
    
    
    
    (6,518,000
    )General corporate
    
    
    (3,258,000
    )
    
    
    (3,262,000
    )
    
    
    (3,186,000
    )Operating income (loss)
    
    
    (891,000
    )
    
    
    4,959,000
    
    
    
    (3,367,000
    )Interest income
    
    
    660,000
    
    
    
    174,000
    
    
    
    260,000Interest expense
    
    
    (1,040,000
    )
    
    
    (989,000
    )
    
    
    (1,273,000
    )Income (loss) before income taxes
    
    $
    (1,271,000
    )
    
    $
    4,144,000
    
    
    $
    (4,380,000
    )Business segment assets:Depreciation and amortization:Technical services (excluding
acquisitions)
    
    $
    2,574,000
    
    
    $
    2,582,000
    
    
    $
    2,609,000Information technology and
government services
    
    
    940,000
    
    
    
    970,000
    
    
    
    3,251,000$
    3,514,000
    
    
    $
    3,552,000
    
    
    $
    5,860,000Capital expenditures:Technical services (excluding
acquisitions)
    
    $
    2,851,000
    
    
    $
    2,927,000
    
    
    $
    1,897,000Information technology
and government services
    
    
    1,364,000
    
    
    
    1,606,000
    
    
    
    1,309,000General corporate
    
    
    
    
    
    
    
    
    
    
    105,000$
    4,215,000
    
    
    $
    4,533,000
    
    
    $
    3,311,000
 F - 24




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31,2005
    
    
    2004
    
    
    2003Total assets:Technical services
    
    $
    100,299,000
    
    
    $
    69,962,000
    
    
    $
    66,117,000Information technology
and government services
    
    
    16,506,000
    
    
    
    16,720,000
    
    
    
    14,902,000General corporate
    
    
    19,673,000
    
    
    
    25,238,000
    
    
    
    23,771,000$
    136,478,000
    
    
    $
    111,920,000
    
    
    $
    104,790,000
   Year Ended December 31,2005
    
    
    2004
    
    
    2003Geographical area revenues:United States
    
    $
    51,475,000
    
    
    $
    55,041,000
    
    
    $
    57,987,000Europe
    
    
    79,767,000
    
    
    
    73,069,000
    
    
    
    62,995,000Asia-Pacific
    
    
    22,639,000
    
    
    
    17,577,000
    
    
    
    14,738,000$
    153,881,000
    
    
    $
    145,687,000
    
    
    $
    135,720,000Geographical area operating income (loss):United States
    
    $
    (13,748,000
    )
    
    $
    (5,673,000
    )
    
    $
    (13,270,000
    )Europe
    
    
    9,646,000
    
    
    
    8,152,000
    
    
    
    7,756,000Asia-Pacific
    
    
    3,211,000
    
    
    
    2,480,000
    
    
    
    2,147,000$
    (891,000
    )
    
    $
    4,959,000
    
    
    $
    (3,367,000
    )
 December 31,2005
    
    
    2004
    
    
    2003Geographical area property and equipment, net:United States
    
    $
    8,478,000
    
    
    $
    5,145,000
    
    
    $
    5,128,000Europe
    
    
    6,984,000
    
    
    
    6,930,000
    
    
    
    5,874,000Asia-Pacific
    
    
    1,658,000
    
    
    
    1,563,000
    
    
    
    1,271,000$
    17,120,000
    
    
    $
    13,638,000
    
    
    $
    12,273,000
  F - 25




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11. ACCRUED EXPENSES
  December 31,2005
    
    
    2004Accrued compensation and benefits
    
    $
    5,647,000
    
    
    $
    5,157,000Accrued acquisition transaction costs
    
    
    2,315,000
    
    
    
    Accrued asset and equipment cost of sales
    
    
    3,260,000
    
    
    
    3,841,000Accrued VAT payable
    
    
    1,006,000
    
    
    
    1,268,000Unearned income
    
    
    1,271,000
    
    
    
    900,000Accrued costs of leased facilities
    
    
    1,002,000
    
    
    
    Accrued taxes other than income
    
    
    766,000
    
    
    
    913,000Accrued interest
    
    
    201,000
    
    
    
    200,000Other
    
    
    6,205,000
    
    
    
    5,278,000$
    21,673,000
    
    
    $
    17,557,000
 12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
   F - 26




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##### Table of Contents



XANSER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 13. QUARTERLY FINANCIAL DATA (UNAUDITED)
  Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2005:Revenues
    
    $
    35,171,000
    
    
    $
    43,469,000
    
    
    $
    40,401,000
    
    
    $
    34,840,000Operating income (loss)
    
    $
    (1,964,000
    )
    
    $
    (520,000
    )
    
    $
    1,379,000
    
    
    $
    214,000Net income (loss)
    
    $
    (2,305,000
    )
    
    $
    (1,703,000
    )
    
    $
    41,000
    
    
    $
    (299,000
    )Earnings (loss) per common share 
basic and diluted
    
    $
    (0.07
    )
    
    $
    (0.05
    )
    
    $
    
    
    
    $
    (0.01
    )2004:Revenues
    
    $
    32,164,000
    
    
    $
    35,656,000
    
    
    $
    35,764,000
    
    
    $
    42,103,000Operating income
    
    $
    390,000
    
    
    $
    1,617,000
    
    
    $
    1,261,000
    
    
    $
    1,691,000Net income
    
    $
    110,000
    
    
    $
    869,000
    
    
    $
    205,000
    
    
    $
    1,212,000Earnings per common share 
basic and diluted
    
    $
    
    
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.04
 F - 27




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##### Table of Contents



Schedule I
 XANSER CORPORATION (PARENT COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003General and administrative expenses
    
    $
    (3,258,000
    )
    
    $
    (3,262,000
    )
    
    $
    (3,186,000
    )Interest expense
    
    
    (477,000
    )
    
    
    (477,000
    )
    
    
    (693,000
    )Interest and other income
    
    
    246,000
    
    
    
    69,000
    
    
    
    159,000Equity in income (loss) of subsidiaries
    
    
    (751,000
    )
    
    
    6,066,000
    
    
    
    (1,426,000
    )Income (loss) before income taxes
    
    
    (4,240,000
    )
    
    
    2,396,000
    
    
    
    (5,146,000
    )Income tax expense
    
    
    (26,000
    )
    
    
    
    
    
    
    (7,959,000
    )Net income (loss)
    
    $
    (4,266,000
    )
    
    $
    2,396,000
    
    
    $
    (13,105,000
    )Earnings (loss) per common share
 basic and diluted
    
    $
    (0.13
    )
    
    $
    0.07
    
    
    $
    (0.41
    )
 
 F - 28




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##### Table of Contents



Schedule I
(Continued)
 XANSER CORPORATION (PARENT COMPANY)
CONDENSED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    11,092,000
    
    
    $
    15,060,000Receivable from businesses distributed to common stockholders
    
    
    6,484,000
    
    
    
    6,699,000Prepaid expenses and other
    
    
    85,000
    
    
    
    63,000Total current assets
    
    
    17,661,000
    
    
    
    21,822,000Property and equipment
    
    
    700,000
    
    
    
    3,905,000Less accumulated depreciation and amortization
    
    
    662,000
    
    
    
    3,848,000Net property and equipment
    
    
    38,000
    
    
    
    57,000Investments in, advances to and notes receivable
from subsidiaries
    
    
    46,112,000
    
    
    
    47,482,000Total assets
    
    $
    63,811,000
    
    
    $
    69,361,000LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    7,389,000
    
    
    $
    6,904,000Total current liabilities
    
    
    7,389,000
    
    
    
    6,904,000Long-term debt, less current portion
    
    
    5,000,000
    
    
    
    5,000,000Other liabilities
    
    
    118,000
    
    
    
    1,567,000Stockholders equity:Common stock, without par value
    
    
    4,507,000
    
    
    
    4,335,000Additional paid-in capital
    
    
    124,481,000
    
    
    
    126,550,000Treasury stock, at cost
    
    
    (20,028,000
    )
    
    
    (26,180,000
    )Retained earnings (accumulated deficit)
    
    
    (50,565,000
    )
    
    
    (46,299,000
    )Accumulated comprehensive income (loss)
    
    
    (7,091,000
    )
    
    
    (2,516,000
    )Total stockholders equity
    
    
    51,304,000
    
    
    
    55,890,000Total liabilities and stockholders equity
    
    $
    63,811,000
    
    
    $
    69,361,000
 
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##### Table of Contents



Schedule I
(Continued)
 XANSER CORPORATION (PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Operating activities:Net income (loss)
    
    $
    (4,266,000
    )
    
    $
    2,396,000
    
    
    $
    (13,105,000
    )Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Equity in income of subsidiaries, net of
dividends
    
    
    (3,205,000
    )
    
    
    (2,627,000
    )
    
    
    1,554,000Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    9,393,000Other, net
    
    
    
    
    
    
    393,000
    
    
    
    477,000Changes in current assets and liabilities:Prepaid expenses and other current assets
    
    
    (22,000
    )
    
    
    898,000
    
    
    
    (400,000
    )Accounts payable and accrued expenses
    
    
    521,000
    
    
    
    (100,000
    )
    
    
    84,000Net cash provided by (used in) operating
activities
    
    
    (6,972,000
    )
    
    
    960,000
    
    
    
    (1,997,000
    )Investing activities:Capital expenditures
    
    
    
    
    
    
    
    
    
    
    (105,000
    )Change in other assets, net
    
    
    19,000
    
    
    
    48,000
    
    
    
    2,852,000Net cash provided by investing activities
    
    
    19,000
    
    
    
    48,000
    
    
    
    2,747,000Financing activities:Payments on debt
    
    
    
    
    
    
    
    
    
    
    (4,930,000
    )Common stock issued and other
    
    
    2,770,000
    
    
    
    78,000
    
    
    
    9,000Increase (decrease) in receivable from businesses
distributed to common stockholders
    
    
    215,000
    
    
    
    865,000
    
    
    
    (152,000
    )Net cash provided by (used in)
financing activities
    
    
    2,985,000
    
    
    
    943,000
    
    
    
    (5,073,000
    )Increase (decrease) in cash and cash equivalents
    
    
    (3,968,000
    )
    
    
    1,951,000
    
    
    
    (4,323,000
    )Cash and cash equivalents at beginning of year
    
    
    15,060,000
    
    
    
    13,109,000
    
    
    
    17,432,000Cash and cash equivalents at end of year
    
    $
    11,092,000
    
    
    $
    15,060,000
    
    
    $
    13,109,000
 
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##### Table of Contents



Schedule II
 XANSER CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
 AdditionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    
    End ofDescriptions
    
    Period
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    PeriodYear Ended December 31, 2005:For doubtful receivables
classified as current assets (a)
    
    $
    667
    
    
    $
    1,050
    
    
    $
    
    
    
    $
    (224
    )(d)
    
    $
    1,493For deferred tax asset valuation
allowance classified as non-current
assets (a)
    
    $
    16,835
    
    
    $
    4,291
    
    
    $
    
    
    
    $
    
    
    
    $
    21,126Year Ended December 31, 2004:For doubtful receivables
classified as current assets (a)
    
    $
    1,183
    
    
    $
    285
    
    
    $
    17
    (c)
    
    $
    (818
    )(d)
    
    $
    667For deferred tax asset valuation
allowance classified as non-current
assets (a)
    
    $
    16,246
    
    
    $
    589
    
    
    $
    
    
    
    $
    
    
    
    $
    16,835Year Ended December 31, 2003:For doubtful receivables
classified as current assets (a)
    
    $
    1,500
    
    
    $
    979
    
    
    $
    43
    (c)
    
    $
    (1,339
    )(d)
    
    $
    1,183For deferred tax asset valuation allowance
classified as non-current assets (a)
    
    $
    4,134
    
    
    $
    12,112
    
    
    $
    
    
    
    $
    
    
    
    $
    16,246
  
 (a)
    
    Allowance deducted from assets to which they apply.(b)
    
    Reserve for costs related to the closing of leased facilities.(c)
    
    Foreign currency translation adjustments.(d)
    
    Receivable write-offs and reclassifications, net of recoveries. F - 31




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XANSER CORPORATIONBy:
    
    //s// MICHAEL L. ROSEPresidentDate:
    
    March 30, 2006
  Signature
    
    Title
    
    DatePrincipal Executive Officer//s// JOHN R. BARNES
    
    Chief Executive Officer Director
    
    March 30, 2006Principal Accounting Officer//s// MAX ELGHANDOUR
    
    Controller
    
    March 30, 2006Directors//s// SANGWOO AHN
    
    Director
    
    March 30, 2006//s// CHARLES R. COX
    
    Director
    
    March 30, 2006//s// HANS KESSLER
    
    Director
    
    March 30, 2006