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FILED BY TELECOMMUNICATION SYSTEMS, INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND DEEMED FILED PURSUANT TO RULE 14a-12 OF THE
SECURITIES EXCHANGE ACT OF 1934
SUBJECT COMPANY: XYPOINT CORPORATION
COMMISSION FILE NO.: 0-30821
TELECOMMUNICATION SYSTEMS, INC. TO ACQUIRE
XYPOINT CORPORATION
MERGED COMPANY TAKES THE LEAD IN MOBILE INTELLIGENT MESSAGING(TM)
Annapolis, MD, --November 15, 2000 -- TeleCommunication Systems, Inc.
(Nasdaq: TSYS) said today that it has signed a definitive agreement to acquire
Xypoint Corporation, a privately held company based in Seattle, WA, in a
stock-for-stock transaction with a fixed exchange ratio.
TeleCommunication Systems (TCS) is a leading developer of software and
services that allow the telecommunication carrier customers to receive and
transmit data messages wirelessly. Xypoint, a leader in wireless location
technology since 1996, enables carriers to locate mobile devices, protect
privacy, and facilitate the delivery of Intelligent Messaging to the core of
carrier networks. We believe Xypoint operates the most widely deployed platform
for wireless commerce and E911, and commercial location services.
STRATEGIC & OPERATIONAL SIGNIFICANCE OF THE ACQUISITION
"Together, we believe our two companies are among the most powerful
messaging players in the wireless industry," said Maurice Tose, TCS Chairman,
CEO and President. "By uniting these two companies, our products will be
available to a base of more than 7 million end users and 30 carrier customers
worldwide, including three of the top four domestic wireless carriers. But the
benefit goes far beyond the immediate increase in our market opportunity.
Xypoint increases our depth and breadth within the carrier, Internet and
enterprise markets. We believe this acquisition will help us to accelerate our
roll out of wireless application service provider (ASP) and service bureau
offerings," Tose said.
"Our customers tend to be telecommunications carriers and enterprises
instead of end users. That means that we are not widely known to the general
public. But it also means that our technology is embedded deep inside the
infrastructure of wireless carriers, and we believe our ability to access the
intelligence that resides in these networks will be enhanced by this
transaction. For carriers such as Verizon, Vodafone, and VoiceStream, TCS is
known as the 'brand behind the brand.'"
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"Products and operations issues consistent with this vision have driven
the acquisition of Xypoint. Accordingly, we believe we can realize immediate
synergies between the two companies, and we will begin immediately to
aggressively maximize the benefits of Xypoint in that regard," he said.
Ken Arneson, Xypoint President and CEO, said, "We will be the first to
deliver on the promise of Intelligent Messaging for wireless carriers and
enterprise networks. We will begin work immediately to bring an enterprise
version of Xypoint's wireless e-mail service, Nomad(TM), to market, and we will
also seek to integrate our Mobile Positioning Center into the TCS network to
leverage TCS' role as a software provider that powers the core of carrier
networks."
TERMS OF THE TRANSACTION
Xypoint shareholders will receive 4.3 million shares of TCS Class A
Common Stock in a fixed exchange ratio. After the acquisition, which will be
accounted for as a purchase, Xypoint shareholders will own approximately 14
percent of TCS stock on a fully diluted basis. The transaction is expected to
close in January 2001, subject to regulatory and requisite shareholder
approvals; and registration of the shares to be issued in conjunction with this
transaction with the SEC.
Xypoint generated $5.5 million of service bureau revenue in the first 9
months of 2000, of which $2.3 million was in the third quarter.
TCS recently reported that for its FY 2000 third quarter ended
September 30, 2000, revenues from its Network Applications segment increased by
35 percent over the preceding quarter and 96 percent over the same quarter last
year. Total revenues for its most recent quarter, inclusive of the company's
communications engineering services business, were $16.4 million.
TCS was advised by Chase H&Q. Broadview, Int'l served as Xypoint's
financial advisor.
CONFERENCE CALL AND WEBCAST FOR INVESTORS SET FOR TODAY AT 11:00 AM EST:
The company has scheduled a conference call for investors for later
today at 11:00 AM EST, which will be webcast on the TCS website,
www.telecomsys.com. Dial in number for domestic conference call participants is
1-888-497-4618. PostView is available for 48 hours following the conference call
at 12:30 EST at 1-800-633-8284, reservation number is 16954942. Tose said that
in the call he will focus on strategic issues, including the company's pursuit
of higher margin revenues, plus other issues relating to the acquisition.
ABOUT TELECOMMUNICATION SYSTEMS, INC.
TeleCommunication Systems, Inc. (TCS) of Annapolis, Maryland, is a
leading developer of network applications that enable the delivery of Internet
content, short messages and enhanced
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data communication services to a wide variety of wireless devices, including
phones, two-way pagers and personal digital assistants. TCS also develops custom
software applications and provides communications engineering services. Visit
the web site at www.telecomsys.com
ABOUT XYPOINT CORPORATION
Xypoint hosts the leading software and network services platform for
wireless location and commerce. Xypoint enables content providers, merchants and
corporations to provide their customers and employees the ability to access and
act upon relevant information via any wireless device. Since its founding in
1996, the company has pioneered the field of "location technology" vital to E911
service and now generates revenues from more than 5 million subscribers. This
year, the company launched Infolink(TM), the first Internet service to work with
any digital phone, and Nomad (TM), a wireless e-mail service that allows
subscribers to access and respond to e-mail anytime anywhere, on their current
digital phone. Consumers can register for Infolink and other Xypoint services at
www.webwirelessnow.com. Xypoint serves numerous corporations including Verizon,
U.S. Cellular, Cricket Communications and 12 other carriers. Additionally,
Xypoint has partnered with Critical Path, Nexus, Nessicom, AirFlash, NextBus,
Vicinity and GeoVector, along with Paging Network Inc., Metrocall Inc., and
WebLinkWireless. For more information about Xypoint, please visit
www.xypoint.com.
This announcement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities and Exchange Act of 1934, as amended. These statements are
based upon TCS' current expectations and assumptions that are subject to a
number of risks and uncertainties that would cause actual results to differ
materially from those anticipated. The actual results realized by TCS could
differ materially from the statements made herein, depending in particular upon
the risks and uncertainties described in TCS' filings with the Securities and
Exchange Commission relating to the ability of TCS to (i) focus its business on
network application software products and related services, (ii) continue to
rely on Lucent Technologies, Inc. to market and sell the Company's network
applications and for other relevant support, (iii) adapt and integrate new
technology into its products, (iv) expand its business offerings in the new
wireless data industry, (v) capitalize on opportunities in the marketplace and
TCS' future financial results (vi) develop software without any errors or
defects, (vii) implement its sales and marketing strategies, and (viii) or
achieve the synergies expected from the Xypoint acquisition. Existing and
prospective investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. TCS
undertakes no obligation to update or revise the information in this press
release, whether as a result of new information, future events or circumstances,
or otherwise.
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The proposed merger will be submitted to Xypoint's shareholders for
their consideration. Pending filing and clearance of the requisite proxy
materials with the Securities and Exchange Commission ("SEC"), Xypoint has not
set a date for a special meeting of its shareholders to approve the merger. TCS
will file with the SEC a proxy statement/prospectus regarding the proposed
merger. The proxy statement/prospectus will be mailed to Xypoint shareholders.
Xypoint shareholders should read the proxy statement/prospectus regarding the
proposed merger when it becomes available because it will contain important
information that Xypoint shareholders should consider. Xypoint shareholders will
be able to obtain a free copy of the proxy statement/prospectus, as well as
other filings containing information about TCS, without charge, at the SEC's
Internet web site (http://www.sec.gov). Copies of the proxy statement/prospectus
and the SEC filings that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, without charge, by directing a
request to TCS at 275 West Street, Annapolis, Maryland 21401, Attention: Tom
Brandt (410-280-1001). Information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy
statement/prospectus to be filed with the SEC.
