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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
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Date of Report (Date of earliest event reported): November 10, 1999 (November 1, 1999)
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XETA Corporation
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(Exact name of registrant as specified in its charter)
Oklahoma 0-16231 73-1130045
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1814 West Tacoma, Broken Arrow, Oklahoma 74012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 918-664-8200
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Not Applicable
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(Former name or address, if changed since last report.)
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Item 5. Other Events
On November 1, 1999, the Company announced that it entered into two
separate stock purchase agreements to purchase all of the issued and outstanding
stock of privately held U.S. Technologies Systems, Inc., a Missouri corporation
"(UST"), with UST's two owners, Mark A. Martin and Lawrence J. Hopp. The
aggregate purchase price is approximately $26 million in cash and 150,000 shares
of XETA common stock. Included in the purchase price is a $3 million hold back,
$1 million of which will be held for two years as security against damages from
any breach of Mr. Martin's representations and warranties, and $2 million of
which is a contingent earn-out to be paid to Mr. Martin only upon UST's
achievement of certain performance goals during the first two years following
closing of the transaction. The stock purchase agreements contain customary
representations, warranties, covenants, indemnities and closing conditions,
including satisfactory completion of due diligence and receipt of approval by
the Company's Board of Directors. The agreements provide for closing prior to
December 15, 1999.
UST is headquartered in St. Louis, Missouri and is an authorized "BCS
BusinessPartner" dealer of Lucent Technologies, Inc. The Company's plan to
acquire UST is part of its previously announced strategy to expand into the
commercial market for voice and data technology. At closing, Mr. Martin, who
will remain in St. Louis, will enter into a separate employment agreement to
function as the President of the Company's Commercial Channel Division.
The Company issued a press release with respect to the signing of these
stock purchase agreements on November 1, 1999, a copy of which is attached as
Exhibit 99 to this Form 8-K.
Item 7. Financial Statements and Exhibits.
The following is filed as an Exhibit to this Report.
Exhibit No. Description
(99) News Release Issued November 1, 1999.
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 hereunto duly authorized.
XETA Corporation
(Registrant)
Dated: November 10, 1999 By: /s/ Jack R. Ingram
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Jack R. Ingram, Chief Executive Officer
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EXHIBIT INDEX
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SEC No. Description Page
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(1) Underwriting Agreement - None.
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession - N/A (will be filed as Exhibit to Item 2 Form
8-K filing upon closing of transaction).
(4) Instruments defining rights of security holders, including
indentures - previously filed as Exhibits 3.1, 3.2 and 3.3 to
the registrant's Registration Statement on Form S-1,
Registration No. 33-7841.
(16) Letter on change in certifying accountant - N/A.
(17) Letter on director resignation - N/A.
(20) Other documents or statements to security holders - None.
(23) Consents of experts and counsel - N/A
(24) Power of attorney - None.
(27) Financial Data Schedule - N/A.
(99) Additional exhibits.
NEWS RELEASE DATED NOVEMBER 1, 1999. 4
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[XETA CORPORATION LOGO]
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NEWS RELEASE
Date: November 1, 1999
FOR IMMEDIATE RELEASE
Contact: Jack Ingram
XETA Corporation
918.664.8200
XETA CORPORATION ACQUIRES US TECHNOLOGIES SYSTEM, INC.
TULSA, OKLA -- XETA Corporation (NASDAQ: XETA) today announced a definitive
purchase agreement to acquire 100% of the stock of the privately held US
Technologies Systems, Inc. Under the terms of the agreement, XETA will purchase
US Technologies for $26 million in cash plus 150,000 shares of XETA common
stock. Included in the purchase price is $3 million contingent upon earn-out
provisions to be satisfied during the first two years after closing. Subject to
satisfactory completion of due diligence and receipt of XETA Board of Director
approval, the transaction is expected to close during XETA's 1Q, 2000 and will
be accretive to XETA's FY 2000 earnings.
This acquisition reflects XETA's previously announced strategy to expand into
the commercial market for voice and data technology, further leveraging the
company's national service network. "US Technologies is a terrific beach head
for expanding beyond our traditional hospitality customer segment," said Jack
Ingram, XETA Chairman and CEO. "US Technologies has outstanding sales, system
design, project management and E-commerce competencies which will be a
compliment to XETA's hospitality channel, financial strength and nationwide
services footprint."
Including the effects of the associated amortization and interest, the
twelve-month Pro-Forma, ending with XETA's latest published results of July 31,
1999, is as follows:
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XETA US TECHNOLOGIES CONSOLIDATED
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Revenues 32,724,000 33,247,000 65,971,000
Net Income before Tax, Amortization and Interest 6,309,000 4,105,000 10,414,000
Associated Amortization and Interest -- -- (2,689,000)
Pro-Forma After Tax Net Income 3,836,000 2,496,000 4,697,000
Pro-Forma Basic Earnings Per Share $ .95 -- $ 1.12
Pro-Forma Diluted Earnings Per Share .83 -- $ .99
Weighted Average Common Shares Outstanding 4,030,003 -- 4,180,003
Weighted Average Common Equivalent Shares 4,602,953 -- 4,752,953
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"Following the closing of the transaction, XETA will be Hitachi's and Lucent's
largest dealer in the nation," said Jon Wiese, XETA President. "XETA's goal is
ultimately to be the equipment and after-market service provider for both voice
and data applications to the hospitality and commercial market -- the
acquisition of US Technologies is the first step in fulfilling this business
strategy." After
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XETA Corporation Acquires US Technologies page 2
closing, XETA will go to market via two sales divisions -- the commercial sales
division and the lodging sales division. The company will have two focused sales
channels to ensure the company maintains the proper sales focus on their
customer's requirements while maximizing their growth potential in both
divisions. XETA's general and administrative functions will support both sales
divisions. Additionally, US Technologies plans to remain a Lucent Diamond
Business Partner, exclusively supporting only Lucent equipment.
US Technologies, headquartered in St. Louis, MO, is Lucent Technologies' largest
dealer and they were Lucent's dealer of the year in 1994 and 1998. In 1986, Mark
Martin and Larry Hopp founded the company as an advocate of corporate and I.S.
professionals by providing speed and quality. From this concept US Technologies'
ability to satisfy some of the largest companies in the world evolved. US
Technologies has sales offices in 5 cities and customers in thirty states
throughout the nation.
"XETA is a company with a compelling growth strategy and a strong balance
sheet," said Mark Martin, US Technologies President. "The combination of US
Technologies sales and design competencies with XETA's national services
organization will create a powerful national voice and data integrator. XETA's
strategy of being a nationally recognized application integrator coupled with
their nationally deployed services organization and management team were the
deciding factors in selling to XETA." Following the acquisition, Mr. Martin will
remain in St. Louis and join XETA Corporation as its Commercial Division
President and he will be nominated to join the Board of Directors.
Jon Wiese, Jack Ingram and Mark Martin will host a conference call regarding
this announcement, Tuesday, November 2nd at 10 AM CST. The media, analysts and
investors are invited to participate by dialing 800.205.6183. For more
information on both companies and detailed information on the acquisition, visit
www.ustec.com/pressroom.
ABOUT XETA CORPORATION
Headquartered in Tulsa, Oklahoma, XETA Corporation is the national leader in the
sales and service of call accounting systems to the lodging industry, boasting
about a 25% share of the market. In 1993, XETA expanded into the sales and
service of Hitachi PBX systems and experienced substantial success bundling
service contracts, call accounting systems and PBX systems together and is now
the leading re-seller of Hitachi PBX systems in the market at 15%. XETA was
recently selected by Forbes Magazine, as one of the Best 200 Small Companies in
the America for the third consecutive year and four times in five years.
Business Week also selected XETA as one of its Top 100 Hot Growth Companies for
1999. XETA has generated six years of record financial results, with sales and
EPS growing at five-year annual compound rates of 41% and 29%.
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Forward-looking statements contained herein are based upon current expectations,
which XETA believes to be reasonable. Actual results may differ significantly
from the results discussed in forward-looking statements. Certain factors that
might cause such differences include, but are not limited to, the risk factors
described by XETA in its 10-QSB for its most recently competed fiscal quarter
and in other public reports previously filed by XETA.
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