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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 23, 1997
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STM WIRELESS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 000-19923 95-3758983
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No)
One Mauchly, Irvine, California 92618
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 753-7864
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Not Applicable
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(Former name or former address, if changed since last report)
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Exhibit Index on Page 4
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ITEMS 1 THROUGH 4 AND 6 THROUGH 8 NOT APPLICABLE.
ITEM 5 OTHER EVENTS.
Reference is made to the press releases issued to the public by the
registrant on December 23, 1997, the text of which releases are attached hereto
as Exhibits 99.1 and 99.2 for a description of the events reported pursuant to
this Form 8-K.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STM WIRELESS, INC.
Date: January 16, 1998 By: /s/ JOSEPH J. WALLACE
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Joseph J. Wallace
Vice President, Finance and Chief
Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
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<S> <C>
99.1 Press Release dated December 23, 1997 5
99.2 Press Release dated December 23, 1997 8
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EXHIBIT 99.1
For Further Information, Contact:
Investor Relations Contact:
Lippert/Heilshorn & Associates
Keith Lippert
(212) 838-3777
Kris Otridge
(415) 433-3777
Corporate Communications:
Frank Connors
(714) 753-7864
Marketing Communications:
Paul Kinderman
(714) 789-2625
Fax: (714) 753-1122
Web Site: www.stmi.com
STM WIRELESS ANNOUNCES STRATEGIC DECISION TO
POSITION THE COMPANY AS A SERVICE PROVIDER
IN EMERGING MARKETS.
- BROADENS ACTIVITIES THROUGH SERVICE OFFERING BY DTPI SUBSIDIARY -
- PREVIEWS EXPECTED 1997 YEAR END RESULTS -
IRVINE, CALIFORNIA, December 23, 1997 - STM WIRELESS, INC. (STM) (NASDAQ
NM Symbol: STMI), a leading manufacturer of wireless communications products,
today announced a strategic decision to emphasize the future operations of its
wholly-owned telecommunications service subsidiary, Direc-To-Phone
International, Inc. (DTPI). With the concurrently announced joint venture with
CANTV in Venezuela, and the previously announced service agreement with Miditel
in Mexico, DTPI now has a minimum backlog of $150 million in service contract
revenues. The first transaction announced in October with Miditel is expected to
generate approximately $100 million minimum in service revenues over its 10 year
term and the transaction announced today with CANTV is approximately $50 million
minimum in service revenues for DTPI over its 15 year term.
STM believes that there is also considerable upside potential in these
projects for increased revenues and earnings resulting from a higher level of
usage and line penetration above the minimum, especially with the anticipated
introduction by STM of lower cost terminals for these networks. DTPI is also in
discussions for similar potential ventures in other countries.
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These service contracts, like other communication service ventures such
as mobile satellite systems and cellular telephony, are different from the
Company's traditional equipment sales business where revenue is normally
recognized on delivery of product. They are characterized by heavy, up-front
capital costs leading to negative cashflow in the early years, but with high
earnings potential over the life of the contract. In order to secure the
operating capital for DTPI, the Company, in conjunction with investment bankers
that it has retained for this purpose, is examining several strategies. These
include raising debt and/or equity financing, strategic partnerships and
spinning-off majority ownership of DTPI prior to the year-end. However, in view
of the high level of success DTPI has had in a very short period, the Company
has decided that it is in the best long-term interest of the Company and its
stockholders to retain control of DTPI for the immediate future. This decision
was heavily influenced by the significant agreement recently signed with CANTV
and by the desire of major customers and potential strategic partners to
maintain direct access to all of STM's technology.
The consequence of the decision to retain control of DTPI is that the
Company will not, under applicable accounting rules, recognize any significant
revenues or gross profits on its shipment of products for the two major
transactions related to DTPI in 1997. Through the end of fourth quarter, STM
would have recognized approximately $14.3 million in revenue and $6.1 million in
gross margin, in sales to DTPI, had the Company completed a spin-off in
compliance with GAAP rules. This would have resulted in approximately $21
million in revenue and $0.20 - $0.24 in earnings per share (including the
acquisition of Telecom International) for the fourth quarter for STM and
approximately $66 million in revenues and $0.50 - $0.54 in earnings per share
for fiscal 1997. After accounting for the sales to DTPI as an inter-company
transfer of assets and the acquisition of Telecom International, the Company
expects its reported revenues for the fourth quarter ending December 31, 1997,
to be approximately $6.5 million, with a net loss in the range of $4.0 - $4.3
million resulting in a net loss per share of $0.60 to $0.64 and for fiscal 1997,
revenues of approximately $52 million with a net loss of $2.0 - $2.3 million or
$0.30 - $0.34 per share. These estimates are preliminary and unaudited and
accordingly, are subject to change.
STM's President and CEO, Emil Youssefzadeh, stated, "We are proud of our
accomplishments over the past 12 months which have included record achievements
in signing sizable telephony related contracts and meeting our revenue targets,
along with our recent acquisition of Telecom International. Despite the ability
we had to spin-off DTPI prior to the yearend, we believe that our decision to
retain full control at present, is in the best long-term interest of our
stockholders and customers. We have had extraordinary success in gaining
acceptability of DTPI's telecommunication services and this decision will allow
us to retain control of our growth business areas and maintain our competitive
advantages, which we consider major assets, for the future. STM expects
continued growth in its core equipment sales business to telephone companies,
service providers and Enterprise networks and will retain its focus on providing
the lowest cost, best performance alternatives for the fixed telephony market.
Our new SES and SPACEWEB products are on the leading edge of technology - they
are designed specifically for rural and low density telephony and international
INTERNET access markets, while remaining
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compatible with our existing networks. With the increased volumes brought by the
present and future contracts, we anticipate a continued reduction in cost of our
wireless user terminals down to a consumer product level."
STM Wireless, Inc., headquartered in Irvine, California (Web Site:
Error! Bookmark not defined., is an international provider of wireless
communications solutions including VSATs (Very Small Aperture Terminals) for
voice, data and video applications with equipment installed in over 80
countries. In addition to its supply of satellite network systems, the Company
has two subsidiaries involved in related businesses. Direc-to-Phone
International (DTPI) is a service subsidiary which uses products manufactured by
STM to enter into service agreements with local partners to provide turnkey
communications services, generating long-term cash flow. Telecom Multimedia
Systems, Inc (TMSI) is a technology subsidiary focused on Internet telephony,
developing products and digital signal processing solutions which provide low
delay, high quality, voice over IP solutions.
This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In addition, from time to time, STM
Wireless, Inc. or its representatives have made or may make forward-looking
statements, orally or in writing. Such forward-looking statements may be
included in, but are not limited to, various filings made by the Company with
the Securities and Exchange Commission, press releases or oral statements made
with the approval of an authorized executive officer of the company. Actual
results could differ materially from those projected or suggested in any
forward-looking statements as a result of a wide variety of factors and
conditions. As discussed in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, and its Forms 10-Q for the first three quarters of
fiscal 1997, the Company's future operating results are uncertain and may be
impacted by the following factors, among others: the long-term cycle involved in
completing major contracts, particularly in foreign markets; increasing
competitive pressures; general economic conditions; technological advances; the
timing of new product introductions; political and economic risks involved in
foreign markets and foreign currencies; and the timing of operating and other
expenditures.
###
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EXHIBIT 99.2
For Further Information, Contact:
Investor Relations Contact:
Lippert/Heilshorn & Associates
Keith Lippert
(212) 838-3777
Kris Otridge
(415) 433-3777
Corporate Communications:
Frank Connors
(714) 753-7864
Marketing Communications:
Paul Kinderman
(714) 789-2625
Fax: (714) 753-1122
Web Site: www.stmi.com
STM WIRELESS SUBSIDIARY - DIREC-TO-PHONE INTERNATIONAL -
ANNOUNCES $50 MILLION JOINT VENTURE WITH CANTV
- WILL OFFER FIXED SATELLITE TELEPHONE SERVICES THROUGHOUT VENEZUELA -
IRVINE, CALIFORNIA, December 23, 1997 - STM WIRELESS, INC. (STM) (NASDAQ
NM Symbol: STMI), a leading manufacturer of wireless communications products,
today announced that its wholly-owned subsidiary, Direc-To-Phone International,
Inc. (DTPI), has entered into a 15 year joint venture service agreement with
Compania Anonima Nacional Telefonos de Venezuela (CANTV) (ADR Symbol: VNT) to
provide a nationwide satellite network for fixed telephony and data services
throughout Venezuela. CANTV is the sole provider of nationwide telephone
services in Venezuela and has GTE as its largest individual investor. In
addition to its fiber optic and wire-line facilities, CANTV is also the INTELSAT
signatory and one of the countries largest cellular operators.
The Joint Venture will be owned 51% by CANTV and 49% by DTPI and will be
under the operational control of DTPI. The J.V. will provide a minimum of 5,000
satellite phone lines to be installed at user locations not currently covered by
CANTV's terrestrial facilities. DTPI has already commenced delivery and
installation of the equipment, which will use STM's DAMA and SES product lines.
The J.V. expects to have two gateways and several hundred lines in operation
within the next 60 days. Revenues to the J.V. over the period of the contract,
for the
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minimum quantity of lines, will be approximately $100 million of which DTPI will
receive 49%, or about $50 million.
Under the terms of the agreement, CANTV purchases two satellite gateways
directly from STM. These will be interconnected to the existing backbone
terrestrial network. The J.V. will be responsible for providing the fixed
satellite phone terminals, the network control system and associated services.
The two major gateways will become the entry point for calls made to and from
the PSTN subscribers using CANTV's existing fiber optic facilities. CANTV will
be the sole provider to the end users who will pay a per minute usage fee,
inclusive of all domestic long distance and termination charges. The J.V. will
receive service revenues for the life of the contract.
Dr. Gustavo Roosen, Chairman and CEO of CANTV, said, "We are pleased to
see an effective solution that can meet our immediate requirements to satisfy
the demand for services in the outlying areas. Our decision to proceed with DTPI
in this project was the result of a comprehensive evaluation of technology and
their ability to react rapidly to a demanding market environment."
STM's President and CEO, Emil Youssefzadeh stated, "This is another
example of STM's strength in the Fixed Satellite Telephony market. We are proud
of our new association with a premier company such as CANTV, which is one of the
largest and best established phone companies in Latin America. STM's success in
rural telephony is due to offering advanced and efficient technology which
addresses the customer's requirements. This has led to an established track
record with major networks in Latin America and Asia Pacific. We are pleased to
see the momentum we have created with our fixed satellite telephony technology
and expect this agreement to set the pace for further expansion of our
Geostationary satellite telephony business in developing markets."
The J.V. will use a combination of various products manufactured by STM
wireless, including the DAMA 10000 network system and the Subscriber Earth
StationTM (SES). Among its features, the DAMA 10000 and the SES terminal offer
communication service providers full-mesh, expandable, multi-service capability.
This makes it possible for callers to telephone from any remote site to any of
multiple gateways within the entire network, or to other remote sites,
eliminating the need for any central hub. The mesh topology of STM's products
allows routing of calls to any gateway based on analysis of dialed digits and if
desired, allows direct routing of PSTN calls among the gateways as a supplement
to the PSTN backbone. The DAMA 10000 also has the capability for full support of
R-2 signaling used in most international telephone networks with capability to
build tariff tables, provide caller ID and support other advanced features.
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The DAMA 10000 product family, in conjunction with Subscriber Earth
Station, provides cost effective single channel and multi-channel solutions for
implementation of fully interconnected network services. The data capabilities
incorporated in the DAMA 10000 provide advanced circuit switched services for
both bandwidth on demand as well as frame-relay applications, including support
for E1/T1 interfaces. Additionally, the DAMA-10000 can be deployed as backbone
switching and transmission infrastructure for wireless local loop systems, for
heavy route traffic and traditional backup services, interconnection of major
telephony switching centers, backbone infrastructure for cellular networks and
gateway access to international PSTN.
STM Wireless, Inc., headquartered in Irvine, California (Web Site:
www.stmi.com), is an international provider of wireless communications solutions
including VSATs (Very Small Aperture Terminals) for voice, data and video
applications with equipment installed in over 80 countries. In addition to its
supply of satellite network systems, the company has two subsidiaries involved
in related businesses. Direc-to-Phone International (DTPI) is a service
subsidiary which uses products manufactured by STM to enter into service
agreements with local partners to provide turnkey communications services,
generating long-term cash flow. Telecom Multimedia Systems, Inc (TMSI) is a
technology subsidiary focused on Internet telephony, developing products and
digital signal processing solutions which provide low delay, high quality, voice
over IP solutions.
This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In addition, from time to time, STM
Wireless, Inc. or its representatives have made or may make forward-looking
statements, orally or in writing. Such forward-looking statements may be
included in, but are not limited to, various filings made by the Company with
the Securities and Exchange Commission, press releases or oral statements made
with the approval of an authorized executive officer of the company. Actual
results could differ materially from those projected or suggested in any
forward-looking statements as a result of a wide variety of factors and
conditions. As discussed in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, and its Forms 10-Q for the first three quarters of
fiscal 1997, the Company's future operating results are uncertain and may be
impacted by the following factors, among others: the long-term cycle involved in
completing major contracts, particularly in foreign markets; increasing
competitive pressures; general economic conditions; technological advances; the
timing of new product introductions; political and economic risks involved in
foreign markets and foreign currencies; and the timing of operating and other
expenditures.
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