<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
T-NETIX, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
T-NETIX, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1997
10:00 A.M.
TO OUR SHAREHOLDERS:
Notice is hereby given that pursuant to the call of its Board of Directors,
the Annual Meeting of Shareholders of T-NETIX, Inc. (the "Company") will be held
at the Company's Headquarters at 67 Inverness Drive East, Suite 100, Englewood,
Colorado, on Thursday, December 11, 1997, at 10:00 a.m., local time, for the
following purposes:
(1) To elect one (1) director to hold office for a three-year term
expiring at the year 2000 Annual Meeting of Shareholders or until his
successor shall be elected and qualified;
(2) To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent accountants for the fiscal year ended July 31, 1998; and
(3) To consider such other business as may be properly presented at
the meeting.
The name of the Board of Directors' nominee to be a director of the Company
is set forth in the accompanying Proxy Statement and is incorporated herein by
reference.
Only shareholders of record at the close of business on November 1, 1997,
will be entitled to vote at the meeting. To be sure that your shares are
represented at the meeting, you are urged to vote, sign, date and promptly
return the enclosed Proxy in the envelope provided. You may revoke your Proxy at
any time prior to the time it is voted.
The Annual Meeting of Shareholders is to be held at a location that is
accessible to participants with disabilities. Auxiliary aids will be provided
upon timely request of the Company.
By Order of the Board of Directors
John Giannaula
Corporate Secretary
November 12, 1997
Englewood, Colorado
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS QUICKLY AS POSSIBLE, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING. YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO
THE EXERCISE OF THE PROXY AT THE MEETING BY GIVING WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY.
<PAGE> 3
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS OF
T-NETIX, INC.
67 INVERNESS DRIVE EAST
ENGLEWOOD, COLORADO 80112
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by management under the direction of the Board of Directors of the
Company for use at the Annual Meeting of Shareholders of the Company to be held
December 11, 1997, and at any postponement or adjournment thereof. Only
shareholders of record as of November 1, 1997, will be entitled to notice of,
and to vote at, the Annual Meeting. The holders of a majority of the Company's
outstanding shares of Common Stock, present in person or by Proxy, are required
for a quorum at the meeting. The Company had 8,475,065 shares of Common Stock
outstanding at the close of business on November 1, 1997. This Proxy Statement
and enclosed Proxy were first mailed to the Company's shareholders on or about
November 12, 1997.
Each share has one vote on each matter voted on at the meeting. Cumulative
voting is not permitted. If a quorum is present at the meeting, the simple
majority vote of shares voting is required for election of the one director and
ratification of the Company's accountants. Assuming a quorum is present,
abstaining votes and broker non-votes will not be counted for or against the
proposed matters.
The cost of soliciting Proxies will be borne by the Company. In addition to
use of the mails, Proxies may be solicited personally or by telephone or
telegraph by directors and officers who will not be specially compensated for
such solicitation. The Company has engaged Corporate Stock Transfer, the
Company's transfer agent, to solicit Proxies for shares held in the name of
brokers and nominees. Brokerage firms and other custodians, nominees and
fiduciaries will be requested to forward these soliciting materials to their
principals and the Company will, upon request, reimburse them for the reasonable
expenses of doing so. The Company's transfer books will remain open between the
record date and meeting date.
Your Proxy is important in helping to achieve good representation at the
meeting. Any shareholder giving a Proxy has the right to revoke it at any time
before it is exercised; therefore, execution of the Proxy will not in any way
affect the shareholder's right to attend the meeting in person. Revocation may
be made prior to the meeting by written revocation or duly executed Proxy
bearing a later date sent to the Company, Attention: John Giannaula, Corporate
Secretary, 67 Inverness Drive East, Suite 100, Englewood, Colorado 80112; or a
Proxy may be revoked personally at the Annual Meeting by written notice to the
Secretary prior to the voting of the Proxy.
In the absence of specific instructions to the contrary, shares represented
by properly executed Proxies received by management, including unmarked Proxies,
will be voted to elect to the Board the nominee listed herein, and to ratify the
selection of KPMG Peat Marwick LLP as the Company's accountants for the fiscal
year ended July 31, 1998.
<PAGE> 4
PRINCIPAL SHAREHOLDERS
As of November 1, 1997, there were 8,475,065 shares of the Company's Common
Stock outstanding held of record by 192 shareholders. Only shareholders of
record as of November 1, 1997, shall be entitled to vote at the Annual Meeting
and each share is entitled to one vote.
The following table sets forth information with respect to the beneficial
ownership of Common Stock as of November 1, 1997, by (i) each person known by
the Company to own beneficially more than 5 percent of the outstanding Common
Stock, (ii) each current director of the Company, and (iii) all executive
officers and directors of the Company as a group. Except as otherwise indicated,
each of the persons named below has sole voting and investment power with
respect to the Common Stock owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
------------------- ----------------------- ----------
<S> <C> <C>
Ingalls and Snyder, LLC................................ 498,617 5.6%
61 Broadway
New York, N.Y. 10006
Daniel M. Carney....................................... 1,910,140(1) 18.4%
Tallgrass Executive Park
Building 1900
8100 East 22nd Street North
Wichita, KS 67226
Robert A. Geist........................................ 305,000(2) 3.5%
Thomas J. Huzjak....................................... 234,355(3) 2.7%
Alvyn A. Schopp........................................ 177,109(4) 2.1%
James L. Mann.......................................... 11,900(5) *
All directors and executive officers as a group
(6 persons).......................................... 2,679,954(6) 24.0%
</TABLE>
- ---------------
* Less than 1 percent.
(1) Includes (i) 115,000 shares owned by Communication Vending Corporation of
Arizona, of which Mr. Carney has a 30% beneficial interest; and (ii) 15,000
shares issuable pursuant to options exercisable within 60 days of November
1, 1997.
(2) The shares are held by Starwood Investments L.P., a company owned and
controlled by Mr. Geist. Includes 15,000 shares issuable pursuant to options
exercisable within 60 days of November 1, 1997.
(3) Includes 184,010 shares issuable pursuant to options exercisable within 60
days of November 1, 1997.
(4) Includes 144,250 shares issuable pursuant to options exercisable within 60
days of November 1, 1997.
(5) Includes 10,000 shares issuable pursuant to options exercisable within 60
days of November 1, 1997.
(6) Includes 409,510 shares issuable pursuant to options exercisable within 60
days of November 1, 1997.
2
<PAGE> 5
PROPOSAL 1 -- ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Articles of Incorporation provide that the Board of Directors
shall be divided into three classes. Each class of directors consists of one,
two or three directors who are currently serving staggered three-year terms with
one class being elected each year. The Class I directors are Mr. Mann, Mr.
Carney and Mr. Geist, the Class II director is Mr. Huzjak and the Class III
director is Mr. Schopp. The Class III director will be elected at this Annual
Meeting to serve until the year 2000 Annual Meeting and until his successor is
duly elected and qualified. Class I and Class II directors will continue in
office for terms expiring at the 1998 and 1999 Annual Meetings, respectively.
The Proxies will be voted, unless authority to do so is withheld, in favor
of the one (1) nominee recommended by the Board: Alvyn A. Schopp. The nominee is
currently a member of the Board of Directors of the Company. Management
recommends voting in favor of the nominee.
Following is a list of the current directors and executive officers of the
Company, including age (as of November 1, 1997), current positions held with the
Company and terms of office.
<TABLE>
<CAPTION>
DIRECTOR TERM TO
NAME AGE POSITION SINCE EXPIRE
---- --- -------- -------- -------
<S> <C> <C> <C> <C>
Thomas J. Huzjak................... 48 Chief Executive Officer and
Chairman of the Board 1991 1999
Alvyn A. Schopp*................... 39 Executive Vice President, Chief
Financial Officer and Director 1993 1997
John Giannaula..................... 36 Vice President of Finance and
Secretary N/A N/A
James L. Mann(1)(2)................ 63 Director 1995 1998
Daniel M. Carney(1)(2)............. 66 Director 1991 1998
Robert A. Geist(1)(2).............. 57 Director 1994 1998
</TABLE>
- ---------------
* Nominee
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Mr. Huzjak has served as Chief Executive Officer and Chairman of the Board
since August 1994 and as President and Chief Operating Officer of the Company
from December 1991 to August 1994. From May 1991 to December 1991, he was Vice
President and General Counsel for the Company. Prior to joining the Company, Mr.
Huzjak owned a private law practice specializing in telecommunications issues
from 1988 until 1991 and prior thereto he held various executive positions with
AT&T, most recently as Division and Branch Manager with AT&T Information
Systems. Prior to that, he held positions at Pacific Telephone, U S WEST and
Ohio Bell.
Mr. Schopp has served as Chief Financial Officer, Treasurer and a director
of the Company since 1993. He was named Executive Vice President in August 1994.
Prior to joining the Company, he spent 13 years with KPMG Peat Marwick. He is a
Certified Public Accountant in the State of Colorado.
Mr. Giannaula has served as Vice President -- Finance of the Company since
June 1994 and as Secretary since July 1994. Prior to joining the Company, he
spent 10 years with KPMG Peat Marwick. He is a Certified Public Accountant in
the State of Colorado.
Mr. Mann became a director in September 1995. Since 1986, Mr. Mann has been
the Chairman and Chief Executive Officer of SunGard Data Systems, Inc., a
provider of proprietary application software systems and processing services for
investment support activities and a provider of computer disaster recovery
services. From 1983 to 1986 he was SunGard's President and Chief Operating
Officer. From 1981 to 1983 he was President of Bradford National Corporation, a
computer services and software concern.
3
<PAGE> 6
Mr. Carney has served as a director of the Company since 1991. Since 1977,
Mr. Carney has been a private investor. He co-founded Pizza Hut, Inc. in 1958
and served as Chairman of the Board until 1975 and as a director through 1977
when Pizza Hut was acquired by PepsiCo, Inc.
Mr. Geist has served as a director of the Company since August 1994. Since
1979, he has been Chairman of the Board and Chief Executive Officer of Rage
Administrative & Marketing Services, Inc., a management company for Pizza Hut
franchises. Since 1991, he has been a director of Beauty Warehouse, Inc. (a
franchisor of beauty salons and professional beauty products).
The officers of the Company hold office until their successors are
appointed by the Board of Directors. There are no arrangements or understandings
between any of the above-listed directors or officers, or any other persons,
pursuant to which any of the directors have been selected as directors, or
officers have been selected as officers.
COMPENSATION OF DIRECTORS
The Company's non-employee directors are compensated at the rate of $1,000
per meeting attended inclusive of expenses. In August 1994, the Company granted
options to acquire 20,000 shares of Common Stock to each of the directors of the
Company other than Mr. Huzjak and Mr. Schopp under the Company's Non-Qualified
Stock Option Plan with an exercise price of $5.50 per share. In September 1995,
Mr. Mann was granted options to acquire 20,000 shares of Common Stock with an
exercise price of $13.00 per share. In August 1997, Mr. Mann's options were
amended to lower the option price to $7.25 per share. See "Stock Option Plans".
The options granted to directors vest evenly over a four-year period.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has established a Compensation Committee which makes
recommendations to the Board concerning salaries and incentive compensation for
officers and employees of the Company. See "Report by the Compensation Committee
on Executive Compensation." The Compensation Committee is currently composed of
Mr. Geist, Mr. Mann and Mr. Carney. The Board of Directors also has an Audit
Committee which reviews the results and scope of the audit and other accounting
related services. The Audit Committee is currently composed of Mr. Geist, Mr.
Mann and Mr. Carney. Nominees for the Board of Directors are determined by the
entire Board.
For the year ended July 31, 1997, there were 4 meetings of the Board of
Directors, 2 meetings of the Compensation Committee and 1 meeting of the Audit
Committee. All directors attended 100 percent of the Company's Board meetings
and meetings of Board committees on which they served.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered in all capacities to the Company for the years
ended July 31, 1997, 1996, and 1995, by Mr. Huzjak and Mr. Schopp. No other
executive officer's compensation exceeded $100,000 during the year ended July
31, 1997. No restricted stock awards, long-term incentive plan payouts or stock
appreciation rights ("SARs") were granted to Mr. Huzjak or Mr. Schopp in such
years.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) STOCK OPTIONS
--------------------------- ---- -------- -------- -------------
<S> <C> <C> <C> <C>
Thomas J. Huzjak 1997 $195,000 -- 36,000
Chairman of the Board 1996 $175,000 -- 100,000
and Chief Executive Officer 1995 $108,000 $52,278 65,000
Alvyn A. Schopp 1997 $143,750 -- 32,000
Chief Financial Officer 1996 $113,000 -- 75,000
1995 $ 96,000 $33,808 65,000
</TABLE>
- ---------------
(1) With respect to each of the individuals named in the Summary Compensation
Table, the aggregate amount of perquisites and other personal benefits
received did not exceed the lessor of either $50,000 or 10% of the total of
annual salary and bonus reported for such individual.
(2) Bonuses, if applicable, were paid pursuant to the Management Incentive
Program described below.
Option Grants. The following table sets forth information regarding stock
options granted to Mr. Huzjak and Mr. Schopp during the year ended July 31,
1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE
NUMBER OF TOTAL OPTIONS EXERCISE APPRECIATION FOR
SECURITIES GRANTED OR BASE OPTION TERM(1)(3)
UNDERLYING TO EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME OPTIONS GRANTED FISCAL YEAR SHARE(3) DATE 5% 10%
---- --------------- --------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Huzjak............. 36,000(2) 15.0% $7.25 8-23-06 $384,040 $766,120
Alvyn A. Schopp.............. 32,000(2) 13.4% $7.25 8-23-06 $341,369 $680,996
</TABLE>
- ---------------
(1) Amounts reflect certain rates of appreciation set forth in the SEC's
executive compensation disclosure rules. Actual gains, if any, on stock
option exercises, will depend on future performance of the Common Stock. No
assurance can be made that the amounts reflected in these columns will be
achieved.
(2) The options become exercisable for 25% of the shares beginning one year from
the date of grant and continuing for 25% annually thereafter, so long as
employment with the Company continues.
(3) Amounts reflect the August 11, 1997 re-pricing of certain stock options. See
"Stock Option Plans".
5
<PAGE> 8
The following table shows certain information regarding the exercise of
options during the year ended July 31, 1997, and unexercised options held by Mr.
Huzjak and Mr. Schopp on an aggregated basis as of July 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
VALUE UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
NUMBER OF REALIZED FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)(2)
SHARES ACQUIRED UPON --------------------------- ---------------------------
NAME ON EXERCISE EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Huzjak.......... 49,968 $497,747 133,760 143,500 $462,235 $164,500
Alvyn A. Schopp........... -- -- 101,250 120,750 $332,812 $164,500
</TABLE>
- ---------------
(1) Based upon the fair market value of the Common Stock on July 31, 1997 ($8.00
per share), less the option exercise price.
(2) Amounts reflect the August 11, 1997 re-pricing of certain stock options. See
"Stock Option Plans".
MANAGEMENT INCENTIVE PROGRAMS
In September 1997, the Board adopted the 1997 Management Incentive Program
which provides that certain employees of the Company will be rewarded for
achieving specific individual and Company objectives. The 1997 Management
Incentive Program rewards individuals for Company performance targets based on
revenue and earnings before interest and taxes (subject to adjustments for
extraordinary events). Payments are made, if earned, at the end of each fiscal
quarter.
In August 1996, the Board adopted the 1996 Management Incentive Program
which provided that certain employees of the Company would be rewarded for
achieving specific individual and Company objectives. The 1996 Management
Incentive Program was designed to reward individuals for Company performance
targets based on total revenue, new revenue, and earnings before interest and
taxes. There were no payments made under the 1996 Management Incentive Program.
Under the 1995 Management Incentive Program the total amount of
compensation available under the program was up to 15 percent of the Company's
improvement in earnings before interest and taxes (less certain adjustments).
There were no payments made under the 1995 Management Incentive Program.
STOCK OPTION PLANS
The Company's 1993 Incentive Stock Option Plan, adopted by the Company on
May 1, 1993 (the "ISO Plan"), and the Company's 1991 Incentive Stock Option
Plan, adopted by the Company on January 10, 1991, provide that options for
Common Stock may be granted to such key employees, including officers and
directors who are also employees, of the Company or its subsidiaries who the
Board of Directors deems to be important to the future of the Company or its
subsidiaries. The Company's Non-Qualified Stock Option Plan (the "NQSO Plan")
adopted by the Company on January 10, 1991, provides that options for Common
Stock may be granted to eligible employees, officers and directors of the
Company or its subsidiaries. The period for which an option is granted under all
three plans may not exceed ten years from the date of the grant. In general, an
optionee may not exercise any part of an option granted under the two incentive
plans unless the optionee has been in the continuous employment of the Company
or a subsidiary at all times from the date of the grant until the date three
months prior to the date of exercise. The option price per share is determined
by the Board of Directors at the time an option is granted and cannot be less
than 100 percent of the fair market value of Common Stock on the date of grant.
On July 24, 1997, the Board amended the ISO Plan and the NQSO Plan to
provide that the Compensation Committee may amend certain outstanding options
with an exercise price in excess of the current market price in order to modify
the exercise price to the current market price or greater. On August 11, 1997,
the Compensation Committee re-priced the exercise price to $7.25 per share for
certain
6
<PAGE> 9
outstanding options under the ISO Plan and NQSO Plan having an exercise price
equal to or greater than $7.50 prior to such re-pricing. This re-pricing
affected 725,500 options under the ISO Plan and 48,000 options under the NQSO
Plan.
The Board of Directors may amend these plans at any time but may not,
without shareholder approval, adopt any amendment that would (i) materially
increase the benefits accruing to participants, (ii) materially modify the
eligibility requirements, or (iii) increase the maximum number of shares which
may be issued under each plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors served as members of the Compensation
Committee for the year ended July 31, 1997: Messrs. Geist, Mann and Carney. The
members of the Company's Compensation Committee have no interlocking
relationships as defined by SEC rules and regulations.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Policies. The Compensation Committee recognizes that
the success of the Company including its ability to expand its service offerings
and its markets and to maintain its existing contracts and customer
relationships is dependent on the performance of its employees. The Company's
employees are its primary asset. As a result, the Compensation Committee has
adopted the following executive compensation policies:
- The Company's executive compensation policies should balance the
long-term and short-term goals of the Company. They should encourage
growth and yet reward current profitability.
- Base salaries should be at or close to market but salaries should be
enhanced by bonus plans and stock option incentives to provide
opportunities for above market compensation to retain employees key to
the Company's success.
- Cash bonus plans should be designed to provide incentives to meet or
exceed Company goals, should reward both group and individual
performances, and should be flexible in their design and application.
- Stock options should be awarded to reward performance and to align
executives interests with those of shareholders.
The Compensation Committee believes its executive compensation program
effectively serves the interests of shareholders by allowing the Company to
attract and retain talented executive personnel who have incentives to perform
at the highest levels.
CEO Compensation. Thomas J. Huzjak has served as the Company's Chief
Executive Officer since August 1994. Prior thereto he was President and Chief
Operating Officer. He has presided over the Company during its emergence into
profitability, its successful initial public offering and the beginnings of its
diversification through the development of certain new services and the
acquisition of others. In fiscal 1997, Mr. Huzjak received a base salary of
$195,000 in recognition of his duties and options for 36,000 shares of the
Company's common stock in recognition of his performance. For fiscal 1998, Mr.
Huzjak will receive a base salary of $240,000 in recognition of the significance
of his duties and his performance in developing potential markets for the
Company's speaker verification products and services. In addition, Mr. Huzjak
has been given the opportunity to receive a bonus based upon performance targets
for revenue and earnings before income taxes (subject to adjustments for
extraordinary events). Mr. Huzjak's salary and bonus levels for fiscal 1998 and
prior stock option awards reflect the strategic importance of Mr. Huzjak to the
Company and his anticipated future contributions toward achievement of the
Company's growth objectives.
The foregoing report has been prepared by the Company's Compensation
Committee.
James L. Mann (Chairman)
Robert A. Geist
Daniel M. Carney
7
<PAGE> 10
COMPANY PERFORMANCE
The following line graph presents the cumulative total yearly shareholder
return for the Common Stock since November 8, 1994, the date of the Company's
initial public offering, compared with the NASDAQ Market Index and the NASDAQ
Telecommunications Stock Index. The graph assumes that $100 was invested on
November 8, 1994, and that all dividends were reinvested.
STOCK PRICE PERFORMANCE
COMPARISON OF CUMULATIVE TOTAL RETURN
T-NETIX, INC., NASDAQ MARKET INDEX AND
NASDAQ TELECOMMUNICATIONS STOCK INDEX
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON NOVEMBER 8, 1994)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ NASDAQ
(FISCAL YEAR COVERED) T-NETIX, INC. TELECOMMUNICATIONS COMPOSITE (US)
<S> <C> <C> <C>
11/8/94 100.00 100.00 100.00
7/31/95 131.58 119.59 130.44
7/31/96 92.11 120.84 140.79
7/31/97 84.21 160.39 207.65
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Any transactions between the Company and its officers, directors, employees
and affiliates that are outside the scope of the Company's employment
relationship with such persons will be subject to the approval of a majority of
the disinterested members of the Board of Directors based upon a determination
that the terms are at least as favorable to the Company as those that could be
obtained from unrelated parties.
PROPOSAL 2 -- RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP has served as the Company's accountant for the years
ended July 31, 1997, 1996 and 1995. At the Annual Meeting, shareholders will be
asked to ratify the appointment of KPMG Peat Marwick LLP as the Company's
accountant for the fiscal year ending July 31, 1998. Representatives of KPMG
Peat Marwick LLP will be present at the Annual Meeting with the opportunity to
make a statement and to respond to appropriate questions.
8
<PAGE> 11
The Board of Directors recommends that shareholders vote for ratification
of the selection of KPMG Peat Marwick LLP as the Company's accountants for 1998.
FILING OF SEC REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than 10 percent of the
stock of the Company to file initial reports of ownership and reports of changes
in ownership. Such persons are also required by SEC regulations to furnish the
Company with copies of these reports.
Based solely on a review of the copies of such reports furnished to the
Company, the Company believes that all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10 percent
beneficial owners during the year ended July 31, 1997, were complied with.
FINANCIAL STATEMENTS
An annual report, including consolidated financial statements of the
Company prepared in conformity with generally accepted accounting principles, is
being distributed to all Company shareholders of record and is enclosed
herewith. THE COMPANY'S ANNUAL REPORT TO THE SEC ON FORM 10-K MAY BE OBTAINED
WITHOUT CHARGE UPON WRITTEN REQUEST DIRECTED TO JOHN GIANNAULA, CORPORATE
SECRETARY, 67 INVERNESS DRIVE EAST, SUITE 100, ENGLEWOOD, COLORADO 80112.
SHAREHOLDERS' PROPOSALS
It is expected that the 1998 Annual Meeting of Shareholders of the Company
will be held on December 10, 1998. Any proposals intended to be presented at the
1997 Annual Meeting must be received at the Company's offices on or before July
5, 1998, in order to be considered for inclusion in the Company's Proxy
Statement and form of Proxy relating to such meeting.
OTHER MATTERS
The Annual Meeting is called for the purposes set forth in this notice.
Management is not aware of any other matter that will come before the meeting.
However, if any other business should come before the meeting, your Proxy, if
signed and returned, will give to the persons designated in it discretionary
authority to vote according to their best judgment. It is the intention of the
persons named in the Proxy to vote pursuant to the Proxy in accordance with the
recommendations of management.
By Order of the Board of Directors
John Giannaula
Corporate Secretary
Date: November 12, 1997
9
<PAGE> 12
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PROXY
T-NETIX, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1997
The undersigned holder of common stock of T-NETIX, Inc., a Colorado
corporation (the "Company"), acknowledges receipt of a copy of the Notice of
Annual Meeting of Shareholders dated November 12, 1997, and, revoking any proxy
heretofore given, hereby appoints Thomas J. Huzjak and Alvyn A. Schopp, and each
of them, with full power to each of substitution as attorneys and proxies to
appear and vote all shares of common stock of the Company registered in the
name(s) of the undersigned and held by the undersigned of record as of November
1, 1997, at the Annual Meeting of Shareholders of the Company to be held at 67
Inverness Drive East, Suite 100, Englewood, Colorado, on December 11, 1997, at
10:00 a.m., and at any postponements and adjournments thereof, upon the
following items as set forth in the Notice of Annual Meeting and to vote
according to their discretion on all other matters which may be properly
presented for action at the meeting. All properly executed proxies will be voted
as indicated.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS:
(1) To elect as director the nominee listed below.
[ ] FOR THE nominee listed below (except as marked to the contrary).
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below.
Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR THE INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Alvyn A. Schopp
(2) To ratify the selection of KPMG Peat Marwick as the Company's public
accountants for the year ended July 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the proxy holders are authorized to vote upon such
other business as may be properly presented at the meeting or matters
incidental to the conduct of the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSALS 1 AND 2. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED.
IF NO DIRECTION IS MADE IT WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
WITNESS my hand this ______ day of ____________ , 1997.
(Please sign exactly as name
appears hereon. When signing as
attorney, executor,
administrator, trustee or
guardian, give full title as
such. If a corporation, please
affix corporate seal. If a
partnership, please sign in
partnership name by authorized
persons. If joint tenants, each
joint tenant should sign.)
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Signature of Shareholder(s)
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY BY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
I/WE DO ____ DO NOT ____ EXPECT TO ATTEND THIS MEETING.
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