<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.
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
T-NETIX, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 10, 1998
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 10, 1998, at 10:00 a.m., local time, for the
following purposes:
(1) To elect three (3) directors to hold office for a three-year term
expiring at the year 2001 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, 1999; 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 2, 1998,
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 10, 1998
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 10, 1998, and at any postponement or adjournment thereof. Only
shareholders of record as of November 2, 1998, 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 8,550,632 shares of Common Stock
outstanding at the close of business on November 2, 1998. This Proxy Statement
and enclosed Proxy were first mailed to the Company's shareholders on or about
November 10, 1998.
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 three directors
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 nominees listed herein, and to ratify
the selection of KPMG Peat Marwick LLP as the Company's accountants for the
fiscal year ended July 31, 1999.
PRINCIPAL SHAREHOLDERS
As of November 2, 1998, there were 8,550,632 shares of the Company's Common
Stock outstanding held of record by 154 shareholders. Only shareholders of
record as of November 2, 1998, 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 2, 1998, 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
<PAGE> 4
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>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OUTSTANDING
OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
- ------------------- ---------- ------------
<S> <C> <C>
Ingalls and Snyder, LLC..................................... 503,625 5.6%
61 Broadway
New York, N.Y. 10006
Daniel M. Carney............................................ 1,915,140(1) 18.3%
Tallgrass Executive Park
Building 1900
8100 East 22nd Street North
Wichita, KS 67226
Robert A. Geist............................................. 310,000(2) 3.5%
Thomas J. Huzjak............................................ 269,605(3) 3.1%
Alvyn A. Schopp............................................. 220,109(4) 2.5%
Martin T. Hart.............................................. 35,000(5) *
James L. Mann............................................... 16,900(6) *
All directors and executive officers as a group (7
persons).................................................. 2,821,954(7) 24.8%
</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) 20,000
shares issuable pursuant to options exercisable within 60 days of November
2, 1998.
(2) Includes (i) 290,000 shares are held by Starwood Investments L.P., a company
owned and controlled by Mr. Geist; and (ii) 20,000 shares issuable pursuant
to options exercisable within 60 days of November 2, 1998.
(3) Includes 234,260 shares issuable pursuant to options exercisable within 60
days of November 2, 1998.
(4) Includes 187,250 shares issuable pursuant to options exercisable within 60
days of November 2, 1998.
(5) Includes 5,000 shares issuable pursuant to options exercisable within 60
days of November 2, 1998.
(6) Includes 15,000 shares issuable pursuant to options exercisable within 60
days of November 2, 1998.
(7) Includes 536,510 shares issuable pursuant to options exercisable within 60
days of November 2, 1998.
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 directors are Mr. Huzjak and Mr. Hart and the
Class III director is Mr. Schopp. The Class I directors will be elected at this
Annual Meeting to serve until the year 2001 Annual Meeting and until their
successors are duly elected and qualified. Class II and Class III directors will
continue in office for terms expiring at the 1999 and 2000 Annual Meetings,
respectively.
The Proxies will be voted, unless authority to do so is withheld, in favor
of the three (3) nominees recommended by the Board: James L. Mann, Daniel M.
Carney, and Robert A. Geist. The nominees are currently members of the Board of
Directors of the Company. Management recommends voting in favor of the nominees.
2
<PAGE> 5
Following is a list of the current directors and executive officers of the
Company, including age (as of November 2, 1998), current positions held with the
Company and terms of office.
<TABLE>
<CAPTION>
TERM
DIRECTOR TO
NAME AGE POSITION SINCE EXPIRE
- ---- --- -------- -------- ------
<S> <C> <C> <C> <C>
Thomas J. Huzjak.............. 49 Chief Executive Officer and Chairman of the 1991 1999
Board
Alvyn A. Schopp............... 40 Executive Vice President, Chief Financial 1993 2000
Officer and Director
John Giannaula................ 37 Vice President of Finance and Secretary N/A N/A
James L. Mann*(1)(2).......... 64 Director 1995 1998
Daniel M. Carney*(2).......... 67 Director 1991 1998
Robert A. Geist *(1)(2)....... 58 Director 1994 1998
Martin T. Hart(1)............. 62 Director 1997 1999
</TABLE>
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* 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.
In April, 1997, he was named President of the Inmate Calling Services Division.
Prior to joining the Company, he spent 13 years as an accountant with KPMG Peat
Marwick.
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 as an accountant with KPMG Peat Marwick. He is a Certified Public
Accountant in the State of Colorado.
Mr. Mann became a director of the Company 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.
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).
Mr. Hart has served as a director of the Company since 1997. Mr. Hart is a
Denver-based businessman and investor. Mr. Hart serves as a director of P.J.
America, a food service company, Pacific National Financial Group Bank, a bank
holding company, MassMutual Corporate Investors, an investment company, Mass-
3
<PAGE> 6
Mutual Participation Investors, an investment company, Optical Securities
Corporation, a manufacturer of security systems, Ardent Software, Inc., a data
management company, and Shuler Homes, Inc., a real estate development company.
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. In December 1997, Mr. Hart
was granted options to acquire 20,000 shares of Common Stock with an exercise
price of $9.00 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 (Chairman) 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. Hart (Chairman). Nominees for the Board of Directors are
determined by the entire Board.
For the year ended July 31, 1998, there were 5 meetings of the Board of
Directors, 1 meeting 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, except for Mr. Hart who
attended two of the three meetings of the Board since he became a Director.
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, 1998, 1997, and 1996, by Mr. Huzjak and Mr. Schopp. No other
executive officer's compensation exceeded $100,000 during the year ended July
31, 1998. 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
FISCAL ------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) STOCK OPTIONS
- --------------------------- ------ -------- -------- -------------
<S> <C> <C> <C> <C>
Thomas J. Huzjak..................................... 1998 $240,000 $15,000 --
Chairman of the Board 1997 $195,000 -- 36,000
and Chief Executive Officer 1996 $175,000 -- 100,000
Alvyn A. Schopp...................................... 1998 $158,625 $15,000 --
Chief Financial Officer 1997 $143,750 -- 32,000
1996 $113,000 -- 75,000
</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 $50,000 or 10% of the total of
annual salary and bonus reported for such individual.
(2) Bonuses, if applicable, were paid pursuant to the Management Incentive
Programs described below under "Management Incentive Programs".
OPTION GRANTS IN THE LAST FISCAL YEAR.
No stock options were granted to executive officers during the fiscal year
ended July 31, 1998.
The following table provides information as to the aggregate dollar value
of unexercised stock options held by Mr. Huzjak and Mr. Schopp at July 31, 1998.
No stock options were exercised by Mr. Huzjak and or Mr. Schopp during fiscal
1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR END(#) YEAR-END($)(1)(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Thomas J. Huzjak............................ 184,010 93,250 $528,360 $98,375
Alvyn A. Schopp............................. 144,250 77,750 $393,500 $86,750
</TABLE>
- ---------------
(1) Represents the fair market value of the Common Stock based upon the closing
price per share as quoted on Nasdaq on July 31, 1998 ($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 October 1998, the Board adopted the 1998 Management Incentive Program
(covering fiscal year 1999) by readopting the basic terms as the prior year
Management Incentive Program with new performance targets.
5
<PAGE> 8
In September 1997, the Board adopted the 1997 Management Incentive Program
(covering fiscal year 1998) which provided that certain employees of the Company
will be rewarded for achieving specific individual and Company objectives. The
1997 Management Incentive Program rewarded individuals for Company performance
targets based on revenue and earnings before interest and taxes (subject to
adjustments for extraordinary events).
In August 1996, the Board adopted the 1996 Management Incentive Program
(covering fiscal year 1997) 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.
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 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, 1998: 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.
6
<PAGE> 9
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. In fiscal 1998, Mr. Huzjak received a base salary of $240,000
in recognition of his duties. In accordance with the 1997 Management Incentive
Program, Mr. Huzjak was eligible to receive a bonus based upon performance
targets for revenue and earnings before income taxes (subject to adjustments for
extraordinary events). Mr. Huzjak received a bonus under the 1997 Management
Incentive Program that was less than the maximum that could have been received
had the targets been fully achieved. The Committee recommended that no
additional stock options be granted to Mr. Huzjak at this time. For fiscal 1999,
Mr. Huzjak will receive a base salary of $240,000. The Committee will continue
to review all aspects of Mr. Huzjak's compensation annually to establish goals
for the ensuing fiscal year against which his performance and adjustments in
compensation will be evaluated. For fiscal 1999, Mr. Huzjak has again been given
the opportunity to receive a bonus based upon performance targets.
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>
NASDAQ NASDAQ
MEASUREMENT PERIOD T-NETIX, TELECOMM. COMPOSITE
(FISCAL YEAR COVERED) INC. INDEX (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
7/31/98 84.21 261.11 243.95
</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, 1998, 1997 and 1996. 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, 1999. 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.
The Board of Directors recommends that shareholders vote for ratification
of the selection of KPMG Peat Marwick LLP as the Company's accountants for
fiscal 1999.
8
<PAGE> 11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1998, 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 1999 Annual Meeting of Shareholders of the Company
will be held on December 9, 1999. Any proposals intended to be presented at the
1999 Annual Meeting must be received at the Company's offices on or before July
5, 1999, 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 10, 1998
9
<PAGE> 12
- --------------------------------------------------------------------------------
PROXY
T-NETIX, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 10, 1998
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 10, 1998, 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
2, 1998, at the Annual Meeting of Shareholders of the Company to be held at 67
Inverness Drive East, Suite 100, Englewood, Colorado, on December 10, 1998, 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 nominees listed below (except as marked to the contrary).
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below.
Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR THE INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
James L. Mann
Daniel M. Carney
Robert A. Geist
(2) To ratify the selection of KPMG Peat Marwick as the Company's public
accountants for the year ended July 31, 1999.
[ ] 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 ____________ , 1998.
(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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