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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 9, 1998
T-NETIX, INC.
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(Exact name of registrant as specified in charter)
COLORADO 0-25016 84-1037352
- ------------------------------ ------------ -------------------
(State or Other Jurisdiction (Commission (IRS Employer
Incorporation or Organization) File Number) Identification No.)
67 INVERNESS DRIVE EAST, SUITE 100 ENGLEWOOD, CO 80112
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 790-9111
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ITEM 5. OTHER EVENTS.
In a press release dated December 9, 1998, T-NETIX, Inc. announced that
Thomas J. Huzjak resigned as the company's chairman of the board, chief
executive officer and president. Mr. Alvyn A. Schopp has been named the
company's chief executive officer and president. Mr. Daniel M. Carney was
elected by the company's board of directors to serve as the chairman of the
board. A copy of the press release is attached as Exhibit A hereto.
ITEM 8. CHANGE IN FISCAL YEAR.
In a press release dated December 10, 1998, T-NETIX, Inc. announced
that it changed its fiscal year end from July 31 to December 31. The Company
plans to file a Form 10-Q covering the five month transition period from August
1, 1998 to December 31, 1998. A copy of the press release is attached as Exhibit
B hereto.
ITEM 7. EXHIBITS
(c) Exhibits
Exhibit 99.A Registrants press release, dated December 9, 1998
Exhibit 99.B Registrants press release, dated December 10, 1998
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
T-NETIX, Inc.
Dated : December 15, 1998 BY: /s/ Alvyn A. Schopp
------------------------------------
Alvyn A. Schopp,
Chief Executive Officer
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EXHIBIT 99.A
[CARL THOMPSON ASSOCIATES]
* NEWS *
FOR IMMEDIATE RELEASE: Wednesday, December 9, 1998
CONTACT: Alvyn A. Schopp Michele Hartley, Account Executive
CEO Wayne Brown, Sr. Vice President
T-NETIX, Inc. Carl Thompson Associates
(303) 790-9111 (800) 959-9677
T-NETIX NAMES NEW CHIEF EXECUTIVE OFFICER,
CHAIRMAN AL SCHOPP, T-NETIX CFO AND INMATE CALLING
SERVICE DIVISION PRESIDENT,
BECOMES CEO; DANIEL CARNEY, PIZZA HUT CO-FOUNDER, ASSUMES CHAIRMANSHIP
ENGLEWOOD, CO -- T-NETIX, Inc. (Nasdaq NMS:TNTX), a leading provider of
specialized call processing and fraud control software technologies, announced
that effective immediately, Alvyn A. Schopp, 40, currently the company's chief
financial officer, has been named chief executive officer. Schopp has been with
the company since 1993. He replaces Tom Huzjak, who resigned today as chief
executive officer and chairman of the board of directors. Schopp will continue
as president of the company's T-NETIX Inmate Calling Service Division.
Daniel Carney, 68, co-founder and former chairman of Pizza Hut, and a member of
the T-NETIX board since 1991, has accepted the chairmanship of the T-NETIX
board. The company noted that the board reached a severance agreement with
Huzjak valued at approximately one year's salary, likely to be taken as a
one-time expense in the second quarter of fiscal year 1999 ended January 31,
1999.
"We appreciate the contributions Tom has made, and acknowledge the company's
progress and revenue growth under his leadership," said Schopp. "However, the
company is undergoing a strategic refocusing, with an emphasis on our core
capabilities and an increase in profitability. As a result of these changes in
strategic and operating philosophies, there was a mutual agreement to part
company."
(more)
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Schopp continued: "In the coming weeks, we will concentrate on corporate
strategies and actions designed to capitalize on our strengths. Our goal for
1999 and beyond is to generate improved returns on our invested capital, and to
enhance shareholder value."
Based in Englewood, Colorado, T-NETIX provides specialized call processing
services, particularly for correctional institutions, and fraud prevention
services utilizing the SpeakEZ process to the telecommunications industry
including AT&T, Bell Atlantic, US WEST, SBC Communications, Inc., GTE and other
call providers.
T-NETIX notes that actual results may differ from the forward-looking statements
made above which involve risks and uncertainties discussed more completely in
the T-NETIX, Inc. Annual Report on Form 10-K and the T-NETIX, Inc.
Quarterly Reports on Form 10-Q.
Editor's note: Electronic file containing a picture of Al Schopp is available.
Note: News releases and other information on T-NETIX, Inc. can be accessed
at no charge at www.ctaonline.com/ir/tnetix.htm
or www.T-NETIX.com on the Internet.
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EXHIBIT 99.B
[CARL THOMPSON ASSOCIATES]
* NEWS *
FOR IMMEDIATE RELEASE: Thursday, December 10, 1998
CONTACT: Alvyn A. Schopp Michele Hartley, Account Executive
CEO Wayne Brown, Sr. Vice President
T-NETIX, Inc. Carl Thompson Associates
(303) 790-9111 (800) 959-9677
T-NETIX REPORTS FISCAL FIRST QUARTER 1999 EARNINGS;
DISCUSSES STREAMLINING OF SPEAKEZ DIVISION
COMPANY WILL SWITCH TO DECEMBER 31 CALENDAR YEAR ACCOUNTING
ENGLEWOOD, CO -- T-NETIX, Inc. (Nasdaq NMS:TNTX) today announced fiscal first
quarter results, and a plan to streamline its SpeakEZ Division to bring
operating expenses more in-line with revenue opportunities. Through its Inmate
Calling Services (ICS) Division, T-NETIX provides telecommunications services
such as specialized call processing to correctional facilities throughout the
United States, and voice verification and fraud control software technologies
through its SpeakEZ Division.
Newly appointed CEO Alvyn A. Schopp announced today that T-NETIX will streamline
the operations of its SpeakEZ Division, including consolidating the division's
Piscataway, New Jersey operations into its Englewood, Colo. headquarters
location. The goal, said Schopp, is to allow the earnings from the ICS business
to be more fully reflected in the company's combined net income.
(more)
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For the fiscal 1999 first quarter ended October 31, 1998, T-NETIX reported total
revenue of $9.2 million compared with $9.7 million a year ago. Revenue from
telecommunication services (ICS) declined to $8.1 million from $8.8 million a
year ago. The company processed 21.9 million calls during the quarter, a 6%
decline compared with call volume a year ago, primarily the result of losing
some business to competing service providers, and a switch by some correctional
facilities to increase call control measures that tend to limit the number of
calls that can be made by inmates.
The company reported a fiscal first quarter net loss of $(386,000) or $(0.05)
per share (diluted) compared with net earnings of $295,000 or $0.03 per share
(diluted) for the prior period. The first quarter 1999 loss included ICS
Division earnings before income taxes of $637,000 offset by a loss before income
taxes from the SpeakEZ Division of $(1,280,000).
"We had noted in earlier announcements that anticipated year-over-year revenue
and net income from the ICS Division would be lower in the fiscal first few
quarters as we bring on a number of new contracts with departments of correction
and correctional facilities, and invest in the implementation of these new
contracts," explained Schopp. "We made a significant investment in the new ICS
calling platform technology, which has been very well received by current and
potential customers. We believe the benefits of this investment will start to be
reflected in more business and higher revenue in the coming months."
As previously announced, the company was recently awarded a major contract by
SBC Communications, Inc. for Los Angeles County, and Schopp referred to several
pending new ICS agreements and contract renewals that the company anticipates
announcing within the next 60 days. Following record net income for the ICS
Division in fiscal 1998, and based on existing contracts and potential new
business and renewals, Schopp said management fully anticipates that calendar
year ICS Division revenue and net income will exceed fiscal 1998 levels.
(more)
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Schopp continued: "We believe that in past years, the level of investment in
SpeakEZ has not been rewarded with commensurate revenue growth, and the losses
recorded by SpeakEZ have had a significant impact on corporate earnings. We are
streamlining SpeakEZ operations to reduce operating costs, and are refining the
sales and marketing strategy to reduce expenditures and increase sales
opportunities by focusing on the most promising markets for voice verification
and fraud detection software and technology."
SPEAKEZ STREAMLINING
As part of narrowing its target customer focus, the company expects to take a
one-time non-cash charge in December 1998 that primarily includes writedowns of
capitalized SpeakEZ Voice Printsm software costs and products. The company will
also consider costs related to employee relocation or severance. The company
anticipates that these future costs will total at least $0.08 per share.
However, the evaluation of SpeakEZ's assets will continue as future plans
develop.
"There is exciting technology and opportunity associated with SpeakEZ, and we
continue to assess how best to capitalize on this technology and eventually
achieve the revenue and profitability levels possible for this business," noted
Schopp. He said that as part of the streamlining, SpeakEZ's sales and marketing
emphasis will switch from direct sales to seeking licensing and sub-licensing
agreements for the technology.
"We will continue to support SpeakEZ research and development using internal
resources, however, we believe we can significantly reduce costs by licensing
our technologies and sharing development costs with our business partners,"
explained Schopp. "By licensing our technology, we give licensees more freedom
to develop solutions that are exactly right for their needs, and to do it faster
and more cost-effectively than can T-NETIX alone. We anticipate that this change
in our marketing strategy will result in more desirable products for our
customers, and increased revenue from licensing for T-NETIX."
(more)
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CONTINUED FOCUS ON CORE TELECOMMUNICATIONS BUSINESS
Schopp continued: "We will continue our strong emphasis on building sales in the
ICS Division, which is volume-driven. Increasing call volume is critical,
offering greater economies of scale that lead to improved gross margins and net
income. We have already identified a number of new business opportunities that
are leading to significant new contracts, and expanded existing relationships."
Schopp said that the company is well along in new contract negotiations with
several correctional facilities and departments of corrections, and that these
contracts, if finalized, would have significant long-term revenue growth
implications for the company. "There is always uncertainty until contracts are
finalized," said Schopp, "but we have proven services and technologies, which I
believe our customers and potential customers fully understand and want."
Schopp noted that the company also has an opportunity to sell selected SpeakEZ
services, such as its PIN-LOCKsm call control software, to correctional
institutions that implement programs to limit inmate telephone calls using
personal identification numbers, as well as the Containsm voice verification
monitoring product for the parole and probation markets.
SETTING FINANCIAL BENCHMARKS
Schopp noted that it is too early to discuss specific near-term earnings and
revenue targets, the company's 15-month goal is to improve consolidated earnings
thus enhancing shareholder value. We believe that new contracts could help us
achieve an 8% - 10% increase in annual call volume and ICS Division revenue
growth in the next 12 to 15 months," said Schopp.
Finally, Schopp announced that as of January 1, 1999, the company will report on
a December 31 calendar year. The company's fiscal 1999 first quarter ended
October 31, 1998. In connection with the change in year end the company will
report results for a five-month "stub" period ended December 31, 1998. Schopp
said the change will bring the company more in line with the
(more)
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reporting practices of its business partners and the financial community, making
it easier for investors to measure the company's ongoing performance and
anticipated improvements.
Based in Englewood, Colorado, T-NETIX provides specialized call processing
services for correctional institutions to the telecommunications industry
including AT&T, Bell Atlantic, US WEST, SBC Communications, Inc., and GTE, plus
voice verification and fraud prevention services utilizing the SpeakEZ Voice
Printsm technology. Contact the company on-line at www.T-NETIX.com.
This news release contains forward-looking statements, as provided for by the
Private Securities Litigation Reform Act of 1995. These statements involve risks
and uncertainties including, but not limited to: the demand for the company's
ICS products and services; the renewal of existing site-specific ICS customer
contracts and the company's ability to win new contracts; the ability to reduce
expenditures in its SpeakEZ Division and to successfully license voice
verification and fraud prevention technology; competitive pricing pressures,
particularly in the company's ICS business; and, changes in regulations or
regulatory practices in the telecommunications industry that would affect sales
or pricing of the company's inmate calling services. For a full discussion of
the company's historical performance, and detailed discussion of risks and
uncertainties, please refer to the company's documents on file with the
Securities and Exchange Commission.
Note: News releases and other information on T-NETIX, Inc. can be accessed
at no charge at www.ctaonline.com/ir/tnetix.htm
or www.T-NETIX.com on the Internet.
- FINANCIALS TO FOLLOW -
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T-NETIX, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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October 31, October 31,
1998 1997
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(amounts in thousands,
except per share amounts)
<S> <C> <C>
Revenue:
Telecommunication services $ 8,107 $ 8,803
Telecommunication licensing 47 46
Direct call provisioning 920 506
Voice print 115 380
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Total revenue 9,189 9,735
Expenses:
Operating costs and expenses
Telecommunications services 4,098 3,963
Direct call provisioning 860 482
Voice print 15 33
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Total operating costs and expenses 4,973 4,478
Selling, general, and administrative 2,153 1,863
Research and development 482 582
Depreciation and amortization 1,988 2,148
================= ====================
Total expenses 9,596 9,071
Operating income (loss) (407) 664
Interest expense (236) (270)
----------------- --------------------
Earnings (loss) before income taxes (643) 394
Income taxes 257 (99)
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Net earnings (loss) $ (386) $ 295
================= ====================
Basic earnings (loss) per common share $ (0.05) $ 0.03
================= ====================
Diluted earnings (loss) per common share $ (0.05) $ 0.03
================= ====================
Weighted average common shares
outstanding - basic 8,549 8,449
================= ====================
Weighted average common shares
outstanding- diluted 8,549 9,089
================= ====================
</TABLE>
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Segment Information
The Company operates in two business segments; ICS Division and the
SpeakEZ Division . Segment information for the three months ended
October 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31, 1998
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(AMOUNTS IN THOUSANDS)
INMATE CALLING
SERVICES SPEAKEZ TOTAL
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<S> <C> <C> <C>
Revenue from external customers...... $ 9,074 $ 115 $ 9,189
Operating income (loss).............. 698 (1,105) (407)
Depreciation and amortization........ 1,759 229 1,988
Interest expense..................... 61 175 236
Segment earnings (loss) before taxes. 637 (1,280) (643)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31, 1997
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(AMOUNTS IN THOUSANDS)
INMATE CALLING
SERVICES SPEAKEZ TOTAL
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<S> <C> <C> <C>
Revenue from external customers...... $ 9,355 $ 380 $ 9,735
Operating income (loss).............. 1,452 (788) 664
Depreciation and amortization........ 1,885 263 2,148
Interest expense..................... 121 149 270
Segment earnings (loss) before taxes. 1,331 (937) 394
</TABLE>
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