T NETIX INC
8-K, 1999-03-03
COMMUNICATIONS SERVICES, NEC
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<PAGE>   1
                       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) : February 11, 1999

                                  T-NETIX, INC.
               (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
   (Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, including area code (303) 790-9111




                                     - 1 -
<PAGE>   2




ITEM 5.          OTHER EVENTS.

         In a press release dated February 11, 1999, T-NETIX, Inc. ("T-NETIX")
announced that it has signed a definitive Agreement and Plan of Merger with
Dallas-based Gateway Technologies, Inc. ("Gateway"), a privately held provider
of inmate telecommunications calling services (ICS) in a transaction valued at
approximately $35.2 million. The merger is subject to shareholder approval and
is expected to close in the second quarter of 1999.

In the merger, a subsidiary of T-NETIX will merge with and into Gateway, and
Gateway will become a wholly owned subsidiary of T-NETIX. T-NETIX will issue up
to 4,231,315 shares to current shareholders of Gateway in connection with the
merger. It is a condition to both companies' obligations to consummate the
merger that the merger will be accounted for as a pooling of interests. A copy
of the press release is attached as Exhibit 99.1 hereto.



ITEM 7.          EXHIBITS

         (c)     Exhibits

         Exhibit 99.1      Registrants press release, dated February 11, 1999

         Exhibit B         Agreement and Plan of Merger dated February 10,
                           1999 by and among Registrant, Gateway, T-NETIX
                           Acquisition Corp. and certain shareholders of
                           Registrant and Gateway incorporated herein by
                           reference to Appendix A of Registrant's Preliminary
                           Proxy Filing on Schedule 14A filed with the
                           Commission on February 16, 1999.





                                   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: March 3, 1999                BY: /s/ ALVYN A. SCHOPP
                                       ----------------------------------------
                                       Alvyn A. Schopp, Chief Executive Officer



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<PAGE>   3
                                  EXHIBIT INDEX


Exhibit No.                       Description
- -----------                       -----------

   99.1              Press Release, dated February 11, 1999





<PAGE>   1
                                                                    EXHIBIT 99.1

NEWS                    RE:          T-NETIX, INC.
BULLETIN                             67 Inverness Drive East
                                     Englewood, CO 80112
                                     Web Site: http://www.T-NETIX.com

FROM:
FRB                                  NASDAQ: TNTX

- -------------------------------------------------------------------------------
THE FINANCIAL RELATIONS BOARD, INC.

FOR FURTHER INFORMATION:

AT THE COMPANY:        AT FRB:
Alvyn Schopp           Tad Gage (general info) (312) 640-6745 ([email protected])
CEO                    Lisa Ferguson (analysts)  (312) 640-6788
(303) 790-9111         Laura Kuhlmann (media) (312) 640-6727

               T-NETIX BROADENS MARKET REACH IN TELECOMMUNICATIONS
           SERVICES BY ACQUIRING KEY INMATE CALLING SERVICES PROVIDER

Englewood, Colo., February 11, 1999 - T-NETIX, Inc. (Nasdaq:TNTX), a leading
provider of specialized call processing and fraud control software technologies,
announced today that it has signed a definitive Agreement and Plan of Merger
with Dallas-based Gateway Technologies, Inc., a privately held provider of
inmate telecommunications calling services (ICS) in a transaction valued at
approximately $35.2 million. Pro forma 1998 revenues for the combined company
were approximately $70 million.


- -------------------------------------------------------------------------------
                              Transaction Details
O  4,047,697 shares of T-NETIX common stock will be issued.
O  A rollover of Gateway option plan shares into T-NETIX options of 347,789 at
   various pricing points.
O  T-NETIX will assume $10.5 million of Gateway debt.
   Gateway President and CEO Richard Cree will be president, Gateway Division, 
   and will join the T-NETIX board.
O  The company anticipates the merger will be accretive to earnings, after
   acquisition expenses, in 1999.
O  No layoffs at either company are anticipated.
O  Pooling method of accounting will be applied.
O  The company estimates there will be about $1.5 million in merger-related 
   costs.
O  The merger is expected to close by March 31, 1999.
O  Key Benefits: Combined ICS intellectual property; larger sales force and
   experienced managers, broader scope of customers, ability to offer 
   value-added direct billing services, strong relationships with virtually all
   the nation's Regional Bell Operating Companies
- -------------------------------------------------------------------------------

"We are enthusiastic about this combination because it gives us significant
growth opportunities, all within our core business of inmate calling services
and other telecommunications services," said Al Schopp, CEO of T-NETIX. "This is
a major win for our customers, who will have access to more services provided by
a larger, fully national provider. Even though the two companies frequently
competed, each has also developed a specialty -- T-NETIX primarily serves larger
facilities with 50 or

                                                                        MORE...

 FINANCIAL RELATIONS BOARD, INC. SERVES AS FINANCIAL RELATIONS COUNSEL TO THIS
    COMPANY, IS ACTING ON THE COMPANY'S BEHALF IN ISSUING THIS BULLETIN AND
       RECEIVING COMPENSATION THEREFOR. THE INFORMATION CONTAINED HEREIN
          IS FURNISHED FOR INFORMATION PURPOSES ONLY AND IS NOT TO BE
                CONSTRUED AS AN OFFER TO BUY OR SELL SECURITIES.

<PAGE>   2
T-NETIX, INC.
ADD 1

more phones, and Gateway specializes in facilities with 75 phones or less. The
combined company, therefore, will be able to serve the entire correctional
facilities market. T-NETIX customers also gain new access to Gateway's
established billing services, which would otherwise not have been an option to
customers until late 1999.

"We are excited about the revenue potential of an expanded call billing services
because many RBOCs want to outsource specialty telecommunications billing
services such as ICS. We have not been in a position to take this business. With
an established billing business and T-NETIX capital and customer base, we
believe this can grow into a tremendous value-added service for our joint
customers."

Schopp said that another major benefit of the merger is that the two companies
will be able to consolidate their substantial individual intellectual property
related to ICS. This means that T-NETIX now holds the important intellectual
property relating to the inmate calling industry.

Schopp noted that T-NETIX also acquires an experienced 20-person sales force,
top managers, and other skilled individuals. He explained that Gateway's sales
force could immediately begin offering T-NETIX products, including a new home
detention monitoring product (Containsm) made possible when T-NETIX's recently
acquired Cell-Tel Monitoring, Inc. of Tampa. Richard Cree, President and CEO of
Gateway, elaborated by noting that Gateway's sales force has traditionally been
focused on the correctional facility as opposed to T-NETIX, which has been
carrier-focused. The merger creates a larger direct sales force able to further
serve T-NETIX customers. This merger is about growth and expansion," said
Schopp. "The employees of both companies have very complementary skills --
another benefit to this merger."

Gateway President and CEO Richard Cree will be a T-NETIX officer, president of
the Gateway Division, and will serve on the T-NETIX board of directors. Gateway
shareholder W.P. Buckthal will also join the T-NETIX board. The addition of Cree
and Buckthal increases the number of T-NETIX board members to nine.

Cree commented, "This alliance will make T-NETIX the largest inmate calling
services provider in the United States, with coast-to-coast coverage. We are
pleased to join forces with a great competitor. The additional size and leverage
of the merged company offers opportunities for growth far beyond what either
company could accomplish separately. There should be additional market coverage,
and the financial strength to leverage a combined calling platform into other
strategic markets."

Based in Dallas, Texas, Gateway Technologies works with major telecommunications
service providers to manage calling and billing services for inmate correctional
services for more than 500 correctional institutions and departments of justice.
Combined with T-NETIX's customer base, the merged company would serve over 1,400
facilities and justice departments nationwide. Gateway provides direct local and
long distance call processing for correctional facilities, value-added
telecommunications services such as pre-connection restrictions, digital
recording, jail and inmate management systems, video booking, and sales of
call-processing systems hardware.

                                                                        MORE...


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T-NETIX, INC.
ADD 2

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.
Through its T-NETIX Monitoring Division, T-NETIX provides parolee and home
detention monitoring services using Internet, and voice verification technology,
including its SpeakEZ Voice Print(R) technology. T-NETIX was represented in this
transaction by Broadview International LLC. For news and information, visit the
company's Web site 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 related to its SpeakEZ voice recognition technology, to
successfully deploy this technology in a corrections-related business, and to
license the technology to offset development costs; competitive pricing
pressures, particularly in the company's ICS business; and, changes in
telecommunications regulations that would affect the company's sales or pricing.
For a full description of the company's historical performance and a detailed
description of risks and uncertainties, please refer to the company's documents
on file with the Securities and Exchange Commission.


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