TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS), a leading
provider of mission-critical wireless communications, today
announced the successful completion of its acquisition of Networks
In Motion, Inc. (NIM), a privately held provider of wireless
navigation solutions for GPS-enabled mobile phones.
Pursuant to the merger agreement, TCS issued former Networks In
Motion shareholders approximately $110 million in cash, $40 million
in promissory notes, and approximately 2.2 million shares of TCS
common stock valued at $20 million based on the volume weighted
average stock price for 10 days prior to close. The promissory
notes bear simple interest at 6% and are due in three installments:
$30 million on the 12 month anniversary of the closing, $5 million
on the 18 month anniversary of the closing, and $5 million on the
24 month anniversary of the closing, subject to escrow
adjustments.
The U.S. consumer Location-Based Services (LBS) space is one of
the most dynamic areas of wireless applications and continues to
transform the mobile experience. In a January 2009 Frost &
Sullivan report on LBS companies, TCS was shown to offer the most
complete LBS solution. In May 2009, TCS acquired the LBS assets of
the company with the next most complete LBS solution,
LocationLogic, adding two leading location-based applications and
additional depth to its carrier LBS infrastructure "stack." TCS has
had wireless traffic and points-of-interest applications since
2004. The acquisition of Networks In Motion adds a Tier 1, market
leading navigation business.
"The addition of Networks In Motion strengthens TCS's market
position in three significant ways," said Maurice B. Tosé, TCS
chairman and CEO. "First, it substantially enhances our portfolio
of Tier 1 location based wireless applications, with market-leading
navigation technology that shares the 99.999% reliability standard
of other TCS solutions. Second, it deepens our longstanding
relationships with three of the largest North American carriers and
adds an internationally recognized navigation application to our
global LBS applications portfolio. And finally, the acquisition
adds 13 patents and 44 applications that are complementary to our
existing patent portfolio of 94 patents issued in the U.S. and
abroad, and more than 260 patent applications pending --
reinforcing our position as a location technology leader. Overall,
we expect this acquisition to enhance our LBS leadership in an
industry which is at the early stages of what is widely viewed as a
long term, high growth market, better enabling us to support
carriers in monetizing LBS as we have with text messaging for more
than a decade."
The acquisition also further shifts the company's revenue mix
from an historical 50% services/50% systems to an expected 2010
revenue that is 65% services/35% systems. Substantially all of
Networks In Motion's revenue is recurring services revenue derived
from subscriptions to its full-featured navigation applications,
providing high visibility of future revenues. Based on contracts in
place at the time of acquisition, TCS expects the NIM business to
add $65 to $75 million to TCS's 2010 commercial services revenue
and $21 to $24 million to EBITDA. Networks In Motion has about 3.5
million subscribers to its applications, and about 200 employees.
The transaction is expected to be accretive to net income by the
end of 2010.
TCS announced its agreement to acquire NIM on December 1, 2009.
TCS may incur one-time acquisition-related charges in this quarter
to account for expenses associated with the transaction.
Raymond James & Associates served as financial advisor to
TCS in this transaction. Networks In Motion was advised by
Jefferies & Co.
Conference Call TCS will hold a conference
call tomorrow at 9:30 A.M. Eastern time on Wednesday, December 16,
2009 to discuss the details of the Networks In Motion acquisition
and an update to fiscal 2009 guidance. The company's chairman,
president and CEO, Maurice B. Tosé, and senior vice president and
CFO, Tom Brandt, will host the call. A question and answer session
will follow management's presentation.
To participate in the call, dial the appropriate number 5-10
minutes prior to the start time, ask for the TeleCommunication
Systems conference call and provide the conference ID:
Dial-In Number: 1-800-862-9098 International: 1-785-424-1051
Conference ID#: 7TELECOM
The conference call will be broadcasted simultaneously on the
company's Web site at www.telecomsys.com.
For the webcast, please go to the Web site at least 15 minutes
early to register, download, and install any necessary audio
software. If you have any difficulty connecting with the conference
call or webcast, please contact the Liolios Group at
949-574-3860.
A replay of the call will be available after 12:30 p.m. Eastern
time on the same day and until January 16, 2010:
Toll-free replay number: 1-800-695-2122 International replay
number: 1-402-530-9027 (No passcode required)
About Networks In Motion With Networks In
Motion's services on your mobile phone, anywhere you go feels like
home. For almost a decade, NIM has helped millions of wireless
users on the world's largest carrier networks make smarter, faster
real-time decisions about where they are and where they want to go.
Using patented Hyper-local Search and the NAVBuilder platform, NIM
makes finding, selecting, and "getting there" easy. NIM is a
recognized pioneer in consumer mobile Software as a Service (SaaS).
The company's mobile discovery service has become one of the most
relied on and trusted mobile services on the handset. NIM now
provides leading turn-by-turn navigation to carriers and their
customers in 38 countries, and in 10 languages.
About TeleCommunication Systems
TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS) engineers and
delivers highly reliable wireless communications technology. TCS is
a leader in wireless text messaging and location-based technology,
including E9-1-1 services and commercial applications like
navigation that use the precise location of a wireless device, and
secure satellite-based communications systems and services.
Customers include leading wireless and VoIP carriers around the
world, cable MSOs, automotive telematics vendors, and agencies of
the U.S. Departments of Defense, State, and Homeland Security. TCS
is one of six primary vendors on a $5 billion Army Worldwide
Satellite Systems Contract vehicle. For more information, visit
www.telecomsys.com.
This announcement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities and Exchange Act of 1934, as
amended. These statements are based upon TCS' current expectations
and assumptions that are subject to a number of risks and
uncertainties that would cause actual results to differ materially
from those anticipated, including those risk factors included in
our filings with the Securities and Exchange Commission such as in
our Annual Report on Form 10-K, as amended, for the year ended
December 31, 2008 and Quarterly Report on Form 10-Q for the quarter
ended September 30, 2009. The words, "believe," "expect," "intend,"
"anticipate," and variations of such words and similar expressions
identify forward-looking statements, but their absence does not
mean that the statement is not forward-looking. Statements in this
announcement that are forward-looking include, but are not limited
to statements: (a) made by Mr. Tosé regarding the acquisition
strengthening TCS's market position in three significant ways,
including enhancing TCS's portfolio of Tier 1 location based
wireless applications, deepening TCS's longstanding relationships
with Verizon Wireless, MetroPCS and Leap Wireless and that NIM's
patents and pending patent applications are complementary to TCS's
existing patent portfolio and will reinforce TCS's position as a
location technology leader, (b) regarding TCS's revenue mix and the
break-down between TCS's services and systems segments, (c) about
NIM's revenues being recurring service revenues from subscriptions
that provide high visibility of future TCS's revenues, (d) about
the NIM business adding approximately $65 - $75 million to TCS's
2010 commercial revenues and approximately $21 to $24 million in
EBITDA, (e) that the acquisition is expected to enhance TCS's LBS
leadership, (f) that the LBS industry is in the early stages and is
poised for long term and high growth, (g) that the LBS industry
will enable TCS to support carriers in monetizing LBS, and (h) that
the acquisition will be accretive to net income by the end of
2010.
Additional risks and uncertainties are described in the
Company's filings with the Securities and Exchange Commission.
These include without limitation risks and uncertainties relating
to the Company's financial results and the ability of the Company
to (i) reach and sustain profitability, (ii) continue to rely on
its customers and other third parties to provide additional
products and services that create a demand for TCS products and
services, (iii) conduct its business in foreign countries, (iv)
adapt and integrate new technologies into TCS's products, (v)
expand TCS's sales and business offerings in the wireless
communications industry, (vi) develop software and provide services
without any errors or defects, (vii) have sufficient capital
resources to fund TCS's operations, (viii) protect its intellectual
property rights, (ix) successfully integrate the assets and
personnel obtained in its acquisitions and investments, (x) not
incur substantial costs from product liability claims relating to
its software, and (xi) implement its sales and marketing strategy.
Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to update
or revise the information in this press release, whether as a
result of new information, future events or circumstances, or
otherwise.
Company Contacts: Tom Brandt Senior Vice President and CFO
TeleCommunication Systems, Inc. Tel 410-280-1001
tbrandt@telecomsys.com Evan Weisel Media Contact Welz & Weisel
Communications Tel 703-218-3555 evan@w2comm.com Scott Liolios
Investor Relations Liolios Group, Inc. Tel 949-574-3860
info@liolios.com
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