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SCC COMMUNICATIONS CORP.
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Proxy Solicitations
SCC will file a proxy statement with the Securities and Exchange Commission in
connection with the acquisition,. Investors are advised to read the proxy
statement when it becomes available because it will contain important
information. Investors may obtain a free copy of the proxy statement (when
available) and other documents filed by SCC with the SEC at the SEC's web site
(http://www.sec.gov). Free copies of the proxy statement (when available) and
SCC's other filings with the SEC may also be obtained from SCC by contacting
Michael Dingman, Jr. CFO of SCC.
The directors and executive officers of SCC may solicit proxies in person or by
mail, telephone or telegraph. In addition, SCC may retain the services of a
proxy solicitation firm to assist in the solicitation. Information regarding the
identity of the persons who may, under the Securities and Exchange Commission's
rules, be deemed to be participants in the solicitation of proxies from the
stockholders of SCC in connection with the acquisition, and their interests in
the solicitation (including holdings of SCC common stock), will be set forth in
the proxy statement in connection with the acquisition. Certain information
regarding the stockholding of directors and executive officer of SCC is
contained in the proxy statement delivered by SCC in connection with its 1999
annual meeting of stockholders, a copy of which may be obtained at the SEC's web
site or by contacting Michael Dingman, Jr. CFO of SCC.
NEWS RELEASE
Company Contacts: PR Contact: Jill Hollingsworth
Michael Dingman, Jr. JohnstonWells
CFO, SCC Communications 303-437-5429
303-581-5600
IR Contact: Marj Charlier
David Bikle Johnston Wells
Lucent Public Safety Systems 303-437-5423
908-582-4120
SCC COMMUNICATIONS SIGNS DEFINITIVE AGREEMENT
TO ACQUIRE LUCENT PUBLIC SAFETY SYSTEMS
Company Will Focus on Developing the Next Generation of Emergency Telephony
To Meet Growing Needs of a Rapidly Changing Market
BOULDER, CO - October 17, 2000 - SCC Communications Corp. (NASDAQ: SCCX), a
leader in enhanced emergency communications services, and Lucent Public Safety
Systems today announced a definitive agreement under which SCC will acquire
Lucent Public Safety Systems (LPSS), an internal venture of Lucent Technologies
and a leading provider of 9-1-1 support hardware and software to the
telecommunications market. SCC will issue approximately 6.1 million shares of
common stock in the acquisition.
Based on the closing price of SCC common stock Friday, Oct. 13, the value of the
transaction is approximately $40 million. As a result of the acquisition, Lucent
will own approximately 35 percent of the common stock of SCC, which will
continue to be headquartered in Boulder, Colorado. The transaction will not
change the product and service choices between SCC and LPSS, and their
respective customers. With the acquisition, however, SCC will integrate the
management, expertise and technology of the two entities.
"Today SCC and LPSS provide unique products to different customer bases. Both
have been pioneers in providing quality emergency-telecommunications products
and services. The acquisition will combine our strengths and create a technology
leader that will be better able to fill gaps in the delivery of emergency
telephony," said Heinrichs.
"The emergence of new and portable communications devices has created an urgent
need to improve methods and protocols in order to maintain the high level of
service Americans have come to expect from their emergency telephony providers,"
Heinrichs continued. "This acquisition will provide us with a
national footprint that will allow us to offer a broader range of products and
services for all telecommunications technologies.
"Further, as SCC continues to focus on the business of emergency
telecommunications, this acquisition will give us additional technological
expertise and resources to develop systems that ensure fast, quality responses
to emergency calls from any communications device anywhere. We believe this will
help create the foundation needed to open the 9-1-1 system to new entrants with
new technology and speed the delivery of these new products and services to the
market."
Bob Oliver, CEO of Lucent Public Safety Systems, added, "Given the magnitude of
the communications challenges facing our public-safety service providers, we
believe this transaction to be an important step towards designing, deploying
and serving a 9-1-1 network for the future. We are excited about joining an
industry leader like SCC. Together, SCC and Lucent Public Safety Systems will
work on developing a generation of 9-1-1 that reaches more people in more
locations, on a timely and accurate basis."
SCC anticipates that the acquisition will be accretive to earnings in the second
half of 2001. The transaction is subject to the approval of the stockholders of
SCC, to regulatory approval and to other customary closing conditions. If
approvals are obtained and other closing conditions satisfied, the transaction
is expected to be completed in December, 2000. After the acquisition, SCC
expects to have approximately 17.5 million shares outstanding, including
approximately 6.1 million newly issued shares that will be held by Lucent and an
affiliate.
SCC has about 460 employees nationwide. SCC will retain a suburban Chicago
location, where LPSS employs about 100 people. At this time, SCC has no plans
for reductions in staff. The acquisition will likely generate new positions as
the company moves forward in its development efforts.
SCC has provided public safety data-management products and services for 21
years, and has developed data management technology for new telecommunications
devices such as wireless telephony and Private Branch Exchanges (PBX). SCC
manages more than 95 million 9-1-1 records for incumbent local exchange
carriers, competitive local exchange carriers, integrated communications
carriers, wireless carriers and state and local governments. The company had
1999 revenue of $32.6 million, and revenue in the first half of 2000 of $19.9
million.
LPSS provides 9-1-1 supporting hardware and software technology, including the
award-winning Palladium(TM) call center and data-management products. A number
of leading telecommunications companies manage their 9-1-1 infrastructure with
LPSS's hardware and software systems. In addition, LPSS products are used by
public safety call centers across the nation to receive and respond to wireline
and wireless E9-1-1 calls. As with other companies that sell hardware and
software licenses and systems, revenues of LPSS are variable - a combination of
monthly recurring revenues and one-time sales of very large systems.
Lucent's computer aided dispatch and records management system products are not
included in the scope of the acquisition. These products will continue to be
supported by 911 Data Systems, another unit of Lucent Technologies.
A webcast will be held at 2:30pm MST today, October 17, 2000. To view the
webcast click the link on the SCC web site at www.scc911.com
About SCC Communications
SCC Communications, Corp. is the largest provider of 9-1-1 data management
services to incumbent local exchange carriers (ILECs), competitive local
exchange carriers (CLECs), integrated communications providers (ICPs) and
wireless carriers in the United States. SCC currently manages the records for
approximately 93.5 million wireline telephone subscribers, including 4.1 million
CLEC subscribers, and more than 1.6 million revenue-generating wireless
subscribers. The company also develops innovative, value-added information
technology systems, software products and services for the location-based
services market. To receive SCC press releases and company updates via e-mail,
please register at the company's website: http://www.scc911.com.
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About Lucent Public Safety Systems
Lucent Public Safety Systems, an internal venture of Lucent Technologies, is
headquartered in Lisle, Illinois. LPSS designs, builds and delivers a wide
range of public safety communications systems and software, including database
management systems, selective routing systems, public safety call center
software and mapping applications and services. More than 100 million telephone
subscribers are currently served by telephone carriers using LPSS database
management and selective routing systems.
Proxy Solicitations
SCC will file a proxy statement with the Securities and Exchange Commission in
connection with the acquisition,. Investors are advised to read the proxy
statement when it becomes available because it will contain important
information. Investors may obtain a free copy of the proxy statement (when
available) and other documents filed by SCC with the SEC at the SEC's web site
(http://www.sec.gov). Free copies of the proxy statement (when available) and
SCC's other filings with the SEC may also be obtained from SCC by contacting
Michael Dingman, Jr. CFO of SCC.
The directors and executive officers of SCC may solicit proxies in person or by
mail, telephone or telegraph. In addition, SCC may retain the services of a
proxy solicitation firm to assist in the solicitation. Information regarding
the identity of the persons who may, under the Securities and Exchange
Commission's rules, be deemed to be participants in the solicitation of proxies
from the stockholders of SCC in connection with the acquisition, and their
interests in the solicitation (including holdings of SCC common stock), will be
set forth in the proxy statement in connection with the acquisition. Certain
information regarding the stockholding of directors and executive officer of SCC
is contained in the proxy statement delivered by SCC in connection with its 1999
annual meeting of stockholders, a copy of which may be obtained at the SEC's web
site or by Michael Dingman, Jr. CFO of SCC.
Safe Harbor Statement
The matters discussed in the second through eighth paragraphs of this press
release include forward-looking statements that involve a number of risks and
uncertainties. Actual results may vary significantly from the SCC's expectations
based on a number of factors, including (1) lengthy sales cycles associated
with SCC's and LPSS's services and products,
(2) reliance by SCC and LPSS on large contracts from a limited number of
significant customers,
(3) potential difficulties in integrating the personnel and operations of the
two companies,
(4) continuing rapid change in the telecommunications market that may affect
LPSS and SCC and its customers, (5) continuing demand for SCC's and LPSS's
services and products, (6) market acceptance of new products and services
introduced by SCC and LPSS, (7) SCC's and LPSS's ability to accurately predict
its costs related to new products, and (8) additional factors described in SCC's
Form 10-Q for the quarter ended June 30, 2000.
# # #
Acquisition Details
Company: SCC Communications Corp.
6285 Lookout Road
Boulder, CO 80301
Phone: 303.581.5600
Fax: 303.581.0900
http://www.scc911.com
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Founded: 1979 by George Heinrichs and Stephen Meer
Ownership: Publicly traded company (NASDAQ: SCCX)
Employees: 460
Management: George Heinrichs, President & CEO
Stephen Meer, Chief Technology Officer
Michael Dingman, Chief Financial Officer
Larry Jennings, Senior VP of Business Operations
Timothy Jenkins, VP/GM ILEC Business Unit
Craig Donaldson, VP, General Counsel
Paul Devenny, VP, Operations
Teri DePuy, VP/GM Direct Business Unit
Barbara Winters, VP/GM Wireless Business Unit
Mark Scott, VP/GM CLEC Business Unit
Susan Cottingham, VP, Software Development
Raymond Paddock, VP, Marketing and Business Development
Susan Pierce, Director of Human Resources
Mission: To lead the market in the development and delivery of systems
that save lives. We are committed to public safety and to
providing the market with the next generation of 9-1-1--one that
will provide a seamless network for all of today's and tomorrow's
communications technologies.
Description: SCC Communications Corp. (Nasdaq: SCCX) is the largest provider
of 9-1-1data management services to incumbent local exchange
carriers (ILECs), competitive local exchange carriers (CLECs),
integrated communications providers (ICPs), and wireless carriers
in the United States. SCC currently manages the records for
approximately 95 million wireline telephone subscribers,
including 4.1 million CLEC subscribers, and more than 1.6 million
revenue-generating wireless subscribers.
Customers: SCC provides services to a range of customers, including ILECs,
CLECs, ICPs and wireless carriers.
Services: SCC's primary offering is the large-scale data management and
delivery infrastructure necessary to deliver enhanced 9-1-1. SCC
also offers
innovative and value-added products and services for the public
safety market. Our products and services include
. Outsourced data management services: SCC manages
millions of 9-1-1 records on behalf of
telecommunications companies. We verify and correct all
records provided to us by our clients. These records
are then made available to the 9-1-1 system for routing
calls.
. Value-added 9-1-1 services for telecommunications
companies: Our value-added services allow
telecommunications companies to offer enhanced 9-1-1
solutions to their customers. These solutions include
our Emergency Warning & EvacuationSM service, which
allows Public Safety Answering Points (PSAPs) to
proactively notify the public proactively of an
impending emergency through outbound phone calls, and
our PS/ALISM service, which allows PBXs to transmit
caller location information to a PSAP.
Acquisition Details
Company: Lucent Public Safety Systems
2600 Warrenville Road
Lisle, IL 60532
Phone: 630.713.5438
Fax: 630.979-9120
http://palladium911.com
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History: Successor to the AT&T organization that worked with FCC to
establish 9-1-1 as the nationwide emergency telephone number in
1968. Formed in 1994 as a product unit within Lucent's Network
Systems Business Group. Established as a Lucent Technologies
standalone "venture" in 1997, within Lucent's New Ventures Group.
Ownership: A wholly-owned business unit of Lucent Technologies (NYSE: LU)
Employees: 109
Management: Bob Oliver, President & CEO
Larry Ciesla, Chief Architect
Jim Ford, Director of Human Resources
Mike Friedrich, AVP of Operations
Dan Hoskins, VP of Business Development and Product Management
Craig Lowder, VP of Sales
Paulette McDermott, VP of Product Development
Jim Mittlestaedt, Controller
Mission: To be the undisputed world leader in the delivery of technology
solutions that save lives.
Description: LPSS provides unique technology solutions to telephone carriers
and to Public Safety Answering Points (PSAPs). It is the leader
in the delivery of E9-1-1database systems to incumbent local
exchange carriers (ILECs), with over 100 million wireline
telephone subscribers currently being served by ILECs using LPSS
database systems. LPSS also sells systems and services that
enable PSAPs to receive and respond to 9-1-1 calls.
Customers: LPSS database systems are used by ILECs to route roughly 60
percent of all wireline E9-1-1 calls in the United States. LPSS
customers include Verizon (comprising the former BellAtlantic,
Nynex and GTE); SBC Communications (comprising the former
Southwestern Bell Telephone, PacBell, S.N.E.T and M.O.K.A.);
Broadwing (the former Cincinnati Bell); and Frontier. LPSS's PSAP
applications products are used by the State of Connecticut; the
State of Vermont; the City of Chicago; Montgomery
County, TX; Bexar County, TX; and numerous other counties and
PSAPs across the nation.
Offerings: LPSS sells systems that enable E9-1-1 calls to be routed to the
appropriate PSAP and handled by the PSAP:
. Wireline Database Solutions: LPSS's suite of wireline
database solutions enables carriers to route E9-1-1 calls
to the appropriate destination. Products include DBMS (a
database management system); ALISA (a selective routing
application); ASK (a Web-based query tool); and Telco Map
Server (a tool for graphical management of emergency
response zone boundaries).
. PSAP Applications: These applications enable PSAPs to
receive and respond to 9-1-1 calls. LPSS is the only
company to sell both analog and ISDN-based (with very fast
call delivery times) call handling solutions. The
Palladium(TM) MappedALI product provides the fastest map
display time on the market.
. Wireless Location Services Applications: The Mobile
Position Center (MPC) and wireless E9-1-1 application will
enable wireless service providers to meet the FCC mandate
for precise location of wireless 9-1-1 callers. The MPC
will also work with other commercially driven location
services applications.
Frequently Asked Questions
Generic (All Audiences)
What is the current state of 9-1-1?
Although the basic 9-1-1 system is working, it is complicated and compromised by
the demands that new communications players and technologies are placing on the
infrastructure. The existing 30-year-old system is based on antiquated wireline
analog technology and has difficulty delivering E9-1-1 services in a world rich
with data-oriented mobile devices such as laptops, PDAs, wireless phones, and
two-way pagers, not to mention newer services such as OnStar, packet voice-over-
IP virtual networks, and home security over cable-company data lines.
To provide the level of service wireline subscribers have come to expect to the
multitude of emerging voice and data technologies, the 9-1-1 system must
overcome inherent challenges to handle data and be able to
. Pinpoint caller location and number
. Route calls to the correct safety agency based on Emergency Service Number
(ESN) and Master Street Address Guide (MSAG) boundary data
. Deliver calls from telematics devices and other "non-voice" calls
. Handle the voice-over-IP calls
. Connect emergency calls from the growing range of networked IP devices
such as home PCs and PDAs, as well as two-way pagers and other wireless
devices.
Will this acquisition resolve all of the problems facing the 9-1-1
infrastructure?
No. This acquisition will help facilitate a resolution to one of the critical
issues facing 9-1-1: the ability to exchange data through common protocols.
Other companies in the 9-1-1 market segment are addressing different
technological issues that currently hinder effective emergency responses,
including
. Slow processing time: Setup time for 9-1-1 calls is six to seven seconds
as compared with one to two seconds for other calls.
. Poor data transmission capabilities: Most Public Safety Answering Points
(PSAPs) receive data over 1200 baud lines and only after the voice portion
of the call has been delivered.
. Use of analog CAMA trunks: The trunks rely on in-band signaling that was
not designed to transport the type of data now required.
. Circuit-switched technology: Companies operating digital phone lines or
trying to deliver IP data packets must translate their data to send it
through the current system.
. Limited digit transferring capabilities: Currently all phone numbers need
to be reduced to eight digits.
Who are the major players in the 9-1-1 market?
A highly complex system, today's 9-1-1 infrastructure is supported by a wide
range of companies that provide hardware, software, and services to public
safety agencies, incumbent local exchange carriers (ILECs), competitive local
exchange carriers (CLECs), integrated communications providers (ICPs), wireless
providers, and telematics companies such as OnStar and ATX. Market participants
include hardware manufacturers (such as for computers, customer premise
telecommunications equipment, telematics devices, and mobile devices) software
developers, systems integrators, mapping service providers, and data
aggregators.
How do SCC and LPSS currently fit into this market?
SCC is a leading provider of enhanced emergency services, supporting efforts to
deliver real-time data to public safety agencies. Lucent Public Safety Systems
(LPSS) is a leading provider of public safety equipment, providing
telecommunications companies with the hardware and software to manage critical
data.
What is the future of 9-1-1?
The next generation of 9-1-1 will provide public safety agencies with accurate
phone number, location, and other critical information to allow both proactive
and reactive communication of emergency information to all devices, whether they
are fixed or mobile, and whether they receive voice or data communications.
How will this acquisition further/support that vision?
With more than 2,500 ILEC, CLEC, and wireless companies operating in the United
States, providing consistent data for 9-1-1 services has become increasingly
difficult. Although the FCC has mandated that critical, basic information be
transferred with every phone call, the proliferation of telecommunications
companies operating in the United States has made data exchange increasingly
complex. Together, SCC and LPSS can work effectively to create a support
infrastructure that permits telecommunications companies to exchange emergency
information universally. In doing so, these two market leaders can create common
data interchange and application interfaces (APIs) for multiple voice and data
platforms that will allow public safety agencies full access to available data,
regardless of the source.
How does this acquisition benefit the public?
The challenges facing the 9-1-1 system are sobering. As the popularity of next-
generation mobile communications devices, such as wireless telephones,
telematics, and voice-over IP, rises dramatically, it is becoming increasingly
difficult for the 9-1-1 system's existing 30-year-old architecture to
accommodate and adapt to these new technologies. Because SCC and LPSS work with
a host of telecommunications providers, we are in a position to bridge the
different standards currently in use by developing call handling and data
protocols. This lays the foundation for the public to receive the same level of
9-1-1 service whether they are using a cellular phone, a two-way pager, voice-
over-IP connection, or any other communications mechanism, and will lay the
foundation for emergency personnel to warn the public proactively during a
crisis.
How does this acquisition benefit PSAPs?
Today, the average PSAP lacks the basic phone number and location data for up to
30 percent of the calls it receives. This acquisition will facilitate the
adoption of a common exchange for critical data so that PSAPs can receive basic
data for all of their calls. The acquisition also establishes a foundation that
eventually will allow 9-1-1 services to be highly interactive so that 9-1-1
professionals can proactively provide a wider range of emergency services to the
public.
Who will serve on the executive team for the company?
George Heinrichs, SCC's cofounder, will serve as CEO and will lead the
management team. Stephen Meer, cofounder of SCC, will serve as the CTO. A
combination of LPSS and SCC management personnel will make up the remainder of
the executive team.
Where will the company be headquartered?
The company will be headquartered in Boulder, Colorado. An office in Lisle,
Illinois, will be maintained.
How will this acquisition affect existing business relationships?
Current customers will do business with the company just as they do with SCC and
LPSS today, whether that entails managing their data in-house using LPSS
hardware and/or software, or outsourcing data management to SCC. Customers will
continue to have the same product choices they have today.
How will this acquisition affect product support?
Customers will continue to have the same product choices they have today. All
SCC and LPSS products will continue to be supported as we begin building for our
future.
Will the stock still be traded under SCCX?
Yes, the stock will continue to be traded under SCCX.
How many shares of SCCX will Lucent own?
Lucent will own 6,123,200 shares of SCCX.
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Webcast Participants
. George Heinrichs, CEO of SCC
. Michael Dingman Jr., CFO of SCC
. Bob Oliver, President and CEO, Lucent Public
Safety Systems
www.scc911.com
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George: Good morning (George ad libs) and welcome to this conference
call to discuss SCC Communications Corp.'s acquisition of Lucent
Technologies' Public Safety Systems division.
Many of you have had the opportunity to read the press release that
was distributed before the market opened this morning. We have posted
the press release along with additional background materials to our
Website, www.scc911.com.
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Here with me on the phone today are Michael Dingman, our new Chief
Financial Officer at SCC, and Bob Oliver, President and CEO of Lucent
Public Safety Systems. Before we get started, we need to take care of
our legal responsibility. Michael?
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Safe Harbor Statement
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Michael: During the course of this conference call, we may make
forward-looking statements regarding this acquisition, future events
or the future performance of the Company. Actual events or results, of
course, could differ materially. We refer you to the documents the
Company files from time to time with the Securities and Exchange
Commission, such as the Form 10-Q for the quarter ended June 30, 2000.
These documents contain and identify factors that could cause actual
results to differ materially from those contained in any forward-
looking statements. Uncertainties caused by the nature of Lucent
Public Safety Systems business provide additional factors that may
cause results to vary from these forward-looking statements, including
but not limited to lengthy sales cycles associated with its products
and reliance on large contracts from a limited number of significant
customers. Additional uncertainties may result from potential
difficulties of integrating the two companies and winning market
acceptance for the new products introduced by the combined entity.
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Mission Moving Forward
. Innovation in the seamless transfer of voice
and data across complex telecommunications
devices and infrastructures
. Maintain & extend leadership in 9-1-1 & data
management
. Capitalize on future wireless opportunities
for emergency telephony & commercial
location-based information services
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George:
Thank you Michael. Thank you for joining us today as we announce our
definitive agreement to acquire Lucent Public Safety Systems.
We think the opportunities provided by this combination are
tremendous, and will provide the fuel for the kind of growth
strategies that investors, employees and our customers are looking to
us to provide.
This acquisition provides us with more of the building blocks we need
to fulfill our mission:
To be the premier provider of innovative telecommunications
products and services that allow for the seamless transfer of
voice and data over a complex variety of telecommunications
devices and infrastructures.
Together we intend to
Maintain and extend our leadership in 9-1-1 products and sophisticated
data-management services, while capitalizing on future opportunities
in the wireless market for both emergency telephony and commercial
location-based information services.
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[LOGO]
Innovation in Emergency Telephony
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We believe this acquisition will ultimately yield tremendous
benefits for the telecommunications industry, our shareholders
and the public.
By combining all the products, services and expertise that SCC
and LPSS have developed separately, we will be creating a company
that is poised to meet the growing market demand for quality
voice and data emergency services across a broad and quickly
multiplying range of telecommunications technologies.
SCC and LPSS have played different but equally committed roles in
the emergency communications world. As we have each developed
unique offerings for a diverse customer base, we each have also
developed top-notch, pioneering technical expertise.
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SCC Communications
. Entrepreneurial company
. Innovative business models
. Quick to market
. Outsourced services to a wide range of
customers
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For those of you on this call who are new to SCC Communications, let
me tell you a little bit about us. SCC was founded 21 years ago as a
consulting and systems design company. In the mid 1980s we changed our
business model to focus on system integration and the 9-1-1 market
segment. Since 1993 we have been focused on outsourced services for
emergency telephony.
We are an entrepreneurial company that prides itself on being quick to
market and quick to respond to our customers' needs. We have
consistently adapted our business model in anticipation of
opportunities in our market segment. For example, when we made the
switch to outsourced services seven years ago, we became an ASP before
anyone knew what an ASP was.
We provide products and services to local exchange companies, wireless
providers, integrated communications carriers and government emergency
agencies. We've developed a very high quality data management
business, because our customers demanded it.
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Lucent Public Safety Systems
. Market leader in 9-1-1 hardware and software
. Internal venture of Lucent Technologies
. Heritage in software and hardware
development
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LPSS is the market leader in providing 9-1-1 support hardware and
software to telecommunications companies.
LPSS's predecessor company was the founder of the nation's 9-1-1
system. We inherit that legacy, along with the engineering discipline
that comes from its Bell Labs heritage and a world-class suite of
software products and platforms that includes the full line of award-
winning Palladium software and hardware for emergency
telecommunications. In addition we expand our world-class customer
base.
Through this acquisition, we are combining the heritage of LPSS with
the entrepreneurial culture of SCC. Together, we will provide our
combined customers with all of the product and service choices we
currently offer and a broader set of choices in the future.
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Called 9-1-1 from a cell phone.
Called 9-1-1 from an onboard telematic
device.
Called 9-1-1 from two-way pager.
Called 9-1-1 from a pay phone.
[PICTURE OF AUTO ACCIDENT APPEARS HERE]
. Bridge dissimilar 9-1-1 infrastructures
. Integration of new technologies
. Provide accuracy and reliability of
services
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A number of challenges face our market segment, but we view these
challenges as opportunities. The current 9-1-1 infrastructure is
antiquated and unable to support the explosion of new devices and
technologies. Because there are so many new telecommunications
providers in the market, there is also now a greater number of
technologies being deployed. And finally, it is becoming more
difficult to get the call from any device to the right place for
help.
As two companies at the leading edge of emergency telephony, we
have already taken steps to help the emergency services world
adapt to the explosion of the Internet, telecommunications and
wireless technologies. We've been addressing some of the problems
that come from trying to offer a modern, multi-channel, flexible
communications network on top of an aging, land-based telephone
system. SCC, for example, introduced 9-1-1 SafetyNet(R) to
provide an answer.
Together we will continue to address the issues of incompatible
voice and data protocols here and abroad that make it difficult
for different emergency response agencies and telecommunications
companies to share calls and to share response-enhancing data.
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Called 9-1-1 from a cell phone.
Called 9-1-1 from an onboard telematic
device.
Called 9-1-1 from two-way pager.
Called 9-1-1 from a pay phone.
[PICTURE OF AUTO ACCIDENT APPEARS HERE]
. Bridge dissimilar 9-1-1 infrastructures
. Compatibility of technologies
. Provide accuracy and reliability of
services
8
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There is a growing demand in the marketplace to integrate today's
wireless devices, Internet devices, pagers, and telematics
devices into a seamless system that allows for fast and accurate
response to emergency calls from any device, at any time, in any
place. With Lucent Public Safety System's clear technology
leadership, which can be traced back to its days as Bell Labs,
and SCC's pioneering 9-1-1 data management and services, we
believe we can integrate this broad array of communications
technologies into an efficient and affordable system.
8
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Called 9-1-1 from a cell phone.
Called 9-1-1 from an onboard telematic device.
Called 9-1-1 from a two-way pager.
Called 9-1-1 from a pay phone.
[PICTURE OF AUTO ACCIDENT APPEARS HERE]
. Bridge dissimilar 9-1-1 infrastructures
. Compatibility of technologies
. Provide accuracy and reliability of services
9
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The 9-1-1 emergency system has earned the trust of the American people. It is
expected that a call will result in immediate response by the right agency.
Together, SCC and LPSS share a passion for providing world-class services for
the delivery of 9-1-1 in a accurate and reliable manner. We offer the emergency
telephony market and telecommunications industry a solution for their customers.
This isn't just about technology, or business, or systems. What we're talking
about here is bringing new lifesaving communications systems to people when and
where they need it most.
9
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Benefits
[CHART CONTAINING FOUR BOXES]
Technology leadership
10
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Ultimately, the combined company will leverage the rich heritage of LPSS and the
visionary capabilities of SCC to become a technology leader. The combined
company will play a key role in bridging the dissimilar technologies that
complicate the current emergency communications infrastructure. In doing so, we
will possess the products, services and expertise that will allow us to create
other location-based services, including commercial applications that we think
will become a major part of our growth story.
10
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Benefits
[CHART CONTAINING FOUR BOXES]
Technology Merging research
leadership and development
expertise
11
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This acquisition brings together unparalleled breadth and depth of expertise. We
will use these resources to tackle one of the fundamental components necessary
for bridging the diverse technologies in the emergency telephony market--the
development of open call handling and data protocols. These protocols must serve
an incredibly diverse customer base. The combined company has both the vision
and the intellectual property necessary to deliver on this critical challenge.
11
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Benefits
[CHART CONTAINING FOUR BOXES]
Technology Merging research
leadership and development
expertise
Complementary
skills and expertise
12
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SCC and LPSS come from fundamentally different worlds. SCC pioneered outsourced
services in the telecommunications industry. We continue to push the limits of
how emergency services are delivered to consumers through a variety of market
channels. LPSS employs the engineering heritage of Bell Labs to deliver custom
software and hardware offerings for its client-base.
The combined company brings the best of both worlds together. Our customers will
have the broadest possible choices. We believe this will allow us to generate
new revenue growth from delivering new products and services that take advantage
of the market opportunities we've talked about.
12
----------------------------------------------------------
Benefits
[CHART CONTAINING FOUR BOXES]
Technology Merging research
leadership and development
expertise
Broader reach and Complementary
greater efficiencies skills and expertise
13
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For SCC, there are additional benefits. As our new 35-percent shareholder,
Lucent Technologies will provide expanded reach for our products. The combined
company intends to work closely with Lucent to leverage its strong distribution
system, market position and wireless offerings to open new markets for our
services and products in North America and around the world.
Furthermore, together we will be able to more efficiently use our administrative
resources, effectively spreading our overhead expenses across a broader customer
base. And we think the efficiencies and synergies made possible by this
acquisition will be realized across the company--through R&D, 24x7 operations,
network & processing infrastructure, and sales & marketing.
13
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Acquisition Details
. All stock transaction
. Lucent: 35% or 6.1 million shares
. Target completion in December
. Shareholder vote
. Regulatory approval
. Sufficient capital resources available for integration
14
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Now let me share some details of the acquisition. Lucent will be receiving
a 35-percent stake, or about 6.1 million shares, in SCC in this all-stock
transaction. Our current model indicates the acquisition will be complete
in December, after a vote of our shareholders and regulatory approval. We
expect the acquisition to be accretive to per share revenues and EBITDA by
the fourth quarter of 2001.
Furthermore, we believe current cash resources combined with existing
opportunities for additional capital will position the combined company
with adequate capital resources for integration, continuing product and
services development, and organic growth.
14
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Acquisition Details
. LPSS revenue stream is variable
. Large hardware and software sales
. 44 million in 1999; $12 million expected in 2000
. Retain suburban Chicago office
. New employee opportunities
. Some administrative redundancies
. No plans to reduce staff
15
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As many of you already know, LPSS's revenue stream is variable--a
combination of monthly recurring revenues and one-time sales of very large
systems. In 1999, LPSS's revenue was approximately $44 million. This year,
LPSS's revenue is expected to be approximately $12 million, a projection
based largely on ongoing maintenance contracts. Looking at historical
product sales cycles, we expect future LPSS revenue trends to improve with
increasing customer demand for additional capacity and greater system
functionality. We expect maintenance revenues to increase with the sale of
additional products. Revenues from new product sales and licenses are
expected to create periodic revenue spikes, which are common and consistent
sales cycles of large transactions.
We expect the opportunities generated by this acquisition to result in new
positions for employees as we take advantage of our enhanced capacity to
meet challenges presented by emergency telephony and the rapidly growing
commercial opportunities in location-based services. We will maintain an
office in suburban Chicago. At this time, we plan no reductions in staff.
15
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[LOGO]
Innovation in Emergency Telephony
16
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This acquisition is great news for our shareholders, Lucent's shareholders, our
emergency services customers, the telecommunications industry and, most of all,
the general public, which has come to expect the highest-possible level of
emergency telecommunications service in times of personal and community
emergencies.
With that, I'd be happy to address your questions.
16
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[LOGO]
Questions and Answers
17
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Questions and Answers
17
E-mail from George to Employees
We have some exciting news for you today--SCC is acquiring Lucent Public Safety
Systems (LPSS). This acquisition is designed to help SCC grow and realize its
visions in the 9-1-1 segment and beyond. Please notice my emphasis on the word
"grow." We chose to buy Lucent Public Safety Systems because its products
represent a perfect complement to our business and where we plan to go in the
future. Details surrounding the acquisition will be disseminated to all
employees through the following methods:
SCC intranet
Insidescc.com
Company meetings
Between 10:00 and 12:00, Stephen Meer and I will hold meetings in Outlander and
the EBC. Please see your manager for the time and place of the meeting you
should attend.
I know this is big news, but please stay focused on the projects at hand. There
are still a lot of steps to be completed before the acquisition is closed. We'll
need to keep our revenues high and our business running as usual during that
time. Information concerning the acquisition will be placed on the intranet
regularly to keep you updated.
Your managers and directors will be notifying key customers by phone and by
mail. If there is a customer that you want to make sure is notified, please let
your manager know. If your customers are asking questions you can direct them to
our Web site, from which they can link to details on the acquisition as well as
a link to a Webcast at 2:30 today.
Thanks for all your hard work!
Sincerely,
George
Proxy Solicitations
SCC will file a proxy statement with the Securities and Exchange Commission in
connection with the acquisition. Investors are advised to read the proxy
statement when it becomes available because it will contain important
information. Investors may obtain a free copy of the proxy statement (when
available) and other documents filed by the SCC with SEC at the SEC's web site
(http://www.sec.gov). Free copies of the proxy statement (when available) and
SCC's other filings with the SEC may also be obtained from SCC by contacting
Michael Dingman, Jr. CFO of SCC.
The directors and executive officers of SCC may solicit proxies in person or by
mail, telephone or telegraph. In addition, SCC may retain the services of a
proxy solicitation. Information regarding the identity of the persons who may,
under the Securities and Exchange Commission's rules, be deemed to be
participants in the solicitation of proxies from the stockholders of SCC in
connections with the acquisition, and their interests in the solicitation
(including holdings of SCC common stock), will be set forth in the proxy
statement in connection with the acquisition. Certain information regarding the
stockholding of directors and executive officer of SCC is contained in the proxy
statement delivered by SCC in connection with its 1999 annual meeting of
stockholders, a copy of which may be obtained at the SEC's web site or by
Michael Dingman, Jr. CFO of SCC
Proxy Solicitations
SCC will file a proxy statement with the Securities and Exchange Commission in
connection with the acquisition,. Investors are advised to read the proxy
statement when it becomes available because it will contain important
information. Investors may obtain a free copy of the proxy statement (when
available) and other documents filed by SCC with the SEC at the SEC's web site
(http://www.sec.gov). Free copies of the proxy statement (when available) and
SCC's other filings with the SEC may also be obtained from SCC by contacting
Michael Dingman, Jr. CFO of SCC.
The directors and executive officers of SCC may solicit proxies in person or by
mail, telephone or telegraph. In addition, SCC may retain the services of a
proxy solicitation firm to assist in the solicitation. Information regarding the
identity of the persons who may, under the Securities and Exchange Commission's
rules, be deemed to be participants in the solicitation of proxies from the
stockholders of SCC in connection with the acquisition, and their interests in
the solicitation (including holdings of SCC common stock), will be set forth in
the proxy statement in connection with the acquisition. Certain information
regarding the stockholding of directors and executive officer of SCC is
contained in the proxy statement delivered by SCC in connection with its 1999
annual meeting of stockholders, a copy of which may be obtained at the SEC's web
site or by contacting Michael Dingman, Jr. CFO of SCC.
Home
Letter from George Heinrichs and Bob Oliver
Welcome to the SCC/LPSS Intranet Site. Combined, our two companies face a unique
opportunity to improve the performance of the 9-1-1 system, provide our
customers with a broader range of products and services, and, ultimately, help
the people who call 9-1-1.
SCC and Lucent Public Safety Systems have played different, but equally
committed roles in the emergency communications world. As we have each developed
unique offerings for a diverse customer base, we have also developed top notch,
pioneering technical expertise. However, as the public safety industry faces the
enormous challenges posed by wireless and voice-over-IP calls, we believe there
are obvious advantages for partnering with one another and we believe it will
lend a new dimension to our mission. We'll offer a broader range of choices to
our customers and simplify their management tasks by creating open, standards-
based protocols for data transfer for 9-1-1 records. By combining the SCC
resources with those of LPSS, we will develop innovative new products and
services, and, more importantly, we will swiftly tackle the future challenges
facing the 9-1-1 system.
This acquisition combines the phenomenal 9-1-1 expertise of both SCC and LPSS to
bring innovation and consistency to the current systems and to lay the
foundation for the future of emergency telephony. We anticipate that there will
be little redundancy between the two companies and that new opportunities will
arise as we move forward. Ultimately, there will be exciting opportunities for
cross-training and professional growth as our companies become more integrated.
Over the next few weeks, we will be working closely with our new teams to ensure
a smooth transition. We hope that you'll share in the excitement as we take this
momentous step toward the future of our company. Throughout the coming weeks we
will use this intranet site to provide you updated status on the integration
planning. We invite you to use the form provided
Together, we can build a great team to address the future challenges facing the
9-1-1 system. You are an important part of that future.
Sincerely,
George Heinrichs Bob Oliver
President & CEO President
SCC Communications, Corp. Lucent Public Safety Systems
Frequently Asked Questions for Employees
What should we tell our customers? Vendors? Partners?
There are strict legal parameters surrounding this process that preclude
------
most public comment. SCC and Lucent Public Safety Systems employees are
not to say anything externally about this acquisition.
---
If your customers ask for updated information, please let them know that the
most up-to-date information is on the Web site and that you, honestly, don't
have any further information. Otherwise, all questions about the SCC-LPSS
announcement should be directed immediately to the company's executive team or
the vice president/general manager of your business unit.
What will happen to current SCC and LPSS employees? Will there be lay-offs?
At this time SCC has no plans for reductions in staff. We believe this
transaction will likely generate new positions as the company moves forward in
its development efforts. The executive team is currently reviewing personnel
needs and no final decisions have been made at this early stage of the
transaction. The business plan does not involve significant lay-offs and the
human assets at both locations are critical to the success of this acquisition.
Employees interested in applying for open positions elsewhere in the
organization should contact their human resources department for details on the
specific opportunities.
What is a definitive agreement?
The parties to a negotiated stock-for-stock merger, such as the acquisition of
LPSS by SCC, usually publicly announce their transaction immediately after
reaching a "definitive agreement." The definitive agreement sets forth the
details of the trans-action agreed to by both parties. This announcement
generally takes the form of a written joint press release followed by a joint
press conference and analyst presentations given by the acquirer and the
target.
When will the acquisition of LPSS by SCC close?
The acquisition of LPSS by SCC is scheduled to close at the end of the fourth
quarter, subject to completion of regulatory review and approval by SCC's
shareholders.
1
What will happen between now and then?
The time between the announcement of the acquisition and the final approval by
the appropriate regulatory bodies will be very active for both companies. During
this time, the federal agencies with jurisdiction over these transactions will
conduct the necessary review of the legal documents submitted by the two
companies at the time of the announcement.
Also, the senior management teams of SCC and LPSS will begin integrating the two
companies.
Where are the SCC and LPSS facilities located?
Lucent Public Safety Systems is headquartered near Chicago in Lisle, Illinois.
LPSS is a business unit of Lucent Technologies, headquartered in Murray Hill,
New Jersey. SCC will maintain an office in Lisle very close to the existing
facility. SCC is located in Boulder, Colorado.
Where will the headquarters be located?
The headquarters of SCC will remain in Boulder, Colorado.
What will the executive leadership team look like?
George Heinrichs, SCC's cofounder, will remain as CEO and will lead the manage-
ment team. Stephen Meer, cofounder of SCC, will serve as CTO. A combination of
LPSS and SCC management personnel will make up the remainder of the executive
team. The combined management team will be announced shortly.
How will this affect the structure of the company?
SCC and LPSS are two complementary organizations. The executive team is now
reviewing how best to integrate the operations and personnel of LPSS into the
existing company structure.
Will we have a new business plan?
The acquisition of LPSS is an important step in realizing our vision for the
future. This agreement provides more of the building blocks we need to fulfill
our mission: to be the premier provider of innovative telecommunications
products and services allowing for seamless transfer of voice and data over the
complex variety of tele-communications devices and infrastructures. As one
entity, we will maintain and extend our leadership in 9-1-1 products and
sophisticated data-management services, while capitalizing on opportunities in
the wireless market for both emergency telephony and location-based information
services.
2
What do our existing customers know about this?
Key customers received phone calls from the executive team on the morning of the
announcement. All managers also received an e-mail template to send to
customers. Finally, every customer will receive all press materials along with a
letter from the executive team by mail. If you have a customer that has not been
informed or needs more information, please contact your manager.
How will this affect our customers?
SCC and LPSS have played different, but equally committed roles in the emergency
communications world. In announcing the definitive agreement, SCC directly
contacted key customers with details of the announcement. Current customers of
SCC and LPSS will do business with the new company just as they do with SCC and
LPSS today, whether that entails managing their data in-house using LPSS
hardware and/or software, or outsourcing data management to SCC. Customers will
continue to have the same choices they have today.
Additionally, by combining all the products, services and expertise that SCC and
LPSS have developed separately, we will create a company that is more capable of
meeting the growing market demand for quality voice and data emergency services
across a broad and quickly multiplying range of telecommunications technologies.
I have additional customer-related questions. To whom do I go for answers?
Direct all customer-related questions to the vice president of your business
unit at SCC, and your immediate supervisor at LPSS.
How will SCC and LPSS products be marketed?
Customers will continue to have the same choices for products and services they
have currently. The acquisition will enhance the product strategy announced by
SCC in June by creating a common, nationwide data interchange for 9-1-1
SafetyNet(SM).
What do I do if I get calls from the press or analysts?
Again, there are strict legal parameters surrounding this process that preclude
most public comment. Questions about the SCC-LPSS announcement should be
directed immediately to the company's executive team or the vice
president/general manager of your business unit.
SCC and LPSS issued an official news release and communicated directly with the
media, financial analysts, industry analysts and key customers. Any inquiry
about the announcement should be directed to the public relations or investor
relations staff.
3
How will this affect SCC stock?
SCC stock will continue to be traded under the ticker symbol SCCX. Employees
with shares in SCC will retain their interest in the company.
Can SCC employees buy/sell stock between now and the close of the agreement?
SEC restrictions limit who can trade in these situations, therefore until
further notice, SCC employees can NOT trade stock (SCCX). You will receive
notification when it is allowable under SEC rules.
How many employees are currently employed by LPSS?
Currently SCC has 460 employees and LPSS has more than 100. Following approval
of the acquisition, SCC will have approximately 560 employees.
How will my benefits be affected by this integration?
SCC is currently analyzing its benefits and intends to offer an attractive and
comprehensive package to all employees. Plans will be finalized prior to open
enrollment in November and employees will be informed of the details of our new
plans as soon as that information is available.
I have additional HR-related questions. To whom do I go for answers?
Please feel free to contact Susan Pierce, SCC's Director of Human Resources,
Karen Laatt, manager of human resources at SCC and Jim Ford, LPSS Director of
Human Resources with any HR-related questions.
4