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): April 9, 1998
MICROTEL INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-10346 77-0226211
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(State or other jurisdiction of (Commission File (IRS Employer)
incorporation or organization) Number) Identification No.)
4290 East Brickell Street, Ontario, California 91761
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (909) 456-4321
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
SALE OF XCEL ARNOLD CIRCUITS, INC. SUBSIDIARY
MicroTel International, Inc. (the "Company") announced that the Company has
sold its Xcel Arnold Circuits, Inc. subsidiary to Arnold Circuits, Inc, a
private corporation on April 9, 1998 for $2.0 million comprised of $1.35 million
in cash and a note for $650,000. The Company's Press Release announcing the
sale is attached as Exhibit A.
ITEM 7. FINANCIAL STATEMENTS; PRO FORMA INFORMATION AND EXHIBITS.
(a) None.
(b) The Pro Forma financial information will be filed by
amendment within sixty (60) days of the date hereof.
(c) The Asset Purchase Agreement (Exhibit 10.52) and Addendum
No. 1 thereto (Exhibit 10.53), Bill of Sale and
Assignment and Assumption Agreement (Exhibit 10.54), and
Promissory Notes (Exhibits 10.59 and 10.60) related to
this sale were filed as Exhibits to the Company's Annual
Report on Form 10-K filed on April 15, 1998.
EXHIBIT A
(BW)(MICROTEL)(MCTL)
Business Editors & High Tech Writers
MICROTEL ANNOUNCES COMPLETION OF SALE OF UNPROFITABLE CIRCUITS
SUBSIDIARY FOR $2 MILLION.
ONTARIO, Calif. -(BUSINESS WIRE) April 14, 1998 --- MicroTel International, Inc.
(NASDAQ Small Cap: MCTL) (the "Company") today announced it has sold its
unprofitable circuits subsidiary for $2 million to a private corporation. The
Company received $1.35 million in cash and a note for $650,000 from the
transaction. The cash was used to retire certain bank and other debt. Included
in the terms of the transaction was the retirement of $714,000 in redeemable
preferred stock without payment of any of the cash payments required under the
terms of its issuance. The terms of the transaction also contain several unique
provisions that call for a sharing with the Company of any gain realized by the
purchaser on the subsequent sale of the subsidiary. Additionally, the Company
and the purchaser entered into a sales, marketing and supply agreement designed
to mutually benefit both parties. The Company will record a gain on the sale of
the subsidiary in the first quarter of 1998.
This circuits subsidiary incurred a net operating loss in 1997 of $2.7 million
which approximated the Company's total net loss from operations exclusive of the
write-down of goodwill of $5.7 million and other non-cash charges. While the
subsidiary produced $9.2 million in net sales in 1997, the Company expects to
offset the revenue loss resulting from the sale with growth in sales of its
other operations, including full year recognition of sales from its CXR Telcom
and CXR, S.A. subsidiaries (for which sales were only recorded for a portion of
1997), revenue growth within these and the Company's XIT Corporation operations
and revenue growth contributed by an acquisition completed in October 1997.
Further details of the sale of the subsidiary are included in the Company's 1997
Annual Report on Form 10-K expected to be filed by April 15, 1998. Commenting
on the sale, Carmine T. Oliva, the Company's CEO, stated "We have now overcome
the largest single obstacle impeding our progress toward profitability of the
combined MicroTel and XIT Corporation entities which merged in March 1997. In
only a nine-month period ending December 31, 1997 we made extraordinary progress
in turning around MicroTel's 1996 and first quarter 1997 losses, but these
results were unfortunately overshadowed by the operating losses from this
circuits subsidiary; nonetheless, we are very pleased with the favorable balance
sheet impact of this sale, especially in light of the difficulty we faced in
selling an operating unit with continuing losses."
MicroTel, through its wholly owned subsidiaries CXR Telcom Inc., in Fremont,
California and CXR, S.A., based in Paris, France, designs, manufactures and
markets electronic test instruments and voice and data transmission equipment to
the telecommunications industry, including telephone companies, interconnect
carriers, private networks, banks, brokerage firms and government agencies.
MicroTel's wholly-owned subsidiary, XCEL Information
Technologies Corporation, with vertically integrated operations in the United
States, England and Japan, designs, manufactures and markets information
technology products including input and display components, subsystem assemblies
and hybrid microelectronics and other circuits for the international
telecommunications, medical, industrial and military/aerospace markets.
The statement in this press release relating to matters that are not historical
are forward-looking statements which involve risks and uncertainties including,
without limitation, economic and competitive conditions in the markets served by
the Company affecting the demand for the Company's products, product pricing,
market acceptance, access to distribution channels and other risks detailed from
time to time in the Company's Securities and Exchange Commission filings. These
risks could cause actual results to differ materially from those anticipated or
described herein.
CONTACT:
MicroTel International, Inc. - James P. Butler, 909/391-4321 (VP Finance, CFO)
H. L. Lanzet, Inc. - Herbert or Dee Dee Lanzet, 212/687-0061
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MICROTEL INTERNATIONAL, INC.
By: /s/ James P. Butler
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James P. Butler
Chief Financial Officer
Date: April 23, 1998