Market Opportunity For Soleus™ and Destinator® Navigation Software Products
Immediate Revenues and Expanded Market Opportunity Benefits of Acquisition
Intrinsyc Software International, Inc. announced that it completed the acquisition of certain assets and operations of Destinator Technologies Inc. (“DTI”) and certain of its affiliates.
“This acquisition enables Intrinsyc to immediately capture the revenues and business operations of the Destinator wireless software product portfolio which includes navigation software for handsets and personal navigation devices. Customers include tier one Original Equipment Manufacturers: Motorola and LG. We have also acquired critical navigation technology, including 17 patents and patents pending, and the engineering expertise that will accelerate Intrinsyc’s growth of its wireless software solutions business,” said Glenda Dorchak,
Chairman and Chief Executive Officer of Intrinsyc. “As a result, we expect Intrinsyc software revenues to make up between 32 percent to 37 percent of overall revenues for fiscal 2008, which is a significant improvement over the software to services revenue mix in fiscal 2007 and accelerates Intrinsyc’s transition to a software solutions provider.”
Dorchak continued, “By combining the capabilities and products of Intrinsyc and Destinator, we now have a larger software revenue business, multiple wireless software products and a substantially larger set of customers. Our combined customer base and sales operation will be able to cross-sell the Soleus and Destinator software products, leading to accelerated revenue growth. This acquisition will also accelerate our Soleus software development efforts which will create a new product based on the Destinator navigation technology and will utilize the Destinator experienced low-cost development center in Beijing. Navigation is a critical technology for developing consumer smart phones and enabling next-generation converged devices, and as a result of this acquisition, we are ideally positioned to enable innovation as our existing and future customers deliver compelling products to the marketplace.”
With the closing of this acquisition, Intrinsyc will have approximately 375 employees worldwide, with the majority in engineering and development. The employees and operations acquired from DTI will be integrated under Intrinsyc’s experienced executive team, allowing for a streamlined integration process and achievement of cost synergies. Support for existing DTI customers, suppliers and partners is being transitioned quickly and is expected to continue uninterrupted. Intrinsyc will generate revenues from Destinator products beginning July 10, 2008.
Transaction Details
Intrinsyc paid a total of approximately U.S. $16.0 million for DTI’s assets, inclusive of estimated related transaction expenses. The price represents a revenue multiple of approximately 1.4 times based on DTI’s historical net revenue, excluding third-party pass through map data revenue, and the share price of Intrinsyc’s common shares as at July 2, 2008. The purchase price consists of CDN $8.5 million in cash or assumption of liabilities of DTI and the issuance of 11.0 million Intrinsyc common shares from treasury. All common shares issued pursuant to this transaction will be subject to a six-month lock-up agreement. The majority of the purchase price will be allocated to specific identifiable intangible assets consisting of software, customer base, patent portfolio and trademarks resulting in future amortization expense to be incurred by the Company over their remaining estimated useful lives. The financial results of the Destinator software business will be consolidated with the Company commencing on the transaction closing date. Additional financial information pertaining to DTI will be provided in the Company’s business acquisition report to be filed within 75 days following closing.
Outlook
As a result of this transaction, total annual revenues of Intrinsyc for its fiscal 2008 ending December 31, 2008 are expected to be in a range between U.S. $26 million and U.S. $29 million, including the Destinator product revenue contribution commencing from the transaction closing date with annual gross margin forecast to be in a range between 49 percent and 55 percent. The Company expects to reduce DTI’s operating expenses levels by 50% or more based on restructuring and cost synergies. This does not include one-time integration costs which are expected to be between U.S. $1.5 million to U.S. $2 million over the next 12 months.
About Destinator Technologies Inc.
Destinator Technologies Inc. is a multinational developer of wireless software for global positioning system (“GPS”) devices and navigation software for wireless handsets.
About Intrinsyc Software International, Inc.
Intrinsyc, (TSX: ICS), a global wireless software solutions provider that enable next-generation handheld products, including mobile handsets, smart phones, and converged devices. The company’s software products include the Soleus™ software platform for consumer device development and the recently acquired Destinator® GPS/navigation technologies. Combined with award winning engineering services and years of systems integration expertise, these solutions help device makers, service providers, and silicon vendors deliver compelling wireless products with faster time-to-market and improved development cost. Intrinsyc is a Microsoft® Windows Embedded Gold Partner and a winner of Windows Embedded Excellence Awards in 2007 and 2008, a Symbian Competence Center and Symbian Platinum Partner. Intrinsyc is publicly traded (TSX:ICS) and headquartered in Vancouver, Canada, with offices in China, Israel, Taiwan, U.K., and the United States.
For more information, please visit their website: http://www.Intrinsyc.com