Subject:
DCI---SHAREHOLDER LETTER FROM PRESIDENT & CEO JOE MURPHY!!!!!!!!!!!!!!!!!!!!
Date:
Mon, 01 Feb 1999 17:06:25 -0500
From:
Brad Driesen <giles@erinet.com>
Organization:
"GRUPO BRAD" NEWS SERVICE
Hi Everyone,
I received my shareholder newsletter today from Joe Murphy. I know some
of you are probably anxious to know what is in it if you have not
received it yet so I will take the time to type the letter in its
entirety.
"Grupo Brad"
January 18, 1999
Dear Friend of DCI,
As we rapidly approach the new millennium, for many this is a time
to reflect on the past. For others, this is a time to concentrate on the
promise of the future. Here at DCI, it is a time for both. It is
gratifying to review the remarkable growth that DCI has enjoyed over the
last three years. The events of the past few months have continued this
impressive growth trend.
It was little more than four years ago that DCI completed a reverse
merger with an OTC Bulletin Board shell company, Fantastic Foods
International. The company struggled through the first fiscal year
because judgments against the predecessor company, inherited through the
merger, strained resources. Once those problems were resolved in fiscal
1996, the company was able to commence its acquisition program in fiscal
1997. Fiscal 1998 was a year of fine tuning the plan. The company
consolidated, eliminated or sold off operating units that did not meet
its concentrated business objectives, thus positioning itself for a
break-through in fiscal 1999.
That break-through has been remarkable. DCI reported $17 million in
the first six months of fiscal year 1999, a figure that exceeds all the
revenues from the previous four fiscal years combined. The expenditure
required to build the infrastructure in Europe resulted in a budgeted
loss of $1.4 million for that same fiscal 1999 period.
However, with that vital infrastructure in place, DCI was able to
enter into a joint venture partnership with TIMEWorldcom (TWC - not
affiliated with WorldCom or its subsidiaries). The joint venture, DCI
TIME Europe, Ltd., is responsible for implementing the European
expansion plan. Currently, efforts are concentrated on upgrading the
switching capabilities in Spain, which will include the installation of
a "super switch" to carry the majority of the traffic.
Edge Communications was acquired in April 1998, and quickly
fulfilled its potential by realizing substantial gains in both sales and
earnings. This was highlighted in the September 23 announcement of $48
million worth of annual prepaid traffic with Latin Debit Technologies,
Inc., a premier supplier to the Latin music recording industry and
foreign language radio stations.
A third significant step was the announcement of the proposed
merger with Wavetech International (Nasdaq: ITELD), which should propel
DCI to listing status. Wavetech was selected from many candidates
because it increases our product line and infrastructure, is in the same
industry, has cash on hand, increases our shareholder base and has
minimal liabilities. In short, a "clean" company with an exciting
product line.
The "block buster" event occurred on December 7, 1998, marking DCI's
arrival as a full-fledged international carrier. Through an alliance
with IXC Communications, Inc. (Nasdaq: IIXC), DCI was elevated to the
status of a global carrier. In essence, this means we can carry our
traffic, over our lines, using our equipment, across the globe. DCI is a
full-service phone company handling international traffic for other
telecom companies that do not own lines or switching facilities. This
transaction provides the backbone to support dramatic growth in DCI's
worldwide traffic.
Under the terms of the alliance, IXC acquired a 13% ownership
position in DCI, and DCI was granted a five-year master service
agreement to utilize specified IXC facilities to support its expanding
long distance business.
Under the agreement, DCI may lease E1 lines from IXC to carry its
traffic, including four E1s between Madrid and London and two E1s from
London to the United States. DCI will install two new switches in
Europe, one in London and the other in Madrid. The existing switch in
London will be relocated to either Denmark or Sweden and linked directly
to London via dedicated E1 connections. An E1 connection, the European
standard that is equivalent to an American T1, is a 32-channel leased
line. All of the switches will be utilized for both long distance and
pre-paid traffic.
In addition, DCI will lease dedicated lines from IXC to originate
traffic in London and terminate to other high-volume countries
throughout Europe and the Far East. This affords DCI the needed capacity
to ramp up traffic at a quicker pace. It is anticipated that the
switching equipment and dedicated lines, subject to financing, will be
in place by March 1, 1999.
In the recent past, DCI derived the bulk of its revenue from the
sale of prepaid phone cards. DCI's goal has been to become less reliant
on prepaid phone cards, which represented over 80% of the first six
month's revenues, and to focus on emerging as a full-service long
distance telephone company. As a result of the agreement with IXC, DCI
can now fulfill its goal of expanding the scope of its business to
become predominantly a long distance supplier. Going forward it is
anticipated that prepaid phone cards will represent less than 50% of
total sales with long distance representing the majority of revenue.
This shift will lead to an increasing portion of revenues dominated by
the profitable long distance segment.
Unlike other companies that were staked to as much as $200 million,
DCI began with zero external financing. It is a marvelous success story,
and a lot of the credit must go to the talented employees of this
company whose commitment to their shareholders is second to none.
DCI's goal has been to build a new kind of telecommunications
company that can respond quickly to meet the changing needs of the
business marketplace. We are accomplishing this goal by building the
needed infrastructure, using the most up-to-date technologies and
offering superior service. We rely on our expertise and industry
leadership to deliver a wide variety of services, including
Internet-based products. The need for constant innovation makes this a
dynamic goal that will never be "complete". However, it should be clear
that we have made great progress in establishing a solid foothold in the
telecommunications industry.
On behalf of all DCI employees, we thank you for our continued
support, and we wish you a very happy and prosperous New Year.
Sincerely,
Joseph J. Murphy
President & CEO
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