-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PCtWxXTo0tsnlF0ImEqY8YHPB27KlgmoQywFzWzlM9H/TRTj2FSSqe5HBPEOiISb stN/USL4RYCmMaz+9fkR9Q== 0000931763-99-001699.txt : 19990518 0000931763-99-001699.hdr.sgml : 19990518 ACCESSION NUMBER: 0000931763-99-001699 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNTELLECT INC CENTRAL INDEX KEY: 0000758830 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 860486871 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18323 FILM NUMBER: 99626129 BUSINESS ADDRESS: STREET 1: 1000 HOLCOMB WOODS PARKWAY STREET 2: SUITE 410A CITY: ROSWELL STATE: GA ZIP: 30076 BUSINESS PHONE: 7705870700 MAIL ADDRESS: STREET 1: 1000 HOLCOMB WOODS PARKWAY STREET 2: SUITE 410A CITY: ROSWELL STATE: GA ZIP: 30076 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- --------------- Commission File Number: 0 - 18323 SYNTELLECT INC. --------------- (Exact name of registrant as specified in its charter) Delaware 86-0486871 -------- ---------- (State or other jurisdiction of (IRS employer identification incorporation) number) 1000 Holcomb Woods Parkway, Suite 410A, Roswell, Georgia 30076 (Address of principal executive office) (Zip Code) (770) 587-0700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 13,448,863 shares of common stock, $.01 par value per share, were outstanding on May 13, 1999 ================================================================================ 1 SYNTELLECT INC. AND SUBSIDIARIES INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets March 31, 1999 and December 31, 1998 3 Unaudited Condensed Consolidated Statements of Operations- Three Months Ended March 31, 1999 and March 31, 1998 4 Unaudited Condensed Consolidated Statements of Cash Flows- Three Months Ended March 31, 1999 and March 31, 1998 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosure about Market Risk 11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 EXHIBITS Exhibit 27.1 - Financial Data Schedule-1999 14 Exhibit 27.2 - Financial Data Schedule-1998 15 2 SYNTELLECT INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except shares and per share amounts)
March 31, December 31, 1999 1998 ----------------------------- (unaudited) ----------- ASSETS Current assets: Cash and cash equivalents $ 2,054 $ 3,236 Marketable securities ($1.2 million restricted) 5,301 8,298 Trade receivables, net of allowance for doubtful accounts of $893 and $932, respectively 14,485 11,202 Inventories 2,754 2,973 Prepaid expenses 1,348 963 -------- -------- Total current assets 25,942 26,672 Property and equipment, net 5,337 5,429 Other assets 26 32 -------- -------- Total assets $ 31,305 $ 32,133 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,197 $ 2,560 Accrued liabilities 3,095 3,278 Customer deposits 3,664 3,080 Deferred revenue 3,689 2,717 Capital lease obligations-current portion 246 240 -------- -------- Total current liabilities 12,891 11,875 Capital lease obligations - noncurrent portion 380 445 -------- -------- Total liabilities 13,271 12,320 -------- -------- Shareholders' equity: Preferred stock, $.01 par value per share. Authorized 2,500,000 shares; no shares issued or outstanding - - Common stock, $.01 par value per share. Authorized 25,000,000 shares; issued, 13,703,095 and 13,699,095, respectively 137 137 Additional paid-in capital 60,936 60,917 Accumulated deficit (41,661) (40,072) Accumulated other comprehensive income (72) ( 21) -------- -------- 19,340 20,961 Treasury stock, at cost, 241,232 and 179,232 shares, respectively (1,306) (1,148) -------- -------- Total shareholders' equity 18,034 19,813 -------- -------- Total liabilities and shareholders' equity $ 31,305 $ 32,133 ======== ========
See accompanying notes to unaudited condensed consolidated financial statements. 3 SYNTELLECT INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Three Months Ended March 31, -------------------------------- 1999 1998 --------- -------- Net revenues: System sales $ 5,888 $ 4,300 Service bureau 2,211 2,220 Maintenance and other services 3,149 4,541 ------- ------- Total net revenues 11,248 11,061 Cost of revenues: System sales 3,576 2,867 Service bureau 1,408 1,371 Maintenance and other services 1,166 1,158 ------- ------- Total cost of revenues 6,150 5,396 ------- ------- Gross margin 5,098 5,665 Operating expenses: Selling, marketing and administrative 4,980 5,156 Research and development 1,176 1,449 Depreciation and amortization 611 677 ------- ------- Total operating expenses 6,767 7,282 ------- ------- Operating loss (1,669) (1,617) Other income (expense) Interest income 101 196 Other (21) (4) ------- ------- Total other income 80 192 ------- ------- Loss before income taxes (1,589) (1,425) Income taxes - - ------- ------- Net loss $(1,589) $(1,425) ======= ======= Net loss per common share - basic $ (.12) $ (.11) ======= ======= Net loss per common share - diluted $ (.12) $ (.11) ======= ======= Weighted average shares - basic 13,505 13,403 ======= ======= Weighted average shares - diluted 13,505 13,403 ======= ======= Other comprehensive income, net of tax: Foreign currency translation adjustment (46) 65 Unrealized gain (loss) on marketable securities (5) 6 ------- ------- Other comprehensive income (loss) (51) 71 ------- ------- Comprehensive loss $(1,640) $(1,354) ======= =======
See accompanying notes to unaudited condensed consolidated financial statements. 4 SYNTELLECT INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Three Months Ended March 31, ------------------------ 1999 1998 --------- --------- Cash flows from operating activities: Net loss $(1,589) $(1,425) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 611 677 Provision for doubtful accounts 81 81 Increase in receivables (3,363) (136) Decrease (increase) in inventories 219 (244) (Decrease) increase in accounts payable (363) 589 Increase in customer deposits 584 600 Increase in deferred revenue 972 251 Decrease in accrued liabilities (183) (527) Increase in other assets (385) (440) ------- ------- Net cash used by operating activities (3,416) (574) ------- ------- Cash flows from investing activities: Purchase of marketable securities (3,545) (3,196) Maturities of marketable securities 6,542 5,665 Proceeds from notes receivable - 250 Purchase of property and equipment (519) (521) ------- ------- Net cash provided by investing activities 2,478 2,198 ------- ------- Cash flows from financing activities: Proceeds from issuance of common stock 19 16 Purchase of treasury stock (158) - Principal payments on long-term debt (59) (45) ------- ------- Net cash used in financing activities (198) (29) ------- ------- Effect of exchange rates on cash (46) 65 ------- ------- Net increase (decrease) in cash and cash equivalents (1,182) 1,660 Cash and cash equivalents at beginning of period 3,236 2,290 ------- ------- Cash and cash equivalents at end of period $ 2,054 $ 3,950 ======= ======= Supplemental disclosure of cash flow information: Cash paid for interest $ 21 $ 14 ======= ======= Cash paid for income taxes $ - $ - ======= =======
See accompanying notes to unaudited condensed consolidated financial statements. 5 SYNTELLECT INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except shares and per share amounts) (unaudited) (1) Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Syntellect Inc. ("Syntellect" or the "Company") and its wholly-owned subsidiaries, Telecorp Systems, Inc., Syntellect Canada Inc., Syntellect Europe Ltd., Syntellect Deutschland GmbH, Syntellect Technology Corporation and Syntellect Interactive Services, Inc. ("SIS"). All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with generally accepted accounting principles, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the financial statements include all adjustments of a normal recurring nature which are necessary for a fair presentation of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. Although the Company believes that the disclosures are adequate to make information presented not misleading, it is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's 1998 Annual Report on Form 10-K. The results of operations for the three months ended March 31, 1999 are not necessarily indicative of the results to be expected for the full year. Revenue Recognition Syntellect recognizes revenue from sales of systems and services in accordance with Statement of Position 97-2, Software Revenue Recognition ("SOP 97-2"). (2) Business Segments Effective for financial statements for fiscal periods beginning after December 15, 1997, Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," requires that an enterprise disclose certain information about operating segments. An operating segment is defined as a component of an enterprise that engages in business activities which may earn revenues and incur expenses, whose results are regularly reviewed by a chief operating decision maker, and for which discrete financial information is available. The Company has three operating segments which are organized around differences in products and services: Systems, Service Bureau ("SB"), and Patents: (in thousands)
Quarter ended March 31, 1999 SYSTEMS SB PATENTS TOTAL - ----------------------------- Revenues from customers $ 9,037 $2,211 $ - $11,248 Depreciation and amortization 494 117 - 611 Segment income (loss) (1,699) 110 - (1,589) Expenditures for segment assets 311 208 - 519 Quarter ended March 31, 1998 - ----------------------------- Revenues from customers $ 7,766 $2,220 $1,075 $11,061 Depreciation and amortization 452 225 - 677 Segment income (loss) (2,140) 52 663 (1,425) Expenditures for segment assets 430 91 - 521
6 (3) Inventories Inventories consist of the following:
March 31, December 31, 1999 1998 --------- ------------ Finished goods $ 998 $ 795 Purchased components 1,601 1,746 Repair, warranty and maintenance inventory 2,286 2,695 ------- ------- 4,885 5,236 Less allowances for obsolescence (2,131) (2,263) ------- ------- $ 2,754 $ 2,973 ======= =======
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET REVENUES Net revenues for the quarter ended March 31, 1999 were $11.2 million, an increase of 2% from the $11.1 million reported for the first quarter of 1998. Net revenues consist of SYSTEM SALES, SERVICE BUREAU REVENUES and MAINTENANCE AND OTHER SERVICES REVENUES, which represented 52%, 20% and 28% of net revenues, respectively, for the quarter ended March 31, 1999, and 39%, 20% and 41% of net revenues, respectively, for the comparable prior year period. SYSTEM SALES for the period ended March 31, 1999 were $5.9 million, an increase of approximately $1.6 million, or 37%, over the $4.3 million reported for the same prior year period. Core product sales include Vista(TM), an open standards-based Interactive Communications Management (ICM) software platform for enterprise customer call centers; VocalPoint, an open architecture Interactive Voice Response ("IVR") platform; an outbound system, the VocalPoint Predictive Dialer; VocalPoint Interactive Services, providing computer telephony integration ("CTI") functionality; and Interactive Web Response ("IWR"). Non- core products include the Premier and Premier 030 proprietary IVR systems and the VocalPoint ARU (Audio Response Unit) for the cable television industry. The increase in SYSTEM SALES was primarily related to sales of the Company's new Vista IVR product in the amount of $2.9 million, or 49% of total Systems Sales revenues. The Company announced the release of Vista in May of 1998 and began recognizing revenue for the Vista product in the third quarter of 1998. SERVICE BUREAU REVENUES decreased by $9,000, or less than 1%, quarter-over- quarter. The cable TV industry has been experiencing a decline in consumer purchases of pay-per-view events which results in lower than historical transaction processing fees by the Company. MAINTENANCE AND OTHER SERVICES REVENUES decreased by approximately $1.4 million between the comparable quarters. The maintenance component decreased $192,000, or 6%, quarter-over-quarter. The decrease was anticipated as the Company has announced to its customers that the VocalPoint ARU is not Year 2000 compliant and will not be made so. As the maintenance contracts on this product expire, they are not being renewed. Revenues from patents and other services decreased $1.1 million, or 100%, as compared to the same prior year period. During the comparable quarter in 1998, the Company recognized $1.1 million in revenue after settling a suit on a patent for which it had retained economic rights after the sale of the Company's patent portfolio in October 1997. The realization of any further revenues related to the Company's former patent portfolio is uncertain. INTERNATIONAL REVENUES for the first quarter of 1999 were $2 million, or 18% of total revenues, compared to $2.1 million, or 19% of total revenues, for the first quarter of 1998. International revenues typically consist of a small number of larger orders and are subject to quarter-to-quarter fluctuations. GROSS MARGIN The gross margin percentage for the quarter ended March 31, 1999 was 45% of net revenues as compared to 51% in the prior year quarter. Gross margins for system sales increased to 39% from 33% between comparable quarters primarily as a result of increased system revenues and the proportion of fixed costs in cost of sales. Gross margins for the service bureau decreased from 38% to 36% between the comparable quarters. Gross margins on maintenance and other services decreased to 63% from 74% between the comparable quarters. The primary reason for the decrease was the absence of patent revenue in the current quarter as compared to the same quarter of the prior year. The Company includes those costs directly associated with the generation of revenue in its computation of gross margin, including direct labor, application development, travel, maintenance, customer support, supplies and hardware. Gross margins will fluctuate on a quarterly basis due to changes in competitive pressures, sales volume, product mix, variations in the ratio of domestic versus international sales, or changes in the mix of direct and indirect sales activity. Accordingly, the gross margins reported for the first quarter of 1999 are not necessarily indicative of the results to be expected for the full year. 8 OPERATING EXPENSES Operating expenses for the first quarter of 1999 were $6.8 million, a decrease of $515,000, or 7%, from the prior year quarter of $7.3 million Selling, marketing and administrative expenses decreased $176,000, or 3%, compared to the prior year period. The primary reason for the decrease was the reduction in patent lawsuit related expenses as compared to the prior year period. Research and development expenses decreased $273,000, or 19%, compared to the prior year period. NET INCOME (LOSS) Syntellect reported a net loss of $1.6 million, or $(.12) per share, for the first quarter of 1999, compared to a net loss of $1.4 million, or $(.11) per share, for the prior year quarter LIQUIDITY AND CAPITAL RESOURCES For the first three months of 1999, the Company had negative cash flows from operations of $3.4 million compared to negative cash flows of $574,000 in the same period of 1998. The decrease in cash flows from operations was primarily due to the net loss for the quarter, increased investments in accounts receivable and other assets, decreases in accounts payable and accrued liabilities; partially offset by the decrease in inventories and the increase in customer deposits and deferred revenues. Cash flows from investing activities provided $2.5 million during the period. Net sales of marketable securities provided $3 million, while cash used in the acquisition of fixed assets totaled $519,000. Cash used in financing activities totaled $198,000 for the period. Proceeds from the issuance of common stock totaled $19,000, while the purchase of treasury stock used $158,000 and the repayment of long-term debt used $59,000. Syntellect had working capital of $13.1 million at March 31, 1999, as compared with $14.8 million at December 31, 1998. The current ratio was 2.0:1 and 2.2:1 on such dates, respectively. Cash, cash equivalents and marketable securities at the end of the first quarter totaled $7.4 million as compared with $11.5 million at year end. Syntellect expects that its current cash, cash equivalents and marketable securities, combined with future cash flows from operating activities, will be sufficient to support the Company's operations for the remainder of 1999. The Company has a $1.1 million letter of credit pledged as a security deposit for the Company's facility in Phoenix, Arizona. This $1.1 million letter of credit is secured by a U.S. Treasury security held in the Company's available-for-sale portfolio and accordingly, this marketable security is restricted as to the disposal by such letter of credit agreement. On November 13, 1998, the Board of Directors of Syntellect approved the stock buyback plan to purchase up to 1.5 million shares of its stock over the next two years. As of May 7, 1999, the Company had repurchased 78,500 shares. YEAR 2000 COMPLIANCE The Year 2000 issue is related to the date-sensitive computer programs and applications using two digits rather than four to designate the year. After January 1, 2000, these systems may incorrectly recognize the year as 1900 causing system failures or incorrect processing of financial information. The Company is addressing the Year 2000 compliance issues. The Company's state of readiness can be explained via three elements: (1) information technology ("IT") and non-IT systems, (2) external customers on maintenance, and (3) third party issues, as listed in the table below:
YEAR 2000 ISSUE DESCRIPTION COMPLIANT STATUS - ---------------------------------------------------------------------------------------------------------------------- IT-internal financial system Production problems necessitated an upgrade to Yes Installed and in production new version of current software - ----------------------------------------------------------------------------------------------------------------------
9
YEAR 2000 ISSUE DESCRIPTION COMPLIANT STATUS - ---------------------------------------------------------------------------------------------------------------------- IT-systems Internal hardware and software, In progress Plan in place to evaluate primarily desktop PC's, servers, internal hardware and software and SIS Transaction Center equipment which is currently being executed with deadline of completion by early fourth quarter of 1999. Purchase of new equipment requires vendors' warranty of being Year 2000 compliant. - ---------------------------------------------------------------------------------------------------------------------- Non-IT systems Building and equipment In progress Completion by end of third quarter of 1999. - ---------------------------------------------------------------------------------------------------------------------- External customers on Inform customers as to Not applicable All maintenance customers have Maintenance whether product purchased is been informed via letter as to Year 2000 compliant and status of their product and options in migrating to options available. versions which are compliant - ---------------------------------------------------------------------------------------------------------------------- Third party issues Assess third party risks-- In progress Ongoing assessment in place via primarily suppliers accessing suppliers' WEB page via the Internet and direct contact with suppliers. - ----------------------------------------------------------------------------------------------------------------------
Costs related to remedying Year 2000 compliance issues are not fully known at this time. The Company is currently analyzing the issues as stated above. The following table provides the status as currently known:
ISSUE COSTS REASON - ----------------------------------------------------------------------------------------------------------------- IT-internal financial system None Production problems required the Company to upgrade to new version of current software regardless of Year 2000 compliance issue. - ----------------------------------------------------------------------------------------------------------------- IT-systems Unknown Evaluation of PC related hardware and software has been integrated into current staff's responsibilities and has not required additional assistance. At this time, the Company does not anticipate the costs to remedy this issue to be material. $490,000 (1998) Cost to upgrade equipment in the Service $700,000 (1999 estimate) Bureau Transaction Center to improve functionality and address Year 2000 compliance issues. - ----------------------------------------------------------------------------------------------------------------- Non-IT systems Not material Completion of projects has been integrated into current staff's responsibilities. - ----------------------------------------------------------------------------------------------------------------- Third party suppliers Not material Evaluation of suppliers has been integrated into current staff's responsibilities and has not required additional assistance. - ----------------------------------------------------------------------------------------------------------------- External customers $25,000 Administration of customer letters and coordination of project - -----------------------------------------------------------------------------------------------------------------
Major risks caused by Year 2000 compliance are primarily related to customers. The Company has reviewed the current products available to customers and has determined that all are Year 2000 compliant. Of the products still supported under maintenance contracts, VocalPoint ARU (Audio Response Unit) is not Year 2000 compliant and will not be made so. 10 ARU customers have been notified of this issue and informed that maintenance contracts of this product will be discontinued by December 31, 1999. The Company will be extending services to these customers on a time and materials basis as their maintenance contracts expire. Total exposure for lost maintenance revenue from this product line is approximately $1.9 million annually based on 1998 revenues earned. The time and materials services plus any ARU customers who choose to migrate to a current product that is Year 2000 compliant will mitigate the exposure of lost ARU maintenance revenue. Other customers may also be on earlier versions of current products, which are not Year 2000 compliant. As described above, the Company has notified all customers on maintenance as to whether products purchased are Year 2000 compliant and options in migrating to the Company's current products which are on versions that are Year 2000 compliant. The risk of lost revenue is unknown at this time but the Company is in progress of assessing this risk and determining any possible contingency plans. Because costs related to this project are based on estimates by management of the Company, there is no assurance that actual costs will not differ materially from the current expectations which may cause an adverse effect on the Company's financial position or results of operations. OPERATING BUSINESS SEGMENTS An operating segment is defined as a component of an enterprise that engages in business activities which may earn revenues and incur expenses, whose results are regularly reviewed by a chief operating decision maker, and for which discrete financial information is available. The Company has three operating segments which are organized around differences in products and services: Systems; Service Bureau; and Patents (see Note 2). Systems is the operating segment which has products and services including IVR, IWR, CTI, predictive dialing technologies, and maintenance. Service Bureau is the operating segment which has products and services including Home Ticket pay-per-view, Hot Spots, Call Redirect, Cyberstats, and a variety of out-sourced electronic capabilities such as benefits enrollment and broadcast faxing. Patents is the operating segment which held the Company's patent portfolio. In October 1997, the Company sold the patent portfolio to a third party for $10 million. The Company received cash of $5 million at closing and a $5 million promissory note which was fully collected by September 1998. As additional consideration under the agreement, the Company retained certain economic rights, including the right to pursue certain litigation against third parties. Revenues from Customers include payments for settlement of patent lawsuits. The Company recognized $1 million in revenue in the quarter ended March 31, 1998 from a patent lawsuit, but had no such revenue in the current period. The Company is still pursuing certain litigation against third parties but the realization of revenue, if any, from potential settlements is doubtful. FORWARD LOOKING STATEMENTS This report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Also see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 for a discussion of important factors that could affect the validity of any such forward-looking statements. ITEM 3. FOREIGN CURRENCY EXCHANGE RATE RISK The Company invoices all international customers in U. S. dollars except customers of the Company's United Kingdom (U.K.) subsidiary which are invoiced in Sterling. The U.K. subsidiary's financials including balance sheet, revenue, and operating expenses are transacted in Sterling. Therefore, the Company's exposure to foreign currency exchange rate risk occurs when translating the financial results of the U.K. subsidiary to U.S. dollars in consolidation. At this time, the Company does not use instruments to hedge its foreign exposure in the U.K. because the effect of foreign exchange rate fluctuations are not material. 11 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27.1 - Financial Data Schedule-1999 Exhibit 27.2 - Financial Data Schedule-1998 (b) Reports on Form 8-K No current reports on Form 8-K were filed during the three months ended March 31, 1999. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SYNTELLECT INC. Date: May 14, 1999 By: /s/ Peter W. Pamplin ------------------------------------ Peter W. Pamplin Vice President, Chief Financial Officer, Secretary and Treasurer By: /s/ Keith A. Pekkala ----------------------------------- Keith A. Pekkala Vice President and Controller, (Principal Accounting Officer) 13 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF SYNTELLECT, INC. AND SUBSIDIARIES AS OF MARCH 31, 1999, AND THE CONSOLIDATED STATEMENT OF OPERATIONS OF SYNTELLECT, INC. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 2,054 5,301 15,378 893 2,754 25,942 14,874 9,537 31,305 12,891 0 0 0 137 17,897 31,305 5,888 12,248 3,576 6,150 6,767 81 0 (1,589) 0 (1,589) 0 0 0 (1,589) (0.12) (0.12)
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF SYNTELLECT, INC. AND SUBSIDIARIES AS OF MARCH 31, 1998, AND THE CONSOLIDATED STATEMENT OF OPERATIONS OF SYNTELLECT, INC. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 3,950 5,770 11,861 912 2,837 25,401 12,678 7,021 34,339 13,010 0 0 0 136 20,712 34,339 4,300 11,061 2,867 5,396 7,282 81 14 (1,425) 0 (1,425) 0 0 0 (1,425) (0.11) (0.11)
-----END PRIVACY-ENHANCED MESSAGE-----