-----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, A89W/A9dvWS5Kh4upvfwA/MlucDIuy3J4Ow1UHDZGT/wWdcydv0p5w/rSs6cSIOV zrwJ0aRWkcvir9caF0T76Q== 0000950134-97-000223.txt : 19970115 0000950134-97-000223.hdr.sgml : 19970115 ACCESSION NUMBER: 0000950134-97-000223 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERVOICE INC CENTRAL INDEX KEY: 0000764244 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 751927578 STATE OF INCORPORATION: TX FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13616 FILM NUMBER: 97505665 BUSINESS ADDRESS: STREET 1: 17811 WATERVIEW PKWY CITY: DALLAS STATE: TX ZIP: 75255 BUSINESS PHONE: 2146693988 10-Q 1 FORM 10-Q FOR QUARTER ENDED NOVEMBER 30, 1996 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 0-13616 INTERVOICE, INC. (Exact name of registrant as specified in its charter) TEXAS 75-1927578 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 17811 WATERVIEW PARKWAY DALLAS, TX 75252 (Address of principal executive offices) 214-454-8000 (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 --- --- The Registrant had 16,302,995 shares of common stock, no par value per share, outstanding as of the close of the period covered by this report. ================================================================================ 2 PART I. FINANCIAL INFORMATION InterVoice, Inc. Consolidated Balance Sheets (Unaudited)
November 30, February 29, ASSETS 1996 1996 - ----------------------------------- ------------- ------------- CURRENT ASSETS Cash and cash equivalents $ 18,935,287 $ 23,573,976 Accounts and notes receivable, net of allowance for doubtful accounts of $208,833 in 1997 and $746,027 in 1996 34,442,964 24,704,425 Inventory 16,081,326 12,586,640 Prepaid expenses 2,032,507 804,428 Deferred taxes 1,377,506 1,714,246 ------------- ------------- 72,869,590 63,383,715 PROPERTY AND EQUIPMENT Building 16,080,638 15,865,605 Computer equipment 10,413,510 8,193,562 Furniture, fixtures and other 5,175,536 4,737,625 Service equipment 2,229,295 2,025,558 ------------- ------------- 33,898,979 30,822,350 Less allowance for depreciation 12,312,384 9,540,886 ------------- ------------- 21,586,595 21,281,464 OTHER ASSETS Intangible assets, net of amortization of $2,555,639 in 1997 and $1,893,619 in 1996 7,496,327 4,712,495 Other assets 199,868 349,132 ------------- ------------- $ 102,152,380 $ 89,726,806 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Accounts payable and accrued expenses $ 12,995,841 $ 11,796,125 Customer deposits 3,022,620 2,527,514 Deferred income 4,157,765 4,075,099 Income taxes payable -- 1,053,519 ------------- ------------- 20,176,226 19,452,257 DEFERRED TAXES 173,074 713,074 CONTINGENCIES STOCKHOLDERS' EQUITY Preferred Stock, $100 par value--2,000,000 shares authorized: none issued Common Stock, no par value, at nominal assigned value--62,000,000 shares authorized:19,302,995 issued, 16,302,995 outstanding in 1997 and 18,984,206 issued, 15,984,206 outstanding in 1996 9,640 9,460 Additional paid-in capital 42,055,854 39,103,070 Unearned compensation (647,945) (436,281) Treasury stock - at cost (24,003,245) (24,003,245) Retained earnings 64,388,776 54,888,471 ------------- ------------- 81,803,080 69,561,475 ============= ============= $ 102,152,380 $ 89,726,806 ============= =============
3 InterVoice, Inc. Consolidated Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended --------------------------- --------------------------- November 30, November 30, November 30, November 30, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Sales $ 24,335,974 $ 25,145,270 $ 77,195,497 $ 70,845,688 Cost of goods sold 9,788,985 8,879,178 29,052,321 24,841,237 ------------ ------------ ------------ ------------ Gross margin 14,546,989 16,266,092 48,143,176 46,004,451 ------------ ------------ ------------ ------------ Research and development expenses 2,996,496 2,502,983 8,610,129 7,052,283 Selling, general and administrative expenses 8,094,980 7,151,063 24,121,521 20,029,879 Litigation settlement 1,800,000 -- 1,800,000 -- ------------ ------------ ------------ ------------ Income from operations 1,655,513 6,612,046 13,611,526 18,922,289 Other income 157,444 122,378 515,322 374,248 ------------ ------------ ------------ ------------ Income before income taxes 1,812,957 6,734,424 14,126,848 19,296,537 Income taxes 562,967 2,323,377 4,626,543 6,657,306 ------------ ------------ ------------ ------------ Net income $ 1,249,990 $ 4,411,047 $ 9,500,305 $ 12,639,231 ============ ============ ============ ============ Earnings per common and common equivalent share $ .08 $ .27 $ .57 $ .77 ============ ============ ============ ============ Weighted average number of common and common equivalent shares 16,524,457 16,542,379 16,675,136 16,368,755 ============ ============ ============ ============
4 InterVoice, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
Common Stock Additional -------------------------- Paid-in Unearned Treasury Retained Shares Amount Capital Compensation Stock Earnings Total ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at February 29, 1996 15,984,206 $ 9,460 $ 39,103,070 $ (436,281) $(24,003,245) $ 54,888,471 $ 69,561,475 Exercise of stock options 283,241 162 1,718,324 -- -- -- 1,718,486 Issuance of restricted stock 35,548 18 1,234,460 (211,664) -- -- 1,022,814 Net Income -- -- -- -- -- 9,500,305 9,500,305 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at November 30, 1996 16,302,995 $ 9,640 $ 42,055,854 $ (647,945) $(24,003,245) $ 64,388,776 $ 81,803,080 ============ ============ ============ ============ ============ ============ ============
5 InterVoice, Inc. Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended Nine Months Ended --------------------------- --------------------------- November 30, November 30, November 30, November 30, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ OPERATING ACTIVITIES Net income $ 1,249,990 $ 4,411,047 $ 9,500,305 $ 12,639,231 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,203,460 1,083,449 3,433,518 3,242,687 Changes in operating assets and liabilities: (5,837,558) (1,976,407) (13,267,465) (7,499,472) ------------ ------------ ------------ ------------ NET CASH FROM OPERATIONS (3,384,108) 3,518,089 (333,642) 8,382,446 INVESTING ACTIVITIES Purchase of property and equipment (1,170,571) (1,065,696) (3,349,036) (3,496,718) Purchased software (1,226,538) (1,512,400) (3,296,588) (2,104,503) (Increase) decrease in notes receivable -- (639,261) 40,412 (558,507) ------------ ------------ ------------ ------------ (2,397,109) (3,217,357) (6,605,212) (6,159,728) FINANCING ACTIVITIES Exercise of stock options 578,306 1,038,446 2,300,165 3,066,902 ------------ ------------ ------------ ------------ 578,306 1,038,446 2,300,165 3,066,902 ------------ ------------ ------------ ------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,202,911) 1,339,178 (4,638,689) 5,289,620 Cash and cash equivalents, beginning of period 24,138,198 14,227,394 23,573,976 10,276,952 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,935,287 $ 15,566,572 $ 18,935,287 $ 15,566,572 ============ ============ ============ ============
6 NOTES TO UNAUDITED FINANCIAL STATEMENTS NINE MONTHS ENDED NOVEMBER 30, 1996 NOTE A -- BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. The Balance Sheet at February 29, 1996 has been derived from audited financial statements at that date. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the unaudited November 30, 1996 and 1995 financial statements have been included. Operating results for the nine month period ended November 30, 1996 are not necessarily indicative of the results that may be expected for the year ending February 28, 1997 as they may be affected by a number of factors, including the timing and ultimate receipt of orders from significant customers which continue to constitute a large portion of the Company's sales, the sales channel mix of products sold, and changes in general economic conditions, any of which could have an adverse effect on operations. NOTE B -- EARNINGS PER SHARE Earnings per share are computed based on the sum of the average outstanding common shares and common equivalent shares. Common equivalent shares assume the exercise of all dilutive stock options using the treasury stock method. Primary and fully diluted earnings per share are not materially different for the periods presented. NOTE C -- CONTINGENCIES The Company is subject to certain legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, based on discussions with and advice of legal counsel, the amount of ultimate liability with respect to these actions will not materially affect the consolidated results of operations or financial condition of the Company. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SALES. Sales in the first nine months of fiscal 1997 increased approximately $6.3 million, or 9%, when compared to the same period of fiscal 1996. The increase was due primarily to increased domestic customer premise equipment sales and international customer premise equipment sales, particularly to Latin America and Asia-Pacific markets. Domestic customer premise equipment sales for the first nine months of fiscal 1997 increased 10% when compared to the same period of fiscal 1996. International customer premise equipment sales for the same period increased 35% when compared to the same period of fiscal 1996. The Company believes that some telecommunications companies have temporarily delayed their implementation of call automation solutions while they evaluate marketing and investment strategies in the light of new opportunities resulting from deregulation under the Telecommunications Act of 1996 and while they also evaluate the implications of the recent judicial stay of certain provisions of the Act and its regulations. Management believes that these regulatory changes for the telecommunications industry, and the industry's reaction to such changes are the primary reasons why sales to domestic telecommunications companies declined to 17% of the Company's total sales for the first nine months of fiscal 1997 as compared to 23% during the same period in fiscal 1996. Sales to a leading domestic telecommunications company in the first nine months of fiscal 1997 were approximately $7.9 million, or 10% of the Company's total sales. Sales in the third quarter of fiscal 1997 decreased $0.8 million, or 3%, compared to the same period of fiscal 1996. Domestic customer premise equipment sales for the third quarter of fiscal 1997 decreased 17% when compared to the same period of fiscal 1996 while international customer premise equipment sales increased 91%. The decrease in domestic customer premise equipment sales was primarily attributable to a decline in reseller sales and a tight local employment market which impacted the Company's ability to ship its backlog of orders. The increase in international sales was partially attributable to $2.9 million in sales, or 12% of the Company's total sales during the third quarter, to a Mexican public utility through one of the Company's resellers. For the reasons mentioned above, sales to telecommunications companies declined to 13% of the Company's total sales in the third quarter of fiscal 1997, as compared to 20% of the Company's total sales for the same period of fiscal 1996. COST OF GOODS SOLD. Cost of goods sold as a percentage of the Company's total sales increased to 38% and 40% in the first nine months and the third quarter of fiscal 1997, respectively, from 35% in the same periods of fiscal 1996. This increase is primarily due to the Company's continued investment in applications engineering and customer service resources to pursue opportunities in all of its markets. RESEARCH AND DEVELOPMENT. Research and development expenses in the first nine months and third quarter of fiscal 1997 increased approximately $1.6 million and $0.5 million, or 22% and 20%, respectively, over the same periods of fiscal 8 1996. Research and development expenses, as a percentage of the Company's total sales, in the first nine months and third quarter of fiscal 1997 increased to 11% and 12%, respectively, from 10% in the same periods of fiscal 1996. This increase is primarily due to the Company's research and development efforts in the first nine months and third quarter of fiscal 1997 which included porting the Company's InterSoft core software to the UNIX and Windows NT operating systems, the development of VisualConnect (the ability to communicate with OneVoice Systems via the Internet), development of InVision (the Company's next generation customer application development tool), and the enhancement of products acquired in the VoicePlex Corporation transaction. Additionally, expenditures were made for the ongoing development of the Company's multi-application platform including OneVoice (the Company's Interactive Voice Response system), InterDial (the Company's outbound predictive dialer system), OneLink (a digital interface for analog switches), and continued development of digital VocalCard software and hardware functionality. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses increased approximately $4.1 million and $0.9 million in the first nine months and third quarter of fiscal 1997, respectively, as compared to the same periods of fiscal 1996. Selling, general and administrative expenses, as a percentage of the Company's total sales, in the first nine months and third quarter of fiscal 1997 increased to 33% and 31%, respectively from 28% in the same periods of fiscal 1996. This increase is primarily due to the Company's continued investment in selling, general and administrative resources as it expands its worldwide sales, service and support infrastructure and invests in marketing and advertising programs. LITIGATION SETTLEMENT. The Company incurred litigation settlement expenses of $1.8 million during the third quarter of fiscal 1997. These expenses are discussed in Part II, Item I of this quarterly report. OTHER INCOME. Other income in the first nine months of fiscal 1997, consisting primarily of interest income on cash and other non-operating interest income, increased approximately $0.1 million from the same period of fiscal 1996 as the result of reduced cash balances, during the same period of fiscal 1996, resulting from the completion of the Company's stock repurchase program, the purchase of VoicePlex Corporation, and the completion of the Company's new facilities in Dallas. Other income during the third quarter of fiscal 1997 was flat as compared to the same period of fiscal 1996. INCOME FROM OPERATIONS. Operating income and net income, adjusted for litigation settlement expenses, during the first nine months of fiscal 1997 decreased 18% and 15%, respectively, from the same period in fiscal 1996. The Company increased its investment in sales, marketing, application engineering, and research and development resources at a greater rate than the increase in the Company's total sales, in order to continue to pursue opportunities in the customer premise equipment and telecommunications markets. For the reasons discussed above, operating income and net 9 income, adjusted for litigation settlement expenses, during the third quarter of fiscal 1997 decreased 47% and 43%, respectively, from the same period in fiscal 1996. Net income during the first nine months and third quarter of fiscal 1997 decreased at a slightly lower rate than operating income due to the favorable tax impact of the Company's international sales through its Foreign Sales Corporation. LIQUIDITY AND CAPITAL RESOURCES. At November 30, 1996, the Company had cash reserves of approximately $18.9 million. The Company believes its cash reserves and internally generated cash flow will be sufficient to meet its operating cash requirements for the foreseeable future. The Company reviews share repurchase and acquisition opportunities from time to time and believes it has access to the financial resources necessary to pursue attractive opportunities as they arise. The Company recently announced a decision by the Board of Directors authorizing the Company to repurchase up to one million shares of its common stock over the next year. The Company believes it has access to the financial resources necessary to repurchase shares from time to time pursuant to the Board's share repurchase authorization. DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS. This report includes "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. All statements other than statements of historical facts included in this Form 10-Q, including without limitation, statements contained in this "Management Discussion and Analysis of Financial Condition and Results of Operations" and under "Notes to Unaudited Financial Statements" located elsewhere herein regarding the Company's financial position, business strategy, plans and objectives of management of the Company for future operations, and industry conditions, are forward-looking statements. 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. The following significant factors, among others, sometimes have affected, and in the future could affect, the Company's actual results and could cause such results during 1997, and beyond, to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company: o The Company faces ever-increasing demands from its actual and prospective customers for its products to be compatible with a variety of rapidly proliferating computing, telephony and computer networking technologies and standards and to provide greater functionality. Since the Company does not have the resources to cause its products to be compatible with each new technology or standard and to provide all requested functionality, the ultimate success of the Company's products is dependent, to a large degree, on the Company allocating its resources to developing and improving products compatible with those technologies, standards and functionalities that ultimately become widely accepted by the Company's actual and prospective customers. The Company's success is also dependent, to a large degree, on the Company's ability to implement arrangements with other vendors with complementary product offerings to provide actual and prospective customers greater 10 functionality and to ensure that the Company's products are compatible with the increased variety of technologies and standards. o Intense competition in the voice automation industry. o Ability of the Company to continue to introduce new features and products as the Company's markets evolve, as new technologies and standards become available, and customers demand additional functionality, requiring a continued high level of expenditures by the Company for research and development. o Ability of the Company to properly estimate costs under fixed price contracts in developing application software and otherwise tailoring its systems to customer-specific requests. o Continued availability of suitable non-proprietary computing platforms and system operating software that are compatible with the Company's products. o The quantity and size of large sales (sales valued at approximately $1 million or more) during any fiscal quarter, which can cause wide variations in the Company's sales on a quarter to quarter basis. o The ability of the Company to retain its customer base and, in particular, its more significant customers (such as MCI Telecommunications, which accounted for over ten percent of the Company's total sales in the last three fiscal years) since such customers generally are not contractually obligated to place further orders with the Company. o Certain of the components for the Company's products are available from limited suppliers. The Company's operating results could be adversely affected if the Company were unable to obtain such components in the future. o Risks involved in the Company's international distribution and sales of its products, including unexpected changes in regulatory requirements, unexpected changes in exchange rates, the difficulty and expense of maintaining foreign offices and distribution channels, tariffs and other barriers to trade, difficulty in protecting intellectual property rights, and foreign governmental regulations that may limit or restrict the sales of call automation systems. Additionally, changes in foreign credit markets and currency exchange rates may result in requests by many international customers for extended payment terms and may have an adverse impact on the Company's cash flow and its level of accounts receivable. o Legislative and administrative changes and, in particular, changes affecting the telecommunications industry, such as the recently enacted Telecommunications Act of 1996. While many industry analysts expect the Telecommunications Act of 1996 11 to result in at least a temporary surge in the procurement of telecommunications equipment and related software and other products, there is no assurance that the Company can estimate with sufficient accuracy those products which will ultimately be purchased, the timing of any such purchases or the quantities to be purchased. o The Company's ability to hire and retain, within the Company's compensation parameters, qualified technical talent and outside contractors in highly competitive markets for the services of such personnel. o Extreme price and volume trading volatility in the U.S. stock market, which has had a substantial effect on the market prices of securities of many high technology companies frequently for reasons other than the operating performance of such companies. These broad market fluctuations could adversely affect the market price of the Company's common stock. o Increasing litigation with respect to the enforcement of patents, copyrights and other intellectual property. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements disclosed in this paragraph and otherwise in this report. 12 PART II, OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company and its wholly-owned French subsidiary recently entered into a settlement agreement with Realizzazione Investimenti per lo Sviluppo delle Comunicazioni s.r.l. ("RISC"), an Italian registered limited company. The settlement will result in the dismissal, with prejudice, of the lawsuit pending between the companies before the Commercial Court of Nanterre in France. The lawsuit was most recently discussed in the Company's Annual Report on Form 10-K for the year ended February 29, 1996, and Quarterly Report on Form 10-Q for the quarter ended August 31, 1996. Pursuant to the settlement, the Company paid $1.8 million to RISC, and RISC returned all equipment and software previously purchased from the Company. 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. INTERVOICE, INC. Date: 1/14/97 By: /S/ ROB-ROY J. GRAHAM ---------------------------------- Rob-Roy J. Graham Chief Financial Officer (Chief Accounting Officer) 13 INTERVOICE, INC. INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBIT - ------- ------- 27.1 Financial Data Schedule
Furnished upon request EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS FEB-28-1997 MAR-01-1996 NOV-30-1996 18,935,287 0 34,442,964 208,833 16,081,326 72,869,590 33,898,979 12,312,384 102,152,380 20,176,226 0 0 0 9,640 81,793,440 102,152,380 77,195,497 77,195,497 29,052,321 29,052,321 0 (56,032) 0 14,126,848 4,626,543 9,500,305 0 0 0 9,500,305 0.57 0.57
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