-----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, BmmDk+QWo0IzKHEpQ0L7leCSdoi01aKQ+zm+AfqR4p0s2wOZIV0/rRrMfYKXmP2Z Ojbsd8JX1RhorO2nk9Vxfw== 0000927016-98-003124.txt : 19980817 0000927016-98-003124.hdr.sgml : 19980817 ACCESSION NUMBER: 0000927016-98-003124 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAVOX CORP CENTRAL INDEX KEY: 0000811640 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 020364368 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15578 FILM NUMBER: 98688946 BUSINESS ADDRESS: STREET 1: 6 TECHNOLOGY PARK DR CITY: WESTFORD STATE: MA ZIP: 01886 BUSINESS PHONE: 5089520200 MAIL ADDRESS: STREET 1: 6 TECHNOLOGY PARK DRIVE STREET 2: 6 TECHNOLOGY PARK DRIVE CITY: WESTFORD STATE: MA ZIP: 01886 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 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 0-15578 DAVOX CORPORATION (Exact name of registrant as specified in its charter) Delaware No. 02-0364368 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification Number) 6 Technology Park Drive Westford, Massachusetts 01886 (Address of principal executive offices) (Zip Code) Telephone: (978) 952-0200 (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: Common Stock, par value $.10 per share, outstanding as of August 6, 1998: 14,226,879 shares. DAVOX CORPORATION & SUBSIDIARIES INDEX
PART I. FINANCIAL INFORMATION Page No. ------- Item 1. Financial Statements: Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997............................ 3 Consolidated Statements of Income for the three months and six months ended June 30, 1998 and 1997....................................................... 4 Consolidated Statements of Cash Flows for the six months ended June 30, 1998 and 1997................ 5 Notes to Consolidated Financial Statements..................... 6 - 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 10 - 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings........................................ 14 Item 4. Submission of Matters to a Vote of Security Holders...... 14 Item 5. Other Information........................................ 15 Item 6. Exhibits and Reports on Form 8-K......................... 15 Signatures............................................... 16
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS DAVOX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, Except Share Amounts) (Unaudited)
June 30, December 31, 1998 1997 ASSETS -------- ------------ Current assets: Cash and cash equivalents $20,680 $ 28,639 Marketable securities 34,682 23,802 Accounts receivable, net of reserves of approximately $968 and $1,134 in 1998 and 1997, respectively 19,997 12,599 Interest receivable 1,073 ---- Deferred tax assets 9,319 9,319 Prepaid expenses and other current assets 1,295 1,123 ------- -------- Total current assets 87,046 75,482 ------- -------- Property and equipment, net 5,488 5,248 Long-term deferred tax assets 669 669 Other assets 149 161 ------- -------- $93,352 $ 81,560 ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,011 $ 5,247 Accrued expenses 14,535 10,837 Customer deposits 1,222 2,018 Deferred revenue - current 5,969 4,355 Current portion of long-term obligations ---- 178 ------- -------- Total current liabilities 27,737 22,635 ------- -------- Deferred revenue - noncurrent 195 253 Long-term obligations, less current portion ---- 297 ------- -------- Total long term liabilities 195 550 ------- -------- Stockholders' equity: Common stock $.10 par value - Authorized - 30,000,000 shares Issued - 14,203,091 and 13,868,097 shares in 1998 and 1997, respectively 1,420 1,387 Capital in excess of par value 72,646 71,598 Cumulative translation adjustments (42) 7 Accumulated deficit (8,580) (14,593) ------- -------- 65,444 58,399 Less - Treasury stock, 3,294 shares at cost (24) (24) ------- -------- Total stockholders' equity 65,420 58,375 ------- -------- $93,352 $ 81,560 ======= ========
The accompanying notes are an integral part of these consolidated financial statements. 3 PART 1 FINANCIAL INFORMATION (Continued) DAVOX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share and Per Share Amounts) (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------------------------------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Product revenue $ 15,072 $ 13,833 $ 31,426 $ 27,055 Service revenue 9,118 6,124 17,184 11,897 ---------- ---------- ---------- ---------- Total revenue 24,190 19,957 48,610 38,952 ---------- ---------- ---------- ---------- Cost of product revenue 2,804 3,125 5,951 5,992 Cost of service revenue 4,789 3,967 9,561 7,761 ---------- ---------- ---------- ---------- Total cost of revenue 7,593 7,092 15,512 13,753 ---------- ---------- ---------- ---------- Gross profit 16,597 12,865 33,098 25,199 ---------- ---------- ---------- ---------- Operating expenses: Research, development and engineering expenses 2,918 2,500 6,022 4,766 Selling, general and administrative expenses 8,930 6,677 18,137 13,154 Non-recurring merger transaction costs 1,329 -- 1,329 -- Non-recurring merger-related integration costs 597 -- 597 -- ---------- ---------- ---------- ---------- Total operating expenses 13,774 9,177 26,085 17,920 ---------- ---------- ---------- ---------- Income from operations 2,823 3,688 7,013 7,279 Other income (primarily interest income) 724 468 1,472 899 ---------- ---------- ---------- ---------- Income before provision for income taxes 3,547 4,156 8,485 8,178 Provision for income taxes 1,206 556 2,885 1,086 ---------- ---------- ---------- ---------- Net income $ 2,341 $ 3,600 $ 5,600 $ 7,092 ========== ========== ========== ========== Earnings per share: Basic $ 0.17 $ 0.28 $ 0.40 $ 0.56 ========== ========== ========== ========== Diluted $ 0.16 $ 0.26 $ 0.37 $ 0.51 ========== ========== ========== ========== Weighted average shares outstanding: Basic 14,076,843 12,731,749 13,991,185 12,606,288 ========== ========== ========== ========== Diluted 14,870,098 14,059,931 14,956,245 13,942,552 ========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 4 PART I. FINANCIAL INFORMATION (continued) DAVOX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)
For the Six Months Ended June 30, ---------------------- 1998 1997 -------- -------- Cash Flows From Operating Activities: Net income $ 5,600 $ 7,092 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 1,580 1,923 Provision for losses on accounts receivable 92 30 Changes in current assets and liabilities - Accounts receivable (7,490) (5,479) Interest receivable (1,073) ---- Prepaid expenses and other current assets (172) 415 Accounts payable 764 (222) Accrued expenses 3,649 1,993 Customer deposits (796) (458) Deferred revenue 1,556 1,155 -------- -------- Net cash provided by operating activities 3,710 6,449 -------- -------- Cash Flows from Investing Activities: Purchases of property and equipment (1,820) (2,261) Decrease in other assets 12 78 Purchases of marketable securities (42,506) (10,626) Sales of marketable securities 31,626 10,902 -------- -------- Net cash used in investing activities (12,688) (1,907) -------- -------- Cash Flows From Financing Activities: Borrowings (payments) of long-term debt (475) 437 Payment of note receivable from officers 414 ---- Proceeds from exercise of stock options 875 1,087 Proceeds from employee stock purchase plan 205 84 -------- -------- Net cash provided by financing activities 1,019 1,608 -------- -------- Net (decrease) increase in cash and cash equivalents (7,959) 6,150 Cash and cash equivalents, beginning of period 28,639 24,275 -------- -------- Cash and cash equivalents, end of period $ 20,680 $ 30,425 ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for income taxes $ 804 $ 107 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 5 PART 1. FINANCIAL INFORMATION (continued) DAVOX CORPORATION & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Preparation The unaudited consolidated financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. The statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K, Commission File No. 0-15578 that was filed with the Securities and Exchange Commission on March 6, 1998. In the opinion of management, the accompanying consolidated financial statements include all adjustments necessary to present fairly the Company's financial position and results of operations. The results of operations for the three month and six month periods ended June 30, 1998 may not be indicative of the results that may be expected for the full fiscal year. 2. Acquisition of AnswerSoft, Inc. In May 1998, the Company acquired AnswerSoft, Inc., (ASI), a Richardson, Texas developer of inbound call center software solutions, in exchange for the issuance of an aggregate of 2,384,452 shares of Davox common stock, including shares which were subject to outstanding AnswerSoft, Inc. stock options and warrants. In connection with the merger with AnswerSoft, Inc., the Company incurred non-recurring merger transaction costs (primarily professional fees) of $1,329. In addition, the Company incurred non-recurring costs (primarily severance and lease termination costs) of $597 related to the integration of the two businesses. The acquisition was accounted for as a pooling of interests under Accounting Principles Board Opinion No. 16. Accordingly, the historical information for 1998 and 1997 has been retroactively restated to reflect the merger. Revenues and net income (loss) for the separate entities prior to the acquisition and as restated for the combined Company are as follows:
For the three months For the six months ended March 31, ended June 30, 1998 1997 1997 ---- ---- ---- Davox ----- Total revenue $23,160 $17,269 $35,439 Net income $ 4,433 $ 3,885 $ 7,960 AnswerSoft ---------- Total revenue $ 1,260 $ 1,726 $ 3,513 Net income $(1,173) $ (393) $ (868) Combined -------- Total revenue $24,420 $18,995 $38,952 Net income $ 3,260 $ 3,492 $ 7,092
6 PART I. FINANCIAL INFORMATION (continued) DAVOX CORPORATION & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 3. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 4. Marketable Securities The Company's investment portfolio of debt securities consists of marketable securities classified as held-to-maturity under the provisions of Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. The marketable securities held at June 30, 1998 consist principally of Eurodollar bonds and commercial paper with original maturities of less than one year, and they are recorded at amortized cost. 5. Provision for Income Taxes In accordance with generally accepted accounting principles, the Company provides for income taxes on an interim basis using its estimated annual effective income tax rate. The Company is providing for income taxes in 1998 at an effective tax rate of 34%, which is lower than the combined federal and state statutory tax rates due primarily to utilization of tax credits and benefits derived from the Company's foreign sales corporation. 6. Earnings Per Share In March 1997, the Financial Accounting Standards Board (FASB) issued SFAS No. 128, Earnings Per Share. This statement established standards for computing and presenting earnings per share and applies to entities with publicly traded common stock or potential common stock. This statement is effective for fiscal years ending after December 15, 1997. The prior years' earnings per share have been retroactively restated in accordance with this statement. Basic earnings per share was determined by dividing net income by the weighted average shares of common stock outstanding during the year. Diluted earnings per share reflects the dilution of the potentially dilutive securities, primarily stock options based on the treasury stock method. 7 PART I. FINANCIAL INFORMATION (continued) DAVOX CORPORATION & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 6. Earnings Per Share (continued) The calculation of basic and diluted shares outstanding is as follows (in thousands):
Three Months Six Months Ended June 30, Ended June 30, 1998 1997 1998 1997 ------ ------ ------ ------ Basic weighted average shares outstanding 14,077 12,732 13,991 12,606 Weighted average common equivalent shares 793 1,328 965 1,337 ------ ------ ------ ------ Diluted weighted average shares outstanding 14,870 14,060 14,956 13,943 ====== ====== ====== ======
For the three month period ended June 30, 1998, 1,230,585 weighted average common equivalent shares were not included in the diluted weighted average shares outstanding as they were antidilutive. For the three month period ended June 30, 1997, there were no antidilutive shares. For the six month periods ended June 30, 1998 and 1997, 605,576 and 210,349 weighted average common equivalent shares, respectively, were not included in the diluted weighted average shares outstanding as they were antidilutive. 7. Revenue Recognition In October 1997, the American Institute of Certified Public Accountants issued SOP 97-2, Software Revenue Recognition. The Company believes that its revenue recognition practices are consistent with those required by SOP 97-2. 8. Comprehensive Income In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 requires disclosure of all components of comprehensive income on an annual and interim basis. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. The Company adopted SFAS No. 130 in 1998. 8 PART I. FINANCIAL INFORMATION (continued) DAVOX CORPORATION & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 8. Comprehensive Income (continued) The changes in the components of comprehensive income are as follows (in thousands):
For the Three Months For the Six Months Ended June 30, 1998 Ended June 30, 1998 -------------------- -------------------- Net income 2,341 5,600 ===== ===== Foreign currency translation adjustments (6) (49) ----- ----- Comprehensive income 2,335 5,551 ===== =====
9. Recently Issued Accounting Standards In July 1997, the FASB issued SFAS No. 131, Disclosures About Segments of Enterprise and Related Information. SFAS No. 131 requires certain financial and supplementary information to be disclosed on an annual and interim basis for each reportable segment of an enterprise. SFAS No. 131 is effective for fiscal years beginning after December 15, 1997, and interim period reporting is not required until interim periods beginning after December 15, 1998. Unless impracticable, companies would be required to restate prior period information upon adoption. Management does not expect the adoption of this standard to have a material impact on the Company and its operations. 9 PART I. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months and Six Months Ended June 30, 1998 and 1997 Total revenue for the second quarter of 1998 increased approximately $4.2 million, or 21.2% to $24.2 million compared to the same period in 1997, while total revenue for the first six months of 1998 increased approximately $9.7 million, or 24.8% to $48.6 million compared to the same period in 1997. Product revenue for the second quarter of 1998 increased approximately $1.2 million, or 9.0% to $15.1 million compared to the same period in 1997, while product revenue for the first six months of 1998 increased approximately $4.4 million, or 16.2% to $31.4 million compared to the same period in 1997. These increases were caused by higher demand for the Unison(R) suite of call center management systems with collections applications, which more than offset slightly lower demand for telemarketing applications. Cost of product revenue for the second quarter of 1998 decreased approximately $321,000, or 10.3% to $2.8 million compared to the same period in 1997. Cost of product revenue for the first six months of 1998 decreased approximately $41,000, or 0.7% to $6.0 million compared to the same period in 1997. These decreases were mainly attributable to a higher margin product mix. Service revenue for the second quarter of 1998 increased approximately $3.0 million, or 48.9% to $9.1 million compared to the same period in 1997. Service revenue for the first six months of 1998 increased approximately $5.3 million, or 44.4% to $17.2 million compared to the same period in 1997. These increases were due to an increase in maintenance revenue related to the growth in the number of the Company's customers, increased installation revenue related to the increased volume of product shipments, and increased professional services revenue in 1998, as compared to 1997. Cost of service revenue for the second quarter of 1998 increased approximately $822,000, or 20.7% to $4.8 million compared to the same period in 1997. Cost of service revenue for the first six months of 1998 increased $1.8 million, or 23.2% to $9.6 million compared to the same period in 1997. These increases were attributable to higher payroll and related expenses in 1998 resulting from customer service headcount increases, and to higher facilities related costs. As a percentage of service revenue, cost of service revenue decreased by 12.3% in the second quarter of 1998 as compared to the same period in 1997. As a percentage of service revenue, cost of service revenue decreased by 9.6% for the first six months of 1998 as compared to the same period in 1997. These decreases as a percentage of service revenue were primarily attributable to the higher service revenue relative to fixed costs. 10 PART I. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Research, development and engineering expenses increased approximately $418,000, or 16.7% to $2.9 million for the second quarter of 1998 as compared to the same period in 1997. Research, development and engineering expenses increased approximately $1.3 million, or 26.4% to $6.0 million for the first six months of 1998 compared to the same period in 1997. These increases were primarily attributable to higher payroll and related expenses due to headcount increases in 1998, and to higher consulting, documentation, and depreciation expenses incurred in 1998. As a percentage of total revenue, research, development and engineering expenses decreased 0.4% to 12.1% for the second quarter of 1998 from 12.5% for the same period in 1997. As a percentage of total revenue, research, development and engineering expenses increased 0.2% to 12.4% for the first six months of 1998 from 12.2% for the same period in 1997. Selling, general and administrative (SG&A) expenses increased by approximately $2.3 million, or 33.7% to $8.9 million for the second quarter of 1998 compared to the same period in 1997. SG&A expenses increased by approximately $5.0 million, or 37.9% to $18.1 million for the first six months of 1998 compared to the same period in 1997. These increases were attributable to increased payroll and related expenses in 1998 resulting from headcount increases, and direct and indirect selling expenses related to the increased product and service revenue. In connection with the merger with AnswerSoft, Inc., the Company incurred non-recurring merger transaction costs (primarily professional fees) of $1,329. In addition, the Company incurred non-recurring costs (primarily severance and lease termination costs) of $597 related to the integration of the two businesses. Interest income in 1998 was derived primarily from investments in Eurodollar bonds, commercial paper, and money market instruments. Interest income increased 61.4% for the second quarter of 1998 compared to the same period in 1997. Interest income increased 69.2% for the first six months of 1998 compared to the same period in 1997. These increases reflect the higher average cash and marketable securities balances in 1998 compared to 1997. In accordance with generally accepted accounting principles, the Company provides for income taxes on an interim basis using its estimated annual effective income tax rate. The Company is providing for income taxes in 1998 at an effective tax rate of 34%, which is lower than the combined federal and state statutory tax rates due primarily to utilization of tax credits and net income benefits derived from the Company's foreign sales corporation. For the first six months of 1997, the Company had available significant net operating loss carryforwards, and provided for federal alternative minimum tax and for state income taxes in those states, which do not allow for net operating loss carryforwards. 11 PART I. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1998, the Company's principal sources of liquidity were its cash and cash equivalent balances of approximately $20.7 million as well as its marketable securities of approximately $34.7 million. As of the end of fiscal year 1997, the Company's cash and cash equivalent balances were approximately $28.6 million and its marketable securities were approximately $23.8 million. The increase was due primarily to favorable operating results, and proceeds from exercises of stock options. In addition, the Company has an agreement for a working capital line of credit with a bank for up to $2.0 million based on eligible receivables, as defined. There were no outstanding balances under the line of credit as of June 30, 1998. The Company's primary investing activities were purchases and sales of marketable securities and purchases of property and equipment. Property and equipment purchases were approximately $1.8 million during the first six months of 1998, compared to approximately $2.3 million during the first six months of 1997. Purchases and sales of marketable securities generated a net cash outflow of approximately $10.9 million during the first six months of 1998, compared to a net cash inflow of approximately $276,000 during the first six months of 1997. Cash provided by financing activities is generated primarily from proceeds from exercises of stock options, and from purchases of stock through the Company's employee stock purchase plan. Proceeds from exercises of stock options and purchases through the employee stock purchase plan totaled approximately $1.1 million during the first six months of 1998, compared to approximately $1.2 million during the first six months of 1997. At June 30, 1998, the working capital of the Company increased to approximately $59.3 million from approximately $52.8 million as of December 31, 1997. This increase was primarily attributable to the higher cash balance due to favorable operating results, and also to the higher receivable balance due to increased sales. Management believes, based on its current operating plan, that the Company's existing cash and marketable securities, cash generated from operations, and amounts available under its working capital line of credit will be sufficient to meet the Company's cash requirements for the next twelve months. ACQUISITION OF ANSWERSOFT, INC. In May 1998, the Company acquired AnswerSoft, Inc., (ASI), a Richardson, Texas developer of inbound call center software solutions, in exchange for the issuance of an aggregate of 2,384,452 shares of Davox common stock, including shares which were subject to outstanding AnswerSoft, Inc. stock options and warrants. In connection with the merger with AnswerSoft, Inc., the Company incurred non-recurring merger transaction costs (primarily professional fees) of $1,329. In addition, the Company incurred non-recurring costs (primarily severance and lease termination costs) of $597 related to the integration of the two businesses. 12 PART I. FINANCIAL INFORMATION (continued) ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) ACQUISITION OF ANSWERSOFT, INC. (continued) The acquisition was accounted for as a pooling of interests under Accounting Principles Board Opinion No. 16. Accordingly, the historical information for 1998 and 1997 has been retroactively restated to reflect the merger. CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS In addition to historical information contained herein, this report 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, and the statements are subject to the safe harbors created thereby. The Company's future actual results could differ materially from the forward-looking statements discussed or implied in this report because of risks or uncertainties including, but not limited to, risks associated with the acquisition of AnswerSoft, Inc., competition and competitive pricing pressures, technological change, new product introduction and market acceptance, the ability of Davox to attract and retain key personnel, general economic conditions in the United States and worldwide markets served by Davox, and those other factors discussed from time to time in Davox's public reports filed with the Securities and Exchange Commission, such as those discussed under "Certain Factors That May Affect Future Results" in Davox's quarterly reports on Form 10-Q and annual report on Form 10-K, and the section entitled "Risk Factors" in the Company's recently filed Registration Statement on Form S-4, file no. 333-49479. Year 2000 Systems Modifications--The Company expects to be continually in the process of updating its products, information and network systems and, as part of that process, the Company is evaluating the costs associated with modifying and testing our systems for the Year 2000. The Company expects to make some of the necessary modifications through its ongoing investment in systems upgrades. The Company is not yet able to estimate the incremental cost of the Year 2000 conversion effort but such costs will be expensed as incurred. The costs incurred to date have not been material. There can be no assurance, however, that there will not be a delay in, or increased costs associated with, the implementation of such changes, and the Company's inability to implement such changes could have an adverse effect on future results of operations. Note: Davox and Unison are registered trademarks and LYRICall and ComposeIt are trademarks of Davox Corporation. All other marks are the properties of their respective holders. 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings There were no material changes since the Company's Annual Report on Form 10-K for the period ended December 31, 1997. Item 4. Submission of Matters to a Vote of Security-Holders The annual meeting of security-holders of the Company was held on May 6, 1998. The number of directors was fixed at four and the following persons were elected as directors:
Total Votes Total Votes Nominee for Nominee Withheld for Nominee ------- ----------- -------------------- Alphonse M. Lucchese 10,957,204 21,986 Michael D. Kaufman 10,957,204 21,986 Walter J. Levison 10,957,204 21,986 R. Scott Asen 10,957,204 21,986
The issuance of 2,384,452 shares of the Corporation's Common Stock, $.10 par value, pursuant to the Amended and Restated Agreement and Plan of Merger dated April 6, 1998 among the Corporation, Duke Acquisition Corporation, and AnswerSoft, Inc., was approved with 9,275,040 shares voting in favor, 50,564 shares voting against and 51,165 shares abstaining. A proposal to approve an increase in the number of shares of the Corporation's Common Stock, $.10 par value, available for issuance under the Corporation's 1996 Stock Plan to 1,950,000 shares, was adopted and approved, with 5,678,566 shares voting in favor, 3,686,547 shares voting against and 11,746 shares abstaining. The selection of the firm Arthur Andersen LLP as auditors for the fiscal year ending December 31, 1998 was ratified, with 10,951,384 shares voting in favor, 8,195 shares voting against and 19,611 shares abstaining. 14 PART II. OTHER INFORMATION (continued) Item 5. Other Information Proposals of stockholders intended for inclusion in the proxy statement to be furnished to all stockholders entitled to vote at the next annual meeting of stockholders of the Company must be received at the Company's principal executive offices not later than December 7, 1998. The deadline for providing timely notice to the Company of matters that stockholders otherwise desire to introduce at the next annual meeting of stockholders of the Company is February 20, 1999. In order to curtail any controversy as to the date on which a proposal was received by the Company, it is suggested that proponents submit their proposals by Certified Mail, Return Receipt Requested. Item 6. Exhibits and Reports on Form 8-K (a) List of Exhibits Exhibit Number Description of Exhibit ------ ----------------------- 27 Article 5 - Summary Financial Data Schedule (b) A Current Report on Form 8-K, dated May 6, 1998, was filed on May 8, 1998, reporting, pursuant to Item 2, the Company's acquisition of AnswerSoft, Inc. pursuant to the Agreement and Plan of Merger among the Company, Duke Acquisition Corporation and AnswerSoft, Inc. Unaudited pro-forma combined condensed financial information was filed as part of the Form 8-K. (c) An amendment to the Company's Current Report on Form 8-K dated May 6, 1998 was filed on May 11, 1998, amending and restating in its entirety the Current Report on Form 8-K dated May 6, 1998 (the "Form 8-K") to correct the omission of certain pages from the original filing which resulted from a transmission error. 15 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. DAVOX CORPORATION Date: August 12, 1998 By: /s/ Alphonse M. Lucchese ------------------------ Alphonse M. Lucchese Chief Executive Officer and Chairman (Principal Executive Officer) Date: August 12, 1998 By: /s/ John J. Connolly -------------------- John J. Connolly Vice President of Finance and Chief Financial Officer (Principal Financial Officer) 16 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS 6-MOS DEC-31-1998 DEC-31-1997 JAN-01-1998 JAN-01-1997 JUN-30-1998 JUN-30-1997 20,680 0 34,682 0 20,965 0 968 0 0 0 87,046 0 5,488 0 0 0 93,352 0 27,737 0 0 0 0 0 0 0 1,420 0 64,024 0 93,352 0 31,426 27,055 48,610 38,952 5,951 5,992 15,512 13,753 6,022 4,766 0 0 1,510 899 8,485 8,178 2,885 1,086 5,600 7,092 0 0 0 0 0 0 5,600 7,092 0.40 0.56 0.37 0.51
-----END PRIVACY-ENHANCED MESSAGE-----