<PAGE> 1
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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
MAY 31, 1995
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 15,482,831 shares of common stock, no par value per
share, outstanding as of the close of the period covered by this report.
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<PAGE> 2
PART I - FINANCIAL INFORMATION
InterVoice, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
May 31, February 28,
1995 1995
----------- -----------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $14,555,700 $10,276,952
Accounts and notes receivable, net 17,299,305 18,222,080
Inventory 10,411,279 9,803,534
Prepaid expenses 596,532 516,091
Deferred taxes 1,168,076 1,168,076
----------- -----------
44,030,892 39,986,733
PROPERTY AND EQUIPMENT
Building 14,885,566 14,545,054
Computer equipment 6,412,339 5,379,320
Furniture, fixtures and other 4,441,948 4,300,907
Service equipment 2,040,211 1,903,632
----------- -----------
27,780,064 26,128,913
Less allowance for depreciation 7,155,583 6,465,385
----------- -----------
20,624,481 19,663,528
OTHER ASSETS
other assets, net 2,830,076 3,068,304
----------- -----------
$67,485,449 $62,718,565
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $8,541,850 $ 9,538,117
Customer deposits 987,852 1,131,764
Deferred income 3,002,631 3,364,848
Income taxes payable 3,608,250 1,836,738
----------- -----------
16,140,583 15,871,467
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: 18,482,831
issued, 15,482,831 outstanding in 1996 and
18,381,503 issued, 15,381,503 outstanding in 1995 9,217 9,167
Additional paid-in capital 33,719,521 33,212,063
Treasury stock - at cost (24,003,245) (24,003,245)
Retained earnings 41,619,373 37,629,113
----------- -----------
51,344,866 46,847,098
----------- -----------
$67,485,449 $62,718,565
=========== ===========
</TABLE>
<PAGE> 3
InterVoice, Inc.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
May 31, May 31,
1995 1994
----------- -----------
<S> <C> <C>
Sales $22,016,697 $16,604,737
Cost of goods sold 7,660,281 6,257,067
----------- -----------
Gross margin 14,356,416 10,347,670
Research and development expenses 2,230,121 1,705,347
Selling, general and administrative expenses 6,137,138 4,508,255
----------- -----------
Income from operations 5,989,157 4,134,068
other income - net 104,072 226,523
----------- -----------
Income before taxes 6,093,229 4,360,591
Income taxes 2,102,969 1,491,334
----------- -----------
Net Income $3,990,260 $2,869,257
========== ==========
Earnings per common and common equivalent share $.25 $.16
========== ==========
Weighted average number of common and common equivalent shares 16,183,441 18,444,879
========== ==========
</TABLE>
<PAGE> 4
InterVoice, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid-in Retained Treasury
Shares Amount Capital Earnings Stock Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at February 28, 1995 15,381,503 $9,167 $33,212,063 $37,629,113 $(24,003,245) $46,847,098
Exercise of stock options 101,328 50 507,458 -- -- $507,508
Net Income -- -- -- 3,990,260 -- $3,990,260
---------- ------ ----------- ----------- ------------ -----------
Balance at May 31, 1995 15,482,831 $9,217 $33,719,521 $41,619,373 $(24,003,245) $51,344,866
========== ====== =========== =========== ============ ===========
</TABLE>
<PAGE> 5
InterVoice, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
May 31, May 31,
1995 1994
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $3,990,260 $2,869,257
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 998,987 621,806
Changes in operating assets and liabilities: 329,357 3,882,210
----------- -----------
NET CASH FROM OPERATIONS 5,318,604 7,373,273
INVESTING ACTIVITIES
Purchase of property and equipment (1,519,034) (4,007,805)
Purchased software (68,707) (12,833)
(Increase) decrease in notes receivable 40,377 (323,051)
----------- -----------
(1,547,364) (4,343,689)
FINANCING ACTIVITIES
Exercise of stock options 507,508 458,773
----------- -----------
507,508 458,773
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 4,278,748 3,488,357
Cash and cash equivalents, beginning of period 10,276,952 36,202,218
CASH AND CASH EQUIVALENTS, END OF PERIOD $14,555,700 $39,690,575
=========== ===========
</TABLE>
<PAGE> 6
NOTES TO UNAUDITED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 31,1995
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 28, 1995 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 May 31, 1995 and 1994 financial statements have
been included. Operating results for the three month period ended May 31, 1995
are not necessarily indicative of the results that may be expected for the year
ending February 28, 1996 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.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SALES. The Company's total sales in the first quarter of fiscal 1996
increased approximately $5.4 million, or 33%, from the same period of the prior
year due primarily to strong performance in international sales and growth in
domestic sales. International sales in the first quarter of fiscal 1996, which
included a $1.7 million sale to an Argentinean telecommunications company and
sales totaling $1.0 million to the Company's distributor in Thailand for resale
to two of Thailand's largest financial institutions, grew 253% over the same
period of the prior year and increased from 10% to 25% of the Company's total
sales. Sales to domestic resellers in the first quarter of fiscal 1996 grew
36% over the same period of the prior year and led to a 9% increase in domestic
sales over the same period of the prior year. The Company had sales of
approximately $3.0 million, or 13.5% of the Company's total sales, to a leading
domestic telecommunications company in the first quarter of fiscal 1996.
COST OF GOODS SOLD. Cost of goods sold as a percentage of sales
decreased to 35% in the first quarter of fiscal 1996 from 38% in the same
period of the prior year. This decrease is primarily due to an increase, versus
the same period of the prior year, in the percentage of the Company's total
sales represented by large systems, system upgrades and international systems,
which have higher gross margins than domestic systems due to higher software
content.
RESEARCH AND DEVELOPMENT. Research and development expenses in the
first quarter of fiscal 1996 increased approximately $0.5 million, or 31%,
over the same period of the prior year. Such expenses in the first quarter of
fiscal 1996 constituted 10% of the Company's total sales, comparable to the
same period of the prior year. Research and development expenses in the first
quarter of fiscal 1996 included the continued development of the multimedia
implementation of Interactive Voice Response (IVR) and enhancement of products
obtained in the acquisition of VoicePlex Corporation. Additionally,
expenditures were made for the ongoing development of the Company's OneVoice
multi-application platform including InterDial (an outbound predictive dialer
system), OneLink (a digital interface for analog switches), the OneVoice System
voice response system, InterForm (a custom application generation tool) and
hardware and software functionality.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased approximately $1.6 million in the first
quarter of fiscal 1996 as compared to the same period of the prior year and, as
a percentage of the Company's total sales, increased slightly from 27% to 28%.
The Company continues to invest in selling, general and administrative
resources as it expands its worldwide sales, service and support personnel and
marketing and advertising programs.
OTHER INCOME. Other income in the first quarter of fiscal 1996,
consisting primarily of interest income on cash and other non-operating
interest income, decreased
<PAGE> 8
approximately $0.1 million from the same period in the prior year. This
decrease is the result of reduced cash balances, versus the same period of the
prior year, resulting from the completion of the Company's stock repurchase
program on July 13, 1994, the Company's purchase of VoicePlex Corporation on
August 31, 1994, and the completion of the Company's construction of the new
Thomas F. Carter building during fiscal 1995.
INCOME FROM OPERATIONS. Operating income and net income increased 45%
and 39%, respectively, in the first quarter of fiscal 1996 compared with the
same period of the prior year due to increased sales. Both operating income
and net income in the first quarter of fiscal 1996, compared to the same period
of the prior year, increased at a greater rate than the Company's total sales
due to the decrease in cost of goods sold, as discussed above. Net income
increased at a slightly lesser rate than operating income due primarily to a
decrease in other income, as discussed above.
LIQUIDITY AND CAPITAL RESOURCES. At May 31, 1995, the Company had
cash reserves of approximately $14.6 million and during the first quarter of
fiscal 1996 had a positive net cash flow of approximately $4.3 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.
In addition, the Company has a $15 million unsecured credit line with Nations
Bank which is available in its entirety. The Company reviews acquisition
opportunities from time to time and believes it has access to the financial
resources necessary to pursue attractive opportunities as they arise.
<PAGE> 9
PART II. OTHER INFORMATION
ITEM I.
LEGAL PROCEEDINGS
Reference is made to the litigation between the Company's wholly owned
subsidiary, InterVoice S.A. and Realizzazione Investmenti per lo Sviluppo delle
Communicazioni s.r.l., an Italian registered limited company, described in Part
1, Item 3 of the Company's Annual Report on Form 10-K for the year ended
February 28, 1995. On June 6, 1995, the court appointed expert filed his
report. The expert, in his report, criticized the suitability of the systems
supplied by InterVoice S.A. The expert also expressed his opinion that there
were certain malfunctions in the system, and that in his opinion InterVoice
S.A. did not fulfill certain obligations under the contract between the
parties. The expert's review was limited to issues of fact. The expert has no
authority under French law to decide legal issues nor to determine the
existence or amount of any damages. InterVoice S.A. disagrees with many of the
opinions expressed in the report and intends to vigorously contest them before
the court.
SIGNATURES
Pursuant to the requirements of the Securities and 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: 07/14/95 BY: /s/ ROB-ROY J. GRAHAM
------------------------------
Rob-Roy J. Graham
Chief Financial Officer
(Chief Accounting Officer)
<PAGE> 10
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> MAY-31-1995
<CASH> 14,555,700
<SECURITIES> 0
<RECEIVABLES> 17,299,305
<ALLOWANCES> 228,857
<INVENTORY> 10,411,279
<CURRENT-ASSETS> 44,030,892
<PP&E> 27,780,064
<DEPRECIATION> 7,155,583
<TOTAL-ASSETS> 67,485,449
<CURRENT-LIABILITIES> 16,140,583
<BONDS> 0
<COMMON> 9,217
0
0
<OTHER-SE> 51,335,649
<TOTAL-LIABILITY-AND-EQUITY> 67,485,449
<SALES> 22,016,697
<TOTAL-REVENUES> 22,016,697
<CGS> 7,660,281
<TOTAL-COSTS> 7,660,281
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 90,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,093,229
<INCOME-TAX> 2,102,969
<INCOME-CONTINUING> 3,990,260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,990,260
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
