<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, 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 16,164,198 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
(Unaudited)
<TABLE>
<CAPTION>
May 31, February 29,
ASSETS 1996 1996
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $25,408,030 $23,573,976
Accounts and notes receivable, net of allowance
for doubtful accounts of $695,545 in 1997 and
$746,027 in 1996 26,295,248 24,704,425
Inventory 14,880,759 12,586,640
Prepaid expenses 1,074,634 804,428
Deferred taxes 1,714,246 1,714,246
----------- -----------
69,372,917 63,383,715
PROPERTY AND EQUIPMENT
Building 15,921,033 15,865,605
Computer equipment 8,957,107 8,193,562
Furniture, fixtures and other 5,005,215 4,737,625
Service equipment 1,991,223 2,025,558
----------- -----------
Construction in progress 0 0
31,874,578 30,822,350
Less allowance for depreciation 10,428,226 9,540,886
----------- -----------
21,446,352 21,281,464
OTHER ASSETS
Intangible assets, net of amortization
of $2,097,906 in 1997 and
$1,893,619 in 1996 5,373,370 4,712,495
Note receivable from corporate officer 0 0
Other assets 345,900 349,132
----------- -----------
$96,538,539 $89,726,806
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $11,594,045 $11,796,125
Customer deposits 1,925,383 2,527,514
Deferred income 4,226,536 4,075,099
Income taxes payable 2,918,609 1,053,519
----------- -----------
20,664,573 19,452,257
DEFERRED TAXES 713,074 713,074
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:19,164,198 issued,
16,164,198 outstanding in 1997
and 18,984,206 issued, 15,984,206
outstanding in 1996 9,564 9,460
Additional paid-in capital 41,397,406 39,103,070
Unearned compensation (1,110,565) (436,281)
Treasury stock - at cost (24,003,245) (24,003,245)
Retained earnings 58,867,732 54,888,471
----------- -----------
75,160,892 69,561,475
----------- -----------
$96,538,539 $89,726,806
=========== ===========
</TABLE>
<PAGE> 3
InterVoice, Inc.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
May 31, May 31,
1996 1995
----------- -----------
<S> <C> <C>
Sales $25,559,501 $22,016,697
Cost of goods sold 9,148,742 7,660,281
----------- -----------
Gross margin 16,410,759 14,356,416
Research and development expenses 2,744,047 2,230,121
Selling, general and administrative
expenses 7,869,663 6,137,138
----------- -----------
Income from operations 5,797,049 5,989,157
Other income - net 186,802 104,072
----------- -----------
Income before taxes 5,983,851 6,093,229
Income taxes 2,004,590 2,102,969
----------- -----------
Net Income $ 3,979,261 $ 3,990,260
=========== ===========
Earnings per common and
common equivalent share $0.24 $0.25
=========== ===========
Weighted average number of common
and common equivalent shares 16,912,703 16,183,441
=========== ===========
</TABLE>
<PAGE> 4
InterVoice, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
------------------- Paid-In Unearned
Shares Amount Capital Compensation
-------------------------------------------------
<S> <C> <C> <C> <C>
Balance at February 29, 1996 15,984,206 $9,460 $39,103,070 ($436,281)
Exercise of stock options 144,444 86 1,426,554 0
Issuance of restricted stock 35,548 18 867,782 (674,284)
Net Income 0 0 0 0
-------------------------------------------------
Balance at May 31, 1996 16,164,198 $9,564 $41,397,406 ($1,110,565)
=================================================
</TABLE>
<TABLE>
<CAPTION>
Treasury Retained
Stock Earnings Total
------------------------------------------
<S> <C> <C> <C>
Balance at February 29, 1996 ($24,003,245) $54,888,471 $69,561,475
Exercise of stock options 0 0 1,426,640
Issuance of restricted stock 0 0 193,516
Net Income 0 3,979,261 3,979,261
------------------------------------------
Balance at May 31, 1996 ($24,003,245) $58,867,732 $75,160,892
==========================================
</TABLE>
<PAGE> 5
InterVoice, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
May 31, May 31,
1996 1995
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 3,979,261 $ 3,990,260
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 1,091,627 998,987
Changes in operating assets
and liabilities: (2,728,440) 329,357
------------ -----------
NET CASH FROM OPERATIONS 2,342,448 5,318,604
INVESTING ACTIVITIES
Purchase of property
and equipment (1,086,563) (1,519,034)
Purchased software (861,930) (68,707)
Decrease in notes
receivable 13,459 40,377
------------ -----------
(1,935,034) (1,547,364)
FINANCING ACTIVITIES
Exercise of stock options 1,426,640 507,508
------------ -----------
1,426,640 507,508
------------ -----------
INCREASE IN CASH AND
CASH EQUIVALENTS 1,834,054 4,278,748
Cash and cash equivalents,
beginning of period 23,573,976 10,276,952
CASH AND CASH EQUIVALENTS,
END OF PERIOD $25,408,030 $14,555,700
============ ===========
</TABLE>
<PAGE> 6
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Three months ended May 31, 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 May 31, 1996 and 1995 financial statements have
been included. Operating results for the three month period ended May 31, 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.
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Sales. The Company's total sales in the first quarter of fiscal 1997
increased approximately $3.5 million, or 16%, from the same period of the
previous year. This increase was due primarily to strong performance in
domestic customer premise equipment sales which rose to 60% of the Company's
total sales from 47% in the same period of the previous fiscal year. The
Company believes that some telecommunications companies have temporarily
delayed their implementation of call automation solutions while they further
evaluate marketing and investment strategies in light of new opportunities
resulting from deregulation under the Telecommunications Act of 1996. As a
result, sales to telecommunications companies declined to 19% of the Company's
total sales from 25% in the same period of the previous year. International
sales in the first quarter of fiscal 1997 declined to 14% of the Company's
total sales from 25% in the same period in the previous fiscal year.
International sales in the first quarter of the previous year were influenced
by large sales to a Latin American telecommunications company and to financial
institutions in Thailand. No customer accounted for 10% or more of the
Company's total sales during the first quarter of fiscal 1997.
Cost of Goods Sold. Cost of goods sold as a percentage of sales
increased to 36% in the first quarter of fiscal 1997 from 35% in the same
period of the prior year. A smaller percentage of the Company's total sales in
the first quarter of fiscal 1997 versus the same period of the previous year
was represented by large systems, system upgrades and international systems.
Large systems, system upgrades and international systems have higher gross
margins than an average domestic system due to higher software content.
Research and Development. Research and development expenses in the
first quarter of fiscal 1997 increased approximately $0.5 million, or 23%, over
the same period of the prior year. Such expenses in the first quarter of
fiscal 1997 constituted 11% of the Company's total sales, comparable to the
same period of the previous year and included porting the Company's InterSoft
core software to the UNIX and Windows NT operating systems and the development
of VisualConnect (the ability to communicate with OneVoice Systems via the
Internet), Media Connect (the multi-media implementation of interactive voice
response, or IVR), and 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 OneVoice Multi-application Platform
including OneVoice (the Company's IVR system), InterDial (the Company's
outbound predictive dialer system), OneLink (a digital interface for analog
switches), and continued development of InterForm (a custom applications
generation, or script building, user tool) and digital VocalCard software and
hardware functionality.
Selling, General and Administrative. Selling, general and
administrative expenses increased approximately $1.7 million in the first
quarter of fiscal 1997 as
<PAGE> 8
compared to the same period of the previous year and, as a percentage of the
Company's total sales, increased from 28% to 31%. The Company continued 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 1997,
consisting primarily of interest income on cash and other non-operating
interest income, increased approximately $0.1 million from the same period in
the previous year. This increase is the result of greater cash balances during
fiscal 1997 compared to the previous year. The Company had lower cash balances
in fiscal 1996 due to the completion of the Company's stock repurchase program,
the Company's purchase of VoicePlex Corporation, and the completion of the
Company's new facilities in Dallas.
Income from Operations. Operating income and net income during the
first quarter of fiscal year 1997 were approximately equal to the same period
of the prior year. 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 to continue to pursue
opportunities in the customer premise equipment and telecommunications markets.
Liquidity and Capital Resources. At May 31, 1996, the Company had
cash reserves of approximately $25.4 million and during the first quarter of
fiscal 1997 had a positive net cash flow of approximately $1.8 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
NationsBank expiring July 29, 1996 which is available in its entirety. 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.
Forward Looking Statements. Except for the historical information
contained herein, the matters discussed in this quarterly report are forward
looking statements that involve risks and uncertainties, including legislative
and administrative changes, and the other risks detailed from time to time in
the Company's press releases and SEC reports, including the report on Form 10-K
for the fiscal year ended February 29, 1996. These risks and uncertainties
could cause actual results to differ materially from those discussed in this
quarterly report.
<PAGE> 9
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The information required by this Item 6(a) is set forth in the
Index to Exhibits accompanying this quarterly report and is
incorporated herein by reference.
(b) Reports on Form 8-K
None
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.
InterVoice, Inc.
Date: 07/10/96 By: /s/ ROB-ROY J. GRAHAM
-----------------------------------------
Rob-Roy J. Graham
Chief Financial Officer
(Chief Accounting Officer)
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
<CASH> 25,408,030
<SECURITIES> 0
<RECEIVABLES> 26,295,248
<ALLOWANCES> 695,545
<INVENTORY> 14,880,759
<CURRENT-ASSETS> 69,372,917
<PP&E> 31,874,578
<DEPRECIATION> 10,428,226
<TOTAL-ASSETS> 96,538,539
<CURRENT-LIABILITIES> 20,664,573
<BONDS> 0
<COMMON> 9,564
0
0
<OTHER-SE> 75,151,328
<TOTAL-LIABILITY-AND-EQUITY> 96,538,578
<SALES> 25,559,501
<TOTAL-REVENUES> 25,559,501
<CGS> 9,148,742
<TOTAL-COSTS> 9,148,742
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 50,482
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,983,851
<INCOME-TAX> 2,004,590
<INCOME-CONTINUING> 3,979,261
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,979,261
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
