<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
-------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JUNE 9, 1999
INTERVOICE, INC.
(Exact name of Registrant as specified in its charter)
TEXAS 000-13616 75-1927578
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
17811 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (972) 454-8000
NOT APPLICABLE
(Former name, former address and former fiscal year, if
changed since last report)
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document that are
subject to risks and uncertainties. Forward-looking statements encompass the
information in this document regarding the below-listed factors, many of which
relate to completion of the acquisition by InterVoice, Inc. ("InterVoice") of
Brite Voice Systems, Inc. ("Brite") through the Offer, as defined herein,
followed by the merger of a subsidiary of InterVoice with Brite (the "Merger"):
o synergies o assimilation of Brite into
o growth InterVoice
o cost savings o economic conditions
o the Merger consideration o fair market value of Brite's assets
o operating performance o the timetable for closing the Merger
Our forward-looking statements are also identified by words such as
"believes," "expects," "anticipates," "intends," "estimates" or similar
expressions.
For those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
You should understand that the following important factors, in addition
to those discussed in this document and other documents which are incorporated
by reference, could affect the future results of InterVoice and Brite, and our
future results after the effective date of the Merger, and could cause those
results or other outcomes to differ materially from those expressed in our
forward-looking statements:
o A price decline in InterVoice common stock could cause the value
of the Merger consideration received to be less than the $13.40
per share of Brite common stock paid in the Offer.
o InterVoice is highly leveraged as a result of indebtedness
incurred to finance the Offer and Merger.
o We may be unable to successfully integrate the businesses and
products of InterVoice and Brite after the Merger.
o Our failure to meet rapidly changing market demands in the highly
competitive telecommunications industry could negatively impact
our competitive position.
o If we are unable to keep up with rapid changes in technology, we
could lose customers and be unable to attract new customers.
o Year 2000 problems for us, our suppliers or our customers could
increase our liabilities and expenses and decrease our revenues
and profitability.
o We depend upon the continued availability of suitable
non-proprietary computing platforms and system operating software
that are compatible with our products.
o Certain of the components for our products are available from
limited suppliers. Our operating results could be adversely
affected if we are unable to obtain such components in the future.
o We may be unable to retain our customer base and, in particular,
our more significant customers because such customers generally
are not contractually obligated to place future orders with us.
o Our industry will face increasing litigation with respect to the
enforcement of patents, copyrights and other intellectual
property.
o International distribution and sales of our products involve
special risks, including unexpected changes in regulatory
requirements, unexpected changes in exchange rates, the difficulty
and expense of
1
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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 sales of call automation systems and systems for
telecommunications service providers. 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 our cash flow and our
level of accounts receivable.
o The quantity and size of large sales (sales valued at
approximately $1 million or more) during any fiscal quarter will
fluctuate, which can cause wide variations in our sales and
earnings on a quarter to quarter basis.
o We must hire and retain, within our compensation parameters,
qualified technical talent and outside contractors in highly
competitive markets for the services of such personnel.
o Our fixed price contracts require that we properly estimate costs
of developing application software and otherwise tailoring our
systems to customer-specific requests.
o Other mergers and acquisitions between companies in the
telecommunications and financial industries which could result in
fewer customers purchasing our products for telecommunications and
banking applications, and/or delay such purchases by customers
that are in the process of reviewing their strategic alternatives
in light of a merger or acquisition.
o We expect continuing legislative, judicial and administrative
changes and, in particular, changes affecting the
telecommunications industry, such as the Telecommunications Act of
1996. While many industry analysts expect the Telecommunications
Act of 1996 ultimately 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 we 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 Extreme price and volume trading volatility in the stock market
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 our common
stock.
2
<PAGE> 4
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 9, 1999, InterVoice, Inc. ("InterVoice"), through its
wholly-owned subsidiary InterVoice Acquisition Subsidiary III, Inc., a Nevada
corporation ("Merger Sub"), completed the purchase of 9,158,155 shares of the
common stock, no par value (collectively, the "Shares"), of Brite Voice Systems,
Inc., a Kansas corporation ("Brite"), pursuant to a tender offer by Merger Sub
to purchase 9,158,155 Shares at a purchase price of $13.40 per Share, net to the
seller in cash, without interest, upon the terms and subject to the Tender Offer
Statement on Schedule 14D-1 filed with the Securities and Exchange Commission on
May 3, 1999 (as amended, the "Schedule 14D-1"), which, together with all
amendments or supplements thereto, constituted the "Offer." The number of Shares
purchased in the Offer represented approximately 75% of the issued and
outstanding Shares at the time of purchase. The Merger Sub purchased the Shares
in connection with that certain Acquisition Agreement and Plan of Merger among
InterVoice, Merger Sub and Brite dated as of April 27, 1999 (the "Merger
Agreement"). The Merger Agreement provides that Merger Sub will acquire the
remaining 25% of the outstanding Brite Shares in the Merger whereby each Brite
Share will be exchanged for shares of common stock, no par value, of InterVoice
valued at $13.40. The exchange ratio in the Merger will be determined based on
the average closing price of an InterVoice share for 25 trading days preceding
the Merger. As a result of the Merger, Brite will become a wholly-owned
subsidiary of InterVoice.
The total amount of cash used by Merger Sub to acquire the Shares
tendered in the Offer was $122.7 million and InterVoice expects to incur
transactional costs associated with the Offer and the Merger of approximately
$10.8 million. Bank of America National Trust and Savings Association arranged
and syndicated a $150 million credit facility to finance the Offer and the
Merger.
Brite is based out of Heathrow, Florida and designs, integrates,
assembles, markets and supports voice processing and call processing systems and
services which incorporate prepaid/postpaid applications, voice response, voice
recognition, voice/facsimile messaging, audiotex and interactive computer
applications into both standard products and customized market solutions.
3
<PAGE> 5
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Brite Voice Systems, Inc.
(incorporated by reference to pages 22 to 44 of Brite's Annual
Report on Form 10-K405 for the fiscal year ended December 31,
1998 and pages 3 to 8 of Brite's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999).
- Report of Independent Certified Public Accountants
- Consolidated Balance Sheets as of December 31, 1998
and 1997
- Consolidated Statements of Income for the Years ended
December 31, 1998, 1997 and 1996
- Consolidated Statements of Comprehensive Income for
the Years ended December 31, 1998, 1997 and 1996
- Consolidated Statements of Stockholders' Equity for
the Years ended December 31, 1998, 1997 and 1996
- Consolidated Statements of Cash Flows for the Years
ended December 31, 1998, 1997 and 1996
- Notes to Consolidated Financial Statements for the
Years ended December 31, 1998, 1997 and 1996
- Consolidated Balance Sheets as of March 31, 1999
(Unaudited) and December 31, 1998
- Consolidated Statements of Income for the Three
Months Ended March 31, 1999 and 1998 (Unaudited)
- Consolidated Statements of Comprehensive Income for
the Three Months Ended March 31, 1999 and 1998
(Unaudited)
- Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1999 and 1998 (Unaudited)
- Notes to Consolidated Financial Statements for the
Three Months Ended March 31, 1999 and 1998
(Unaudited)
(b) Pro Forma Financial Information (Unaudited)
- Unaudited Pro Forma Combined Financial Statements
- Unaudited Pro Forma Combined Balance Sheet as of
February 28, 1999
- Unaudited Pro Forma Combined Statement of Operations
for the Fiscal Year ended February 28, 1999
- Notes to Unaudited Pro Forma Combined Financial
Statements
(c) Exhibits
2.1 Acquisition Agreement and Plan of Merger by and among
InterVoice, Inc., InterVoice Acquisition Subsidiary III, Inc.
and Brite Voice Systems, Inc. dated as of April 27, 1999
(incorporated herein by reference to Exhibit 99.(c)(1) to the
Schedule 14D-1 filed by InterVoice, Inc. and InterVoice
Acquisition Subsidiary III, Inc. on May 3, 1999).
99.1 Financial Statements of Brite Voice Systems, Inc.
(incorporated by reference to pages 22 to 44 of Brite's Annual
Report on Form 10-K405 for the fiscal year ended December 31,
1998 and pages 3 to 7 of its Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999).
99.2* Pro Forma Financial Information
99.3 The Credit Agreement dated June 1, 1999, among InterVoice,
Inc., InterVoice Acquisition Subsidiary III, Inc., Bank of
America National Trust and Savings Association, an
administrative agent and other agents and lenders and certain
other financial institutions indicated as being parties to the
Credit Agreement (incorporated herein by reference to Exhibit
99.(b)(1) to the Schedule 14D-1 (Amendment No. 4) filed by
InterVoice, Inc. and InterVoice Acquisition Subsidiary III,
Inc. on June 14, 1999).
- --------------------
*filed herewith
4
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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.
By: /s/ Rob-Roy J. Graham
-------------------------------------
Rob-Roy J. Graham
Secretary and Chief Financial Officer
Date: June 23, 1999
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
2.1 Acquisition Agreement and Plan of Merger by and among
InterVoice, Inc., InterVoice Acquisition Subsidiary
III, Inc. and Brite Voice Systems, Inc. dated as of
April 27, 1999 (incorporated herein by reference to
Exhibit 99.(c)(1) to the Schedule 14D-1 filed by
InterVoice, Inc. and InterVoice Acquisition
Subsidiary III, Inc. on May 3, 1999).
99.1 Financial Statements of Brite Voice Systems, Inc.
(incorporated by reference to pages 22 to 44 of
Brite's Annual Report on Form 10-K405 for the fiscal
year ended December 31, 1998 and pages 3 to 7 of its
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999).
99.2* Pro Forma Financial Information
99.3 The Credit Agreement dated June 1, 1999, among
InterVoice, Inc., InterVoice Acquisition Subsidiary
III, Inc., Bank of America National Trust and Savings
Association, an administrative agent and other agents
and lenders and certain other financial institutions
indicated as being parties to the Credit Agreement
(incorporated herein by reference to Exhibit
99.(b)(1) to the Schedule 14D-1 (Amendment No. 4)
filed by InterVoice, Inc. and InterVoice Acquisition
Subsidiary III, Inc. on June 14, 1999.
</TABLE>
- -----------------------
*filed herewith
<PAGE> 1
EXHIBIT 99.2
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements have
been prepared to give effect to the following transactions, which are
collectively referred to as the "Pro Forma Transactions," using the purchase
method of accounting:
o the Offer;
o the funding of the debt financing for the Offer and the
Merger;
o the Merger of Merger Sub with and into Brite whereby Brite
becomes a wholly-owned subsidiary of InterVoice at an assumed
exchange ratio of 1.3215 shares of InterVoice common stock for
each share of Brite common stock;
o the repurchase by Brite of the Common Stock Purchase Warrant
dated December 12, 1997 issued by Brite to AT&T Corp.;
o the repurchase by Brite of all outstanding stock options under
Brite's stock option plans as contemplated by the Merger
Agreement; and
o the costs and expenses incurred in consummating the Pro Forma
Transactions.
The unaudited pro forma combined financial statements of InterVoice
give effect to the consummation of the Pro Forma Transactions, as if the Pro
Forma Transactions had been consummated: (i) on February 28, 1999, in the case
of the Unaudited Pro Forma Combined Balance Sheet and (ii) on March 1, 1998, in
the case of the Unaudited Pro Forma Combined Statement of Operations for the
fiscal year ended February 28, 1999.
The unaudited pro forma combined financial statements are presented for
illustrative purposes only and are not necessarily indicative of what
InterVoice's actual financial position or results of operations would have been
had the Pro Forma Transactions been consummated on such dates, nor is it
necessarily indicative of future financial position or results of operations.
Additionally, these financial statements do not give effect to (i) any
transactions other than the Pro Forma Transactions and those described in the
accompanying notes to unaudited pro forma combined financial statements of
InterVoice, (ii) InterVoice's results of operations since February 28, 1999,
(iii) Brite's results of operations since December 31, 1998, (iv) any one-time
charges that may result from the restructuring of InterVoice's existing business
due to the Pro Forma Transactions, or (v) any cost savings or other synergies
anticipated by InterVoice or Brite management as a result of the Pro Forma
Transactions. The actual exchange ratio used for purposes of determining the
number of shares of InterVoice common stock to be issued may be different at the
effective time of the Merger.
InterVoice's management is evaluating and planning for restructuring
activities directly related to the Pro Forma Transactions. Any charges which may
be incurred in connection with restructuring activities have not been included
in the unaudited pro forma combined financial statements. Such restructuring
costs, should they occur, would be expected to be incurred in the fiscal quarter
ending August 31, 1999. Although InterVoice's management is still in the process
of evaluating the nature, scope and extent of any restructuring costs, it
currently estimates that the related charges would be in the range of $5 million
to $7 million.
The unaudited pro forma combined financial statements do not purport to
be indicative of InterVoice's financial position or results of operations as of
the date hereof or for any period ended on the date hereof, as of the closing
date of the Merger, or for any period ending at the closing date, or as of or
for any other future date or period.
<PAGE> 2
The following unaudited pro forma combined financial statements are
based upon, and should be read in conjunction with, the historical financial
statements of InterVoice and Brite. In making the pro forma adjustments to
InterVoice's and Brite's historical financial information to prepare the
unaudited pro forma combined financial statements, no adjustment has been made
to take into account the two companies' differing fiscal periods. InterVoice has
retained independent valuation professionals to determine the fair value of the
assets and liabilities of Brite, including intangible assets, as of the
effective time. Although such determination of fair value is not presently
expected to result in values that are materially greater or less than the values
assumed in the preparation of the following unaudited pro forma combined
financial statements, there can be no assurance with respect thereto.
<PAGE> 3
INTERVOICE, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
FEBRUARY 28, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
INTERVOICE BRITE
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
2/28/99 3/31/99 ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
(SEE NOTE 2)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents .................. $ 12,196 $ 12,432 $ (12,500)(a) $ 12,128
Accounts and notes receivable, net ......... 42,156 49,512 -- 91,668
Inventory .................................. 11,704 22,557 -- 34,261
Prepaid expenses and other current assets .. 4,498 6,172 -- 10,670
Deferred income taxes ...................... 4,514 732 -- 5,246
------------ ------------ ------------ ------------
Total current assets ............... 75,068 91,405 (12,500) 153,973
Property and equipment, net .................. 27,055 16,831 -- 43,886
Intangibles and other assets, net ............ 9,407 7,408 (2,000)(a) 93,415
78,600 (b)
Goodwill ..................................... -- -- 32,450 (b) 32,450
Investment in Brite .......................... -- -- 175,200 (c) --
(72,550)(d)
(102,650)(b)
------------ ------------ ------------ ------------
Total assets ....................... $ 111,530 $ 115,644 $ 96,550 $ 323,724
============ ============ ============ ============
Current liabilities:
Accounts payable and accrued expenses ...... $ 7,651 $ 9,869 $ 3,500 (c) $ 21,020
Accrued compensation ....................... 3,018 2,971 -- 5,989
Other accrued expenses ..................... 1,188 4,813 -- 6,001
Customer deposits .......................... 4,096 2,957 -- 7,053
Deferred income ............................ 5,626 5,042 -- 10,668
Income taxes payable ....................... 1,022 3,184 (1,700)(a) 2,506
Current portion of long-term obligations ... -- -- 5,000 (c) 5,000
------------ ------------ ------------ ------------
Total current liabilities .......... 22,601 28,836 6,800 58,237
Deferred income .............................. -- 1,458 1,458
Deferred income taxes ........................ 1,356 -- 28,500 (b) 29,856
Long-term obligations, less current portion .. 5,000 -- 125,000 (c) 130,000
Stockholders' equity:
Common stock, no par value ................. 14 45,325 2 (c) 16
(45,325)(d)
Additional capital ......................... 1,720 -- 41,698 (c) 43,418
Unearned compensation ...................... (649) -- -- (649)
Cumulative foreign translation adjustment .. -- (1,089) 1,089 (d) --
Retained earnings .......................... 81,488 41,114 (12,800)(a) 61,388
(28,314)(d)
(20,100)(b)
------------ ------------ ------------ ------------
82,573 85,350 (63,750) 104,173
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity ... $ 111,530 $ 115,644 $ 96,550 $ 323,724
============ ============ ============ ============
</TABLE>
<PAGE> 4
INTERVOICE, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INTERVOICE BRITE
HISTORICAL HISTORICAL
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
2/28/99 12/31/98 ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
(SEE NOTE 3)
<S> <C> <C> <C> <C>
Sales ................................... $ 136,904 $ 135,715 $ $ 272,619
Cost of goods sold ...................... 54,191 73,105 127,296
------------ ------------ ------------ ------------
82,713 62,610 -- 145,323
Research and development expenses ....... 13,285 15,795 29,080
Selling, general and administrative
expenses .............................. 40,279 43,187 17,068 (a) 100,534
Nonrecurring expenses ................... -- 1,410 1,410
------------ ------------ ------------ ------------
53,564 60,392 17,068 131,024
Income (loss) from operations ........... 29,149 2,218 (17,068) 14,299
Other income (expense), net ............. (353) 628 (10,300)(b) (10,025)
------------ ------------ ------------ ------------
Income before income taxes .............. 28,796 2,846 (27,368) 4,274
Income taxes ............................ 8,603 1,073 (8,761)(c) 915
------------ ------------ ------------ ------------
Income from continuing operations ....... $ 20,193 $ 1,773 $ (18,607) $ 3,359
============ ============ ============ ============
Earnings per share:
Basic ................................. $ .72 $ .11
============ ============
Diluted ............................... $ .68 $ .10
============ ============
Weighted average shares outstanding:
Basic ................................. 27,990,907 4,114,848 32,105,755
Diluted ............................... 29,772,504 4,114,848 33,887,352
</TABLE>
<PAGE> 5
INTERVOICE, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. GENERAL
The Pro Forma Transactions will be accounted for as a purchase business
combination by InterVoice. These unaudited, pro forma combined financial
statements reflect the payment of approximately $122.7 million in cash and the
issuance of 4,114,848 shares of InterVoice common stock in exchange for
3,113,773 shares of Brite common stock (amount of Brite common stock outstanding
as of April 27, 1999, excluding shares owned by InterVoice or its subsidiaries).
The pro forma adjustments assume a payment of $13.40 in cash per share of Brite
common stock for 9,158,155 shares and the issuance of 4,114,848 shares of
InterVoice common stock in exchange for each share of Brite common stock as set
forth in the following table:
<TABLE>
<S> <C>
Assumed number of shares of Brite common stock outstanding at effective time of
Merger (excluding shares owned by
InterVoice and its subsidiaries)................................................ 3,113,773
Assumed exchange ratio............................................................ 1.3215
-----------
Assumed number of shares of InterVoice common stock issued
in Merger....................................................................... 4,114,848
</TABLE>
The exchange ratio to be used in determining the actual number of
shares of InterVoice common stock to be issued in exchange for Brite common
stock will be determined at the effective time based on the actual number of
shares of Brite common stock outstanding on that date, excluding shares owned by
InterVoice or its subsidiaries, and the average of the per share closing price
of InterVoice common stock on Nasdaq for the 25 trading days immediately
preceding the effective time of the Merger. The actual exchange ratio used for
purposes of determining the number of shares of InterVoice common stock to be
issued may be different at the effective time of the Merger. For purposes of
determining the assumed exchange ratio above, the 25-day average closing price
as of May 15, 1999 was used ($10.14 per share).
The accompanying unaudited pro forma combined financial statements
reflect an aggregate purchase price of approximately $175.2 million, consisting
of $13.40 in cash paid per share for 9,158,155 shares of Brite common stock in
the Offer, 4,114,848 shares of InterVoice common stock issued to Brite
stockholders (valued at approximately $10.14 per share of InterVoice common
stock), and costs of InterVoice directly related to the transactions as follows
(in thousands):
<TABLE>
<S> <C>
Cash paid to Brite stockholders in Offer......................................... $ 122,700
InterVoice common stock issued in the Merger..................................... 41,700
Investment advisor, legal, accounting and other professional
fees and expenses.............................................................. 5,200
Other costs related to the Pro Forma Transactions................................ 5,600
---------------
$ 175,200
===============
</TABLE>
For purposes of preparing the accompanying unaudited pro forma combined
balance sheet, the aggregate purchase price has been allocated to the net assets
acquired, with the remainder recorded as goodwill on the basis of preliminary
estimates of fair value. These preliminary estimates of fair value were
determined by InterVoice's management based primarily on information furnished
by management of Brite and preliminary results of an independent appraisal of
the assets acquired.
While the pro forma information has been presented based on the best
information currently available to InterVoice's management, the final allocation
of the purchase price will be based on a completed appraisal of the assets and
liabilities of Brite. Although the final valuation of the assets to be acquired
is not presently expected to
<PAGE> 6
result in values that are significantly different from management's estimates as
included in the unaudited pro forma combined balance sheet, there can be no
assurance with respect thereto.
2. UNAUDITED PRO FORMA COMBINED BALANCE SHEET
The accompanying unaudited pro forma combined balance sheet assumes the
Pro Forma Transactions were consummated on February 28, 1999 and reflects the
following pro forma adjustments:
(a) in connection with the Pro Forma Transactions, Brite will make
cash payments prior to the effective time of the Merger of
$12.5 million as follows: (1) $7.5 million to repurchase from
AT&T Corp. the Common Stock Purchase Warrant dated December
12, 1997 issued by Brite to AT&T Corp., and (2) approximately
$5 million as consideration to Brite optionees for canceling
all outstanding Brite stock options in connection with the Pro
Forma Transactions. A pro forma adjustment has been recorded
to reduce Brite's retained earnings by $12.8 million to
reflect the charge, net of a $1.7 million tax benefit,
associated with the cash payments and the write off of a $2
million deferred asset reflected in Brite's historical balance
sheet related to the AT&T warrant;
(b) to record the estimated allocation of the purchase price for
the Pro Forma Transactions to the fair value of assets and
liabilities acquired as follows (in thousands):
<TABLE>
<S> <C>
Working capital......................................................... $ 51,769
Property and equipment.................................................. 16,831
Other assets............................................................ 5,408
Other liabilities....................................................... (1,458)
--------------
Fair value of Brite's historical net assets--as adjusted............ 72,550
Identified intangible assets............................................ 78,600
Purchased in-process research and development to be charged to
expense upon consummation of the pro forma transactions................. 20,100
Deferred income tax liability related to identified intangible assets... (28,500)
Goodwill................................................................ 32,450
--------------
$ 175,200
==============
</TABLE>
The historical book value of Brite's net assets as of March 31, 1999
reconciles with the fair value of the net assets included in the
purchase price allocation above as follows (in thousands):
<TABLE>
<S> <C>
Book value of Brite's historical net assets............................. $ 85,350
Pro forma adjustment (a):
o to reduce working capital for cash payments..................... (12,500)
o to increase working capital for income tax benefit.............. 1,700
o to reduce other assets for write off of deferred asset.......... (2,000)
-------------
Fair value of Brite's historical net assets-- as adjusted $ 72,550
=============
</TABLE>
<PAGE> 7
The amounts identified as intangible assets were categorized as follows
(in thousands):
<TABLE>
<CAPTION>
ALLOCATED
CATEGORY VALUE
- ------------------------------------------------------------------------ -------------
<S> <C>
Existing product technology............................................. $ 22,000
Customer relationships.................................................. 38,500
Assembled workforce..................................................... 8,300
Tradename............................................................... 9,800
-------------
Total intangibles.................................................. $ 78,600
=============
</TABLE>
(c) to record the aggregate cost of the Pro Forma Transactions as
described in Note 1 above. In connection with the Pro Forma
Transactions, InterVoice has obtained a credit facility up to
an aggregate amount of $150 million. InterVoice anticipates
that $135 million of the new financing will be utilized as of
the effective time of the Merger, and $5 million of the new
financing will be used to pay off existing InterVoice
long-term debt. Accordingly, the Pro Forma Transactions will
result in $130 million of additional indebtedness on a pro
forma combined basis. In addition, approximately $3.5 million
is reflected as an accrued liability for certain costs
directly related to the Pro Forma Transactions that will not
be paid at the effective time of the Merger; and
(d) to eliminate Brite's historical equity balances after
considering adjustment (a) above.
3. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
The accompanying unaudited pro forma combined statement of operations
has been prepared as if the Pro Forma Transactions were consummated as of March
1, 1998, and reflect the following pro forma adjustments:
(a) to record amortization of identified intangibles acquired in
the Pro Forma Transactions computed using the straight-line
method over their estimated economic lives (three to ten
years) and amortization of goodwill over its estimated
economic life (ten years);
(b) to record estimated interest expense incurred as if the Pro
Forma Transactions had been completed on March 1, 1998. The
applicable interest rate for the debt financing relating to
the Pro Forma Transactions is a variable rate indexed to
LIBOR. The pro forma interest expense adjustment assumes an
interest rate of 7.9% on the additional long-term borrowings
of $130 million in connection with the Pro Forma Transactions.
An increase of 1/8% in this assumed interest rate would have
the effect of reducing pro forma net income by approximately
$105,000; and
(c) to adjust the provision for income taxes to reflect the impact
on the results of operations of the Pro Forma Transactions and
related pro forma adjustments. The effective tax rate on the
pro forma adjustment to income taxes is lower than the
statutory tax rate due to non-deductible goodwill amortization
expense recorded as part of the adjustment described in Note
3(a).
4. UNAUDITED PRO FORMA COMBINED EARNINGS PER COMMON SHARE DATA
The unaudited pro forma combined basic net income per common share is
computed by dividing pro forma combined net income by the weighted average
number of shares of InterVoice common stock outstanding during the period plus
4,114,848, the number of shares of InterVoice common stock currently anticipated
to be issued in the Merger to complete the Pro Forma Transactions. The unaudited
pro forma combined diluted net income per common share is computed by dividing
pro forma combined net income by the weighted average number of shares of
InterVoice common stock outstanding during the period, as adjusted for the
effect of dilutive stock options, plus the number of shares of InterVoice common
stock currently anticipated to be issued in the Merger to complete the Pro Forma
Transactions.