<PAGE>
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) March 9, 1998
DAVOX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
______________________________________________
(State or other jurisdiction of incorporation)
0-15578 02-0364368
- ------------------------- ----------------------------
(Commission File Number) (IRS Employer
Identification No.)
6 TECHNOLOGY PARK DRIVE, WESTFORD, MASSACHUSETTS 01886
-------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(978) 952-0200
--------------
<PAGE>
ITEM 5. OTHER EVENTS.
On March 9, 1998, Davox Corporation ("Davox") entered into an Agreement and Plan
of Merger dated as of March 9, 1998 among Davox, Duke Acquisition Corporation, a
direct, wholly-owned subsidiary of Davox ("DAC") and AnswerSoft, Inc.
("AnswerSoft"), providing for the merger (the "Merger") of DAC with and into
AnswerSoft with AnswerSoft surviving as a wholly-owned subsidiary of Davox.
This Current Report on Form 8-K is being filed to disclose and make publicly
available certain pro forma financial information giving effect to the Merger
and certain historical financial information of AnswerSoft.
The information contained in the press release of Davox dated March 10, 1998
attached as Exhibit 99.3 is hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired. None.
-----------------------------------------
(b) Pro Forma Financial Information. None.
-------------------------------
(c) Exhibits.
---------
Exhibit No. Description
----------- -----------
23.1 Consent of Ernst & Young LLP
99.1 Pro Forma Combined Condensed Financial Data of Davox
Corporation and AnswerSoft, Inc.
99.2 Historical Consolidated Financial Statements of
AnswerSoft, Inc.
99.3 Press Release of Davox Corporation announcing the
Merger
- 2 -
<PAGE>
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 hereunto duly authorized.
DAVOX CORPORATION
By: /s/ John J. Connolly
----------------------------------
John J. Connolly
Vice President, Finance,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
Dated: March 17, 1998
- 3 -
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description Page No. in
- ----------- ----------- Sequentially
Numbered Copy
-------------
23.1 Consent of Ernst & Young LLP
99.1 Pro Forma Combined Condensed Financial
Data of Davox Corporation and
AnswerSoft, Inc.
99.2 Historical Consolidated Financial
Statements of AnswerSoft, Inc.
99.3 Press Release of Davox Corporation
announcing the Merger
- 4 -
<PAGE>
Exhibit 23.1
------------
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-89582, 333-07003, 333-16209 and 333-30727) of
Davox Corporation, of our report dated February 28, 1998, with respect to the
consolidated financial statements of AnswerSoft, Inc. including the consolidated
balance sheets for the years ended December 31, 1997 and 1996 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years ended December 31, 1997, included in Davox Corporation's
Current Report on Form 8-K dated March 9, 1998.
/s/ Ernst & Young LLP
Dallas, Texas
March 12, 1998
- 5 -
<PAGE>
Exhibit 99.1
------------
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
On March 9, 1998, Davox Corporation ("Davox") entered into an
Agreement and Plan of Merger dated as of March 9, 1998 among Davox, Duke
Acquisition Corporation, a direct, wholly-owned subsidiary of Davox ("DAC") and
AnswerSoft, Inc. ("AnswerSoft"), providing for the merger (the "Merger") of DAC
with and into AnswerSoft with AnswerSoft surviving as a wholly-owned subsidiary
of Davox.
The unaudited pro forma combined condensed financial statements
reflect certain assumptions deemed probable by Davox regarding the Merger (e.g.,
that share information used in the unaudited pro forma information approximates
actual share information at the effective date). No adjustments to the
unaudited pro forma combined condensed financial information have been made to
account for different possible results in connection with the foregoing, as
Davox believes that the impact on such information of the varying outcomes,
individually or in the aggregate, would not be materially different.
The unaudited pro forma combined condensed balance sheet as of
December 31, 1997 gives effect to the Merger as if it had occurred on December
31, 1997, and combines the audited consolidated balance sheet of Davox and the
audited consolidated balance sheet of AnswerSoft as of December 31, 1997.
The unaudited pro forma combined condensed statements of operations
combine the historical consolidated statements of operations of Davox and
AnswerSoft for each of the three years ended December 31, 1997, in each case as
if the Merger had occurred at the beginning of the periods presented.
Davox and AnswerSoft estimate that they will incur direct transaction
costs of approximately $1.5 million associated with the Merger, which will be
charged to operations upon consummation of the Merger. In addition, it is
expected that following the Merger, the combined company will incur an
additional significant charge to operations, which is not currently reasonably
estimable, to reflect costs associated with integrating the two companies.
There can be no assurance that the combined company will not incur additional
charges to reflect costs associated with the Merger or that management will be
successful in its efforts to integrate the operations of the two companies.
Such unaudited pro forma combined condensed financial information is
presented for illustrative purposes only and is not necessarily indicative of
the financial position or results of operations that would have actually been
reported had the Merger occurred at the beginning of the periods presented, nor
is it necessarily indicative of future financial position or results of
operations. These unaudited pro forma combined condensed financial statements
are based upon the respective historical consolidated financial statements of
Davox and AnswerSoft and should be read in conjunction with the audited
historical consolidated financial statements and notes thereto of Davox filed on
Form 10-K for the fiscal year ended December 31, 1997 and the audited historical
consolidated financial statements and notes thereto of AnswerSoft included
elsewhere herein, and do not incorporate, nor do they assume, any benefits from
cost savings or synergies of operations of the combined company.
- 6 -
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DAVOX ANSWERSOFT ADJUSTMENTS COMBINED
------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......... $25,366 $3,273 $ $28,639
Short-term investments............ 23,802 -- 23,802
Accounts receivable, net.......... 10,359 2,240 12,599
Deferred tax asset................ 9,319 -- 9,319
Prepaid expenses and other current
assets........................... 969 154 1,123
------- ------ -------
Total current assets............ 69,815 5,667 75,482
------- ------ -------
Property and equipment, net......... 4,585 663 5,248
------- ------ ------- -------
Other assets, net................... 768 62 830
------- ------ ------- -------
Total assets.................... $75,168 $6,392 $ -- $81,560
======= ====== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................. $ 4,987 $ 260 $ $ 5,247
Accrued expenses.................. 10,223 614 10,837
Customer deposits................. 2,018 -- 2,018
Deferred revenue, current......... 3,783 572 4,355
Current portion of long-term
obligations...................... -- 178 178
------- ------ ------- -------
Total current liabilities....... 21,011 1,624 22,635
------- ------ ------- -------
Long-term obligations, less current
portion............................ -- 297 297
------- ------ -------
Deferred revenue, noncurrent........ -- 253 253
------- ------ -------
Preferred stock, $0.01 par value.... -- 13,911 (13,911) --
Stockholders' equity:
Common stock, $0.10 par value..... 1,186 13 231 1,430
Additional paid-in capital........ 57,758 117 13,680 71,555
Cumulative translation
adjustment....................... -- 7 7
Amounts due from officer.......... -- (414) (414)
Accumulated deficit............... (4,763) (9,416) (14,179)
------- ------ ------- -------
54,181 (9,693) 13,911 58,399
Less--treasury stock, at cost.... (24) -- (24)
------- ------ ------- -------
Total stockholders' equity...... 54,157 (9,693) 13,911 58,375
------- ------ ------- -------
$75,168 $6,392 $ -- $81,560
======= ====== ======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenue................................... $ 38,597 $ 57,099 $ 83,553
----------- ----------- -----------
Cost of revenue........................... 17,164 22,232 28,029
----------- ----------- -----------
Gross profit............................ 21,433 34,867 55,524
Research, development and engineering ex-
penses................................... 4,901 6,733 10,418
Selling, general and administrative ex-
penses................................... 13,967 19,705 29,710
----------- ----------- -----------
Total operating expenses................ 18,868 26,438 40,128
----------- ----------- -----------
Income from operations.................... 2,565 8,429 15,396
Interest income, net...................... 629 1,217 2,031
----------- ----------- -----------
Income before provision for income taxes.. 3,194 9,646 17,427
Provision for income taxes................ 344 965 2,091
----------- ----------- -----------
Net income.............................. $ 2,850 $ 8,681 $ 15,336
=========== =========== ===========
Earnings per share:
Basic................................... $ 0.25 $ 0.72 $ 1.18
Diluted................................. $ 0.22 $ 0.64 $ 1.07
Weighted average shares outstanding:
Basic................................... 11,320,202 11,987,829 12,987,463
Diluted................................. 12,888,415 13,636,657 14,323,335
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) MERGER SHARES ISSUED
These unaudited pro forma combined financial statements reflect the issuance
of 2,448,897 shares of Davox Common Stock in exchange for an aggregate of
14,882,832 shares of AnswerSoft Common Stock, on a fully diluted basis, which
includes the Preferred Stock on an as converted basis, and the outstanding
options and warrants (outstanding as of March 9, 1998) in connection with the
Merger, based on the Exchange Ratios set forth in the following table:
<TABLE>
<S> <C> <C>
AnswerSoft Series A Preferred Stock and warrants, out-
standing as of
March 9, 1998......................................... 8,615,000
Exchange Ratio......................................... 0.1665189
---------
Number of shares of Davox Common Stock exchanged..... 1,434,561
AnswerSoft Series B Preferred Stock, outstanding as of
March 9, 1998......................................... 2,060,047
Exchange Ratio......................................... 0.2180747
---------
Number of shares of Davox Common Stock exchanged..... 449,244
AnswerSoft Common Stock and options, outstanding as of
March 9, 1998......................................... 4,207,785
Exchange Ratio......................................... 0.1342967
---------
Number of shares of Davox Common Stock exchanged..... 565,092
----------
Total Number of shares of Davox Common Stock
Exchanged........................................... 2,448,897
Number of shares of Davox Common Stock outstanding as
of December 31, 1997.................................. 11,864,216
----------
Number of shares of Combined Company Common Stock out-
standing after completion of the Merger............... 14,313,113
==========
</TABLE>
(2) MERGER RELATED EXPENSES
Davox and AnswerSoft estimate they will incur direct transaction costs of
approximately $1.5 million associated with the Merger consisting of
transaction fees for investment bankers, attorneys, accountants, financial
printing and other related charges. These nonrecurring transaction costs will
be charged to operations upon consummation of the Merger. These direct
transaction costs have not been reflected in the unaudited pro forma combined
condensed financial statements.
It is expected that following the Merger, the combined company will incur
additional significant charges to operations, which are not currently
reasonably estimable, to reflect costs associated with integrating the two
companies. These charges have not been reflected in the unaudited pro forma
combined condensed financial statements. There can be no assurance that the
combined company will not incur additional charges to reflect costs associated
with the Merger or that management will be successful in its efforts to
integrate the operations of the two companies.
(3) MERGER CONFORMITY ADJUSTMENTS
The unaudited pro forma combined condensed financial statements do not
include adjustments to conform the accounting policies of AnswerSoft to those
followed by Davox. The nature and extent of such adjustments, if any, will be
based upon further analysis and are not expected to be material.
(4) EARNINGS PER SHARE
The pro forma net earnings per share reflect: (i) the weighted average
number of shares of Davox Common Stock that would have been outstanding if the
Merger occurred at the beginning of the periods presented based
<PAGE>
upon the conversion of each share of AnswerSoft Common Stock, AnswerSoft
Series A Preferred Stock and AnswerSoft Series B Preferred Stock into shares
of Davox Common Stock, assuming Exchange Ratios of 0.1342967, 0.1665189 and
0.2180747, respectively (in each case assuming an Average Share Price equal to
$31.03438 and 14,882,832 fully diluted shares of AnswerSoft Common Stock), and
(ii) the dilutive impact of stock options and warrants using the treasury
stock method. All AnswerSoft options and warrants to purchase AnswerSoft
Common Stock are assumed to be converted into options to purchase Davox Common
Stock at an exchange ratio of 0.1342967 shares of Davox Common Stock for each
share of AnswerSoft Common Stock before application of the treasury stock
method.
(5) RECLASSIFICATIONS
Certain financial statement balances of AnswerSoft have been reclassified to
conform with the Davox financial statement presentation.
<PAGE>
EXHIBIT 99.2
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
AnswerSoft, Inc.
We have audited the accompanying consolidated balance sheets of AnswerSoft,
Inc. as of December 31, 1997 and 1996, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of AnswerSoft, Inc. at December 31, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Dallas, Texas
February 28, 1998
<PAGE>
ANSWERSOFT, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 3,273,323 $ 2,942,179
Accounts receivable, net of reserves of
approximately $85,910 at
December 31, 1997 and $12,357 at December 31,
1996, respectively................................ 2,240,092 1,179,149
Prepaid expenses and other current assets.......... 153,737 197,431
----------- -----------
Total current assets............................. 5,667,152 4,318,759
Property and equipment, net.......................... 663,092 266,754
Other assets......................................... 62,095 163,217
----------- -----------
Total assets......................................... $ 6,392,339 $ 4,748,730
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................. $ 178,205 $ 5,295
Accounts payable................................... 260,003 316,514
Accrued expenses and other liabilities............. 614,128 400,405
Deferred revenue................................... 571,830 1,177,129
----------- -----------
Total current liabilities........................ 1,624,166 1,899,343
Long-term debt....................................... 297,008 --
Deferred revenue..................................... 252,945 314,953
Commitments..........................................
Preferred stock, $.01 par value......................
Authorized shares--25,000,000
Issued and outstanding shares--10,615,047 at
December 31, 1997 and 8,480,000 at December 31,
1996.............................................. 13,911,122 8,480,000
Stockholders' equity:
Common stock $.01 par value:
Authorized shares--20,000,000
Issued and outstanding shares--1,354,442 at
December 31, 1997 and 630,141 at December 31,
1996.............................................. 13,544 6,301
Paid-in capital..................................... 117,169 5,420
Other............................................... 6,629 --
Amounts due from officer............................ (413,992) --
Accumulated deficit................................. (9,416,252) (5,957,287)
----------- -----------
Total stockholders' equity........................... (9,692,902) (5,945,566)
----------- -----------
Total liabilities and stockholders' equity........... $ 6,392,339 $ 4,748,730
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
ANSWERSOFT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
Revenue
Product............................... $ 5,307,222 $2,565,957 $ 240,803
Product support and services.......... 1,430,891 890,913 799,925
----------- ---------- -----------
6,738,113 3,456,870 1,040,728
----------- ---------- -----------
Cost of revenue
Product............................... 170,650 89,936 33,412
Product support and services.......... 1,308,008 564,602 678,519
----------- ---------- -----------
1,478,658 654,538 711,931
----------- ---------- -----------
Gross profit............................ 5,259,455 2,802,332 328,797
----------- ---------- -----------
Costs and expenses
Sales and marketing................... 5,036,145 1,939,435 1,316,533
Software development.................. 1,939,366 872,460 880,726
General and administrative............ 1,821,602 552,527 484,923
----------- ---------- -----------
8,797,113 3,364,422 2,682,182
----------- ---------- -----------
Loss from operations.................... (3,537,658) (562,090) (2,353,385)
Interest income......................... 99,817 82,208 211,583
Interest expense........................ (21,124) (2,046) (3,872)
----------- ---------- -----------
Loss before income taxes................ (3,458,965) (481,928) (2,145,674)
Income taxes............................ -- -- 24,875
----------- ---------- -----------
Net loss................................ $(3,458,965) $ (481,928) $(2,170,549)
=========== ========== ===========
Basic and diluted loss per common
share.................................. $ (3.37) $ (0.79) $ (4.33)
Weighted average shares outstanding..... 1,026,561 607,141 501,058
</TABLE>
See accompanying notes.
<PAGE>
ANSWERSOFT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------- PAID-IN ACCUMULATED NOTE DUE
SHARES AMOUNT CAPITAL DEFICIT FROM OFFICER OTHER TOTAL
--------- ------- -------- ----------- ------------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE at December 31,
1994................... 434,020 $ 4,340 $ -- $(3,304,810) $ -- $ -- $ (3,300,470)
Issuance of common
stock pursuant to
stock option
exercises............. 144,420 1,444 1,764 -- -- -- 3,208
Net loss............... -- -- -- (2,170,549) -- -- (2,170,549)
--------- ------- -------- ----------- --------- ------ -------------
BALANCE at December 31,
1995................... 578,440 5,784 1,764 (5,475,359) -- -- (5,467,811)
Issuance of common
stock pursuant to
stock option
exercises............. 51,701 517 3,656 -- 4,173
Net loss............... -- -- -- (481,928) -- -- (481,928)
--------- ------- -------- ----------- --------- ------ -------------
BALANCE at December 31,
1996................... 630,141 6,301 5,420 (5,957,287) -- -- (5,945,566)
Issuance of Series B
preferred stock
pursuant to stock
option exercises...... -- -- -- -- (356,122) -- (356,122)
Issuance of common
stock pursuant to
stock option
exercises............. 589,301 5,893 77,999 -- (57,870) -- 26,022
Net loss............... -- -- -- (3,458,965) -- -- (3,458,965)
Other.................. 135,000 1,350 33,750 -- -- 6,629 41,729
--------- ------- -------- ----------- --------- ------ -------------
BALANCE at December 31,
1997................... 1,354,442 $13,544 $117,169 $(9,416,252) $(413,992) $6,629 $ (9,692,902)
========= ======= ======== =========== ========= ====== =============
</TABLE>
See accompanying notes.
<PAGE>
ANSWERSOFT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................... $(3,458,965) $ (481,928) $(2,170,549)
Adjustments to reconcile net loss to
net cash used in
operating activities:
Depreciation and amortization......... 290,585 99,783 75,927
Provision for loss on accounts
receivable........................... 90,894 12,357 --
Changes in operating assets and
liabilities:
Accounts receivable.................. (1,151,837) (889,976) (294,080)
Prepaid expenses other assets........ 138,990 (320,993) (24,516)
Accounts payable, accrued expenses
and other liabilities............... 157,212 468,126 (33,949)
Deferred revenue..................... (667,307) 1,477,082 15,000
Other................................ 116,729 -- --
----------- ---------- -----------
Net Cash (used in) provided by
operating activities................ (4,483,699) 364,451 (2,432,167)
----------- ---------- -----------
INVESTING ACTIVITIES
Purchases of property and equipment.... (681,097) (193,212) (191,662)
Disposals of property and equipment.... -- 128,751 --
----------- ---------- -----------
Net cash used in investing activities.. (681,097) (64,461) (191,662)
----------- ---------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of Series B
Preferred Stock....................... 5,000,000 -- --
Proceeds from issuance of common stock
pursuant to stock options............. 26,022 4,173 3,208
Proceeds from issuance of long-term
debt.................................. 475,213 -- --
Payments on obligations under capital
leases................................ (5,295) (9,749) (21,407)
----------- ---------- -----------
Net cash provided by (used in)
financing activities.................. 5,495,940 (5,576) (18,199)
----------- ---------- -----------
Increase (decrease) in cash.............. 331,144 294,414 (2,642,028)
Cash at beginning of period.............. 2,942,179 2,647,765 5,289,793
----------- ---------- -----------
Cash at end of period.................... $ 3,273,323 $2,942,179 $ 2,647,765
=========== ========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid............................ $ 21,124 $ 2,046 $ 3,872
=========== ========== ===========
</TABLE>
See accompanying notes.
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
AnswerSoft, Inc. (the "Company"), a Delaware corporation, is a private
company and was founded in 1993 for the purpose of developing and marketing
inter-application automation software in the computer telephony integration
market ("CTI") throughout the world with a primary focus on business call
centers. The Company's products are designed to enhance the customer to
business interactions by way of the call center.
Consistent with the Company's operating structure, major markets are served
by the Company's sales organization and indirect distribution channels
consisting of the world's major telephone switch suppliers, independent
resellers and distributors. One customer accounted for 36%, 35%, and 24% of
the total revenues for 1997, 1996 and 1995, respectively. One other customer
accounted 29% of the total revenue in 1997. Additionally, four other customers
separately accounted for 17%, 15%, 14%, and 11% of the total revenue in 1995.
Basis of Presentation
The consolidated financial statements include the accounts of Company and
its wholly owned subsidiaries after elimination of intercompany balances and
transactions. The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the results of operations for the years ended December 31,
1997, 1996 and 1995. While management has based their assumptions and
estimates on the facts and circumstances currently known, final amounts may
differ from such estimates. Certain reclassifications have been made to the
prior periods financial statements to conform to the current period financial
statement presentation.
Revenue
The Company offers its customers software products, post contract customer
support services and professional implementation services on a fee basis. For
a license fee, customers enter into software license arrangements which grant
a right to use, but not to own, the Company's software products. The customer,
at its option, may enter into a post contract product support agreement which
allows the customer access to telephone support, product code patches, and
unspecified product upgrades, enhancements and releases on a when and if
available basis. Revenue from license fees for software products is recognized
after the software is delivered, provided that no significant future vendor
obligations exist and that collection of the license fee is probable. Post
contract product support revenue including product support included in initial
license fees, is recognized ratably over the term of the contract beginning in
the month following the date of the post contract customer support agreement.
Service revenue is recognized as the services are performed.
Software Development Costs
In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," (SFAS No.86), software development costs are expensed as incurred
until technological feasibility of the related products has been established,
at which time such costs are capitalized until the product is released as
generally available to customers. Because the products' features and
functionality are highly sophisticated, they require exhaustive testing and
technological feasibility is not reached until shortly before a product is
released for general availability. Accordingly, software development costs
qualifying for capitalization have been insignificant and therefore, such
costs have been charged to expense as incurred.
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Depreciation and Amortization
Property and equipment are recorded at cost and depreciated using the
straight-line method over average useful lives of three (3) to five (5) years.
Other intangible assets are amortized on a straight-line basis over a period
of three (3) years.
Advertising Costs
Advertising costs, which include expenses relating to promotions, trade
shows, direct mailings, and other advertising, are expensed as incurred.
During 1997, 1996 and 1995, advertising costs were approximately $368,000,
$194,000 and $100,000, respectively.
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No. 25
("APB 25"), "Accounting for Stock Issued to Employees," in accounting for its
employee stock options and stock based awards. Under APB 25, if the exercise
price of an employee's stock option equals or exceeds the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
The Company has granted all stock options at estimated fair market value;
accordingly, no compensation expense has been recorded. Note 9 below provides
additional disclosures required under Statement of Financial Accounting
Standard No. 123 ("FAS 123"), "Accounting for Stock-Based Compensation."
Loss per Common Share
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 128, Earnings per Share. Statement 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities. Loss per
common share amounts for all periods have been presented to conform to the
Statement 128 requirements. The Company's loss per common share calculations
are based on the average number of shares of common stock outstanding during
each year presented. There is no difference in basic and diluted loss per
share for 1997, 1996 and 1995, since the effects for those periods from the
potential exercise of options and warrants and the potential conversion to
common stock of preferred stock was antidilutive.
Foreign Currency Translation
The assets and liabilities of the Company's non-U.S. operations are
translated into U.S. dollars at exchange rates in effect as of the respective
balance sheet dates, and revenue and expense accounts of these operations are
translated at average exchange rates during the months the transactions occur.
Unrealized translation gains and losses are included as an adjustment to
stockholders' equity.
Cash and Cash Equivalents
Cash equivalents consist primarily of a highly liquid money market fund
investments. The carrying amount of cash and cash equivalents approximates
fair value.
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Developments
In October 1997 the FASB approved the American Institute of Certified Public
Accountants Statement of Position ("SOP 97-2"), "Software Revenue
Recognition," which will be effective for transactions occurring after
December 31, 1997. The Company's adoption of SOP 97-2 is not expected to have
a material impact on the financial position or results of operations of the
Company; however, to date, implementation guidance is minimal and the Company
has not completed its evaluation of the effect of the new standard on future
revenue recognition.
In June 1997 the FASB issued Statement No. 130 ("FAS 130"), "Reporting
Comprehensive Income." FAS 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. FAS 130 is effective for fiscal years beginning after
December 15, 1997. The adoption of FAS 130 will require additional disclosure
in the Company's financial statements but will not have any impact on the
financial position or results of operations of the Company.
2. ACCOUNTS RECEIVABLE
Accounts and notes receivable consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Billed accounts receivable........................... $1,399,651 $1,191,506
Unbilled accounts receivable......................... 926,351 --
Less: Allowance for doubtful accounts................ (85,910) (12,357)
---------- ----------
$2,240,092 $1,179,149
========== ==========
</TABLE>
At December 31, 1997 and 1996, 55% and 39% , respectively, of total accounts
receivable were from one customer that is under a software product
distribution contract for certain of the Company's products. Loss of this
customer as a distributor of the Company's products could have a material
adverse effect on the Company's results of operations and financial condition.
The distribution contract provides for the right to replicate and sell certain
of the Company's products and is subject to automatic renewal for an
additional one year term in the Company's second quarter unless either party
notifies the other of non-renewal sixty days prior to renewal. Management
expects that this contract will be renewed for another one year term. Unbilled
receivables consist of fees due from the distributor for product sold by the
distributor in the Company's fourth quarter. A separate customer accounted for
27% of the total accounts receivable at December 31, 1996.
The remainder of the Company's receivables are due principally from
corporations in diverse industries, distributors and resellers located in
North America, and to a lesser extent, Europe and Asia Pacific. The Company
does not perform routine credit evaluations of its large customers' financial
conditions as they are generally large well-known companies, and collateral is
generally not required. Foreign customers generally provide a partial payment
prior to shipment or are required to supply a standby letter of credit drawn
on a US bank. The carrying amounts of accounts receivable approximate fair
value.
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Equipment............................................. $ 558,357 $ 188,067
Furniture and fixtures................................ 224,979 6,659
Computer software..................................... 362,468 269,981
---------- ---------
1,145,804 464,707
Accumulated depreciation.............................. (482,712) (197,953)
---------- ---------
$ 663,092 $ 266,754
========== =========
</TABLE>
4. LINES OF CREDIT
On November 18, 1997, the Company entered into an agreement with a bank
which allows the Company to borrow up to $1,000,000 on a revolving line of
credit, based on a defined borrowing base, which is secured by the Company's
accounts receivable. The borrowings bear interest at the prevailing prime rate
plus .25% and are due at the end of November 1998. No borrowings have been
made under the revolving line of credit. On April 1, 1997, the Company entered
into an equipment line of credit agreement for $2,000,000 with the bank.
Borrowings bear interest at the prevailing prime rate plus .25% per annum. The
term of the agreement is 36 months and the Company may make six (6) draws
during first 12 months of the agreement. During the first twelve (12) months
of the agreement interest payments are due quarterly. Payments are interest
only during the first 12 months of the agreement. Payment of principal and
interest are payable monthly beginning April 1, 1998. During 1997, the Company
borrowed $475,213 under the equipment line of credit. Borrowings under both
lines are secured by substantially all the assets of the Company. The
agreements also subject the Company to maintain compliance with financial
ratios such as a quick ratio and a tangible net worth requirements, maximum
quarterly loss provisions, restrictions on dividend payments and limitations
on investments. At December 31, 1997 the Company was in compliance with the
debt covenants. The aggregate amount of principal maturities are $178,205 in
1998, $237,606 in 1999 and $59,402 in 2000.
5. 401(K) PLAN
The Company maintains a defined contribution plan under section 401(k) of
the Internal Revenue Code of 1996, as amended, (the "401(k) Plan"). The 401(k)
Plan covers all full-time employees over 21 years of age who have completed at
least one year of service with the Company. The participants may make pre-tax
contributions to the 401(k) Plan up to 15% of annual compensation as defined.
No contributions have been made by the Company to the 401(k) Plan in 1997,
1996 or 1995.
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Compensation and payroll taxes............................. $239,417 $180,000
Employee benefits.......................................... 150,026 76,364
Other...................................................... 224,685 144,041
-------- --------
$614,128 $400,405
======== ========
</TABLE>
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
7. INCOME TAXES
Deferred tax assets and liabilities are determined based on differences
between financial reporting and tax basis of assets and liabilities, and are
measured using enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
The significant components of the Company's deferred tax liabilities and
assets are as follows at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Deferred tax liabilities:
Prepaid expenses............................... $ (48,220) $ (3,763)
Other.......................................... (7,964) (7,623)
----------- -----------
Total deferred tax liabilities............... $ (56,184) $ (11,386)
----------- -----------
Deferred tax assets:
Net operating loss carryforwards............... $ 2,655,632 $ 1,449,486
Depreciation and amortization.................. 44,947 11,102
Accrued liabilities and deferred revenue....... 118,237 197,757
Allowance for doubtful accounts................ 31,761 4,330
Research and development credit carryforwards.. 87,926 65,903
----------- -----------
Total deferred tax assets.................... $ 2,938,503 $ 1,728,578
----------- -----------
Deferred tax assets, net of deferred tax
liabilities..................................... $ 2,882,319 $ 1,717,192
Valuation allowance.............................. (2,882,319) (1,717,192)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>
The provision for income taxes is reconciled with the federal statutory rate
as follows at December 31:
<TABLE>
<CAPTION>
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Provision computed at federal statutory
rate................................... $(1,176,048) $(163,856) $(729,529)
State income taxes, net of federal tax
effect................................. -- 631 16,418
Valuation allowance..................... 1,164,707 144,936 741,271
Other................................... 11,341 18,289 (3,285)
----------- --------- ---------
$ -- $ -- $ 24,875
=========== ========= =========
</TABLE>
For federal income tax purposes, the Company has a net operating loss
carryforward of $7,811,000 and unused research and development credits of
approximately $87,900 which begin to expire in the years 2008 and 2009,
respectively. Utilization of approximately $2,300,000 of the net operating
loss and approximately $36,000 of the research and development credit
carryforwards is restricted because of changes in ownership, as defined by the
Tax Reform Act of 1986, which occurred in March 1994 and in February 1995.
Subsequent changes in ownership of the Company may further restrict
utilization of the entire net operating loss and research and development
credit carryforwards.
8. PREFERRED STOCK
The Company has two issues of preferred stock outstanding, Series A
Preferred Stock ("Series A") and Series B Preferred Stock ("Series B") or
collectively referred to as the "Preferred Stock". The Series A was
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
8. PREFERRED STOCK (CONTINUED)
issued in 1994 at $1.00 per share. On July 16, 1997 the Company issued
1,923,077 shares of Series B at $2.60 per share raising gross proceeds of
approximately $5,000,000.
The shares of Preferred Stock are convertible at the option of the holder
but are subject to automatic conversion upon the closing of a firm
underwritten public offering pursuant to a registration statement filed under
the Securities Act of 1933, as amended, in which the aggregate sales price of
such securities equals at least $10,000,000 and the per share sales price is
not less than $10.00, or upon the affirmative vote of the holders of at least
51% of the outstanding shares of the Preferred Stock. The conversion rate is
initially one share of Common Stock for each share of Preferred Stock, but is
subject to adjustment as set forth in the Certificate of Incorporation.
Holders of Preferred Stock have voting rights equal to the number of common
shares they would have upon conversion of the Preferred Stock.
Prior to May 1, 2001, Holders of the Preferred Stock may require the Company
to redeem such shares if redemption is elected by holders of at least 67% of
the outstanding Preferred Stock. The redemption price per share is the greater
of $1.00 and $2.60 per share or the fair market value of the Series A and
Series B, respectively, as of a date within 45 days after receipt by the
corporation of the redemption certificate, plus all unpaid dividends declared
and accrued with respect to the Preferred Stock. The redemption elected by
holders of the Preferred Stock is to be effected in two installments with 50%
of each holder's shares of Preferred Stock to be redeemed in the first
installment on October 1, 2001 and the remainder Preferred Stock in the second
installation on October 1, 2002.
Holders of Series A and Series Preferred B Stock are entitled to receive
dividends at a per share rate of $0.10 and $0.26, respectively, per annum.
Prior to September 21, 1999, dividends are payable only to the extent declared
by the Company's Board of Directors. Subsequent to September 21, 1999,
dividends on the Preferred Stock accrue quarterly and are cumulative.
Dividends on Common Stock may be declared or paid only if dividends have been
declared and set apart for payment or paid on all outstanding shares of
Preferred Stock. As of December 31, 1997, the Company had declared no
dividends on either its Common Stock or Preferred Stock.
Holders of Preferred Stock are entitled to liquidation preferences of $1.00
and $2.60 per share for Series A and Series B, respectively, plus accrued and
unpaid dividends in the event of liquidation, dissolution or winding up of the
Company including the merger of the Company or the sale of the Company
including the sale of substantially all of its assets.
Warrants to purchase 25,000 shares of Series A at a price of $1.00 per share
(exercisable on or before February 11, 1999) were outstanding at December 31,
1997. In connection with an equipment lease (Note 10), the lessor received
warrants to acquire 35,000 shares of Series A shares at an exercise price of
$1.00 per share, exercisable on or before January 1, 2003.
On November 3, 1997 an option for 136,970 shares of Series B shares with an
exercise price of $2.60 was granted to an officer of the Company as part of
his employment with the Company. The options were exercised on December 4,
1997 in exchange for a non-recourse promissory note from the officer.
At December 31, 1997, 8,555,000 shares of Series A and 2,060,047 of Series B
Stock were outstanding.
9. STOCK OPTIONS
In 1994, the Company's Board of Directors approved the adoption of an
employee stock option plan, as amended, (the "Plan") which authorized the
grant of options up to 4,200,000 of the Company's Common Stock.
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
9. STOCK OPTIONS (CONTINUED)
The Plan provides for the granting of options to eligible employees to
purchase the Company's Common stock at an exercise price of not less than 100%
of the fair market value per share on the date of grant as determined by the
Board of Directors. All employees are eligible to participate in the Plan. The
Plan is administered by the Board of Directors who determine the number of
shares for which options will be granted, the effective dates of the grants,
the option price and the vesting schedules. All options under the Plan have a
ten (10) year term and typically vest over four (4) years from the effective
date of grant. Unless otherwise established, options granted pursuant to the
Plan vest 25% upon the completion of twelve (12) months of service and at a
rate of 1/48 of the shares granted each month thereafter. Certain option
grants became exercisable upon grant or within thirty (30) days after grant
pursuant to agreements with the employees.
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- ------------------------ ------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
--------- -------------- -------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January
1...................... 881,569 $ 0.08 575,759 $ 0.07 524,499 $ 0.04
Granted................. 3,018,524 $ 0.22 554,644 $ 0.10 399,092 $ 0.10
Exercised............... (589,301) $ 0.15 (51,701) $ 0.08 (144,420) $ 0.05
Canceled or expired..... (356,857) $ 0.12 (197,133) $ 0.10 (203,412) $ 0.06
--------- -------- --------
Outstanding at December
31..................... 2,953,935 $ 0.21 881,569 $ 0.08 575,759 $ 0.07
========= ======== ========
Exercisable at end of
year................... 362,555 $ 0.18 326,494 $ 0.07 129,691 $ 0.04
========= ======== ========
Weighted average fair
value of options
granted during the
year................... $ 0.05 $ 0.02 $ 0.02
</TABLE>
The range of exercise prices for the options outstanding at December 31,
1997 range from $0.10 to $0.26 per share with 651,409 shares outstanding at
$0.10 per share. For all options, all $0.l0 per share options, and all $0.26
per share options outstanding at December 31, 1997, the weighted average
remaining contractual lives were nine years, eight years and ten years,
respectively. Of the 362,555 options currently available for exercise, 170,802
shares have a contractual exercise price of $0.10 per share. Options available
for grant at December 31, 1997 represented 470,383 shares.
FAS 123 requires disclosure of pro forma net earnings and net earnings per
common share information computed as if the Company had accounted for its
employee stock options granted subsequent to January 1, 1995 under the fair
value method set forth in FAS 123. The fair value of the Company's outstanding
stock options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted average assumptions.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Expected option life in years............... 4.0 4.0 4.0
Risk-free interest rate..................... 5.74% 6.14% 7.63%
</TABLE>
The Company does not have a history of paying dividends and none have been
assumed in estimating the fair value of the options.
<PAGE>
ANSWERSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997, 1996 AND 1995
9. STOCK OPTIONS (CONTINUED)
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions. Because, among other things, changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options. For
purposes of pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options' vesting periods. In addition, because
FAS 123 is applicable only to options granted subsequent to January 1, 1995,
the pro forma information does not reflect the pro forma effect of all
previous stock option grants of the Company. Therefore, the pro forma
information is not necessarily indicative of future amounts until FAS 123 is
applied to all outstanding stock options. The pro forma effects of FAS 123 on
net losses reported in 1996 and 1995 were less than $5,000 in each year. In
1997, pro forma net loss is $3,504,329 and pro forma loss per share is $3.41.
10. COMMITMENTS
The Company leases facilities and certain equipment under operating leases.
In 1996 the Company entered into a Master Lease Agreement ("MLA") with a third
party. A sale-leaseback arrangement was executed whereby the Company sold
equipment for its net book value of $129,000 and leased back the equipment for
an initial term of 42 months at a monthly payment of $3,681. In 1997, the
Company executed another sale-leaseback arrangement of equipment under the MLA
whereby equipment was sold at its net book value of $355,486 and leased back
for monthly payments of $10,977 over a term of 42 months. Both leases have
been accounted for as operating leases.
Total rent expense for the years ended December 31, 1997, 1996 and 1995 was
$502,724, $89,683 and $106,213, respectively. At December 31, 1997, minimum
future rental payments due under all operating leases, net of estimated future
sublease income, are as follows:
<TABLE>
<S> <C>
1998................................ $725,320
1999................................ 686,325
2000................................ 647,099
2001................................ 456,652
2002................................ 42,673
Thereafter.......................... 2,003
</TABLE>
In addition, the Company has a standby letter of credit in the amount of
$100,000 payable to the landlord of its office space should the Company not be
able to meet its obligation under its lease. As of December 31, 1997 no
amounts have been drawn on this standby letter of credit.
<PAGE>
Exhibit 99.3
------------
DAVOX CORPORATION
Contact: John J. Connolly
Vice President Finance &
Chief Financial Officer
(978) 952-0245
FOR IMMEDIATE RELEASE
DAVOX CORPORATION TO ACQUIRE ANSWERSOFT, INC.
Westford, MA and Richardson, TX (March 10, 1998) -- Davox Corporation
(Nasdaq/NM:DAVX) and AnswerSoft, Inc. today announced the signing of a
definitive agreement pursuant to which Davox will acquire AnswerSoft in a tax-
free, stock-for-stock transaction which will be accounted for as a pooling-of-
interests.
Under the terms of the agreement, which has been unanimously approved by the
Boards of Directors of both companies, Davox expects to issue 2,448,897 shares
of its common stock. The combined pro forma total revenue and pro forma net
income of the two companies for the year ended December 31, 1997 were
$83,553,000 and $14,921,000, respectively. Davox expects the transaction to be
dilutive to its earnings for periods before and immediately following the
transaction. After expense and sales-related synergies anticipated to result
from the combination of the two companies, the transaction is expected to be
slightly accretive to earnings by the fourth quarter of 1998. Davox anticipates
a nonrecurring charge in the second quarter of 1998 relating to this
transaction.
In a joint statement, Alphonse M. Lucchese, Chairman and Chief Executive Officer
of Davox, and David W. Brandenburg, Chief Executive Officer of AnswerSoft, said:
"This merger positions our combined companies as premiere solution providers in
the growing inbound and outbound call center markets."
Mr. Lucchese added: "I am very pleased that AnswerSoft will be joining the Davox
family. After looking at a number of other acquisition opportunities, it was
clear that AnswerSoft's management philosophy, product direction, and commitment
to customer satisfaction make it an excellent addition to our team."
Mr. Lucchese said that AnswerSoft is anticipated to operate as a wholly owned
subsidiary of Davox. Mr. Lucchese further added that the AnswerSoft management
team will report directly to Davox President Louis Marianacci.
In commenting on the strategic importance of the merger, Mr. Marianacci noted:
"This merger will have tremendous benefits for companies with call centers. We
expect that the combination of AnswerSoft's Concerto product line and Davox's
newly introduced LYRICall browser-based application/scripting design software
will provide best-in-class solutions for our call center customers. The
simplicity of the products means that there is little or no learning curve for
supervisors and agents in the creation, customization, and use of applications
and scripts."
AnswerSoft Co-Founder and Chairman, Jeanne A. Bayless, said: "Davox and
AnswerSoft are known for their excellent records in deploying world class call
center solutions and their shared commitment to customer satisfaction. After
the merger, our goal will be to provide the most comprehensive, highly-
integrated, end-to-end solution available for inbound, outbound and blended call
center environments."
"Davox's Unison and IN/UNISON systems and AnswerSoft's Concerto product lines
are highly sophisticated, yet easily customizable to meet unique call center
needs," said Ms Bayless who added, "Our goal is to continue to provide superior
products and service that shorten the costly delays in system implementation
that are being experienced with most of the "one-off" solutions being offered in
the marketplace today."
<PAGE>
Consummation of the merger is subject to shareholder approval of both Davox and
AnswerSoft. Shareholders are expected to vote in late May 1998, with
consummation of the transaction expected shortly thereafter.
Davox Corporation, founded in 1981, is a leading supplier of unified call center
solutions for businesses involved in collection, telemarketing, telesales,
customer service, fund-raising and other mission-critical customer contact
activities. Its Unison family of call center management solutions combine open
system, client/server, and relational database technology with sophisticated
applications and superior customer support. Davox was ranked 16th in the Boston
Globe's 1997 Top 100 Companies, 9th in the Boston Herald's 1997 HeraldHundred,
and 23rd among the Best Small Corporations in the United States according to a
1997 article in Business Week Magazine. More information about Davox and its
products and services can be obtained from the company's Web site at
www.davox.com.
AnswerSoft, founded in 1993, delivers industry leading Inter-Application
Automation (IAA) solutions that optimize the value of customer-to-company
interactions, personalizing service for telephone and Internet customer
contacts. AnswerSoft consistently delivers award-winning products based on
technological breakthroughs such as smart screen pop, intelligent call routing,
data mining and Internet-enabled call centers. The company's customers include:
Thomson Consumer Electronics, Compaq Computer Corporation, Gateway 2000, Sonoco,
and Prudential Insurance of America. AnswerSoft was ranked 3rd among the "1997
Fast Tech 50," a premiere business award recognizing the 50 fastest-growing high
technology companies in the Dallas metroplex. For further information, visit
AnswerSoft's Web site at www.answersoft.com.
In addition to historical information contained herein, this release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities and Exchange Act of
1934, as amended, including the statements made in the second paragraph
regarding expected results of operations upon consummation of the transaction,
and 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 herein because of risks or uncertainties including, but not
limited to, the difficulty of integrating the two companies, the potential
failure to achieve the beneficial synergies expected to result from the merger,
risks associated with 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 "Factors
Which May Affect Future Operating Results" in Davox's quarterly reports on Form
10-Q and annual report on Form 10-K.
Note: Davox and Unison are registered trademarks and LYRICall and IN/UNISON are
trademarks of Davox Corporation. AnswerSoft is a registered trademark and
Concerto is a trademark of AnswerSoft, Inc.
