<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-15578
DAVOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware No. 02-0364368
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
6 Technology Park Drive
Westford, Massachusetts 01886
(Address of principal executive offices) (Zip Code)
Telephone: (978) 952-0200
(Registrant's telephone number, including area code)
----------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ___
---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock: Common Stock, par value $.10 per share, outstanding as of May
4, 2000: 13,557,961 shares.
<PAGE>
DAVOX CORPORATION & SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements: Page No.
-------
<S> <C>
Consolidated Balance Sheets as of 3
March 31, 2000 and December 31, 1999
Consolidated Statements of Income
for the Three Months Ended
March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 13
Item 3. Quantitative and Qualitative Disclosures About Market Risks 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------- -------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 51,948 $34,433
Marketable securities 24,689 30,770
Accounts receivable, net of reserves of $2,014 and
$1,631 in 2000 and 1999, respectively 17,543 20,320
Prepaid expenses and other current assets 1,901 2,280
Deferred tax assets 4,811 4,811
-------- -------
Total current assets 100,892 92,614
Property and equipment, net 5,327 5,050
Other assets 1,422 1,379
-------- -------
$107,641 $99,043
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,573 $ 5,733
Accrued expenses 10,369 11,815
Customer deposits 2,520 3,515
Deferred revenue 8,489 5,466
-------- -------
Total current liabilities 26,951 26,529
Stockholders' equity:
Common stock, $.10 par value -
Authorized - 30,000 shares
Issued - 14,556 shares 1,456 1,456
Additional paid-in capital 77,150 74,691
Accumulated foreign currency translation adjustments (130) (17)
Retained earnings 9,960 6,355
-------- -------
88,436 82,485
Treasury stock, 1,003 and 1,298 shares, at cost, at
March 31, 2000 and December 31, 1999, respectively (7,746) (9,971)
-------- -------
Total stockholders' equity 80,690 72,514
-------- -------
$107,641 $99,043
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM I. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
2000 1999
-------------- ----------
<S> <C> <C>
Product revenue $14,828 $11,432
Service revenue 11,555 8,817
------- -------
Total revenue 26,383 20,249
------- -------
Cost of product revenue 2,197 2,217
Cost of service revenue 5,610 5,254
------- -------
Total cost of revenue 7,807 7,471
------- -------
Gross profit 18,576 12,778
------- -------
Operating expenses:
Research, development and engineering 3,842 3,122
Selling, general and administrative 10,170 8,297
------- -------
Total operating expenses 14,012 11,419
------- -------
Income from operations 4,564 1,359
Other income (primarily interest income) 901 639
------- -------
Income before provision for income taxes 5,465 1,998
Provision for income taxes 1,858 299
------- -------
Net income $ 3,607 $ 1,699
======= =======
Earnings per share:
Basic $ 0.27 $ 0.12
======= =======
Diluted $ 0.25 $ 0.11
======= =======
Weighted average shares outstanding:
Basic 13,404 14,335
======= =======
Diluted 14,552 14,802
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM I. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
2000 1999
------------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 3,607 $ 1,699
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 985 947
Changes in current assets and liabilities -
Accounts receivable 2,776 (753)
Prepaid expenses and other current assets 374 (145)
Accounts payable (160) 223
Accrued expenses (1,440) (509)
Customer deposits (994) (39)
Deferred revenue 3,022 861
-------- --------
Net cash provided by operating activities 8,170 2,284
-------- --------
Cash Flows From Investing Activities:
Purchases of property and equipment (1,260) (692)
(Increase) decrease in other assets (44) 207
Purchases of marketable securities (20,450) (23,667)
Maturities of marketable securities 26,531 22,307
-------- --------
Net cash provided by (used in) investing activities 4,777 (1,845)
-------- --------
Cash Flows From Financing Activities:
Proceeds from exercise of stock options 4,682 30
Proceeds from employee stock purchase plan -- 160
Purchases of treasury stock -- (686)
-------- --------
Net cash provided by (used in) financing activities 4,682 (496)
-------- --------
Effect of exchange rate changes on cash and cash equivalents (114) (7)
-------- --------
Net increase (decrease) in cash and cash equivalents 17,515 (64)
Cash and cash equivalents, beginning of period 34,433 31,759
-------- --------
Cash and cash equivalents, end of period $ 51,948 $ 31,695
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for income taxes $ 1,142 $ 568
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
PART 1. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Preparation
The unaudited consolidated financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and note disclosures required by generally accepted
accounting principles. The statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Form 10-K, Commission File No. 0-15578, that was filed with the Securities and
Exchange Commission on March 7, 2000. In the opinion of management, the
accompanying consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Company's financial position and results of operations. The results of
operations for the three-month period ended March 31, 2000 may not be indicative
of the results that may be expected for the full fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
3. Revenue Recognition
The Company generates software revenue from licensing the rights to use its
software products. The Company also generates service revenues from the sale of
product maintenance contracts, installation services and consulting services.
The Company recognizes revenue in accordance with the provisions of the American
Institute of Certified Public Accountants Statement of Position (SOP) No. 97-2
Software Revenue Recognition. Revenue from software license fees are generally
recognized upon delivery, net of estimated returns, provided that there are no
significant post delivery obligations, payment is due within one year and
collection is probable. If acceptance is required beyond the Company's standard
published specifications, software license revenue is recognized upon customer
acceptance. SOP No. 97-2 generally requires revenue earned on software
arrangements involving multiple elements to be allocated to each element based
on the relative fair values of the elements.
The fair value of an element must be based on evidence that is specific to
the vendor. If a vendor does not have evidence of the fair value for all the
elements in a multiple-element arrangement, all revenue from the arrangement is
deferred until such evidence exists or until all elements are delivered.
Revenues for consulting services are recognized over the period in which
services are provided, the revenue is fixed and determinable and collection is
probable. Maintenance
6
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
revenue is deferred at the time of software license shipment and is recognized
ratably over the term of the support period, which is typically one year.
On December 3, 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
(SAB 101). SAB 101 was initially to become effective for calendar year end
companies for the quarter ending March 31, 2000. However, the SEC in late March
2000 announced that they were delaying the effective date for SAB 101 until the
quarter ending June 30, 2000 due to the significant uncertainty regarding the
application of SAB 101. As a result, the Company is currently in the process of
evaluating the potential impact that SAB 101 may have on its revenue recognition
policies and its results of operations. At this time, due to the uncertainty
that exists regarding the application of SAB 101, the Company is not able to
reasonably determine the potential impact of the application of SAB 101 on its
business.
4. Provision for Income Taxes
In accordance with generally accepted accounting principles, the Company
provides for income taxes on an interim basis using its estimated annual
effective income tax rate. The Company is providing for income taxes in 2000 at
an effective tax rate of 34%, which is lower than the combined federal and state
statutory tax rates due primarily to net operating loss carryforwards,
utilization of tax credits and benefits derived from the Company's foreign sales
corporation.
5. Earnings Per Share
Basic earnings per share is calculated using the weighted average number of
common shares outstanding. Diluted earnings per share is computed on the basis
of the weighted average number of common shares outstanding and the effect of
dilutive stock options using the treasury stock method. A reconciliation of
basic and diluted weighted average shares outstanding is as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
<S> <C> <C>
2000 1999
------ ------
Basic weighted average shares outstanding 13,404 14,335
Effect of dilutive stock options 1,148 467
------ ------
Diluted weighted average shares outstanding 14,552 14,802
====== ======
</TABLE>
7
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
5. Earnings Per Share (continued)
For the three months ended March 31, 2000 and 1999, 307,274 and 1,833,294
common equivalent shares, respectively, were not included in the diluted
weighted average shares outstanding, as they were antidilutive.
6. Comprehensive Income
The components of comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
<S> <C> <C>
2000 1999
---- ----
Net income $3,607 $1,699
Foreign currency translation adjustments (114) (7)
------ ------
Comprehensive income $3,493 $1,692
====== ======
</TABLE>
7. Segment and Geographic Information
Product revenue from international sources totaled approximately $3.0
million and $2.3 million for the first quarter of 2000 and 1999, respectively.
The Company's revenue from international sources was primarily generated from
customers located in Europe, Canada, Asia/Pacific and Latin America. All of the
Company's product revenue for the periods presented was shipped from its
headquarters located in the United States.
8
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Segment and Geographic Information (continued)
The following table represents the Company's percentage of product revenue
by geographic region from customers for the three months ended March 31, 2000
and 1999:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
2000 1999
---- ----
<S> <C> <C>
U.S. 79.7% 79.5%
U.K. 10.0 13.0
Europe 5.0 6.3
Canada 3.1 0.2
Asia/Pacific 1.7 0.7
Latin America 0.5 0.3
----- -----
Total 100.0% 100.0%
===== =====
</TABLE>
CAUTIONARY STATEMENTS
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. Statements set forth herein may
contain "forward-looking" information that involves risks and uncertainties.
Actual future financial or operating results may differ materially from such
forward-looking statements. Statements indicating that the Company "expects,"
"estimates," "believes," "is planning," or "plans to" are forward looking, as
are other statements concerning future financial or operating results, product
offerings or other events that have not yet occurred. There are several
important factors that could cause actual results or events to differ materially
from those anticipated by the forward-looking statements. Such factors are
described in greater detail under Management's Discussion and Analysis of
Financial Condition and Results of Operations--Certain Factors That May Affect
Future Results. Although the Company has sought to identify the most significant
risks to its business, the Company cannot predict whether, or to what extent,
any of such risks may be realized nor can there be any assurance that the
Company has identified all possible issues that the Company may face.
9
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 and 1999
Total revenue for the first quarter of 2000 increased approximately $6.1
million, or 30.3%, to $26.4 million compared to the same period in 1999.
Product revenue for the first quarter of 2000 increased approximately $3.4
million, or 29.7%, to $14.8 million compared to the same period in 1999. This
increase was due to increased sales in the U.S. and Canada for Unison(R)
systems.
Cost of product revenue for the first quarter of 2000 decreased
approximately $20,000, or 0.9%, to $2.2 million compared to the same period in
1999. As a percentage of product revenue, the cost of product revenue decreased
by 4.6% to 14.8% in the first quarter of 2000 compared to the same period in
1999. The decrease in the cost of product revenue was due primarily to the
product revenue mix and the continued decrease in the hardware content of the
Company's products.
Service revenue for the first quarter of 2000 increased approximately $2.7
million, or 31.1%, to $11.6 million compared to the same period in 1999. The
increase in service revenue was due primarily to increased implementation and
professional services revenue in the first quarter of 2000 compared to the same
period in 1999 and an increase in maintenance revenue resulting from the
increases in the installed base of the Company's products.
Cost of service revenue for the first quarter of 2000 increased
approximately $356,000, or 6.8%, to $5.6 million compared to the same period in
1999. As a percentage of service revenue, the cost of service revenue decreased
by 11.0% in the first quarter of 2000 compared to the same period in 1999. The
increase in service costs was due to higher payroll and related expenses in the
first quarter of 2000 compared to the same period in 1999 resulting from
customer service headcount increases which was partially offset by lower third
party consulting costs. The decrease as a percentage of revenue is primarily
due to the higher service revenue in the first quarter of 2000 compared to the
same period in 1999.
Research, development and engineering expenses increased approximately
$720,000, or 23.1%, to $3.8 million for the first quarter of 2000 compared to
the same period in 1999. This increase was due primarily to higher payroll and
related expenses in the first quarter of 2000 compared to the same period in
1999 resulting from research, development and engineering headcount increases.
10
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Selling, general and administrative expenses increased by approximately
$1.9 million, or 22.6%, to $10.2 million for the first quarter of 2000 compared
to the same period in 1999. This increase was due to an increase in payroll and
related expenses resulting from headcount increases and also to increases in
commission and travel related expenses in the first quarter of 2000 compared to
the same period in 1999.
Other income in 2000 was derived primarily from interest income from
investments in commercial paper, corporate bonds, Eurodollar bonds, and similar
financial instruments, net of investment fees. Other income increased 41.0% for
the first quarter of 2000 compared to the same period in 1999. This increase
reflects the higher average cash and investment balances in 2000 compared to
1999.
In accordance with generally accepted accounting principles, the Company
provides for income taxes on an interim basis using its estimated annual
effective income tax rate. The Company is providing for income taxes in 2000 at
an effective tax rate of 34%, which is lower than the combined federal and state
statutory tax rates due primarily to net operating loss carryforwards,
utilization of tax credits and benefits derived from the Company's foreign sales
corporation.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company's principal sources of liquidity were its
cash and cash equivalent balances of approximately $51.9 million, as well as its
marketable securities of approximately $24.7 million. At December 31, 1999, the
Company's cash and cash equivalent balances were approximately $34.4 million and
its marketable securities were approximately $30.8 million. The overall increase
of approximately $11.4 million in the total cash and marketable securities
balances was due primarily to favorable operating results and proceeds received
from exercises of stock options in the first quarter of 2000. This was offset
slightly by purchases of property and equipment.
Net cash provided by operating activities for the first three months of
2000 was approximately $8.2 million, compared to approximately $2.3 million for
the same period in 1999. The increase in cash provided by operating activities
for the first three months of 2000 was due primarily to net income of
approximately $3.6 million, an increase in deferred revenue of approximately
$3.0 million and a decrease in accounts receivable of approximately $2.8 million
for the period.
11
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company's primary investing activities were purchases and maturities of
marketable securities and purchases of property and equipment. Purchases and
maturities of marketable securities generated a net cash inflow of approximately
$6.1 million during the first three months of 2000, compared to a net cash
outflow of approximately $1.4 million during the same period in 1999. Property
and equipment purchases were approximately $1.3 million during the first three
months of 2000, compared to approximately $692,000 during the same period in
1999.
Cash provided by financing activities during the first three months of 2000
totaled approximately $4.7 million and was generated from proceeds from
exercises of stock options. Cash used in financing activities during the first
three months of 1999 totaled approximately $496,000, and was due primarily from
the repurchase of 80,000 shares of common stock for $686,000, partially offset
by proceeds from exercises of stock options and from purchases of stock through
the Company's employee stock purchase plan.
At March 31, 2000, the working capital of the Company increased to
approximately $73.9 million from approximately $66.1 million as of December 31,
1999. This increase was primarily attributable to the higher total cash and
marketable securities balance resulting from the favorable operating results in
the first quarter of 2000.
The Company has an agreement for a working capital line of credit with a
bank for up to $2.0 million based on eligible receivables, as defined. There
were no outstanding balances under the line of credit as of March 31, 2000.
Management believes, based on its current operating plan, that the
Company's existing cash and marketable securities balances, cash generated from
operations, and amounts available under its working capital line of credit are
sufficient to meet the Company's cash requirements for the next twelve months.
YEAR 2000
Year 2000 Readiness Disclosure - made pursuant to the Year 2000 Information and
Readiness Disclosure Act, Pub. L. No. 105-271 (1998)
The Year 2000 presented potential concerns and issues for the Company as
well as other companies in the information technology industry. In general, Year
2000 readiness issues typically arose in computer software and hardware systems
that used two digit date formats, instead of four digit dates, to represent a
particular year. Users had to (and should continue to) test their unique
combination of hardware, system software (including databases, transaction
processors, and operating systems) and application software in order to achieve
Year 2000 readiness.
12
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Year 2000 Committee
The Company established a Year 2000 steering committee under the auspices
of the Company's senior technical executive to evaluate, plan and implement
policies and practices, including contingency planning, and to address the
impact of the Year 2000 on the Company and its products. The Company's Year
2000 readiness preparations fell into three categories: (1) product readiness,
addressing product functionality; (2) internal readiness, addressing the Year
2000 operability of internal information technology ("IT") systems and mission
critical non-IT systems; and (3) third party readiness, addressing the
preparedness of relevant third parties and the Year 2000 operability of products
furnished for internal use and resale. After reviewing these areas, the
committee reported to the Board of Directors specific areas of concern and a
plan for resolving and further testing of any remaining Year 2000 issues. The
committee also formulated a contingency plan in the event that the committee
reasonably determined that certain Year 2000 issues may not be resolved by the
end of 1999 or if unforeseen problems arose. As of the date of this filing, the
Company has not encountered any material problems. Despite this fact, the
Company and the steering committee remain focused on addressing any problems
that may arise. The Company does not anticipate any material problems. Should
any problems arise, the Company believes it has adequate resources to address
them properly.
Contingency Plans and Worst Case Scenario
The Company developed contingency plans to operate in the event that its
products, systems, or business partners were not Year 2000 ready. The Company
did not and does not anticipate experiencing any material adverse effects on its
business due to the Year 2000 readiness of its products, systems or business
partners.
Costs, Source of Funds and Accounting Treatment
The Company expensed all costs related to its Year 2000 compliance program
unless the useful life of the technological asset was extended or increased.
The expenses incurred to date have not had a material impact on the Company's
results of operations or financial condition. The Company funded its Year 2000
expenses through cash flows from its operations. The impact of the Year 2000 was
and remains difficult to discern, but it is not considered to be a material risk
when evaluating future growth and performance of the Company.
13
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 3: QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Derivative Financial Instruments, Other Financial Instruments, and Derivative
Commodity Instruments.
As of March 31, 2000, the Company did not participate in any derivative
financial instruments or other financial and commodity instruments for which
fair value disclosure would be required under Statement of Financial Standards
(SFAS) No. 107. All of the Company's investments are short-term; commercial
paper, corporate bonds, Eurodollar bonds, and similar financial instruments that
are carried on the Company's books at amortized cost, which approximates fair
market value. Accordingly, the Company has no quantitative information
concerning the market risk of participating in such investments.
Primary Market Risk Exposures.
The Company's primary market risk exposures are in the areas of interest
rate risk and foreign currency exchange rate risk. The Company's investment
portfolio of cash equivalents and marketable securities is subject to interest
rate fluctuations, but the Company believes this risk is immaterial due to the
short-term nature of these investments.
The Company's exposure to currency exchange rate fluctuations has been and
is expected to continue to be modest due to the fact that the operations of its
international subsidiaries are almost exclusively conducted in their respective
local currencies. International subsidiary operating results are translated
into U.S. dollars and consolidated for reporting purposes. The impact of
currency exchange rate movements on intercompany transactions was immaterial for
the three months ended March 31, 2000. Currently, the Company does not engage
in foreign currency hedging activities.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
In addition to historical information contained herein, this report
contains forward-looking statements concerning future expected financial and
operating results. The Company's future actual results could differ materially
from the forward-looking statements discussed or implied in this report because
of risks or uncertainties including, but not limited to, 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, the implementation of the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101; and those other factors discussed from time to time
in Davox's public reports filed with the Securities and
14
<PAGE>
Exchange Commission, such as those discussed under "Certain Factors That May
Affect Future Results" in Davox's quarterly reports on Form 10-Q and annual
report on Form 10-K.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There were no material changes since the Company's Annual Report
on Form 10-K for the period ended December 31, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
27 Article 5 - Summary Financial Data Schedule
(b) No current reports on Form 8-K were filed during the quarter ended March
31, 2000.
15
<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 thereunto duly authorized.
DAVOX CORPORATION
Date: May 5, 2000 By: /s/ Alphonse M. Lucchese
------------------------
Alphonse M. Lucchese
Chief Executive Officer
and Chairman (Principal
Executive Officer)
Date: May 5, 2000 By: /s/ John J. Connolly
--------------------
John J. Connolly
Senior Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 51,948 0
<SECURITIES> 24,689 0
<RECEIVABLES> 19,557 0
<ALLOWANCES> 2,014 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 100,892 0
<PP&E> 5,327 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 107,641 0
<CURRENT-LIABILITIES> 26,951 0
<BONDS> 0 0
0 0
0 0
<COMMON> 1,456 0
<OTHER-SE> 79,234 0
<TOTAL-LIABILITY-AND-EQUITY> 107,641 0
<SALES> 14,828 11,432
<TOTAL-REVENUES> 26,383 20,249
<CGS> 2,197 2,217
<TOTAL-COSTS> 7,807 7,471
<OTHER-EXPENSES> 3,842 3,122
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 5,465 1,998
<INCOME-TAX> 1,858 299
<INCOME-CONTINUING> 3,607 1,699
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,607 1,699
<EPS-BASIC> 0.27 0.12
<EPS-DILUTED> 0.25 0.11
</TABLE>
