<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 June 30, 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
August 3, 2000: 13,399,842 shares.
<PAGE>
DAVOX CORPORATION & SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements: Page No.
------
Consolidated Balance Sheets as of
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Income
for the Three Months and Six Months Ended
June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 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 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 34,538 $ 34,433
Marketable securities 38,795 30,770
Accounts receivable, net of reserves of $1,917 and
$1,631 in 2000 and 1999, respectively 18,241 20,320
Prepaid expenses and other current assets 2,486 2,280
Deferred tax assets 4,811 4,811
--------- ---------
Total current assets 98,871 92,614
Property and equipment, net 5,282 5,050
Other assets 1,985 1,379
--------- ---------
$ 106,138 $ 99,043
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,403 $ 5,733
Accrued expenses 7,182 11,815
Customer deposits 3,447 3,515
Deferred revenue 8,666 5,466
--------- ---------
Total current liabilities 24,698 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 77,361 74,691
Accumulated foreign currency translation adjustments (246) (17)
Retained earnings 10,344 6,355
--------- ---------
88,915 82,485
Treasury stock, 966 and 1,298 shares, at cost,
in 2000 and 1999, respectively (7,475) (9,971)
--------- ---------
Total stockholders' equity 81,440 72,514
--------- ---------
$ 106,138 $ 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 Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Product revenue $ 9,700 $ 12,389 $ 24,527 $ 23,821
Service revenue 11,873 9,619 23,429 18,436
-------- -------- -------- --------
Total revenue 21,573 22,008 47,956 42,257
-------- -------- -------- --------
Cost of product revenue 1,832 2,188 4,028 4,405
Cost of service revenue 5,906 5,320 11,516 10,574
-------- -------- -------- --------
Total cost of revenue 7,738 7,508 15,544 14,979
-------- -------- -------- --------
Gross profit 13,835 14,500 32,412 27,278
-------- -------- -------- --------
Operating expenses:
Research, development and engineering 3,967 3,137 7,809 6,259
Selling, general and administrative 10,359 9,155 20,529 17,452
-------- -------- -------- --------
Total operating expenses 14,326 12,292 28,338 23,711
Income (loss) from operations (491) 2,208 4,074 3,567
Other income (primarily interest income) 1,072 625 1,972 1,264
-------- -------- -------- --------
Income before provision for income taxes 581 2,833 6,046 4,831
Provision for income taxes 198 425 2,056 724
-------- -------- -------- --------
Net income $ 383 $ 2,408 $ 3,990 $ 4,107
======== ======== ======== ========
Earnings per share:
Basic $ 0.03 $ 0.18 $ 0.30 $ 0.30
======== ======== ======== ========
Diluted $ 0.03 $ 0.17 $ 0.28 $ 0.29
======== ======== ======== ========
Weighted average shares outstanding:
Basic 13,572 13,453 13,488 13,892
======== ======== ======== ========
Diluted 14,320 13,940 14,412 14,368
======== ======== ======== ========
</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>
Six Months Ended
June 30,
--------
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 3,990 $ 4,107
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 1,977 1,891
Changes in current assets and liabilities -
Accounts receivable 2,103 (1,619)
Prepaid expenses and other current assets (228) 716
Accounts payable (330) 79
Accrued expenses (4,592) (667)
Customer deposits (67) 422
Deferred revenue 3,202 2,399
-------- --------
Net cash provided by operating activities 6,055 7,328
-------- --------
Cash Flows From Investing Activities:
Purchases of property and equipment (2,196) (1,546)
(Increase) decrease in other assets (607) 180
Purchases of marketable securities (52,784) (45,514)
Maturities of marketable securities 44,759 48,635
-------- --------
Net cash (used in) provided by investing activities (10,828) 1,755
-------- --------
Cash Flows From Financing Activities:
Proceeds from exercise of stock options 5,165 43
Proceeds from employee stock purchase plan -- 160
Purchases of treasury stock -- (10,217)
-------- --------
Net cash provided by (used in) financing activities 5,165 (10,014)
-------- --------
Effect of exchange rate differences on cash (287) (14)
-------- --------
Net increase (decrease) in cash and cash equivalents 105 (945)
Cash and cash equivalents, beginning of period 34,433 31,759
-------- --------
Cash and cash equivalents, end of period $ 34,538 $ 30,814
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for income taxes $ 2,429 $ 788
======== ========
</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 and six month periods ended June 30, 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 shipment, net of estimated returns, provided that there are no
significant post shipment 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 and 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 June
2000 announced that they were delaying the effective date for SAB 101 until no
later than the quarter ending December 31, 2000. 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, the Company is not able to reasonably determine the potential impact of
the application of SAB 101 on its financial condition or results of operations.
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 Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic weighted average shares outstanding 13,572 13,453 13,488 13,892
Effect of dilutive stock options 748 487 924 476
------ ------ ------ ------
Diluted weighted average shares outstanding 14,320 13,940 14,412 14,368
====== ====== ====== ======
</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-month periods ended June 30, 2000 and 1999, 1,254,639 and
1,648,996 common equivalent shares, respectively, were not included in diluted
weighted average shares outstanding, as their effect would be antidilutive. For
the six-month periods ended June 30, 2000 and 1999, 610,720 and 1,882,900 common
equivalent shares, respectively, were not included in diluted weighted average
shares outstanding, as their effect would be antidilutive.
6. Comprehensive Income
The components of comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 383 $ 2,408 $ 3,990 $ 4,107
Foreign currency translation adjustments (116) (7) (229) (14)
------- ------- ------- -------
Comprehensive income $ 267 $ 2,401 $ 3,761 $ 4,093
======= ======= ======= =======
</TABLE>
6. Segment and Geographic Information
Product revenue from international sources totaled approximately $1.8
million and $2.4 million for the second quarter of 2000 and 1999, respectively,
and totaled approximately $4.8 million for each of the six-month periods ended
June 30, 2000 and 1999. The Company's revenue from international sources was
primarily generated from customers located in Europe, Asia/Pacific, Latin
America and Canada. 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)
6. Segment and Geographic Information (continued)
The following table represents the Company's percentage of product revenue
by geographic region from customers for the three and six-month periods ended
June 30, 2000 and 1999:
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2000 1999 2000 1999
---- ---- ---- ----
U.S. 81.3% 80.5% 80.3% 80.0%
United Kingdom 12.6 10.0 11.2 10.8
Europe 2.6 6.7 3.9 7.2
Asia/Pacific 1.1 2.6 1.5 1.7
Latin America 1.6 0.2 0.9 0.2
Canada 0.8 0.0 2.2 0.1
--- --- --- ---
Total 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======
Substantially all of the Company's assets are located in the United States.
9
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
RESULTS OF OPERATIONS
Three Months and Six Months Ended June 30, 2000 and 1999
Total revenue for the second quarter of 2000 decreased approximately
$435,000, or 2.0%, to $21.6 million compared to the same period in 1999, while
total revenue for the first six months of 2000 increased approximately $5.7
million, or 13.5%, to $48.0 million compared to the same period in 1999.
Product revenue for the second quarter of 2000 decreased approximately
$2.7 million, or 21.7%, to $9.7 million compared to the same period in 1999,
while product revenue for the first six months of 2000 increased approximately
$706,000, or 3.0%, to $24.5 million compared to the same period in 1999. The
decrease in the second quarter of 2000 was due to decreased product shipments in
the second quarter of 2000 compared to the same period in 1999 resulting from a
slowdown in Unison(R) outbound system sales and a longer than expected sales
cycle associated with the Company's new Ensemble(TM) software suite.
Cost of product revenue for the second quarter of 2000 decreased
approximately $356,000, or 16.3%, to $1.8 million compared to the same period in
1999. Cost of product revenue for the first six months of 2000 decreased
approximately $377,000, or 8.6%, to $4.0 million compared to the same period in
1999. The decreases were due to lower product shipments in the second quarter of
2000 as well as the continued decrease in the hardware content of the company's
products.
10
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Service revenue for the second quarter of 2000 increased approximately
$2.3 million, or 23.4%, to $11.9 million compared to the same period in 1999.
Service revenue for the first six months of 2000 increased approximately $5.0
million, or 27.1%, to $23.4 million compared to the same period in 1999. The
increase in service revenue for the three and six months ended June 30, 2000 was
primarily due to the growth in the Company's installed customer base, resulting
in increased new and renewed contract maintenance, implementation and
professional services revenue as compared to the same period in 1999.
Cost of service revenue for the second quarter of 2000 increased
approximately $586,000, or 11.0%, to $5.9 million compared to the same period in
1999. Cost of service revenue for the first six months of 2000 increased
approximately $942,000, or 8.9%, to $11.5 million compared to the same period in
1999. The increases during the second quarter and first six months of 2000 were
due primarily to increased headcount and payroll and related expenses compared
to the same period in 1999.
Research, development and engineering expenses increased approximately
$830,000, or 26.5%, to $4.0 million for the second quarter of 2000 as compared
to the same period in 1999. Research, development and engineering expenses
increased approximately $1.6 million, or 24.8%, to $7.8 million for the first
six months of 2000 compared to the same period in 1999. These increases were
primarily due to increased headcount and payroll and related expenses in the
first six months of 2000 compared to the same period in 1999.
Selling, general and administrative (SG&A) expenses increased by
approximately $1.2 million, or 13.1%, to $10.4 million for the second quarter of
2000 compared to the same period in 1999. SG&A expenses increased by
approximately $3.1 million, or 17.6%, to $20.5 million for the first six months
of 2000 compared to the same period in 1999. The increase for the second quarter
of 2000 was attributable to increases in headcount, payroll and related expenses
and travel expenses compared to the same period in 1999. The increase for the
first six months of 2000 is due primarily to the increase in payroll and related
expenses, marketing program expenditures for Ensemble(TM) and higher commission
and bonus expenses compared to the same period in 1999.
Other income in 2000 and 1999 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 71.5% for the second quarter of 2000 compared to the same period in
1999 and increased 56.0% for the first six months of 2000 compared to the same
period in 1999. The increase for the second quarter of 2000 and first six months
of 2000 is due to the higher average cash and investment balances compared to
the same periods in 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 the anticipated use of net
11
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
operating loss carryforwards, tax credits and benefits derived from the
Company's foreign sales corporation.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company's principal sources of liquidity were
its cash and cash equivalent balances of approximately $34.5 million, as well as
its marketable securities of approximately $38.8 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 $8.1 million in the total cash and marketable
securities balances was due primarily to cash provided from operating activities
and proceeds received from exercises of stock options during the six months of
2000.
Net cash provided by operating activities for the first six months of
2000 was approximately $6.0 million, compared to approximately $7.3 million for
the same period of 1999. The decrease in cash provided by operating activities
for the first six months of 2000 was due primarily to the decrease in accrued
expenses of approximately $4.6 million partially offset by a decrease in
accounts receivable of approximately $2.1 million for the period.
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 outflow
of approximately $8.0 million during the first six months of 2000, compared to a
net cash inflow of approximately $3.1 million during the same period in 1999.
Property and equipment purchases were approximately $2.2 million during the
first six months of 2000, compared to approximately $1.5 million during the same
period in 1999.
Cash provided by financing activities during the first six months of
2000 totaled approximately $5.2 million and was generated from proceeds from the
exercise of stock options. Cash used in financing activities during the first
six months of 1999 totaled approximately $10.0 million and was due primarily to
the repurchase of 1,326,400 shares of the Company's common stock, partially
offset by proceeds from the exercise of stock options and from purchases of
stock through the Company's employee stock purchase plan.
At June 30, 2000, the working capital of the Company increased to
approximately $74.2 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 cash provided from operations
and the proceeds from the exercise of stock options during the first six months
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 June 30, 2000.
12
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
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 IMPACT
For the first six months of 2000, the Company has not yet experienced
any material problems with its computer systems relating to distinguishing
twenty-first century dates and twentieth century dates, which generally are
referred to as Year 2000 problems. The Company is also not aware of any material
Year 2000 problems with its customers or vendors. Accordingly, the Company does
not anticipate incurring material expenses or experiencing any material
operational disruptions as a result of any Year 2000 problems.
13
<PAGE>
PART I. FINANCIAL INFORMATION (continued)
ITEM 3: QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivative Financial Instruments, Other Financial Instruments, and Derivative
Commodity Instruments.
As of June 30, 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 and six months ended June 30, 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 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.
14
<PAGE>
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 4. Submission of Matters to a Vote of Security-Holders
The annual meeting of security-holders of the Company was held on
May 4, 2000. The number of directors was fixed at three and
the following persons were elected as directors:
Total Votes Against
Nominee Total Votes for Nominee Nominee
Alphonse M. Lucchese 11,959,261 263,280
Michael D. Kaufman 11,959,261 263,280
R. Scott Asen 11,960,261 262,280
A proposal to approve an increase in the number of shares of the
Corporation's Common Stock, $.10 par value, available for issuance under the
Corporation's 1996 Stock Plan to 3,350,000 shares, was adopted and approved,
with 4,598,093 shares voting in favor, 4,347,646 shares voting against, 27,167
shares abstaining and 3,249,625 not voting.
A proposal to approve an increase in the number of shares of the
Corporation's Common Stock, $.10 par value, available for issuance under the
Corporation's 1991 Employee Stock Plan to 450,000 shares, was adopted and
approved, with 8,548,762 shares voting in favor, 397,821 shares voting against,
26,333 shares abstaining and 3,249,625 not voting.
The selection of the firm Arthur Andersen LLP as auditors for the
fiscal year ending December 31, 2000 was ratified, with 12,191,132 shares voting
in favor, 26,625 shares voting against and 4,784 shares abstaining.
15
<PAGE>
PART II. OTHER INFORMATION
(Continued)
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 June 30,
2000.
16
<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: August 4, 2000 By: /s/ Alphonse M. Lucchese
------------------------
Alphonse M. Lucchese
Chief Executive Officer
and Chairman (Principal
Executive Officer)
Date: August 4, 2000 By: /s/ Michael J. Provenzano III
-----------------------------
Michael J. Provenzano III
Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer)
17
