<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 0-17920
BRITE VOICE SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
KANSAS 48-0986248
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
7309 E. 21ST STREET NORTH
WICHITA, KANSAS 67206
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(316) 652-6500
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 [ ]
As of May 8, 1995, 8,097,473 shares of the registrant's common stock were
outstanding.
<PAGE>
BRITE VOICE SYSTEMS, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1995
and December 31, 1994................................... 3
Consolidated Statements of Income - Three Months
Ended March 31, 1995 and 1994........................... 5
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1995 and 1994........................... 6
Notes to Financial Statements............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 8
PART II. OTHER INFORMATION.............................................. 11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . $ 4,022,000 $ 4,251,000
Temporary investments (at cost which
approximates market). . . . . . . . . . . . . . . 3,704,000 5,201,000
Accounts receivable, less allowance for doubtful
accounts: 1995-$810,000, 1994-$844,000. . . . . . 21,373,000 17,132,000
Inventories. . . . . . . . . . . . . . . . . . . . 9,180,000 8,263,000
Prepaid expenses and other . . . . . . . . . . . . 1,883,000 1,883,000
------------ ------------
Total Current Assets . . . . . . . . . . . . . 40,162,000 36,730,000
------------ ------------
PROPERTY AND EQUIPMENT
Land and building. . . . . . . . . . . . . . . . . 3,074,000 3,074,000
Furniture and equipment. . . . . . . . . . . . . . 15,987,000 14,469,000
------------ ------------
19,061,000 17,543,000
Less accumulated depreciation. . . . . . . . . . . (9,133,000) (8,419,000)
------------ ------------
Total Property and Equipment . . . . . . . . . 9,928,000 9,124,000
------------ ------------
INVESTMENT IN SALES TYPE LEASES. . . . . . . . . . . 524,000 711,000
------------ ------------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . 1,767,000 1,873,000
------------ ------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . $ 52,381,000 $ 48,438,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . 6,833,000 6,211,000
Accrued salaries and wages . . . . . . . . . . . 2,017,000 1,941,000
Other accrued expenses . . . . . . . . . . . . . 1,875,000 1,993,000
Deferred revenue . . . . . . . . . . . . . . . . 1,422,000 1,287,000
Customer deposits. . . . . . . . . . . . . . . . 1,055,000 775,000
Income taxes payable . . . . . . . . . . . . . . 1,176,000 354,000
------------ ------------
Total Current Liabilities . . . . . . . . . 14,378,000 12,561,000
------------ ------------
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . 138,000 138,000
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized
10,000,000 shares; none issued and
outstanding. . . . . . . . . . . . . . . . . . -- --
Common stock, no par value; authorized
30,000,000 shares; issued 8,089,523
shares - 1995; 7,923,798 shares - 1994 . . . . 33,429,000 33,271,000
Retained earnings. . . . . . . . . . . . . . . . 4,448,000 2,683,000
Foreign currency translation adjustment. . . . . (12,000) (215,000)
------------ ------------
Total Stockholders' Equity. . . . . . . . . 37,865,000 35,739,000
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY. . . . . . . . . . . . . $ 52,381,000 $ 48,438,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
REVENUES
System sales . . . . . . . . . . . . . . . . . . $ 12,143,000 $ 9,301,000
Service revenues . . . . . . . . . . . . . . . . 6,897,000 5,104,000
------------ ------------
19,040,000 14,405,000
------------ ------------
COSTS AND EXPENSES
Cost of Sales:
System . . . . . . . . . . . . . . . . . . . . 5,040,000 4,222,000
Service. . . . . . . . . . . . . . . . . . . . 4,278,000 3,467,000
Research and engineering . . . . . . . . . . . . 1,578,000 1,287,000
Selling, general and administrative. . . . . . . 6,007,000 4,276,000
------------ ------------
16,903,000 13,252,000
------------ ------------
INCOME FROM OPERATIONS . . . . . . . . . . . . . . 2,137,000 1,153,000
OTHER INCOME, NET. . . . . . . . . . . . . . . . . 148,000 72,000
------------ ------------
INCOME BEFORE TAXES. . . . . . . . . . . . . . . . 2,285,000 1,225,000
PROVISION FOR INCOME TAXES . . . . . . . . . . . . 594,000 345,000
------------ ------------
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 1,691,000 $ 880,000
------------ ------------
------------ ------------
EARNINGS PER SHARE . . . . . . . . . . . . . . . . $ .20 $ .11
------ ------
------ ------
WEIGHTED AVERAGE SHARES OUTSTANDING. . . . . . . . 8,573,000 8,164,000
</TABLE>
See Notes to Financial Statements
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . $ 1,691,000 $ 880,000
Items not requiring cash:
Depreciation and amortization. . . . . . . . . 827,000 585,000
(Gain) loss on disposition of assets . . . . . (1,000) --
Non-qualified stock option compensation. . . . 1,000 1,000
Changes in:
Accounts receivable. . . . . . . . . . . . . . (3,843,000) (2,758,000)
Inventories. . . . . . . . . . . . . . . . . . (902,000) (684,000)
Accounts payable and accrued expenses. . . . . 260,000 1,177,000
Other current assets and liabilities . . . . . 1,318,000 574,000
------------ ------------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . (649,000) (225,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment . . . . . . . (1,432,000) (689,000)
Proceeds from sales of property and
equipment. . . . . . . . . . . . . . . . . . . 10,000 --
Proceeds from maturity of temporary
investments. . . . . . . . . . . . . . . . . . 4,229,000 4,613,000
Purchase of temporary investments. . . . . . . . (2,732,000) (4,286,000)
Increase (decrease) in other assets. . . . . . . 2,000 (228,000)
Net cash received from business acquisitions . . 44,000 --
------------ ------------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . 121,000 (590,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock . . . . . . . . . . . . 99,000 124,000
------------ ------------
Net cash provided by financing activities. . 99,000 124,000
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH. . . . . . . . . . . . . . . . . . . . . 200,000 19,000
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS. . . . . . . (229,000) (672,000)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD. . . . . . . . . . . . . . . . . . . . 4,251,000 3,168,000
------------ ------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD . . . . . . . . . . . . . . . . . . . . . $ 4,022,000 $ 2,496,000
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements
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<PAGE>
BRITE VOICE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. The 1995 and 1994 financial statements (except for the December 31, 1994
Balance Sheet) included herein have been prepared by the Company, without audit,
and reflect all adjustments (consisting only of those of a normal recurring
nature) which are, in the opinion of management, necessary to fairly present the
financial position, results of operations and cash flows for the interim
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes that
the disclosures are adequate to make the information presented not misleading.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto for the year ended December
31, 1994, contained in the Company's Annual Report to Stockholders and Form 10-K
filed with the Securities and Exchange Commission.
2. Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- -----------
<S> <C> <C>
Purchased parts . . . . . . . . . . . . . $ 2,990,000 $ 2,677,000
Work in progress. . . . . . . . . . . . . 3,171,000 2,383,000
Finished goods. . . . . . . . . . . . . . 3,019,000 3,203,000
----------- -----------
$ 9,180,000 $ 8,263,000
----------- -----------
----------- -----------
</TABLE>
3. Income taxes paid (refunds received) during the three months ended March
31, 1995 and 1994 were $(301,000) and $59,000, respectively.
4. On March 31, 1995, Touch-Talk, Incorporated ("Touch-Talk"), a company
specializing in the creation of custom software and application development
tools, was merged into the Company in a transaction accounted for as a pooling
of interests. The Company issued 150,000 shares of its common stock in
exchange for all outstanding shares of Touch-Talk common stock. The net assets
of Touch-Talk amounted to $388,000 at March 31, 1995. The effect of the pooling
is immaterial to the Company's operations and, accordingly, prior years'
financial statements have not been restated. The Company's first quarter
results include Touch-Talk revenues of $464,000 and income from operations of
approximately $100,000.
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<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues increased $4,635,000, or 32.2%, compared to the same period
in 1994. Domestic system sales, consisting of general purpose voice response
systems and electronic publishing systems, increased 13.0%, from $7,136,000 to
$8,067,000. General purpose voice response system sales increased from
$4,441,000 to $6,394,000, or 44.0%, primarily due to system sales to value-added
resellers providing equipment to major U.S. companies. Electronic publishing
system sales decreased from $2,695,000 to $1,673,000, or 37.9%, due primarily to
decreased system sales to regional Bell operating companies. The Company
believes that the market for electronic publishing systems is beginning to
mature and that sales of these systems will be more difficult to achieve in
future periods.
International system sales increased 88.3%, from $2,165,000 to $4,076,000.
This improvement was primarily due to sales of VoiceSelect-TM-, a product used
by cellular telephone companies to provide "hands-free" dialing to cellular
subscribers, and to the introduction of the Voice Services Director, a voice
messaging product marketed by the Company's foreign subsidiaries.
Service revenues increased $1,793,000, or 35.1%, due primarily to increased
service contract and repair revenues and managed services revenues. Service
contract and repair revenues increased 51.2%, from $1,811,000 to $2,739,000, due
to the Company's emphasis on expanding its base of customers who subscribe for
quarterly or annual maintenance contracts. Managed services revenues increased
37.7%, from $2,148,000 to $2,957,000, due to an expanding customer base and a
larger number of end users. Information services and other service revenues
increased from $1,145,000 to $1,201,000, or 4.9%, due to an increase in the
Company's customer base.
Cost of system sales increased $818,000, or 19.4%, while decreasing as a
percentage of system sales from 45.4% to 41.5%. The increase in actual costs
was due to an increase in the number of systems shipped. The decrease as a
percentage of system sales was due to increased margins on the Company's
domestic system sales, resulting from an increase in software licenses and
applications sold as part of the Company's voice response systems when compared
to a year ago. Software sales typically provide larger margins than those
associated with hardware.
Cost of service revenues increased $811,000, or 23.4%, while decreasing as
a percentage of service revenues from 67.9% to 62.0%. The increase in actual
costs was due primarily to increased staffing requirements in the customer
support and managed services departments. The decrease as a percentage of
revenues was due to a combination of factors. 900 Voice Personals revenues,
which typically have lower margins than other components of managed services
revenues, decreased as a percentage of the total product mix compared to the
same period a year ago, thus improving overall margins. In addition, the
Company has negotiated more favorable terms with the long distance carrier
providing 900 access, billing and collection
-8-
<PAGE>
services for the Company's 900 Voice Personals services, thus reducing the
variable costs associated with such services.
Operating expenses increased 36.3%, from $5,563,000 to $7,585,000, due
primarily to increased selling, general and administrative expenses. Selling,
general and administrative expenses increased from $4,276,000 to $6,007,000, or
40.5%, primarily because of additional staff required for the Company's
expanding international operations. Research and engineering expenses increased
$291,000, or 22.6%, due to the addition of research engineers to support the
Company's continued commitment to product development.
Other income increased by $76,000, or 105.6%. Interest income increased
from $88,000 to $123,000, or 39.8%, due to higher yields and a higher average
balance of funds invested during the period. Interest expense decreased from
$26,000 to zero, or 100%, because the Company paid off the remainder of its debt
at the end of 1994.
The provision for income taxes was 26.0% for the three months ended March
31, 1995 compared to 28.2% for the same period in 1994. The variance in the
effective income tax rate from the United States statutory rate for both periods
was due to the ability to utilize net operating loss and credit carryforwards
acquired through the merger with Perception Technology partially offset by
higher tax rates imposed on its European subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1995, the Company had a current ratio of 2.8 to 1, and
working capital of $25,784,000, compared to a current ratio of 2.9 to 1 and
working capital of $24,169,000 at December 31, 1994. Cash and cash equivalents
and temporary investments decreased from $9,452,000 at December 31, 1994 to
$7,726,000 at March 31, 1995, primarily due to increases in accounts receivable
and inventory, and purchases of property and equipment.
Accounts receivable and inventory increased by $4,241,000 and $917,000,
respectively, during the quarter ended March 31, 1995. Accounts receivable
increased primarily due to extended payment terms granted to certain
international customers, and the inclusion of Touch-Talk receivables at the
end of the period. The increase in inventory occurred primarily as a
result of the anticipation of sales increases by the Company's foreign
subsidiaries. These foreign subsidiaries require longer lead times for
certain components which are included in customer systems. The increases in
receivables and inventory were funded by increases in current liabilities and
decreases in the Company's cash balances.
Property and equipment increased significantly during the three month
period in 1995 due primarily to expansion and remodeling of the Company's
Wichita and Dallas facilities. While the Company expects capital expenditures
to continue during the year, it does not expect the increases to continue at the
rate experienced in the first quarter.
The Company regularly invests excess funds in short-term securities, such
as bankers' acceptances, government obligations and variable rate demand notes,
having maturities up to one year. Management believes that restricting
investments to these types of securities maximizes financial flexibility and
minimizes exposure to interest rate and market risks. The Company utilizes
these investments as a source of
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<PAGE>
liquidity, to the extent that cash requirements exceed short-term cash receipts.
The Company has no bank lines of credit or other credit arrangements.
The Company has no significant capital commitments and believes that
working capital on hand and funds provided from future operations will be
sufficient to fund all of the Company's known short-term and long-term capital
requirements.
INFLATION
Inflation has not had a material impact on the Company's results of
operations. Because of the competitive nature of the computer industry, the
costs of parts used in the Company's products have remained relatively stable.
However, should inflation rise to higher levels, the Company believes that such
inflationary costs would be passed on to customers by both the Company and its
competition.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER MATTERS
None
ITEM 6. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
(a) None
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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<PAGE>
SIGNATURE
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.
Dated: May 15, 1995
BRITE VOICE SYSTEMS, INC.
/s/ Glenn A. Etherington
------------------------------------
Glenn A. Etherington
Chief Financial Officer
Duly Authorized Officer on behalf of
the Registrant
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,022
<SECURITIES> 3,704
<RECEIVABLES> 22,183
<ALLOWANCES> 810
<INVENTORY> 9,180
<CURRENT-ASSETS> 40,162
<PP&E> 19,061
<DEPRECIATION> 9,133
<TOTAL-ASSETS> 52,381
<CURRENT-LIABILITIES> 14,378
<BONDS> 0
<COMMON> 33,429
0
0
<OTHER-SE> 4,436
<TOTAL-LIABILITY-AND-EQUITY> 52,381
<SALES> 12,143
<TOTAL-REVENUES> 19,040
<CGS> 5,040
<TOTAL-COSTS> 16,903
<OTHER-EXPENSES> (148)<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,285
<INCOME-TAX> 594
<INCOME-CONTINUING> 1,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,691
<EPS-PRIMARY> .20
<EPS-DILUTED> .00
<FN>
<F1>Principally interest income
</FN>
</TABLE>
