<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 September 30, 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 November 7, 1995, 11,469,801 shares of the registrant's common stock were
outstanding.
TOTAL NUMBER OF PAGES: 16
<PAGE>
BRITE VOICE SYSTEMS, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1995
and December 31, 1994. . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income - Three Months and
Nine Months Ended September 30, 1995 and 1994. . . . . . . . . 5
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and 1994. . . . . . . . . . . . . . . 6
Notes to Financial Statements. . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . 14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 14
Item 5. Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits Required by Item 601 of Regulation S-K . . . . . . . . 14
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................ $ 4,866,000 $ 5,776,000
Temporary investments (at cost which
approximates market)........................... -- 5,201,000
Accounts receivable, less allowance for doubtful
accounts: 1995 - $665,000, 1994 - $844,000..... 26,491,000 18,846,000
Inventories...................................... 11,670,000 8,263,000
Prepaid expenses and other....................... 1,384,000 1,889,000
----------- -----------
Total Current Assets....................... 44,411,000 39,975,000
----------- -----------
PROPERTY AND EQUIPMENT
Land and building................................ 3,074,000 3,074,000
Furniture and equipment.......................... 19,066,000 15,161,000
----------- -----------
22,140,000 18,235,000
Less accumulated depreciation.................... (11,038,000) (8,906,000)
----------- -----------
Total Property and Equipment............... 11,102,000 9,329,000
----------- -----------
INVESTMENT IN SALES TYPE LEASES.................... 565,000 711,000
----------- -----------
OTHER ASSETS....................................... 1,109,000 1,873,000
----------- -----------
$57,187,000 $51,888,000
----------- -----------
----------- -----------
</TABLE>
See Notes To Financial Statements.
-3-
<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long term debt............. $ 2,267,000 $ 2,782,000
Accounts payable................................. 8,760,000 6,492,000
Accrued salaries and wages....................... 2,129,000 1,941,000
Other accrued expenses........................... 1,721,000 2,786,000
Deferred revenue................................. 1,312,000 1,287,000
Customer deposits................................ 2,268,000 775,000
Income taxes payable............................. 1,355,000 --
----------- -----------
Total Current Liabilities.................. 19,812,000 16,063,000
----------- -----------
DEFERRED INCOME TAXES.............................. -- 138,000
----------- -----------
LONG TERM DEBT..................................... 99,000 140,000
----------- -----------
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 11,464,364
shares - 1995; 11,254,798 shares - 1994........ 34,117,000 33,404,000
Retained earnings................................ 3,337,000 2,358,000
Foreign currency translation adjustment.......... (178,000) (215,000)
----------- -----------
Total Stockholders' Equity................. 37,276,000 35,547,000
----------- -----------
$57,187,000 $51,888,000
----------- -----------
----------- -----------
</TABLE>
See Notes to Financial Statements
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES
System sales..................................... $12,659,000 $10,732,000 $36,400,000 $30,380,000
Service revenues................................. 11,474,000 9,948,000 32,767,000 27,532,000
----------- ----------- ----------- -----------
24,133,000 20,680,000 69,167,000 57,912,000
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of Sales:
System......................................... 5,864,000 4,630,000 15,344,000 13,378,000
Service........................................ 5,829,000 5,068,000 16,718,000 14,231,000
Research and engineering......................... 2,284,000 1,636,000 5,917,000 4,735,000
Selling, general and administrative.............. 6,850,000 5,191,000 20,129,000 14,607,000
S-Corporation distributions...................... 1,077,000 2,403,000 4,831,000 6,970,000
Merger costs and other........................... 4,327,000 -- 4,327,000 --
----------- ----------- ----------- -----------
26,231,000 18,928,000 67,266,000 53,921,000
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS...................... (2,098,000) 1,752,000 1,901,000 3,991,000
OTHER INCOME, NET.................................. 49,000 100,000 334,000 304,000
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES......................... (2,049,000) 1,852,000 2,235,000 4,295,000
PROVISION FOR INCOME TAXES......................... 191,000 674,000 1,331,000 1,789,000
----------- ----------- ----------- -----------
NET INCOME (LOSS).................................. $(2,240,000) $1,178,000 $904,000 $2,506,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EARNINGS (LOSS) PER SHARE.......................... $ (.19) $ .10 $ .08 $ .22
------ ------ ------ ------
------ ------ ------ ------
WEIGHTED AVERAGE SHARES OUTSTANDING................ 12,005,000 11,477,000 11,940,000 11,467,000
</TABLE>
See Notes to Financial Statements
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................ $ 904,000 $ 2,506,000
Items not requiring cash:
Depreciation and amortization.................. 2,463,000 1,972,000
Non-qualified stock option compensation........ 4,000 4,000
Changes in:
Accounts receivable............................ (7,244,000) (4,596,000)
Inventories.................................... (3,392,000) (1,266,000)
Accounts payable and accrued expenses.......... 2,014,000 7,900,000
Other current assets and liabilities........... 2,216,000 1,796,000
----------- -----------
Net cash provided (used) by operating
activities............................... (3,035,000) 8,316,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment............... (3,909,000) (2,783,000)
Proceeds from sale of assets..................... 44,000 --
Proceeds from maturity of temporary
investments.................................... 8,580,000 11,631,000
Purchase of temporary investments................ (3,379,000) (9,684,000)
(Increase) decrease in other assets.............. 766,000 (427,000)
Net cash received from business acquisitions..... 44,000 --
----------- -----------
Net cash provided (used) by investing
activities............................... 2,146,000 (1,263,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock......................... 498,000 368,000
Principal payment on debts....................... (556,000) (1,399,000)
----------- -----------
Net cash used by financing activities...... (58,000) (1,031,000)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............ 37,000 282,000
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS... (910,000) 6,304,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..... 5,776,000 3,624,000
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD........... $ 4,866,000 $ 9,928,000
----------- -----------
----------- -----------
</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 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 (a) 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, and (b) the unaudited pro forma combined condensed
financial statements of the Company for the three years ended December 31, 1994
and the three months ended March 31, 1994 and 1995, and other information
contained in the Company's Proxy Statement dated July 17, 1995, and filed with
the Securities and Exchange Commission.
2. Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ -----------
<S> <C> <C>
Purchased parts.......................... $ 3,397,000 $ 2,677,000
Work in progress......................... 4,339,000 2,383,000
Finished goods........................... 3,934,000 3,203,000
----------- -----------
$11,670,000 $ 8,263,000
----------- -----------
----------- -----------
</TABLE>
3. Income taxes paid during the nine months ended September 30, 1995 and 1994
were $736,000 and $693,000, respectively.
Interest paid during the nine months ended September 30, 1995 and 1994 was
$18,000 and $64,000, respectively.
4. Effective August 8, 1995, the Company consummated its mergers (the
"Mergers") with each of Telecom Services Limited (U.S.), Inc., Telecom Services
Limited (West), Inc., TSL Software Services, Inc., and TSL Management Group,
Inc. (collectively the "TSL Companies"). Pursuant to the Agreement and Plan of
Reorganization and Merger dated May 24, 1995 (the "Merger Agreement"), the TSL
Companies were merged into the Company in a transaction involving the issuance
of 3,331,000 shares of the Company's common stock in conversion of all
outstanding shares of common stock of the TSL Companies.
The Mergers have been accounted for as a pooling of interests.
Accordingly, the consolidated financial statements have been retroactively
restated to include the results of operations, financial positions and cash
flows of the TSL Companies for all periods prior to consummation of the Mergers.
-7-
<PAGE>
Operating results of the separate companies are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1994 September 30, 1994
---------------------------- ----------------------------
Net Operating Net Net Operating Net
Revenues Income (Loss) Revenues Income (Loss)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Brite Voice Systems, Inc.. $16,781,000 $1,495,000 $47,173,000 $3,568,000
TSL Companies............. 3,899,000 (317,000) 10,739,000 (1,062,000)
----------- ---------- ----------- -----------
$20,680,000 $1,178,000 $57,912,000 $2,506,000
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
In connection with the Mergers, the Company recognized nonrecurring charges
of $3,509,000 for expenses incurred that are specific to the Mergers, consisting
primarily of fees to financial advisors, attorneys and accountants, and costs of
integrating operations.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1994
Total revenues increased $3,453,000, or 16.7%, compared to the same period
in 1994. This improvement was due primarily to increases in system sales by the
Company's foreign subsidiaries and service revenues.
Domestic system sales, consisting of general purpose voice response systems
and electronic publishing systems, decreased 12.1%, from $7,169,000 to
$6,301,000. General purpose voice response system sales increased from
$5,400,000 to $5,761,000, or 6.7%, primarily due to a large system upgrade to an
existing customer. Electronic publishing system sales decreased from $1,769,000
to $540,000, or 69.5%, due primarily to the weakness in demand for systems by
the Company's newspaper and directory publishing customers. The Company
believes that the market for electronic publishing systems is mature, and that
sales of these systems will be more difficult to achieve in the future.
International system sales increased 78.4%, from $3,563,000 to $6,358,000,
due primarily to increased sales by the Company's foreign subsidiaries. Sales
by foreign subsidiaries increased 104.6%, from $2,593,000 to $5,306,000,
primarily due to sales of the Voice Services Director, a voice messaging product
marketed primarily by the Company's foreign subsidiaries. System sales by the
Company's United States-based sales force increased 8.5%, from $970,000 to
$1,052,000, primarily due to a large system sale to a customer in South Africa.
The Company's system sales are dependent upon continued orders by existing
customers, orders from new customers, and development of new products. There
can be no assurance that the Company will be able to increase or sustain recent
growth rates.
Service revenues increased $1,526,000, or 15.3%. Managed services
revenues, consisting of revenues from the TSL Companies, Consumer Tips, Person-
to-Person and 900 Voice Personals customers, increased 15.8%, from $6,357,000
to $7,359,000, due to an expanding customer base and a larger number of end
users. Included in managed services revenues are revenues from the TSL
Companies of $3,976,000 in 1995 and $3,899,000 in 1994. Service contract and
repair revenues increased 23.0%, from $2,313,000 to $2,844,000, due to the
Company's continuing emphasis on expanding its base of customers who subscribe
to quarterly or annual maintenance contracts. Information services and other
service revenues decreased from $1,278,000 to $1,271,000, or 0.5%.
Cost of system sales increased $1,234,000, or 26.7%, while increasing as a
percentage of equipment sales from 43.1% to 46.3%. The increase in actual costs
was due to an increase in the number of systems shipped by the Company's foreign
subsidiaries, while the increase as a percentage of system sales was due to a
shift in product mix to a higher level of pass-through sales and hardware
upgrades than in prior periods. These types of sales generally have lower
margins than typical system shipments.
-9-
<PAGE>
Cost of service revenues increased $761,000, or 15.0%, while decreasing as
a percentage of service revenues from 50.9% to 50.8%. The increase in actual
costs was due primarily to an increase in variable costs, such as telephone
transmission costs and revenue sharing payments to customers, associated with
increased managed services revenues. The decrease as a percentage of revenues
was due to an increase in service contract and repair revenues as a percentage
of the total product mix. These services typically have higher margins than
other components of service revenues.
Selling, general and administrative expenses increased $1,659,000, or
32.0%, primarily because of the additional staff required for the Company's
expanding international operations. Research and engineering expenses increased
$648,000, or 39.6%, due to the addition of research engineers to support the
Company's continued commitment to product development. As a percentage of total
revenues, selling, general and administrative and research and engineering
expenses increased from 33.0% to 37.8%. The Company expects these expenses as a
percentage of revenues to decline as the additional staff begins generating
revenues.
S-Corporation distributions represent payments made to the former TSL
Companies' stockholders, which are approximately equal to the tax basis earnings
of the TSL Companies. Under the terms of the Merger Agreement, the TSL
Companies were allowed to distribute estimated tax basis income through the
closing date of the Mergers, August 8, 1995. These distributions decreased
$1,326,000, or 55.2%, during the three month period ended September 30, 1995,
principally because these distributions were for approximately 39 days during
the quarter ended September 30, 1995 compared to the full quarter in 1994. Upon
consummation of the Mergers, these payments ceased and will not recur in future
periods.
During the three months ended September 30, 1995, the Company recorded a
charge of $4,327,000. This charge consisted of $3,509,000 for expenses
incurred that are specific to the Mergers, primarily fees to financial advisors,
attorneys and accountants, and costs of integrating the operations of the TSL
Companies. Also included was a charge of $818,000, reflecting the write-off of
prepaid royalties and certain equipment associated with the Company's Person-to-
Person product, one of two voice personals products offered by the Company.
Other income decreased by $51,000, or 51.0%. Interest income, the largest
component of other income, decreased from $120,000 to $85,000, or 29.2%,
primarily due to a lower average balance of funds invested. Interest expense
decreased from $36,000 to $7,000, or 80.6%, due to the repayment of the
Company's long-term debt at the end of 1994. Other income decreased by $45,000,
from income of $16,000 during the period ended September 30, 1994 to a net
expense of $29,000 during the current period. This decrease was due primarily
to non-recurring charges incurred by the Company's foreign subsidiaries.
The provision for income taxes was $191,000 for the three months ended
September 30, 1995, although the Company incurred a loss before taxes. This
provision resulted from the nondeductibility for federal income tax purposes of
certain merger costs associated with the Company's acquisition of the TSL
Companies, and taxes imposed on its European subsidiaries. For the same period
in 1994, the provision for income taxes was 36.4%. The variance in the
effective income tax rate from the United States statutory rate for 1994 was
primarily due to the higher tax rates of the European subsidiaries.
-10-
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1994
Total revenues increased $11,255,000, or 19.4%, compared to the same period
in 1994. This improvement was due primarily to increases in international
system sales and service revenues.
Domestic system sales decreased 4.9%, from $21,587,000 to $20,519,000.
General purpose voice response system sales increased from $15,154,000 to
$17,736,000, or 17.0%, primarily due to system sales to value-added resellers
providing equipment to major U.S. companies. Electronic publishing system sales
decreased from $6,433,000 to $2,783,000, or 56.7%, due primarily to the weakness
in demand for systems by newspaper and directory publishing customers.
International system sales increased 80.6%, from $8,793,000 to $15,881,000.
System sales by the Company's foreign subsidiaries increased 65.0%, from
$7,298,000 to $12,040,000, primarily due to sales of the Voice Services
Director. System sales by the Company's United States-based sales force
increased 156.9%, from $1,495,000 to $3,841,000, primarily due to foreign sales
of VoiceSelect, a system used by cellular telephone companies to provide "hands-
free" dialing to cellular subscribers.
Service revenues increased $5,235,000, or 19.0%. Managed services revenues
increased 17.1%, from $17,699,000 to $20,724,000, due to an expanding customer
base and a larger number of end users. Included in managed services revenues
are revenues from the TSL Companies of $11,284,000 in 1995 and $10,739,000 in
1994. Service contract and repair revenues increased 34.9%, from $6,131,000 to
$8,273,000, due to the Company's emphasis on expanding its base of customers who
subscribe to quarterly or annual maintenance contracts. Information services
and other service revenue increased from $3,702,000 to $3,770,000, or 1.8%.
Cost of system sales increased $1,966,000, or 14.7%, while decreasing as a
percentage of system sales from 44.0% to 42.2%. The increase in actual costs
was due to an increase in the number of systems shipped by the Company's foreign
subsidiaries. The decrease as a percentage of system sales was due to increased
margins on system sales, resulting from an increase in software licenses and
applications sold as part of the Company's voice response systems. Software
revenues typically provide larger margins than those associated with hardware.
Cost of service revenues increased $2,487,000, or 17.5%, while decreasing
as a percentage of service revenues from 51.7% to 51.0%. The increase in actual
costs was due primarily to increased staffing requirements in the customer
support and managed services departments and the increase in variable costs
associated with increased managed services revenues. The decrease as a
percentage of revenues was due to a large increase in service revenues, which
was accomplished without a corresponding increase in the associated costs.
Selling, general and administrative expenses increased $5,522,000, or
37.8%, primarily because of the additional staff required for the Company's
expanding international operations. Research and engineering expenses increased
$1,182,000, or 25.0%, due to the addition of research engineers to support the
Company's continued commitment to product development. As a percentage of total
revenues, selling, general and administrative and research and engineering
expenses increased
-11-
<PAGE>
from 33.4% to 37.7%. The Company expects these expenses as a percentage of
revenues to decline as the additional staff begins generating revenues.
S-Corporation distributions decreased $2,139,000, or 30.7%, during the nine
month period ended September 30, 1995. The distributions for the period consist
of approximately seven months of operating income of the TSL Companies while the
same period in 1994 includes all nine months.
Other income increased by $30,000, or 9.9%, primarily due to the
elimination of interest charges during the current nine month period as a result
of the repayment in December 1994 of the majority of the Company's long-term
debt. Interest income decreased from $348,000 to $337,000, or 3.3%, due to the
lower average balance of funds invested for the period.
The provision for income taxes was 59.6% for the nine months ended
September 30, 1995 compared to 41.7% for the same period in 1994. The variance
in the effective income tax rate from the United States statutory rate for 1995
was due primarily to the nondeductibility of merger costs associated with the
acquisition of the TSL Companies. For the same period in 1994, the variance was
due to the nondeductibility of S-Corporation distributions for the TSL Companies
and the higher tax rates of the foreign subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1995, the Company had a current ratio of 2.2 to 1, and
working capital of $24,599,000, compared to a current ratio of 2.5 to 1 and
working capital of $23,912,000 at December 31, 1994. Cash and cash equivalents
and temporary investments decreased from $10,977,000 at December 31, 1994 to
$4,866,000 at September 30, 1995, primarily due to increases in accounts
receivable and inventory, purchases of property and equipment, and costs
incurred in connection with the acquisition of the TSL Companies.
Accounts receivable and inventory increased by $7,645,000 and $3,407,000,
respectively, during the nine months ended September 30, 1995. Accounts
receivable increased primarily due to higher sales levels and extended payment
terms granted to certain customers. 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.
The Company regularly invests excess funds in short-term securities, such
as bankers' acceptances, government obligations and variable rate demand notes,
having maturities of 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 liquidity, to the extent that cash requirements
exceed short-term cash receipts. The Company has a $5,000,000 unsecured line of
credit to provide funds needed on a short-term basis.
-12-
<PAGE>
The Company has no significant capital commitments and believes that
working capital on hand and funds provided from future operations and short-term
borrowings 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.
-13-
<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
At a Special Meeting of Stockholders of the Company held on August 8, 1995,
the Company's stockholders approved and adopted the Agreement and Plan of
Reorganization and Merger (the "Merger Agreement") dated as of May 24, 1995,
between the Company and Telecom Services Limited (U.S.), Inc., Telecom Services
Limited (West), Inc., TSL Software Services, Inc., and TSL Management Group,
Inc. (collectively the "TSL Companies"), and Alan C. Maltz, Scott A. Maltz,
Stephen B. Rockoff, and Alan C. Maltz as custodian for Sari Maltz and Lori
Maltz, approved the merger of each of the TSL Companies with and into the
Company pursuant to the Merger Agreement, and approved the issuance of 3,331,000
shares of the Company's common stock in the Mergers. There were 5,356,738 votes
cast in favor of the proposal, 18,691 votes cast against, 25,865 abstentions and
2,716,931 broker nonvotes.
ITEM 5. OTHER MATTERS
None
ITEM 6. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
(a) None
(b) During the quarter covered by this report, the Company filed a report
on Form 8-K dated August 9, 1995, reporting the consummation of the
Mergers with the TSL Companies, effective August 8, 1995, as described
in Item 4 above. A Form 8-K/A amendment to the report was filed with
the Commission on October 24, 1995. The following financial
statements were filed with the Form 8-K report, as amended:
Financial Statements of the TSL Companies
1. Combined balance sheets of the TSL Companies as of December 31,
1994, and 1993.
2. Combined statements of operations and retained earnings (deficit)
of the TSL Companies for each of the three years in the period
ended December 31, 1994, and for the six months ended June 30,
1994, and June 30, 1995 (unaudited).
-14-
<PAGE>
3. Combined statements of cash flows for the TSL Companies for each
of the three years in the period ended December 31, 1994, and for
the six months ended June 30, 1994, and June 30, 1995
(unaudited).
Pro Form Financial Statements of the Company and the TSL Companies
1. Unaudited pro forma combined condensed balance sheet of the
Company and the TSL Companies as of June 30, 1995.
2. Unaudited pro forma combined condensed statements of income for
the six months ended June 30, 1995, and June 30, 1994.
3. Unaudited pro forma combined condensed statements of income of
the Company and the TSL Companies for the years ended December
31, 1994, 1993 and 1992.
4. Notes to unaudited pro forma combined condensed financial
statements of the Company and the TSL Companies.
-15-
<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: November 13, 1995
BRITE VOICE SYSTEMS, INC.
/s/ Glenn A. Etherington
------------------------------------
Glenn A. Etherington
Chief Financial Officer
Duly Authorized Officer on behalf of
the Registrant
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
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<OTHER-SE> 3,159
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