<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, 1997
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)
250 INTERNATIONAL PARKWAY
HEATHROW, FLORIDA 32746
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 357-1000
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, 1997, 11,993,196 shares of the registrant's common stock
were outstanding.
TOTAL NUMBER OF PAGES: 17
<PAGE>
BRITE VOICE SYSTEMS, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1997 and
December 31, 1996............................................ 3
Consolidated Statements of Income - Three and Nine Months
Ended September 30, 1997 and 1996............................ 5
Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1997 and 1996.................................. 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............................................. 16
Item 1. Legal Proceedings............................................. 16
Item 2. Changes in Securities......................................... 16
Item 3. Defaults Upon Senior Securities............................... 16
Item 4. Submission of Matters to a Vote of Security Holders........... 16
Item 5. Other Information............................................. 16
Item 6. Exhibits and Reports on Form 8-K.............................. 16
SIGNATURES .............................................................. 17
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................. $ 2,561 $ 8,084
Accounts receivable, less allowance for doubtful
accounts: $824 - 1997; $471 - 1996................... 38,436 35,067
Inventories........................................... 13,763 12,507
Prepaid expenses and other............................ 7,631 2,601
Total Current Assets............................. 62,391 58,259
PROPERTY AND EQUIPMENT
Land and building..................................... 3,074 3,074
Furniture and equipment............................... 24,106 23,430
---------- ----------
27,180 26,504
---------- ----------
Less accumulated depreciation......................... (13,428) (12,204)
---------- ----------
Total Property and Equipment..................... 13,752 14,300
---------- ----------
OTHER ASSETS 1,980 2,323
---------- ----------
TOTAL ASSETS................................ $ 78,123 $ 74,882
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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BRITE VOICE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable................................................ $ 9,914 $ 10,539
Accrued salaries and wages...................................... 3,180 1,974
Other accrued expenses.......................................... 4,168 1,512
Deferred revenue................................................ 1,850 2,063
Customer deposits............................................... 2,749 3,526
Income taxes payable............................................ 376 1,087
Short-term debt................................................. 6,751 --
----------- ----------
Total Current Liabilities.................................. 28,988 20,701
----------- ----------
COMMITMENTS AND CONTINGENCIES....................................... -- --
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 11,938,196 shares - 1997; 11,829,595 shares - 1996...... 39,190 38,417
Retained earnings............................................... 10,401 14,938
Cumulative foreign currency translation adjustment.............. (456) 826
----------- ----------
Total Stockholders' Equity................................. 49,135 54,181
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $ 78,123 $ 74,882
----------- ----------
----------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES
Systems.................................. $ 16,243 $ 14,553 $ 52,119 $ 44,357
Services................................. 13,184 10,803 37,443 35,514
----------- ----------- ----------- -----------
29,427 25,356 89,562 79,871
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of Sales:
Systems................................ 7,700 6,093 23,860 19,210
Services............................... 7,537 5,746 21,563 17,660
Research and engineering................. 3,337 2,947 9,693 8,271
Selling, general and administrative...... 10,716 9,262 32,815 25,834
Restructuring, relocation and other...... 1,543 -- 8,328 --
----------- ----------- ----------- -----------
30,833 24,048 96,259 70,975
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS................ (1,406) 1,308 (6,697) 8,896
OTHER INCOME (EXPENSE), NET.................. 24 (44) 61 136
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES................... (1,382) 1,264 (6,636) 9,032
PROVISION (CREDIT) FOR
INCOME TAXES................................ (414) 320 (2,083) 2,496
----------- ----------- ----------- -----------
NET INCOME (LOSS)............................ $ (968) $ 944 $ (4,553) $ 6,536
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EARNINGS (LOSS) PER SHARE.................... $ (.08) $ .08 $ (.38) $ .54
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
WEIGHTED AVERAGE SHARES
OUTSTANDING................................. 12,028 12,166 12,042 12,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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BRITE VOICE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................................... $ (4,553) $ 6,536
Items not requiring cash:
Depreciation and amortization................................... 3,155 2,375
Restructuring, relocation and other............................. 3,328 --
Changes in:
Accounts receivable............................................. (4,213) (6,459)
Inventories..................................................... (2,260) (1,184)
Accounts payable and accrued expenses........................... 3,285 388
Other current assets and liabilities............................ (6,540) (376)
---------- ----------
Net cash provided by (used in) operating activities........ (7,798) 1,280
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment, net.............................. (3,516) (4,085)
(Increase) decrease in other assets.................................. (1,441) 251
Proceeds from sale of property and equipment......................... -- 323
---------- ----------
Net cash provided by (used in) investing activities........ (4,957) 2,922
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock............................................. -- 2,761
Exercise of stock options............................................ 774 712
Principal payments on debt........................................... -- (551)
Short term borrowings................................................ 6,751 --
---------- ----------
Net cash provided by (used in) financing activities........ 7,525 2,922
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.................................. (293) 67
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......................... (5,523) 758
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD............................................................... 8,084 3,405
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................. $ 2,561 $ 4,163
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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<PAGE>
BRITE VOICE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. The 1997 and 1996 financial statements (except for the December 31, 1996
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, 1996, 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 (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Purchased parts . . . $ 4,709 $ 4,060
Work in progress. . . 6,694 5,581
Finished goods. . . . 2,360 2,066
--------- ---------
$ 13,763 $ 12,507
--------- ---------
--------- ---------
</TABLE>
3. The Company has recorded charges of $1,543,000 for the three months and
$8,328,000 for the nine months ended September 30, 1997, related to the
restructuring of the Company's operations and the relocation of its
headquarters to Orlando, Florida. Included in the charge was
approximately $3,327,000 in asset impairments as a result of the
Company's decision to discontinue certain product lines and abandon
certain assets, and the reevaluation of the net realizable value of
certain intangible assets. The Company also recorded severance costs of
approximately $1,243,000 relating to the elimination of certain product
lines, the closing of its Dallas, Texas facility and the transfer of
certain functions from its facilities in Wichita, Kansas, and Boston,
Massachusetts to its new headquarters in Orlando. Other costs,
consisting principally of moving expenses, consulting costs, temporary
labor and travel, amounted to approximately $3,758,000 during the nine
months ended September 30, 1997.
4. On September 23, 1997, the Company entered into an Asset Purchase
Agreement with IT Network, Inc. pursuant to which the Company would sell
certain assets used in its electronic publishing business for $35,000,000
to be paid in cash upon closing of the transaction. The business sold
includes: i) the management of audiotex systems installed on customers'
premises; ii) the creation and transmission by satellite of information
for access by telephone callers; iii) the creation and provision of a
variety of information for yellow pages publishers over the Internet; iv)
the sale of advertising sponsorships to various categories of audiotex
information made available through yellow pages publishers' audiotex
systems and v) advertiser management services provided on behalf of
yellow pages publishers whereby advertising entities are contacted from
an outbound call center
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<PAGE>
for periodic updating of their audiotex sponsorships and advertisements.
This transaction was consummated on October 30, 1997. Revenues related
to the businesses being sold were $3,344,000 for the three months, and
$9,743,000 for the nine months ended September 30, 1997, and are included
in "Services Revenues" in the accompanying financial statements.
5. Income taxes paid, net of refunds received, during the three months ended
September 30, 1997 and 1996 were $754,000 and $333,000, respectively.
Interest paid during the three months ended September 30, 1997 and 1996 was
$124,000 and $19,000, respectively.
-8-
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission, including this Form 10-Q report, may contain certain
"forward-looking" information, as that term is defined by the Private Securities
Litigation Reform Act of 1995 (the "Act"). The words "expects," "anticipates,"
"believes" and similar words generally signify a "forward-looking" statement.
These forward-looking statements are made pursuant to the safe harbor provisions
of the Act. The reader is cautioned that all forward-looking statements are
necessarily speculative and that there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements. Such risks and uncertainties include those
inherent generally in the voice processing and telecommunications consulting
industries, such as product demand, pricing, market acceptance, reliance on
significant customers, intellectual property rights, risks in product and
technology developments, and other risk factors detailed in the section below
entitled "Certain Factors to be Considered". The Company undertakes no
obligation to publicly revise any forward-looking statement due to changes in
circumstances after the date of this report, or to reflect the occurrence of
unanticipated events.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1996
The Company derives revenue from the sale of voice processing systems to
domestic and international customers and the provision of services related to
the operation of these systems. The Company's systems can be divided into two
categories: those that increase its customers' revenues through increased
subscription or user fees ("Network Systems"), and those that reduce customers'
costs or improve the efficiency of services provided to end user customers
("Business Systems").
Total revenues increased $4,071,000, or 16.1%, for the three months ended
September 30, 1997 and increased $9,691,000, or 12.1%, for the nine months ended
September 30, 1997. The increases were due primarily to increased equipment
sales to new and existing customers, increases in managed services and service
contract and repair revenue, offset by a decrease in telecommunications
management services revenues.
Systems revenues increased $1,690,000, or 11.6%, for the three months ended
September 30, 1997 and increased $7,762,000, or 17.5%, for the nine months ended
September 30, 1997. Network systems revenues increased while business systems
revenues decreased as shown in the following table:
-9-
<PAGE>
SYSTEMS REVENUES
<TABLE>
<CAPTION>
Three Months ended
September 30, %Increase/
1997 1996 (Decrease)
------------- ------------- ----------
<S> <C> <C> <C>
Business Systems........ $ 5,819,000 $ 8,417,000 (30.9%)
Network Systems......... 10,424,000 6,136,000 69.9%
------------- ------------- ------
Total................... $ 16,243,000 $ 14,553,000 11.6%
<CAPTION>
Nine Months ended
September 30, %Increase/
1997 1996 (Decrease)
------------- ------------- ----------
<S> <C> <C> <C>
Business Systems........ $ 14,482,000 $ 19,841,000 (27.0%)
Network Systems......... 37,637,000 24,516,000 53.5%
------------- ------------- ------
Total................... $ 52,119,000 $ 44,357,000 17.5%
</TABLE>
Business Systems revenue consists principally of sales of interactive voice
response ("IVR"), audiotex or electronic publishing, and small voice messaging
systems for use in conjunction with a corporation's PBX. The decrease of
$2,598,000, or 30.9%, for the three months ended September 30, 1997 and the
decrease of $5,359,000, or 27.0%, for the nine months ended September 30, 1997
were primarily due to reduction in the number of systems shipped to new and
existing customers. The Company believes this decline is primarily due to delays
in purchasing upgrades by existing customers for the Company's IVR equipment,
the discontinuation of the Company's CPE based voice messaging product line, and
to a decline in sales of the Company's audiotex systems. Because many of the
Company's customers have shifted their emphasis from audiotex to other on-line
systems and services, future sales of electronic publishing systems in the
domestic market will be increasingly more difficult to obtain.
Network Systems revenues, consisting of sales of voice activated dialing
and prepaid calling systems, increased $4,288,000, or 69.9%, for the three
months ended September 30, 1997 and increased $13,121,000, or 53.5%, for the
nine months ended September 30, 1997. These increases are due primarily to
continued purchases by existing customers, as well as expansion of the Company's
customer base in the European and Pacific Rim markets. The Company believes
that international markets are behind the United States in terms of market
penetration of voice processing systems and intends to devote additional
resources to capture these markets.
The Company's systems 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 maintain its market
share in the future or to sustain recent growth rates.
Services revenues increased $2,381,000, or 22.0%, for the three months
ended September 30, 1997 and increased $1,929,000, or 5.4%, for the nine months
ended September 30, 1997, principally due to increased managed services revenues
and contract and repair revenues offset by declines in telecommunications
management services revenues during the first six months of 1997. In addition,
the Company sold its 900 Voice Personals product in July 1996. With the Voice
Personals product revenue excluded from the 1996 results, services revenues
would have increased $2,705,000, or 25.8%, for the three months ended September
30, 1997 and $4,696,000, or 14.3%, for the nine months ended September 30,
1997. The breakdown of services revenues is shown in the following table:
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<PAGE>
SERVICES REVENUES
<TABLE>
<CAPTION>
Three Months ended
September 30, %Increase/
1997 1996 (Decrease)
------------- ------------- ----------
<S> <C> <C> <C>
Managed services(1)........... $ 3,637,000 $ 2,561,000 42.0%
Service contract and repair 3,656,000 3,142,000 16.4%
Information services.......... 1,470,000 1,530,000 (3.9%)
Telecommunication management
services..................... 4,421,000 3,570,000 23.8%
------------- ------------- ------
Total......................... $ 13,184,000 $ 10,803,000 22.0%
<CAPTION>
Nine Months ended
September 30, %Increase/
1997 1996 (Decrease)
------------- ------------- ----------
<S> <C> <C> <C>
Managed services(1)........... $ 10,760,000 $ 8,713,000 23.5%
Service contract and repair... 11,031,000 9,759,000 13.0%
Information services.......... 4,431,000 4,283,000 3.5%
Telecommunication management
services................. 11,221,000 12,759,000 (12.0%)
------------- ------------- ------
Total......................... $ 37,443,000 $ 35,514,000 5.4%
</TABLE>
(1) Included Voice Personals revenues of $324,000 for the three
months ended and $2,767,000 for the nine months ended September 30,
1996. The Voice Personals product line was sold in July 1996.
Managed services revenues increased $1,076,000, or 42.0%, for the three
months ended September 30, 1997 and $2,047,000, or 23.5%, for the nine months
ended September 30, 1997, primarily due to a large system rental to one customer
and the commencement of advertising sales on behalf of yellow page customers.
With the Voice Personals product revenues excluded from 1996 results, managed
services revenues would have increased $1,400,000, or 62.6%, for the three
months ended September 30, 1997 and $4,814,000, or 81.0%, for the nine months
ended September 30, 1997.
Service contract and repair revenue increased $514,000 or 16.4%, for the
three months ended September 30, 1997 and increased $1,272,000, or 13.0%, for
the nine months ended September 30, 1997. The increases are due primarily to an
increase in the installed base of customers who subscribe to quarterly or annual
maintenance contracts.
Information services revenue decreased $60,000, or 3.9%, for the three
months ended September 30, 1997 and increased $148,000, or 3.5%, for the nine
months ended September 30, 1997. Future information services revenues are
expected to be minimal because of the sale of certain of the assets of the
electronic publishing division which was consummated on October 30, 1997 (see
Note 4 above).
Telecommunications management services consists of three principal
products: billing verification services, software and managed services, and
professional services. Revenues increased $850,000, or 23.8% for the three
months ended September 30, 1997 and decreased $1,538,000, or 12.0% for the
nine months ended September 30, 1997. Software and managed services and
professional services revenues increased by $723,000, or 27.7% for the three
months, and $1,656,000, or 23.3% for the nine months ended September 30, 1997,
primarily due to an increase in the number of customers utilizing the
Company's professional and software services. Billing verification revenues
increased $128,000, or 13.3% for the three months ended September 30, 1997,
but decreased $5,638,000, or 56.7% for the nine months ended September 30,
1997. The Company's billing verification revenues are
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<PAGE>
characterized by a small number of large refunds, the timing of which is
difficult to predict on a quarterly basis. The decline in revenues for the
nine month period reflects the lack of large refunds similar to those received
during the same period a year ago. Because these large refunds have
relatively low incremental costs of sale, the presence or absence of such
refunds has a significant effect on the Company's quarterly financial
performance. The Company continues to pursue large billing verification
contracts, but is unable to predict the success of its efforts in this area.
The Company is currently evaluating the strategic significance of its
telecommunications management business, and because of the inconsistent
results experienced during the last twelve months, may choose to sell or
otherwise dispose of this business unit.
Cost of system sales increased $1,607,000, or 26.4%, for the three months
ended September 30, 1997 and $4,650,000, or 24.2%, for the nine months ended
September 30, 1997. As a percentage of system sales, actual costs increased to
47.4% from 41.9% for the three months ended September 30, and increased to 45.8%
from 43.3% for the nine months ended September 30, 1997. Actual costs increased
due primarily to an increase in the number of systems shipped by the Company.
The increases as a percentage of revenues are due primarily to an increase in
pass through sales, a decline in software content and a greater presence of
international sales, which have historically had lower gross margins than
domestic sales.
Cost of services revenues increased $1,791,000, or 31.2%, for the three
months ended September 30, 1997 and $3,903,000, or 22.1%, for the nine months
ended September 30, 1997. As a percentage of services revenues, actual costs
increased to 57.2% from 53.2% for the three months ended September 30, and
increased to 57.6% from 49.7% for the nine months ended September 30, 1997.
These increases were due primarily to an expansion of the infrastructure of
the telecommunications management services departments. The decline in margins
was due principally to a shift in the revenue mix from predominantly billing
verification revenues to lower margin outsourcing and software services
revenue.
Research and engineering expenses increased $390,000, or 13.2%, for the
three months ended September 30, 1997 and $1,422,000, or 17.2%, for the nine
months ended September 30, 1997. The increase in actual expenditures is due to
an increase in staff dedicated to designing new products and enhancing existing
products. As a percentage of revenue, these expenses decreased to 11.3% from
11.6% for the three months ended September 30 and increased to 10.8% from 10.4%
for the nine months ended September 30, 1997. The Company believes that it must
continue to increase spending on research and engineering activities in absolute
terms in order to remain competitive in the voice response market. Such
expenses could continue to increase as a percentage of revenues as well.
Selling, general and administrative expenses increased $1,454,000, or
15.7%, for the three months ended September 30, 1997 and $6,981,000, or 27.0%,
for the nine months ended September 30, 1997. The increase in actual
expenditures is primarily due to the relocation of the European facility in
October 1996, the expansion of the European sales and administration staff and
the addition of offices in France and Denmark. As a percentage of revenues,
these expenses declined slightly to 36.4% from 36.5% for the three months ended
September 30, 1997, and increased to 36.6% from 32.3% for the nine months ended
September 30, 1997. The Company continues to expand its international and
domestic sales and marketing efforts.
The Company has recorded charges of $1,543,000 for the three months and
$8,328,000 for the nine months ended September 30, 1997, related to the
restructuring of the Company's operations and the relocation of its headquarters
to Orlando, Florida. Included in the charge was approximately $3,327,000 in
asset impairments as a result of the Company's decision to discontinue certain
product lines and abandon certain assets, and the reevaluation of the net
realizable value of certain intangible assets. The Company also recorded
severance costs of approximately $1,243,000 relating to the elimination of
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<PAGE>
certain product lines, the closing of its Dallas, Texas facility and the
transfer of certain functions from its facilities in Wichita, Kansas, and
Boston, Massachusetts to its new headquarters in Orlando. Additionally, costs
consisting principally of moving expenses, consulting costs, temporary labor
and travel amounted to approximately $3,758,000 during the nine months ended
September 30, 1997.
The effective income tax rates for the three months and nine months ended
September 30, 1997 resulted in a benefit of 29.9% and 31.4% of the loss before
income taxes, respectively. The variances from the United States statutory rate
are due primarily to net operating losses offset by certain relocation charges
that may not be deductible for tax purposes. The effective tax rates for the
three months and nine months ended September 30, 1996 was 25.3% and 27.6%,
respectively. The variance from the United States statutory rate was primarily
due to a reduction of the Company's deferred tax valuation allowance and
utilization of net operating losses and credit carryforwards acquired through
the Company's 1993 merger with Perception Technology Corporation.
On September 23, 1997, the Company entered into an Asset Purchase Agreement
with IT Network, Inc. pursuant to which the Company would sell certain assets
used in its electronic publishing business for $35,000,000 to be paid in cash
upon closing of the transaction. The business sold includes: i) the management
of audiotex systems installed on customers' premises; ii) the creation and
transmission by satellite of information for access by telephone callers; iii)
the creation and provision of a variety of information for yellow pages
publishers over the Internet; iv) the sale of advertising sponsorships to
various categories of audiotex information made available through yellow pages
publishers' audiotex systems and v) advertiser management services provided on
behalf of yellow pages publishers whereby advertising entities are contacted
from an outbound call center for periodic updating of their audiotex
sponsorships and advertisements. This transaction was consummated on October
30, 1997. Revenues related to the businesses being sold were $3,344,000 for the
three months and $9,743,000 for the nine months ended September 30, 1997, and
are included as "Services Revenues" in the accompanying financial statements.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had a current ratio of 2.1 to 1, and
working capital of $33,403,000, compared to a current ratio of 2.8 to 1 and
working capital of $37,558,000 at December 31, 1996.
Cash flows from operating activities utilized net cash of $7,798,000 for
the nine months ended September 30, 1997. Accounts receivable at September 30,
1997 increased by $4,213,000 compared to December 31, 1996, principally due to
an increase in international sales, which typically have longer payment and
collection cycles. Inventory increased by $2,260,000, primarily due to the
backlog of orders that will be recognized in future periods. The Company
believes the increase in each of these areas to be in line with the revenue
growth experienced during the nine months ended September 30, 1997, and the
backlog of orders at the end of the quarter. The cash utilization was funded by
the available cash of $8,082,000 at December 31, 1996 plus short-term borrowings
of $6,751,000.
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 liquidity, to the extent that cash requirements
exceed short-term cash receipts.
-13-
<PAGE>
The Company maintains a $10,000,000 line of credit that is used from time
to time to fund short-term cash requirements. Borrowings of $6,751,000 were
outstanding under the line as of September 30, 1997.
The Company consummated the sale of certain assets of its electronic
publishing division on October 30, 1997. Proceeds from the sale were
$35,000,000, a portion of which will be used to retire the short-term borrowings
under the Company's unsecured line of credit. The remainder of the funds will
be added to working capital and used for general corporate purposes.
The Company has committed to constructing a hardware platform capable of
providing certain of its products on a managed services basis. Costs estimated
to complete this platform are between $3,000,000 and $4,000,000. The Company
has funded these capital requirements through a combination of operating and
financing leases. The Company has no other significant capital commitments, and
believes that current working capital, funds from the sale of certain assets of
the electronic publishing division and future operations will be sufficient to
fund the Company's capital requirements for at least the next twelve months.
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.
CERTAIN FACTORS TO BE CONSIDERED
The Company has historically operated with very little backlog. There are
no long-term supply agreements with customers and, as a result, revenues in any
quarter are dependent upon orders that are received and shipped during the
quarter. Further, a large percentage of any quarter's system shipments are
recorded in the last month of the quarter. Consequently, quarterly revenues and
operating results will depend on the volume and timing of new orders received
during a quarter, which are difficult to predict. Failure to receive adequate
amounts of new orders could adversely affect revenues and operating results, and
such shortfalls may not be known until very late in any quarter.
The Company faces a number of risks in conducting its international
business that do not affect its domestic business, including greater
concentration of business with fewer customers, longer payment cycles, greater
difficulty in accounts receivable collection and difficulty in staffing and
managing foreign subsidiary operations. Installation of the Company's products
outside the United States requires that the Company conform to local telephone
and electrical regulations. The Company has traditionally relied on its
suppliers to obtain the necessary registrations in order for the Company to
install products within specific countries. There can be no assurance that
these factors will not have an adverse impact on the Company's future
international sales or operating results.
The voice processing industry is subject to rapid technological change,
including continuing improvements in hardware and software performance. In
order to maintain its competitive position, the Company must continually release
new products and develop enhancements and new features for its existing products
on a timely basis. There can be no assurance that the Company will be
successful in developing and marketing, on a timely basis, product modifications
or enhancements, or new products that respond to technological advances by
others, or that such new or enhanced products or features will adequately and
competitively address the needs of the marketplace. Because of the increasing
complexity of the Company's products, these efforts can be expected to continue
to increase in technical
-14-
<PAGE>
difficulty. Moreover, the Company must manage product transitions
successfully, since announcements or introductions, or the perception that
such events are likely to occur, by either the Company or its competitors,
could adversely affect sales of existing products. In recent months, the
Company has dedicated much of its engineering capacity to the development of a
prepaid calling platform to be offered by a large customer on a service bureau
basis. The dedication of substantial resources to this project may adversely
affect the Company's ability to obtain and complete other development projects.
The Company recently relocated its corporate headquarters and certain sales
and marketing functions to Orlando, Florida, and has experienced anticipated
disruptions in its operations in the process. It is possible that these
disruptions could lead to delays in the development or delivery of new products
and that customer dissatisfaction could result. In addition, it is possible
that actual relocation costs will exceed those projected.
The Company's success is largely dependent upon its ability to attract and
retain qualified employees, especially technical employees and executives.
There exists substantial competition for highly qualified personnel and there
can be no assurance that the Company will be successful in hiring and retaining
the required personnel. The Company has experienced some attrition in its work
force as a result of the relocation of its headquarters to Orlando.
For quality control, ease of development and purchasing efficiencies, the
Company has elected to purchase certain components from one supplier. Although
the Company has been able to obtain supplies of these components in a timely
manner, the interruption in supply of any of these components could have an
adverse impact on the Company's revenues and operating results. While the
Company believes that other suppliers could provide required components in the
event of an interruption in supply, a change in suppliers could cause a delay in
manufacturing and a possible loss of sales, which would adversely affect
operating results.
The Company has periodically received, and may receive in the future,
communications from third parties asserting patent rights or copyrights on
certain of the Company's products and product features. The Company believes
that its products and other proprietary rights do not infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not assert infringement claims against the Company in the future, or that
any such claims will not require the Company to enter into license arrangements
or result in protracted and costly litigation, regardless of the merits of such
claims. There also can be no assurance that the Company will be able to obtain
licenses to disputed third party technology or that such licenses, if available,
would be available on commercially reasonable terms.
The market for the Company's stock is highly volatile. Any variance in
operating results from analysts' expectations or changes in estimated results by
industry analysts could have an adverse affect on the trading price of the
Company's common stock in a given period. Furthermore, in recent years the
market prices of securities of many high technology companies have experienced
extreme fluctuations, in many cases for reasons unrelated to the operating
performance of the specific companies. These broad market fluctuations may
adversely affect the market price of the Company's common stock.
-15-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.1 - Employment Agreement dated July 1, 1997 between the
Company and Donald R. Walsh.
Exhibit 10.2 - Employment Agreement dated July 23, 1997 between the
Company and Ray S. Naeini.
Exhibit 10.3 - Amendment to Employment Agreement dated June 1, 1997
between the Company and Alan C. Maltz.
Exhibit 27 - Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
-16-
<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 12, 1997
BRITE VOICE SYSTEMS, INC.
/S/ GLENN A. ETHERINGTON
-----------------------------------------
Glenn A. Etherington
Chief Financial Officer
Duly Authorized Officer on behalf of the
Registrant
-17-
<PAGE>
INDEX TO EXHIBITS
Exhibit 10.1 Employment Agreement dated July 1, 1997 between the Company and
Donald R. Walsh
Exhibit 10.2 Employment Agreement dated July 23, 1997 between the Company and
Ray S. Naeini
Exhibit 10.3 Amendment to Employment Agreement dated June 1, 1997 between the
Company and Alan C. Maltz
Exhibit 27 Financial Data Schedule
<PAGE>
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is made and entered into this 1st
day of July, 1997, by and between Donald R. Walsh ("Employee") and Brite Voice
Systems, Inc. ("Brite").
WHEREAS, Brite has elected to relocate Employee to its new headquarters
facility in Heathrow, Florida; and
WHEREAS, Brite wishes to provide certain inducements to Employee to
relocate to Brite's Heathrow, Florida area headquarters;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the covenants
and obligations herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES. From and after July 1, 1997, ("Commencement
Date") Brite shall employ Employee as Executive Vice President. Employee shall
report to Brite's President or as the President may otherwise direct. Employee
shall use his best and most diligent efforts on a full time, exclusive basis to
promote the best interests of Brite.
2. COMPENSATION AND BENEFITS.
A. SALARY. Employee's initial annual salary shall be $176,400 ("Base
Salary") payable pursuant to Brite's customary payroll policies in force at
the time of payment.
B. BONUS. For each year of employment commencing with calendar year
1997, Employee will be entitled to participate in an incentive compensation
program which shall be based on the performance of Employee measured
against performance targets established for Employee. For calendar year
1997, such bonus program shall provide for aggregate bonus compensation of
(See attachment) if targeted performance is attained, and additional bonus
compensation, not to exceed an additional (See attachment) upon the
attainment of performance levels above the target performance goal. For
years subsequent to calendar year 1997, Employee will be entitled to
participate in such incentive compensation programs as shall be established
for other employees of Brite holding positions of similar responsibility.
C. BENEFITS. Employee will be entitled to participate in Brite's
standard benefits provided to other employees having similar
responsibilities with Brite, as established and/or modified by Brite from
time to time, including, but not limited to, paid vacation time, life
insurance, health insurance and dental insurance.
D. BUSINESS EXPENSES. Pursuant to Brite's customary policies in force at
the time of payment, employee shall be promptly reimbursed against
presentation of vouchers or receipts, for all authorized expenses properly
incurred by him in the performance of his duties hereunder.
1
<PAGE>
3. TERM AND TERMINATION.
A. TERM. Employee's employment with Brite pursuant to this Agreement
shall begin on the Commencement Date and shall extend to the first
anniversary of the date on which Employee has assumed his responsibilities
at Brite's headquarters facility in Heathrow, Florida (the "Employment
Period"), subject to earlier termination as provided elsewhere herein.
B. TERMINATION FOR CAUSE. If Employee's employment is terminated during
the Employment Period and such termination is a termination for Cause,
Employee shall be entitled to payment of his Base Salary to the date of
termination, accrued bonus (if any) and benefits existing at the time of
termination of his employment. Termination for Cause means one or more of:
(I) voluntary termination of employment by Employee for any reason; (ii)
the death of Employee; (iii) Employee having been unable to render services
required of him hereunder for a consecutive period of six months in any
twelve month period because of a serious and continuing health impairment,
which impairment will most likely result in Employee's continued inability
to render the services required of him hereunder; (iv) Employee's
misappropriation of corporate funds; (v) Employee's conviction of a felony;
(vi) Employee's conviction of any crime involving theft, dishonesty, or
moral turpitude; (vii) Employee's failure to devote substantially his full
business time to Brite as provided in Section 1 hereof; (viii)
falsification of any material representation made by Employee to Brite; or
(ix) the commission by Employee of a material breach of the terms of this
Agreement.
C. TERMINATION OTHER THAN FOR CAUSE. If Employee's employment with Brite
is terminated and such termination is not a Termination for Cause, Employee
shall be entitled to (I) the greater of the aggregate amount of Base Salary
and bonus due to Employee through the end of the Employment Period or (ii)
severance pay according to Brite's severance policy then in effect, plus
that portion of Employee's Base Salary, bonus and benefits that had accrued
as of the termination date. The foregoing payments and benefits shall
constitute full satisfaction of any and all payments or benefits that might
otherwise be due Employee hereunder.
4. RELOCATION EXPENSES. Employee shall receive relocation expenses
reimbursements in accordance with the relocation plan summary previously
provided to Employee. All unearned payments of relocation expenses made by
Brite, either directly to third party providers or reimbursements made to the
Employee, shall be reimbursed to Brite by Employee in the event that Employee's
employment is terminated prior to the end of the Employment Period, and such
termination is a voluntary termination of employment by the Employee.
Relocation expenses will be deemed earned by Employee according to the following
schedule:
<TABLE>
<CAPTION>
Employment for Not Less Than Percent Earned
---------------------------- --------------
<S> <C>
6 months 50%
9 months 75%
12 months 100%
</TABLE>
2
<PAGE>
With respect to any calculation of the number of months of Employee's employment
for purposes of this Section 4, the first day of Employee's employment at the
Heathrow headquarters shall be the beginning date and the corresponding day in
each succeeding month shall constitute one month of employment.
If Employee is required to make reimbursement to Brite as provided herein, any
such amount may be deducted by Brite from the last paycheck or any other amounts
owed by Brite upon Employee's Termination. To the extent such amounts are
insufficient, Employee agrees to pay to Brite any remaining unpaid relocation
expenses required to be reimbursed hereunder.
5. NOTICES. Any notice permitted or required to be given under this
Agreement shall be sufficient if in writing and delivered personally or by
registered mail return receipt requested, if to Employee, at his residence
address as reflected in Brite's records, and if to Brite, to the attention of
President, Brite Voice Systems, Inc., 250 International Parkway,Suite 300,
Heathrow, Florida 32779. A party may change its address for receipt of notices
by complying with this section.
6. NON-DISCLOSURE OF TERMS. The terms of this Agreement are to be kept
confidential by Employee and shall not be disclosed by Employee to any third
party without the express written consent of Brite. Any breach of the preceding
sentence shall terminate Employee's right, if any, to receive payment under
Section 3(C)(i).
7. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties in respect of its subject matter and supersedes all prior agreements
and understandings between the parties with respect to such subject matter;
provided, however, that the terms of any Confidentiality and Non-compete
Agreement heretofore entered into between the Employee and Brite shall remain in
effect unless expressly amended by the terms of a written agreement between the
Employee and Brite.
8. AMENDMENT: WAIVER. This Agreement may not be amended, supplemented,
canceled or discharged except by written instrument executed by the party
affected thereby. No failure to exercise, and no delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof. No
waiver of any provision of this agreement shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision.
9. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind an inure to the benefit of successor of Brite by
reorganization, merger or consolidation or any assignee of all or substantially
all of Brite's business and properties. Employee's rights or obligations under
this agreement may not be assigned by Employee, except that upon Employee's
death, all right to compensation hereunder shall pass to Employee's executor or
administrator.
10. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11. GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance with, and governed for all purposes by, the laws and public policy of
the State of Florida applicable to contracts executed and to be wholly performed
within such State.
3
<PAGE>
12. FURTHER ASSURANCES. Each of the parties agrees to execute,
acknowledge, deliver and perform, and/or cause to be executed, acknowledged,
delivered and performed, at any time and/or from time to time, as the case may
be, all such further acts, documents, transfers, conveyances, and/or assurances
as may be necessary and/or proper to carry out the provisions and/or intent of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective the date first above written.
BRITE VOICE SYSTEMS, INC.
By: /s/ D. S. Gergacz
-----------------------------------------
Name: D. S. Gergacz
---------------------------------------
Title: CEO
--------------------------------------
EMPLOYEE
By: /s/ Donald R. Walsh
-----------------------------------------
Name: Donald R. Walsh
---------------------------------------
4
<PAGE>
EMPLOYMENT AGREEMENT
THIS Employment Agreement ("Agreement") is made and entered into this 23 day of
July, 1997, by and between Ray S. Naeini ("Employee") and Brite Voice Systems,
Inc. ("Brite").
WHEREAS, Brite has elected to relocate Employee to its new headquarters
facility in Heathrow, Florida; and
WHEREAS, Brite wishes to provide certain inducements to Employee to
relocate to Brite's Heathrow, Florida area headquarters;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the covenants
and obligations herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES. From and after August 1, 1997,
("Commencement Date") Brite shall employ Employee as Senior Vice President &
General Manager of Network Services. Employee shall report to Brite's President
or as the President may otherwise direct. Employee shall use his best and most
diligent efforts on a full time, exclusive basis to promote the best interests
of Brite.
2. COMPENSATION AND BENEFITS.
A. SALARY. Employee's initial annual salary shall be $165,000 ("Base
Salary") payable pursuant to Brite's customary payroll policies in force at
the time of payment.
B. BONUS. For each year of employment commencing with calendar year
1997, Employee will be entitled to participate in an incentive compensation
program which shall be based on the performance of Employee measured
against performance targets established for Employee. For calendar year
1997, such bonus program shall provide for aggregate bonus compensation of
(See attachment) if targeted performance is attained, and additional bonus
compensation, not to exceed an additional (See attachment) upon the
attainment of performance levels above the target performance goal. For
years subsequent to calendar year 1997, Employee will be entitled to
participate in such incentive compensation programs as shall be established
for other employees of Brite holding positions of similar responsibility.
C. BENEFITS. Employee will be entitled to participate in Brite's standard
benefits provided to other employees having similar responsibilities with
Brite, as established and/or modified by Brite from time to time,
including, but not limited to, paid vacation time, life insurance, health
insurance and dental insurance.
1
<PAGE>
D. BUSINESS EXPENSES. Pursuant to Brite's customary policies in force at
the time of payment, employee shall be promptly reimbursed against
presentation of vouchers or receipts, for all authorized expenses properly
incurred by him in the performance of his duties hereunder.
3. TERM AND TERMINATION.
A. TERM. Employee's employment with Brite pursuant to this
Agreement shall begin on the Commencement Date and shall extend to the
first anniversary of the date on which Employee has assumed his
responsibilities at Brite's headquarters facility in Heathrow, Florida (the
"Employment Period"), subject to earlier termination as provided elsewhere
herein.
B. TERMINATION FOR CAUSE. If Employee's employment is terminated during
the Employment Period and such termination is a termination for Cause,
Employee shall be entitled to payment of his Base Salary to the date of
termination, accrued bonus (if any) and benefits existing at the time of
termination of his employment. Termination for Cause means one or more of:
(I) voluntary termination of employment by Employee for any reason; (ii)
the death of Employee; (iii) Employee having been unable to render services
required of him hereunder for a consecutive period of six months in any
twelve month period because of a serious and continuing health impairment,
which impairment will most likely result in Employee's continued inability
to render the services required of him hereunder; (iv) Employee's
misappropriation of corporate funds; (v) Employee's conviction of a felony;
(vi) Employee's conviction of any crime involving theft, dishonesty, or
moral turpitude; (vii) Employee's failure to devote substantially his full
business time to Brite as provided in Section 1 hereof; (viii)
falsification of any material representation made by Employee to Brite; or
(ix) the commission by Employee of a material breach of the terms of this
Agreement.
C. TERMINATION OTHER THAN FOR CAUSE. If Employee's employment with Brite
is terminated and such termination is not a Termination for Cause, Employee
shall be entitled to (I) the greater of the aggregate amount of Base Salary
and bonus due to Employee through the end of the Employment Period or (ii)
severance pay according to Brite's severance policy then in effect, plus
that portion of Employee's Base Salary, bonus and benefits that had accrued
as of the termination date. The foregoing payments and benefits shall
constitute full satisfaction of any and all payments or benefits that might
otherwise be due Employee hereunder.
4. RELOCATION EXPENSES. Employee shall receive relocation expenses
reimbursements in accordance with the relocation plan summary previously
provided to Employee. All unearned payments of relocation expenses made by
Brite, either directly to third party providers or reimbursements made to the
Employee, shall be reimbursed to Brite by Employee in the event that Employee's
employment is terminated prior to the end of the Employment Period, and such
termination is a voluntary termination of employment by the Employee.
Relocation expenses will be deemed earned by Employee according to the following
schedule:
2
<PAGE>
<TABLE>
<CAPTION>
Employment For Not Less Than Percent Earned
---------------------------- --------------
<S> <C>
6 months 50%
9 months 75%
12 months 100%
</TABLE>
With respect to any calculation of the number of months of Employee's employment
for purposes of this Section 4, the first day of Employee's employment at the
Heathrow headquarters shall be the beginning date and the corresponding day in
each succeeding month shall constitute one month of employment.
If Employee is required to make reimbursement to Brite as provided herein, any
such amount may be deducted by Brite from the last paycheck or any other amounts
owed by Brite upon Employee's Termination. To the extent such amounts are
insufficient, Employee agrees to pay to Brite any remaining unpaid relocation
expenses required to be reimbursed hereunder.
5. NOTICES. Any notice permitted or required to be given under this
Agreement shall be sufficient if in writing and delivered personally or by
registered mail return receipt requested, if to Employee, at his residence
address as reflected in Brite's records, and if to Brite, to the attention of
President, Brite Voice Systems, Inc., 250 International Parkway, Suite 300,
Heathrow, Florida 32779. A party may change its address for receipt of notices
by complying with this section.
6. NON-DISCLOSURE OF TERMS. The terms of this Agreement are to be kept
confidential by Employee and shall not be disclosed by Employee to any third
party without the express written consent of Brite. Any breach of the preceding
sentence shall terminate Employee's right, if any, to receive payment under
Section 3(C)(i).
7. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties in respect of its subject matter and supersedes all prior
agreements and understandings between the parties with respect to such subject
matter; provided, however, that the terms of any Confidentiality and Non-compete
Agreement heretofore entered into between the Employee and Brite shall remain in
effect unless expressly amended by the terms of a written agreement between the
Employee and Brite.
8. AMENDMENT: WAIVER. This Agreement may not be amended, supplemented,
canceled or discharged except by written instrument executed by the party
affected thereby. No failure to exercise, and no delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof. No
waiver of any provision of this agreement shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision.
9. BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind an inure to the benefit of successor of Brite by
reorganization, merger or consolidation or any assignee of all or substantially
all of Brite's business and properties. Employee's rights or
3
<PAGE>
obligations under this agreement may not be assigned by Employee, except that
upon Employee's death, all right to compensation hereunder shall pass to
Employee's executor or administrator.
10. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11. GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with, and governed for all purposes by, the laws and public policy
of the State of Florida applicable to contracts executed and to be wholly
performed within such State.
12. FURTHER ASSURANCES. Each of the parties agrees to execute,
acknowledge, deliver and perform, and/or cause to be executed, acknowledged,
delivered and performed, at any time and/or from time to time, as the case may
be, all such further acts, documents, transfers, conveyances, and/or assurances
as may be necessary and/or proper to carry out the provisions and/or intent of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective the date first above written.
BRITE VOICE SYSTEMS, INC.
By: /s/ D. S. Gergacz
-----------------------------------------
Name: D. S. Gergacz
---------------------------------------
Title: CEO
--------------------------------------
EMPLOYEE
By: /s/ Ray S. Naeini
-----------------------------------------
Name: Ray S. Naeini
---------------------------------------
4
<PAGE>
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment"), is made and entered
into effective this 1st day of June, 1997, by and between ALAN C. MALTZ
("Employee") and BRITE VOICE SYSTEMS, INC., a Kansas corporation ("Brite").
WHEREAS, Brite and Employee entered into an Employment Agreement dated
August 9, 1995 ("Agreement"), and,
WHEREAS, Brite and Employee desire to amend the Agreement as set forth in
this Amendment.
NOW, THEREFORE, in consideration of the premises, covenants and conditions
contained herein, the parties agree as follows:
1. All terms and conditions of the Agreement shall remain in full force
and effect, unless expressly changed by this Amendment.
2. All definitions contained in the Agreement shall be incorporated into
and have the same meanings in this Amendment.
3. Section 1 of the Agreement shall be modified to provide that Employee
shall devote at least 20 hours per week to the business and affairs of Brite.
4. The salary amount set forth in Section 2.1 as Employee's Base Pay
shall be modified so that, as of June 1, 1997, Employee's Base Pay is an annual
rate of $107,625.
5. Any incentive compensation owed under Section 2.2 of the Agreement
shall be paid at the rate of fifty percent (50%) of the amount of incentive
compensation that would have been payable under the Agreement.
<PAGE>
6. Section 2.4 of the Agreement is amended to provide that Employee's car
allowance shall be paid at the rate of fifty percent (50%) of the amount that
would have been payable under the Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
BRITE VOICE SYSTEMS, INC.
By /s/ David S. Gergacz
---------------------------------
David S. Gergacz
President
/s/ Alan C. Maltz
---------------------------------
ALAN C. MALTZ
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 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-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,561
<SECURITIES> 0
<RECEIVABLES> 38,436
<ALLOWANCES> 824
<INVENTORY> 13,763
<CURRENT-ASSETS> 62,391
<PP&E> 27,180
<DEPRECIATION> 13,428
<TOTAL-ASSETS> 78,123
<CURRENT-LIABILITIES> 28,988
<BONDS> 0
0
0
<COMMON> 39,190
<OTHER-SE> 9,945
<TOTAL-LIABILITY-AND-EQUITY> 78,123
<SALES> 16,243
<TOTAL-REVENUES> 29,427
<CGS> 7,700
<TOTAL-COSTS> 30,833
<OTHER-EXPENSES> 24
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,382)
<INCOME-TAX> (414)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (968)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0
</TABLE>
