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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 1)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO
SECTION 14(d)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
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BRITE VOICE SYSTEMS, INC.
(Name of Subject Company)
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BRITE VOICE SYSTEMS, INC.
(Name of Person Filing Statement)
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COMMON STOCK, NO PAR VALUE PER SHARE
(Title of Class of Securities)
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110411105
(CUSIP Number of Class of Securities)
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GLENN A. ETHERINGTON
CHIEF FINANCIAL OFFICER
BRITE VOICE SYSTEMS, INC.
250 INTERNATIONAL PARKWAY, SUITE 300
HEATHROW, FLORIDA 32746
(407) 357-1000
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person Filing Statement)
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Copies to:
THOMAS P. GARRETSON
TRIPLETT, WOOLF & GARRETSON, LLC
2959 N. ROCK ROAD, SUITE 300
WICHITA, KANSAS 67226
(316) 630-8100
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THIS AMENDMENT AMENDS AND SUPPLEMENTS THE SOLICITATION/RECOMMENDATION STATEMENT
ON SCHEDULE 14D-9 DATED MAY 3, 1999, OF BRITE VOICE SYSTEMS, INC. (THE
"COMPANY") FILED IN CONNECTION WITH THE TENDER OFFER STATEMENT ON SCHEDULE 14D-1
OF INTERVOICE ACQUISITION SUBSIDIARY III, INC. (THE "PURCHASER") TO PURCHASE
9,158,155 SHARES OF COMMON STOCK, NO PAR VALUE (THE "SHARES") OF THE COMPANY AS
SET FORTH IN THE OFFER TO PURCHASE. THE PURPOSE OF THIS AMENDMENT IS TO CLARIFY
THE DESCRIPTION OF THE NEGOTIATIONS LEADING TO THE EXECUTION OF THE MERGER
AGREEMENT AND THE DESCRIPTION OF THE CONSIDERATION TO BE RECEIVED IN THE MERGER.
CAPITALIZED TERMS NOT DEFINED HEREIN HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN
THE SCHEDULE 14D-9 STATEMENT DATED MAY 3, 1999.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The 25th paragraph of Item 4 -- "The Solicitation or Recommendation" -- (b)
"Background Reasons for the Board of Directors' Recommendations", is amended and
restated as follows:
On April 21, 1999, noting recent movements in Parent's stock price, Mr.
Brannan contacted Mr. Hammond and indicated that a proposal made on April 18,
1999, which would have fixed the exchange value of the Parent Common Stock at
$12 rather than its actual trading price for purposes of computing the exchange
ratio of the Shares for Parent Common Stock in the Merger, would not be
acceptable. After a lengthy discussion among Mr. Hammond, Mr. Graham, Mr.
Brannan and Mr. Etherington, it was agreed that the price to be paid to AT&T to
cancel the Warrant, which was not acceptable to AT&T unless it was at least
$7,500,000, was an unanticipated additional cost of the transaction which would
be split, in part, by the two companies, resulting in a revised offer price of
$13.40 per Share. Based on 12,271,928 shares outstanding, Parent agreed to pay
$122,719,280 to purchase 9,158,155 shares in the tender offer, with the balance
of the Shares to be acquired in the Merger in exchange for Parent Common Stock.
Additionally, the executives agreed to recommend a collar between $8 per share
and $14 per share, which was centered around the trailing 25-day average price
of approximately $11 per share for the Parent Common Stock. The $8 lower collar
was fixed at that level in order to insure that Parent would not be required to
issue more than 20% of its outstanding Parent Common Stock. Under Nasdaq listing
standards, Parent would be required to obtain approval of its shareholders if
the transaction were to require Parent to issue more than 20% of its outstanding
stock. Both companies believed that the potential delay occasioned by such
approval would create an additional element of uncertainty to the proposed
transaction that was unacceptable.
The $8 lower collar also assumed that all outstanding options to purchase
Common Stock under the Company's stock option plans would be repurchased by the
Company prior to exercise. However, if the Company is unable to repurchase all
outstanding stock options and their exercise by optionees prior to the Effective
Time would require that Parent issue more than 20% of its outstanding Parent
Common Stock, the parties agreed that the $8 lower collar would be adjusted
upwards so that the maximum number of Shares required to be issued in such event
would be 5,719,877, representing approximately 19.9% of the outstanding Parent
Common Stock. If the Purchaser elected to waive the Minimum Condition and
purchase less then 9,158,155 shares in the Offer, the cash not used in the Offer
would then be applied to the purchase of the remaining Shares outstanding on a
prorata basis and the exchange ratio would be adjusted to take into account the
amount of cash to be distributed per Share in determining the number of shares
of Parent Common Stock to be issued in the Merger. It was understood that if the
value of Parent Common Stock is ultimately established below $8 per share or the
value is near $8 per share and the Company is unable to obtain cancellation of
substantially all of the outstanding stock options, the Merger Consideration
would be adversely impacted. Although the formulas proposed for the calculation
of the Merger Consideration created uncertainty as to the ultimate consideration
to be received in the Merger, the Company's management agreed that they were
necessary considering the necessity for maintaining the cash and stock portions
of the aggregate consideration at fixed levels.
The Company believes that the description of the Merger Consideration set
forth in the Supplement to the Offer to Purchase dated May 14, 1999, accurately
describes the parties' mutual understanding of the types and amounts of the
consideration to be delivered in the Merger, and encourages all stockholders to
read the Supplement in its entirety.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
Exhibit 11 -- Transcript of InterVoice, Inc./Brite Voice Systems, Inc.
Conference Call on April 27, 1999
</TABLE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Brite Voice Systems, Inc.
By /s/ STANLEY G. BRANNAN
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Stanley G. Brannan
Chairman, President and
Chief Executive Officer
Dated: May 14, 1999
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<C> <S>
Exhibit 11 -- Transcript of InterVoice, Inc./Brite Voice Systems, Inc.
Conference Call on April 27, 1999
</TABLE>
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EXHIBIT 11
TRANSCRIPT OF INTERVOICE, INC./BRITEVOICE SYSTEMS, INC.
CONFERENCE CALL ON APRIL 27, 1999
ROB GRAHAM: Hello, I'm Rob Graham, CFO of InterVoice. This conference
call has been arranged to discuss the merger of InterVoice and
Brite Voice Systems. With me are Stan Brannan, Brite's
Chairman and CEO, Dan Hammond, InterVoice's Chairman and CEO,
Dave Berger, InterVoice's President and Chief Operating
Officer and Glenn Etherington, Brite's CFO. Stan, Dan, Dave
and I will make comments about the InterVoice Brite merger
after which we along with Glenn will take questions for as
long as time allows. But before we start I would like to
remind you that our comments and responses may contain
forward-looking statements which are subject to the risks and
uncertainties which both our companies have detailed in our
various SEC filings. These risks and uncertainties are such
that actual results could be different from what we discuss
today. This concludes the introduction to this call. I will be
back a bit later on with comments on the financial aspects of
the transaction. Now let me turn the mike over to Dan Hammond.
DAN HAMMOND: Thanks Rob. The merging of InterVoice and Brite creates a
clear leader in the call automation industry. Consolidation of
operations will facilitate a significant increase in leverage
of our combined infrastructure and R&D resources. This
provides a worldwide platform for growth eliminating duplicate
efforts and enabling a major increase of our investment in
emerging technology such as internet telephony, speech
recognition and new phone-based prepaid services. Our combined
revenue provides a well balanced mix between CPE and Telco,
domestic and international as well as products and managed
services. The merger will create a stronger resulting company
which we plan to call InterVoice Brite. This strength will
provide benefits to our investors, customers and employees.
First, our investors. We believe market leadership along with
the increased resource leverage will generate faster top line
growth along with EPS growth. Our decision to use debt as the
primary vehicle to facilitate this transaction was driven by
several factors including the current valuation of InterVoice
shares. We will begin reducing debt with cash flow from day
one and eliminate it in about two and a half years. While
currently debt provides greater EPS performance, we'll
consider converting to equity when market conditions are more
favorable and only if it would be nondilutive. Second, our
customers. Our product plan secures customers' investment in
both the InterVoice and Brite
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product lines. CPE and Telco customers have large investments
in their existing solutions and applications. Over the course
of the next two quarters, we'll provide product bridges
allowing our combined installed base to benefit from new
technology such as hands-free IVR and internet telephony.
Third, employees, our most valuable resource. Both InterVoice
and Brite have spent the better part of the last decade
building world class teams of computer telephony
professionals. We believe InterVoice Brite will provide
opportunities which will continue to retain and attract the
best and brightest for continued success going forward. As of
today we have an organization plan for the combined companies.
This plan was jointly developed by senior management from
InterVoice and Brite. Every employee deserves to know their
role going forward and those whose jobs are redundant as a
result of this merger deserve to know that as well. Suffice it
to say, we will hit the ground running when the transaction is
complete with all employees fully energized knowing their role
in the new organization. In summary, this is a defining event
in our industry. InterVoice Brite is a clear industry leader.
We will provide the best value for our investors, innovative
products and services for our customers and career challenges
and opportunities for our employees. Now over to Stan Brannan.
STAN BRANNAN: Thanks Dan. Today is a very significant day for all Brite
shareholders, customers and employees. As Brite's founder,
chairman, CEO and the second largest shareholder, I can say I
fully support the tender offer announced today by InterVoice.
I agree with Dan Hammond that this combination will create a
much stronger company and a global leader. Brite and
InterVoice are very complementary companies. We develop very
similar technology solutions and we sell in similar
marketplaces. When you study the details it becomes clear that
these two companies bring a lot of synergy to their combined
mission. Brite continues to be successful by growing our share
of the global Telco market and we continue to build
significant recurring service business using our technology
experience. We are also very successful in the high end of the
interactive voice response market. Upon analyzing our product
and marketing strengths it became clear that Brite and
InterVoice don't directly compete on most sales opportunities.
We actually serve strong separate customer lists with our own
unique platforms, products and services. We do see
opportunities to cross sell products in different markets
where the sales force of Brite or InterVoice is stronger. This
means that some Brite products will have better sales in
markets where today we don't have the best sales coverage. And
it also means that InterVoice products can be sold in markets
where Brite has a
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strong marketing presence but may not have the platform or
application the customer wants. We will combine our global
marketing efforts, support organizations and our product
development programs. This will create the opportunity for
more rapid growth and better operating margins for the
combined company. By increasing our total resources we can
compete for much larger opportunities. Brite has an
outstanding employee and management team with years of
experience and a track record of bringing important innovative
new products to our customers. By combining our employee team
with InterVoice we will be able to offer customers a more
comprehensive catalog of applications and product solutions.
We will offer better global customer support and almost double
the size and scope of our product development effort.
Employees will have increased opportunities for growth and
responsibility with the combined company. Shareholders should
benefit from sales synergies and the improvement and
efficiencies gained by combining these two similar companies.
The management teams have reviewed the plan for merger and
have identified numerous opportunities to improve operations
and save costs. Once the tender offer is successful we expect
to be ready to implement the integration plan quickly and
generate the synergies and the savings. I think it is a very
well thought out plan. I agree with Dan that the employees
will have a better company to work for with more
opportunities. The combination will eliminate some duplicated
positions and we will be communicating directly with these
employees as quickly as possible. Our goal is to make sure the
combined employee team is motivated to implement the many
synergies this combination offers. And I'm excited about being
part of the new InterVoice Brite. Now to turn the call over to
Dave Berger, InterVoice President and Chief Operating Officer.
DAVE BERGER: Thanks Stan. Dan talked about what this merger meant for our
customers, our employees and our investors. I'd like to add
another layer of specificity to what he talked about. A part
of our due diligence in this process was focused on two key
questions. Does it make strategic sense to merge these
companies? And can we make it work economically? Let me
address the question of does it make strategic sense first. We
see these businesses as highly complementary and when combined
will provide the opportunity to accelerate the implementation
of both companies' strategies. This is so because one
company's strong suit is the other company's strategic
investment. We fill in each others holes very nicely. This is
possible because each company is focused on the same markets,
products and customers. But they are at different stages of
maturity in each of the product lines and sales
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channels. Let me give you some specific examples. Now the
numbers I'm using are approximate but they illustrate the
point. At the end of last year Brite had 100 plus million
dollars of sales in their networks business and 35 million
dollars of sales in their IVR business. InterVoice, on the
other hand, was the reciprocal of that, with 35 million in the
networks business and 100 million of sales in the IVR
business. Both were focused on these same two businesses. So
when combined, both the networks and IVR businesses are about
the same size. Each about 135 plus million in sales. So Brite
has their strongest suit in the networks business and is
developing the IVR business whereas InterVoice has its strong
suit in the IVR business and is developing the networks
business. Each is making product and channel investments to
grow both pieces of their business. Let me give you some
examples. In order to grow the IVR business Brite is currently
developing an NT based IVR product and call center solutions.
InterVoice has product strength here and can accelerate
Brite's efforts. On the other hand InterVoice is currently
investing in and develop products for the network business.
Brite has product strength here and can accelerate these
efforts. Another example, Brite has a managed services
business that excites the InterVoice sales team. The
InterVoice network sales guys are excited about having this
new offering to sell immediately. And the IVR sales guys see a
base on which a future service offering for the IVR business
could be built. Another example, Europe. Brite has a strong
customer base and a significant product development and
support facility which is located in the U.K. Now this base
can accelerate InterVoice's ability to penetrate the European
market. Likewise, in Latin America, InterVoice has a strong
presence and a strong customer base that can accelerate
Brite's efforts there. These examples and others in the
technology area like speech recognition are the basis for our
view that these businesses are highly complementary. So the
case for strategic fit can be well supported which brings us
to the question, can we make it work economically? To answer
this question and as part of our due diligence efforts, we had
a total of 15 senior managers from both companies locked in a
hotel room for several days. Their mission was to produce a
jointly recommended road map for the integration of these
businesses and to provide a joint view of the savings that
could be achieved by combining them. As a result of this
effort we estimate that 20 plus million dollars of savings out
of the combined operating plans on an annualized basis can be
achieved. This view is based on the joint recommendations of
that team who by the way have worked very well together
throughout this process. The savings is primarily head count
based but there are other sources of cost savings as well. The
head count savings will be about evenly
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split between reductions and hiring avoidance and will be
staged over time. Since none of this can be implemented prior
to completing the merger and getting the teams together to
develop a detailed operating plan, it's premature to provide
further detail on the combined operations at this time.
However in the next segment of this call Rob Graham will give
you more information about the deal structure. So in
conclusion, we think there's a good strategic fit and it makes
sense economically. Although all of the implementation is in
front of us, we have a good plan for this stage of the game
that can generate the necessary savings and accelerate the
product and channel developments of both companies. The senior
managers from both companies support these plans and
respective sales teams are excited about the opportunities
that they see. Now let me pass the microphone back to Rob.
ROB GRAHAM: Thanks Dave. As we detailed in our press release the aggregate
consideration to be paid for Brite's 12.3 million outstanding
shares is approximately $164.4 million. Of that total $122.7
million will be paid in cash and the rest in InterVoice common
stock. The press release described the two step nature of the
merger. The first step being a cash tender offer for
approximately 9.2 million Brite shares at $13.40 per share.
The second step will consist of a merger in which those Brite
shares not tendered will be exchanged into InterVoice shares.
The ratio of exchange will be determined at the day of closing
based on the average price of an InterVoice share for the
preceding 25 trading days. Now two questions should
immediately rise in your minds as to this merger process.
Number one, why a cash tender offer? And number two, why a
cash tender offer for less than 100% of Brite's shares? The
answers. Both Brite and InterVoice management teams and their
respective board of directors feel a cash tender offer
accelerates the certainty of the merger. This is important for
all InterVoice Brite constituents, certainty for our
customers, certainty for our employees and certainty for the
financial markets. Perhaps even more important is that the
acceleration of the certainty of the merger allows both
management teams to accelerate the execution of the
integration of both companies. The answer to the second
question is quite simple. There was a practical limit to the
acquisition financing available from the private debt markets.
Given the answer I gave about financing, the next question I
suppose would be asked is: If there were a limitation on
acquisition financing, and a portion of the consideration for
Brite shares had to be InterVoice stock, why was the purchase
option versus the pooling of interest option selected? The
answer is that we firmly believe that within a few years this
merger, even though accounted for as a purchase, will be
significantly more accretive by any measure of earnings per
share
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than pooling. Why? Two main reasons. The first is that fewer
shares will be issued under a purchase transaction versus
pooling offsetting the impact of the amortization of the
excess of purchase price over net assets. The second is that
the expected synergies of combining our companies' operations
will generate significant cash flow for rapid debt reduction,
reducing the initial interest drag on earnings. I also believe
that as we de-lever the company, we will have the opportunity
to refinance our acquisition financing with a lower cost
working capital facility or with longer-lived, lower cost debt
vehicles. Of course, with the synergies to be generated by
combining operations and if the financial markets recognize
the resulting improvement in earnings, there may be an
opportunity to replace the debt with equity. Now before any of
you hit the panic button about that last statement, let me
repeat what I've so often said. We only want to do accretive
transactions. Rest assured we will keep this in mind before we
would consider approaching the equity markets. Now while we're
on the subject of accretiveness, this transaction will be
accretive. It would be inappropriate and premature for me to
speak about the details of the synergies to be derived from
this combination because they cannot be acted upon until we
clear regulatory and shareholder approvals. And as with any
merger there will be an initial dilutive shake out period as
we begin execution of our synergy plans. Suffice to say that
in our due diligence process we have identified in excess of
$20 million in synergy savings, the full impact of which will
be enjoyed in the fiscal year beginning March 1, 2000. There
is the potential of $5 million in synergy savings in this
current fiscal year. As mentioned in our press release Dan
Hammond will be InterVoice Brite's chairman and CEO. Stan
Brannan will become the board's vice chairman. Dave Berger
will become the InterVoice Brite president and chief operating
officer and I'll be the chief financial officer. Ray Naeini
and Scotty Walsh will become executive vice presidents
reporting to Dave Berger. Glenn Etherington has agreed to
continue with InterVoice Brite to help with integrating the
two companies. I hope to persuade Glenn to accept a meaningful
permanent position with InterVoice Brite, but I'm respectful
of his personal career objectives. We are very pleased with
this merger. I for one have been impressed by the Brite
management team as we have done our mutual due diligence. I
look forward to future conference calls and personal meetings
with many of you to keep you abreast of this landmark
transaction. Thank you.
