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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER 0-22804
ACTIVE VOICE CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1235111
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2901 THIRD AVENUE, SUITE 500 98121-9800
SEATTLE, WASHINGTON (Zip Code)
(Address of principal executive offices)
(206) 441-4700
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS NOVEMBER 1, 1996
Common Stock, No Par Value 4,582,539
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ACTIVE VOICE CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE PAGE 14
EXHIBITS 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACTIVE VOICE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $12,122,558 $11,291,921 $23,235,930 $21,698,866
Cost of goods sold 5,019,750 4,070,656 9,474,698 7,871,182
----------- ----------- ----------- -----------
Gross profit 7,102,808 7,221,265 13,761,232 13,827,684
Operating expenses:
Research and development 1,649,761 1,321,535 3,208,478 2,553,716
Sales and marketing 3,168,300 2,719,929 6,281,487 5,206,102
General and administrative 1,129,885 1,127,065 2,179,732 2,084,314
----------- ----------- ----------- -----------
Total operating expenses 5,947,946 5,168,529 11,669,697 9,844,132
----------- ----------- ----------- -----------
Operating income 1,154,862 2,052,736 2,091,535 3,983,552
Interest income 185,767 168,917 383,234 322,954
----------- ----------- ----------- -----------
Income before income taxes 1,340,629 2,221,653 2,474,769 4,306,506
Income tax provision 428,600 699,900 791,500 1,356,600
----------- ----------- ----------- -----------
Net income $ 912,029 $ 1,521,753 $ 1,683,269 $ 2,949,906
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per common share $0.20 $0.33 $0.36 $0.64
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Average number of common
and common equivalent
shares outstanding 4,619,954 4,654,563 4,624,034 4,641,930
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
3
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ACTIVE VOICE CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,788,709 $ 3,389,760
Marketable securities 6,346,004 7,216,738
Accounts receivable, less allowances 10,701,535 8,628,280
Inventories 5,830,576 5,482,704
Deferred tax asset 1,236,075 1,023,324
Prepaid expenses and other assets 787,711 774,316
----------- -----------
Total current assets 27,690,610 26,515,122
Marketable securities 8,109,251 8,461,607
Furniture and equipment, net 2,302,646 2,094,480
Other assets 238,659 328,503
----------- -----------
Total assets $38,341,166 $37,399,712
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,632,242 $ 2,138,073
Accrued compensation and benefits 1,579,370 1,871,755
Other accrued expenses 810,294 762,340
Income taxes payable 633,980 830,888
----------- -----------
Total current liabilities 4,655,886 5,603,056
Commitments
Stockholders' equity:
Preferred stock, no par value:
Authorized shares - 2,000,000 - none outstanding
Common stock, no par value:
Authorized shares - 10,000,000
Issued shares, including repurchased shares - 4,976,933 16,871,896 16,790,931
Retained earnings 18,991,717 17,301,477
----------- -----------
35,863,613 34,092,408
Less 400,405 and 421,988 shares repurchased at
September 30, and March 31, 1996, respectively,
at cost (2,178,333) (2,295,752)
----------- -----------
Total stockholders' equity 33,685,280 31,796,656
----------- -----------
Total liabilities and stockholders' equity $38,341,166 $37,399,712
----------- -----------
----------- -----------
</TABLE>
Note: The balance sheet at March 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. See notes to consolidated financial statements.
4
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ACTIVE VOICE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
------------------------------
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,683,269 $ 2,949,906
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 436,314 392,676
Provisions for accounts receivable 320,000 354,000
Deferred income taxes (233,187) (151,217)
Loss on disposal of equipment 8,878 27,452
Changes in operating assets and liabilities:
Increase in accounts receivable (2,393,255) (1,453,793)
Increase in inventories (347,872) (896,550)
Decrease in prepaid expenses and
other assets 76,449 4,688
Increase (decrease) in accounts payable (505,831) 31,510
Increase (decrease) in other liabilities (371,743) 618,795
----------- -----------
Net cash provided by (used in) operating activities (1,326,978) 1,877,467
INVESTING ACTIVITIES
Purchases of marketable securities (2,675,928) (1,419,345)
Proceeds from sale and maturity of marketable securities 3,959,126 692,284
Purchases of furniture and equipment (653,358) (532,231)
----------- -----------
Net cash provided by (used in) investing activities 629,840 (1,259,292)
FINANCING ACTIVITIES
Repurchase of common stock (20,625)
Proceeds from exercise of stock options 96,087 371,158
----------- -----------
Net cash provided by financing activities 96,087 350,533
----------- -----------
Increase (decrease) in cash and cash equivalents (601,051) 968,708
Cash and cash equivalents at beginning of period 3,389,760 649,553
----------- -----------
Cash and cash equivalents at end of period $ 2,788,709 $ 1,618,261
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
5
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ACTIVE VOICE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
1. INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Active Voice
Corporation and subsidiary (the Company) are unaudited. In the opinion of
the Company's management, the financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to state fairly
the financial information set forth therein. Results of operations for the
three month and six month periods ended September 30, 1996 are not
necessarily indicative of future financial results.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
Accordingly, these financial statements should be read in conjunction with
the Company's annual report on Form 10-K for the year ended March 31, 1996.
2. INVENTORIES
Inventories are comprised of the following:
SEPTEMBER 30, MARCH 31,
1996 1996
------------- ----------
Computer equipment $3,722,925 $2,544,034
Custom component parts 1,437,667 2,211,527
Supplies 669,984 727,143
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$5,830,576 $5,482,704
------------- ----------
------------- ----------
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Active Voice Corporation (the Company) is a leading manufacturer of PC-based
voice processing systems and computer telephone integration (CTI) products.
The Company's products are sold worldwide through a network of independent
telecommunications dealers and computer resellers. The Company has three
principal products. Repartee, the Company's flagship and most feature rich
product, offers the largest call handling capacity. In addition, Repartee
serves as the base for TeLANophy, a suite of the Company's CTI software
products. Replay Plus is the Company's mid-priced product that offers most of
the voice processing features found in Repartee with the exception of the CTI
functionality. The Company's Replay product provides basic voice processing
features at a price point attractive to the small business market.
RESULTS OF OPERATIONS
NET SALES
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
- --------------------------------------------------------------------------------
(Dollars in thousands)
Net sales $12,123 $11,292 7.4% $23,236 $21,699 7.1%
- --------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 1996
Net sales to the Company's domestic dealer network in the three months ended
September 30, 1996 were unchanged from the corresponding period in the prior
fiscal year, representing 67.0% of total net sales compared to 71.8% of total
net sales in the prior fiscal year. Unit sales of Replay increased by
greater than 65%, however, net sales only increased approximately 12% due
primarily to lower average selling prices. Domestic dealer net sales of
Repartee decreased by approximately 10% despite an approximate increase of
17% in unit sales due to discounting and a shift toward lower priced kit
sales as opposed to turnkey system sales. During the three months ended
September 30, 1996, the Company shipped the majority of the initial 100
Replay Plus units under its previously announced agreement with Montgomery
Ward.
Net sales to original equipment manufacturers (OEM's) increased by 39.2%
during the three months ended September 30, 1996 compared to the three months
ended September 30, 1995. Net sales to OEM customers represented 18.0% of
total net sales for the three months ended September 30, 1996, compared to
13.9% of total net sales for the three months ended September 30, 1995. The
aggregate increase in net sales in the OEM channel was primarily attributable
to a greater than 250% increase in unit sales of Replay. The majority of the
increased Replay unit sales were attributable to the successful launch of
product for a new OEM customer. As of September 30, 1996, the Company had six
domestic OEM relationships. The largest OEM customer accounted for
approximately 40% of OEM sales and approximately 7% of total net sales for
the three months ended September 30, 1996.
7
<PAGE>
Net sales to international customers increased by 12.5% during the three
months ended September 30, 1996, compared to the corresponding period in the
preceding fiscal year, reflecting increasing penetration of existing
international voice processing markets and the successful introduction of new
products for international OEM customers. International sales represented
15.0% of total net sales for the three months ended September 30, 1996,
compared to 14.3% of total net sales for the three months ended September 30,
1995. International net sales of Replay increased by greater than 30% due to
an approximate 145% increase in units sold partially offset by sales price
discounting and a shift in sales mix to lower-priced kit sales as opposed to
turnkey system sales. Net sales from Replay Plus decreased by approximately
20% due to sales price discounting and a shift in sales mix toward smaller
average port size systems. Beyond the usual risks associated with foreign
sales (currency fluctuations and restrictions; export-import regulations;
customs matters; foreign collection problems; and military, political and
transportation risks), the Company's international sales involve additional
governmental regulation, product adaptations to local languages and switching
systems, and uncertainties arising from local business practices and cultural
considerations.
During the three months ended September 30, 1996, revenue from TeLANophy
modules alone were not significant (less than 5%); however, the Company has
experienced growing demand for TeLANophy capable systems and related client
desktop software over the last twelve months. The Company is pusuing a new
channel of distribution for these products and is in the process of
developing new initiatives to sell client desktop software directly to its
substantial installed end user customer base.
The Company experiences significant quarterly variability in the level of
sales through its three distinct distribution channels. The diversification
provided by these three channels has in the past reduced the quarterly
volatility of aggregate net sales.
SIX MONTHS ENDED SEPTEMBER 30, 1996
Net sales to the domestic dealer network increased by 7.4% in the six months
ended September 30, 1996, compared to the corresponding period in the prior
fiscal year. Domestic dealer net sales represented 70.9% of total net sales
for the six months ended September 30, 1996, compared to 70.7% of total net
sales for the six months ended September 30, 1995. Of the aggregate increase
in domestic dealer net sales, greater than one-half was attributable to an
increase of approximately 90% in unit sales of Replay, partially offset by
lower average selling prices of the systems due to discounting. An additional
20% of the increase was due to increased sales of TeLANophy software,
hospitality and fax products, switch integration packages, hardware
components and other miscellaneous items.
Net sales to OEM's increased by 1.0% during the six months ended September
30, 1996 compared to the comparable period in the prior fiscal year. Net
sales to OEM customers represented 14.7% and 15.6% of total net sales for the
six month periods ended September 30, 1996 and 1995, respectively. Net sales
of the Replay product increased by approximately 150% during the six month
period ended September 30, 1996 compared to the comparable period of the
prior fiscal year, due primarily to increased unit sales. The increase in
Replay sales was almost completely offset by a 95% decline in unit sales of
Repartee kits. The largest OEM customer accounted for approximately 28% of
OEM sales and approximately 4% of total net sales for the six months ended
September 30, 1996.
Net sales to international customers increased by 12.4% during the six months
ended September 30, 1996, compared to the corresponding period in the
preceding fiscal year. International sales represented 14.4% of total net
sales for the six months ended September 30, 1996, compared to 13.7% of total
net sales for the six months ended September 30, 1995. Greater than one-half
of the aggregate increase in net sales to international customers was due to
increased unit sales of Replay. Partially offsetting the increased net sales
of Replay was an approximate 35% decline in net sales of Repartee kits,
primarily attributable to lower unit sales.
8
<PAGE>
GROSS MARGIN
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
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(Dollars in thousands)
Gross profit $7,103 $7,221 (1.6%) $13,761 $13,828 (0.5%)
Percentage of net sales 58.6% 64.0% 59.2% 63.7%
The Company's gross margin varies in part depending upon the mix of
higher-margin voiceboard-and-software kit sales (offered in all sales
channels) and software-only sales (available only to OEM customers) as
opposed to turnkey system sales (which include the cost of a PC and other
related hardware). The proportion of sales contributed by each distribution
channel also affects the overall gross margin, as international sales have
historically had higher gross margins than the other distribution channels.
The decreases in gross margin between the three month and six month periods
ended September 30, 1996 in comparison to the comparable periods in fiscal
1996 were primarily attributable to a shift in the sales mix toward the lower
margin Replay product line. A 25% price reduction on Replay implemented
during the third quarter of fiscal 1996 contributed to the shift in sales mix
and reduced the gross margin on Replay units. Lower unit sales of Repartee
kits in the OEM channel also contributed to the decline in gross margin.
Management expects that gross margins will continue to decline steadily as a
result of price competition and further shifts in product mix.
RESEARCH AND DEVELOPMENT
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
- --------------------------------------------------------------------------------
(Dollars in thousands)
Research and development $1,650 $1,322 24.8% $3,208 $2,554 25.6%
Percentage of net sales 13.6% 11.7% 13.8% 11.8%
- --------------------------------------------------------------------------------
The increases in research and development expenses, both in dollar amounts
and as a percentage of net sales between comparable periods, were primarily
attributable to an increase in project-based contract development staff and
an increase of approximately 5% in engineering and development personnel. The
increase in contract staff and engineering personnel was primarily
attributable to the Company's continuing effort to localize products for new
international markets, as well as customization of products for new OEM
customers and new product development, particularly CTI-related products.
During the six months ended September 30, 1996, the Company announced several
significant product releases including Message Integration for the Novell
GroupWise client/server e-mail system, ViewMail for Microsoft Exchange and
multilingual TeLANophy products for the desktop.
During fiscal 1996, the Company announced its intention to allocate
additional resources to the development of products for the international
market. The Company believes that the international market has significant
growth opportunities but that localization of its products will be necessary
to successfully penetrate the world market for voice processing equipment.
The Company also believes that in order to remain competitive in a rapidly
changing technological environment, it will continue to be necessary to
allocate significant resources to the development of new products. The
Company expects the dollar amount of research and development expenditures to
continue to increase for the foreseeable future, and that these expenses as a
percentage of sales will vary from period to period.
9
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SALES AND MARKETING
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
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(Dollars in thousands)
Sales and marketing $3,168 $2,720 16.5% $6,281 $5,206 20.7%
Percentage of net sales 26.1% 24.1% 27.0% 24.0%
- --------------------------------------------------------------------------------
Approximately one-half of the aggregate increases in sales and marketing
expenses during the three month and six month periods ended September 30,
1996 over the comparable periods in the prior year were due to increased
compensation-related expenses associated with approximately 20% growth in
sales and marketing personnel and increased commission expense due to higher
sales levels. The increase in personnel primarily reflected additions to the
Company's domestic and international sales force, and to a lesser extent,
additional product support representatives. An additional 40% of the
aggregate increases in sales and marketing expense between comparable periods
was attributable to added promotional costs, including promotional
literature, trade-show attendance and a marketing road show conducted during
the second quarter of fiscal 1997 to promote the Company's CTI product
offerings.
GENERAL AND ADMINISTRATIVE
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
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(Dollars in thousands)
General and administrative $1,130 $1,127 0.3% $2,180 $2,08 44.6%
Percentage of net sales 9.3% 10.0% 9.4% 9.6%
- --------------------------------------------------------------------------------
The increases in general and administrative expenses during the three month
and six month periods ended September 30, 1996 compared to the corresponding
periods in the prior fiscal year were primarily attributable to an
approximate 15% increase in general and administrative personnel. General and
administrative expenses, being relatively fixed in nature, can be expected to
fluctuate as a percentage of net sales from period to period.
INTEREST INCOME
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
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(Dollars in thousands)
Interest income $186 $169 10.0% $383 $323 18.7%
- --------------------------------------------------------------------------------
The increases in interest income during the three month and six month periods
ended September 30, 1996 over the comparable periods in the prior fiscal year
were primarily attributable to higher average invested cash and marketable
security balances and to a lesser extent, higher average yields earned on
investments.
10
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INCOME TAX PROVISION
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
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(Dollars in thousands)
Income tax provision $429 $700 (38.8%) $792 $1,357 (41.7%)
Effective tax rate 32.0% 31.5% 32.0% 31.5%
- --------------------------------------------------------------------------------
Variations in the customary relationship between the income tax provision and
the statutory income tax rate of 34% result from certain nondeductible
expenses, tax exempt investment income, research and development tax credits,
and the benefit provided by the Company's foreign sales corporation. The
increase in the Company's effective tax rate for the three month and six
month periods ended September 30, 1996 over the comparable periods in the
prior year was primarily attributable to declines in the research and
development tax credit and foreign sales corporation benefit as a percentage
of taxable income. The Company expects the effective tax rate to continue to
increase in the future due to the impact of declining research and
development tax credits, tax exempt interest income, and foreign sales
corporation benefits as a percentage of taxable income.
NET INCOME AND NET INCOME PER SHARE
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 CHANGE 1996 1995 CHANGE
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
Net income $912 $1,522 (40.1%) $1,683 $2,950 (42.9%)
Percentage of net sales 7.5% 13.5% 7.2% 13.6%
Net income per share $0.20 $0.33 (39.6%) $0.36 $0.64 (42.7%)
- --------------------------------------------------------------------------------
The decreases in net income and net income per share compared to the
comparable periods in the prior fiscal year were primarily attributable to
5.4% and 4.5% declines in gross margin for the three month and six month
periods ended September 30, 1996, respectively. In addition, operating
expenses increased by 18.5% in the six month period ended September 30, 1996
compared to the comparable period in the prior fiscal year, which was greater
than the 7.1% increase in net sales. The number of common and common
equivalent shares outstanding was comparable in the three month and six month
periods ended September 30, 1996 and 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents, and marketable securities decreased to
$17,244,000, or 45.0% of total assets, at September 30, 1996 from
$19,068,000, or 51.0% of total assets, at March 31, 1996. Cash flow used in
operations totaled $1,327,000 during the six months ended September 30, 1996
due to lower accounts payable balances and increases in accounts receivable.
The Company had net working capital of $23,035,000 at September 30, 1996.
11
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Accounts receivable, net of allowances, increased to $10,702,000 at September
30, 1996 from $8,628,000 at March 31, 1996. During the quarter, the Company
attempted to convert to a new financial and manufacturing information system.
Implementation problems resulted in approximately a six week delay in
invoicing and an eight week delay in preparing customer statements. In
addition, during the entire quarter, the Company was without a credit
manager, which resulted in an increase in days' sales outstanding. Both of
these issues were addressed by the end of the quarter and management believes
that accounts receivable balances will return to historical levels.
Inventory levels increased to $5,831,000 at September 30, 1996 from
$5,483,000 at March 31, 1996 to meet the increasing raw material stocking
requirements of a growing sales base and an increase in the number of
available hardware platform options.
The Company made $653,000 in capital expenditures during the six months ended
September 30, 1996, compared to $532,000 during the comparable period of the
prior fiscal year. The majority of the capital expenditures during the six
months ended September 30, 1996 consisted of computer hardware and software
used to augment the Company's management information systems infrastructure.
Additional computer equipment was purchased for use in research and
development. The Company currently has no specific commitments with respect
to additional capital expenditures during the remainder of fiscal 1997, but
expects to spend an aggregate of approximately $1,100,000 for the year.
The Company believes that ongoing maturity of securities in its investment
portfolio, together with funds from operations will provide sufficient funds
to finance operations for the next several years.
CERTAIN STATEMENTS IN THIS QUARTERLY REPORT CONTAIN "FORWARD LOOKING"
INFORMATION (AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995) INVOLVING RISKS AND UNCERTAINTIES, INCLUDING WITHOUT LIMITATION,
PROJECTIONS FOR SALES AND EXPENDITURES, AND VARIOUS BUSINESS ENVIRONMENT AND
TREND PROJECTIONS. ACTUAL FUTURE RESULTS AND TRENDS MAY DIFFER MATERIALLY
DEPENDING ON A VARIETY OF FACTORS, INCLUDING, BUT NOT LIMITED TO, THE RISKS
DISCUSSED IN DOCUMENTS FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
12
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Active Voice Corporation was
held on August 30, 1996. A total of 4,142,601 shares of the Company's
common stock were represented in person or by proxy at the meeting,
which comprised 90.56% of the total number of shares of the Company's
common stock outstanding on July 10, 1996, the record date for the
meeting.
At the meeting, all of the current directors of the Company, namely,
Tom A. Alberg, Robert C. Greco, Harold H. Kawaguchi, and Robert L.
Richmond, were re-elected to serve as directors of the Company until
the 1997 Annual Meeting of Shareholders or until their earlier
retirement, resignation, or removal. The following table sets forth
information regarding the voting in the election for directors:
Votes Cast Votes
Nominee For Nominee Withheld
Tom A. Alberg 4,130,772 11,829
Robert C. Greco 4,121,872 20,729
Harold H. Kawaguchi 4,121,172 21,429
Robert L. Richmond 4,128,872 13,729
The shareholders approved the proposed 1996 Employee Stock Purchase
Plan. The following table sets forth information regarding the voting
on the proposal:
Votes Cast Votes Cast Broker
For Proposal Against Proposal Abstentions Non-Votes
3,904,642 86,692 17,929 133,338
The shareholders ratified the appointment of Ernst & Young as the
Company's auditors for the fiscal year ending March 31, 1997. The
following table sets forth information regarding the voting on the
proposal:
Votes Cast Votes Cast
For Proposal Against Proposal Abstentions
4,133,448 3,250 5,903
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of Earnings Per Share
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended September 30, 1996.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Active Voice Corporation
(Registrant)
Date: November 8, 1996 By: /s/ Jose S. David
-------------------------------------
Jose S. David
Chief Financial Officer
Signing on behalf of registrant and
as principal financial officer
14
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EXHIBIT 11
ACTIVE VOICE CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1996 1995 1996 1995
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 4,575,438 4,510,523 4,569,085 4,495,685
Net effect of dilutive stock options
based on the treasury stock method
using average market price 44,516 144,040 54,949 146,245
--------- ---------- ---------- ----------
Total 4,619,954 4,654,563 4,624,034 4,641,930
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Net income $912,029 $1,521,753 $1,683,269 $2,949,906
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Per share amount $0.20 $0.33 $0.36 $0.64
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
FULLY DILUTED
Average shares outstanding 4,575,438 4,510,523 4,569,085 4,495,685
Net effect of dilutive stock options
based on the treasury stock method
using the period end market price,
if higher than average market price 44,519 144,037 54,974 147,895
--------- ---------- ---------- ----------
Total 4,619,957 4,654,560 4,624,059 4,643,580
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Net income $912,029 $1,521,753 $1,683,269 $2,949,906
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Per share amount $0.20 $0.33 $0.36 $0.64
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
</TABLE>
16
<TABLE> <S> <C>
<PAGE>
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,789
<SECURITIES> 6,346
<RECEIVABLES> 12,387
<ALLOWANCES> 1,685
<INVENTORY> 5,831
<CURRENT-ASSETS> 27,691
<PP&E> 5,259
<DEPRECIATION> 2,956
<TOTAL-ASSETS> 38,341
<CURRENT-LIABILITIES> 4,656
<BONDS> 0
0
0
<COMMON> 16,872
<OTHER-SE> 16,813
<TOTAL-LIABILITY-AND-EQUITY> 38,341
<SALES> 23,236
<TOTAL-REVENUES> 23,236
<CGS> 9,475
<TOTAL-COSTS> 9,475
<OTHER-EXPENSES> 11,670
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 2,475
<INCOME-TAX> 792
<INCOME-CONTINUING> 1,683
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,683
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
