SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1996 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: 33-59598
DIALOGIC CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-2476114
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1515 Route 10
Parsippany, New Jersey 07054
(Address of principal executive office, including zip code)
201-993-3000
(Registrant's telephone number, including area code)
-------------------------------------------------------------------------
Former name, former address and former fiscal year,if changed since last report)
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.
At March 31, 1996, there were 15,547,836 shares of Common Stock, no par
value, outstanding.
<PAGE>
DIALOGIC CORPORATION
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 (Unaudited)
Consolidated Statements of Income for the Three
Months Ended March 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
DIALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
March 31, December 31,
ASSETS 1996 1995
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 4,733 $ 5,987
Short term investments 34,859 24,689
Convertible note, options and shares recorded at fair market value 13,995 12,777
Accounts receivable (net of allowance for doubtful
accounts of $1,065 in 1996 and $894 in 1995) 24,844 25,727
Inventory 28,234 23,969
Deferred income taxes 3,221 3,067
Other current assets 4,639 3,175
Total current assets 114,525 99,391
PROPERTY AND EQUIPMENT - Net 16,517 15,126
DEPOSITS AND OTHER ASSETS 2,696 2,845
_______ _______
TOTAL ASSETS $133,738 $117,362
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,274 $ 9,232
Accrued expenses 7,528 6,284
Taxes payable 3,289 915
Deferred income taxes 5,948 5,320
Current maturities of long-term liabilities 315 595
_______ ______
Total current liabilities 26,354 22,346
LONG-TERM LIABILITIES 2,431 2,259
SHAREHOLDERS' EQUITY:
Preferred stock, no par value--10,000,000 shares authorized; none issued:
Common stock, no par value--60,000,000 shares authorized;
15,547,836 and 15,491,965 shares outstanding, respectively 200 199
Additional paid-in capital 39,585 38,697
Retained earnings 57,335 46,723
Unrealized gains/losses on available for sale securities 7,668 6,765
Cumulative translation adjustment 165 373
_______ _______
Total shareholders' equity 104,953 92,757
_______ _______
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $133,738 $117,362
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
DIALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three months ended
March 31,
<S> <C> <C>
1996 1995
REVENUES $ 48,732 $ 35,812
COSTS AND EXPENSES:
Cost of goods sold 19,751 14,336
Research and development expenses 8,877 6,637
Selling, general and administrative expenses 13,483 10,685
Merger costs --- 1,294
Interest expense 3 7
Interest income (757) (426)
Realized (gains)/losses on available for sale securities (9,245) (9)
_______ _______
Total costs and expenses 32,112 32,524
______ ______
INCOME BEFORE PROVISION FOR
INCOME TAXES 16,620 3,288
PROVISION FOR INCOME TAXES 6,008 1,238
______ _____
NET INCOME $10,612 $ 2,050
Income Per Share $ .65 $ .13
_______ _______
Shares used in the calculation of income per share 16,256 15,980
______ ______
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
DIALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March 31,
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
Net income $10,612 $2,050
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,225 1,048
Provision for inventory obsolescence 215 (29)
Provision for bad debts 218 197
Tax benefit from exercise of stock options 434 1,056
Minority interest 9 ---
Compensation expense on issuance of options below fair market value --- 608
Deferred income taxes (157) (112)
Deferred rent 162 140
Non-cash interest income (318) ---
Realized (gains)/losses on available for sale securities (9,245) (9)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 665 (1,650)
Increase in inventory (4,480) (1,478)
Increase in other current assets (1,464) (775)
Increase (decrease) in accounts payable 42 (17)
Increase in accrued expenses 1,243 426
Increase (decrease) in taxes payable 2,374 (311)
Other (93) 469
______ _____
Net cash provided by operating activities 1,442 1,613
______ _____
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,616) (2,385)
Purchases of available for sale securities (27,848) (3,000)
Proceeds from sale of available for sale securities 27,592 161
Other --- 378
_______ ______
Net cash used in investing activities (2,872) (4,846)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations (30) (45)
Repayments of current maturities (250) ---
Proceeds from short-term borrowings 500 ---
Repayments on short-term borrowings (500) ---
Exercise of stock options 164 329
Issuance of common stock 292 ---
Repayments of note receivable for stock --- 285
Net cash provided by financing activities 176 569
_______ ______
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,254) (2,664)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 5,987 8,281
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,733 $ 5,617
======= =======
(continued)
</TABLE>
<PAGE>
DIALOGIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March 31,
1996 1995
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 19 $ 7
_______ _________
Income taxes $ 3,769 $ 435
======== ==========
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Unrealized gains/losses on
available for sale securities $ 903 $ 422
========= ==========
See Notes to Consolidated Financial Statements
<PAGE>
DIALOGIC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The 1996 and 1995 financial statements have been prepared by Dialogic
Corporation (the "Company" or "Dialogic") and are unaudited. In the opinion of
the Company's management, all adjustments (consisting solely of normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the interim periods have been made. Certain
information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the consolidated
financial statements pursuant to the rules and regulations of the Securities and
Exchange Commission. The consolidated financial statements presented herein
should be read in conjunction with the year-end consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995. The results of operations for the
three months ended March 31, 1996 are not necessarily indicative of the results
to be expected for any other interim period or the entire fiscal year.
2. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," which is effective for the Company beginning January
1, 1996. SFAS No. 123 requires expanded disclosures in annual financial
statements of stock-based compensation arrangements with employees and
encourages (but does not require) compensation cost to be measured based on the
fair value of the equity instrument awarded. Companies are permitted, however,
to continue to apply APB Opinion No. 25, which recognizes compensation cost
based on the intrinsic value of the equity instrument awarded. The Company will
continue to apply APB Opinion No. 25 to its stock based compensation awards to
employees and will disclose the required pro forma effect on net income and
earnings per share in its annual financial statements.
3. Inventory consisted of the following (in thousands):
March 31, December 31,
1996 1995
___________ ___________
Raw materials $ 14,237 $ 11,900
Work-in process 3,000 2,784
Finished goods 10,997 9,285
______ ______
$ 28,234 $ 23,969
========= ========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
A. Results of Operations
The following table sets forth, for the periods indicated, the percentage
relationship to net sales of certain items included in the Company's
consolidated statements of income.
Three Months Ended
March 31,
______________________
1996 1995
100.0% 100.0%
Revenues
Cost and expenses:
Cost of goods sold 40.5 40.0
Research and development expenses 18.2 18.5
Selling, general and administrative expenses 27.7 29.9
Merger costs --- 3.6
Interest expense (income) - net (1.5) (1.2)
Realized (gains)/losses on available
for sale securities (19.0) ---
Income before provision for income taxes 34.1 9.2
Provision for income taxes 12.3 3.5
Net income 21.8% 5.7%
===== ======
The following table sets forth, for the periods indicated, the percentage
increase of certain items included in the Company's consolidated
statements of income.
Three Months Ended March 31, 1996
Compared With
Three Months Ended March 31, 1995
_________________________________
Revenues 36.1%
Costs and expenses:
Cost of goods sold 37.8
Research and development expenses 33.8
Selling, general and administrative expenses 26.2
Merger costs NSM(1)
Interest expense (income) - net 80.0
Realized gains/losses on available
for sale securities - net NSM(1)
Income before provision for income taxes 405.5
Provision for income taxes 385.3
Net income 417.7
(1) Not statisically meaningful
<PAGE>
The Company's revenues increased by 36% during the first quarter of 1996. These
revenue gains were attributable to the sales of several new products, design
"wins" during 1995 that resulted in shipments to new customers during 1996 and
increased unit sales of existing products to new and existing customers. During
the first quarter of 1996, sales growth was especially strong in the Company's
domestic markets. The following table allocates the Company's revenues between
domestic and international markets for the periods presented:
Three Months Ended
March 31,
____________________
1996 1995
(In millions)
Domestic:
Amount $34,219 $24,116
Percentage of total revenues 70.2% 67.3%
International:
Amount $14,513 $11,696
Percentage of total revenues 29.8% 32.7%
Gross margins for the period were 59.5% compared to 60.0% from first quarter
1995. This change in the margin primarily reflects a full quarter's effect of
the Company's new low cost four line board, as well as increased sales of custom
OEM products at substantially lower gross margins.
Research and development expenses grew at 34% over the first quarter of 1995,
and represented 18.2% of revenues in the quarter, slightly below the 18.5%
incurred in the first quarter of 1995. The increase in dollar amount from the
first quarter of 1995 to the first quarter of 1996 reflect continued expansion
of the Company's engineering staff, allowing the Company to release fourteen new
products during the quarter and to continue to support the ECTF software
initiative. The Company believes that investment in research and development is
critical to future growth and anticipates investing at these or greater levels
throughout 1996 in an effort to enable the Company to maintain its technological
leadership in the market.
Selling, general and administrative expenses grew 26% and represented 27.7% of
revenues in the quarter compared to 29.9% of revenues for the first quarter of
1995. This reduction in the percentage of revenues primarily reflects a greater
leveraging of general and administrative expenses over an increased sales
volume. The increase in the dollar amount of such expenses reflects, in part,
marketing efforts related to a large trade show held during the quarter.
Interest income for the period increased $331,000 over the comparable period in
1995. This increase reflects, in part interest earned from the Company's
election to convert accrued interest on a note of Voice Control Systems ("VCS")
into capital stock of VCS.
Realized gains on available for sale securities were $9.2 million for the
quarter. During the quarter, the Company sold 1,150,000 shares of VCS' stock in
VCS' public offering.
<PAGE>
The increase in the provision for income taxes reflects the Company's
substantially increased pre-tax income.
Net income for the quarter was $10.6 million or $.65 per share. On an operating
basis (i.e., in 1996, excluding the effect of realized gains on available for
sale securities and in 1995, excluding $1.3 million of merger-related expense)
net income was $4.8 million during the first quarter of 1996, up 66% from $2.9
million during the first quarter of 1995. Earnings per share on an operating
basis were $.30, up 67% from $.18 on an operating basis for the first quarter of
1995. Weighted average shares increased from 16.0 million to 16.3 million during
the period.
B. Financial Condition
As of March 31, 1996, Dialogic had working capital of $88.2 million and a
current ratio (i.e., the ratio of current assets to current liabilities) of 4.3
to 1, as compared with working capital of $77.0 million and a current ratio of
4.4 to 1 at December 31, 1995.
For the three months ended March 31, 1996, Dialogic's cash and cash
equivalents decreased by $1.3 million. This decrease primarily reflects an
increase in inventory ($4.5 million) and cash used for capital expenditures
($2.6 million), offset in part by net cash provided by other operating
activities. The increase in inventory represents the transition of the Company's
full line PEB based products to SC based products. The average period during
which accounts receivable are outstanding remained consistent with the first
quarter of 1995 (in the forty day range), while inventory turns have decreased
slightly with the transistion to new products. Capital expenditures reflect the
expansion of the Company's headquarters associated with the Company's growth.
During the three months ended March 31, 1996, short-term investments increased
by $10.2 million, principally as a result of the above-mentioned sale of VCS
stock.
Dialogic believes that its current liquidity, coupled with cash generated from
operations and credit available under its credit lines, will be sufficient to
meet its liquidity and capital requirements for at least the next twelve months.
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
Reference is made to Item 3 of Dialogic's Annual Report on Form 10-K for the
year ended December 31, 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 - 1988 Incentive Compensation Plan, as amended.
11.1 - Calculation of income per share
27.1 - Financial Data Schedule
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.
DIALOGIC CORPORATION
By: /s/Edward B. Jordan
Edward B. Jordan
Vice President,
Chief Financial Officer and
Chief Accounting Officer
Dated: May 14, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page
10.1 1988 Incentive Compensation Plan
11.1 Calculation of Income Per Share E-1
27.1 Financial Data Schedule E-2
<PAGE>
EXHIBIT 10.1
1988 INCENTIVE COMPENSATION PLAN
OF
DIALOGIC CORPORATION
(as amended through April 28, 1996)
Section 1. Definitions.
As used in this Incentive Compensation Plan the following
terms have the meanings stated. The singular includes the plural, and the
masculine gender includes the feminine and neuter genders, and vice versa, as
the context requires. The word "person" includes any natural person and any
corporation, firm, partnership or other form of association.
"Award Date" means the date on which an Incentive is awarded as
specified by the Board.
"Board" means the Board of Directors of the Company.
"Cash Award" means a cash payment by the Company to a
Participant as additional compensation for that Participant's services to the
Group.
"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Committee" means a committee of two or more members of the
Board, to which the Board has delegated the authority to administer the Plan
under Section 3.
"Common Stock" means the Common Stock, no par value, of the
Company.
"Company" means Dialogic Corporation.
"Director" means a member of the Board.
"Disability" means a permanent and total disability as defined
in Section 22 of the Code.
"Disinterested Person" means a person who has not been granted
or awarded Incentives under the Plan nor any substantially similar incentives
under any other plan of the Company or any member of the Group for at least one
year before serving on the Committee, except that participation in a formula
plan meeting the conditions set forth in Securities and Exchange Commission Rule
16b-3(c)(2)(ii) shall not disqualify a Director from being a Disinterested
Person.
"Election" has the meaning stated in Section 13.08(a).
"Exercise Date" means the date on which the Company receives a
notice of the exercise of an Incentive, which notice meets the requirements of
this Plan.
"Fair Market Value" has the meaning stated in Section 13.12.
"Group" means the Company, each parent corporation to the
Company, and each of the Company's subsidiaries, as these terms are defined in
Sections 424(e) and 424(f) of the Code.
"In Tandem" means that two Incentives are related to each
other such that, the number of shares subject to the first Incentive is reduced
by the number of shares for which the second Incentive is exercised, and the
number of shares subject to the second Incentive is reduced by the number of
shares for which the first Incentive is exercised.
"Incentive Stock Option" means a stock option intended to
qualify as an incentive stock option under Section 422 of the Code.
"Incentives" mean the economic incentives listed in
Section 5 that may be awarded under this Plan.
"Non-Statutory Stock Option" means any Stock Option other than
an Incentive Stock Option.
"Participant" means an employee or director of any member of
the Group to whom an Incentive has been awarded.
"Performance Stock Right" means a contingent right to receive
Shares upon the achievement of certain performance objectives.
"Plan" means this 1988 Incentive Compensation Plan of the
Company.
"Qualified Person" means a Participant's legal guardian or
legal representative or a deceased Participant's heir or legatee who has a legal
right to or in respect of an Incentive of that Participant.
"Restricted Stock Award" means the award of Shares by the
Company to the Participant at a price that may be below Fair Market Value, or
without payment to the Company, but these Shares are subject to restrictions on
sale and other transfer and are subject to forfeiture.
"Retirement" means (i) the voluntary termination of employment
by a Participant who is 59 1/2 years old or older unless, prior to such
termination, such Participant advises the Company that he intends to be employed
on a full-time basis by an employer that is not a member of the Group or (ii)
the voluntary termination of employment by any Participant if the Board
determines, prior to such termination, that such termination shall be deemed to
be a "Retirement" for purposes of the Plan.
"SAR" means a stock appreciation right relating to the Common
Stock and is a right to receive Shares, cash or a combination thereof without
payment to the Company.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as it may be amended from time to time.
"Share" means a share of Common Stock.
"Stock Award" means the award of Shares by the Company to a
Participant as additional compensation and without payment to the Company.
"Stock Option" means an Incentive Stock Option or a Non-
Statutory Stock Option.
"Tax Date" has the meaning stated in Section 13.08(a).
"Unit of Phantom Stock" means a right to receive, without
payment to the Company, cash, dividends or a combination thereof.
Section 2. Purpose.
The purpose of this Plan is to advance the interests of the
Group by furnishing Incentives designed to attract, retain and motivate
employees. Incentives may consist of opportunities to acquire Shares or cash or
both, as provided by this Plan.
Section 3. Administration.
3.01. Administrative body. Subject to Section 3.02, the Plan
shall be administered by the Board or the Committee. The Board may in its sole
discretion, but subject to Section 3.02, delegate the authority to administer
the Plan to the Committee. If the Committee has been delegated the authority to
administer the Plan, all references to the Board in this Plan (except in this
Section 3.01, Section 3.02, Section 13.07 and Section 13.11) shall mean and
refer to the Committee.
3.02. Public company. If any member of the Group has any stock
registered under Section 12 of the Securities Exchange Act, this Section 3.02
shall apply. Unless all of the members of the Board are Disinterested Persons,
the Board shall delegate the authority to administer the Plan to a Committee of
two or more Directors each of whom is a Disinterested Person.
3.03. Authority. Subject to applicable law and the terms of
the Plan, the Board shall have plenary authority to (a) award Incentives under
the Plan, (b) set the terms, conditions and restrictions of the Incentives,
their exercise and all related rights, (c) accelerate the date on which a
previously granted Incentive may be exercised, (d) prescribe the form of
agreements awarding and governing the Incentives, (e) interpret the Plan, (f)
establish any rules or regulations relating to the Plan and (g) make all other
determinations for the proper administration of the Plan. Terms, conditions and
restrictions of Incentives may vary from Participant to Participant and from
award to award. The Board's decisions on matters relating to the Plan shall be
final and conclusive on the Group and the Participants and their respective
successors, assigns, transferees, heirs and representatives.
Section 4. Eligibility.
4.01. Designation of employees. All employees of any member of
the Group, including officers and directors who are employees, are eligible to
receive Incentives under the Plan. Directors and officers who are not employees
of any member of the Group may not receive Incentives under the Plan.
4.02. Participants. The Board may consider any factor in
selecting Participants and in determining the type and amount of their
Incentives, including, but not limited to, (a) the current or anticipated
financial condition of the Group, (b) the contributions by the Participant to
the Group and (c) the other compensation provided to the Participant. The
Board's award of an Incentive to a person in any year shall not require the
Board to award any Incentive to that person in any other year.
Section 5. Types of Incentive.
Incentives may be granted in any one or any combination of the
following forms: (a) Non-Statutory Stock Options (Section 7); (b) Incentive
Stock Options (Section 7); (c) SARs (Section 8); (d) Units of Phantom Stock
(Section 9); (e) Stock Awards (Section 10); (f) Restricted Stock Awards (Section
10); (g) Performance Stock Rights (Section 11); and (h) Cash Awards (Section
12).
Section 6. Shares Subject to the Plan.
6.01. Number of Shares. Subject to Section 13.07, the
aggregate number of Shares which may be issued under the Plan shall not exceed
3,025,000 Shares. For purposes of this Section 6.01, each Unit of Phantom Stock
shall constitute a single Share. Notwithstanding any provision of this Plan to
the contrary, the aggregate consideration (including cash and property) paid to
the Company upon the purchase of all Shares on which "Pre-Public Incentives" are
issued shall not (unless and until the shares issuable pursuant to this Plan are
registered with the Securities and Exchange Commission) exceed $5,000,000 or
such lesser amount from time to time permitted under Rule 701 of the Securities
and Exchange Commission or any successor rule. For purposes of this Section
6.01, the term "Pre-Public Incentives" means Incentives issued prior to the
first date on which the Company becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act.
6.02. Expiration and cancellation. If an Incentive granted
under the Plan expires, is terminated or is otherwise cancelled before exercise,
that Incentive and the related shares of Common Stock, SARs or phantom stock
shall not apply toward the limits provided in Section 6.01. If Shares, SARs or
Units of Phantom Stock issued or awarded under this Plan are forfeited,
cancelled, terminated or reacquired by the Company, those forfeited, cancelled,
terminated or reacquired Shares, SARs, and Units of Phantom Stock shall not
apply toward the limits provided in Section 6.01 and shall be available again
for the grant of Incentives.
6.03. Maintenance of stock. Shares issued under the Plan shall
be authorized and unissued shares or shares of treasury stock. The Company shall
always maintain the number of such Shares at least equal to a number of Shares
for which Incentives have been granted and remain outstanding and unexercised.
Section 7. Stock Options.
Each Stock Option granted under this Plan shall be subject to
the following terms and conditions:
7.01. Price. The option price per share shall be determined
by the Board; provided, however, that the option price shall not be less
than 1% of the Fair Market Value on the Award Date of the Common Stock
subject to the option.
7.02. Number. The number of Shares subject to the Stock
Option shall be determined by the Board.
7.03. Duration and time for exercise. The Award Date of a
Stock Option shall be the date specified by the Board, provided that that date
shall not be before the date on which the Stock Option is actually awarded. The
term of each Stock Option shall be determined by the Board but shall not exceed
10 years from the date of grant. Each Stock Option shall become exercisable at
such time or times and in such amount or amounts during its term as shall be
determined by the Board at the time of grant. If Section 3.02 then applies, no
Stock Option may be exercised during the first six months of its term. The Board
may accelerate the exercisability of any Stock Option. Unless otherwise
specified by the Board, once a Stock Option becomes exercisable, whether in full
or in part, it shall remain so exercisable until its expiration, forfeiture,
termination or cancellation.
7.04. Exercise. A Stock Option may be exercised, in whole or
in part, by giving written notice to the Company (Attention: Chief Financial
Officer) at its principal office or to such transfer agent as the Company may
designate. The notice shall identify the Incentive being exercised and shall
contain such other information and terms as the Board may require. The notice
shall be accompanied by full payment of the purchase price for the Shares (a) in
United States dollars in cash or by check, (b) at the discretion of the Board,
by delivery of previously acquired Shares having a Fair Market Value equal on
the date of exercise to the cash exercise price of the Stock Option, or (c) at
the discretion of the Board, by a combination of (a) and (b) above. As soon as
practicable after receipt of the written notice, the Company shall deliver to
the person exercising the Stock Option the one or more certificates for the
Shares.
7.05. Incentive Stock Options. Notwithstanding anything in this
Plan to the contrary, the following additional provisions shall apply to
the grant of Incentive Stock Options:
(a) The aggregate Fair Market Value on the Award Date of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by any Participant during any calendar year (under all plans of the
Group) shall not exceed $100,000;
(b) All Incentive Stock Options must be granted within
10 years from the date on which the Plan was adopted by the Board;
(c) Unless exercised sooner, each Incentive Stock Option shall
expire no later than 10 years after the Award Date for that Incentive Stock
Option;
(d) The option price for each Incentive Stock Option shall be
not less than 100% of the Fair Market Value of the Shares subject to the option
on the Award Date of that Incentive Stock Option;
(e) No Incentive Stock Option shall be granted to any
Participant who, at the time that option is granted, owns (within the meaning of
Section 422 of the Code) stock having more than 10% of the total combined voting
power of all classes of stock of the Company or any member of the Group, unless
the option price is equal to at least 110% of the Fair Market Value of the
Shares subject to the option on the Award Date and the option is not exercisable
later than five years from the Award Date;
(f) Incentive Stock Options may be issued alone or with other
Incentives (including Non-Statutory Stock Options) but may not be issued In
Tandem with Non-Statutory Stock Options; and
(g) Each Incentive Stock Option agreement referred to in
Section 13.05 shall contain or be deemed to contain all provisions required in
order to qualify those Stock Options as incentive stock options under Section
422 of the Code, and the provisions of this Plan shall be interpreted and
construed to effect such treatment under that Section.
Section 8. Stock Appreciation Rights.
An SAR may be granted (i) together with any Stock Option
granted under this Plan in which case it shall be exercisable with and in
addition to that Stock Option, (ii) In Tandem with any Stock Option granted
under this Plan (except with respect to an Incentive Stock Option if the grant
of the SAR would cause the Incentive Stock Option not to qualify as such under
Section 422 of the Code) or (iii) alone, without reference to any Stock Option.
Each SAR granted under this Plan shall be subject to the following terms and
conditions:
8.01. Number. Each SAR shall relate to the number of Shares
as may be determined by the Board.
8.02. Duration. The term of each SAR shall be determined by
the Board but shall not exceed 10 years from the Award Date of the SAR. If
Section 3.02 then applies, no SAR may be exercised during the first six months
of its term. Except as provided in the preceding sentence, the Board may
accelerate the exercisability of any SAR.
8.03. Exercise. An SAR may be exercised, in whole or in part,
by giving written notice to the Company (Attention: Chief Financial Officer) at
its principal office or to such transfer agent as the Company shall designate.
The notice shall identify the Incentive being exercised and shall contain such
other information and terms as the Board may require. As soon as practicable
after receipt of the written notice, the Company shall deliver to the person
exercising the SAR certificates for the Shares, cash or a combination thereof to
which that person is entitled under Section 8.04.
8.04. Payment. When the Board awards an SAR, it shall specify
whether the SAR is exercisable (a) for cash only, (b) for Shares only, (c) for
any combination thereof as specified by the person exercising the SAR at the
time of the exercise of the SAR or (d) for any combination thereof as specified
by the Board at the time of the exercise of the SAR.
(a) If an SAR is exercisable for Shares, the number of Shares
issuable upon the exercise of the SAR shall be determined by dividing:
(i) the number of Shares for which the SAR is exercised
multiplied by the amount of the appreciation per Share (for this purpose the
"appreciation per Share" shall be the amount by which the Fair Market Value of
a Share on the Exercise Date exceeds (A) in the case of an SAR granted In
Tandem with a Stock Option, the option price or (B) in the case of an SAR
granted alone without reference to a Stock Option, the Fair Market Value of a
Share on the Award Date of the SAR); by
(ii) the Fair Market Value of a Share on the Exercise
Date.
(b) If an SAR is exercisable for cash, the amount of cash
payable upon exercise shall be equal to the Fair Market Value on the Exercise
Date of any or all of the Shares that would be issuable if the SAR were
exercised for Shares.
(c) No fractional Shares shall be issued upon the exercise of
an SAR. Instead, the holder of the SAR shall receive a cash payment equal to the
Fair Market Value of the fractional share. Notwithstanding the foregoing, the
Board may decide to pay cash to Participants covered by Section 16 of the
Securities Exchange Act only if the Company, the Board and the Participant
comply with all applicable provisions of that Section 16 and the related
regulations.
Section 9. Phantom Stock.
Each Unit of Phantom Stock granted under this Plan shall be
subject to the following terms and conditions:
9.01. Number. Each Unit of Phantom Stock shall relate to one
Share.
9.02. Duration. The term of each Unit of Phantom Stock shall
be determined by the Board but shall not exceed 10 years from the Award Date for
that Unit of Phantom Stock. If Section 3.02 then applies, no Unit of Phantom
Stock may be exercised during the first six months of its term. Except as
provided in the preceding sentence, the Board my accelerate the exercisability
of any Unit of Phantom Stock.
9.03. Exercise. A Unit of Phantom Stock may be exercised, in
whole or in part, by giving written notice to the Company (Attention: Chief
Financial Officer) at its principal office or to such transfer agent as the
Company shall designate. The notice shall identify the Incentive being exercised
and shall contain such other information and terms as the Board shall require.
As soon as practicable after receipt of the written notice, the Company shall
deliver to the person exercising the Unit of Phantom Stock the amount of cash to
which that person is entitled under Section 9.04.
9.04. Payment.
(a) When the Board awards a Unit of Phantom Stock, it shall
specify whether that unit is entitled to the dividends that would accrue to a
single Share. If any Unit of Phantom Stock is so entitled, dividends shall be
paid on the unit as if the unit were a Share.
(b) The amount of cash payable upon exercise of a Unit of
Phantom Stock shall be the excess of Fair Market Value of one Share on the
Exercise Date over the Fair Market Value of one Share on the Award Date.
Section 10. Stock Awards and Restricted Stock.
Stock Awards and Restricted Stock Awards shall be subject to
the following terms and conditions:
10.01. Number of Shares. The number of Shares to be issued
by the Company to a Participant under a Stock Award or a Restricted Stock
Award shall be determined by the Board.
10.02. Sale price. The Board shall determine the prices, if
any, at which Shares issued under a Restricted Stock Award shall be sold to a
Participant, which prices may vary from time to time and among Participants and
which may be below the Fair Market Value of Shares at the date of sale. The
Shares of restricted stock awarded at a price must be paid for (a) in United
States Dollars in cash or by check, (b) at the discretion of the Board, by
delivery of Shares having a Fair Market Value equal on the purchase date to the
purchase price or (c) at the discretion of the Board, by a combination of (a)
and (b) above.
10.03. Duration. Shares of restricted stock that are to
be sold to the Participant must be fully paid for by the Participant within
the time specified by the Board. If payment is not timely made, the Incentive
shall lapse and terminate.
10.04. Delivery. As soon as practicable after granting a Stock
Award, the Company shall deliver to the Participant one or more certificates for
the Shares awarded. As soon as practicable after granting a Restricted Stock
Award and, if the restricted stock is to be sold to the Participant, after
payment of the full purchase price, the Company shall deliver one or more
certificates for the Shares as provided in Section 10.06.
10.05. Restrictions. All Shares issued under a Restricted
Stock Award shall be subject to such restrictions as the Board may determine,
including, but not limited to, any or all of the following:
(a) a prohibition against the sale, transfer, pledge,
encumbrance or other disposition of the Shares. Such a prohibition shall lapse
at the time or times that the Board may determine (whether in annual or more
frequent installments, at the time of the death, disability or retirement of the
Participant, or otherwise); and
(b) a requirement that the Participant forfeit (or in the case
of Shares sold to a Participant, resell to the Company at the same price at
which the Participant purchased the Shares) all or any part of those Shares if
the Participant's employment is terminated during any period in which those
Shares are subject to restrictions.
10.06. Escrow. Shares issued under a Restricted Stock Award
shall be registered in the name of the Participant and deposited, together with
a stock power endorsed in blank, in escrow with the Company. Each certificate
for those Shares shall bear a legend in substantially the following form:
The transfer of this certificate and the shares of Common Stock
represented by it is subject to the terms and conditions (including
conditions of forfeiture) contained in the 1988 Incentive Compensation
Plan of Dialogic Corporation (the "Company") and an agreement entered
into between the registered owner and the Company. Copies of the Plan and
agreement are on file in the office of the Secretary of the Company.
10.07. End of restrictions. After the restrictions have
expired, certificates evidencing the Shares shall be delivered to the
Participant free of the legend. The Shares, however, shall remain subject to all
other restrictions stated in this Plan or in the agreement providing for that
Incentive.
10.08. Stockholder. Subject to the terms and conditions of the
Plan and any other restrictions determined by the Board and set forth in the
agreement for the Restricted Stock Award, each Participant who receives Shares
under a Restricted Stock Award shall have all of the rights of a stockholder
during any period in which the Shares are subject to restrictions, including,
but not limited to, the right to vote the Shares. Dividends on the Shares paid
in cash or property shall be paid to the Participant. Dividends payable in
Shares or other stock, however, shall be paid in restricted Shares subject to
all provisions of this Section 10.
Section 11. Performance Stock Rights.
The award of Performance Stock Rights shall be subject to such
terms and conditions as the Board considers appropriate. Each award of a
Performance Stock Right shall include the performance objectives to be achieved
by the Group or the Participant. The number of Performance Stock rights awarded
shall be determined by the Board and shall be subject to such terms and
conditions as the Board may determine. If the performance objectives are
achieved, the Participant shall be issued a number of Shares equal to the number
of Performance Stock Rights granted to that Participant.
Section 12. Cash Awards.
The amount of any Cash Award shall be determined by the Board.
Cash Awards shall be subject to other terms and conditions as the Board may
determine.
Section 13. General.
13.01. Effective date. This Plan was adopted by the Board on
December 5, 1988.
13.02. Duration. Unless the Plan is terminated earlier, the
Plan shall terminate 10 years from the date on which the Plan is adopted by the
Board. No Incentive or other rights under the Plan shall be granted thereafter.
The Board, without further approval of the Company's stockholders, may at any
time before that date terminate the Plan. After termination of the Plan, no
further Incentives may be granted under the Plan. Incentives granted before any
termination shall continue to be exercisable in accordance with the terms of the
Incentive.
13.03. Non-transferability of Incentives; exercise by
Participant. No Incentive (except Cash Awards) may be sold, pledged, assigned,
encumbered, disposed of or otherwise transferred other than by will or the laws
of descent and distribution. The Company shall not be required to recognize any
attempted disposition by any Participant or Qualified Person. During a
Participant's lifetime, such Participant's Incentives are only exercisable by
such Participant.
13.04. Effects of termination of employment or death. Each
agreement providing for an Incentive shall include such provisions as the Board
may determine for the exercise and termination of the Incentive, the rights
thereunder, the forfeiture thereof and the rights of the Company to repurchase
or convert into non-voting or other Shares the Shares acquired thereunder in
each case if the Participant ceases to be an employee of the Company or any
member of the Group for any reason; provided, however, that notwithstanding any
provision to the contrary herein or in any Incentive Agreement, the provisions
of Section 13.04A shall govern in the event that the employment of a holder of a
Stock Option terminates as a result of death, Disability or Retirement or in the
event that the employment of a holder of a Stock Option is terminated for
reasons other than death, Disability or Retirement that do not constitute
"cause" (any determination of cause to be made by the Committee). An employee's
employment shall be deemed to have terminated when the Company gives the
employee notice of termination or receives a notice of termination from the
employee, irrespective of the subsequent payment of salary, wages or severance
or other benefits. The Board's determination as to whether leave of absence
(whether or not by approval of the Company or by reason of military or
governmental service) constitutes termination of employment for purposes of the
Plan shall be binding and conclusive.
13.04A Termination of Employment as a Result of Death,
Disability or Retirement. Notwithstanding any provision to the contrary herein
or in any Incentive Agreement, the following provisions shall apply with respect
to Stock Options held by a Participant at the termination of such Participant's
employment with members of the Group in the event that such Participant's
employment terminates as a result of death, Disability or Retirement or in the
event that such Participant's employment is terminated for reasons other than
death, Disability or Retirement that do not constitute "cause" (any
determination of "cause" to be made be the Committee):
(a) If such employment terminates as a result of death, the
Participant's estate shall have the right to exercise the
Participant's Stock Options for a period ending on the earlier
of the expiration dates of such Stock Options or one year from
the date of termination of employment, provided that such
Stock Options shall be exercisable by such estate only to the
extent exercisable on the date of termination of employment.
(b) If such employment terminates as a result of Disability,
the Participant shall have the right to exercise his Stock
Options for a period ending on the earlier of the expiration
dates of such Stock Options or one year from the date that the
Participant is notified that he will not longer be employed by
any members of the Group (the "Notification Date"), provided
that such Stock Options shall be exercisable by the
Participant after termination of employment only to the extent
exercisable on the Notification Date.
(c) If such employment terminates as a result of Retirement,
the Participant shall have the right to exercise his Stock
Options for a period ending on the earlier of the expiration
dates of such Stock Options or one year from the date of
termination of employment, provided that such Stock Options
shall be exercisable by the Participant after Retirement only
to the extent exercisable on the date of termination of
employment.
(d) If such employment terminates for reasons that do not
constitute death, Disability, Retirement or "cause", the
Participant shall have the right to exercise his Stock Options
for a period ending on the earlier of the expiration dates of
such Stock Options or ninety days from the date of termination
of employment, provided that such Stock Options shall be
exercisable by the Participant after termination of employment
only to the extent exercisable on the date of termination of
employment.
13.05. Incentive agreements. Except in the case of Cash
Awards, the terms of each Incentive shall be stated in an agreement between the
Company and the Participant in a form approved by the Board. The Participant
must execute and deliver the agreement to the Company as a condition to the
effectiveness of the Incentive. The Board may also determine to enter into
agreements with holders of options (a) to reclassify or convert certain
outstanding options, within the terms of the Plan, as Incentive Stock Options or
as Non-Statutory Stock Options or (b) to eliminate SARs for all or part of such
options and any other previously issued options. All such agreements may contain
all terms and conditions as the Board considers advisable that are not
inconsistent with the Plan, including, but not limited to, transfer
restrictions, rights of first refusal, forfeiture provisions, representations
and warranties of the Participant and provisions to ensure compliance with all
applicable laws, regulations and rules and provided in Section 13.06.
13.06. Compliance with law. The Company may determine, in its
sole discretion, that it is necessary or desirable to list, register or qualify
(or to update any listing, registration or qualification of) any Incentive or
the Shares issuable or issued under any Incentive or this Plan on any securities
exchange or under any federal or state securities law, or to obtain consent or
approval of any governmental body as a condition of, or in connection with, the
award of any Incentive, the issuance of Shares under any Incentive or this Plan,
or the removal of any restrictions imposed on such Shares. If the Company makes
such a determination, the Incentive shall not be awarded or the Shares shall not
be issued or the restrictions shall not be removed, as applicable, in whole or
in part, unless and until the listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company. The Company's obligation to sell or issue Shares
under an Incentive is subject to compliance with all applicable laws and
regulations. The Board, in its sole discretion, shall determine whether the sale
and issue of Shares is in compliance with all applicable laws and regulations.
13.07. Adjustment. If the outstanding Shares of Common Stock
are increased or decreased or changed into or exchanged for a different number
or kind of securities of the Company (after the filing of the Restated
Certificate of Incorporation approved by the Board on February 25, 1993) or of
another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination of securities or
dividend payable in corporate securities, then an appropriate adjustment shall
be made by the Board in the number, kind and/or price of Shares for which
Incentives may be granted under the Plan. In addition, the Board shall make
appropriate adjustment in the number, kind and/or price of Shares as to which
outstanding Incentives, or portions thereof then unexercised, shall be
exercisable. In the event of any such adjustment, the exercise price of any
Stock Option, the performance objectives, restrictions or other terms and
conditions of any Incentive and the Shares issuable under any Incentive shall be
adjusted as and to the extent appropriate, in the sole and absolute discretion
of the Board, to provide each Participant with substantially the same relative
rights before and after such adjustment to the extent practical.
13.08. Withholding.
(a) The Company shall have the right to withhold from any
payments made under the Plan or to collect as a condition to any award, payment
or issuance of Shares under the Plan any taxes required to be withheld by
Federal, state or local law. Whenever a Participant is required to pay to the
Company an amount required to be withheld under applicable tax laws in
connection with a distribution of Shares or cash or upon exercise of a Stock
Option or SAR, the Participant may satisfy this obligation in whole or in part
by electing (the "Election") to have the Company withhold from the distribution
that number of Shares having a value equal to the amount required to be
withheld. The value of the Shares to be withheld shall be based on the Fair
Market Value of the Shares on the date on which the amount of tax to be withheld
is determined ("Tax Date").
(b) Each Election must be made before the Tax Date. The Board
may disapprove any Election, may suspend or terminate the right to make
Elections, or may provide with respect to any Incentive that the right to make
an Election shall not apply to that Incentive. An Election is irrevocable.
(c) If a Participant is subject to the restrictions of Section
16 of Securities Exchange Act, then an Election is subject to the following
additional restrictions:
(i) No Election shall be effective for a Tax Date
that occurs within six months of the Award Date of the Incentive; and
(ii) The Election must be made either six months
before the Tax Date or during a period beginning on the third business day
after release for publication of the Company's quarterly or annual summary
statements of sales and earnings and ending on the twelfth business day after
that release.
13.09. No right to continued employment. No Participant under
the Plan shall have any right to continue in the employ of the Company or any
member of the Group for any period of time because of his or her participation
in the Plan.
13.10. No right as stockholder. No Participant or Qualified
Person shall have the rights of a stockholder with respect to the Shares covered
by an Incentive unless a stock certificate is issued to that person for the
Shares. No adjustment shall be made for cash dividends or similar rights for
which the record date is before the date on which such stock certificate is
issued.
13.11. Amendment of the Plan. The Board may amend the Plan
from time to time in such respects as the Board deems advisable. No such
amendment, however, shall (a) change or impair an Incentive without the consent
of the Participant or Qualified Person holding that Incentive, or (b) without
the prior approval of the Company stockholders (i) increase the limits provided
in Section 6.01 (except by adjustment under Section 11.07), (ii) change or
expand the types of Incentives that may be granted under the Plan, (iii) change
the class of persons eligible to receive Incentives under the Plan, (iv)
materially increase either the benefits accruing to Participants under the Plan
or the cost of the Plan to the Company, or (v) make any other change that
requires approval of the Company stockholders under applicable law or to
preserve the treatment of the Incentive Stock Options as such under Section 422
of the Code.
13.12. Definition of fair market value. Whenever "Fair Market
Value" of Common Stock is to be determined for purposes of this Plan, it shall
be determined as follows:
(a) If the Common Stock is publicly traded at the time Fair
Market Value is to be determined under the Plan, "Fair Market Value" shall mean
closing sale price on that date on the over-the-counter market as reported by
NASDAQ or, if the Common Stock is then traded on a national securities exchange,
the closing sale price on that date on the principal national securities
exchange on which it is so traded; or
(b) If the Common Stock is not publicly traded at the time
Fair Market Value is to be determined under the Plan, "Fair Market Value" shall
be determined in good faith from time to time by the Board.
13.13. Repurchase, replacement and substitution of options.
Upon approval of the Board, the Company may repurchase a previously granted
Stock Option from a Participant by mutual agreement before that Stock Option has
been exercised upon such terms and conditions as the Company and the Participant
shall agree, provided that the purchase price per Share shall not exceed the
amount by which the Fair Market Value of the Common Stock subject to the option
on the date of purchase exceeds the option price. The Board may agree to the
cancellation of Stock Options in order to make a Participant eligible for the
grant of a replacement Stock Option at a lower price than the option to be
cancelled. In the event of a merger or consolidation, or the acquisition by the
Company of property or stock of an acquired corporation or any reorganization or
other transaction qualifying under Section 424 of the Code, the Board may, in
accordance with the provisions of that section, substitute Stock Options under
this Plan for options under the plan of the acquired corporation, provided that
(a) the excess of the aggregate Fair Market Value of the Shares subject to the
option immediately after the substitution over the aggregate option price of
such Shares is not more than the similar excess immediately before such
substitution, and (b) the new option does not give the Participant or Qualified
Person holding that Stock Option additional benefits.
13.14. Fractional and minimum Shares. In no event shall a
fraction of a Share be purchased or issued under the Plan without Board
approval. The Board may specify a minimum number of Shares for which each Stock
Option and/or SAR must be exercised, which number, however, shall not be more
than 100.
13.15. Application of funds. The proceeds received by
the Company from the sale of Shares under the Plan shall be used for general
corporate purposes.
13.16. Other incentives and plans. Nothing in this Plan
shall prohibit any member of the Group from establishing other employee incen-
tives and plans.
13.17. Governing law. The validity and construction of the
Plan and of each agreement evidencing Incentives shall be governed by the laws
of the State of New Jersey, excluding the conflict-of-laws principles thereof.
14. Change in Control. In the event that a "Senior Level Optionee" (as
defined herein) experiences a "Termination Event" (as defined herein) within
twelve months after a "Change in Control Event" (as defined) occurs, all Options
granted hereunder which are held by such Senior Level Optionee on the date that
such Termination Event occurs (the "Termination Date") shall be deemed to be
fully vested hereunder as of such Termination Date for purposes of determining
the exerciseability of such Options on and after such Termination Date. For
purposes of this Section 14, the term "Change in Control Event" shall mean any
of the following events occurring after the "Two Year Date" (as defined herein):
(i) the acquisition by any one person, or more than
one person acting as a group, of ownership of stock of the
Company, other than any person or group of persons who held
such total voting power on April 10, 1994 (the day before the
Company commenced its initial public offering), possessing
50.1% or more of the total voting power of the capital stock
of the Company;
(ii) the approval by the stockholders of the Company
of (i) any consolidation or merger of the Company, in which
the holders of voting stock of the Company immediately before
the consolidation or merger will not own 50% or more of the
voting shares of the continuing or surviving corporation
immediately after such consolidation or merger, or (ii) any
sale, lease, exchange or other transfer (in one transaction or
series of related transactions) of all or substantially all of
the assets of the Company; or
(iii) a change of 50% (rounded to the next whole
percent) in the membership of the Board of Directors within a
12-month period, unless the election, or nomination for
election by stockholders, of each new director within such
period was approved by the vote of 80% (rounded to the next
whole person) of the directors then still in office who were
in office at the beginning of such 12-month period.
For purposes of this Section 14, a Senior Level Optionee shall be deemed to have
experienced a "Termination Event" if, and only if, within twelve months after a
"Change in Control Event" occurs, (i) such Senior Level Optionee's employment
with the Company or any subsidiary thereof is terminated by the Company or such
subsidiary without cause, (b) such Senior Level Optionee's base salary
(excluding bonuses and/or commissions) is reduced by more than 10% per annum or
(c) the duties and responsibilities of such Senior Level Optionee are
substantially reduced without such Senior Level Optionee's consent.
For purposes of this Section 14, the term "Two Year Date" shall mean (x) the
date hereof if the event described in clauses (i), (ii) or (iii) above is not to
be accounted for as a pooling of interests or (y) if the event described in
clauses (i), (ii) or (iii) above is to be accounted for as a pooling of
interests, February 16, 1997 (the date two years after this Section 14 was first
approved by the Board of Directors of the Company).
For purposes of this Section 14, the term "Senior Level Optionee" shall mean the
Company's Chairman of the Board, the Company's Chief Executive Officer and each
vice president of the Company who, on the date on which a Change in Control
Event occurs, reports directly to the Company's Chief Executive Officer pursuant
to the Company's then existing table of organization.
Exhibit 11.1
DIALOGIC CORPORATION AND SUBSIDIARIES
CALCULATION OF INCOME PER SHARE
(In thousands, except per share amounts)
Three Months Ended Three Months Ended
March 31, 1996 March 31, 1995
Income applicable to shares used in
calculation of income per share $10,612 $ 2,050
======= =======
Shares used in calculation of income per share:
Weighted average shares outstanding 15,518 15,211
Dilutive effect of stock options after
application of treasury stock method 738 769
Number of shares used in calculation
of income per share 16,256 15,980
====== ======
Income per share $ 0.65 $ 0.13
_______ _______
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This financial data schedule contains summary
financial information extracted from Dialogic
Corporation's financial statements and is qualified
in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 4,733
<SECURITIES> 48,854
<RECEIVABLES> 24,844
<ALLOWANCES> 1,065
<INVENTORY> 28,234
<CURRENT-ASSETS> 114,525
<PP&E> 16,517
<DEPRECIATION> 1,225
<TOTAL-ASSETS> 133,738
<CURRENT-LIABILITIES> 26,354
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 133,738
<SALES> 48,732
<TOTAL-REVENUES> 48,732
<CGS> 19,751
<TOTAL-COSTS> 19,751
<OTHER-EXPENSES> 22,360
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 16,620
<INCOME-TAX> 6,008
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,612
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0
</TABLE>
