<PAGE>
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the quarterly period ended September 30, 1997
Commission File Number 0-25186
APPLIED VOICE TECHNOLOGY, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Washington 91-1190085
(State of incorporation) (I.R.S. Employer
Identification Number)
11410 NE 122nd Way
Kirkland, WA 98034
(Address of principal executive offices)
Registrant's telephone number, including area code: (425) 820-6000
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 [_]
The number of outstanding shares of the Registrant's Common Stock as of October
31, 1997 was 5,759,089.
================================================================================
<PAGE>
APPLIED VOICE TECHNOLOGY, INC.
FORM 10-Q
For the Quarter Ended September 30, 1997
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. Financial Information
Item 1. Financial Statements (unaudited)....................... 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 9
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K...................... 13
Signatures............................................................... 14
Exhibits................................................................. 15
</TABLE>
2
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
APPLIED VOICE TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
ASSETS (in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,902 $12,195
Short-term investments 18,614 15,484
Accounts receivable, net 6,940 6,106
Inventories 4,530 2,458
Deferred income taxes 2,605 1,056
Prepaid expenses and other 855 502
------- -------
Total current assets 43,446 37,801
------- -------
Equipment and leasehold improvements, net 2,027 1,479
Intangibles, net 6,021 6,847
------- -------
$51,494 $46,127
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,067 $ 2,033
Accrued compensation and benefits 1,208 1,252
Other accrued liabilities 2,139 2,715
Note payable - current portion 464 586
Federal income taxes payable 1,893 345
------- -------
Total current liabilities 7,771 6,931
------- -------
Note payable - 313
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $.01 per
share, 1,000,000 authorized; none
outstanding - -
Common stock, par value $.01 per
share, 30,000,000 authorized;
5,759,089 and 5,425,713 shares
outstanding 57 54
Additional paid-in capital 30,418 28,267
Retained earnings 13,248 10,562
------- -------
Total shareholders' equity 43,723 38,883
------- -------
$51,494 $46,127
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
APPLIED VOICE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
-------------------------- ---------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
(in thousands, except per share data)
Net sales $14,781 $11,221 $40,503 $31,457
Cost of sales 5,475 4,202 15,023 12,084
------- ------- ------- -------
Gross profit 9,306 7,019 25,480 19,373
Operating expenses:
Research and development 1,678 1,093 4,747 3,029
Sales, general and administrative 4,599 3,719 13,422 10,565
Write-off of purchased, in-process
research and development - - 3,898 4,140
------- ------- ------- -------
Total operating expenses 6,277 4,812 22,067 17,734
======= ======= ======= =======
Operating income 3,029 2,207 3,413 1,639
Other income, net 265 252 783 650
------- ------- ------- -------
Income before income tax expense 3,294 2,459 4,196 2,289
Income tax expense 1,185 886 1,510 2,315
------- ------- ------- -------
Net income (loss) $ 2,109 $ 1,573 $ 2,686 $ (26)
======= ======= ======= =======
Primary net income (loss) per common share $ 0.33 $ 0.26 $ 0.44 $ -
Fully diluted net income per common share * * $ 0.42 *
Primary weighted average common shares
outstanding 6,342 6,106 6,160 6,064
Fully diluted weighted average common
shares outstanding * * 6,391 *
</TABLE>
- -----------------
* Primary and fully diluted net income per common share not materially
different
See accompanying notes to consolidated financial statements.
4
<PAGE>
APPLIED VOICE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30
---------------------------------------
1997 1996
----------------- -----------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,686 $ (26)
------- -------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,489 1,035
Write-off of purchased in-process research and
development 3,898 4,140
Stock compensation expense - 34
Changes in current assets and liabilities, net of
effects of acquisition:
Accounts receivable (557) 895
Inventories (1,349) (518)
Deferred income tax asset (1,549) 4
Prepaid expenses and other assets (355) (12)
Accounts payable (100) (69)
Accrued compensation and benefits (44) 729
Other accrued liabilities 185 (13)
Federal income taxes payable 1,548 (576)
------- -------
Total adjustments 3,166 5,649
------- -------
Net cash provided by operating activities 5,852 5,623
------- -------
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (954) (647)
Cash paid in acquisition, net of cash acquired (5,052) (3,318)
Purchase of short-term investments (3,130) -
Net proceeds from the sale of investments - 4,037
Purchase of intangibles and other long-term assets (29) (397)
------- -------
Net cash used by investing activities (9,165) (325)
------- -------
Cash flows from financing activities:
Repayment of long-term debt (435) (399)
Proceeds from exercise of stock options 1,455 302
------- -------
Net cash provided (used) by financing
activities 1,020 (97)
------- -------
Net (decrease) increase in cash and cash
equivalents (2,293) 5,201
Cash and cash equivalents at beginning of period 12,195 12,249
------- -------
Cash and cash equivalents at end of period $ 9,902 $17,450
======= =======
Noncash transactions:
Stock and warrants issued in acquisitions 700 2,849
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
APPLIED VOICE TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Interim Financial Statements
The accompanying consolidated financial statements of Applied Voice
Technology, Inc. and subsidiaries (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 nine
month period ended September 30, 1997 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 December 31,
1996.
2. Short-Term Investments
In accordance with FAS 115, the Company has classified its investments
as "available-for-sale" and recorded these investments at estimated fair value
with unrealized gains and losses, when material, reported as a separate
component of Shareholders' Equity.
Interest income is recorded using an effective interest rate, with the
associated premium or discount amortized to interest income over the term of the
investment. The cost of securities sold is based upon the specific
identification method. Available-for-sale securities as of September 30, 1997
consisted of municipal notes and bonds whose amortized cost approximates
estimated fair value. The average maturity for these investments is four
months.
3. Inventories
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(in thousands)
<S> <C> <C>
Raw materials and service parts $4,193 $2,193
Finished goods 337 265
------ ------
$4,530 $2,458
====== ======
</TABLE>
6
<PAGE>
APPLIED VOICE TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Businesses Acquired
On January 3, 1997, the Company acquired selected assets and
liabilities of Telcom Technologies, Inc., a developer of NT-based open-
architecture automatic call distribution (ACD) systems. The purchase price for
the acquisition was $3.5 million in cash, plus warrants to purchase 100,000
shares of the Company's common stock exercisable at $13.36 per share, which may
be exercised at any time prior to January 3, 2002. The Company accounted for
the business combination as a purchase and recognized a nonrecurring charge of
$3.9 million in the first quarter of 1997, representing the value of the
purchased, in-process research and development acquired.
On January 2, 1996, the Company acquired RightFAX, Inc., (RightFAX), a
privately held developer of fax server software for local area networks, through
a merger of RightFAX into a wholly owned subsidiary of the Company. The
purchase price for the acquisition paid at the closing was $4.2 million in cash
plus 163,000 shares of the Company's common stock. In addition, the Company
paid consideration of $1.4 million in cash and 95,000 shares of the Company's
common stock in 1997, relating to the 1996 earn out and guaranteed value of the
Company's common stock. As a result of the earn out, the Company recorded an
additional $2.0 million of goodwill at December 31, 1996. The former
shareholders of RightFAX are entitled to receive additional consideration worth
$1.8 million in a combination of cash and the Company's common stock over the
next two years, if certain revenue and profit margin goals are achieved by
RightFAX. The Company accounted for the business combination as a purchase and
recognized a nonrecurring charge of $4.1 million in the first quarter of 1996,
representing the value of the purchased, in-process research and development
acquired.
5. New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
128), and No. 129, Disclosure of Information About Capital Structure (SFAS 129),
which are effective for periods beginning after December 15, 1997. SFAS 128
establishes new standards for computing and presenting earnings per share (EPS).
Companies will now report basic EPS and diluted EPS compared to primary and
fully diluted EPS, which were previously reported. Under the new standard, the
Company's basic EPS for the quarter ended September 30, 1997, was net income per
share of $0.37. For the nine months ended September 30, 1997, the basic EPS was
$0.48 per share. For the quarter ended September 30, 1997, the diluted EPS is
equivalent to the reported primary EPS. SFAS 129 requires companies to disclose
in their financial statements details of their capital structure and EPS
calculations, both of which are currently disclosed in exhibits to the Company's
10-K and 10-Q filings.
7
<PAGE>
6. Subsequent Events
On October 22, 1997, the Company acquired all the outstanding capital stock
of CommercePath, Inc. (CommercePath) from Forest City Trading Group, Inc. for
$10.7 million in cash. The Company will account for the business combination as
a purchase and expects to record a nonrecurring charge of approximately $7.2
million in the fourth quarter of 1997, representing the value of the purchased,
in-process research and development, and to record approximately $1.9 million of
goodwill that it will amortize over seven years.
In October 1997, the Company filed a registration statement with the
Securities and Exchange commission for the registration of 1,840,000 shares of
common stock, of which 717,000 shares are being offered by the Company, 883,000
shares are being offered by selling shareholders and the remaining 240,000
shares may be offered by the Company and one of the selling shareholders upon
the exercise of the underwriters' over-allotment option. As a result of recent
market volatility, the Company has not yet determined when it will proceed with
this offering.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is a leading provider of software-based computer-telephony
solutions for medium-sized enterprises. These solutions are designed to enhance
individual and work group productivity, improve customer service, reduce
business operating costs and simplify access to data and dissemination of
information. The Company's products provide enhanced voice and data integration
through applications such as unified voice and data messaging, call center
management, IVR and document distribution. The Company's key products are
multi-application computer-telephony platforms that run on off-the-shelf
hardware, support Windows NT and OS/2 and interface with a wide variety of
telephony and computer equipment. The Company also offers add-on modules and
software upgrades that provide increased capacity and functionality.
The Company sells its products primarily through an indirect channel of
resellers and distributors, as well as through direct sales and OEM and private
label agreements. The Company has significantly expanded its product offering
in 1997 by releasing Windows NT-based products in each of its main product
categories. The Company's telephony-oriented products include: CallXpress for
Windows NT and CallXpress3, the Company's premier multi-application, high
capacity computer-telephony product lines; PhoneXpress, a full-featured voice
messaging system for small to medium-sized enterprises; AgentXpress for Windows
NT, a high-performance Windows NT-based ACD system for medium-sized call
centers; and Enhanced Agent, a set of interfaces and applications designed to
extend the capabilities of AgentXpress. The Company's computer-oriented
products include RightFAX 5.0 and RightFAX Enterprise, the Company's LAN-based
fax server lines for Windows NT, and RightFAX 4.5, which runs on the OS/2
operating system. With the completion of its acquisition of CommercePath in
October 1997, the Company added the CommercePath line of production document
delivery systems for Unix and Windows NT to its computer-oriented product line.
The Company's products address the needs of four segments of the computer-
telephony market: advanced computer telephony integration ("CTI") applications,
CTI-ready systems, basic messaging systems, and installed base add-ons and
service. Advanced CTI applications products include CallXpress for Windows NT
and CallXpress3 systems sold with at least one advanced CTI application module
(in addition to voice mail/automated attendant), AgentXpress for Windows NT, the
RightFAX line of fax servers and the CommercePath line of product fax systems.
CTI-ready systems are CallXpress for Windows NT and CallXpress3 systems sold
initially with voice mail/automated attendant capabilities only, but which can
be easily upgraded to include advanced computer-telephony features. The basic
messaging market is addressed by the PhoneXpress product. Sales to the
installed based of non-CTI capability-enhancing add-ons, capacity-increasing
upgrades, maintenance, training and service parts represent the fourth market
segment.
Since January 1996, the Company has made three strategic acquisitions, each
of which was accounted for as a purchase. The Company acquired RightFAX, a
developer of LAN-based fax server software, in January 1996. In January 1997,
the Company acquired selected assets and liabilities of Telcom Technologies, a
developer of NT-based open architecture ACD systems. In connection with the
RightFAX and Telcom Technologies acquisitions, the Company recorded nonrecurring
charges of $4.1 million and $3.9 million, respectively, for the write-off of
purchased, in-process research and development, and recorded additional amounts
of goodwill that are being amortized over future years. See "Liquidity and
Capital Resources." In October 1997, the Company acquired CommercePath, a
developer of high-volume production-oriented fax servers. For the fiscal year
ended January 31, 1997, CommercePath's net sales were approximately $6 million.
The Company expects to record a nonrecurring charge of approximately $7.2
million for the write-off of purchased, in-process research and development
related to this acquisition and additional amounts of goodwill that will be
amortized in future years.
9
<PAGE>
When used in this discussion, the words "believes," "anticipates" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. Factors which could
affect the Company's financial results are described below and under the caption
"Risk Factors" in the Company's Registration Statement on form S-3 filed October
23, 1997. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrences of
unanticipated events.
Results of Operations
Net sales. Net sales increased 32% to $14,781,000 in the quarter ended
September 30, 1997, from $11,221,000 in the comparable 1996 quarter. The
increase resulted primarily from sales of advanced CTI applications, which
increased 47% from the comparable prior-year quarter, and represented 54% of
net sales, as compared with 49% in the comparable prior-year quarter. Sales of
basic messaging systems decreased 17% in the current quarter as compared to the
comparable prior-year quarter and represented 16% of net sales. The lower-
margin basic messaging market continues to be affected by price pressures from
competitive offerings. International sales for the third quarter of 1997
increased 67% compared to the third quarter of 1996, and represented 22% of
total net sales.
For the nine months ended September 30, 1997, net sales increased 29% to
$40,503,000 from $31,457,000 in the comparable prior-year period. The increase
resulted primarily from sales of advanced CTI applications, which increased 57%
over the comparable period of 1996, and represented 58% of net sales, as
compared with 47% of net sales in the 1996 period. Sales of CTI-ready systems
represented 10% of net sales in the nine months ended September 30, 1997, as
compared with 14% of net sales in the comparable 1996 period. The lower-margin
basic messaging market continued to be affected by price pressures from
competitive offerings. Basic messaging sales declined 18% in the first nine
months of 1997 from the first nine months of 1996, and represented 17% of net
sales in the 1997 period compared to 27% of net sales in the 1996 period. Sales
to the installed base increased 62% in the nine months ended September 30, 1997
from the nine months ended September 30, 1996 due to accelerated marketing
efforts of telephony-oriented products and the inclusion of maintenance and
spare parts sales related to the January 1997 acquisition of selected assets of
Telcom Technologies. Sales to the installed base represented 15% of net sales
for the nine months ended September 30, 1997, an increase from 12% of net sales
in the comparable 1996 period. International sales for the first nine months of
1997 increased 55% compared to the comparable prior-year period, and represented
21% of total sales.
Gross profit. Gross profit as a percentage of net sales improved to 63.0% in
the quarter ended September 30, 1996, as compared to 62.6% in the comparable
prior-year quarter, due to the favorable sales mix of advanced CTI applications
as compared with basic messaging systems. Because advanced CTI application
products contain a higher software content, gross margins are typically higher
than other sales. Also, the basic messaging market continues to be very
competitive, resulting in downward pressure on prices and margins.
For the nine months ended September 30, 1997, gross profit as a percentage of
net sales improved to 62.9% from 61.6% in the comparable prior-year period, due
primarily to the favorable mix of advanced CTI application sales.
Research and development. Research and development expenses increased to
$1,678,000 in the quarter ended September 30, 1997 from $1,093,000 in the
comparable prior-year period, due primarily to increased personnel costs
relating to acceleration of certain development projects and the inclusion of
the recently formed call center development group, which was acquired from
Telcom Technologies. Research and development expenses for the current quarter
represented 11.4% of net sales as compared with 9.7% of net sales in the
comparable prior-year quarter. For
10
<PAGE>
the nine months ended September 30, 1997 research and development expenses
increased to $4,747,000 from $3,029,000 in the comparable prior-year period and
represented 11.7% of sales.
Sales, general and administrative. Sales, general and administrative
expenses increased to $4,599,000 in the quarter ended September 30, 1997 from
$3,719,000 in the comparable prior-year period, due primarily to increased
personnel-related costs of domestic and international development of both the
telephony-oriented and computer-oriented distribution channels and the new
product launches of CallXpress for Windows NT and AgentXpress for Windows NT.
Sales, general and administrative costs for the current quarter represented
31.1% of net sales as compared with 33.1% in the comparable prior-year period.
Sales, general and administrative expenses for the nine months ended September
30, 1997 included amortization of $0.5 million of goodwill relating to
acquisitions. For the nine months ended September 30, 1997 sales, general and
administrative expenses increased to $13,422,000 from $10,565,000 in the
comparable prior-year period and represented 33.2% of sales.
Operating income. Operating income for the quarter ended September 30, 1997
increased to $3,029,000, or 20.5% of net sales, from $2,207,000 in the
comparable prior-year quarter, due to increased sales, higher gross profits and
controlled expenses.
In the first quarter of 1997, the Company recognized a nonrecurring charge of
$3,898,000 for the write-off of purchased, in-process research and development
resulting from the acquisition of Telcom Technologies in January 1997. In the
comparable prior-year period, the Company recognized a $4,140,000 similar charge
resulting from the January 1996 acquisition of RightFAX. As a result, the
company recognized operating income of $3,413,000 for the nine months ended
September 30, 1997 and $1,639,000 in the comparable prior-year period.
Excluding the nonrecurring charges, the Company's operating income for the first
nine months of 1997 would have been $7,311,000, or 18.1% of net sales, as
compared with $5,779,000 in the comparable prior-year period.
Other income, net. Net other income was $265,000 in the quarter ended
September 30, 1997, as compared to $252,000 in the comparable prior-year
quarter. For the nine months ended September 30, 1997 net other income was
$783,000 as compared to $650,000 in the comparable prior-year period.
Income tax expense. The effective tax rate for the quarters ended September
30, 1997 and 1996 was 36.0%, with income tax expense for the quarters ended
September 30, 1997 and 1996 of $1,185,000 and $886,000, respectively. The
acquisition of Telcom Technologies in 1997 was a taxable purchase of assets,
and, therefore, the resulting excess of purchase price over net tangible assets
acquired is deductible for income tax purposes. By contrast, the excess of the
purchase price over net tangible assets acquired associated with the acquisition
of RightFAX in 1996 is not tax deductible. Primarily as a result of the
differing tax treatment of the two acquisitions, the Company recognized an
income tax expense of $1,510,000 in the first nine months of 1997, as compared
to an income tax expense of $2,315,000 in the comparable period in 1996.
Net income (loss). The Company recognized net income of $2,109,000 or $0.33
per primary share for the quarter ended September 30, 1997, as compared to
$1,573,000 or $0.26 per primary share for the comparable prior-year quarter.
Due to the first quarter nonrecurring charges discussed above, the Company
recognized net income for the nine months ended September 30, 1997 of $2,686,000
compared to a net loss of $26,000 in the comparable 1996 period. Excluding
these nonrecurring charges, net income for the first nine months of 1997 would
have been $5,181,000 or $0.84 per primary share as compared with $4,114,000, or
$0.68 per primary share, in the comparable prior-year period.
11
<PAGE>
Liquidity and Capital Resources
Cash provided by operating activities in the nine months ended September 30,
1997 was $5.8 million due primarily to continuing profitable operations. The
average accounts receivable collection period remained unchanged at
approximately 40 days. Inventories increased to $4.5 million at September 30,
1997 from $2.5 million at December 31, 1996, due primarily to the acquisition of
assets of Telcom Technologies and the ramp-up of production of AgentXpress for
Windows NT and CallXpress for Windows NT.
In January 1997, the Company acquired selected assets and liabilities of
Telcom Technologies. The purchase price for the acquisition was $3.5 million in
cash, plus warrants to purchase 100,000 shares of the Company's common stock
exercisable at $13.36 per share, which may be exercised any time prior to
January 3, 2002. The Company accounted for the business combination as a
purchase and recognized a nonrecurring charge of $3.9 million in the first
quarter of 1997, representing the value of the purchased, in-process research
and development.
In January 1996, the Company acquired RightFAX through a merger of RightFAX
into a wholly owned subsidiary of the Company. The purchase price for the
acquisition paid at the closing was $4.2 million in cash plus 163,000 shares of
the Company's common stock. Approximately $4.1 million of the purchase price
was recognized as a nonrecurring charge in the first quarter of 1996,
representing the value of purchased, in-process research and development. The
remaining intangible assets are being amortized over seven years from the date
of acquisition. In addition, the Company paid $1.4 million in cash and 95,000
shares of the Company's common stock in 1997, relating to the 1996 earn out and
guaranteed value of the Company's common stock. As a result of the earn out,
the Company recorded an additional $2.0 million of goodwill at December 31,
1996. The former shareholders of RightFAX are entitled to receive additional
consideration of up to $1.8 million in a combination of cash and the Company's
common stock, if certain revenue and profit margin goals are achieved by
RightFAX during 1997 and 1998.
In October 1997, the Company acquired all the outstanding capital stock of
CommercePath from Forest City Trading Group, Inc. for $10.7 million in cash. In
connection with the acquisition, the Company also granted options to purchase
120,000 shares of Common Stock, at an exercise price of $28.09 per share, to two
of CommercePath's executive officers. The Company will account for the
acquisition as a purchase and expects to record a nonrecurring charge of
approximately $7.2 million for the write-off of purchased, in-process research
and development. In addition, the Company will record additional amounts of
goodwill that will be amortized over the future years.
The Company expects that its current cash, cash flow from operations, and
available bank line of credit will provide sufficient working capital for
operations for the foreseeable future.
12
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended September 30, 1997. On October 22, 1997, the Company filed a
report on form 8-K relating to the acquisition of CommercePath.
13
<PAGE>
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.
Applied Voice Technology, Inc.
(Registrant)
Date: November 10, 1997 By: /s/ ROGER A. FUKAI
---------------------------
Roger A. Fukai
Senior Vice President
Finance and Administration,
Chief Financial Officer
Signing on behalf of registrant and
as principal financial officer
14
<PAGE>
EXHIBIT 11.1
Exhibit 11.1
APPLIED VOICE TECHNOLOGY, INC.
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Nine Months ended
September 30, September 30,
------------- -----------------
1997 1997
------------- -----------------
(in thousands, except per share data)
Fully
Primary Primary Diluted
------------- ------- -------
<S> <C> <C> <C>
Net income (loss) $2,109 $2,686 $2,686
====== ====== ======
Computation of common and
common equivalent shares
outstanding:
Common Stock 5,713 5,656 5,656
Options 629 504 735
------ ------ ------
Common and common equivalent
shares used in computing per
share amounts 6,342 6,160 6,391
====== ====== ======
Net income per share $ 0.33 $ 0.44 $ 0.42
====== ====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets as of September 30, 1997 (Unaudited) and the
Consolidated Statements of Income for the Three Months Ended September 30, 1997
(Unaudited) 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-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,902
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0
0
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</TABLE>
