FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-15578
DAVOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware No. 02-0364368
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
6 Technology Park Drive
Westford, Massachusetts 01886
(Address of principal executive offices) (Zip Code)
Telephone: (978) 952-0200
(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: Common Stock, par value $.10 per share, outstanding as of
August 9, 2001: 12,792,586 shares.
DAVOX CORPORATION & SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements: Page(s)
-------
Consolidated Balance Sheets as of
June 30, 2001 and December 31, 2000 3
Consolidated Statements of Income
for the Three Months and Six Months Ended
June 30, 2001 and 2000 4
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2001 and 2000 5
Notes to Consolidated Financial Statements 6 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 13
Item 3. Quantitative and Qualitative Disclosures About
Market Risks 14 - 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 4. Submission of Matters to a Vote of Security-Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Data)
June 30, December 31,
2001 2000
-------- ------------
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 48,908 $ 61,758
Marketable securities 22,215 8,999
Accounts receivable, net of reserves of $2,117
and $2,255 in 2001 and 2000, respectively 14,668 14,195
Prepaid expenses and other current assets 4,099 4,564
Deferred tax assets 3,511 3,511
-------- --------
Total current assets 93,401 93,027
-------- --------
Property and equipment, net 6,699 5,863
Other assets 3,645 3,290
-------- --------
$103,745 $102,180
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,109 $ 5,450
Accrued expenses 7,582 8,092
Customer deposits 5,524 5,914
Deferred revenue 9,117 6,986
-------- --------
Total current liabilities 27,332 26,442
-------- --------
Stockholders' equity:
Common stock, $0.10 par value -
Authorized - 30,000 shares
Issued - 14,556 shares 1,456 1,456
Additional paid-in capital 81,647 82,676
Accumulated foreign currency translation
adjustments (389) (299)
Retained earnings 11,929 10,988
-------- --------
94,643 94,821
Treasury stock, 1,787 and 1,927 shares, at cost,
in 2001 and 2000, respectively (18,230) (19,083)
-------- --------
Total stockholders' equity 76,413 75,738
-------- --------
$103,745 $102,180
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
3
PART I. FINANCIAL INFORMATION (continued)
ITEM 1. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2001 2000 2001 2000
-------- ------- ------- -------
Product revenue $12,369 $ 9,700 $24,273 $24,527
Service revenue 13,214 11,873 26,007 23,429
------- ------- ------- -------
Total revenue 25,583 21,573 50,280 47,956
------- ------- ------- -------
Cost of product revenue 2,171 1,832 4,154 4,028
Cost of service revenue 6,807 5,906 13,867 11,516
------- ------- ------- -------
Total cost of revenue 8,978 7,738 18,021 15,544
------- ------- ------- -------
Gross profit 16,605 13,835 32,259 32,412
------- ------- ------- -------
Operating expenses:
Research, development and engineering 4,966 3,967 9,712 7,809
Selling, general and administrative 11,438 10,359 22,803 20,529
------- ------- ------- -------
Total operating expenses 16,404 14,326 32,515 28,338
Income (loss) from operations 201 (491) (256) 4,074
Other income (primarily interest income) 683 1,072 1,621 1,972
------- ------- ------- -------
Income before provision for income taxes 884 581 1,365 6,046
Provision for income taxes 274 198 424 2,056
------- ------- ------- -------
Net income $ 610 $ 383 $ 941 $ 3,990
======= ======= ======= =======
Earnings per share:
Basic $ 0.05 $ 0.03 $ 0.07 $ 0.30
======= ======= ======= =======
Diluted $ 0.05 $ 0.03 $ 0.07 $ 0.28
======= ======= ======= =======
Weighted average shares outstanding:
Basic 12,784 13,572 12,737 13,488
======= ======= ======= =======
Diluted 13,218 14,320 13,229 14,412
======= ======= ======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
4
ITEM 1. FINANCIAL STATEMENTS
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
------------------
2001 2000
-------- --------
Cash Flows from Operating Activities:
Net income $ 941 $ 3,990
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 2,005 1,977
Tax benefit from exercise of stock options 171 295
Changes in current assets and liabilities -
Accounts receivable 584 2,103
Prepaid expenses and other current assets (612) (228)
Accounts payable (341) (330)
Accrued expenses (501) (4,592)
Customer deposits (390) (67)
Deferred revenue 2,130 3,202
-------- --------
Net cash provided by operating activities 3,987 6,350
-------- --------
Cash Flows From Investing Activities:
Purchases of property and equipment (2,834) (2,196)
Increase in other assets (354) (607)
Purchases of marketable securities (56,558) (52,784)
Maturities of marketable securities 43,343 44,759
-------- --------
Net cash used in investing activities (16,403) (10,828)
-------- --------
Cash Flows From Financing Activities:
Proceeds from exercise of stock options 327 4,870
Proceeds from employee stock purchase plan 198 --
Purchases of treasury stock (874) --
-------- --------
Net cash (used in) provided by financing
activities (349) 4,870
-------- --------
Effect of exchange rate changes on cash and
cash equivalents (85) (287)
-------- --------
Net (decrease) increase in cash and cash equivalents (12,850) 105
Cash and cash equivalents, beginning of period 61,758 34,433
-------- --------
Cash and cash equivalents, end of period $ 48,908 $ 34,538
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for income taxes $ 227 $ 2,429
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
5
PART 1. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Preparation
The unaudited consolidated financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and note disclosures required by generally accepted
accounting principles. The statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Form 10-K, Commission File No. 000-15578, that was filed with the Securities and
Exchange Commission on March 15, 2001. In the opinion of management, the
accompanying consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Company's financial position and results of operations. The results of
operations for the three month and six month periods ended June 30, 2001 may not
be indicative of the results that may be expected for the next quarter or the
full fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
3. Revenue Recognition
The Company generates software revenue from licensing the rights to use its
software products. The Company also generates service revenues from the sale of
product maintenance contracts, implementation, education and consulting
services. The Company recognizes revenue in accordance with the provisions of
the American Institute of Certified Public Accountants Statement of Position
(SOP) No. 97-2, Software Revenue Recognition, and SOP No. 98-9, Modification of
SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions.
Revenue from software license fees are generally recognized upon delivery
provided that there are no significant post delivery obligations, persuasive
evidence of an agreement exists, the fee is fixed or determinable and collection
of the related receivable is probable. If acceptance is required beyond the
Company's standard published specifications, software license revenue is
recognized upon customer acceptance.
SOP 98-9 requires use of the residual method for recognition of revenues
when vendor-specific objective evidence exists for undelivered elements but does
not exist for the delivered elements of a multiple-element arrangement. In such
circumstances, the Company defers the fair value of the undeliverable elements
and recognizes, as revenue, the remaining value for the delivered elements.
6
PART 1. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Revenue Recognition (continued)
Revenues for consulting, implementation and educational services are
recognized over the period in which services are provided. Maintenance revenue
is deferred at the time of software license shipment and is recognized ratably
over the term of the support period, which is typically one year. Amounts
collected from customers prior to satisfying the revenue recognition criteria
are reflected as deferred revenue in the accompanying balance sheet.
4. Earnings Per Share
Basic earnings per share is calculated using the weighted average number of
common shares outstanding. Diluted earnings per share is computed using the
weighted average number of common shares outstanding and the effect of dilutive
common stock options using the treasury stock method. A reconciliation of basic
and diluted weighted average shares outstanding is as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
Basic weighted average shares
outstanding 12,784 13,572 12,737 13,488
Effect of dilutive stock options 434 748 492 924
-------- -------- -------- --------
Diluted weighted average shares
outstanding 13,218 14,320 13,229 14,412
======== ======== ======== ========
For the three months ended June 30, 2001 and 2000, 1,587,607 and 1,254,639
common equivalent shares, respectively, were not included in the diluted
weighted average shares outstanding, as their effect would be antidilutive. For
the six months ended June 30, 2001 and 2000, 1,611,107 and 610,720 common
equivalent shares, respectively, were not included in the diluted weighted
average shares outstanding, as their effect would be antidilutive.
7
PART I. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
5. Comprehensive Income
The components of comprehensive income are as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net income $ 610 $ 383 $ 941 $3,990
Foreign currency translation adjustments (151) (116) (90) (229)
------- ------- ------- -------
Comprehensive income $ 459 $ 267 $ 851 $3,761
======= ======= ======= =======
6. Segment and Geographic Information
Product revenue from international sources totaled approximately $4.3
million and $1.8 million for the three months ended June 30, 2001 and 2000
respectively and $9.4 million and $4.8 million for the first six months of 2001
and 2000, respectively. The Company's revenue from international sources was
primarily generated from customers located in the United Kingdom, Europe and
Asia/Pacific. Substantially all of the Company's product revenue for the periods
presented was shipped from its headquarters located in the United States.
The following table represents the Company's percentage of product revenue
by geographic region from customers for the three months and six months ended
June 30, 2001 and 2000:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
United States 65.5% 81.3% 61.3% 80.3%
United Kingdom 17.4 12.6 21.7 11.2
Europe 6.6 2.6 4.4 3.9
Asia/Pacific 10.5 1.1 11.9 1.5
Latin America -- 1.6 0.4 0.9
Canada -- 0.8 0.3 2.2
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
Substantially all of the Company's assets are located in the United States.
8
PART I. FINANCIAL INFORMATION (continued)
DAVOX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. New Accounting Standards
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 141, Business
Combinations. SFAS No. 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. The adoption of
SFAS No. 141 is not expected to have a material impact on the Company's
consolidated financial statements.
In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other
Intangible Assets. Under SFAS No. 142, goodwill is no longer subject to
amortization over its estimated useful life. Rather, goodwill is subject to at
least an annual assessment for impairment by applying a fair-value-based test.
Also under SFAS No. 142, intangible assets acquired in conjunction with a
business combination should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of the acquirer's intent to do so. Intangible assets will continue
to be amortized over their respective useful lives under SFAS No. 142. The
Company must adopt SFAS No. 142 on January 1, 2001. The adoption of SFAS No.
142 is not expected to have a material impact on the Company's consolidated
financial statements.
8. Subsequent Events
In July 2001, the Company completed a 10% reduction in its workforce,
resulting in a pretax charge to operations of approximately $1.0 million, which
will be recorded in the third quarter of 2001.
9
PART I. FINANCIAL INFORMATION (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENTS
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. Statements set forth herein may
contain "forward-looking" information that involves risks and uncertainties.
Actual future financial or operating results may differ materially from such
forward-looking statements. Statements indicating that the Company "expects,"
"estimates," "believes," "is planning," or "plans to" are forward-looking, as
are other statements concerning future financial or operating results, product
offerings or other events that have not yet occurred. There are several
important factors that could cause actual results or events to differ materially
from those anticipated by the forward-looking statements. Such factors are
described in greater detail under Management's Discussion and Analysis of
Financial Condition and Results of Operations--Certain Factors That May Affect
Future Results. Although the Company has sought to identify the most significant
risks to its business, the Company cannot predict whether, or to what extent,
any of such risks may be realized nor can there be any assurance that the
Company has identified all possible issues that the Company may face.
10
PART I. FINANCIAL INFORMATION (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2001 and 2000
Total revenue for the second quarter of 2001 increased approximately $4.0
million, or 18.5%, to $25.6 million compared to $21.6 million for the same
period in 2000. Total revenue for the first six months of 2001 increased
approximately $2.3 million, or 4.8%, to $50.3 million compared to $48.0 million
for the same period in 2000.
Product revenue for the second quarter of 2001 increased approximately $2.7
million, or 27.5%, to $12.4 million compared to the same period in 2000.
Product revenue for the first six months of 2001 decreased approximately $0.3
million, or 1.0%, to $24.3 million compared to the same period in 2000. This
increase in product revenue for the second quarter of 2001 was due principally
to an increase in the number of sales of the Company's Ensemble(TM) product and
continued strong international sales. The decrease in product revenue for the
first six months of 2001 compared to 2000 was due to lower sales of the
Company's Unison product, which was partially offset by the increase in
Ensemble(TM) product sales.
Cost of product revenue for the second quarter of 2001 increased
approximately $0.3 million, or 18.5%, to $2.2 million compared to the same
period in 2000. Cost of product revenue for the first six months of 2001
increased approximately $0.1 million, or 3.1%, to $4.2 million compared to the
same period in 2000. The cost of product revenue increase for the three and six
month periods in 2001 is related to higher material and operating costs compared
to the same periods in 2000.
Service revenue for the second quarter of 2001 increased approximately $1.3
million, or 11.3%, to $13.2 million compared to the same period in 2000.
Service revenue for the first six months of 2001 increased approximately $2.6
million, or 11.0%, to $26.0 million compared to the same period in 2000. The
increase in service revenue for the three and six months ended June 30, 2001 was
primarily due to the growth in the Company's installed customer base, resulting
in increased new and renewed contract maintenance revenue as compared to the
same periods in 2000.
Cost of service revenue for the second quarter of 2001 increased
approximately $0.9 million, or 15.3%, to $6.8 million compared to the same
period in 2000. Cost of service revenue for the first six months of 2001
increased approximately $2.4 million, or 20.4%, to $13.9 million compared to the
same period in 2000. The increases during the second quarter and first six
months of 2001 were due primarily to increased headcount, payroll and related
expenses, and increased costs related to the international expansion of the
Company's support and services organizations to better serve our international
customers.
11
Part I. Financial Information (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Research, development and engineering expenses increased approximately $1.0
million, or 25.1%, to $5.0 million for the second quarter of 2001 as compared to
the same period in 2000. Research, development and engineering expenses
increased approximately $1.9 million, or 24.4%, to $9.7 million for the first
six months of 2001 compared to the same period in 2000. The three and six month
period increases for research, development and engineering expenses were
primarily due to increased headcount and payroll and related expenses in 2001
compared to the same periods in 2000.
Selling, general and administrative (SG&A) expenses increased by
approximately $1.1 million, or 10.4%, to $11.4 million for the second quarter of
2001 compared to the same period in 2000. SG&A expenses increased by
approximately $2.3 million, or 11.1%, to $22.8 million for the first six months
of 2001 compared to the same period in 2000. The increases in SG&A for the
second quarter and first six months of 2001 compared to the same periods in 2000
were principally due to increased headcount and payroll related expenses and
continuing investment in the international operations as the Company continues
to expand its global presence.
Other income in 2001 was derived primarily from interest income from
investments in commercial paper, corporate bonds, Eurodollar bonds, and similar
financial instruments, net of investment fees. Other income decreased 36.3% for
the second quarter of 2001 compared to the same period in 2000 and decreased
17.8% for the first six months of 2001 compared to the same period in 2000. The
decreases for the second quarter of 2001 and first six months of 2001 were due
to the lower average investment balances combined with lower interest rates and
investment yields compared to the same periods in 2000.
In accordance with generally accepted accounting principles, the Company
provides for income taxes on an interim basis using its estimated annual
effective income tax rate. The Company is providing for income taxes in 2001 at
an effective tax rate of 31%, which is lower than the combined federal and state
statutory tax rates due primarily to net operating loss carryforwards,
utilization of tax credits and benefits derived from the Company's foreign sales
corporation.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2001, the Company's principal sources of liquidity were its
cash and cash equivalent balances of approximately $48.9 million, as well as its
marketable securities of approximately $22.2 million. At December 31, 2000, the
Company's cash and cash equivalent balances were approximately $61.8 million and
its marketable securities were approximately $9.0 million. The overall increase
of approximately $0.4 million in the total cash and marketable securities
balances was due primarily to cash provided from operating activities during the
first six months of 2001.
12
PART I. FINANCIAL INFORMATION (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Net cash provided by operating activities for the first six months of 2001,
was approximately $4.0 million compared to cash provided by operating activities
of approximately $6.4 million for the same period in 2000. The decrease in cash
provided by operating activities for the first six months of 2001 was due
primarily to less favorable operating results, a decrease in accrued expenses of
approximately $0.5 million and an increase in accounts receivable of
approximately $0.6 million for the period.
The Company's primary investing activities were purchases and maturities of
marketable securities and purchases of property and equipment. Purchases and
maturities of marketable securities generated a net cash outflow of
approximately $13.2 million during the first six months of 2001, compared to a
net cash outflow of approximately $8.0 million during the same period in 2000.
Property and equipment purchases were approximately $2.8 million during the
first six months of 2001, compared to approximately $2.2 million during the same
period in 2000.
Cash used in financing activities during the first six months of 2001
totaled approximately $0.3 million. The utilization of cash was the result of
the repurchase of 92,300 shares of the Company's common stock, for approximately
$0.9 million during the first six months of 2001, and was partially offset by
the proceeds received from exercises of stock options and from purchases of
stock through the Company's employee stock purchase plan. Cash provided by
financing activities during the first six months of 2000 totaled approximately
$4.9 million and was generated from proceeds from exercises of stock options.
At June 30, 2001, the working capital of the Company decreased to
approximately $66.1 million from approximately $66.6 million as of December 31,
2000.
Management believes, based on its current operating plan, that the
Company's existing cash and marketable securities balances and cash generated
from operations are sufficient to meet the Company's cash requirements for the
next twelve months.
13
PART I. FINANCIAL INFORMATION (continued)
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Derivative Financial Instruments, Other Financial Instruments, and Derivative
Commodity Instruments.
As of June 30, 2001, the Company did not participate in any derivative
financial instruments or other financial and commodity instruments for which
fair value disclosure would be required under Statement of Financial Standards
(SFAS) No. 107. Substantially all, of the Company's investments are short-term;
commercial paper, corporate bonds, Eurodollar bonds, and similar financial
instruments that are carried on the Company's books at amortized cost, which
approximates fair market value. Accordingly, the Company has no quantitative
information concerning the market risk of participating in such investments.
Primary Market Risk Exposures.
The Company's primary market risk exposures are in the areas of interest
rate risk and foreign currency exchange rate risk. The Company's investment
portfolio of cash equivalents and marketable securities is subject to interest
rate fluctuations, but the Company believes this risk is minimized due to the
short-term nature of these investments.
The Company's exposure to currency exchange rate fluctuations has been and
is expected to continue to be modest due to the fact that the operations of its
international subsidiaries are almost exclusively conducted in their respective
local currencies. International subsidiary operating results are translated
into U.S. dollars and consolidated for reporting purposes. The impact of
currency exchange rate movements on intercompany transactions was immaterial for
the six months ended June 30, 2001. Currently, the Company does not engage in
foreign currency hedging activities.
New Accounting Standards
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 141, Business
Combinations. SFAS No. 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. The adoption of
SFAS No. 141 is not expected to have a material impact on the Company's
consolidated financial statements.
In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other
Intangible Assets. Under SFAS No. 142, goodwill is no longer subject to
amortization over its estimated useful life. Rather, goodwill is subject to at
least an annual assessment for impairment by applying a fair-value-based test.
Also under SFAS No. 142, intangible assets acquired in conjunction with a
business combination should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of the acquirer's intent to do so.
14
Part I. Financial Information (continued)
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS (continued)
Intangible assets will continue to be amortized over their respective useful
lives under SFAS No. 142. The Company must adopt SFAS No. 142 on January 1,
2001. The adoption of SFAS No. 142 is not expected to have a material impact on
the Company's consolidated financial statements.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
In addition to historical information contained herein, this report
contains forward-looking statements concerning future expected financial and
operating results. The Company's future actual results could differ materially
from the forward-looking statements discussed or implied in this report because
of risks or uncertainties including, but not limited to, competition and
competitive pricing pressures, technological change, new product introduction
and market acceptance, the ability of Davox to attract and retain key personnel
and general economic conditions in the United States and worldwide markets
served by Davox; and those other factors discussed from time to time in Davox's
public reports filed with the Securities and Exchange Commission, such as those
discussed under "Certain Factors That May Affect Future Results" in Davox's
quarterly reports on Form 10-Q and annual report on Form 10-K.
15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There were no material changes since the Company's Annual Report on
Form 10-K for the period ended December 31, 2000.
Item 4. Submission of Matters to a Vote of Security-Holders
The annual meeting of security-holders of the Company was held on
May 2, 2001. The number of directors was fixed at five and the
following persons were elected as directors:
Nominee
Total Votes
Nominee Total Votes for Nominee Against Nominee
Alphonse M. Lucchese 11,837,190 70,398
Michael D. Kaufman 11,843,133 64,455
R. Scott Asen 11,751,633 155,955
David M. Sample 11,566,093 341,495
Peter Gyenes 11,453,779 453,809
The selection of the firm Arthur Andersen LLP as auditors for the fiscal
year ending December 31, 2001 was ratified, with 11,881,127 shares voting in
favor and 17,582 shares abstaining.
Item 5. Other Information
Proposal of stockholders intended for inclusion in the proxy statement
to be furnished to all stockholders entitled to vote at the next annual
meeting of stockholders of the Company must be received at the
Company's principal executive offices not later than December 3, 2001.
The deadline for providing timely notice to the Company of matters that
stockholders otherwise desire to introduce at the next annual meeting
of stockholders of the Company is February 15, 2001. In order to
curtail any controversy as to the date, on which a proposal was
received by the Company, it is suggested that proponents submit their
proposal by Certified Mail, Return Receipt Requested.
Item 6. Exhibits and Reports on Form 8-K
(a) No current reports on Form 8-K were filed during the quarter ended June 30,
2001.
16
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.
DAVOX CORPORATION
Date: August 10, 2001 By: /s/ David M. Sample
------------------------------
David M. Sample
Chief Executive Officer
and President (Principal
Executive Officer)
Date: August 10, 2001 By: /s/ Michael J. Provenzano III
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Michael J. Provenzano III
Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer)
17