##### Table of Contents



As Filed
    with the Securities and Exchange Commission on May 9,
    2007
    UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    February 28, 2007Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to       Commission File Number: 1-15045
  Intervoice, Inc.
 (Exact name of registrant as
    specified in its charter)
  Texas

75-1927578(State of
    Incorporation)

(I.R.S. Employer Identification
    Number)17811 Waterview Parkway 
    Dallas, Texas(Address of principal
    executive offices)

75252(Zip
    Code)   Registrants telephone number, including area code:
 (972) 454-8000
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
   Title of Each Class
 Common Stock, No Par Value
 Preferred Share Purchase Rights
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
      Documents
    Incorporated by Reference




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##### 



TABLE OF
    CONTENTS
  PagePART IItem 1.


Business


3Overview


3Products and
    Services


4Markets


8Competition


9Sales and
    Marketing


9Backlog


10Research and
    Development


10Proprietary
    Rights


10Manufacturing and
    Facilities


11Employees


11Availability of
    Company Filings with the SEC


11Item 1A.


Risk
    Factors


12Item 1B.


Unresolved Staff
    Comments


17Item 2.


Properties


18Item 3.


Legal
    Proceedings


18Item 4.


Submission of
    Matters to a Vote of Security Holders


21PART IIItem 5.


Market for Registrants
    Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities


21Item 6.


Selected Financial
    Data


24Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


25Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


38Item 8.


Financial
    Statements and Supplementary Data


38Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


69Item 9A.


Controls and
    Procedures


69Item 9B.


Other
    Information


69PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


71Item 11.


Executive
    Compensation


71Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


71Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


71Item 14.


Principal
    Accountant Fees and Services


71PART IVItem 15


Exhibits and
    Financial Statement Schedules


72SubsidiariesConsent of Independent Registered Public Accounting FirmCertification by CEO Pursuant to Rule 13a-14(a)Certification by CFO Pursuant to Rule 13a-14(a)Certification by CEO Pursuant to Rule 13a-14(b)Certification by CFO Pursuant to Rule 13a-14(b)




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##### Table of Contents



PART I  Item 1.
    Business Overview  Intervoice, Inc. (NASDAQ: end-to-end
  Mark-up
  end-to-end Mark-up Mark-up
    IP-based
    
    The increasing demand for sophisticated speech applications that
    enable users to use their voices to interact with technology;
    The emerging interest worldwide in multi-channel, multimedia and
    multimodal means of communication;
    The acceleration of adoption of open-standards that increase
    compatibility and interoperability among hardware components and
    software applications;
    The burgeoning adoption of VoIP (Voice over IP) is driving
    convergence of voice and data communications, including the
    ability to network customer service agents regardless of their
    location  in a call center, branch office, or at home;  
    The growing demand from businesses for
    end-to-end
    solutions that give them a single-point of
    accountability; and  
    The increasing popularity of software-as-a-service (SaaS), where
    Intervoice provides hosted solutions, onsite maintenance and
    support for the software we provide to customers for
    installation on their premises. 3




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Products
    and Services  and/or
  Intervoice
    Solutions Framework
  tm . IP-based,
 4




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Contact
    Center Solutions
  Intervoice
    Voice Portal
  text-to-speech
  return-on-investment
  end-to-end best-of-class
  Intervoice
    IP Contact Center
  end-to-end e-mail
  Horizontal
    Application Modules
    Personalization
 5




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Survey Automation
  Auto Attendant
  Locator Automation
  Password Reset (Identifier)
  Authenticator
  Voice or Web Convergence
  Field Force Automation
  Vertical
    Application Modules
    
  Network
    Service Provider Solutions
  IP-based
  Media
    Exchange for Networks
  IP-based
   6




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Voicemail MX
  Video Mail
  Voice to MMS (V2MMS)
  Voice Activated Dialing
  Traditional,
    IN-based Messaging
  mailbox-to-mailbox
  Portal
    Payment
      Consulting
    Services
   7




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return-on-investment
  Recurring
    Services
  Maintenance
    and Software Support
    ®
  Hosted
    Solutions
  state-of-the-art SIP-based
  inter-networked
 Markets      return-on-investment
 8




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Competition  text-to-speech end-to-end
  and/or
  IP-based
 Sales and
    Marketing       9




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Backlog   Research
    and Development    text-to-speech, ® return-on-investment
   Proprietary
    Rights   10




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and/or
 Manufacturing
    and Facilities   Employees   Availability
    of Company Filings with the SEC  Form 10-K, Form 10-Q, Form 8-K
 11




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Item 1A.
    Risk
    Factors  Form 10-K Form 10-K,
  
    Our operating results may fluctuate significantly from period
    to period, and this may cause our stock price to
    decline.  Our revenue and operating results have
    fluctuated in the past and we expect further fluctuations in the
    future. Given these fluctuations, we believe that quarter to
    quarter comparisons of our revenue and operating results are not
    necessarily meaningful or an accurate indicator of our future
    performance. As a result, our results of operations may not meet
    the expectations of securities analysts or investors in the
    future, which could cause our stock price to decline. Factors
    that contribute to fluctuations in our operating results and can
    preclude our ability to accurately forecast our results include
    the following:  
    variability in the time periods necessary to complete projects
    and achieve project milestones in order to recognize revenue,
    which may be influenced by volume, size, timing, contractual
    terms of new licenses and renewals of existing licenses and cash
    basis revenues;
    the components of our revenue that are deferred, including our
    subscription-based hosted solutions and that portion of our
    software licenses attributable to support and maintenance;
    volume, timing and fulfillment of customer orders, particularly
    with respect to large orders (sales of approximately
    $2.0 million or more), some of which are completed in the
    same quarter in which they are ordered and some of which are
    completed over several quarters, and fluctuations in demand for
    our products and services;
    our ability to complete orders from our solutions backlog,
    subject to timing changes requested by our customers, and
    projects accounted for on a percentage of completion basis,
    including estimates based on a variety of factors and subject to
    revision;
    the use of low pricing to win important customers, and the
    possible recognition of loss contingencies for certain projects
    that we estimate will be delivered at a negative gross margin;
    the lengthy sales cycle for our products, which typically
    involve comprehensive solutions that may require detailed
    customer evaluations;
    the performance of our international business, which accounts
    for a significant portion of our consolidated revenues, and
    fluctuations in foreign currency exchange rates;
    the mix of products we sell and services we offer and whether
    our products are sold through our direct sales force or through
    an intermediary;
    introduction of new products, product upgrades or updates by us
    or our competitors, and any resulting customer delays in
    purchasing products;
    any increased price sensitivity by our customers, particularly
    due to increased competition including open source or free
    software; 12




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
    periodic difficult economic conditions, particularly affecting
    the technology industry, as well as economic uncertainties;
    higher than anticipated costs related to fixed-price contracts
    with our customers;
    our ability to effectively manage our operating expense levels;
    timing of significant marketing and sales promotions, and
    expenses incurred pursuing new product or market opportunities;
    stock-based compensation expense, which we began recognizing for
    our stock-based compensation plans in the first quarter of
    fiscal 2007;
    costs and charges related to certain events, including
    Sarbanes-Oxley compliance efforts, matters relating to our Audit
    Committee investigation and litigation;
    the structure, timing and integration of acquisitions of
    businesses, products and technologies and related disruption of
    our current business;
    factors that lead to substantial declines in estimated values of
    long-lived assets below their carrying value; and
    changes in generally accepted accounting principles.    
    We are subject to potential and pending lawsuits and other
    claims.  We are subject to certain potential and
    pending lawsuits and other claims discussed in
    Item 3  Legal Proceedings of
    Part I of this Annual Report on
    Form 10-K.
    Furthermore, we may become subject to claims, including claims
    by the government, or other adverse consequences arising from
    the findings of the Audit Committee investigation and related
    SEC investigation discussed in Item 3. We and certain of
    our current and former officers and non-officer employees are
    currently responding to or have responded to SEC subpoenas to
    produce documents and provide testimony about the transactions
    that were the subject of the investigation. Any adverse
    judgment, penalty or settlement related to any lawsuit or other
    such claim could have consequences that would be material to our
    financial position or results of operations. We may be required
    to indemnify certain of our current and former directors and
    officers under existing arrangements in connection with the
    defense, or advancement of defense-related expenses, we are
    currently providing to certain individuals in connection with
    the class action lawsuit and the SEC investigation. Our
    insurance policies provide coverage for losses and expenses
    incurred by us and our current and former directors and officers
    in connection with claims made under the federal securities
    laws. These policies, however, exclude losses and expenses
    related to the Barrie class action lawsuit discussed in
    Item 3 or to other litigation based on claims that are
    substantially the same as the claims in the Barrie class action
    and contain other customary provisions to limit or exclude
    coverage for certain losses and expenses.
    We face intense competition based on product capabilities and
    we experience ever increasing demands from our actual and
    prospective customers for our products to be compatible with a
    variety of rapidly proliferating computing, telephony and
    computer networking technologies and
    standards.  Our success is dependent, to a large
    degree, on our effectiveness in allocating resources to
    developing and improving products compatible with those
    technologies, standards and functionalities that ultimately
    become widely accepted by our current and prospective customers.
    Our success is also dependent, to a large degree, on our ability
    to implement arrangements with vendors of complementary product
    offerings so that we can provide our current and prospective
    customers greater functionality. Our principal competitors
    include Avaya, Nortel, Nuance Communications, Comverse
    Technology, Unisys and Alcatel/Lucent. Many of our 13




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competitors have greater financial, technological and marketing
    resources than we have, as well as greater name recognition.
    Although we have committed substantial resources to enhance our
    existing products and to develop and market new products, there
    is no assurance we will be successful. In addition, it is
    possible that new entrants to the market and strategic
    acquisitions and partnerships between existing companies could
    increase the competition in the markets in which we participate.
    An increase in such competition could materially adversely
    affect our ability to sell our products, thereby adversely
    affecting our business, operating results and financial
    condition.  
    We may not be successful in selling and implementing our
    products and services in the face of the new, standards-based
    market.  Intervoice has historically provided
    complete, bundled hardware and software solutions using
    internally developed components to address our customers
    total business needs. The markets for our products have required
    a shift to the development of products and services based on an
    open, standards-based architecture such as the J2EE and
    Microsofts®.
    NET environments utilizing VoiceXML
    and/or SALT
    standards. Such an open, standards-based approach allows
    customers to independently purchase and combine hardware
    components, standardized software modules, and customization,
    installation and integration services from individual vendors
    deemed to offer the best value in the particular class of
    product or service. In such an environment, we believe we may
    sell less hardware and fewer bundled systems and may become
    increasingly dependent on our development and sale of software
    application packages, customized software and consulting and
    integration services. This shift places new challenges on us to
    hire and retain the mix of personnel necessary to respond to
    this business environment, to adapt to the changing expense
    structure that the new environment may tend to foster, to
    respond to potentially different competitors, and to increase
    sales of services, customized software and application packages
    to offset reduced sales of hardware and bundled solutions.
    Failure to develop, enhance, acquire and introduce new products
    and services to respond to continually changing market
    conditions or customer requirements, or lack of customer
    acceptance of our products or services will materially adversely
    affect the value of our intellectual property, barriers to entry
    to our business, customer retention, gross margins, and the
    results of operations and financial condition.
    We may not be able to retain our customer base, and, in
    particular, our more significant customers.  Our
    success is heavily dependent on our ability to retain our
    significant customers. The loss of one of our significant
    customers could negatively impact our operating results. Our
    installed base of customers generally is not contractually
    obligated to place further solutions orders with us or to extend
    their services contracts with us at the expiration of their
    current contracts.
    We will be harmed if we lose key business and technical
    personnel.  We rely upon the services of a
    relatively small number of key technical, project management and
    senior management personnel, most of whom do not have employment
    contracts. If we were to lose any of our key personnel,
    replacing them could be difficult and costly. If we were unable
    to successfully and promptly replace such personnel, our
    business could be materially harmed.
    Our reliance on significant vendor relationships could result
    in significant expense or an inability to serve our customers if
    we lose these relationships.  Although we
    generally use standard parts and components in our products,
    some of our hardware components are available only from a small
    number of vendors. Likewise, we license speech recognition
    technology primarily from Nuance Communications, Inc., the
    dominant vendor for this technology. As we continue to migrate
    to open, standards-based systems, we will become increasingly
    dependent on our component suppliers and software vendors. To
    date, we have been able to obtain adequate supplies of needed
    components and licenses in a timely manner, and we expect to
    continue to be able to do so. Nevertheless, if our significant
    vendors are unable to supply components or licenses at current
    levels, we may not be able to obtain these items from another
    source or at historical prices. In such instances, we would be
    unable to provide products and services to our customers or
    generate historical operating margins, and our business and
    operating results would suffer.
    If third parties assert claims that our products or services
    infringe on their technology and related intellectual property
    rights, whether the claims are made directly against us or
    against our customers, we could incur substantial
    costs.  We believe software and technology
    companies, including us and others 14




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in our industry, increasingly may become subject to infringement
    claims. Such claims may require us to enter into costly license
    agreements or result in even more costly litigation. To the
    extent a licensing arrangement is required, the arrangement may
    not be available at all, or, if available, may be very expensive
    or even prohibitively expensive. As with any legal proceeding,
    there is no guarantee we will prevail in any litigation
    instituted against us asserting infringement of intellectual
    property rights. To the extent we suffer an adverse judgment, we
    might have to pay substantial damages, discontinue the use and
    sale of infringing products, repurchase infringing products from
    our customers in accordance with indemnity obligations, expend
    significant resources to acquire non-infringing alternatives,
    and/or
    obtain licenses to the intellectual property that has been
    infringed upon. As with licensing arrangements, non-infringing
    substitute technologies may not be available and, if available,
    may be very expensive, or even prohibitively expensive, to
    implement. Accordingly, for all of the foregoing reasons, a
    claim of infringement could ultimately have a material adverse
    effect on our business, financial condition and results of
    operations.  
    We are exposed to risks related to our international
    operations that could increase our costs and hurt our
    business.  Our products are currently sold in more
    than 75 countries. Our international sales were 35% and 45% of
    total sales for the fiscal years ended February 28, 2007
    and 2006, respectively. International sales, personnel and
    property are subject to certain risks, including:  
    terrorism;
    fluctuations in currency exchange rates;
    ability to collect on accounts receivable;
    the difficulty and expense of maintaining foreign offices and
    distribution channels;
    tariffs and other barriers to trade;
    greater difficulty in protecting and enforcing intellectual
    property rights;
    general economic and political conditions in each country,
    including nationalization of customers or channel partners;
    loss of revenue, property and equipment from expropriation;
    import and export licensing requirements; and
    additional expenses and risks inherent in conducting operations
    in geographically distant locations, including risks arising
    from differences in language and cultural approaches to the
    conduct of business.  
    Our inability to meet contracted performance targets could
    subject us to significant penalties.  Many of our
    contracts, particularly for hosted solutions, foreign contracts
    and contracts with telecommunication companies, include
    provisions for the assessment of damages for delayed project
    completion
    and/or for
    our failure to achieve certain minimum service levels. We have
    had to pay damages in the past and may have to pay additional
    damages in the future. Any such future damages could be
    significant.
    Increasing consolidation in the telecommunications and
    financial industries could adversely affect our revenues and
    profitability.  The majority of our largest
    customers are in the telecommunications and financial
    industries. These industries are undergoing significant
    consolidation as a result of merger and acquisition activity.
    This activity could result in a decrease in the number of
    customers purchasing our products
    and/or in
    delayed purchases of our products by customers that are
    reviewing their strategic alternatives in light of a pending
    merger or acquisition. If these results occur, our revenues and
    profitability could decline or our loss could increase.
    Our products are complex, and software defects could reduce
    our revenues and expose us to litigation.  The
    software products we offer are complex and may contain errors or
    defects, even after extensive testing and quality control,
    particularly in early versions. Furthermore, because our
    products increasingly are designed around an open standards
    based architecture incorporating elements developed by third
    parties, such errors or defects may be outside of our direct
    ability to control or correct. Any defects or errors could
    potentially result in loss of revenues, product returns or order
    cancellations, and could potentially hinder market 15




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acceptance of our products and harm our reputation. Accordingly,
    any defects or errors could have a material adverse effect on
    our business, results of operations and financial condition. Our
    customer license agreements typically contain provisions to
    limit our product warranty obligations and exposure to potential
    liability claims.  
    We have grown, and may continue to grow, through
    acquisitions, which could dilute our existing shareholders and
    could involve substantial acquisition risks.  As
    part of our business strategy, we have in the past acquired, and
    expect to continue to acquire or make investments in, other
    businesses and technologies. We may issue equity securities for
    future acquisitions, which would dilute our existing
    stockholders, and we may incur debt in connection with future
    acquisitions, which may include covenants or other restrictions
    that hinder our ability to operate our business. Furthermore,
    our prior acquisitions required substantial integration and
    management efforts. Acquisitions can involve a number of risks,
    including:  
    difficulty in transitioning and integrating the operations,
    facilities and personnel of the acquired businesses, including
    different and complex order processing, support and accounting
    and financial reporting systems;
    loss of key management, sales, research and development and
    other key employees of the acquired company;
    difficulty in integrating acquired products into our product
    portfolio, including engineering, sales and marketing
    integration;
    impairment of relationships with partners, suppliers and
    customers;
    difficulty in implementing and standardizing company-wide
    financial, accounting, billing, information and other systems
    and the internal controls surrounding those systems and
    processes;
    disruption of our ongoing operations and distraction of
    management and other employees;
    difficulty in incorporating acquired technology and rights into
    our products and technology;
    unanticipated expenses and delays in completing acquired
    development projects and technology integration;
    difficulty in management of geographically remote operations in
    the United States and internationally;
    delay of sales to customers pending resolution of product
    integration between our existing and our newly acquired
    products; and
    difficulty entering new markets or businesses in which we have
    limited experience.    
    Our stock price has been and may continue to be subject to
    wide fluctuations.  Our stock price historically
    has been volatile and may continue to be volatile in the future.
    Various factors contribute to the volatility of our stock price,
    including business developments (such as new product
    introductions and acquisitions or dispositions), litigation
    developments, quarterly variations in our financial results, our
    ability to meet investors expectations, and general
    economic and market conditions. In addition, third-party
    announcements by our partners and competitors may contribute to
    our stock price volatility. Certain types of investors may
    choose not to invest in stocks with this level of stock price
    volatility. Fluctuations in our stock price could cause
    increased risk of shareholder litigation, which could result in
    substantial costs and divert managements attention and
    resources.
    We are exposed to risks related to our channel program that
    could decrease our revenues and hurt our
    business.  Although we principally sell our
    products and services through our direct sales force, a
    significant amount of our sales are made through intermediaries
    such as distributors, system integrators and other strategic
    channel partners. We expect the percentage of sales through
    intermediaries to increase as 16




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we continue to focus our sales efforts through the channel and
    other partners. We anticipate future revenue growth to depend in
    large part on our success in expanding relationships, and
    establishing new relationships, with intermediaries. These
    intermediaries may sell their own products or other
    vendors products that compete with our products, and may
    compete with our own direct sales force in certain sales
    opportunities. While we have instituted programs designed to
    increase sales of our products through intermediaries, certain
    intermediaries may give greater priority to products of other
    suppliers, including competitors. Our ability to grow sales
    through intermediaries depends on our investment in appropriate
    financial incentives, support and sales tools for
    intermediaries, while effectively alleviating conflict with our
    own sales force. Failure to effect this strategy appropriately
    may result in certain intermediaries choosing to cease or reduce
    the sales of our products, resulting in a material adverse
    change in our business, results of operations and financial
    condition.  
    We implemented a new company-wide ERP system during the third
    quarter of fiscal 2007.  During the third quarter
    of fiscal 2007, we completed the implementation of a new,
    company-wide ERP system. Our new system affects all facets of
    our business, including our ability to quote, receive and
    process orders, track inventory and work in process, ship and
    bill completed orders, process and apply cash receipts from our
    customers and summarize and report the results of our
    operations. If we encounter problems in the operation of our new
    system, our ability to conduct our daily operations in an
    efficient, effective and properly controlled manner could be
    compromised, and our operating results could suffer. In
    addition, any such operational problems could cause us to expend
    significant time and other resources in an effort to resolve
    such problems, and this diversion of management and staff time
    could further adversely affect our ability to serve our
    customers and sustain our normal operations.
    Unanticipated changes in our effective tax rates or exposure
    to additional income tax liabilities could affect our
    profitability or increase our loss.  We are a
    U.S. based multinational company subject to tax in multiple
    U.S. and foreign tax jurisdictions. We are generally required to
    account for taxes in each jurisdiction in which we operate,
    including making assumptions, interpretations and judgments with
    respect to the applicable tax requirements. Our provision for
    income taxes is calculated based on a mix of earnings, statutory
    rates, and enacted tax rules by jurisdiction, including transfer
    pricing. Significant judgment is required in determining our
    provision for income taxes and in evaluating our tax positions
    on a worldwide basis. It is possible that these positions may be
    challenged which may have a significant impact on our effective
    tax rate, which could affect our results of operations and
    financial condition.
    Failure to maintain effective internal controls could have a
    material adverse effect on our business, results of operations,
    financial condition, and our stock price.  A
    failure to maintain adequate internal control procedures as
    required by Section 404 of the Sarbanes-Oxley Act of 2002
    may preclude our managements ability to conclude that we
    have effective internal controls over our financial reporting.
    These internal controls are also required for us to produce
    management financial information, make determinations on revenue
    recognition and other material accounting issues, and prevent
    financial fraud. If we are unable to produce reliable financial
    reports, make appropriate determinations on revenue recognition
    and material accounting policies or prevent fraud, our business,
    operating results and financial condition could be adversely
    affected.
    We have sustained operating losses in the past, and may incur
    additional losses in the future which may require us to raise
    additional capital on unfavorable terms.  We
    cannot be certain that our revenue will grow or that we will
    achieve or maintain profitable operations in the future. If we
    are unable to return to and maintain profitability, the market
    price for our stock may decline, perhaps substantially. If we
    continue to have operating losses, we may be required to raise
    additional capital to maintain or grow our operations. Such
    additional capital may only be available at unfavorable terms
    that could be dilutive to existing shareholders, have a high
    interest rate, contain restrictive covenants, or contain other
    unfavorable terms.  Item 1B.
    Unresolved
    Staff Comments   17




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Item 2.
    Properties    Square FeetOrlando, Florida


34,000Manchester, United Kingdom


27,000Mountain View, California


26,000Other domestic and international
    locations


12,000   Item 3.
    Legal
    Proceedings  Intellectual
    Property Matters
           18




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and/or
      Pending
    Litigation
  David Barrie, et al., on Behalf of Themselves and All
    Others Similarly Situated v. InterVoice-Brite, Inc.,
    et al. No. 3-01CV1071-D,
  Rule 10b-5
      Phoenix Solutions, Inc. vs. Sony Electronics, Inc., No. C07-2112
 19




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No. C07-2112
  Audit
    Committee Investigation
       20




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Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Common
    Stock
      Fiscal 2007 Quarter

High


Low4th

$
8.10


$
6.343rd

$
7.75


$
5.952nd

$
7.40


$
5.581st

$
8.70


$
6.24   Fiscal 2006 Quarter

High


Low4th

$
9.25


$
7.723rd

$
9.60


$
8.202nd

$
9.84


$
7.721st

$
12.40


$
8.64     Securities
    Authorized for Issuance Under Equity Compensation
    Plans
   21




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A


D


CNumber of SecuritiesRemaining Available forNumber of Securities to





Future Issuance Underbe Issued Upon


Weighted-Average


Equity CompensationExercise of Outstanding


Exercise Price of


Plans (ExcludingOptions, Warrants and


Outstanding Options,


Securities Reflected inPlan Category

Rights


Warrants and Rights


Column (A))Equity compensation plans approved
    by security holders


7,808,405



8.19



1,063,935Equity compensation plans not
    approved by security holders


152,238



4.41



Total


7,960,643



8.12



1,063,935    22




---



##### Table of Contents



Stock
    Performance Graph
    COMPARISON
    OF CUMULATIVE TOTAL RETURN
    OF COMPANY, INDUSTRY INDEX AND BROAD MARKET(1)
  
  Fiscal Year EndingCompany/Index/Market

2002

2003

2004

2005

2006

2007Intervoice, Inc


100.00



33.73



240.87



215.28



170.04



127.38Telephone, Telegraph Apparatus


100.00



53.92



135.04



118.90



135.26



158.63NASDAQ Market Index


100.00



78.34



119.25



120.72



135.05



143.72     (1)
    
    Assumes $100 invested on March 1, 2002 and all dividends
    reinvested through February 28, 2007. 23




---



##### Table of Contents



Item 6.
    Selected
    Financial Data    Fiscal Year Ended February
    28/292007*


2006**


2005


2004


2003***(In millions, except per share data)Sales

$
196.3


$
168.1


$
183.3


$
165.3


$
156.2Income (loss) from operations


(3.1
)


9.0



24.7



18.8



(44.1
)Income (loss) before the
    cumulative effect of a change in accounting principle


(1.7
)


16.5



22.5



11.3



(50.6
)Net income (loss)


(1.7
)


16.5



22.5



11.3



(66.4
)Total assets


168.6



158.1



134.9



111.6



101.0Current portion of long term debt










0.4







3.3Long term debt, net of current
    portion










1.3



13.1



15.8Per basic common share:Income (loss) before the
    cumulative effect of a change in accounting principle


(0.04
)


0.43



0.62



0.33



(1.49
)Net income (loss)


(0.04
)


0.43



0.62



0.33



(1.95
)Shares used in per basic common
    share calculation


38.6



38.1



36.2



34.4



34.0Per diluted common share:Income (loss) before the
    cumulative effect of a change in accounting principle


(0.04
)


0.42



0.59



0.32



(1.49
)Net income (loss)


(0.04
)


0.42



0.59



0.32



(1.95
)Shares used in per diluted common
    share calculation


38.6



39.0



38.5



35.7



34.0     *
    
    During fiscal 2007, we incurred approximately $2.5 million
    in special charges in connection with three severance and
    organizational changes affecting approximately 55 positions. In
    addition, we incurred approximately $1.2 million in special
    charges in connection with the elimination of redundant office
    leases. In addition, we recorded a loss provision of
    approximately $1.9 million related to a contract and a loss
    provision of approximately $0.9 million related to the
    current status of settlement discussions with the SEC.**
    
    We acquired all of the outstanding stock of Edify on
    December 30, 2005. Beginning December 31, 2005, our
    financial results include the operations of Edify. During fiscal
    2006, we incurred approximately $1.9 million in charges in
    connection with restructuring expenses for severance and
    organizational changes affecting approximately 50 persons made
    at the time of the acquisition of Edify. In addition, during
    fiscal 2006, our income tax provision included benefits totaling
    $7.6 million resulting from the reversal of valuation
    allowances on certain deferred tax assets and from the
    resolution of tax contingencies, partially offset by a charge of
    $1.0 million related to the repatriation of foreign
    earnings.***
    
    The fiscal 2003 loss from operations was impacted by special
    charges of $34.3 million related to staffing reductions,
    facilities closures, the write down of excess inventories, costs
    associated with loss contracts, loss on early extinguishment of
    debt, and impairment of certain intangible assets. The fiscal
    2003 net loss was also increased as a result of a
    $15.8 million charge for the cumulative effect of a change
    in accounting principle associated with our adoption of
    Statement of Financial Accounting Standards No. 142
    Accounting for Goodwill and Other Intangible Assets.
    Fiscal 2003 results benefited from a change in the
    U.S. federal tax law that allowed us to recognize net tax
    benefits of approximately $3.0 million. 24




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Critical
    Accounting Policies
    Revenue
    Recognition
  No. 97-2 (SOP 97-2), 00-21
  Sale of Hardware and Software Solutions: and/or No. 81-1 (SOP 81-1),
       25




---



##### Table of Contents



and/or
  Sale of Maintenance and Software Support:
  Sale of Hosted Solutions:
    Loss Contracts:
  Stock-Based
    Compensation
     26




---



##### Table of Contents



Intangible
    Assets and Goodwill
  Intangible Assets:
    Goodwill:
  Income
    Taxes
     27




---



##### Table of Contents



Results
    of Operations
    Year Ended February 282007


2006


2005Sales


100.0
%


100.0
%


100.0
%Cost of goods sold


45.0



43.7



44.2Gross margin


55.0



56.3



55.8Research and development expenses


12.0



10.7



8.6Selling, general and
    administrative expenses


42.8



39.6



32.9Amortization of acquisition
    related intangible assets


1.3



0.7



0.8Settlement provision


0.5







Operating income (loss)


(1.6
)


5.3



13.5Other income (expense), net


0.6



1.4



0.2Income (loss) before income taxes


(1.0
)


6.7



13.7Income taxes (benefit)


(0.1
)


(3.1
)


1.4Net income (loss)


(0.9
)%


9.8
%


12.3
%   Sales
  and/or
    % Change





% ChangeFrom Prior





From Prior2007


Year


2006


Year


2005Voice portal solution sales

$
69.2



40.7
%

$
49.2



(33.5
)%

$
74.0Messaging solution sales


14.6



(23.6
)%


19.1



83.7
%


10.4Payment solution sales


8.6



(12.2
)%


9.8



(39.1
)%


16.1Total solution sales


92.4



18.3
%


78.1



(22.3
)%


100.5Maintenance and related services
    revenues


83.2



29.2
%


64.4



8.4
%


59.4Hosted solutions revenues


20.7



(19.1
)%


25.6



9.4
%


23.4Total recurring services revenues


103.9



15.4
%


90.0



8.7
%


82.8Total Sales

$
196.3



16.8
%

$
168.1



(8.3
)%

$
183.3  28




---



##### Table of Contents



% Change





% ChangeFrom Prior





From Prior2007


Year


2006


Year


2005North America

$
127.7



38.7
%

$
92.1



(14.6
)%

$
107.8Europe


28.5



(27.1
)%


39.1



(4.4
)%


40.9Middle East and Africa


15.4



(19.4
)%


19.1



(10.3
)%


21.3Central and South America


14.7



16.7
%


12.6



85.3
%


6.8Pacific Rim


10.0



92.3
%


5.2



(20.0
)%


6.5Total

$
196.3



16.8
%

$
168.1



(8.3
)%

$
183.3              29




---



##### Table of Contents



Year Ended February 282007


2006


2005(Based on Averages of Quarterly Activity)Sales from recurring service and
    support contracts, including contracts for hosted solutions


53
%


54
%


45
%Sales from solutions backlog


27
%


29
%


41
%Sales from the pipeline


20
%


17
%


14
%100
%


100
%


100
%        30




---



##### Table of Contents



® and/or
  Special
    Charges
  Fiscal
    2007
    Cost of





Selling,Goods


Research and


General andSold


Development


Administrative


TotalSeverance payments and related
    benefits

$
1.0


$
0.3


$
1.2


$
2.5Facility costs

$



$



$
1.2


$
1.2Total

$
1.0


$
0.3


$
2.4


$
3.7     Fiscal
    2006
    Cost of





Selling,Goods


Research and


General andSold


Development


Administrative


TotalSeverance payments and related
    benefits

$
0.5


$
0.2


$
1.2


$
1.9    31




---



##### Table of Contents



Cost of
    Goods Sold
    2007


2006


2005Solution COGS

$
59.2


$
48.0


$
52.1As percentage of solutions sales


64.1
%


61.5
%


51.9
%Services COGS

$
29.1


$
25.5


$
28.9As percentage of services revenues


28.0
%


28.4
%


35.0
%Total COGS

$
88.3


$
73.5


$
81.0As percentage of total sales


45.0
%


43.7
%


44.2
%       Research
    and Development
    2007


2006


2005Research and development expenses

$
23.6


$
17.9


$
15.8As percentage of total sales


12.0
%


10.7
%


8.6
%    32




---



##### Table of Contents



year-over-year
  text-to-speech, ® return-on-investment
    Selling,
    General and Administrative
    2007


2006


2005Selling, general and
    administrative expenses

$
84.1


$
66.5


$
60.3As percentage of total sales


42.8
%


39.5
%


32.9
%   Form 10-K
 33




---



##### Table of Contents



Settlement
    provision
    Amortization
    and Impairment of Goodwill and Acquired Intangible
    Assets
    2007


2006


2005Amortization of acquisition
    related intangible assets

$
2.5


$
1.2


$
1.5     Fiscal 2008

$
2.8Fiscal 2009

$
2.5Fiscal 2010

$
1.8Fiscal 2011

$
1.3Fiscal 2012

$
0.5     Interest
    Income
    Other
    Income (Expense)
    Income
    Taxes
   34




---



##### Table of Contents



Income
    From Operations and Net Income
   35




---



##### Table of Contents



Liquidity
    and Capital Resources
        and/or
      Letter
    of Credit Facility
   36




---



##### Table of Contents



Summary
    of Future Obligations
    Payments Due by PeriodFiscal Year Ending February
    28/29Nature of Commitment

2008


2009


2010


2011


2012Operating lease payments

$
3.1


$
2.8


$
2.4


$
2.4


$
2.4Firm purchase commitments


2.9



0.4











Total obligations and commitments

$
6.0


$
3.2


$
2.4


$
2.4


$
2.4         Impact
    of Inflation
    Selected
    Quarterly Financial Data (Unaudited)
  Three Months EndedMay 31,


August 31,


November 30,


February 28,Fiscal 2007

2006


2006


2006*


2007**(In millions, except per share data)Sales

$
45.7


$
50.5


$
52.8


$
47.4Gross profit


25.9



28.0



28.8



25.4Income (loss) from operations


(1.3
)


2.0



(0.1
)


(3.7
)Net income (loss)


(0.4
)


1.6



(0.1
)


(2.8
)Net income (loss) per basic share


(0.01
)


0.04



0.00



(0.07
)Net income (loss) per diluted share


(0.01
)


0.04



0.00



(0.07
)   Three Months EndedMay 31,


August 31,


November 30,


February 28,Fiscal 2006

2005


2005


2005


2006***(In millions, except per share data)Sales

$
43.3


$
43.3


$
41.0


$
40.5Gross profit


24.3



24.0



23.1



23.1Income (loss) from operations


4.5



4.5



2.8



(2.8
)Net income


3.9



4.6



3.6



4.3Net income per basic share


0.10



0.12



0.09



0.11Net income per diluted share


0.10



0.12



0.09



0.11     *
    
    During the third quarter of fiscal 2007, we incurred
    approximately $1.3 million in special charges in connection
    with organizational changes affecting approximately 35
    positions. In addition, we incurred $1.1 million in special
    charges in connection with the elimination of redundant office
    leases. 37




---



##### Table of Contents



**
    
    During the fourth quarter of fiscal 2007, we incurred
    approximately $0.7 million in special charges in connection
    with severance and organizational changes affecting
    approximately 10 positions. In addition, we incurred
    approximately $0.1 million in special charges in connection
    with the elimination of redundant office leases. We also
    recorded a loss provision of approximately $1.9 million
    related to a contract and a loss provision of approximately
    $0.9 million related to the current status of settlement
    discussions with the SEC.***
    
    We acquired all of the outstanding stock of Edify on
    December 30, 2005. Beginning December 31, 2005, our
    financial results include the operations of Edify. During the
    fourth quarter of fiscal 2006, we incurred approximately
    $1.9 million in charges in connection with restructuring
    expenses for severance and organizational changes affecting
    approximately 50 persons made at the time of the acquisition of
    Edify. In addition, for the fourth quarter of fiscal 2006, our
    income tax provision included benefits totaling
    $6.8 million resulting from the reversal of valuation
    allowances on certain deferred tax assets and from the
    resolution of tax contingencies, partially offset by a charge of
    $1.0 million related to the repatriation of foreign
    earnings.  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    Foreign
    Currency Risks
      and/or
  Item 8.
    Financial
    Statements and Supplementary Data   38




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  
            
    39




---



##### Table of Contents



INTERVOICE,
    INC.
 CONSOLIDATED
    BALANCE SHEETS  February 28,


February 28,2007


2006(In thousands, except share and per share data)ASSETSCurrent AssetsCash and cash equivalents

$
28,215


$
42,076Trade accounts receivable, net of
    allowance for doubtful accounts of $1,476 in 2007 and $1,701 in
    2006


36,837



25,745Inventory


13,751



9,439Prepaid expenses and other current
    assets


3,909



4,406Income taxes receivable


1,098



Deferred income taxes


3,880



3,04787,690



84,713Property and Equipment, net of
    accumulated depreciation of $62,419 in 2007 and $59,002 in 2006


34,429



28,893Other AssetsIntangible assets, net of
    accumulated amortization of $20,040 in 2007 and $17,343 in 2006


9,505



10,284Goodwill


32,193



32,461Long term deferred income taxes


4,613



1,330Other assets


135



454$
168,565


$
158,135LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable

$
12,881


$
10,154Accrued expenses


15,571



15,176Customer deposits


4,365



6,157Deferred income


32,368



32,172Income taxes payable






484Deferred income taxes


196



27065,381



64,413Commitments and ContingenciesStockholders EquityPreferred stock, $100 par
    value  2,000,000 shares authorized: none issuedCommon stock, no par value, at
    nominal assigned value  62,000,000 shares
    authorized: 38,727,628 issued and outstanding in 2007,
    38,470,087 issued and outstanding in 2006


19



19Additional capital


101,608



92,050Retained earnings


1,861



3,558Accumulated other comprehensive
    loss


(304
)


(1,905
)103,184



93,722$
168,565


$
158,135    40




---



##### Table of Contents



INTERVOICE,
    INC.
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Fiscal Year EndedFebruary 28,


February 28,


February 28,2007


2006


2005(In thousands, except per share data)SalesSolutions

$
92,455


$
78,107


$
100,504Recurring services


103,890



89,996



82,754196,345



168,103



183,258Cost of goods soldSolutions


59,151



48,007



52,116Recurring services


29,116



25,534



28,92888,267



73,541



81,044Gross marginSolutions


33,304



30,100



48,388Recurring services


74,774



64,462



53,826108,078



94,562



102,214Research and development expenses


23,630



17,918



15,812Selling, general and
    administrative expenses


84,120



66,462



60,265Settlement provision


943







Amortization of acquisition
    related intangible assets


2,518



1,228



1,461Income (loss) from operations


(3,133
)


8,954



24,676Interest income


1,526



2,245



914Interest expense


(17
)


(31
)


(585
)Other income (expense)


(276
)


56



60Income (loss) before income taxes


(1,900
)


11,224



25,065Income taxes (benefit)


(203
)


(5,265
)


2,555Net income (loss)

$
(1,697
)

$
16,489


$
22,510Net income (loss) per
    share  basic

$
(0.04
)

$
0.43


$
0.62Shares used in basic per share
    computation


38,585



38,064



36,214Net income (loss) per
    share  diluted

$
(0.04
)

$
0.42


$
0.59Shares used in diluted per share
    computation


38,585



39,044



38,461    41




---



##### Table of Contents



INTERVOICE,
    INC.
 CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY  Retained


AccumulatedEarnings


OtherCommon Stock


Additional


(Accumulated


ComprehensiveShares


Amount


Capital


Deficit)


Loss


Total(In thousands, except share data)Balance at February 29, 2004


35,691,389


$
18


$
75,276


$
(35,441
)

$
(600
)

$
39,253Net income














22,510







22,510Foreign currency translation
    adjustment


















539



539Comprehensive income






















23,049Tax benefit from exercise of stock
    options










939











939Exercise of stock options


1,504,827



1



9,206











9,207Balance at February 28, 2005


37,196,216


$
19


$
85,421


$
(12,931
)

$
(61
)

$
72,448Net income














16,489







16,489Foreign currency translation
    adjustment


















(1,844
)


(1,844
)Comprehensive income






















14,645Utilization of net operating loss
    carryforward and current year tax benefits










952











952Exercise of stock options


652,567







3,152











3,152Exercise of warrants


621,304







2,500











2,500Non-cash compensation










25











25Balance at February 28, 2006


38,470,087


$
19


$
92,050


$
3,558


$
(1,905
)

$
93,722Net income














(1,697
)






(1,697
)Foreign currency translation
    adjustment


















1,601



1,601Comprehensive income (loss)






















(96
)Utilization of net operating loss
    carryforward and current year tax benefits










3,823











3,823Exercise of stock options


257,541







715











715Non-cash compensation










5,020











5,020Balance at February 28, 2007


38,727,628


$
19


$
101,608


$
1,861


$
(304
)

$
103,184    42




---



##### Table of Contents



INTERVOICE,
    INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Fiscal Year EndedFebruary 28,


February 28,


February 28,2007


2006


2005(In thousands)Operating activitiesNet income (loss)

$
(1,697
)

$
16,489


$
22,510Adjustments to reconcile net
    income (loss) to net cash provided by operating activities:Depreciation and amortization


11,433



8,602



7,733Deferred income taxes


(4,205
)


(4,082
)


Provision for doubtful accounts


475



506



312Write down of inventories






501



57Disposal of equipment


145



23



(4
)Foreign exchange loss (gain)


275



(233
)


(271
)Utilization of net operating loss
    carryforward


2,153



603



Tax benefit from exercise of stock
    options






349



939Non-cash compensation


5,020



25



Changes in operating assets and
    liabilities:Accounts receivable


(10,010
)


10,085



(8,701
)Inventories


(3,110
)


(3,296
)


807Prepaid expenses and other assets


758



546



895Accounts payable and accrued
    expenses


2,997



(3,977
)


1,822Income taxes payable


(1,548
)


(3,506
)


(3,280
)Customer deposits


(1,792
)


(714
)


385Deferred income


(863
)


4,817



1,732Other


205



(16
)


560Net cash provided by operating
    activities


236



26,722



25,496Investing activitiesPurchase of Edify Corporation, net
    of cash acquired


(926
)


(34,341
)


Purchase of property and equipment


(13,571
)


(13,182
)


(7,253
)Purchase of Nuasis assets, net of
    cash acquired


(2,439
)






Other






(300
)


Net cash used in investing
    activities


(16,936
)


(47,823
)


(7,253
)Financing activitiesPaydown of debt






(1,733
)


(19,368
)Premium on early extinguishment of
    debt










(5
)Borrowings










8,000Restricted cash










2,750Exercise of stock options


715



3,152



9,207Tax benefit from exercise of stock
    options


1,669







Exercise of warrants






2,500



Net cash provided by financing
    activities


2,384



3,919



584Effect of exchange rate on cash


455



(984
)


556Increase (decrease) in cash and
    cash equivalents


(13,861
)


(18,166
)


19,383Cash and cash equivalents,
    beginning of period


42,076



60,242



40,859Cash and cash equivalents, end of
    period

$
28,215


$
42,076


$
60,242    43




---



##### Table of Contents



INTERVOICE,
    INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Note A 
    Description of Business
  and/or return-on-investment
  Note B 
    Significant Accounting Policies
  Principles of Consolidation:
  Use of Estimates:
  Cash and Cash Equivalents:
  Inventories: first-in,
  Property and Equipment:
   44




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Goodwill:
  Customer Deposits:
  Deferred Income:
  Product Warranties:
  Revenue Recognition: No. 97-2 (SOP 97-2), 00-21 00-21).
  Sale of Hardware and Software Solutions: and/or No. 81-1 (SOP 81-1),
 45




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          and/or
  Sale of Maintenance and Software Support:
  Sale of Hosted Solutions:
 46




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Loss Contracts:
  Research and Development:
  Advertising Costs:
  Income Taxes:
    Stock-based Compensation:
   47




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Note C 
    Acquisition of Edify Corporation
    Cash

$
0.2Accounts receivable, net


4.8Prepaid expenses


0.7Property and equipment, net


0.5Separately identifiable intangible
    assets


6.8Goodwill


28.8Other assets


0.3Total assets acquired

$
42.1Accounts payable

$
0.3Accrued restructuring costs


0.3Other accrued liabilities


2.7Deferred income


3.3Total liabilities assumed

$
6.6Total purchase price

$
35.5          48




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Fiscal Year Ended February 28,2006


2005(Unaudited)Sales

$
198.4


$
220.4Income before income taxes


11.4



23.0Net income


16.6



20.6Net income per share 
    diluted


0.43



0.54   Note D 
    Goodwill and Intangible Assets
    Balance at February 28, 2005

$
3.4Additions  Acquisition
    of Edify


29.1Impairment charges


Balance at February 28, 2006

$
32.5Additions


Adjustments  Edify


(0.3
)Impairment charges


Balance at February 28, 2007

$
32.2     February 28, 2007GrossAmortization


Carrying


Accumulated


UnamortizedAmortized Intangible Assets

Period


Amount


Amortization


BalanceCustomer
    relationships  Brite


10 years


$
18.6


$
16.3


$
2.3Developed
    technology  Edify


5 years



4.0



0.9



3.1Customer
    relationships  Edify


8 years



2.5



0.4



2.1Trademark/trade
    name  Edify


18 months



0.3



0.2



0.1Purchased
    technology  Nuasis


5 years



1.9



0.2



1.7Other intangibles


5-12 years



2.2



2.0



0.2Total





$
29.5


$
20.0


$
9.5   49




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  February 28, 2006GrossAmortization


Carrying


Accumulated


UnamortizedAmortized Intangible Assets

Period


Amount


Amortization


BalanceCustomer
    relationships  Brite


10 years


$
18.6


$
15.3


$
3.3Developed
    technology  Edify


5 years



4.0



0.1



3.9Customer
    relationships  Edify


8 years



2.5



0.1



2.4Trademark/trade
    name  Edify


18 months



0.3







0.3Other intangibles


5-12 years



2.3



1.9



0.4Total





$
27.7


$
17.4


$
10.3     Fiscal 2008

$
2.8Fiscal 2009

$
2.5Fiscal 2010

$
1.8Fiscal 2011

$
1.3Fiscal 2012

$
0.5   Note E 
    Inventory
    2007


2006Purchased parts

$
4.5


$
3.9Work in progress


9.3



5.5$
13.8


$
9.4   Note F 
    Property & Equipment
    February 28, 2007


February 28, 2006Land and buildings

$
17.4


$
16.9Computer equipment and software


52.3



42.8Furniture and fixtures


3.3



3.2Hosted solutions equipment


16.5



16.3Maintenance services equipment


7.3



8.796.8



87.9Less allowance for accumulated
    depreciation


(62.4
)


(59.0
)Property and equipment, net

$
34.4


$
28.9    50




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Note G 
    Accrued Expenses
    2007


2006Accrued compensation and other
    employee related costs, including accrued vacation

$
8.9


$
8.7Other


6.7



6.5$
15.6


$
15.2   Note H 
    Long-Term Borrowings
    Letter
    of Credit Facility
    Cash
    Interest Paid
    Note I 
    Income Taxes
    Domestic


ForeignFiscal Year

Operations


Operations


Total2007

$
0.9


$
(2.8
)

$
(1.9
)2006


5.8



5.4



11.22005


15.4



9.7



25.1  51




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2007


2006


2005Income tax provision
    (benefit):Current:Federal

$
0.3


$
(1.1
)

$
0.6State






(0.1
)


(0.1
)Foreign


(0.6
)






2.1Total current


(0.3
)


(1.2
)


2.6Deferred:Federal






(4.4
)


State










Foreign


0.1



0.3



Total deferred


0.1



(4.1
)


$
(0.2
)

$
(5.3
)

$
2.6     2007


2006


2005Federal income taxes (benefit) at
    statutory rates

$
(0.7
)


35
%

$
3.9



35
%

$
8.8



35
%AJCA repatriation tax










1.0



9







Deemed dividends and other taxable
    income from wholly owned foreign subsidiaries


















1.3



5Release of valuation allowance in
    February 2006










(4.4
)


(39
)






Change in valuation allowance,
    primarily as a result of the use of net operating losses and tax
    credits carried forward from prior years










(0.6
)


(5
)


(6.2
)


(25
)Resolution of tax contingencies










(3.2
)


(29
)


(0.9
)


(4
)Other foreign tax adjustments










(0.4
)


(4
)






Effect of
    non-U.S. tax
    rates


0.3



(14
)


(0.6
)


(5
)


(0.2
)


(1
)State taxes and foreign taxes
    withheld, net of federal effect


0.1



(5
)


(0.1
)


(1
)


(0.1
)


Other


0.1



(5
)


(0.9
)


(8
)


(0.1
)


$
(0.2
)


(11
)%

$
(5.3
)


(47
)%

$
2.6



10
%      52




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
             2007


2006Deferred Tax Assets:Net operating loss carryforwards

$
1.2


$
3.9Tax credit carryforwards


4.1



3.1Accrued expenses


2.2



1.8Inventory


1.4



1.5Depreciation and amortization


1.4



1.0Deferred revenue


0.4



0.1Allowance for doubtful accounts


0.4



0.4Stock-based compensation


1.5



0.0Other items


0.4



0.9Total deferred tax assets


13.0



12.7Valuation allowance


(2.9
)


(6.4
)Net deferred tax assets


10.1



6.3Deferred tax
    liabilities:Acquisition-related identified
    intangibles


(1.0
)


(1.2
)Other items


(0.8
)


(1.0
)Total deferred tax liabilities


(1.8
)


(2.2
)Net deferred tax assets

$
8.3


$
4.1  53




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        non-U.S. subsidiaries
  Note J 
    Stock-Based Compensation
  7-year 10-year
   54




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Year EndedFebruary 28, 2007Cost of Goods Sold

$
0.9R&D


0.5SG&A


3.4Decrease in operating income

$
4.8Related deferred income tax benefit


1.4Decrease in net income

$
3.4Decrease in earnings per
    share  basic

$
0.09Decrease in earnings per
    share  diluted

$
0.09         Year EndedFebruary 28,2007


2006


2005Expected Volatility


57.7
%


57.0
%


86.0
%Expected term (in years)


3.76



3.52



2.16Risk-free rates


4.9
%


3.99
%


2.47
%Dividend yield


0.0
%


0.0
%


0.0
%Forfeiture rate


8.0
%


0.0
%


0.0
%          55




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ended


Year EndedFebruary 28,


February 28,2006


2005Net income, as reported

$
16.5


$
22.5Less: Total stock-based
    compensation expense determined under fair value based methods
    for all awards, net of tax


(5.2
)


(7.5
)Pro forma net income

$
11.3


$
15.0Net income per share:Basic  as reported

$
0.43


$
0.62Basic  pro forma

$
0.30


$
0.42Diluted  as reported

$
0.42


$
0.59Diluted  pro forma

$
0.30


$
0.40   Stock
    Options
    Weighted Average


AggregateNumber of


Weighted Average


Remaining


IntrinsicShares


Exercise Price


Contractual Term


ValueOutstanding as of
    February 28, 2006


7,094,003


$
8.39Granted


2,138,060


$
6.93Exercised


(257,541
)

$
2.78Forfeited and cancelled


(1,013,879
)

$
8.88Outstanding as of
    February 28, 2007


7,960,643


$
8.12



5.8 years


$
2.9 millionExercisable as of
    February 28, 2007


4,425,688


$
8.15



5.3 years


$
2.9 million     Restricted
    Stock Units
   56




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Weighted Average


Weighted Average


AggregateNumber of


Grant Date Fair


Remaining


IntrinsicRSUs


Value


Contractual Term


ValueOutstanding as of
    February 28, 2006


46,875


$
8.20Granted


106,250


$
6.74Vested


0Forfeited


(5,625
)

$
7.55Outstanding as of
    February 28, 2007


147,500


$
7.17



2.2 years


$
0.9 million     Note K 
    Stockholders Equity
  Preferred
    Share Purchase Rights
  one-for-one
 57




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Warrants
    Accumulated
    Comprehensive Loss
    Balance at February 29, 2004

$
(0.6
)Foreign currency translation
    adjustments


0.5Balance at February 28, 2005

$
(0.1
)Foreign currency translation
    adjustments


(1.8
)Balance at February 28, 2006

$
(1.9
)Foreign currency translation
    adjustments


1.6Balance at February 28, 2007

$
(0.3
)   Note L 
    Leases
    Fiscal Year

Amount2008

$
3.12009

$
2.82010

$
2.42011

$
2.42012

$
2.4Thereafter

$
0.3  58




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Note M 
    Special Charges
  Fiscal
    2007
    Selling,Cost of


Research


GeneralGoods


and


andSold


Development


Administrative


TotalSeverance payments and related
    benefits

$
1.0


$
0.3


$
1.2


$
2.5Facility Costs

$



$



$
1.2


$
1.2Total

$
1.0


$
0.3


$
2.4


$
3.7     Fiscal
    2006
    Selling,Cost of


Research


GeneralGoods


and


andSold


Development


Administrative


TotalSeverance payments and related
    benefits

$
0.5


$
0.2


$
1.2


$
1.9    59




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Note N 
    Earnings Per Share
    Year Ended February 28,2007


2006


2005(In millions, except per share data)Numerator:Net income (loss)

$
(1.7
)

$
16.5


$
22.5Denominator:Denominator for basic earnings per
    share


38.6



38.1



36.2Effect of dilutive securities:Employee stock options and
    restricted stock units






0.9



1.9Outstanding warrants










0.4Denominator for diluted earnings
    per share


38.6



39.0



38.5Net income per share 
    basic

$
(0.04
)

$
0.43


$
0.62Net income per share 
    diluted

$
(0.04
)

$
0.42


$
0.59     Note O 
    Operating Segment Information and Major Customers
    2007


2006


2005Voice portal solution sales

$
69.2


$
49.2


$
74.0Messaging solution sales


14.6



19.1



10.4Payment solution sales


8.6



9.8



16.1Total solution sales


92.4



78.1



100.5Maintenance and related services
    revenues


83.2



64.4



59.4Hosted solutions revenues


20.7



25.6



23.4Total recurring services revenues


103.9



90.0



82.8Total sales

$
196.3


$
168.1


$
183.3  60




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Geographic
    Operations
    2007


2006


2005North America

$
127.7


$
92.1


$
107.8Europe


28.5



39.1



40.9Middle East and Africa


15.4



19.1



21.3Central and South America


14.7



12.6



6.8Pacific Rim


10.0



5.2



6.5Total

$
196.3


$
168.1


$
183.3     2007


2006United States

$
33.2


$
27.4United Kingdom


1.2



1.5$
34.4


$
28.9   Concentration
    of Revenue
    Note P 
    Concentrations of Credit Risk
    Note Q 
    Employee Benefit Plan
    Note R 
    Contingencies
  Intellectual
    Property Matters
  and/or
 61




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
             62




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  and/or
      Pending
    Litigation
  David Barrie, et al., on Behalf of Themselves and All
    Others Similarly Situated v. InterVoice-Brite, Inc.,
    et al. No. 3-01CV1071-D,
  Rule 10b-5
      Phoenix Solutions, Inc. vs. Sony Electronics, Inc., No. C07-2112
 63




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  No. C07-2112
  Audit
    Committee Investigation
       64




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Other
    Matters
      and/or
         65




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Article 2.02-1
  Article 2.02-1
    Article 2.02-1
 66




---



##### Table of Contents



INTERVOICE,
    INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Note S 
    Subsequent Event (Unaudited)
   67




---



##### Table of Contents



SCHEDULE II  INTERVOICE,
    INC.
  VALUATION
    AND QUALIFYING ACCOUNTS
  Column A

Column B


Column C


Column D


Column EAdditions


Additions(1)


(2)Balance at


Charged to


Charged to





Balance atBeginning of


Costs and


Other





End ofDescription

Period


Expenses


Accounts


Deductions


Period(In millions)Year Ended February 28, 2007:Allowance for doubtful accounts

$
1.7


$
0.5


$



$
(0.7
)(A)_

$
1.5Year Ended February 28, 2006:Allowance for doubtful accounts

$
0.8


$
0.5


$
0.5
(B)

$
(0.1
)(A)

$
1.7Year Ended February 28, 2005:Allowance for doubtful accounts

$
0.9


$
0.3






$
(0.4
)(A)

$
0.8     (A)
    
    Accounts written off.(B)
    
    Allowance accounts included in Edify acquisition. 68




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of disclosure controls and
    procedures. Rule 13a-15(e)
  Managements Report on Internal Control over Financial
    Reporting. Rule 13a-15(f)
        Changes in Internal Control Over Financial
    Reporting.
  Item 9B.
    Other
    Information   69




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on Internal
    Control
    over Financial Reporting
                 ERNST &
    YOUNG LLP
    70




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K. Form 10-K
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   71




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Page(1)

Financial StatementsReport of
    Independent Registered Public Accounting Firm

39Consolidated
    Balance Sheets at February 28, 2007 and 2006

40Consolidated
    Statements of Operations for each of the three years in the
    period ended February 28, 2007

41Consolidated
    Statements of Changes in Stockholders Equity for each of
    the three years in the period ended February 28,
    2007

42Consolidated
    Statements of Cash Flows for each of the three years in the
    period ended February 28, 2007

43Notes to
    Consolidated Financial Statements

44(2)

Financial
    Statement Schedule II Valuation and Qualifying
    Accounts

68     Exhibits:
   72




---



##### Table of Contents



SIGNATURES
      By:
    /s/  ROBERT
    E. RITCHEY    President and Chief Executive Officer
      Signature

Title

Date/s/  ROBERT
    E. RITCHEYRobert
    E. Ritchey

President and Chief Executive
    Officer
    and Director

May 9, 2007/s/  CRAIG
    E. HOLMESCraig
    E. Holmes

Executive Vice President, Chief
    Financial Officer and Principal Accounting Officer

May 9, 2007/s/  GERALD
    F. MONTRYGerald
    F. Montry

Chairman of the Board

May 9, 2007/s/  SAJ-NICOLE
    A. JONISaj-Nicole
    A. Joni

Director

May 9, 2007/s/  JOSEPH
    J.
    PIETROPAOLOJoseph
    J. Pietropaolo

Director

May 9, 2007/s/  GEORGE
    C. PLATTGeorge
    C. Platt

Director

May 9, 2007/s/  DONALD
    B. REEDDonald
    B. Reed

Director

May 9, 2007/s/  JACK
    P. REILYJack
    P. Reily

Director

May 9, 2007  73




---



##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Description2
.1

Agreement and Plan of Merger dated
    November 18, 2005 by and among S1 Corporation, Edify
    Corporation, Edify Holding Company, Inc., Intervoice, Inc. and
    Arrowhead I, Inc. (28)2
.2

Asset Purchase Agreement dated
    September 1, 2006 by and between Intervoice, Inc. and
    Nuasis Corporation. (31)3
.1

Articles of Incorporation, as
    amended, of Registrant.(1)3
.2

Amendment to Articles of
    Incorporation of Registrant.(7)3
.3

Amendment to Articles of
    Incorporation of Registrant.(12)3
.4

Third Restated Bylaws of
    Registrant.(19)4
.1

Third Amended and Restated Rights
    Agreement dated as of May 1, 2001 between the Registrant
    and Computershare Investor Services, LLC, as Rights Agent.(3)4
.2

Registration Rights Agreement,
    dated as of May 29, 2002, between the Registrant and each
    of the Buyers under a Securities Purchase Agreement.(10)4
.3

First Amendment to Third Amended
    and Restated Rights Agreement dated as of May 29, 2002,
    between the Registrant and Computershare Investor Services, LLC,
    as Rights Agent.(10)10
.1

The InterVoice, Inc. 1990
    Incentive Stock Option Plan, as Amended.(5)10
.2

The InterVoice, Inc. 1990
    Nonqualified Stock Option Plan for Non-Employees, as amended.(2)10
.3

InterVoice, Inc. Restricted Stock
    Plan.(4)10
.4

InterVoice, Inc. 1998 Stock Option
    Plan.(6)10
.5

Acquisition Agreement and Plan of
    Merger dated as of April 27, 1999, by and among the
    Company, InterVoice Acquisition Subsidiary III, Inc.
    (Acquisition Subsidiary) and Brite Voice
    Systems, Inc.(8)10
.6

Patent License Agreement between
    Lucent Technologies GRL Corp. and InterVoice Limited
    Partnership, effective as of October 1, 1999. Portions of
    this exhibit have been excluded pursuant to a request for
    confidential treatment.(7)10
.7

Intervoice, Inc. 1999 Stock Option
    Plan.(9)10
.8

Second Amended Employment
    Agreement dated as of February 18, 2002, between the
    Company and David W. Brandenburg.(11)10
.9

Employment Agreement dated as of
    October 23, 2002, between the Company and Robert E.
    Ritchey.(13)10
.10

Separation Agreement with Rob-Roy
    J. Graham dated June 25, 2003. (14)10
.11

Intervoice, Inc. Employee Stock
    Purchase Plan, as amended and restated effective June 24,
    2003.(15)10
.12

Credit and Security Agreement
    dated as of January 26, 2004, between the Company and Wells
    Fargo Bank, N.A.(16)10
.13

Amended and Restated Credit
    Agreement dated as of June 3, 2004, between the Registrant
    and Wells Fargo Bank, National Association (Wells
    Fargo).(18)10
.14

First Amendment to Credit
    Agreement dated as of August 17, 2004, between Registrant
    and Wells Fargo.(19)10
.15

Fiscal Year 2005 Transition Year
    Incentive Plan Summary.(19)10
.16

Intervoice, Inc. 2003 Stock Option
    Plan.(19)10
.17

Letter Agreement dated
    November 18, 2004 between Registrant and David W.
    Brandenburg. (21)10
.18

Summary of Fiscal Year 2005 Second
    Half Incentive Plan. (20)10
.19

Summary of Fiscal Year 2006 Annual
    Incentive Compensation Plan. (22)10
.20

Summary of Fiscal Year 2006
    Non-Employee Director Cash Compensation. (23)10
.21

Employment Agreement effective
    December 1, 2004 between Registrant and Robert E. Ritchey.
    (29)10
.22

Statement of Terms and Conditions
    of Employment for Francis Sherlock. (24)10
.23

Intervoice, Inc. 2005 Stock
    Incentive Plan Summary of Stock Option Grant and Stock Option
    Award Agreement for Employees. (25)10
.24

Intervoice, Inc. 2005 Stock
    Incentive Plan Summary of Stock Option Grant and Stock Option
    Award Agreement for Non-employee Directors. (25)10
.25

Intervoice, Inc. 2005 Stock
    Incentive Plan. (26)10
.26

Extension of Health Care Coverage
    to Non-Employee Directors. (27)10
.27

Salary Increases for Executive
    Officers. (27) 74




---



##### Table of Contents



ExhibitNumber

Description10
.28

Summary of the Fiscal Year 2007
    Annual Incentive Compensation Plan. (30)10
.29

Employment Agreement effective
    May 8, 2006 between Registrant and Craig E. Holmes. (32)10
.30

Employment Agreement effective
    May 8, 2006 between Registrant and James A. Milton. (32)10
.31

Separation Agreement dated as of
    September 19, 2006 between Registrant and Ronald Nieman.
    (33)10
.32

Sublease dated as of
    March 30, 2004, by and between PayPal, Inc., a Delaware
    corporation (Sublandlord) and Nuasis Corporation, a
    Delaware corporation regarding property known as 303 Bryant
    Street in the City of Mountain View, California. (34)10
.33

Assignment, Assumption and
    Amendment of Sublease dated as of August 30, 2006, by and
    between Nuasis Corporation, as Assignor, Intervoice, Inc., as
    Assignee and PayPal, Inc., as Sublandlord. (34)14


Code of Ethics.(17)21


Subsidiaries. (35)23


Consent of Independent Registered
    Public Accounting Firm. (35)31
.1

Certification of Chief Executive
    Officer of Periodic Report Pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a).
    (35)31
.2

Certification of Chief Financial
    Officer of Periodic Report Pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a).
    (35)32
.1

Certification by Chief Executive
    Officer of Periodic Report Pursuant to
    Rule 13a-14(b)
    and 18 U.S.C. Section 1350. (35)*32
.2

Certification by Chief Financial
    Officer of Periodic Report Pursuant to
    Rule 13a-14(b)
    and 18 U.S.C. Section 1350. (35)*99
.1

Pages 12, 13, 18, 38-40,
    43 and 45 of the Registration Statement on
    Form S-4,
    as amended (incorporated by reference to pages 12,
    13, 18, 38-40, 43 and 45 of the Registration Statement on
    Form S-4/A
    (Amendment No. One) filed by the Company on July 13, 1999).
    (7)     (1)
    
    Incorporated by reference to exhibits to the Companys 1995
    Annual Report on
    Form 10-K
    for the fiscal year ended February 28, 1995, filed with the
    SEC on May 30, 1995.(2)
    
    Incorporated by reference to exhibits to the Companys
    Registration Statement on
    Form S-8
    filed with the SEC on April 6, 1994, with respect to the
    Companys 1990 Nonqualified Stock Option Plan for
    Non-Employees, Registration
    Number 33-77590.(3)
    
    Incorporated by reference to exhibits to
    Form 8-A/A
    (Amendment 3) filed with the SEC on May 9, 2001.(4)
    
    Incorporated by reference to exhibits to the Companys 1996
    Annual Report on
    Form 10-K
    for the fiscal year ended February 29, 1996, filed with the
    SEC on May 29, 1996.(5)
    
    Incorporated by reference to the Companys 1997 Annual
    Report on Form
    10-K for the
    fiscal year ended February 28, 1997, filed with the SEC on
    May 29, 1997.(6)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended August 31, 1998, filed with
    the SEC on October 14, 1998.(7)
    
    Incorporated by reference to the Companys Quarterly Report
    on Form 10-Q
    for the fiscal quarter ended August 31, 1999, filed with
    the SEC on October 14, 1999.(8)
    
    Incorporated by reference to Exhibit 99(b)(1) of the
    Schedule 14-D1
    filed by Brite Voice Systems, Inc. and Intervoice Acquisition
    Subsidiary III, Inc. on May 3, 1999.(9)
    
    Incorporated by reference to Registration Statement on
    Form S-8
    filed with the SEC on October 15, 1999, Registration
    Number 333-89127.(10)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on May 30, 2002.(11)
    
    Incorporated by reference to exhibits to the Companys 2002
    Annual Report on
    Form 10-K
    for the fiscal year ended February 28, 2002, filed with the
    SEC on May 30, 2002.(12)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended August 31, 2002, filed with
    the SEC on October 15, 2002. 75




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##### Table of Contents



(13)
    
    Incorporated by reference to exhibits to the Companys
    Annual Report on
    Form 10-K
    for the fiscal year ended February 28, 2003, filed with the
    SEC on May 29, 2003.(14)
    
    Incorporated by reference to exhibits to Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended May 31, 2003, filed with the
    SEC on July 15, 2003.(15)
    
    Incorporated by reference to exhibits to Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended August 31, 2003, filed with
    the SEC on October 14, 2003.(16)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on January 26, 2004.(17)
    
    Incorporated by reference to exhibits to the Companys
    Annual Report on
    Form 10-K
    for the fiscal year ended February 29, 2004, filed with the
    SEC on May 14, 2004.(18)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on June 4, 2004.(19)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended August 31, 2004, filed with
    the SEC on October 12, 2004.(20)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on November 19, 2004.(21)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended November 30, 2004, filed with
    the SEC on January 10, 2005.(22)
    
    Incorporated by reference to the Companys Current Report
    on Form 8-K,
    filed with the SEC on April 28, 2005.(23)
    
    Incorporated by reference to the Companys Current Report
    on Form 8-K,
    filed with the SEC on January 21, 2005.(24)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended November 30, 2005, filed with
    the SEC on January 9, 2006.(25)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended August 31, 2005, filed with
    the SEC on October 7, 2005.(26)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on June 3, 2005.(27)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended May 31, 2005, filed with the
    SEC on July 8, 2005.(28)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on January 3, 2006.(29)
    
    Incorporated by reference to exhibits to the Companys
    Annual Report on
    Form 10-K
    for the fiscal year ended February 28, 2005, filed with the
    SEC on May 16, 2005.(30)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on March 10, 2006.(31)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on September 6, 2006.(32)
    
    Incorporated by reference to exhibits to the Companys
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended May 31, 2006, filed with the
    SEC on July 10, 2006.(33)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on October 5, 2006.(34)
    
    Incorporated by reference to exhibits to the Companys
    Current Report on
    Form 8-K,
    filed with the SEC on September 20, 2006.(35)
    
    Filed herewith.  *
    
    The certifications attached as Exhibit 32.1 and
    Exhibit 32.2 accompany the
    Form 10-K
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    and shall not be deemed filed by the Company for
    purposes of Section 18 of the Securities Exchange Act of
    1934. 76