##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q/A
 Amendment No. 1
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED November 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 1-15045
 INTERVOICE, INC.
 (Exact name of registrant as specified in its charter)
 TEXAS
(State or other jurisdiction of 
incorporation or organization)
    
    75-1927578
(I.R.S. Employer
Identification No.)
 17811 WATERVIEW PARKWAY, DALLAS, TX
(Address of principal executive offices)
    
    75252
(Zip Code)
 972-454-8000
(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 þ No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated filer o Accelerated filer þ Non-Accelerated Filer o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
 The Registrant had 38,644,203 shares of common stock, no par value per share, outstanding as of
December 21, 2006.




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TABLE OF CONTENTS  Item 2. Financial StatementsSIGNATURESIndex to ExhibitsCertification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Rule 13a-14(b)Certification of CFOP Pursuant to Rule 13a-14(b)    Table of Contents  Explanatory Note
  
 Item 1. Financial Statements
 
 (In Thousands, Except Share and Per Share Data)November 30, 2006
    
    
    February 28, 2006(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    17,924
    
    
    $
    42,076Trade accounts receivable, net of allowance for
doubtful accounts of $1,649 in fiscal 2007 and
$1,701 in fiscal 2006
    
    
    40,368
    
    
    
    25,745Inventory
    
    
    13,260
    
    
    
    9,439Prepaid expenses and other current assets
    
    
    4,642
    
    
    
    4,406Deferred income taxes
    
    
    3,047
    
    
    
    3,04779,241
    
    
    
    84,713Property and Equipment, net of accumulated depreciation of
$63,475 in fiscal 2007 and $59,002 in fiscal 2006
    
    
    34,086
    
    
    
    28,893Other AssetsIntangible assets, net of accumulated amortization of $19,310
in fiscal 2007 and $17,343 in fiscal 2006
    
    
    10,136
    
    
    
    10,284Goodwill
    
    
    32,461
    
    
    
    32,461Long term deferred income taxes
    
    
    2,972
    
    
    
    1,330Other assets
    
    
    401
    
    
    
    454$
    159,297
    
    
    $
    158,135LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    11,484
    
    
    $
    10,154Accrued expenses
    
    
    14,218
    
    
    
    15,176Customer deposits
    
    
    4,317
    
    
    
    6,157Deferred income
    
    
    27,223
    
    
    
    32,172Income taxes payable
    
    
    785
    
    
    
    484Deferred income taxes
    
    
    211
    
    
    
    27058,238
    
    
    
    64,413Stockholders 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: 38,640,517 issued and
outstanding in fiscal 2007 and 38,470,087 issued
and outstanding in fiscal 2006
    
    
    19
    
    
    
    19Additional capital
    
    
    96,667
    
    
    
    92,050Retained earnings
    
    
    4,661
    
    
    
    3,558Accumulated other comprehensive loss
    
    
    (288
    )
    
    
    (1,905
    )Stockholders equity
    
    
    101,059
    
    
    
    93,722$
    159,297
    
    
    $
    158,135
  2




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##### Table of Contents



(In Thousands, Except Per Share Data)Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,2006
    
    
    2005
    
    
    2006
    
    
    2005SalesSolutions
    
    $
    27,151
    
    
    $
    19,328
    
    
    $
    70,865
    
    
    $
    62,720Recurring services
    
    
    25,617
    
    
    
    21,683
    
    
    
    78,051
    
    
    
    64,84452,768
    
    
    
    41,011
    
    
    
    148,916
    
    
    
    127,564Cost of goods soldSolutions
    
    
    16,604
    
    
    
    11,474
    
    
    
    44,194
    
    
    
    37,328Recurring services
    
    
    7,405
    
    
    
    6,409
    
    
    
    22,071
    
    
    
    18,79424,009
    
    
    
    17,883
    
    
    
    66,265
    
    
    
    56,122Gross marginSolutions
    
    
    10,547
    
    
    
    7,854
    
    
    
    26,671
    
    
    
    25,392Recurring services
    
    
    18,212
    
    
    
    15,274
    
    
    
    55,980
    
    
    
    46,05028,759
    
    
    
    23,128
    
    
    
    82,651
    
    
    
    71,442Research and development expenses
    
    
    6,258
    
    
    
    4,226
    
    
    
    17,279
    
    
    
    12,305Selling, general and administrative expenses
    
    
    21,959
    
    
    
    15,801
    
    
    
    62,967
    
    
    
    46,601Amortization of acquisition related intangible assets
    
    
    673
    
    
    
    252
    
    
    
    1,836
    
    
    
    756Income (loss) from operations
    
    
    (131
    )
    
    
    2,849
    
    
    
    569
    
    
    
    11,780Interest income
    
    
    290
    
    
    
    685
    
    
    
    1,237
    
    
    
    1,781Interest expense
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )
    
    
    (31
    )Other income (expense)
    
    
    (292
    )
    
    
    212
    
    
    
    (210
    )
    
    
    379Income (loss) before taxes
    
    
    (150
    )
    
    
    3,746
    
    
    
    1,579
    
    
    
    13,909Income taxes
    
    
    (62
    )
    
    
    121
    
    
    
    476
    
    
    
    1,764Net income (loss)
    
    $
    (88
    )
    
    $
    3,625
    
    
    $
    1,103
    
    
    $
    12,145Net income per share  basic
    
    $
    0.00
    
    
    $
    0.09
    
    
    $
    0.03
    
    
    $
    0.32Shares used in basic per share computation
    
    
    38,616
    
    
    
    38,251
    
    
    
    38,557
    
    
    
    37,970Net income per share  diluted
    
    $
    0.00
    
    
    $
    0.09
    
    
    $
    0.03
    
    
    $
    0.31Shares used in diluted per share computation
    
    
    38,616
    
    
    
    39,080
    
    
    
    39,120
    
    
    
    39,046
  3




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##### Table of Contents



(In Thousands)Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Operating activitiesNet income (loss)
    
    $
    (88
    )
    
    $
    3,625
    
    
    $
    1,103
    
    
    $
    12,145Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    3,023
    
    
    
    2,324
    
    
    
    8,274
    
    
    
    5,916Non-cash compensation expense
    
    
    1,055
    
    
    
    
    
    
    
    3,804
    
    
    
    Change in accounts receivable
    
    
    (7,412
    )
    
    
    884
    
    
    
    (13,415
    )
    
    
    5,814Other changes in operating activities
    
    
    (6,224
    )
    
    
    (2,500
    )
    
    
    (10,666
    )
    
    
    (5,112
    )Net cash provided by (used in) operating activities
    
    
    (9,646
    )
    
    
    4,333
    
    
    
    (10,900
    )
    
    
    18,763Investing activitiesPurchases of property and equipment
    
    
    (2,109
    )
    
    
    (3,055
    )
    
    
    (10,723
    )
    
    
    (10,099
    )Purchase of Nuasis assets, net of cash acquired
    
    
    (2,439
    )
    
    
    
    
    
    
    (2,439
    )
    
    
    Purchase of Edify Corporation
    
    
    
    
    
    
    
    
    
    
    (926
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (300
    )Net cash used in investing activities
    
    
    (4,548
    )
    
    
    (3,055
    )
    
    
    (14,088
    )
    
    
    (10,399
    )Financing activitiesPaydown of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,733
    )Exercise of stock options
    
    
    118
    
    
    
    314
    
    
    
    376
    
    
    
    2,392Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Net cash provided by financing activities
    
    
    118
    
    
    
    314
    
    
    
    376
    
    
    
    3,159Effect of exchange rates on cash
    
    
    37
    
    
    
    (726
    )
    
    
    460
    
    
    
    (1,507
    )Increase (decrease) in cash and cash equivalents
    
    
    (14,039
    )
    
    
    866
    
    
    
    (24,152
    )
    
    
    10,016Cash and cash equivalents, beginning of period
    
    
    31,963
    
    
    
    69,392
    
    
    
    42,076
    
    
    
    60,242Cash and cash equivalents, end of period
    
    $
    17,924
    
    
    $
    70,258
    
    
    $
    17,924
    
    
    $
    70,258
  4




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##### Table of Contents



Accumulated OtherCommon Stock
    
    Additional
    
    Retained
    
    ComprehensiveShares
    
    Amount
    
    Capital
    
    Earnings
    
    Loss
    
    TotalBalance at February 28, 2006
    
    
    38,470,087
    
    
    $
    19
    
    
    $
    92,050
    
    
    $
    3,558
    
    
    $
    (1,905
    )
    
    $
    93,722Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,103
    
    
    
    
    
    
    
    1,103Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,617
    
    
    
    1,617Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,720Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    437
    
    
    
    
    
    
    
    
    
    
    
    437Exercise of stock options
    
    
    170,430
    
    
    
    
    
    
    
    376
    
    
    
    
    
    
    
    
    
    
    
    376Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    3,804
    
    
    
    
    
    
    
    
    
    
    
    3,804Balance at November 30, 2006
    
    
    38,640,517
    
    
    $
    19
    
    
    $
    96,667
    
    
    $
    4,661
    
    
    $
    (288
    )
    
    $
    101,059
  5




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED NOVEMBER 30, 2006
 Note A  Basis of Presentation
   Note B
 Acquisition of Edify Corporation
   Three Months Ended
    
    Nine Months EndedNovember 30, 2005
    
    November 30, 2005(unaudited)
    
    (unaudited)Sales
    
    $
    50,899
    
    
    $
    152,986Income before income taxes
    
    
    4,624
    
    
    
    14,553Net income
    
    
    4,518
    
    
    
    12,940Net income per share
    
    
    0.12
    
    
    
    0.33
 6




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##### Table of Contents



Note C  Inventory
  November 30, 2006
    
    
    February 28, 2006Purchased parts
    
    $
    3,931
    
    
    $
    3,908Work in progress
    
    
    9,329
    
    
    
    5,531$
    13,260
    
    
    $
    9,439
 Note D  Property and Equipment
  November 30, 2006
    
    
    February 28, 2006Land and buildings
    
    $
    17,400
    
    
    $
    16,932Computer equipment and software
    
    
    51,328
    
    
    
    42,817Furniture and fixtures
    
    
    3,416
    
    
    
    3,165Hosted solutions equipment
    
    
    17,931
    
    
    
    16,331Maintenance services equipment
    
    
    7,486
    
    
    
    8,65097,561
    
    
    
    87,895Less allowance for accumulated depreciation
    
    
    63,475
    
    
    
    59,002Property and equipment, net
    
    $
    34,086
    
    
    $
    28,893
  Note E   Stock-based Compensation
   7




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedNovember 30, 2006
    
    
    November 30, 2006Cost of Goods Sold
    
    $
    175
    
    
    $
    699R&D
    
    
    111
    
    
    
    392SG&A
    
    
    704
    
    
    
    2,561Decrease in operating income
    
    $
    990
    
    
    $
    3,652Related deferred income tax benefit
    
    
    294
    
    
    
    1,072Decrease in net income
    
    $
    696
    
    
    $
    2,580Decrease in earnings per share  basic
    
    $
    0.02
    
    
    $
    0.07Decrease in earnings per share  diluted
    
    $
    0.02
    
    
    $
    0.07
   Three Months Ended
    
    Nine Months EndedNovember 30, 2006
    
    November 30, 2006Expected Volatility
    
    
    58.9
    %
    
    
    57.7
    %Expected term (in years)
    
    
    3.95
    
    
    
    3.76Risk-free rates
    
    
    4.5
    %
    
    
    4.9
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Forfeiture rate
    
    
    8.0
    %
    
    
    8.0
    %
    Accounting for Stock-Based Compensation-Transition
and Disclosure, an amendment of FASB Statement No. 123
 Three Months Ended
    
    
    Nine Months EndedNovember 30, 2005
    
    
    November 30, 2005Net income, as reported
    
    $
    3,625
    
    
    $
    12,145Less: Total stock-based compensation
expense determined under fair
value based methods for all awards
    
    
    (2,615
    )
    
    
    (5,854
    )Pro forma net income
    
    
    1,010
    
    
    
    6,291Net income per share:Basic  as reported
    
    $
    0.09
    
    
    $
    0.32Basic  pro forma
    
    $
    0.03
    
    
    $
    0.17Diluted  as reported
    
    $
    0.09
    
    
    $
    0.31Diluted  pro forma
    
    $
    0.03
    
    
    $
    0.16
 8




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##### Table of Contents



Stock Options
  Weighted AverageWeighted Average
    
    Remaining
    
    Aggregate IntrinsicNumber of Shares
    
    Exercise Price
    
    Contractual Term
    
    ValueOutstanding as of February 28, 2006
    
    
    7,094,033
    
    
    $
    8.39Granted
    
    
    2,108,060
    
    
    $
    6.93Exercised
    
    
    (170,430
    )
    
    $
    2.18Forfeited and cancelled
    
    
    (857,202
    )
    
    $
    8.89Outstanding as of November 30, 2006
    
    
    8,174,431
    
    
    $
    8.09
    
    
    6.0 years
    
    $3.5 millionExercisable as of November 30, 2006
    
    
    4,459,034
    
    
    $
    7.99
    
    
    5.4 years
    
    $3.5 million
  Restricted Stock Units
   Weighted Average
    
    
    Weighted Average
    
    
    AggregateNumber of
    
    
    Grant Date Fair
    
    
    Remaining
    
    
    IntrinsicRSUs
    
    
    Value
    
    
    Contractual Term
    
    
    ValueOutstanding as of
February 28, 2006
    
    
    46,875
    
    
    $
    8.20Granted
    
    
    93,750
    
    
    $
    6.73Vested
    
    
    0Forfeited
    
    
    (4,375
    )
    
    $
    7.68Outstanding as of
November 30, 2006
    
    
    136,250
    
    
    $
    7.21
    
    
    2.4 years
    
    $0.9 million
  Note F
 Special Charges
 Fiscal 2007
  Cost of Goods
    
    
    Research and
    
    
    Selling, GeneralSold
    
    
    Development
    
    
    and Administrative
    
    
    TotalSeverance payments and related
benefits
    
    $
    573
    
    
    $
    195
    
    
    $
    519
    
    
    $
    1,287Facility Costs
    
    
    
    
    
    
    
    
    
    $
    1,075
    
    
    $
    1,075Total
    
    $
    573
    
    
    $
    195
    
    
    $
    1,594
    
    
    $
    2,362
  Fiscal 2006
  9




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##### Table of Contents



Accrued Balance
    
    
    
    
    
    
    
    
    
    Accrued BalanceFebruary 28, 2006
    
    Payments
    
    Adjustments
    
    November 30, 2006Severance payments and related
benefits
    
    $
    1,748
    
    
    $
    1,536
    
    
    $
    (29
    )
    
    $
    183
  Note G
 Income Taxes
    Accounting for Income Tax Uncertainties,
  10




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##### Table of Contents



Note H  Earnings Per Share
 Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,(in thousands, except per share data)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Net income (loss)
    
    $
    (88
    )
    
    $
    3,625
    
    
    $
    1,103
    
    
    $
    12,145Denominator:Denominator for basic
earnings per share
    
    
    38,616
    
    
    
    38,251
    
    
    
    38,557
    
    
    
    37,970Dilutive potential common sharesEmployee stock options
    
    
    
    
    
    
    829
    
    
    
    563
    
    
    
    1,005Outstanding warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71Denominator for diluted
earnings per share
    
    
    38,616
    
    
    
    39,080
    
    
    
    39,120
    
    
    
    39,046Net income per share:Basic
    
    $
    0.00
    
    
    $
    0.09
    
    
    $
    0.03
    
    
    $
    0.32Diluted
    
    $
    0.00
    
    
    $
    0.09
    
    
    $
    0.03
    
    
    $
    0.31
  Note I  Operating Segment Information and Major Customers
  Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Voice automation/IVR solution sales
    
    $
    19,062
    
    
    $
    10,438
    
    
    $
    52,060
    
    
    $
    38,371Messaging solution sales
    
    
    4,347
    
    
    
    5,877
    
    
    
    11,634
    
    
    
    16,743Payment solution sales
    
    
    3,742
    
    
    
    3,013
    
    
    
    7,171
    
    
    
    7,606Total solution sales
    
    
    27,151
    
    
    
    19,328
    
    
    
    70,865
    
    
    
    62,720Maintenance and related
service revenues
    
    
    21,329
    
    
    
    15,589
    
    
    
    62,180
    
    
    
    45,964Hosted solutions revenues
    
    
    4,288
    
    
    
    6,094
    
    
    
    15,871
    
    
    
    18,880Total recurring services revenues
    
    
    25,617
    
    
    
    21,683
    
    
    
    78,051
    
    
    
    64,844Total sales
    
    $
    52,768
    
    
    $
    41,011
    
    
    $
    148,916
    
    
    $
    127,564
 11




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##### Table of Contents



Geographic Operations
  Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,2006
    
    
    2005
    
    
    2006
    
    
    2005North America
    
    $
    34,880
    
    
    $
    22,105
    
    
    $
    94,127
    
    
    $
    67,508Europe
    
    
    7,168
    
    
    
    7,233
    
    
    
    22,551
    
    
    
    28,938Middle East and Africa
    
    
    4,660
    
    
    
    5,201
    
    
    
    12,219
    
    
    
    17,146Central and South America
    
    
    2,898
    
    
    
    4,831
    
    
    
    12,342
    
    
    
    10,207Pacific Rim
    
    
    3,162
    
    
    
    1,641
    
    
    
    7,677
    
    
    
    3,765Total
    
    $
    52,768
    
    
    $
    41,011
    
    
    $
    148,916
    
    
    $
    127,564
 Concentration of Revenue
  Note J
 Contingencies
 Intellectual Property Matters
     12




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Pending Litigation
 David Barrie, et al., on Behalf of Themselves and All Others Similarly Situated v.
InterVoice-Brite, Inc., et al.
    13




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##### Table of Contents



Phoenix Solutions, Inc. v. Sony Electronics, Inc.
 Audit Committee Investigation
     14




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Other Matters
        15




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Barrie Barrie
 16




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SIGNATURES
  INTERVOICE, INC.Date: May 1, 2007
    By:
    /s/ CRAIG E. HOLMESCraig E. HolmesExecutive Vice President and Chief Financial Officer




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##### Table of Contents



Index to Exhibits
 ExhibitNo.
    
    Description31.1
    
    Certification of Chief Executive Officer of Periodic Report
Pursuant to Rule 13a-14(a) or Rule 15d-14(a). (1)31.2
    
    Certification of Chief Financial Officer of Periodic Report
Pursuant to Rule 13a-14(a) or Rule 15d-14(a). (1)32.1
    
    Certification of Chief Executive Officer of Periodic Report
Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350. (1)*32.2
    
    Certification of Chief Financial Officer of Periodic Report
Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350. (1)*
 
 (1)
    
    Filed herewith.*
    
    The certifications attached as Exhibit 32.1 and 32.2 accompany the Quarterly Report on Form 10-Q
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, as amended.