Intervoice Announces Fourth Fiscal Quarter and Full Fiscal Year 2008 Results

Fourth Quarter Revenues Up 12 Percent and Solutions Backlog Up 21
Percent
DALLAS--(Business Wire)--
Intervoice, Inc. (NASDAQ: INTV) today reported revenues of $53.1
million for its fourth fiscal quarter ended February 29, 2008, an
increase of 12 percent from $47.4 million posted in the same quarter
of the prior year. Full fiscal year revenues were $202.4 million, an
increase of 3 percent from $196.3 million in the prior year. The
Company's solutions backlog of $65.7 million at February 29, 2008 was
up 21 percent from $54.1 million at the end of the fourth quarter of
the prior year, and up 18 percent from $55.9 million at the end of the
third quarter of fiscal 2008.

"We announced several significant orders during our fourth fiscal
quarter which confirm that we have made the right strategic
investments in new IP-based products and services," said Bob Ritchey,
the Company's CEO. "Based on our strong solutions bookings which were
the highest in over 24 quarters, I believe the Company's long-term
outlook continues to be favorable. I currently believe revenues for
the first quarter of fiscal 2009 will be in the $51 million to $55
million range. I look forward to discussing details of our fourth
quarter results, as well as our outlook for the future, in today's
conference call with investors."

On a GAAP basis, the Company's fourth fiscal quarter net income of
$2.1 million, or $0.05 per diluted share, is an increase from a $2.8
million GAAP net loss, or $0.07 per share loss, in the same quarter of
the prior fiscal year. Non-GAAP income of $3.1 million, or $0.08 per
diluted share for the fourth fiscal quarter 2008 was up from a $0.1
million non-GAAP income, or $0.00 per diluted share, recorded in the
same quarter of the prior year. Non-GAAP income excludes stock-based
compensation expenses of $1.4 million, acquisition related intangible
amortization charges and restructuring expenses of $0.8 million and
effective tax adjustments of $1.3 million. Excluded charges and
related income tax effects are detailed on the attached reconciliation
of GAAP to non-GAAP financial measures.

On a GAAP basis, the Company's fiscal year 2008 net income of $5.5
million, or $0.14 per diluted share, is an increase from a $1.7
million GAAP net loss, or $0.04 per share loss, recorded in the prior
year. On a non-GAAP basis, the Company reported non-GAAP income of
$12.5 million, or $0.32 per diluted share, for fiscal year 2008, up 88
percent from $6.6 million, or $0.17 per diluted share, of non-GAAP
income in the prior year. Non-GAAP income excludes stock-based
compensation expenses of $5.2 million, acquisition related intangible
amortization charges and restructuring expenses of $5.1 million, proxy
contest expenses of $0.7 million and effective tax adjustments of $4.0
million. Excluded charges and related income tax effects are detailed
on the attached reconciliation of GAAP to non-GAAP financial measures.

"Our fiscal 2008 results reflected significant operational
improvements from the prior year," said Craig Holmes, the Company's
Executive Vice President and Chief Financial Officer. "During this
transition year, we completed the integration of two strategic
acquisitions and drove positive cash flow and profitability. These
actions strengthened our financial position and overall business
model."

The Company has scheduled a conference call for 4:00 p.m. Central
Time on Thursday, April 10, 2008, to discuss its fourth fiscal quarter
results and its outlook for the future. To participate in the call,
dial (877) 743-6785 or (706) 679-4758 and reference the conference ID
of 38633568. A replay of the call will be available at the Company's
website: www.intervoice.com.

Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP.
However, the Company's internal reporting and incentive compensation
programs include adjustments to exclude stock-based compensation
charges, amortization of acquisition related intangibles, corporate
restructuring and certain special charges from GAAP financial
measures. In addition, for comparison purposes, the Company adjusts
income tax expense to reflect a 34 percent tax rate on the non-GAAP
pre-tax income measure. The Company uses these non-GAAP financial
measures in its budgeting and forecasting process to analyze financial
trends. The Company believes these adjustments provide an additional
meaningful measurement of results that enhances period to period
comparisons.

In the future, the Company anticipates incurring expenses similar
to certain of the non-GAAP adjustments described in the non-GAAP
financial measures, and exclusion of these items in the presentation
of our non-GAAP financial measures should not be construed as an
inference that all of these costs are unusual, infrequent, or
non-recurring. In addition, other companies, including those in the
Company's industry, may calculate non-GAAP financial measures
differently, potentially limiting non-GAAP measures for cross-company
comparisons. The Company acknowledges that the items excluded from
GAAP based measures may have a material impact on the Company's
financial results determined in accordance with GAAP.

Non-GAAP adjusted results are supplemental information and are not
intended to be a substitute for GAAP results or considered in
isolation, and should be read only in conjunction with consolidated
financial statements prepared in accordance with GAAP. These non-GAAP
measures and their reconciliation to the most directly comparable GAAP
measures are shown as an additional table at the end of this press
release and in schedules provided on the Company's website at
www.intervoice.com.

Forward-Looking Statements

Intervoice has included in this press release certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, and Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended concerning its business and
operations that are based on management's current beliefs. All
statements other than statements of historical fact in this press
release are forward-looking statements. Readers are cautioned to read
the risks and uncertainties, described in the Company's filings with
the Securities and Exchange Commission, including without limitation,
the risks and uncertainties set forth under Item 1A "Risk Factors" in
the Company's Annual Report filed on Form 10-K and Quarterly Reports
filed on Form 10-Q. Intervoice cautions current and potential
investors that such risks and uncertainties could result in material
differences from the forward-looking statements in this press release,
and investors should not place reliance on forward-looking statements
as a prediction of future results. We undertake no obligation to
update or revise any forward-looking statement.

About Intervoice

Intervoice is a world leader in delivering natural, intuitive ways
for people to interact, transact and communicate. Intervoice software
and professional services enable innovative voice portal, IP contact
center, hosted and mobile messaging and self-service applications.
More than 5,000 customers in 80 countries have relied on Intervoice,
including many of the world's leading financial and healthcare
institutions, telecommunications companies, utilities, and
governments. For more information, visit www.intervoice.com.

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*T

INTERVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

February 29, February 28,
2008 2007
------------ ------------

(In thousands, except
share and per share data)

ASSETS
------------------------------------------
Current Assets
Cash and cash equivalents $ 38,732 $ 28,215
Trade accounts receivable, net of
allowance for
doubtful accounts of $634 in fiscal
2008 and
$1,476 in fiscal 2007 36,971 36,837
Inventory 14,628 13,751
Prepaid expenses and other current
assets 5,141 3,909
Income taxes receivable 608 1,098
Deferred income taxes 3,360 3,880
------------ ------------
Total current assets 99,440 87,690
------------ ------------

Property and Equipment, net of accumulated
depreciation
of $71,744 in fiscal 2008 and $62,419
in fiscal 2007 32,524 34,429

Other Assets
Intangible assets, net of accumulated
amortization
of $22,944 in fiscal 2008 and
$20,040 in fiscal 2007 7,080 9,505
Goodwill 32,193 32,193
Long term deferred income taxes 6,078 4,613
Other assets 183 135
------------ ------------
$ 177,498 $ 168,565
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------

Current Liabilities
Accounts payable $ 10,516 $ 12,881
Accrued expenses 12,736 15,571
Customer deposits 8,289 4,365
Deferred income 32,708 32,368
Deferred income taxes 1,067 196
------------ ------------
Total current liabilities 65,316 65,381

Commitments and Contingencies

Stockholders' Equity
Preferred stock, $100 par value--
2,000,000
shares authorized: none issued
Common stock, no par value, at nominal
assigned value--62,000,000 shares
authorized: 38,843,851 issued and
outstanding in fiscal 2008 and
38,727,628
issued and outstanding in fiscal
2007 19 19
Additional capital 107,329 101,608
Retained earnings 4,843 1,861
Accumulated other comprehensive loss (9) (304)
------------ ------------
Stockholders' equity 112,182 103,184
------------ ------------
$ 177,498 $ 168,565
============ ============
*T

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INTERVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended Year Ended
------------------------- -------------------------
February 29, February 28, February 29, February 28,
2008 2007 2008 2007
------------ ------------ ------------ ------------

(In thousands, except per share data)

Sales
Solutions $ 26,299 $ 21,589 $ 96,911 $ 92,455
Recurring
Services 26,830 25,839 105,524 103,890
------------ ------------ ------------ ------------
53,129 47,428 202,435 196,345
------------ ------------ ------------ ------------
Cost of goods sold
Solutions 17,956 14,957 66,696 59,151
Recurring
Services 7,912 7,044 30,751 29,116
------------ ------------ ------------ ------------
25,868 22,001 97,447 88,267
------------ ------------ ------------ ------------
Gross margin
Solutions 8,343 6,632 30,215 33,304
Recurring
Services 18,918 18,795 74,773 74,774
------------ ------------ ------------ ------------
27,261 25,427 104,988 108,078
------------ ------------ ------------ ------------
Research and
development
expenses 5,596 6,351 19,071 23,630
Selling, general
and
administrative
expenses 19,159 21,153 77,031 84,120
Settlement
provision --- 943 --- 943
Amortization of
acquisition
related
intangible assets 648 682 2,705 2,518
------------ ------------ ------------ ------------
Income (loss) from
operations 1,858 (3,702) 6,181 (3,133)
Interest income 333 289 1,701 1,526
Interest expense --- --- (37) (17)
Other income
(expense), net 271 (66) 94 (276)
------------ ------------ ------------ ------------
Income (loss)
before taxes
(benefit) 2,462 (3,479) 7,939 (1,900)
Income taxes
(benefit) 326 (679) 2,410 (203)
------------ ------------ ------------ ------------
Net income (loss) $ 2,136 $ (2,800) $ 5,529 $ (1,697)
============ ============ ============ ============

Net income (loss)
per share - basic $ 0.06 $ (0.07) $ 0.14 $ (0.04)
============ ============ ============ ============

Shares used in
basic per share
computation 38,834 38,670 38,798 38,585
============ ============ ============ ============

Net income (loss)
per share -
diluted $ 0.05 $ (0.07) $ 0.14 $ (0.04)
============ ============ ============ ============

Shares used in
diluted per share
computation 39,418 38,670 39,515 38,585
============ ============ ============ ============
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INTERVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Year Ended
--------------------------
February 29, February 28,
2008 2007
------------ ------------

(In thousands)

Operating activities
Net income (loss) $ 5,529 $ (1,697)
Adjustments to reconcile net income
(loss) to net
cash provided by operating activities
Stock-based compensation expenses 5,191 5,020
Change in accounts receivable (100) (10,010)
Depreciation and amortization 12,665 11,433
Other changes in operating activities (4,418) (4,510)
------------ ------------
Net cash provided by operating activities 18,867 236
------------ ------------

Investing Activities
Purchase of property and equipment (7,962) (13,571)
Purchase of Edify Corporation, net of
cash acquired --- (926)
Purchase of Nuasis assets, net of cash
acquired --- (2,439)
------------ ------------
Net cash provided by operating activities (7,962) (16,936)
------------ ------------

Financing Activities
Exercise of stock options 2,378 715
Repurchase of common stock (3,168) ---
Excess tax benefit for exercise of stock
options 531 1,669
------------ ------------
Net cash provided by (used in) financing
activities (259) 2,384

Effect of exchange rate changes on cash (129) 455
------------ ------------

Increase (decrease) in cash and cash
equivalents 10,517 (13,861)

Cash and cash equivalents, beginning of
period 28,215 42,076
------------ ------------

Cash and cash equivalents, end of period $ 38,732 $ 28,215
============ ============
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INTERVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

(In thousands, except share data)

Accumu-
lated
Other
Compre-
Common Stock Additional Retained hensive
-----------------
Shares Amount Capital Earnings Loss Total
------------------------------------------------------

Balance at
February 28,
2007 38,727,628 $19 $101,608 $1,861 $(304) $103,184

Net income --- --- --- 5,529 --- 5,529

Foreign
currency
translation
adjustment --- --- --- --- 295 295

--------
Comprehensive
income 5,824
--------

Repurchase and
retirement
of shares (400,000) --- (3,168) --- --- (3,168)

Utilization of
net operating
loss carry
forward and
tax benefit
from
exercise
of stock
options --- --- 1,320 --- --- 1,320

Cumulative
effect of
adopting
FIN48 --- --- --- (2,547) --- (2,547)

Exercise of
stock options 516,223 --- 2,378 --- --- 2,378
Stock-based
compensation --- --- 5,191 --- --- 5,191

------------------------------------------------------
Balance at
February 29,
2008 38,843,851 $19 $107,329 $4,843 $(9) $112,182
======================================================
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INTERVOICE, INC. AND SUBSIDIARIES
REVENUES BY MARKET AND GEOGRAPHY
FOR THE QUARTER ENDED FEBRUARY 29, 2008
UNAUDITED

(In thousands)

North Rest of
America World Total
-------------- ------------- ---------------

Solutions $ 9,237 35.1% $17,062 64.9% $ 26,299 100.0%
Customer and
Software Support 16,747 75.9% 5,307 24.1% 22,054 100.0%
Hosted Solutions 4,449 93.2% 327 6.8% 4,776 100.0%
-------- ----- ------- ----- -------- ------
Total Sales $ 30,433 57.3% $22,696 42.7% $ 53,129 100.0%
======== ===== ======= ===== ======== ======

Voice Portal $ 13,922 26.2%
Messaging 10,276 19.3%
Payment 2,101 4.0%
-------- ------
Total Solutions 26,299 49.5%
-------- ------
Customer and
Software Support 22,054 41.5%
Hosted Solutions 4,776 9.0%
-------- ------
Total Recurring
Services 26,830 50.5%
-------- ------
Total Sales $ 53,129 100.0%
======== ======

INTERVOICE, INC. AND SUBSIDIARIES
REVENUES BY MARKET AND GEOGRAPHY
FOR THE YEAR ENDED FEBRUARY 29, 2008
UNAUDITED

(In thousands)

North Rest of
America World Total
-------------- ------------- ---------------

Solutions $ 41,040 42.3% $55,871 57.7% $ 96,911 100.0%
Customer and
Software Support 65,274 75.6% 21,105 24.4% 86,379 100.0%
Hosted Solutions 17,113 89.4% 2,032 10.6% 19,145 100.0%
-------- ----- ------- ----- -------- ------
Total Sales $123,427 61.0% $79,008 39.0% $202,435 100.0%
======== ===== ======= ===== ======== ======

Voice Portal $ 54,504 26.9%
Messaging 35,527 17.6%
Payment 6,880 3.4%
-------- ------
Total Solutions 96,911 47.9%
-------- ------
Customer and
Software Support 86,379 42.7%
Hosted Solutions 19,145 9.4%
-------- ------
Total Recurring
Services 105,524 52.1%
-------- ------
Total Sales $202,435 100.0%
======== ======
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INTERVOICE, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

Three Months Ended Twelve Months Ended
------------------- --------------------
February February February February
29, 28, 29, 28,
2008 2007 2008 2007
--------- -------- --------- ---------

(In Thousands, Except Per Share Data)

Gross margin
GAAP gross margin $ 27,261 $25,427 $104,988 $108,078
Gross margin % 51.3% 53.6% 51.9% 55.0%

Stock-based
compensation
charges (A) 335 198 1,167 897
Restructuring
charges and
intangible
amortization (B) (24) 123 354 971
--------- -------- --------- ---------

Non-GAAP gross
margin $ 27,572 $25,748 $106,509 $109,946
========= ======== ========= =========
Non-GAAP gross
margin % 51.9% 54.3% 52.6% 56.0%

Operating income
GAAP operating
income $ 1,858 $(3,702) $ 6,181 $ (3,133)

Stock-based
compensation
charges (A) 1,415 1,118 5,191 4,770
Restructuring
charges and
intangible
amortization (B) 838 1,536 5,098 6,237
SEC disgorgement (C) --- 943 --- 943
Proxy contest
expenses (D) --- --- 714 ---
--------- -------- --------- ---------

Non-GAAP operating
income $ 4,111 $ (105) $ 17,184 $ 8,817

Net income
GAAP net income $ 2,136 $(2,800) $ 5,529 $ (1,697)
Net income per share
- diluted $ 0.05 $ (0.07) $ 0.14 $ (0.04)

Stock-based
compensation
charges (A) 1,415 1,118 5,191 4,770
Restructuring
charges and
intangible
amortization (B) 838 1,536 5,098 6,237
SEC disgorgement (C) --- 943 --- 943
Proxy contest
expenses (D) --- --- 714 ---
Non-GAAP adjustment
for income tax (E) (1,277) (719) (4,029) (3,619)
--------- -------- --------- ---------

Non-GAAP income $ 3,112 $ 78 $ 12,503 $ 6,634
========= ======== ========= =========
Non-GAAP income per
share - diluted $ 0.08 $ 0.00 $ 0.32 $ 0.17

Shares used in non-
GAAP diluted per
share computation (F) 39,418 39,116 39,515 39,122
*T

The non-GAAP financial measures of non-GAAP gross margin, non-GAAP
operating income, non-GAAP income and non-GAAP income per
share-diluted are adjusted for the following items: stock-based
compensation charges, restructuring charges and intangible
amortization, SEC disgorgement, proxy contest expenses and the related
income tax effects. Management believes that the presentation of these
non-GAAP financial measures is useful to investors for the reasons
discussed earlier and below.

The non-GAAP financial measures in the table, "Reconciliation of
GAAP to non-GAAP Financial Measures" include the following adjustments
to GAAP based reported results and are further described below and
correspond to the following paragraphs, (A) through (F).

(A) Stock-based compensation charges consist of non-cash charges
relating to employee stock-based compensation awards determined in
accordance with SFAS 123R, beginning March 1, 2006, which requires
companies to measure all employee stock-based compensation awards
using a fair value method and recognize compensation costs in their
financial statements. Because of varying available valuation
methodologies, subjective assumptions and the variety of award types,
the Company believes that the exclusion of stock-based compensation
allows for useful comparisons of financial results to peer companies,
and of financial results between periods. In addition, the Company
believes it is useful to investors to understand the specific impact
of the application of SFAS 123R on operating results.

(B) Restructuring charges and intangible amortization include
severance, facilities consolidation, corporate restructuring and
related legal and professional fees, as well as amortization of
intangible assets relating to acquisitions. The Company's management
excludes these costs when evaluating its ongoing performance and
believes that the exclusion of these costs allows for useful
comparisons of operating results to peer companies and enhanced period
to period comparisons.

(C) SEC disgorgement represents settlements costs related to the
Company's Audit Committee investigation. The Company's management
excludes this charge when evaluating ongoing performance and believes
that the exclusion of this charge allows for useful comparisons of
financial results to peer companies and enhanced period to period
comparison.

(D) During the second quarter of fiscal year 2008 we settled a
proxy contest and completed the election and alignment of our Board of
Directors at our Annual Shareholders meeting held on July 23, 2007.
Legal and other expenses were incurred in connection therewith which
management believes are not related to the on-going operations of the
Company and believes their exclusion in the determination of non-GAAP
measures allows for useful comparisons of operating results. In
addition, management believes it is useful to investors to understand
the specific impact of these expenses.

(E) Non-GAAP adjustment for income tax. The Company's management
adjusts the reported effective tax rate to a 34 percent non-GAAP
effective tax rate to calculate non-GAAP income. Management believes
that the 34 percent effective tax rates are reflective of a long-term
normalized tax rate based on the Company's current tax structure.

(F) Shares used in computing non-GAAP income per share-diluted are
generally on the same basis as our reported net income per
share-diluted. No adjustment has been made to exclude unrecognized
compensation cost and excess tax benefits from the calculation of
assumed proceeds, as the impact is not material to the calculation.

Intervoice, Inc.
Rob Sutton, 972-454-8981
rob.sutton@intervoice.com

Copyright Business Wire 2008