<PAGE> 1
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM_________ TO
___________.
Commission File Number 0-26814
DATAWORKS CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0209937
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
5910 PACIFIC CENTER BOUVELVARD 92121
SUITE 300 (Zip Code)
SAN DIEGO, CALIFORNIA
(Address of principal executive offices)
(619) 546-9600
(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. [x] Yes [ ] No
As of June 30, 1996, there were 5,955,416 shares of the Registrant's
Common Stock outstanding.
==============================================================================
<PAGE> 2
DATAWORKS CORPORATION
FORM 10-Q INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996 (unaudited)
and December 31, 1995 3
Consolidated Statements of Operations (unaudited) for the Three
Months and Six Months Ended June 30, 1996 and June 30, 1995 4
Consolidated Statements of Cash Flows (unaudited) for the Six
Months Ended June 30, 1996 and June 30, 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DATAWORKS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,253,376 $10,726,636
Accounts receivable, net 13,298,651 9,951,922
Deferred income taxes 1,515,780 1,515,780
Other current assets 2,646,193 983,368
----------- -----------
Total current assets 25,714,000 23,177,706
Equipment, furniture and fixtures, net 2,105,429 1,589,760
Receivable from officer 155,300 206,000
Acquired and developed software costs, net 3,370,712 1,852,115
Intangible assets, net 4,211,058 4,574,277
Other assets 121,885 125,045
----------- -----------
Total assets $35,678,384 $31,524,903
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,355,788 $ 2,742,380
Accrued compensation 1,584,347 1,350,091
Other accrued liabilities 2,605,381 912,019
Deferred revenue 3,070,357 3,281,665
----------- -----------
Total current liabilities 10,615,873 8,286,155
Deferred income taxes 1,885,815 1,929,189
Deferred rent 126,264 133,266
Commitments
Shareholders' equity:
Common stock, no stated par value:
Authorized shares - 25,000,000
Issued and outstanding shares - 5,955,416 and 5,661,436
at June 30, 1996 and December 31, 1995, respectively 26,344,390 26,005,540
Accumulated deficit (3,293,958) (4,829,247)
----------- -----------
Total shareholders' equity 23,050,432 21,176,293
----------- -----------
Total liabilities and shareholders' equity $35,678,384 $31,524,903
=========== ===========
</TABLE>
See accompanying notes
3
<PAGE> 4
DATAWORKS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- --------------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Software licenses $ 6,772,309 $4,064,873 $11,339,028 $ 6,742,663
Hardware 1,389,590 1,511,518 2,601,206 2,530,664
Maintenance and other 3,356,212 2,022,609 6,215,146 3,894,324
----------- ---------- ----------- -----------
Total revenues 11,518,111 7,599,000 20,155,380 13,167,651
Cost of revenues:
Software licenses 533,761 325,360 922,945 581,572
Hardware 1,029,476 1,125,787 1,943,602 1,984,323
Maintenance and other 2,679,161 1,413,776 4,911,588 2,737,098
----------- ---------- ----------- -----------
Total cost of revenues 4,242,398 2,864,923 7,778,135 5,302,993
----------- ---------- ----------- -----------
Gross profit 7,275,713 4,734,077 12,377,245 7,864,658
Operating expenses:
Sales & marketing 3,213,274 1,956,023 5,603,844 3,640,026
Research & development 987,120 596,823 1,891,504 1,180,223
General & administrative 1,415,675 1,057,932 2,543,737 1,863,786
----------- ---------- ----------- -----------
Total operating expenses 5,616,069 3,610,778 10,039,085 6,684,035
----------- ---------- ----------- -----------
Income from operations 1,659,644 1,123,299 2,338,160 1,180,623
Other income (expense), net 76,714 (478,650) 178,707 (913,946)
----------- ---------- ----------- -----------
Income before income taxes 1,736,358 644,649 2,516,867 266,677
Provision for income taxes 677,000 253,783 981,578 112,004
----------- ---------- ----------- -----------
Net income $ 1,059,358 $ 390,866 $ 1,535,289 $ 154,673
=========== ========== =========== ===========
Per share information:
Net income $ 0.17 $ 0.12 $ 0.24 $ 0.05
=========== ========== =========== ===========
Shares used in per share 6,413,000 3,321,000 6,357,000 3,321,000
=========== ========== =========== ===========
</TABLE>
See accompanying notes
4
<PAGE> 5
DATAWORKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------------------
1996 1995
------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,535,289 $ 154,671
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation 410,590 178,971
Amortization of intangible assets 400,721 328,089
Amortization of debt discount and debt issue costs - 149,593
Reduction of advances to officers charged to
operating expenses - 77,000
Deferred rent expense (7,002) 10,775
Deferred income taxes (43,374) (79,372)
Changes in operating assets and liabilities:
Accounts payable 613,408 1,105,700
Accrued compensation 234,256 89,460
Other accrued liabilities 1,693,362 (107,228)
Deferred revenue (211,308) 1,520,488
Accounts receivable (3,346,729) (3,882,565)
Other current assets (1,662,825) (373,668)
----------- ----------
Net cash used in operating activities (383,612) (828,086)
INVESTING ACTIVITIES
Purchases of equipment, furniture and fixtures (926,259) (309,565)
Additions to acquired and developed software costs (1,556,099) (606,908)
Advances to officers 50,700 (99,500)
Other assets 3,160 (11,516)
----------- ----------
Net cash used in investing activities (2,428,498) (1,027,489)
FINANCING ACTIVITIES
Net increase in obligations under lines of credit - 626,553
Proceeds from notes payable - 1,250,000
Repayments of notes payable - (134,828)
Deferred debt issue costs - (113,338)
Issuance of common stock, net 338,850 -
----------- ----------
Net cash provided by financing activities 338,850 1,628,387
----------- ----------
Net decrease in cash and cash equivalents (2,473,260) (227,188)
Cash and cash equivalents at beginning of period 10,726,636 618,332
----------- ----------
Cash and cash equivalents at end of period $ 8,253,376 $ 391,144
=========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 27,518 $ 617,517
=========== ==========
Cash paid during the period for income taxes $ 38,743 $ 351,818
=========== ==========
</TABLE>
See accompanying notes
5
<PAGE> 6
DATAWORKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim unaudited consolidated financial statements included herein have
been prepared by DataWorks Corporation (the "Company"), pursuant to the rules
and regulations of the Securities and Exchange Commission (the "SEC").
Accordingly, they do not include all of the information and disclosures
required by generally accepted accounting principles for complete financial
statements. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto for
the year ended December 31, 1995 included in the Company's Annual Report on
Form 10-K. In the opinion of management all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation of the
consolidated financial position of the Company as of June 30, 1996 and the
results of operations for the three- and six-month periods ended June 30, 1996
and June 30, 1995, and changes in cash flows for the six-month periods ended
June 30, 1996 and 1995 have been included. The results of operations for the
interim period ended June 30, 1996 are not necessarily indicative of the
results which may be reported for any other interim period or for the year
ended December 31, 1996.
2. ACCOUNTING POLICIES
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standard No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" (SFAS 121). The adoption of the
new standard had no effect on the financial statements.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standard No. 123 "Accounting and Disclosure of Stock-Based
Compensation" (SFAS 123). As allowed under SFAS 123, the Company has elected
to continue to account for stock option grants in accordance with Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" (APB
25) and related interpretations. The adoption of the new standard had no
effect on the financial statements.
3. NET INCOME PER SHARE
For periods subsequent to the completion of the Company's initial public
offering (the "IPO") in October 1995, income per share information is computed
using the weighted average number of common shares outstanding plus common
share equivalents arising from outstanding stock options and warrants using the
treasury stock method. Prior to the IPO, net income (loss) per share was
computed pursuant to the requirements of the SEC, which require that common
stock and convertible preferred shares issued by the Company during the twelve
months immediately preceding the IPO, plus the number of common equivalent
shares which were granted during the same period pursuant to the grant of stock
options and warrants, be included in the calculation of the shares used in
computing net income (loss) per share as if these shares were outstanding for
all periods presented using the treasury stock method.
4. ACQUISITIONS
In January 1996, the Company agreed to purchase software assets of Arrowkey
Systems for $450,000. These assets facilitate the integration of shop floor
data collection systems into the Company's current software products. In
addition, the Company may be required to pay up to $75,000 annually through
1998 if certain sales levels of Arrowkey Systems software products are
achieved, as defined. The assets acquired have been included on the
accompanying consolidated balance sheet as "Acquired and developed software
costs, net" and will be amortized over their estimated useful life of five
years.
6
<PAGE> 7
DATAWORKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. ACQUISITIONS (continued)
On July 22, 1996 the Company announced it has signed a letter of intent to
acquire, through a merger, DCD Corporation ("DCD"). The Company plans to issue
up to 1.8 million shares of its common stock, subject to certain reductions,
and will account for this acquisition as a pooling of interests. Consummation
of this transaction is contingent upon approval of the Company's shareholders,
execution of a definitive acquisition agreement and satisfactory due diligence
reviews by each party. DCD develops, markets and supports business management
software for the make-to-order manufacturing segment, primarily job shops and
custom manufactures. The Company believes that DCD's Windows- and NT- based
products are complimentary to its current existing products.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company develops, markets, implements and supports open systems,
client-server based ERP software for mid-sized discrete manufacturing
companies. The Company expects that the factors affecting its growth will
include expansion in the range and capabilities of its ERP software products,
continued focus on licensing products to new customers and licensing additional
sites and modules to existing customers, extended availability of sales and
services through the expansion of regional centers and investment in
infrastructure to support anticipated growth in sales and service requirements.
The Company has experienced significant fluctuations in its revenues and
operating results from quarter to quarter and anticipates that it will continue
to experience such quarterly fluctuations. The Company's revenues occur
predominantly in the third month of each fiscal quarter and tend to be
concentrated in the latter half of such third month. Accordingly, the
Company's quarterly results of operations are difficult to predict, and delays
in product delivery or in closings of sales near the end of the quarter could
cause quarterly revenues and, to a greater degree, net income to fall
substantially short of anticipated levels. The forward-looking comments
contained in the following discussion involve risks and uncertainties. The
Company's actual results may differ materially from those discussed here.
Factors that could cause or contribute to such differences can be found in the
following discussion and elsewhere throughout this Quarterly Report on Form
10-Q, as well as in the Company's Annual Report on Form 10-K as filed with the
SEC.
RESULTS OF OPERATIONS
The following table sets forth the percentage of total revenues represented by
certain statement of operations data for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- ---------------------------
1996 1995 1996 1995
----------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Software licenses 59 % 53 % 56 % 51 %
Hardware 12 20 13 19
Maintenance and other services 29 27 31 30
--- --- --- ---
Total revenues 100 100 100 100
Cost of revenues:
Software licenses 5 4 5 4
Hardware 9 15 10 15
Maintenance and other services 23 19 24 21
--- --- --- ---
Total cost of revenues 37 38 39 40
--- --- --- ---
Gross profit 63 62 61 60
Operating expenses:
Sales & marketing 28 26 28 28
Research & development 9 8 9 9
General & administrative 12 14 13 14
--- --- --- ---
Total operating expenses 49 48 50 51
--- --- --- ---
Income from operations 14 14 11 9
Other income (expense), net 1 (6) 1 (7)
--- --- --- ---
Income before income taxes 15 8 12 2
Provision for income taxes 6 3 4 1
--- --- --- ---
Net income 9 % 5 % 8 % 1 %
=== === === ===
</TABLE>
8
<PAGE> 9
Revenues. Total revenues increased 52% to $11.5 million from $7.6
million and increased 53% to $20.2 million from $13.2 million for the three-
and six-month periods ended June 30, 1996, respectively, as compared to the
same periods in 1995. These increases in total revenues were primarily due to
growth in software license revenues, which increased 67% and 68% for the three-
and six-month periods ended June 30, 1996, respectively, as compared to the
same periods in 1995, and maintenance and other service revenues, which
increased 66% and 60% for the three- and six-month periods ended June 30, 1996,
respectively, as compared to the same period in 1995. This growth is
attributable to increased marketing efforts, expansion of the sales force and
increased capacity created by the growth in the Company's service organization.
Hardware revenues as a percentage of total revenue declined 8% and 6% for the
three- and six-month periods ended June 30, 1996, respectively, as compared to
the same periods in 1995 reflecting an increasing tendency for new customers
who purchase PC-based systems to purchase hardware directly from third party
vendors.
Cost of revenues. Total cost of revenues increased 48% to $4.2
million from $2.9 million and increased 47% to $7.8 million from $5.3 million
for the three- and six-month periods ended June 30, 1996, respectively, as
compared to the same periods in 1995. The costs related to software license
revenues increased 64% and 59% for the three- and six-month periods ended June
30, 1996, respectively, as compared to the same periods in 1995 representing
approximately 5% of total revenues for each of the respective periods. These
increases are directly related to the increase in software license revenues for
the respective periods. The most significant cost increase was related to the
cost of maintenance and other service revenues which increased by 90% and 79%
for the three- and six-month periods ended June 30, 1996, respectively, as
compared to the same periods in 1995. These increases are primarily due to the
expansion of the Company's professional service resources required to support
the current and expected growth in new customer accounts.
Gross profit. Gross profit increased 54% to $7.3 million from $4.7
million and increased 57% to $12.4 million from $7.9 million for the three- and
six-month periods ended June 30, 1996, respectively, as compared to the same
periods in 1995. These increases are directly related to the increase in total
revenues and are positively effected by the increase in software license
revenues which carry a higher gross profit percentage than other components of
revenue. Gross profit as a percentage of total revenues increased to 63% from
62% and increased to 61% from 60% for the three- and six-month periods ended
June 30, 1996, respectively, as compared to the same periods of 1995. The
gross profit percentage increases, resulting from the overall higher content of
software license revenues, were partially offset in each of the respective
periods by the Company's investments in the accelerated development of the
infrastructure for professional services.
Sales and marketing expenses. Sales and marketing expenses increased
64% to $3.2 million from $2.0 million and increased 54% to $5.6 million from
$3.6 million for the three- and six-month periods ended June 30, 1996,
respectively, as compared to the same periods in 1995. Sales and marketing
expenses represent 28% and 26% of total revenues for the three months ended
June 30, 1996 and 1995, respectively, and represent 28% of total revenues for
each of the six-month periods ended June 30, 1996 and 1995. These increases in
sales and marketing expenses were attributable to the Company's expansion of
its direct sales force, increased marketing efforts, commissions and other
expenses related directly to the increased sales activity. The Company expects
that such expenses will continue to increase as it expands its sales efforts.
Research and development expenses. Research and development expenses
increased 65% to approximately $987,000 from approximately $597,000 and
increased 60% to $1.9 million from $1.2 million for the three- and six-month
periods ended June 30, 1996 as compared to the same periods in 1995
representing approximately 9% of total revenues for each of the respective
periods. The Company believes that investments in research and development are
necessary to maintain a market leadership position in its targeted markets.
During these periods, the Company has continued to increase its expenditures on
research and development primarily through the employment of additional
development personnel. For the foreseeable future, the Company anticipates
continued increased expenditures on research and development for both the
enhancement of current products and the addition of new products.
9
<PAGE> 10
General and administrative expenses. General and administrative
expenses increased 34% to $1.4 million from $1.1 million and increased 36% to
$2.5 million from $1.9 million for the three- and six-month periods ended June
30, 1996, respectively, as compared to the same periods in 1995. General and
administrative expenses represent 12% and 14% of total revenues for the three
months ended June 30, 1996 and 1995, respectively, and represent 13% and 14% of
total revenues for the six months ended June 30, 1996 and 1995, respectively.
These increases in expense are primarily due to the increase in administrative
staff necessary to manage the growth of the Company.
Interest income and expense. The Company reported net interest income
of approximately $77,000 for the three months ended June 30, 1996 as compared
to net interest expense of approximately $479,000 for the same period in 1995.
For the six months ended June 30, 1996 the Company reported net interest income
of $179,000 as compared to net interest expense of approximately $914,000 for
the same period in 1995. The net interest income for the first three- and
six-month periods of 1996 relate primarily to the income from the investment
of the Company's excess cash. The interest expense recorded for the same
periods in 1995 relate primarily to long-term debt and the amortization of debt
issue cost with respect to prior financings, all of which were retired with a
portion of the proceeds from the Company's initial public offering in October
1995.
Provision for income taxes. The Company's estimated effective tax
rate was 39% for each of the three-month periods ended June 30, 1996 and 1995.
For the six months ended June 30, 1996 the estimated effective tax rate was 39%
as compared to a 42% tax rate for the same period in 1995. The difference
between the Company's effective rate and the combined statutory rates is due to
benefits from certain tax credit carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations primarily through cash flow from operations
and its current cash and short-term investment balances. For the six months
ended June 30, 1996, operating activities required cash of approximately
$384,000 primarily to support increases in accounts receivable resulting from
the growth in software licensing activity. The Company's principal uses of
cash for investing activities were for capital equipment of approximately
$926,000, continued funding of the Company's new ECS product of $1.1 million
and the purchase of certain software from Arrowkey Systems of $450,000. The
increase in capital equipment was primarily related to the increase in
personnel.
As of June 30, 1996, the Company had cash and cash equivalents totaling
approximately $8.3 million.
The Company maintains a secured bank line of credit expiring in June 1997 that
provides for borrowings of up to $6.0 million, based upon eligible accounts
receivable, at the bank's prime rate. No borrowings were outstanding under the
line of credit at June 30, 1996.
The Company's principal commitments as of June 30, 1996 consisted primarily of
leases on facilities and equipment. There were no material commitments for
capital expenditures.
The Company's capital resources may be used to support working capital
requirements, product development, capital equipment requirements and possible
acquisitions of businesses, products or technologies complementary to the
Company's current business.
On July 22, 1996 the Company announced it has signed a letter of intent to
acquire, through a merger, DCD Corporation ("DCD"). The Company plans to issue
up to 1.8 million shares of its common stock, subject to certain reductions,
and will account for this acquisition as a pooling of interests. Consummation
of this transaction is contingent upon approval from each of the Company's
shareholders, execution of a definitive acquisition agreement and satisfactory
due diligence reviews by each party. Whether or not the merger is
consummated, the Company will bear its own costs and expenses in connection
with the merger. The Company estimates that they will incur
10
<PAGE> 11
direct transaction costs and costs associated with the integration of DCD
personnel of approximately $2,000,000 and will charge these nonrecurring costs
to operations upon consummation of the merger.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on May 23, 1996. At such
meeting Stuart W. Clifton, Norman R. Farquhar, Mark S. Howlett, Nathan W. Bell,
Finis F. Conner and Ronald S. Parker were elected to the Board of Directors for
the ensuing year. The voting for each of the above named individuals was
5,033,250 shares for election, no abstentions and 2,774 shares withheld,
respectively.
The selection of Ernst & Young LLP by the Board of Directors as
auditors for the fiscal year ending December 31, 1996 was ratified by the
stockholders. The vote was 5,030,019 shares for their selection, with none
against and 6,005 abstentions.
ITEM 5. OTHER INFORMATION
On July 22, 1996 the Company announced it has signed a letter of
intent to acquire, through a merger, DCD Corporation ("DCD"). The Company
plans to issue up to 1.8 million shares of its common stock, subject to certain
reductions, and will account for this acquisition as a pooling of interests.
Consummation of this transaction is contingent upon approval of the Company's
shareholders, execution of a definitive acquisition agreement and satisfactory
due diligence reviews by each party. DCD develops, markets and supports
business management software for the make-to-order manufacturing segment,
primarily job shops and custom manufactures. The Company believes that DCD's
Windows- and NT-based products are complimentary to its current existing
products.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibit Index
Exhibit 11 - Statement Regarding Computation of Earnings Per
Share
Exhibit 27 - Financial Data Schedule
(B) No reports on Form 8-K were filed during the three months
ended June 30, 1996.
11
<PAGE> 12
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATAWORKS CORPORATION
(Registrant)
Date: August 13, 1996 /s/Stuart W. Clifton
---------------------------
Stuart W. Clifton
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: Augsut 13, 1996 /s/Norman R. Farquhar
----------------------------
Norman R. Farquhar
Chief Financial Officer and
Director
(Principal Financial Officer)
12
<PAGE> 13
Exhibit 11
DATAWORKS CORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -----------------------
JUNE 30, JUNE 30,
------------------------ -----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 5,920 2851 5,857 2851
Net effect of dilutive stock options - based 493 470 500 1,249
------ ----- ------ -----
Totals 6,413 3,321 6,357 4,100
====== ===== ====== =====
Net income $1,059 $391 $1,535 $155
====== ===== ====== =====
Per share amount $0.17 $0.12 $0.24 $0.04
====== ===== ====== =====
</TABLE>
Fully dilutive effect of stock options on per share amounts for the three- and
six-month periods ended June 30, 1996 and 1995, has not been presented since
any reduction of less than 3% in the aggregate need not be considered as
dilution.
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,253,376
<SECURITIES> 0
<RECEIVABLES> 13,634,151
<ALLOWANCES> 335,500
<INVENTORY> 1,567,643
<CURRENT-ASSETS> 25,714,000
<PP&E> 3,713,989
<DEPRECIATION> 1,608,560
<TOTAL-ASSETS> 35,678,384
<CURRENT-LIABILITIES> 10,615,873
<BONDS> 0
0
0
<COMMON> 26,344,390
<OTHER-SE> (3,293,958)
<TOTAL-LIABILITY-AND-EQUITY> 35,678,384
<SALES> 13,940,234
<TOTAL-REVENUES> 20,155,380
<CGS> 2,866,547
<TOTAL-COSTS> 7,778,135
<OTHER-EXPENSES> 10,039,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (178,707)
<INCOME-PRETAX> 2,516,867
<INCOME-TAX> 981,578
<INCOME-CONTINUING> 1,535,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,535,289
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
