<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-27772
METROWERKS INC.
(exact name of registrant as specified in its charter)
CANADA N/A
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2201 DONLEY DRIVE, SUITE 310, AUSTIN, TEXAS 78758
(Address of principal executive offices) (zip code)
(512) 873-4700
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ x ] No [ ]
Number of shares of common stock outstanding as of December 15, 1997: 11,578,119
<PAGE>
METROWERKS INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
PART I: FINANCIAL INFORMATION
- - -----------------------------
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets as of July 31, and October 31, 1997........2
Consolidated Statements of Operations for the periods
ended October 31, 1996 and 1997........................................3
Consolidated Statements of Changes in Stockholders' Equity for the
period ended October 31, 1997..........................................4
Consolidated Statements of Cash Flows for the periods
ended October 31, 1996 and 1997........................................5
Notes to Consolidated Financial Statements.............................6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................7
Item 3 Quantitative and Qualitative Disclosures About Market Risk............10
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 Securities Holders.................11
Item 5 Other Information.....................................................11
Item 6 Exhibits and Reports on Form 8-K......................................11
Signature.....................................................................11
<PAGE>
PART 1. FINANCIAL STATEMENTS
- - ----------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
METROWERKS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(U.S. THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
July 31, October 31,
ASSETS 1997 1997
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,042 $15,468
Accounts receivable, net 5,027 7,147
Inventories 302 227
Income and other taxes recoverable 295 245
Prepaid expenses and other current assets 456 404
---------- ----------
Total current assets 11,122 23,491
Property and equipment, net 3,046 2,912
---------- ----------
Total assets $14,168 $26,403
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,913 $ 1,642
Accrued liabilities 1,498 1,986
Deferred revenue 195 143
---------- ----------
Total current liabilities 3,606 3,771
Stockholders' equity:
Capital stock
Preferred stock, Class A and B, no par value,
unlimited as to number; none outstanding -- --
Common stock, no par value, unlimited as to number;
shares issued and outstanding 11,537,500 and
11,575,786, respectively 17,596 17,722
Special warrants, issued and outstanding
nil and 1,500,000, respectively -- 11,718
Accumulated deficit (6,984) (6,747)
Cumulative translation adjustment (50) (61)
---------- ----------
Total stockholders' equity 10,562 22,632
---------- ----------
Total liabilities and stockholders' equity $14,168 $26,403
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
METROWERKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(U.S. THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months
Ended
October 31,
1996 1997
-------- --------
<S> <C> <C>
Revenue, net $ 3,766 $ 6,153
Cost of sales 1,094 1,133
Operating expenses
Research and development 1,141 2,083
Selling, administrative and technical support 1,584 2,374
Depreciation 209 386
-------- --------
Total operating expenses 2,934 4,843
Earnings (loss) from operations (262) 177
Other income:
Interest income and other, net 127 60
-------- --------
Net earnings (loss) $ (135) $ 237
Net earnings (loss) per common and common equivalent share $ (0.01) $ 0.02
Weighted average number of common shares and common
equivalent shares outstanding (in thousands) 11,505 11,769
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
METROWERKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(U.S. THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative Total
Common Stock Special Warrants Accumulated Translation Stockholders'
Shares Amount Shares Amount Deficit Adjustment Equity
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at August 1, 1997 11,537,500 $17,596 -- -- $(6,984) $(50) $10,562
Exercise of common
stock options 38,286 126 -- -- -- -- 126
Issuance of special
warrants, net of offering
costs of $301,000 (Note 3) -- -- 1,500,000 $11,718 -- -- 11,718
Foreign currency
translation adjustment -- -- -- -- -- (11) (11)
Net earnings -- -- -- -- 237 -- 237
- - -------------------------------------------------------------------------------------------------------------------
Balance at October 31, 1997 11,575,786 $17,722 1,500,000 $11,718 $(6,747) $(61) $22,632
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
METROWERKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. THOUSANDS OF DOLLARS)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months
Ended
October 31,
1996 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (135) $ 237
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Depreciation of property and equipment 209 386
Amortization of software development costs 127 --
Changes in assets and liabilities
Accounts receivable (311) (2,131)
Other current assets (258) 177
Current liabilities (204) (136)
-------- --------
Net cash used in operating activities (572) (1,467)
Cash flows from investing activities:
Additions to property and equipment (967) (252)
Software development costs capitalized (327) --
-------- --------
Net cash used in investing activities (1,294) (252)
Cash flows from financing activities:
Net proceeds from issue of special warrants -- 12,019
Proceeds from exercise of stock options 45 126
-------- --------
Net cash provided by financing activities 45 12,145
Increase (decrease) in cash and cash equivalents (1,821) 10,426
Cash and cash equivalents at beginning of period 11,498 5,042
-------- --------
Cash and cash equivalents at end of period 9,677 15,468
Non-cash investing and financing activities:
Accrued offering costs -- 301
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
METROWERKS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. THOUSANDS OF DOLLARS)
- - --------------------------------------------------------------------------------
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited interim
consolidated financial statements contain all adjustments, consisting of normal
recurring accruals, considered necessary for a fair presentation. Operating
results for the three months ended October 31, 1997 are not necessarily
indicative of the results that may be expected for the year ended July 31, 1998,
or for any other interim period. For further information, refer to the
consolidated financial statements and footnotes thereto included in Form 10-K
for the year ended July 31, 1997 of Metrowerks Inc. and subsidiaries (the
"Company").
The consolidated financial statements include the accounts of Metrowerks Inc.
and its two wholly-owned subsidiaries, Metrowerks Corporation, a Texas
corporation, which was formed in June 1994, and Metrowerks Co. Ltd., a Japanese
corporation, which was formed in October 1996. All significant intercompany
transactions and balances have been eliminated.
Certain amounts have been reclassified in the October 31, 1996 consolidated
financial statements to conform to the current period classifications.
Note 2 - Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (OFASBO) issued
Statement of Financial Accounting Standards ("SFAS") No. 128, OEarnings Per
ShareO which establishes standards for computing and presenting earnings per
share. SFAS No. 128 is effective for fiscal years ending after December 15,
1997. Management does not believe the implementation of SFAS No. 128 will have a
material effect on its consolidated financial statements.
In February 1997, the FASB issued SFAS No. 129, ODisclosure of Information About
Capital StructureO which establishes disclosure requirements for an entityOs
capital structure. SFAS No. 129 is effective for fiscal years periods ending
December 15, 1997. Management does not believe the implementation of SFAS No.
129 will have a material effect on its consolidated financial statements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which establishes standards for reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements. SFAS
No. 130 is effective for fiscal years beginning after December 15, 1997.
Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which establishes standards for the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. SFAS No. 131 is
effective for financial statements for periods beginning after December 15,
1997.
Management does not believe the implementation of SFAS No. 130 and No. 131 will
have a material effect on its consolidated financial statements.
6
<PAGE>
Note 3 - Special Warrants
On October 21, 1997, the Company entered into an Underwriting Agreement for the
purpose of issuing to certain underwriters by way of private placement in
Canada, 1,500,000 special warrants ("Special Warrants") at a price of $10.08
each ($9.62 net of underwriters' fee). Upon the exercise of the 1,500,000
Special Warrants thereby sold, 1,250,000 shares were to have been issued from
treasury by the Company and 250,000 were to have been transferred by three
officers of the Company. These arrangements have been modified in that the
Company has agreed to assume two of the officers' obligations to deliver an
aggregate of 225,000 Common Shares upon the exercise of the Special Warrants in
consideration of the payment by those officers of the proceeds received by them
in connection with the offering of the Special Warrants. As a result, upon the
exercise of the Special Warrants, 1,475,000 Common Shares will be issued from
treasury by the Company and 25,000 Common Shares will be transferred by an
officer of the Company. The 225,000 Common Shares to have been transferred by
the other two officers of the Company will be purchased by the Company for
cancellation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion of the consolidated financial condition and results of
operations of the Company should be read in conjunction with the consolidated
financial statements and related notes thereto. Statements in this report
concerning expectations for the future constitute forward-looking statements
which are subject to a number of known and unknown risks, uncertainties and
other factors which may cause actual results, performance or achievements of the
Company or industry trends to differ materially from those expressed or implied
by such forward looking statements. Relevant risks and uncertainties include,
among others, fluctuations in quarterly results, the development of new
products, technological change, the Company's entry into the embedded systems
market, the dependence on key personnel, the protection of proprietary
technology, the quality of the Company's software products, reliance on
international sales, increased competition, the Company's limited history of
profitability, the management of growth, potential litigation, the need for
additional funds, and the dependence on third-party distribution channels.
Other risk factors which should be read in conjunction with the consolidated
financial condition and results of operations are included from time to time in
the Company's other filings with the securities commissions in Canada and the
United States Securities and Exchange Commission, press releases and other
communications. The Company undertakes no obligation to publicly release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.
THE COMPANY
Metrowerks designs, develops, markets and supports software programming tools.
The Company's products are used primarily by professional software programmers,
and by programmers in the academic community, to develop applications software
for a variety of platforms, including Windows 95 and Windows NT operating system
used by PCs; the MacOS operating system used by the Macintosh and Power
Macintosh computers; and for operating systems and microprocessors used in the
embedded systems market. Examples of the Company's tools used in the embedded
systems market include CodeWarrior for Sony PlayStation, CodeWarrior for
PalmPilot, CodeWarrior for PowerPC and CodeWarrior for MIPS.
The Company derives substantially all of its revenue from a limited number of
products. The Company's future revenue is substantially dependent upon the
continued acceptance of its CodeWarrior products. The Company is also in the
process of developing a number of new products and believes that its future
revenue will depend upon the commercial success of these new products.
The Company also derives a significant portion of its revenue from third party
product development agreements pursuant to which the Company receives payments
from a third party for developing programming tools for a particular platform,
operating system or programming language. The amount of revenue the Company
receives from this particular source will depend upon the number of such
agreements to which the Company is a party during such quarter period. Further,
there can be no assurance that the Company will be able to continue to enter
into such development agreements in the future. The Company's product
development efforts have also entailed significant research and development
expenditures. In addition, to enhance its competitive position in the future, it
will be necessary for the Company to broaden its product offerings. This
objective may require expansion of the Company's internal product development
efforts or acquisitions of or investments in complementary businesses, products
or technologies. Furthermore, if the Company were unable to enter into new
software development agreements in the future, the Company would, at a minimum,
have to increase its research and development
7
<PAGE>
expenditures. These higher expense levels combined with fluctuations in revenue
could affect the Company's quarterly and annual results and result in
fluctuations in its operating results. The Company intends to continue to invest
significant amounts in expanding its product line and accordingly may continue
to experience losses and volatility of revenue and operating results in future
periods. The Company believes that the recent growth rates reflected in results
of operations for prior periods should not be relied upon as an indication of
growth rates for future periods.
RECENT EVENTS
In October 1997, the Company entered into an agreement with AG Communication
Systems to build Sun Solaris-and Windows NT-hosted software development tools
for AG Communication Systems's central office switch. AG Communication Systems,
a subsidiary of Lucent Technologies Inc., develops and manufactures advances
telecommunications products and services, including access, wireless and
intelligent network products. As part of this agreement, Metrowerks will create
a new set of tools to support software development for the GTD-5 EAX digital
switch.
The Company has recently announced that it will provide CodeWarrior software
development support for building applications for WindRiver Systems' Tornado
development environment. The Company expects to release initial support for
Tornado's VxWorks operating system component, running on PowerPC and MIPS
microprocessors in the first quarter of calendar 1998.
Additionally, in the first quarter of fiscal 1998 the Company released the
second version of CodeWarrior Professional, which combines Windows-hosted and
Mac-hosted versions of the Company's desktop tools in one product. The release
included the newest version of the Company's integrated development environment
("IDE"), CodeWarrior IDE 2.1. The new IDE includes improved project management
capabilities and debugger support. The Company also released new versions of
CodeWarrior for PowerPC, CodeWarrior Discover Programming and CodeWarrior
Latitude as well as initial releases of CodeWarrior for OS-9 and CodeWarrior for
MIPS in the first quarter of fiscal 1998.
RESULTS OF OPERATIONS
The following table sets forth certain items from the Company's consolidated
statement of operations as a percentage of revenue for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
OCTOBER 31, 1996 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
Revenue, net.......................... 100.0% 100.0%
Cost of sales......................... 29.0 18.4
Product margins (1)................... 65.5 78.5
Operating expenses:
Research and development............ 30.3 33.9
Selling, administrative and
technical support.................. 42.1 38.6
Depreciation of property and
equipment.......................... 5.5 6.3
Total operating expenses.......... 77.9 78.8
Operating income (loss).............. (6.9) 2.8
Other income:
Interest income and other........... 3.3 1.0
Net earnings (loss).................. (3.6) 3.8
</TABLE>
(1) Product margins are based on net software product revenues and cost of
software product sales only.
REVENUE
The Company recognizes revenue from the sale of its products upon the later of
shipment or the satisfaction of all significant Company obligations. All revenue
is derived from unaffiliated customers. Product returns are estimated and
provided for at the time of sale. Such return allowances as a percentage of
revenues have varied significantly over recent years and periods, reflecting the
Company's experience in product returns as its has
8
<PAGE>
significantly expanded the proportion of its sales through third-party
distribution channels and increased its product portfolio. The Company expects
return allowances will continue to vary in the future. The Company's agreements
with its distributors generally provide the distributors with limited rights to
return unsold inventories under a stock balancing program. The Company monitors
activities of its distributors in an effort to minimize excessive returns and
establishes its reserves based on its estimates of expected returns. While
historically the Company's returns have been within expectations, the setting of
return allowances requires judgments regarding such factors as future
competitive conditions and product acceptance, which can be difficult to
predict.
The Company also derives revenue from product development agreement fees.
Product development agreement fees related to software development are
recognized on a percentage of completion basis over the term of the contract,
and are included in revenue in the income statement.
Revenue, a substantial portion of which has been derived from sales of the
Company's CodeWarrior professional programming tools, increased 63% from $3.77
million in the first quarter of fiscal 1997 to $6.15 million in the first
quarter of fiscal 1998. The increase in revenues is due in large part to an
increase in net product sales of $1.56 million from $3.05 million in the first
quarter of fiscal 1997 to $4.61 million in the first quarter of fiscal 1998.
Sales of new products for the embedded systems market such as CodeWarrior for
O/S 9 (Microware's real-time operating system), CodeWarrior for PowerPC and
CodeWarrior for MIPS, were the primary factors in the growth of product sales
for the quarter. Product development agreement revenues for the first quarter
of fiscal 1998 increased to $1.55 million from $715,000 in the first quarter of
fiscal 1997. A significant portion of the increase in product development
agreement revenues during first quarter of fiscal 1998 is due to the recently
announced agreement with AG Communication Systems to build Sun Solaris- and
Windows NT-hosted software development tools for AG Communication Systems'
central office switch. Net revenues in the first quarter of fiscal 1998 were
approximately the same as net revenues for the fourth quarter of fiscal 1997.
COST OF SALES AND PRODUCT MARGINS
Cost of sales consists primarily of the cost of product media and duplication,
the cost of packaging materials, royalties and shipping expenses. Costs
associated with product development agreement revenues are included in research
and development expenses, are not separately identified and approximate revenue.
Cost of sales increased from $1.09 million in the first quarter of fiscal 1997
to $1.13 million in the first quarter of fiscal 1998. Of these amounts, the cost
of gross software sales was $976,000 in the first quarter of fiscal 1997 and
$938,000 in the first quarter of fiscal 1998, representing 30% and 21% of gross
software sales, respectively. The increase in product margins from the first
quarter of fiscal 1997 to the first quarter of fiscal 1998, is due to the
Company's decision to bring in-house its packaging, fulfillment and shipping
operations. Sequentially, cost of sales in the fourth quarter of fiscal 1997
were 18% of gross software sales. The reduction in margins from the fourth
quarter of fiscal 1997 to the first quarter of fiscal 1998 was due to royalties
incurred in the first quarter of fiscal 1998 by the Company on the sale of
CodeWarrior for OS-9.
OPERATING EXPENSES
Selling, administrative and technical support. Selling, administrative and
technical support costs increased from $1.58 million in the first quarter of
fiscal 1997 to $2.37 million in the first quarter of fiscal 1998, representing
42.1% and 38.6% of net revenues, respectively. This increase in absolute costs
is due to an increase in selling, administrative and technical support headcount
from 60 employees at October 31, 1996 to 82 employees at October 31, 1997.
Selling, administrative and technical support costs as a percentage of sales
decreased year over year as the Company has developed the infrastructure to
support the growth in revenues. In the fourth quarter of fiscal 1997, selling
administrative and technical support costs totaled $2.44 million or 39.1% of net
revenues. This decrease in quarter over quarter selling, administrative and
technical support costs is the result of increased focus on operational expenses
by the Company.
Research and Development. Research and development costs are expensed as
incurred. Eligible software costs incurred between the time a product achieves
technological and financial feasibility until its general release to customers
are capitalized and amortized on a straight-line basis over the economic life of
the product, which is generally three years. The Company evaluates the
realizable value of capitalized software on an ongoing basis, relying on a
number of factors, including operating results, business plans, budgets and
economic projections. In addition, the Company evaluates non-financial data such
as market trends and product development cycles. Research and development costs
are reduced by related grants and investment tax credits.
9
<PAGE>
Research and development costs increased from $1.14 million in the first quarter
of fiscal 1997 to $2.08 million in the first quarter of fiscal 1998,
representing 30.3% and 33.9% of net revenues, respectively. Research and
development expenditures consist primarily of personnel-related costs.
Increases in expenses were due primarily to the growth of the Company's research
and development team from 69 employees to 97 employees. Research and
development expenses in the fourth quarter of fiscal 1997 were $2.27 million or
36% of net revenues. The decrease in research and development costs in the
first quarter of fiscal 1998 from the fourth quarter of fiscal 1997 was due to a
reduction in the use of third party consultants for development projects. The
Company has increased the research and development team to a point where less
third party consultants are needed to assist in development efforts.
Depreciation expense totaled $209,000 in the first quarter of fiscal 1997,
$360,000 in the fourth quarter of fiscal 1997, and $386,000 in the first
quarter of fiscal 1998. The increase in depreciation expense is due to the
Company's investment in property and equipment necessary to provide support for
the Company's personnel growth during this period.
LIQUIDITY AND CAPITAL RESOURCES
On October 21, 1997, the Company entered into an Underwriting Agreement for the
purpose of issuing to certain underwriters by way of private placement,
1,500,000 special warrants ("Special Warrants") at a price of $10.08 each ($9.62
net of underwriters' fee). Upon the exercise of the 1,500,000 Special Warrants
thereby sold, 1,250,000 shares were to have been issued from treasury by the
Company and 250,000 were to have been transferred by three officers of the
Company. These arrangements have been modified in that the Company has agreed
to assume two of the officers' obligations to deliver an aggregate of 225,000
Common Shares upon the exercise of the Special Warrants in consideration of the
payment by those officers of the proceeds received by them in connection with
the offering of the Special Warrants. As a result, upon the exercise of the
Special Warrants, 1,475,000 Common Shares will be issued from treasury by the
Company and 25,000 Common Shares will be transferred by an officer of the
Company. The 225,000 Common Shares to have been transferred by the other two
officers of the Company will be purchased by the Company for cancellation. The
Company received net proceeds of $12.02 million from the offering. The proceeds
are net of underwriter's fees of $ 580,938 and will be further reduced by
anticipated offering costs of $301,000 which are included in accrued liabilities
at October 31, 1997.
Net cash used in operating activities was $1.47 million and $572,000 for the
three-month periods ended October 31, 1997 and 1996, respectively. The decrease
in cash from operations is primarily due to the growth in receivable during the
quarter. Net cash used in investing activities was $252,000 and $1.29 million
for the three-month periods ended October 31, 1997 and 1996, respectively. These
expenditures were primarily for the acquisition of furniture and equipment to
support the increase in headcount. Net cash provided by financing activities
was $12.15 million and $45,000 for the three-month periods ended October 31,
1997 and 1996, respectively. As mentioned above, the Company completed a
financing in the first quarter of fiscal 1998 resulting in an increase in cash
of $12.02 million before estimated offering costs of $301,000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
10
<PAGE>
PART II - OTHER INFORMATION
- - ---------------------------
ITEMS 1, 2, 3, 4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 6. EXHIBITS AND REPORTS ON THE FORM 8-K
(A) EXHIBITS
11. Computation of Earnings Per Share.
27. Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter ended
October 31, 1997.
For further information, refer to the Form 10-K for the year ended July 31, 1997
of the company.
Signature
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.
Metrowerks Inc.
Date: December 15, 1997 By: /s/ James H. Welch
------------------------------------
James H. Welch,
Vice President, Finance and
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
METROWERKS INC.
11
<PAGE>
METROWERKS INC. AND SUBSIDIARIES EXHIBIT 11
EARNINGS PER SHARE CALCULATION
(U.S. THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months ended
October 31,
1996 1997
-------- --------
<S> <C> <C>
Net income (loss) for the year $ (135) $ 237
-------- --------
Weighted average number of common shares
issued and outstanding (a) 11,505 11,555
Common stock equivalents:
Employee stock options - (b) 214 (c)
-------- --------
Average common and common stock equivalents 11,505 11,769
-------- --------
Primarily earnings per share $ (0.01) $ 0.02
</TABLE>
(a) Weighted average number of Common Shares is calculated based on the number
of days outstanding during the year.
(b) For the period ended October 31, 1996, stock options are excluded as their
inclusion would be anti-dilutive given the Company's loss.
(c) For the period ended October 31, 1997, calculated under the "treasury
stock" method
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 128, Earnings Per Share. The new rule will
require specific disclosure of both diluted earnings per share and earnings per
share common share calculated without the dilutive impacts of outstanding stock
options. There was no material difference between reported earnings per share
and diluted earnings per share for any period presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS ON PAGES 2
AND 3 OF THE COMPANY'S FORM 10-Q QUARTERLY REPORT FOR THE QUARTER ENDED OCTOBER
31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1998
<CASH> 1,643
<SECURITIES> 13,825
<RECEIVABLES> 7,226
<ALLOWANCES> (79)
<INVENTORY> 227
<CURRENT-ASSETS> 23,491
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0
0
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</TABLE>
