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 August 31, 1995
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: 0-18268
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INTEGRATED SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
California 94-2658153
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
------------------------------
3260 Jay Street
Santa Clara, California 95054-3309
(408) 980-1500
(Address, including zip code, of Registrant's
principal executive offices and 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
------ -----
The number of shares outstanding of the Registrant's Common Stock on September
30, 1995 was 9,747,272 shares.
The Exhibit Index is located on page 12. Page 1 of 15 pages.
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INTEGRATED SYSTEMS, INC.
INDEX
<CAPTION>
PAGE
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PART I - FINANCIAL INFORMATION
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<S> <C> <C>
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets at August 31, 1995 and February 28, 1995 4
Condensed Consolidated Statements of Income for the Three Months and Six Months
Ended August 31, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended August 31, 1995 and 1994 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
PART II - OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 14
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</TABLE>
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<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
The condensed consolidated interim financial statements included herein have
been prepared by Integrated Systems, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Although certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, the Company believes that the disclosures made are adequate to make
the information presented not misleading. It is suggested that the condensed
consolidated interim financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended February 28, 1995. The
February 28, 1995 condensed consolidated balance sheet data was derived from the
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles.
The accompanying condensed consolidated interim financial statements have been
prepared in all material respects in conformity with the standards of accounting
measurements set forth in Accounting Principles Board Opinion No. 28 and, in the
opinion of management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the financial position,
results of operations, and cash flows for the periods indicated. The results of
operations for the interim periods presented are not necessarily indicative of
the results to be expected for the full year.
Prior to fiscal 1996, the Company's fiscal year was reported on a 52/53-week
period ending on the last Saturday in February of each year. Accordingly,
quarterly periods did not necessarily end on the last day of a calendar month.
Beginning in fiscal 1996, the Company's fiscal year end is the last day in
February and quarterly periods will end on the last day of a calendar month. The
effect of this change was not material to the Company's financial statements for
the three and six-month periods ended August 31, 1995. For clarity of
presentation herein, all fiscal periods are described as ending on a calendar
month-end.
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<PAGE>
INTEGRATED SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
AUGUST 31, FEBRUARY 28,
1995 1995
---------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $10,848 $7,144
Marketable securities, current 11,206 6,472
Accounts receivable, net 13,293 14,156
Deferred income taxes 937 1,153
Other current assets 2,546 2,757
-------- --------
Total current assets 38,830 31,682
Marketable securities, noncurrent 21,513 22,299
Property and equipment, net 3,167 2,584
Other assets 605 427
Intangible assets, net 4,773 5,466
-------- --------
Total assets $68,888 $62,458
======== ========
LIABILITIES
Current liabilities:
Accounts payable $2,115 $1,741
Accrued payroll and related expenses 2,446 2,110
Other accrued liabilities 2,503 3,097
Income taxes payable 3,002 1,952
Deferred revenue 6,090 6,067
-------- --------
Total current liabilities 16,156 14,967
Other liabilities 182 200
-------- --------
Total liabilities 16,338 15,167
-------- --------
SHAREHOLDERS' EQUITY
Common Stock, no par value, 25,000 shares authorized:
9,717 and 9,494 shares issued and outstanding at
August 31, 1995 and February 28, 1995,
respectively 37,320 35,529
Unrealized holding gain (loss) on marketable
securities, net 215 (109)
Retained earnings 15,015 11,871
-------- --------
Total shareholders' equity 52,550 47,291
-------- --------
Total liabilities and shareholders' equity $68,888 $62,458
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
INTEGRATED SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
------------------ ----------------
1995 1994 1995 1994
------ ------- ------ -------
Revenue:
Product licenses $10,732 $8,337 $20,251 $14,126
Maintenance and renewals 2,586 2,312 4,923 4,613
Engineering services 2,815 1,952 5,101 3,963
-------- ------- ------ ------
Total revenue 16,133 12,601 30,275 22,702
-------- ------- ------ ------
Costs and expenses:
Cost of product licenses revenue 1,780 1,619 3,541 2,272
Cost of maintenance and
renewals revenue 85 249 238 414
Cost of engineering serices revenue 2,321 1,243 4,042 2,692
Marketing and sales 5,551 4,787 11,248 8,966
Research and development 2,596 1,965 4,935 3,672
General and administrative 1,207 905 2,440 1,782
Amortization of intangible assets 186 410 372 942
-------- ------- ------ ------
Total costs and expenses 13,726 11,178 26,816 20,740
-------- ------- ------ ------
Income from operations 2,407 1,423 3,459 1,962
Interest and other income 647 466 1,164 857
-------- ------- ------ ------
Income before income taxes 3,054 1,889 4,623 2,819
Provision for income taxes 977 604 1,479 902
-------- ------- ------ ------
Net income $2,077 $1,285 $3,144 $1,917
======== ======= ====== ======
Earnings per share $0.21 $0.14 $0.31 $0.20
======== ======= ====== ======
Shares used in per share calculations 10,085 9,367 10,030 9,410
======== ======= ====== ======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
INTEGRATED SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
SIX MONTHS ENDED
AUGUST 31,
-------------------
1995 1994
------- -------
Cash flows from operating activities:
Net income $3,144 $1,917
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,640 1,860
Changes in assets and liabilities:
Accounts receivable 863 (668)
Other current assets 211 (546)
Accounts payable, accrued payroll and
other accrued liabilities 116 (483)
Income taxes payable 1,050 (376)
Deferred revenue 23 (69)
Other assets and liabilities (196) (170)
------- ------
Net cash provided by operating activities 6,851 1,465
------- ------
Cash flows from investing activities:
(Purchases) sales of marketable securities, net (3,408) 691
Additions to property and equipment, net (1,295) (977)
Capitalized software development costs (235) (375)
Other investments -- (200)
------- -------
Net cash used in investing activities (4,938) (861)
------- -------
Cash flows from financing activities:
Proceeds from exercise of common stock options and
purchases under the employee stock purchase plan 1,791 743
Repurchase of common stock -- (1,094)
------- -------
Net cash provided by (used in) financing activities 1,791 (351)
------- -------
Net increase in cash and cash equivalents 3,704 253
Cash and cash equivalents at beginning of period 7,144 8,021
-------- -------
Cash and cash equivalents at end of period $10,848 $8,274
======== =======
Supplemental disclosure of noncash investing and
financing activities:
Unrealized gain (loss) on marketable securities $540 $(460)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
INTEGRATED SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information for the three and six months ended August 31, 1995
and 1994 is unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of
Integrated Systems, Inc. and its majority owned subsidiaries, after elimination
of all significant intercompany accounts and transactions, and should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
February 28, 1995. These condensed consolidated financial statements do not
include all disclosures normally required by generally accepted accounting
principles.
2. SOFTWARE DEVELOPMENT COSTS
The Company incurs certain costs to develop computer software to be licensed or
otherwise marketed to customers. Costs that are required to be capitalized under
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed" ("SFAS No. 86") were
$235,000 in the first six months of fiscal 1996 compared to $375,000 in the same
period of the previous year. Such costs are being amortized using the greater of
the amount computed using the ratio that current gross revenues for a product
bear to the total of current and anticipated future gross revenues for that
product, or on a straight-line basis over three years. Amortization for the
three and six months ended August 31, 1995 was $247,000 and $461,000,
respectively, compared to $148,000 and $193,000, respectively, for the same
periods of the previous year.
3. EARNINGS PER SHARE
Earnings per share is computed using the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent shares
result from the assumed exercise of outstanding stock options that have a
dilutive effect when applying the treasury stock method.
The following table sets forth the calculation of earnings per share for
purposes of this report:
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
------------------ -----------------
(in thousands, except per share data) 1995 1994 1995 1994
------- -------- ------- -------
(unaudited) (unaudited)
Primary:
Net income $2,077 $1,285 $3,144 $1,917
======= ======== ======= =======
Number of shares:
Weighted average number of
common shares outstanding 9,648 9,133 9,591 9,148
Dilutive effect of stock
options, net 437 234 439 262
------- -------- ------- -------
10,085 9,367 10,030 9,410
======= ======== ======= =======
Earnings per share $0.21 $0.14 $0.31 $0.20
======= ======== ======= =======
Fully diluted:
Net income $2,077 $1,285 $3,144 $1,917
======= ======== ======= =======
Number of shares:
Weighted average number of
common shares outstanding 9,648 9,133 9,591 9,148
Dilutive effect of stock
options, net 470 301 455 300
------- -------- ------- -------
10,118 9,434 10,046 9,448
======= ======== ======= =======
Earnings per share $0.21 $0.14 $0.31 $0.20
======= ======== ======= =======
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with the condensed
consolidated interim financial statements and the notes thereto included in Item
1 of this Quarterly Report and with Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report on Form 10-K for the year ended February 28, 1995, as filed with the
Securities and Exchange Commission on May 26, 1995.
RESULTS OF OPERATIONS
The following tables set forth for the periods indicated the percentage of total
revenue represented by each line item in the Company's condensed consolidated
statements of income and the percentage change from the comparative prior period
in each line item:
PERCENTAGE OF PERIOD-TO-PERIOD
TOTAL REVENUE PERCENTAGE CHANGE
------------------ ---------------------
THREE MONTHS ENDED THREE MONTHS ENDED
AUGUST 31, AUGUST 31,
1995 1994 1995 COMPARED TO 1994
------- ------ ---------------------
Revenue:
Product licenses 67 % 66 % 29 %
Maintenance and renewals 16 18 12
Engineering services 17 16 44
------- ------
Total revenue 100 100 28
------- ------
Costs and expenses:
Cost of product licenses revenue 11 13 10
Cost of maintenance and renewals
revenue 1 2 (66)
Cost of engineering services
revenue 14 10 87
Marketing and sales 34 38 16
Research and development 16 16 32
General and administrative 8 7 33
Amortization of intangible assets 1 3 (55)
------- ------
Total costs and expenses 85 89 23
------- ------
Income from operations 15 11 69
Interest and other income 4 4 39
------- ------
Income before income taxes 19 15 62
Provision for income taxes 6 5 62
------- ------
Net income 13 % 10 % 62 %
------- ------
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<PAGE>
PERCENTAGE OF PERIOD-TO-PERIOD
TOTAL REVENUE PERCENTAGE CHANGE
------------------ ---------------------
SIX MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
1995 1994 1995 COMPARED TO 1994
------- ------ ---------------------
Revenue:
Product licenses 67 % 62 % 43 %
Maintenance and renewals 16 20 7
Engineering services 17 18 29
----- -----
Total revenue 100 100 33
----- -----
Costs and expenses:
Cost of product licenses revenue 12 10 56
Cost of maintenance and
renewals revenue 1 2 (43)
Cost of engineering services
revenue 14 12 50
Marketing and sales 37 39 25
Research and development 16 16 34
General and administrative 8 8 37
Amortization of intangible assets 1 4 (61)
----- -----
Total costs and expenses 89 91 29
----- -----
Income from operations 11 9 76
Interest and other income 4 4 36
----- -----
Income before income taxes 15 13 64
Provision for income taxes 5 4 64
----- -----
Net income 10 % 9 % 64 %
----- -----
Revenue
- -------
The Company's revenue is primarily derived from the licensing of its products,
related maintenance and license renewals, and engineering services. Total
revenue in the second quarter of fiscal 1996 of $16,133,000 increased 28%
compared to the second quarter of fiscal 1995, and total revenue for the first
six months of fiscal 1996 of $30,275,000 increased 33% compared to the first six
months of fiscal 1995, due to growth in all revenue categories. Product licenses
revenue increased by 29% in the second quarter of fiscal 1996 compared to the
second quarter of fiscal 1995 and 43% for the first six months of fiscal 1996
compared to the first six months of fiscal 1995, due to growth in the real-time
product line and, to a lesser extent, growth in the MATRIXx product line. Total
maintenance and renewals revenue increased by 12% over the prior year's second
quarter and by 7% over the prior year's first six months due to increased
customer base. Engineering services revenue over these periods increased by 44%
and 29%, respectively, due to increases in the number and size of contracts.
The Company's real-time product licenses, maintenance and renewals revenue
increased 45% in the second quarter of fiscal 1996 compared to the same quarter
of the prior fiscal year and by 56% in the first six months of fiscal 1996
compared to the same period of the prior fiscal year. Contributing to revenue
growth of the real-time product family was the introduction of new products and
sales of the FlexOS product line, which was acquired in the third quarter of
fiscal 1995. MATRIXx product licenses, maintenance and renewals revenue
increased 2% in the second quarter of fiscal 1996 compared to the second quarter
of fiscal 1995 and 9% in the first six months of fiscal 1996 compared to the
first six months of fiscal 1995.
Domestic product licenses, maintenance and renewals revenue increased by 11%
between the comparative quarterly periods and 18% between the comparative
six-month periods, while international product licenses, maintenance and
renewals revenue increased by 58% and 70%, respectively. The percentage of the
Company's total revenue from customers located internationally increased to 32%
in the second quarter of fiscal 1996 and 34% in the first six months of fiscal
1996, compared to 26% in both the second quarter of fiscal 1995 and the first
six months of fiscal 1995.
-9-
<PAGE>
Costs and Expenses
- ------------------
The Company's cost of product licenses revenue as a percentage of total revenue
decreased to 11% in the second quarter of fiscal 1996 compared to 13% in the
second quarter of fiscal 1995. This decrease was due in part to higher than
usual costs in the second quarter of fiscal 1995 associated with the
introduction of MATRIXx version 4.0. The cost of product licenses revenue as a
percentage of total revenue in the first six months of fiscal 1996 increased to
12% compared to 10% in the first six months of fiscal 1995 due to an increase in
the amortization of capitalized research and development expenditures with the
recent releases of new products and an increase in royalty and other third party
software costs. The cost of maintenance and renewals revenue as a percentage of
total revenue was not significant in the second quarter and first six months of
fiscal 1996 and fiscal 1995. The cost of engineering services revenue increased
as a percentage of engineering services revenue due primarily to increased
amounts charged to contracts and changes in contract mix.
Marketing and sales expenses increased 16% quarter over quarter but decreased
from 38% to 34% of total revenue. For the first six months of fiscal 1996,
marketing and sales expenses increased 25% between the comparison periods but
decreased from 39% to 37% of total revenue. Sales and marketing expenses as a
percentage of revenue are expected to be higher for the whole of fiscal 1996 as
the Company continues to build its sales and marketing infrastructure,
particularly in Japan and the rest of Asia.
Research and development expenses increased by 32% and 34%, respectively,
between the quarterly and six-month comparative periods. These increases were
primarily the result of increased activity associated with bringing several
significant products to market, including increased personnel and consulting
expenses. Costs that are required to be capitalized under Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software to
be Sold, Leased or Otherwise Marketed" ("SFAS No. 86") were $75,000 in both the
second quarters of fiscal 1996 and fiscal 1995 and $235,000 in the first six
months of fiscal 1996 compared to $375,000 in the first six months of fiscal
1995. The amount capitalized represents approximately 3% of total research and
development expenditures for the second quarter of fiscal 1996 compared to 4%
for the second quarter of fiscal 1995, and 5% for the first six months of fiscal
1996 compared to 9% for the first six months of fiscal 1995. The amount of
research and development expenditures capitalized in a given time period depends
upon the nature of the development performed and, accordingly, amounts
capitalized may vary from period to period. Capitalized costs are being
amortized using the greater of the amount computed using the ratio that current
gross revenues for a product bear to the total of current and anticipated future
gross revenues for that product, or on a straight-line basis over three years.
Amortization for the three months ended August 31, 1995 was $247,000 compared to
$148,000 for the three months ended August 31, 1994, and $461,000 for the six
months ended August 31, 1995 compared to $193,000 for the six months ended
August 31, 1994.
General and administrative expenses increased 33% between the three-month
comparative periods and 37% between the six-month comparative periods but
remained basically flat as a percentage of total revenue.
Amortization of intangible assets in the second quarter of fiscal 1996 and for
the six months ended August 31, 1995 has decreased from the prior year quarter
and comparative six-month period as certain assets and deferred compensation
related to the acquisition of Software Components Group, Inc. in the second
quarter of fiscal 1992 became fully amortized in fiscal 1995.
Other
- -----
The Company's interest and other income increased by $181,000 between the
three-month comparative periods and $307,000 between the six-month comparative
periods due primarily to an increase in cash and marketable securities.
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Risk Factors That May Affect Future Results of Operations
- ---------------------------------------------------------
The Company believes that in the future, its results of operations could be
impacted by factors such as delays in shipment of the Company's new products and
major new versions of existing products, market acceptance of new products and
upgrades, growth in the marketplace in which it operates, competitive product
offerings and adverse changes in general economic conditions in any of the
countries in which the Company does business. The Company's performance may also
be adversely affected by the ability of its suppliers to provide competitive
products. During the quarter, the Company's competitors have continued to make a
variety of product announcements and offerings. The Company continues to release
new versions of its product lines and the successful acceptance of these
products will play a key role in future growth. The impact of any of these
factors is difficult to predict or forecast.
Due to the risk factors noted above, the Company's future earnings and stock
price may be subject to significant volatility, particularly on a quarterly
basis. Any shortfall in revenue or earnings from levels expected by securities
analysts could have an immediate and significant adverse effect on the trading
price of the Company's common stock in any given period. Additionally, the
Company often does not learn of such shortfalls until late in the fiscal
quarter, or even after the quarter is over, which could result in an even more
immediate and adverse effect on the trading price of the Company's common stock.
The trading prices of many high technology companies' stocks, including the
stock of the Company, are at or near their historical highs and reflect
price/earnings ratios substantially above historical norms. There can be no
assurance that the trading price of the Company's stock will remain at or near
its current level. Finally, the Company participates in a highly dynamic
industry, which often results in significant volatility of the Company's common
stock price. Consequently, the purchase or holding of the Company's stock
involves a high degree of risk.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its operations principally through cash flows from operations.
As of August 31, 1995, the Company had $43,567,000 of cash, cash equivalents and
marketable securities. This represents an increase of $7,652,000 from February
28, 1995. During fiscal 1995, the Company announced that the Board of Directors
authorized the Company to repurchase up to an additional 500,000 shares of
common stock for cash, from time-to-time at market prices, pursuant to a
repurchase program announced in September 1992. In fiscal 1995, under this
program, the Company repurchased 125,000 shares of common stock for $1,094,000.
The Company believes that cash flows from operations, together with existing
cash balances and available borrowings, will be adequate to meet the Company's
cash requirements for working capital, capital expenditures and stock
repurchases for the next twelve months and the foreseeable future.
Net cash provided by operating activities during the six months ended August 31,
1995 totaled $6,498,000 compared to $1,465,000 in the six months ended August
31, 1994. The increase in net cash provided by operating activities was
primarily due to increased net income and from changes in accounts receivable,
other current assets and income taxes payable. Net cash used in investing
activities totaled $4,585,000 in the first six months of fiscal 1996 compared to
$861,000 in the first six months of fiscal 1995. The increase in net cash used
in investing activities was due primarily to net purchases of marketable
securities. Net cash provided by financing activities during the six months
ended August 31, 1995 totaled $1,791,000. This compares to net cash used in
financing activities of $351,000 for the six months ended August 31, 1994. The
net outflow of cash from financing activities in fiscal 1995 was due to the
repurchase of common stock for $1,094,000 in June 1994. The Company expects that
it will be able to sustain its level of expenditures on property and equipment
and fund operational needs for the next twelve months and the foreseeable
future, from cash flow from operations.
-11-
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held July 18, 1995, the
shareholders elected directors of the Company with the following
nominees receiving the votes indicated:
Name For Withheld
---- --- --------
John C. Bolger 8,931,348 49,016
Narendra K. Gupta 8,929,872 50,492
Vinita Gupta 8,926,974 53,390
Thomas Kailath 8,931,348 49,016
Richard C. Murphy 8,931,448 48,916
David P. St. Charles 8,930,372 49,992
The shareholders also approved the appointment of Coopers & Lybrand as
the Company's independent accountants for fiscal 1996 by a vote of
8,964,547 for, 13,500 against, and 2,317 abstain.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
---------
The following exhibit is filed herewith:
Exhibit Page
Number Title Number
------- ----- -------
27.00 Financial Data Schedule 15
The following exhibits are incorporated herein by reference:
Exhibit
Number Title
-------- -----
2.01 Agreement and Plan of Reorganization by and among
Registrant, Software Components Group, Inc. a California
corporation ("SCG"), and Alfred Chao dated as of August 9,
1991 (incorporated by reference to Exhibit Number 2.01 to
Registrant's Form 8-K filed with the Securities and
Exchange Commission on September 3, 1991 (the "September 3,
1991 Form 8-K")).
2.02 Agreement of a Merger by and between Registrant and SCG
dated as of August 20, 1991 (incorporated by reference to
Exhibit Number 2.02 to the September 3, 1991 Form 8-K).
3.01(i) Registrant's Articles of Incorporation, as amended to date
(incorporated by reference to Exhibit Number 3.04 to the
Registrant's Form 10-K for the fiscal year ended February
28, 1993).
3.01(ii) Registrant's Bylaws, as amended July 14, 1993 (incorporated
by reference to Exhibit Number 3.03 to Registrant's Form
10-Q for the quarter ended August 31, 1993).
10.01 * Registrant's 401(k) Plan (incorporated by reference to
Exhibit Number 10.01 to Registrant's Registration Statement
on Form S-1 under the Securities Act of 1933, as amended,
filed January 26, 1990, Registration No. 33-33219 (the "S-1
Registration Statement")).
- --------------------
* Represents a management contract or compensatory plan or arrangement.
-12-
<PAGE>
Exhibit
Number Title
------- -----
10.02 * Registrant's 1983 Incentive Stock Option Plan, as amended
to date, and related documents (incorporated by reference
to Exhibit Number 10.02 to the S-1 Registration Statement).
10.03 * Registrant's 1988 Stock Option Plan, as amended to date
(incorporated by reference to Exhibit Number 4.01 to the
Registrant's Form S-8 filed with the Securities and
Exchange Commission on June 16, 1992).
10.04 * Registrant's 1990 Stock Purchase Plan, as amended to date
(incorporated by reference to Exhibit Number 4.03 to the
Registrant's Form S-8 filed with the Securities and
Exchange Commission on October 18, 1993).
10.05 * Form of Indemnity Agreement with Directors (incorporated
by reference to Exhibit Number 10.06 to the S-1
Registration Statement).
10.06 Lease Agreement by and between Registrant and Boyd C.
Smith, Trustee of the Richard T. Peery 1976 Children
Trusts, and Louis B. Sullivan, Trustee of the John
Arrillaga 1976 Children Trusts, dba A&P Family Investments
dated as of December 13, 1990 (for 3260 Jay Street, Santa
Clara, CA 95054) (incorporated by reference to Exhibit
Number 10.09 to the Registrant's Form 10-K for the fiscal
year ended February 28, 1991).
10.07 * Form of Stock Option Grant used in connection with
Registrant's 1988 Stock Option Plan, as amended to date
(incorporated by reference to Exhibit Number 19.01 to
Registrant's Form 10-Q for the quarter ended August 31,
1990).
10.08 * Form of Option Modification Agreement (incorporated by
reference to Exhibit Number 19.01 to the Registrant's Form
10-Q for the quarter ended August 31, 1991).
10.09 Registrant's 1994 Directors Stock Option Plan (incorporated
by reference to Exhibit Number 10.10 to the Registrant's
Form 10-K for the fiscal year ended February 28, 1994 (the
"FY94 Form 10-K")).
10.10 * Form of Stock Option Grant and Stock Option Exercise Form
used in connection with Registrant's 1994 Directors Stock
Option Plan (incorporated by reference to Exhibit Number
10.11 to the Registrant's FY94 Form 10-K).
10.11 Revolving Line of Credit Note by and between Registrant and
Wells Fargo Bank, National Association, dated July 15, 1994
and related Letter Agreement (incorporated by reference to
Exhibit Number 10.11 to the Registrant's Form 10-Q for the
quarter ended August 31, 1994).
10.12 Amendment dated January 19, 1995, to Revolving Line of
Credit Note by and between Registrant and Wells Fargo Bank,
National Association, dated July 15, 1994 and related
Letter Agreement (incorporated by reference to Exhibit
Number 10.12 to the Registrant's Form 10-K for the fiscal
year ended February 28, 1995 (the "FY95 Form 10-K")).
10.13 Form of Stock Option Exercise Form used in connection with
Registrant's 1988 Stock Option Plan, as amended to date
(incorporated by reference to Exhibit Number 10.13 to the
Registrant's Form 10-Q for the quarter ended May 31, 1995).
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed by Registrant
--------------------- during the three months ended August 31, 1995.
- --------------------
* Represents a management contract or compensatory plan or arrangement.
-13-
<PAGE>
SIGNATURES
----------
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.
Dated: October 11, 1995 INTEGRATED SYSTEMS, INC.
(Registrant)
-----------------------------
DAVID P. ST. CHARLES
President and Chief Executive Officer
----------------------------
STEVEN SIPOWICZ
Vice President Finance and
Chief Financial Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM Q2 FY96 FORM 10-Q FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 10,848
<SECURITIES> 11,206
<RECEIVABLES> 13,293
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,830
<PP&E> 3,167
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,888
<CURRENT-LIABILITIES> 16,156
<BONDS> 0
<COMMON> 37,320
0
0
<OTHER-SE> 15,230
<TOTAL-LIABILITY-AND-EQUITY> 68,888
<SALES> 25,174
<TOTAL-REVENUES> 30,275
<CGS> 3,779
<TOTAL-COSTS> 7,821
<OTHER-EXPENSES> 18,995
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,623
<INCOME-TAX> 1,479
<INCOME-CONTINUING> 3,144
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,144
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
