30
_________________________________________________________
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 October 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: 0-15188
INTERSOLV, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-0990382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9420 Key West Avenue
Rockville, Maryland 20850
(Address of principal executive offices)
(301) 838-5000
(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_______
As of November 30, 1995, there were 19,483,182 shares
outstanding of the Registrant's Common Stock, par value
$.01 per share.
_________________________________________________________
INTERSOLV, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Statements of Operations
for the three months ended October 31, 1995
and 1994 4
Condensed Consolidated Statements of Operations
for the six months ended October 31, 1995
and 1994 5
Condensed Consolidated Balance Sheets as of
October 31, 1995 and April 30, 1995 6
Condensed Consolidated Statements of Cash Flows
for the six months ended October 31, 1995
and 1994. 7
Notes to Condensed Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II. OTHER INFORMATION
Item 4. Results of Votes of Securities Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
PART I. FINANCIAL INFORMATION
Financial Statements.
The financial statements set forth below for the three
and six month periods ended October 31, 1995 and 1994
are unaudited, and have been prepared pursuant to the
rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures
normally included in annual financial statements
prepared in accordance with generally accepted
accounting principles have been condensed or omitted
pursuant to those rules and regulations. INTERSOLV,
Inc. believes that the disclosures made are adequate to
make the information presented not misleading. The
results for the three and six month periods ended
October 31, 1995 are not necessarily indicative of the
results for the fiscal year.
In the opinion of management, the accompanying
consolidated condensed financial statements reflect all
necessary adjustments (consisting only of normal
recurring adjustments) that are necessary for a fair
presentation of results for the periods presented. It
is suggested that these financial statements be read in
conjunction with the latest audited financial
statements and the notes thereto (included in the
Annual Report on Form 10-K for the fiscal year ended
April 30, 1995).
INTERSOLV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended October 31
(dollars in thousands, except per share data)
(unaudited)
1995 1994
Revenues:
License fees $20,379 $20,298
Service fees 13,335 11,616
Total revenues 33,714 31,914
Costs and expenses:
Cost of products 4,002 2,569
Cost of services 6,119 5,063
Sales and marketing 15,681 13,828
Research and development 3,526 3,488
General and administrative 3,161 3,323
Acquisition charges 11,600 ---
Total costs and expenses 44,089 28,271
Operating income (loss) (10,375) 3,643
Other income, net 275 1
Income (loss) before income taxes (10,100) 3,644
Provision (benefit) for income taxes (194) 1,060
Net income (loss) $(9,906) $ 2,584
Shares used in computing primary net income per share
19,303 19,520
Primary Net income (loss) per share $ (0.51) $ 0.13
Shares used in computing fully diluted net income per
share 19,303 20,248
Fully diluted net income (loss) per share $(0.51) $ 0.13
The accompanying notes are an integral part of these
condensed consolidated statements.
INTERSOLV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the six months ended October 31
(dollars in thousands, except per share data)
(unaudited)
1995 1994
Revenues:
License fees $39,469 $37,005
Service fees 26,909 21,963
Total revenues 66,378 58,968
Costs and expenses:
Cost of products 7,872 5,096
Cost of services 12,037 9,675
Sales and marketing 30,892 26,377
Research and development 7,432 6,663
General and administrative 6,500 5,838
Acquisition charges 13,600 ---
Total costs and expenses 78,333 53,649
Operating income (loss) (11,955) 5,319
Other income, net 480 71
Income (loss) before income taxes (11,475) 5,390
Provision for income taxes --- 1,579
Net income (loss) ($11,475) $ 3,811
Shares used in computing primary net income per share
18,985 19,129
Primary net income (loss) per share $ (0.60) $ 0.20
Shares used in computing fully diluted net income per
share 18,985 19,701
Fully diluted net income (loss) per share $(0.60) $ 0.19
The accompanying notes are an integral part of these
condensed consolidated statements.
INTERSOLV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
October 31, April 30,
1995 1995
ASSETS
Current assets:
Cash and cash equivalents $32,905 $26,661
Accounts receivable, net 34,105 41,355
Refundable income taxes 580 580
Prepaid expenses and other current assets
5,245 5,557
Total current assets 72,835 74,153
Software, net 20,868 21,549
Property and equipment, net 8,804 7,449
Notes receivable and other assets 1,226 1,657
Total assets $103,733 $104,808
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$26,225 $30,592
Accrued acquisition charges 8,528 ---
Deferred revenue 15,141 15,546
Total current liabilities 49,894 46,138
Long-term liabilities 3,633 3,708
Total liabilities 53,527 49,846
Subordinated convertible notes 3,865 4,000
Stockholders' equity
Common stock 231 171
Paid-in capital 98,196 91,693
Treasury stock (1,770) (2,637)
Accumulated deficit (49,157) (37,682)
Cumulative currency translation adjustment
(1,159) (583)
Total stockholders' equity 46,341 50,962
Total liabilities and stockholders' equity
$103,733 $104,808
The accompanying notes are an integral part of these
condensed consolidated statements.
INTERSOLV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended October 31
(amounts in thousands)
(unaudited)
1995 1994
CASH INFLOWS (OUTFLOWS)
Operating activities:
Net income (loss) $(11,475) $3,811
Non-cash items:
Depreciation and amortization 7,174 5,670
Deferred taxes (100) 1,374
Capitalized software writedowns 2,386 ---
Payment of restructuring / acquisition charges
(684) (3,871)
Accrued acquisition charges 8,528 ---
Change in assets and liabilities 3,711 2,696
Net cash provided by operating activities 9,540 9,680
Investing activities:
Additions to software (6,924) (4,356)
Additions to property and equipment (3,979) (1,439)
Sale/leaseback of equipment 776 ---
Other 324 (101)
Net cash used in investing activities (9,803) (5,896)
Financing activities:
Proceeds from subordinated notes and debt, net
232 3,190
Payment of acquisition installment liability
(1,107) ---
Proceeds from sale of common stock 7,430 2,336
Purchase of company stock for treasury --- (3,035)
Net cash provided by financing activities 6,555 2,491
Effect of exchange rate changes on cash (48) 369
Net increase in cash and cash equivalents 6,244 6,644
Cash and cash equivalents, beginning of period
26,661 22,549
Cash and cash equivalents, end of period
$32,905 $29,193
The accompanying notes are an integral part of these
condensed consolidated statements.
INTERSOLV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Basis of Presentation
The accompanying condensed consolidated financial
statements include the accounts of INTERSOLV, Inc. and
its wholly owned subsidiaries (collectively, the
"Company" or "INTERSOLV").
The accompanying unaudited financial statements reflect
all the adjustments that, in the opinion of management,
are necessary for a fair presentation of the results
for the interim periods presented. The results for the
three and six-month periods ended October 31, 1995 may
not necessarily be indicative of the results for the
entire year. The April 30, 1995 condensed consolidated
balance sheet data was derived from audited financial
statements as of the same date and has been restated to
include the balance sheet data of PC Strategies &
Solutions, Inc. and TechGnosis International, Inc., as
more fully described on page 9 under Acquisitions. The
results for the three and six months ended October 31,
1994 were also restated to include the results of
operations of PC Strategies & Solutions, Inc., and
TechGnosis International, Inc.
These financial statements should be read in
conjunction with the Company's annual audited financial
statements, as filed with the Securities and Exchange
Commission on Form 10-K, for the year ended April 30,
1995.
Operations
The Company develops, markets and supports computer
software used by software developers to accelerate the
development and maintenance process, improve quality
and reduce cost.
Contracting Costs (Discontinued Operations)
Prior to April 1986, certain revenues associated with
discontinued operations were generated under cost-plus-
fee contracts with the U.S. government and are subject
to adjustments upon audit by the Defense Contract Audit
Agency (DCAA). Audits through October 31, 1986 have
been completed. On December 5, 1990, the Company
received a notice from the DCAA questioning certain
charges aggregating approximately $2.4 million incurred
by the Company during fiscal 1985 and 1986. The
Company filed a response in April, 1991, which provided
additional information regarding the issues raised in
the notice. The amount of the liability, if any,
cannot be ascertained.
Sales and Income Tax
The Company sells its products in various states
through different distribution channels, including
telesales, field sales and third party resellers. On
certain sales, the Company must collect and remit sales
tax to the respective state. These sales taxes are
subject to adjustment upon audit by the respective
state. Liabilities may result from this process;
however, management believes the reserves provided for
these liabilities are sufficient.
The Company's income tax returns are subject to audit
by Federal, state and foreign tax authorities.
Adjustments to increase or decrease taxable income or
losses may result from these audits. Management
believes the impact of these adjustments, if any, would
not have a material impact on the Company's financial
statements taken as a whole.
Capitalization of Computer Software Development Costs
and Purchased Software
In accordance with Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise
Marketed,"("FAS 86") the Company capitalizes certain
internal software development costs subsequent to the
establishment of technological feasibility for the
product as evidenced by a working model. In addition,
the Company supplements its internal development effort
by acquiring rights to selected software technologies
("purchased software") from others. Capitalized
software costs and purchased software are amortized on
a straight line basis over the estimated economic lives
of the products, which range from three to five years.
The Company continually compares the unamortized
software development costs and purchased software costs
in light of the expected future revenues for those
products. If the unamortized costs exceed the expected
future net value from sales of the related product,
then the excess amount is written off.
Acquisitions
Effective May 1, 1995, INTERSOLV acquired all of the
outstanding common stock of PC Strategies & Solutions,
Inc. ("PCS") for 675,000 shares of INTERSOLV common stock
(valued at $9.3 million). PCS provides consulting and
training services focusing on the implementation of
object-oriented client/server technology. The
transaction was accounted for using the "pooling-of-
interests" method, accordingly the historical financial
statements have been restated to include the financial
position and results of operations of PCS. INTERSOLV's
previously reported revenues for the quarter ended
October 31, 1994 increased by approximately $0.9 million,
with no significant change in net income or net income
per share.
In May 1995, INTERSOLV acquired the C++/Views product
line from Liant Software for $1.2 million. The
transaction value was allocated to existing software
products that had reached technological feasibility
("capitalized software") and to in-process software
development ("purchased research and development") based
on their respective fair market values. This resulted in
$0.7 million of the transaction value being allocated to
purchased research and development, which was charged to
operations in the first quarter.
In October 1995, INTERSOLV acquired all of the
outstanding common and preferred stock of TechGnosis
International, Inc. ("TechGnosis") for 2.5 million shares
of INTERSOLV common stock and $4.8 million in cash. In
addition, INTERSOLV also assumed $3.9 million of
TechGnosis' obligations under its 8.4% Subordinated
Convertible Notes ("Notes") due in 1999. The notes are
convertible into 1,020,756 shares of INTERSOLV common
stock. Total value of the transaction was approximately
$80 million. TechGnosis, which is headquartered in
Belgium, provides cross-platform data access technology
for client/server environments. The transaction was
accounted for using the "pooling-of-interests" method;
accordingly. INTERSOLV's historical financial statements
have been restated to include the results of operations
of TechGnosis. INTERSOLV's previously reported revenues
for the three and six months ended October 31, 1994
increased to $3.6 million and $6.6 million, respectively,
to reflect the acquisition of TechGnosis. There was no
significant change in previously reported net income.
Acquisition Charges
In May 1995, the Company incurred $2 million of non-
recurring charges related to the acquisition of the PC
Strategies business and the C++/Views product line.
Acquisition charges included a $0.7 million charge for
purchased research and development related to the
C++/Views transaction. The remaining $1.3 million charge
was for direct transaction expenses, severance and costs
to consolidate operations. All personnel affected by the
acquisitions have been notified and most of the severance
and transaction expenses were disbursed by October 31,
1995.
In October 1995, the Company incurred $11.6 million of
non-recurring charges related to the acquisition of
TechGnosis. This includes $3.3 million to restructure
distributor agreements, $2.5 million for consolidation of
offices and equipment, $2.2 million for severance and
related costs, $2 million to writeoff overlapping
technologies and $1.6 million of direct transaction and
other transition expenses. All personnel affected by the
acquisition have been notified and it is anticipated that
most severance and transaction costs will be disbursed by
December 31, 1995. The majority of the other acquisition
charges should be disbursed by April 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operating Results Overview
The following table sets forth, for the periods
indicated, the percentage which selected items in the
Consolidated Statements of Operations bear to total
revenues:
Percentage of Total Revenue
Three Months Ended Six Months Ended
October 31, October 31,
1995 1994 1995 1994
Revenues:
License fees 60.4% 63.6% 59.5% 62.8%
Service fees 39.6% 36.4% 40.5% 37.2%
100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of products 11.9% 8.1% 11.9% 8.7%
Cost of services 18.1% 15.9% 18.1% 16.4%
Sales and marketing 46.5% 43.3% 46.5% 44.7%
Research and development
10.5% 10.9% 11.2% 11.3%
General and administrative
9.4% 10.4% 9.8% 9.9%
Acquisition charges 34.4% --- 20.5% ---
Total costs and expenses
130.8% 88.6% 118.0% 91.0%
Operating income (loss)
(30.8%) 11.4% (18.0)% 9.0%
Other income, net 0.8% --- 0.7% 0.1%
Income (loss) before taxes
(30.0%) 11.4% (17.3)% 9.1%
Provision (benefit) for income taxes
(0.6%) 3.3% --- 2.7%
Net Income (loss) (29.4%) 8.1% (17.3)% 6.4%
Revenues from North America and International were split
66% and 34%, respectively, for the three months ended
October 31, 1995. Revenues from North America and
International for the same period last year were split
70% and 30% respectively. Revenues from North America
and International were split 68% and 32%, respectively,
for the six months ended October 31, 1995. Revenues from
North America and International for the six months ended
October 31, 1994 were split 66% and 34%,
respectively.
The above results have been restated to include the results of
acquired companies accounted for using the "pooling-of-interest"
method, including the October 1995 acquisition of TechGnosis.
Revenues for the three months ended October 31, 1995
increased 6% from $31.9 million for the same period last
year to $33.7 million. Revenues for the six months ended
October 31, 1995 increased 13% from $59 million to $66.4
million. Revenues from the Company's newer client/server
software solutions, focused in the areas of Software
Configuration Management (or "SCM"), Data Warehousing and
Object Oriented Development, grew 15% for the three
months ended October 31, 1995 and 24% for the six months
ended October 31, 1995. Growth in the newer
client/server products primarily resulted from increased
demand for products and services in the SCM solution area
coupled with our expanded sales and marketing effort.
Revenue growth in these product groups more than offset
the 18% and 13% revenue decline in the area of Enterprise
Client/Server Development for the three and six months
ended October 31, 1995, respectively. This decline is
consistent with the shift in the market that the Company
has experienced in the past year as demand for COBOL
based software solution declined. Approximately 21% of
the Company's revenues from the quarter ended October 31,
1995 was from the area of Enterprise Client/Server
Development.
Cost of Products
Cost of products includes cost of software media,
freight, royalties and amortization of capitalized
software development costs and purchased technology
costs. Cost of products for the three months ended
October 31, 1995 increased 56% from $2.6 million for the
same period last year to $4 million. Cost of products
for the six months ended October 31, 1995 increased 54%
from $5.1 million to $7.9 million. The increase is
primarily due to higher levels of software amortization,
caused by releases of new products or new versions of
existing products since a year ago.
Cost of Services
Cost of services includes personnel and related overhead
costs incurred to provide consulting and training
services, as well as telephone support to customers under
maintenance contracts. Cost of services increased 21%
from $5.1 million for the three months ended October 31,
1994 to $6.1 million for the three months ended October
31, 1995. Cost of services for the six months ended
October 31, 1995 increased 24% from $9.7 million to $12
million. Increases in the number of personnel in the
Company's consulting functions for both the three and six
month periods ended October 31, 1995 led to the increased
costs.
Sales and Marketing
Sales and marketing expenses for the three months ended
October 31, 1995 increased 13% from $13.8 million for the
same period last year to $15.7 million. Sales and
marketing expenses for the six months ended October 31,
1995 increased 17% from $26.4 million to $30.9 million.
The Company's ongoing investment in telesales, third
party distribution channels and marketing programs,
combined with TechGnosis' significant investment in sales
and marketing costs to help broaden its revenue base,
were the primary reasons for the increase during the
three and six months ended October 31, 1995.
Research and Development
Research and development ("R & D") expenses reflect gross
expenditures less amounts capitalized in accordance with
FAS 86. Amortization of capitalized software is included
in cost of products. R & D expenses were $3.5 million in
the second quarter of fiscal 1996, which is substantially
unchanged when compared to the same period last year.
R&D expenses for the six months ended October 31, 1995
increased 11% from $5.8 million to $6.5 million. The
increase is the result of higher levels of investment in
the Company's Object Oriented Development, Data
Warehousing and Software Configuration Management
solution areas.
General and Administrative
General and administrative expenses were $3.2 million in
the second quarter of fiscal 1996 as compared to $3.3
million in the same period last year. General and
administrative expenses for the six months ended October
31, 1995 increased 11% from $5.8 million to $6.5 million.
The increase in the six month period is due to higher
administrative costs associated with supporting a larger
customer base, combined with increases in administrative
costs by TechGnosis prior to the acquisition.
Acquisition Charges
In May 1995, the Company incurred $2 million of non-
recurring charges related to the acquisition of the PC
Strategies business and the C++/Views product line.
Acquisition charges included a $0.7 million charge for
purchased R&D related to the C++/Views transaction. The
remaining $1.3 million charge was for direct transaction
expenses, severance and costs to consolidate operations.
In October 1995, the company incurred $11.6 million of
non-recurring charges related to the acquisition of
TechGnosis. This includes $3.3 million to buyout
exclusive distributor arrangements, $2.5 million for
consolidation of offices and equipment, $2.2 million for
severance and related costs, $2 million to write-off
overlapping technologies and $1.6 million of direct
transaction and other transition expenses. All personnel
affected by the acquisition have been notified and most
severance transaction costs will be disbursed by December
31, 1995.
Operating Income
Operating income before acquisition costs was $1.2
million for the three months ended October 31, 1995, or
down 66% from last year. Operating income before
acquisition charges for the six months ended October 31,
1995 was $1.6 million or down 69% for the same period
last year. TechGnosis had been investing in sales and
marketing costs to expand its presence in the United
States. As a result, it reported operating losses for
the three and six months ended October 31, 1995, which
led to a decrease in the Company's results for the same
time frame. Operating loss after acquisition costs was
$10.4 million for the three months ended October 31, 1995
compared with operating income of $3.6 million for the
same quarter last year.
Other Income, net
Other income increased due to higher levels of cash
available for investment, when compared to the same
period last year.
Income Taxes
The Company has not recognized the full benefit of the
available net operating losses as of October 31, 1995,
which has led to no tax benefit for the six months ended
October 31, 1995. The Company expects that the tax rate
for the remainder of fiscal 1996 will be 30%. The
difference from the statutory rate is primarily because
of the estimated tax benefit resulting from the
utilization of net operating losses and research and
development tax credit carryforwards.
Financial Condition - Liquidity and Capital Resources
During the six months ended October 31, 1995, operations
provided $9.6 million of cash. Financing activities in
the form of stock option exercises and purchases under
the employee purchase plan generated $7.4 million and the
Company made its final Q+E Software installment payment
of $1.1 million. Investing activities used $9.8 million
as the Company invested $6.9 million in software and a
net $3.2 million in fixed assets. Overall cash and cash
equivalents were $32.9 million at October 31, 1995, which
is up $6.3 million from $26.7 million at the beginning of
the fiscal year.
The Company has a bank line of credit arrangement which
allows short-term borrowings of up to $12 million. As of
October 31, 1995 and for the six months then ended, there
were no amounts outstanding under this line of credit.
Management believes that cash generated from operations,
cash on hand and available borrowings are sufficient to
meet the Company's capital requirements for the
foreseeable future.
PART II. OTHER INFORMATION
Item 4. Results of Votes of Shareholders
The Annual Meeting of Stockholders was held at the
Company's offices at 9420 Key West Avenue, Rockville, MD
20850 on September 20, 1995.
The stockholders voted to approve the following matters
as set forth in the proxy statement.
Number of Votes Cast
Description of Matter For Against Abstain
1. The following Class C Directors were elected:
Robert N. Goldman 14,148,398 --- 144,430
Gary E. Greenfield 14,147,019 --- 145,809
Charles O. Rossotti 14,148,498 --- 144,330
2. The addition of 1,000,000 shares of common stock
to the Company's 1992 stock option plan was approved.
8,561,531 3,934,161 1,797,136
3. The selection of Coopers & Lybrand L.L.P. as the
Company's independent auditors for fiscal 1996 was
ratified.
14,285,057 1,976 5,975
Item 5. Other
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Number Exhibit Description
11.1 Computation of Net Income
Per Share for the three months
ended October 31, 1995 and 1994.
11.2 Computation of Net Income
per Share for the six months ended
October 31, 1995 and 1994.
27 Financial Data Schedule (as
part of electronic filing)
(b) Reports on Form 8-K:
INTERSOLV filed a Form 8-K on November 7,
1995 to report the acquisition of TechGnosis
International, Inc. on October 23, 1995. No
financial data was filed with this report.
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.
INTERSOLV, Inc.
Date: December 20, 1995 By: /s/Kenneth
A. Sexton____________
Kenneth A. Sexton
Vice President,
Finance and
Administration,
Chief Financial
Officer, and Secretary
(Principal Financial
and Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description
11.1 Computation of Net Income per share
for the three months ended October
31, 1995 and 1994.
11.2 Computation of Net Income per share
for the six months ended October 31,
1995 and 1994.
EXHIBIT 11.1
INTERSOLV, INC
COMPUTATION OF NET INCOME PER SHARE
Three months ended October 31
(in thousands, except net income per share)
1995 1994
PRIMARY
Weighted average number of shares
outstanding 19,303 18,448
Additional shares under stock option plan assumed
outstanding less shares assumed repurchased
under the treasury stock method --- 1,072
Primary Shares 19,303 19,520
Net Income (Loss) $(9,906) $2,584
Net Income (Loss) Per Share ($0.51) $ 0.13
FULLY DILUTED
Weighted average number of shares
outstanding 19,303 18,448
Additional shares under stock option plan assumed
outstanding less shares assumed repurchased
under the treasury stock method --- 1,277
Additional shares under the subordinated
convertible notes assumed outstanding
--- 523
Fully Diluted Shares 19,303 20,248
Net Income (loss) before adjustments ($9,906) $2,584
Elimination of interest expense, net of related tax
effect, related to 8.4% subordinated convertible notes
-0- 25
Net income (loss) used for fully diluted net income per
share ($9,906) $2,609
Net Income (Loss) Per Share ($0.51) $0.13
EXHIBIT 11.1
INTERSOLV, INC
COMPUTATION OF NET INCOME PER SHARE
Six months ended October 31
(in thousands, except net income per share)
1995 1994
PRIMARY
Weighted average number of shares
outstanding 19,105 18,456
Additional shares under stock option plan assumed
outstanding less shares assumed repurchased under
the treasury stock method --- 793
Primary Shares 19,105 19,249
Net Income (Loss) $(11,475) $ 3,811
Net Income (Loss) Per Share $ (0.60) $ 0.20
FULLY DILUTED
Weighted average number of shares outstanding
19,105 18,456
Additional shares under stock option plan assumed
outstanding less shares assumed repurchased
under the treasury stock method --- 1,105
Additional shares under the subordinated convertible
notes assumed outstanding
--- 260
Fully Diluted Shares 19,105 19,821
Net Income (Loss) before adjustments $(11,475) $ 3,811
Elimination of interest expense, net of related tax
effect, related to 8.4% subordinated (loss) per share
--- 25
Net Income (Loss) used for fully diluted net income
(loss) per share $(11,475) $ 3,836
Net Income (Loss) Per Share ($0.60) $0.19
<TABLE> <S> <C>
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0
0
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