_________________________________________________________
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 January 31, 1996
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 February 29, 1996, there were 19,568,439 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 January 31, 1996 and 1995 4
Condensed Consolidated Statements of Operations for
the nine months ended January 31, 1996 and 1995 5
Condensed Consolidated Balance Sheets as of
January 31, 1996 and April 30, 1995 6
Condensed Consolidated Statements of Cash Flows for
the nine months ended January 31, 1996 and 1995. 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 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements set forth below for the three
and nine month periods ended January 31, 1996 and 1995
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 nine month periods ended
January 31, 1996 are not necessarily indicative of the
results for the fiscal year.
In the opinion of management, the accompanying
condensed consolidated 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 consolidated
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 January 31,
(amounts in thousands, except per share data)
(unaudited)
1996 1995
Revenues:
License fees $24,990 $22,754
Service fees 13,904 12,512
Total revenues 38,894 35,266
Costs and expenses:
Cost of products 3,655 2,829
Cost of services 6,833 5,822
Sales and marketing 15,513 14,517
Research and development 3,638 3,502
General and administrative 2,893 3,720
Total costs and expenses 32,532 30,390
Operating income 6,362 4,876
Other income, net 283 111
Income before income taxes 6,645 4,987
Provision for income taxes 1,994 1,692
Net income $4,651 $ 3,295
Shares used in computing primary
net income per share 20,059 19,692
Primary net income per share $0.23 $0.17
Shares used in computing fully
diluted net income per share 21,080 20,748
Fully diluted net income per share $0.22 $0.16
The accompanying notes are an integral part of these
condensed consolidated financial statements.
INTERSOLV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the nine months ended January 31,
(amounts in thousands, except per share data)
(unaudited)
1996 1995
Revenues:
License fees $64,459 $59,759
Service fees 40,813 34,475
Total revenues 105,272 94,234
Costs and expenses:
Cost of products 11,527 7,925
Cost of services 18,870 15,497
Sales and marketing 46,405 40,894
Research and development 11,070 10,165
General and administrative 9,393 9,558
Acquisition charges 13,600 ---
Total costs and expenses 110,865 84,039
Operating income (loss) (5,593) 10,195
Other income, net 763 182
Income (loss) before income taxes (4,830) 10,377
Provision for income taxes 1,994 3,271
Net income (loss) ($6,824) $ 7,106
Shares used in computing primary
net income per share 19,256 19,265
Primary net income (loss) per share ($0.35) $0.37
Shares used in computing fully
diluted net income per share 19,256 19,832
Fully diluted net income (loss) per
share ($0.35) $0.36
The accompanying notes are an integral part of these
condensed consolidated financial statements.
INTERSOLV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
As of As of
January 31, April 30,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $22,314 $26,661
Accounts receivable, net 40,674 41,355
Refundable income taxes 389 580
Prepaid expenses and other current
assets 5,740 5,557
Total current assets 69,117 74,153
Software, net 20,825 21,549
Property and equipment, net 9,758 7,449
Notes receivable and other assets 1,826 1,657
Total assets $101,526 $104,808
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $23,777 $30,592
Accrued acquisition charges 6,631 ---
Deferred revenue 15,896 15,546
Total current liabilities 46,304 46,138
Long-term liabilities 5,768 3,708
Total liabilities 52,072 49,846
Subordinated convertible notes 3,865 4,000
Stockholders' equity
Common stock 230 171
Paid-in capital 94,391 91,693
Treasury stock (1,732) (2,637)
Accumulated deficit (44,506) (37,682)
Cumulative currency translation
adjustment (2,794) (583)
Total stockholders' equity 45,589 50,962
Total liabilities and stockholders'
equity $101,526 $104,808
The accompanying notes are an integral part of these
condensed consolidated financial statements.
INTERSOLV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended January 31,
(amounts in thousands)
(unaudited)
1996 1995
CASH INFLOWS (OUTFLOWS)
Operating activities:
Net income (loss) ($6,824) $7,106
Non-cash items:
Depreciation and amortization 10,692 8,362
Deferred income taxes 1,841 3,099
Capitalized software writedowns 2,386 ---
Payment of restructuring / acquisition
charges (2,581) (4,073)
Change in assets and liabilities 3,608 (3,600)
Net cash provided by operating
activities 9,122 10,894
Investing activities:
Additions to software (8,891) (6,648)
Acquisition of TechGnosis
International (4,800) ---
Additions to property and equipment (6,387) (2,014)
Sale/leaseback of equipment 776 ---
Changes in other assets (330) 226
Net cash used in investing activities (19,632) (8,436)
Financing activities:
Proceeds (payments) from debt, net (808) 4,339
Payment of acquisition installment
liability (1,107) (1,107)
Proceeds from sale of common stock 8,327 5,056
Purchase of common stock for treasury --- (3,420)
Net cash provided by financing activities 6,412 4,868
Effect of exchange rate changes on cash (249) 197
Net increase (decrease) in cash and cash
equivalents (4,347) 7,523
Cash and cash equivalents, beginning
of period 26,661 22,549
Cash and cash equivalents, end of
period $22,314 $30,072
The accompanying notes are an integral part of these
condensed consolidated financial 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 nine-month periods ended January 31, 1996 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 nine month periods ended
January 31, 1995 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 January 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
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.
In May 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 INTERSOLV's historical financial statements
have been restated to include the financial position and
results of operations of PCS.
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 of fiscal 1996.
Acquisition Charges
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 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 and
transaction costs have been disbursed as of January 31,
1996. The majority of the other acquisition charges are
expected to be disbursed by April 1996.
In May 1995, the Company incurred $2 million of non-
recurring charges related to the acquisition of PCS 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 the severance and transaction expenses were
disbursed by January 31, 1996.
Item 2.
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 Nine Months Ended
January 31, January 31,
1996 1995 1996 1995
Revenues:
License fees 64.3% 64.5% 61.2% 63.4%
Service fees 35.7% 35.5% 38.8% 36.6%
100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of products 9.4% 8.0% 10.9% 8.4%
Cost of services 17.6% 16.5% 17.9% 16.4%
Sales and marketing 39.9% 41.2% 44.1% 43.4%
Research and development 9.4% 9.9% 10.5% 10.8%
General and administrative 7.4% 10.5% 8.9% 10.1%
Acquisition charges --- --- 12.9% ---
Total costs and expenses 83.7% 86.1% 105.2% 89.1%
Operating income (loss) 16.3% 13.9% (5.2%) 10.9%
Other income, net 0.7% 0.3% 0.7% 0.2%
Income (loss) before taxes 17.0% 14.2% (4.5%) 11.1%
Provision for income taxes 5.0% 4.8% 1.9% 3.5%
Net Income (loss) 12.0% 9.4% (6.4%) 7.6%
Revenues from North America and International were 67%
and 33%, respectively, for the three months ended January
31, 1996 as compared to 68% and 32%, respectively for the
same period last year.. Revenues from North America and
International were 66% and 34%, respectively, for the
nine months ended January 31, 1996 as compared to 68% and
32%, respectively, for the nine months ended January 31,
1995.
The above results for the three and nine months ended
January 31, 1995 have been restated to include the
results of acquired companies accounted for using the
"pooling-of-interests" method, including the May 1995
acquisition of PCS and the October 1995 acquisition of
TechGnosis.Revenues
Revenues for the three months ended January 31, 1996
increased 10% from $35.3 million for the same period last
year to $38.9 million. Revenues for the nine months
ended January 31, 1996 increased 12% from $94.2 million
to $105.3 million. Revenues from the Company's family of
newer client/server product solutions, focused in the
areas of Software Configuration Management ("SCM"), Data
Warehousing and Object Oriented Development, grew 33% and
27% for the three and nine months ended January 31, 1996,
respectively. Growth in new license sales and services
for the SCM and Data Warehousing areas led to the overall
growth in the newer client/server products. Revenue
growth in these product groups more than offset the 26%
and 15% revenue decline for the three and nine months
ended January 31, 1996, respectively, in the area of
Enterprise Client/Server Development. This decline was
due largely to a decrease in new license sales and is
consistent with the shift in the market that the Company
has experienced in the past year as the demand for COBOL
based software solutions has declined. Approximately 26%
and 28% of the Company's revenues for the three and nine
months ended January 31, 1996, respectively, were 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
January 31, 1996 increased 29% from $2.8 million for the
same period last year to $3.6 million. Cost of products
for the nine months ended January 31, 1996 increased 45%
from $7.9 million to $11.5 million. The increase is
primarily due to higher levels of software amortization
related to releases of new products or new versions of
existing products in the current fiscal year.
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 17%
from $5.8 million for the three months ended January 31,
1995 to $6.8 million for the three months ended January
31, 1996. Cost of services for the nine months ended
January 31, 1996 increased 22% from $15.5 million to
$18.9 million. Increases in the number of personnel in
the Company's consulting functions, which are needed to
support the increasing consulting service revenues, led
to the increased costs for both the three and nine month
periods ended January 31, 1996.
Sales and Marketing
Sales and marketing expenses for the three months ended
January 31, 1996 increased 7% from $14.5 million for the
same period last year to $15.5 million. Sales and
marketing expenses for the nine months ended January 31,
1996 increased 13% from $40.9 million to $46.4 million.
The Company has been investing in telesales, third party
distribution channels and marketing programs to support
the increasing revenue streams. In addition, prior to its
acquisition in October 1995, TechGnosis was making
significant investment in sales and marketing costs to
help broaden its revenue base. These factors were the
primary reasons for the increase during the three and
nine months ended January 31, 1996.
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 $3.6 million in
the third quarter ended January 31, 1996, which is 4%
higher than last year's level of $3.5 million. R&D
expenses for the nine months ended January 31, 1996
increased 9% from $10.2 million to $11.1 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 $2.9 million in
the third quarter of fiscal 1996, which is a 22% decrease
as compared to $3.7 million in the same period last year.
General and administrative expenses for the nine months
ended January 31, 1996 decreased 2% from $9.6 million to
$9.4 million. The decrease is due largely to the
elimination of redundant TechGnosis administrative
functions subsequent to the October 1995 acquisition.
Acquisition Charges
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 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 and
transaction costs were disbursed by January 31, 1996.
The majority of the remaining charges are expected to be
disbursed by April 30, 1996.
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.
All personnel affected by the acquisitions have been
notified and the severance and transaction expenses were
disbursed by January 31, 1996.
Operating Income
Operating income before acquisition charges was $6.4
million for the three months ended January 31, 1996, or
up 30% from last year. Operating income before
acquisition charges for the nine months ended January 31,
1996 was $8 million or down 21% for the same period last
year. Prior to its acquisition, TechGnosis had been
investing in sales and marketing costs to expand its
market presence in the United States. As a result, it
reported operating losses through the six months ended
October 31, 1995. When combined with the Company's
results, this led to a decrease in the Company's results
for the nine months ended January 31, 1996. Operating
loss after acquisition charges was $5.6 million for the
nine months ended January 31, 1996 compared with
operating income of $10.2 million for the same period
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's tax rate for the three months ended January
31, 1996 was 30% as the Company has not recognized the
full benefit of the available net operating losses as of
January 31, 1996. This is also the reason the Company
has recorded a tax provision for the nine months ended
January 31, 1996. The Company expects that the tax rate
for the remainder of fiscal 1996 will be 30%. The other
difference from the statutory rate is because of the
estimated tax benefit resulting from the utilization of
research and development tax credit carryforwards.
Financial Condition - Liquidity and Capital Resources
During the nine months ended January 31, 1996, operations
provided $9.1 million of cash. Financing activities in
the form of stock option exercises and purchases under
the employee purchase plan generated $8.3 million. The
Company made $8.5 million of payments related to its
acquisitions, including the final Q+E Software
installment payment of $1.1 million, and disbursed $4.8
million in connection with the acquisition of TechGnosis
stock and $2.6 million for acquisition related
restructuring charges. Investing activities used $19.6
million as the Company invested $8.9 million in software
and a net $5.6 million in fixed assets. Overall cash and
cash equivalents were $22.3 million at January 31, 1996,
which is down $4.3 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
January 31, 1996 and for the nine 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
None.
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 January 31, 1996 and 1995.
11.2 Computation of Net Income
(Loss) per Share for the nine months ended January 31, 1996 and 1995.
27 Financial Data Schedule (as part of
electronic filing)
(b) Reports on Form 8-K:
INTERSOLV filed an amendment to Form 8-K on
January 5, 1996 to report certain required
financial data in connection with its
acquisition of TechGnosis International, Inc.
on October 23, 1995.
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: March 15, 1996 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
January 31, 1996 and 1995.
11.2 Computation of Net Income (Loss) per share for the nine months
ended January 31, 1996 and 1995.
EXHIBIT 11.1
INTERSOLV, INC
COMPUTATION OF NET INCOME PER SHARE
Three months ended January 31,
(in thousands, except net income per share)
1996 1995
PRIMARY
Weighted average number of shares outstanding 19,515 18,632
Additional shares under stock option plan
assumed outstanding less shares assumed
repurchased under the treasury stock method 544 1,060
Primary Shares 20,059 19,692
Net Income $ 4,651 $3,295
Net Income Per Share $0.23 $0.17
FULLY DILUTED
Weighted average number of shares outstanding 19,515 18,632
Additional shares under stock option plan
assumed outstanding less shares assumed
repurchased under the treasury stock method 544 1,060
Additional shares under the subordinated
convertible notes assumed outstanding 1,021 1,056
Fully Diluted Shares 21,080 20,748
Net Income before adjustments $4,651 $3,295
Elimination of interest expense, net of
related tax effect, related to 8.4%
subordinated convertible notes 57 55
Net income used for fully diluted net
income per share $ 4,708 $ 3,350
Net Income Per Share $0.22 $ 0.16
EXHIBIT 11.2
INTERSOLV, INC
COMPUTATION OF NET INCOME (LOSS) PER SHARE
Nine months ended January 31,
(in thousands, except net income per share)
1996 1995
PRIMARY
Weighted average number of shares outstanding 19,256 18,514
Additional shares under stock option plan
assumed outstanding less shares assumed
repurchased under the treasury stock method --- 751
Primary Shares 19,256 19,265
Net Income (Loss) ($6,824) $ 7,106
Net Income (Loss) Per Share ($0.35) $ 0.37
FULLY DILUTED
Weighted average number of shares outstanding 19,256 18,514
Additional shares under stock option plan
assumed outstanding less shares assumed
repurchased under the treasury stock method --- 792
Additional shares under the subordinated
convertible notes assumed outstanding --- 526
Fully Diluted Shares 19,256 19,832
Net Income (Loss) before adjustments ($6,824) $ 7,106
Elimination of interest expense, net of
related tax effect, related to 8.4%
subordinated (loss) per share --- 85
Net Income (Loss) used for fully diluted
net income (loss) per share ($6,824) $ 7,191
Net Income (Loss) Per Share ($0.35) $0.36
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</TABLE>
