<PAGE> 1
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 May 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 0-15811
BRODERBUND SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2768218
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
500 REDWOOD BLVD.
NOVATO, CA 94948-6121
(Address of principal executive offices)
TELEPHONE NUMBER (415) 382-4400
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 May 31, 1996 there were 20,737,302 shares of the Registrant's Common Stock
Outstanding.
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BRODERBUND SOFTWARE, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
At May 31, 1996 and August 31, 1995 3
Condensed Consolidated Statements of Income
Three and Nine Months Ended
May 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended May 31, 1996 and 1995 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BRODERBUND SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
May 31, 1996 August 31, 1995
------------ ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and short term investments $174,496 $126,547
Accounts receivable, net 1,258 7,880
Income tax prepayments - 487
Inventories 2,007 2,562
Deferred income taxes 16,866 13,880
Other 835 1,186
-------- --------
Total current assets 195,462 152,542
Equipment and improvements, net 6,396 5,570
Deferred income taxes 928 928
Other assets 6,663 2,511
-------- --------
$209,449 $161,551
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,514 $ 6,094
Accrued compensation 9,753 11,062
Royalties payable 4,442 4,625
Accrued income taxes 11,284 -
Other accrued expenses 7,654 10,867
-------- --------
Total current liabilities 36,647 32,648
Other liabilities - 21
-------- --------
Total liabilities 36,647 32,669
Stockholders' equity:
Common stock 34,242 31,140
Retained earnings 138,560 97,742
-------- --------
Total stockholders' equity 172,802 128,882
-------- --------
$209,449 $161,551
======== ========
</TABLE>
See accompanying notes.
3
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BRODERBUND SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months Nine months
ended May 31, ended May 31,
------------------------ --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $34,993 $36,114 $153,998 $134,411
Cost of revenues 10,287 12,077 50,243 50,110
------- ------- -------- --------
Gross margin 24,706 24,037 103,755 84,301
Operating expenses:
Sales and marketing 6,760 5,280 26,840 19,045
Research and
development 6,758 5,662 21,771 15,677
General and
administrative 2,961 2,846 8,721 8,309
------- ------- -------- --------
Total operating
expenses 16,479 13,788 57,332 43,031
------- ------- -------- --------
Income from operations 8,227 10,249 46,423 41,270
Interest and dividend
income, net 1,907 1,467 4,915 3,354
Equity in earnings of
joint venture - 359 1,291 3,179
Gain on sale of
investment - - - 1,602
Terminated merger fee,
net - - 15,464 -
------- ------- -------- --------
Income before
income taxes 10,134 12,075 68,093 49,405
Provision for
income taxes 3,953 5,040 27,137 20,410
------- ------- -------- --------
Net income $ 6,181 $ 7,035 $ 40,956 $ 28,995
======= ======= ======== ========
Net income per share $ 0.29 $ 0.33 $ 1.90 $ 1.39
======= ======= ======== ========
Shares used in computing
net income per share 21,435 21,138 21,583 20,814
======= ======= ======== ========
</TABLE>
See accompanying notes.
4
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BRODERBUND SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine months
ended May 31,
--------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 40,956 $ 28,995
Adjustments to reconcile net income
to net cash provided by
operating activities:
Equity in earnings of joint venture (1,291) (3,179)
Depreciation and amortization 2,033 1,567
Deferred income taxes (2,986) (8,135)
Write-off of intangible asset - 1,678
Changes in operating assets
and liabilities 12,014 26,467
-------- --------
Net cash provided by
operating activities 50,726 47,393
Cash flows from investing activities:
Additions to equipment and
improvements (2,645) (2,313)
Other (3,155) 2,550
--------- -------
Net cash (used in)
investing activities (5,800) 237
Cash flows from financing activities:
Exercise of stock options 1,658 4,165
Tax benefit of stock option exercises 1,444 2,411
-------- -------
Net cash provided by
financing activities 3,102 6,576
-------- -------
Translation adjustment (79) 3
--------- -------
Increase in cash and
short term investments 47,949 54,209
Cash and short term investments,
beginning of period 126,547 75,000
-------- -------
Cash and short term investments,
end of period $174,496 $129,209
======== ========
</TABLE>
See accompanying notes.
5
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BRODERBUND SOFTWARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements for the three and nine months
ended May 31, 1996 and 1995 are unaudited and reflect all adjustments,
consisting only of normal recurring adjustments, which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods. These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report (Form 10-K) for the year ended August 31, 1995. The
results of operations for the three months and nine months ended May 31, 1996
are not necessarily indicative of the results for the entire fiscal year ending
August 31, 1996.
NOTE 2. PROPOSED MERGER TERMINATED
On December 7, 1995, Broderbund and The Learning Company terminated an agreement
to merge. In conjunction with the terminated merger, Broderbund received a
break-up fee of $18 million, less related expenses, which was reflected as
non-operating income in the second quarter of fiscal 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the consolidated
financial statements and the notes thereto and in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's Annual Report (Form 10-K) for the year ended August 31, 1995.
RESULTS OF OPERATIONS
The following table sets forth certain consolidated statement of income data as
a percentage of net revenues for the periods indicated:
<TABLE>
<CAPTION>
Three months Nine months
ended May 31, ended May 31,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues 100% 100% 100% 100%
Cost of revenues 29% 33% 33% 37%
---- ---- ---- ----
Gross margin 71% 67% 67% 63%
Operating expenses:
Sales and marketing 19% 15% 17% 14%
Research and development 19% 16% 14% 12%
General and administrative 9% 8% 6% 6%
---- ---- ---- ----
Total operating expenses 47% 39% 37% 32%
---- ---- ---- ----
Income from operations 24% 28% 30% 31%
Interest and
dividend income, net 5% 4% 3% 3%
Equity in earnings of
joint venture - 1% 1% 2%
Gain on sale of investment - - - 1%
Terminated merger fee, net - - 10% -
---- ---- ---- ----
Income before income taxes 29% 33% 44% 37%
Provision for income taxes 11% 14% 17% 15%
---- ---- ---- ----
Net income 18% 19% 27% 22%
==== ==== ==== ====
</TABLE>
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Net revenues
The Company derives revenue from products which are published by Broderbund
(published products) and products from other software developers which are
distributed by Broderbund (affiliated label products). The Company sells its
products in North America through distributors and retailers, as well as
directly to consumers. The Company's international sales are derived from a
foreign subsidiary and licensing arrangements with foreign distributors.
Net revenues for the third quarter of fiscal 1996 were $35.0 million, as
compared with the $36.1 million recorded in the third quarter of fiscal 1995.
Net revenues were $154.0 million for the nine months of fiscal 1996, up 15% from
the $134.4 million reported for the same period last year. During the third
fiscal quarter, the Company experienced strong revenue growth from international
markets and domestically in the education category. The productivity area grew
moderately while the entertainment and affiliated label revenues declined.
International sales have been fueled by the Company's direct presence in Europe
and an increasing number of localized products. Currently, Broderbund sells its
products directly and through strategic partnerships in more than 30 countries
worldwide. Education revenues were primarily driven by the release of the new
Advantage Libraries(TM) suites of products. Growth in the productivity area came
from market acceptance of the additional products released in The Print Shop(R)
group during the second fiscal quarter, and from the Family Tree Maker(TM) line
of genealogy products and the supporting Family Archive(TM) CD's. However, sales
of Myst(R), the Company's best-selling entertainment product, declined 32% from
the same period last year, which caused a decline in the revenue contribution
from the entertainment category and contributed to the overall decline in
revenue. Affiliated label revenues also declined in the third quarter mainly due
to a higher than normal level of returns in this area. Year-to-date revenues
grew moderately, primarily due to stronger growth in the first fiscal quarter
during the holiday selling season.
During the third fiscal quarter, Broderbund released 23 new products as compared
with 15 new products in the same quarter last year. Nineteen of the new products
were on CD-ROM. The Company released 71 new products during the first nine
months of fiscal 1996 versus 51 products during the same period last year. The
new products released in the third quarter this year included a series of suites
of products called Advantage Libraries. The Advantage Libraries include a Carmen
Advantage Library(TM) with two Carmen Sandiego(TM) products and PC Globe(R) Maps
'n' Facts(R), a Creative Advantage Library(TM) composed of Kid Pix(R) Studio and
Amazing Writing Machine(TM), and two Learning Advantage Libraries(TM). Each
Learning Advantage Library provides an age-appropriate creative learning
solution to build the development of essential skills: reading, writing, math,
geography and creativity.
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<PAGE> 9
Broderbund also released nine Family Archive CD's to support the Family Tree
Maker line of genealogy products, four new line extensions in the Imagimaker(TM)
series to provide more entry points into the Kid Pix creativity line of
products. New affiliated label products included two Three for Me(TM) suites of
products from Living Books(R) which combine three popular Living Books together
in one package, and Sunset Garden Problem Solver from Sunset New Media.
Revenues from sales of affiliated label products accounted for 12% of net
revenues in the third quarter and 16% in the first nine months of fiscal 1996,
as compared with 19% of net revenues in both the third quarter and the first
nine months of fiscal 1995.
Cost of revenues
Cost of revenues includes cost of goods sold, royalties paid to developers and
accrued technical support costs, which relate primarily to telephone support
provided to consumers shortly after they purchase software. The Company does not
capitalize internal software development costs as the impact on the financial
statements would be immaterial.
In the third quarter of fiscal 1996, the Company's gross margin rose to 71%, up
from 67% in the third quarter of fiscal 1995. For the nine months of fiscal
1996, the Company's gross margin increased to 67% from 63% during the same
period of the prior year. The increase in gross margin in the third quarter of
fiscal 1996 compared to the third quarter of fiscal 1995 was primarily the
result of higher levels of sales of the Company's published products, especially
in the education area, and lower levels of sales of affiliated label products.
Affiliated label products carry lower gross margins than products published by
the Company since the Company performs only a distribution function, and in
certain cases, a manufacturing function, for these products. In addition, sales
of Myst, which has a higher royalty rate and therefore reduces the Company's
gross margin percentage, are lower this year than in the same period of the
prior year. Changes in the mix of sales of the Company's published products and
between published products and affiliated label company products are normal
quarter-to-quarter fluctuations. The increase in gross margin in the first nine
months of fiscal 1996 compared to the same period of fiscal 1995 was due
primarily to a greater percentage of net revenues generated from higher margin
productivity and education products and to a one-time charge to cost of goods
sold during the first quarter of fiscal 1995 of $1.3 million for the write-off
of unamortized intangible assets arising from the 1992 acquisition of PC Globe,
Inc.
Royalties paid to developers were 7% of net revenues in both the third quarter
and the nine months of fiscal 1996 and the third quarter of fiscal 1995, down
from 8% during the first nine months of the prior year The decrease was
primarily the result of lower
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<PAGE> 10
net revenues from externally designed products, such as Myst, which have higher
royalties associated with them than royalties paid for content included in other
Broderbund published products.
Sales and marketing
Sales and marketing expenses increased 28% to $6.8 million in the third quarter
of fiscal 1996 from $5.3 million in the third quarter of fiscal 1995. Sales and
marketing expenses increased 41% to $26.8 million in the first nine months of
fiscal 1996 from $19.0 million in the comparable period last year. The increases
were primarily the result of higher expenditures for marketing programs with the
Company's channel partners, variable selling expenses and costs from the Banner
Blue division acquired at the end of April 1995. The Company has also incurred
additional marketing expenses to support some of its more established product
lines. In addition, programs for educational marketing and customer service have
been enlarged. The number of new products in the marketplace has expanded,
causing the competition for retail shelf space to increase. As a result, the
Company may incur increases in sales and marketing expenses in the future to
more clearly distinguish its products from its competitors' products and to
obtain available shelf space.
Research and development
Research and development expenses increased 19% to $6.8 million in the third
quarter of fiscal 1996 from $5.7 million in the third quarter of fiscal 1995.
Research and development expenses increased 39% to $21.8 million in the first
nine months of fiscal 1996 from $15.7 million in the same period in the prior
year. The increases were largely attributable to higher employee-related
expenses from increased headcount and costs from the Banner Blue division and
the establishment of a new educational division at the Company's Fremont
facility. In addition, the Company has continued to invest in the development of
multimedia products which have the capacity for expanded sound, animation and
information content. The development of products with more content increases
research and development costs. To partially offset this increase in content
costs, the Company has developed proprietary systems to reduce the number of
programming hours required to bring a product to market on multiple platforms.
The Company is in the process of updating its product line to be Windows 95
native. Last August, the Company updated its product line to be Windows 95
compatible, incorporating features from Windows 95 into its Windows 3.1 product
code. The Company includes multiple platform versions of many of its products on
a single CD in the same package to reduce costs.
General and administrative
General and administrative expenses increased 4% to $3.0 million in the third
quarter of fiscal 1996 from $2.8 million in the third quarter of fiscal 1995.
General and administrative
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expenses increased 5% to $8.7 million in the first nine months of fiscal 1996
from $8.3 million in the same period in the prior year. The increases were
primarily due to the Company's increased staffing to handle a larger volume of
transactions and costs from the Banner Blue division.
Non-operating income
Non-operating income includes equity in earnings of the Living Books joint
venture, interest and dividend income and other nonrecurring items. The Company
and Random House, Inc. are equal partners in a joint venture to publish Living
Books products. Both Broderbund and Random House, Inc. are distributing Living
Books through their respective distribution channels under an affiliated label
arrangement. The Company reports its 50% share in earnings and losses of the
Living Books joint venture under the equity method of accounting. The Company's
share is based on the joint venture's most recent quarter-end results, which are
reported on a calendar year basis. The Company did not report any equity in
earnings of the joint venture for the third quarter of fiscal 1996. For the nine
months ended May 31, 1996, the equity in earnings of the joint venture was $1.3
million. For the third quarter and the first nine months of fiscal 1995, the
equity in earnings of the joint venture was $.4 million and $3.2 million,
respectively. The decline in earnings of the joint venture was primarily due to
increased marketing costs associated with the launch of new products and, to a
lesser degree, increases in development activities. The Company expects the
profitability of the Living Books joint venture to be more variable than that of
the Company because of the effect that the timing of new product releases has on
Living Books' smaller revenue base.
Interest and dividend income increased to $1.9 million and $4.9 million in the
third quarter and the first nine months of fiscal 1996, respectively, from $1.5
million and $3.4 million in the third quarter and first nine months of fiscal
1995, respectively. The increases were primarily due to greater cash and short
term investment balances. In the first quarter of fiscal 1995, the Company
reported a gain on the sale of an investment of $1.6 million.
In the second quarter of fiscal 1996, the Company received a one-time payment of
$18.0 million in conjunction with a terminated merger. The Company recorded a
pretax gain of $15.5 million, net of expenses related to the terminated merger.
Provision for income taxes
The Company's effective income tax rate decreased to 39.0% during the third
fiscal quarter and 39.9% for the first nine months of fiscal 1996, down from
41.7% and 41.3% in the third quarter and first nine months of fiscal 1995,
respectively. The decreases
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<PAGE> 12
were primarily a result of higher tax exempt interest and dividend income as a
percentage of income before income taxes.
Net income
Net income was $6.2 million or $0.29 per share in the third quarter of fiscal
1996 as compared with $7.0 million or $0.33 per share in the third quarter of
fiscal 1995. For the first nine months of fiscal 1996, net income was $41.0
million or $1.90 per share. Exclusive of the one-time gain, net income for the
nine months ended May 31, 1996 was $31.7 million or $1.47 per share, an increase
of 9% from the $29.0 million or $1.39 per share reported in the same period of
the prior year.
Future operating results
As is typical in the consumer software industry, the Company's business is
highly seasonal with net revenues and operating income generally highest during
the first fiscal quarter, lower in the second fiscal quarter, and lowest in the
seasonally slow third and fourth fiscal quarters. The usual pattern is due
primarily to the increased demand for the Company's products during the calendar
year-end holiday selling season. In addition, due to the typical slower summer
selling season in Europe, the Company does not expect international revenues in
the fourth fiscal quarter to be comparable to the prior fiscal quarters. For the
third quarter of fiscal 1996, the Company reported a year-to-year decline in
revenues and profitability. The Company expects that revenues in the next two
fiscal quarters will be approximately the same as those of the same period in
the prior year. If there is little or no growth in net revenues in the next two
fiscal quarters, the Company's increasing operating expenses would cause net
income to decline when compared to the same period in the prior year.
Recent data indicates a slowdown in growth of end-user demand for consumer
software and hardware during 1996. Also, changes in the operating systems, such
as Windows 95, appear to have caused confusion in the consumer market. In
addition, competition in the consumer market has intensified with the
proliferation of many new products as existing competitors continue to broaden
their product lines and new competitors enter into or increase their focus on
the consumer software market. In response to increasing price competition, the
Company has reduced the price of some of its products, including its
best-selling series, The Print Shop. If such conditions persist, the Company's
future growth in net revenues, if any, could be adversely affected. Further,
there can be no assurance that sales of the Company's existing products,
particularly its entertainment products, will continue to sustain market
acceptance and to generate significant levels of revenue in subsequent quarters
or that a shortfall in revenue from any product could be replaced in a timely
manner. In addition, sales of products on older platforms and in certain product
lines have declined, and there can be no assurance that
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sales of these products or other existing products will not decline further or
experience lower than expected sales levels. Because a significant portion of
the Company's expense levels are fixed and based on its expectations regarding
future revenues, operating results would be disproportionately adversely
affected by a decrease in sales or failure to meet the Company's sales
expectations. Further, any significant shortfall in net revenues from levels
expected by securities analysts and stockholders could result in substantial
volatility in the trading price of the Company's common stock.
The Company's operating results and quarterly revenues are also affected by the
timing of new product introductions, product mix, timing of orders placed by the
Company's distributors and retailers and timing of marketing expenditures. There
can be no assurance that expected new product introductions will not experience
material delays, that new products introduced by the Company will achieve any
significant degree of market acceptance, or that such acceptance will be
sustained for any length of time. In addition, because the Company expects that
the cost of developing new products will continue to increase, the financial
risks associated with new product development will increase as will the risks
associated with material delays in the introduction of such new products. The
Company has previously announced that Myst 2, the sequel to the Company's
best-selling entertainment title Myst, will not be released in calendar 1996 as
previously expected. Moreover, sales of Myst have declined substantially
year-over-year, and there can be no assurance that the shortfall from the
decline in Myst revenues can be replaced in a timely manner. The shortfall from
the decline in Myst revenues was not fully replaced in the third fiscal quarter.
In addition, due to the consolidation of platforms that has occurred in
conjunction with the shift to CD-ROM, the adoption of the Windows 95 operating
system and the practice of putting multiple versions of a product on the same
CD-ROM, the Company may release fewer new products in future fiscal years than
it has in the past.
The distribution channels through which consumer software products are sold have
been characterized by intense competition and continuing uncertainties and there
can be no assurance that distributors and retailers will continue to purchase
the Company's products or provide the Company's products with adequate levels of
shelf space and promotional support. The Company believes that the rate of
product returns will increase as competition in the distribution channel
increases and as mass merchants become an increasing percentage of the Company's
sales. In addition, the business difficulties of a distributor or retailer could
have an adverse effect on the operating results and financial condition of the
Company.
Except for the historical information contained in this Form 10-Q, the
information set forth herein includes forward looking statements that are
dependent on certain risks and uncertainties.
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<PAGE> 14
Important factors that could cause actual results to differ materially from the
anticipated results include, but are not limited to, the anticipation of growth
of specific market segments, the positioning of Broderbund's products in those
segments, the competitive environment in the consumer software industry, the
dependence on other products such as Windows 95, the anticipation and successful
adaptation to rapid technological change, and the importance of the timing and
market acceptance of new Broderbund product releases.
Changes in accounting principles
On October 23, 1995, the Financial Accounting Standards Board issued Statement
No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation" which is
effective for fiscal years beginning after December 15, 1995. SFAS No. 123
permits a company to choose either a new fair value based method or the current
Accounting Principles Board Opinion No. 25 intrinsic value based method of
accounting for its stock-based compensation arrangements. The Company has
elected to continue to follow current practice but SFAS No. 123 requires pro
forma disclosures of net income and earnings per share computed as if the fair
value based method had been applied.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company's primary source of liquidity has been cash generated from
operations. The Company's working capital increased $38.9 million during the
first nine months of fiscal 1996 to $158.8 million from $119.9 million at August
31, 1995. Cash and short term investments increased $48.0 million to $174.5
million at May 31, 1996 from $126.5 million at the end of the prior fiscal year.
Accounts receivable, net of reserves, decreased $6.6 million to $1.3 million at
May 31, 1996, from $7.9 million at August 31, 1995. The increase in cash and
short term investments and decrease in accounts receivable was primarily the
result of strong collections from products sold during the holiday selling
season. Cash and short term investments also increased from the receipt of $15.5
million, net of expenses, as a terminated merger fee. Increases in cash and
short term investments were partially offset by income tax payments due in the
third fiscal quarter.
At this time, the Company is not committed to incur any significant capital
expenditures in fiscal 1996. Broderbund's Board of Directors has authorized the
repurchase of up to two million shares of its common stock in open market
transactions as market and business conditions warrant. No time frame has been
set for this repurchase program. The Company has 20.7 million shares outstanding
as of May 31, 1996. In June, 1996, the Company began purchasing shares of common
stock, utilizing some of the Company's available cash.
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<PAGE> 15
In addition to cash and short term investments, the Company has $5.0 million
available under an unsecured line of credit agreement with no outstanding
borrowings. Borrowings under the line of credit bear interest at the bank's
prime rate. The line of credit is subject to renewal by the bank on January 31,
1997.
The Company uses its working capital to finance ongoing operations and to fund
the expansion and development of its product lines. During the third fiscal
quarter, the Company made a minority equity investment in a company, Live
Pictures, Inc., which is included in other assets. In addition, the Company
evaluates from time to time acquisitions of products or companies that
complement the Company's business.
Management believes the existing cash and short term investments balances and
cash generated from operations will be sufficient to meet the Company's
liquidity and capital needs for the coming year.
15
<PAGE> 16
PART II - OTHER INFOMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended May 31, 1996.
16
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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.
BRODERBUND SOFTWARE, INC.
(Registrant)
Dated: July 11, 1996
By: /s/ Michael J. Shannahan
-------------------------------
Michael J. Shannahan
Vice President and
Chief Financial Officer
(Principal Financial Officer)
17
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INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Page
<S> <C>
None
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> MAY-31-1996
<CASH> 174,496
<SECURITIES> 0
<RECEIVABLES> 28,770
<ALLOWANCES> 27,512
<INVENTORY> 2,007
<CURRENT-ASSETS> 195,462
<PP&E> 16,174
<DEPRECIATION> 9,778
<TOTAL-ASSETS> 209,449
<CURRENT-LIABILITIES> 36,647
<BONDS> 0
0
0
<COMMON> 34,242
<OTHER-SE> 138,560
<TOTAL-LIABILITY-AND-EQUITY> 209,449
<SALES> 153,998
<TOTAL-REVENUES> 153,998
<CGS> 50,243
<TOTAL-COSTS> 57,332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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<INCOME-TAX> 27,137
<INCOME-CONTINUING> 40,956
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<NET-INCOME> 40,956
<EPS-PRIMARY> 1.90
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</TABLE>
