<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended DECEMBER 31, 1997
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File No 0-15949
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2862863
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1895 EAST FRANCISCO BLVD., SAN RAFAEL, CA 94901
- ------------------------------------------ ----------
(Address of principal executive offices) (Zip code)
(415) 257-3000
---------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
As of February 11, 1998, 5,630,184 shares of Registrant's Common Stock, no par
value, were outstanding.
<PAGE> 2
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements
Consolidated Balance Sheets at December 31, 1997 and June 30, 1997 3
Consolidated Statements of Operations for the three and six months ended
December 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the six months ended
December 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 976,000 $ 1,126,000
Receivables, less allowances for doubtful
accounts and returns of $3,686,000 and $2,943,000 10,643,000 7,535,000
Inventories, net 5,680,000 3,472,000
Prepaid royalties and licenses, net 1,777,000 1,285,000
Deferred tax assets, net 1,170,000 1,473,000
Other current assets 672,000 478,000
------------ ------------
Total current assets 20,918,000 15,369,000
------------ ------------
Furniture and equipment, net 2,473,000 1,694,000
Deferred tax assets, net 2,858,000 265,000
Capitalized software development costs, net 1,574,000 92,000
Other assets, net 184,000 153,000
------------ ------------
Total assets $ 28,007,000 $ 17,573,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Credit line payable $ 4,315,000 $ --
Short term debt and other obligations 487,000 402,000
Trade accounts payable 5,844,000 4,501,000
Current portion of notes payable 1,987,000 558,000
Wages, benefits and sales tax payable 703,000 515,000
Contracts payable 1,607,000 1,318,000
Income taxes payable 216,000 742,000
------------ ------------
Total current liabilities 15,159,000 8,036,000
Long term debt and other obligations 1,770,000 2,042,000
------------ ------------
Total liabilities 16,929,000 10,078,000
Shareholders' equity:
Common stock, no par value; 300,000,000 authorized;
issued and outstanding 5,594,341 and 5,128,759 shares 11,870,000 6,453,000
Retained earnings (accumulated deficit) (521,000) 1,373,000
Cumulative translation adjustment 14,000 (46,000)
Notes receivable from shareholders (285,000) (285,000)
------------ ------------
Total shareholders' equity 11,078,000 7,495,000
------------ ------------
Total liabilities and shareholders' equity $ 28,007,000 $ 17,573,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
---------------------------------------------------------
1997 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Net revenues $16,380,000 100.0% $11,791,000 100.0%
Product costs 5,932,000 36.2% 5,124,000 43.5%
----------- ----- ----------- -----
Gross margin 10,448,000 63.8% 6,667,000 56.5%
Costs and expenses:
Sales and marketing 4,640,000 28.3% 3,234,000 27.4%
General and administrative 1,278,000 7.8% 1,216,000 10.3%
Research and development 2,390,000 14.6% 1,122,000 9.5%
Write off of purchased research and dev. 6,367,000 22.0%
----------- ----- ----------- -----
Total operating expenses 8,308,000 50.7% 5,572,000 47.2%
----------- ----- ----------- -----
Operating income (loss) 2,140,000 13.1% 1,095,000 9.3%
Other income (expense) (234,000) (1.4)% 53,000 0.4%
----------- ----- ----------- -----
Income (loss) before taxes 1,906,000 11.7% 1,148,000 9.7%
Provision (benefit) for income taxes 686,000 4.3% 442,000 3.7%
----------- ----- ----------- -----
Net income (loss) $ 1,220,000 7.4% $ 706,000 6.0%
=========== ===== =========== =====
Basic earnings (loss) per share: $ 0.22 $ 0.14
=========== ===========
Diluted earnings (loss) per share: $ 0.19 $ 0.12
=========== ===========
Shares used in computing basic
earnings (loss) per share: 5,570,000 4,924,000
=========== ===========
Shares used in computing diluted
earnings (loss) per share: 6,572,000 5,690,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
---------------------------------------------------------
1997 1996
----------------------- ------------------------
<S> <C> <C> <C> <C>
Net revenues 28,891,000 100.0% 19,903,000 100.0%
Product costs 10,463,000 36.2% 8,120,000 40.8%
----------- ----- ------------ ------
Gross margin 18,428,000 63.8% 11,783,000 59.2%
Costs and expenses:
Sales and marketing 8,294,000 28.8% 5,710,000 28.7%
General and administrative 2,270,000 7.9% 2,070,000 10.4%
Research and development 4,025,000 13.9% 2,167,000 10.9%
Write off of purchased research and dev. 6,367,000 22.0% 0.0%
----------- ----- ------------ ------
Total operating expenses 20,956,000 72.6% 9,947,000 50.0%
----------- ----- ------------ ------
Operating income (loss) (2,528,000) (8.8)% 1,836,000 9.2%
Other income (expense) (431,000) (1.5)% (24,000) (0.1)%
----------- ----- ------------ ------
Income (loss) before taxes (2,959,000) (10.3)% 1,812,000 9.1%
Provision (benefit) for income taxes (1,065,000) (3.7)% 696,000 3.5%
----------- ----- ------------ ------
Net income (loss) $(1,894,000) (6.6)% $ 1,116,000 5.6%
=========== ===== ============ ======
Basic earnings (loss) per share: $ (0.35) $ 0.23
=========== ============
Diluted earnings (loss) per share: $ (0.30) $ 0.20
=========== ============
Shares used in computing basic
earnings (loss) per share: 5,377,000 4,906,000
=========== ============
Shares used in computing diluted
earnings (loss) per share: 6,272,000 5,585,000
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,894,000) $ 1,116,000
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities
Depreciation and amortization 954,000 468,000
Deferred taxes (2,290,000) --
Write-off of purchased in-process research and development 6,367,000 --
Changes in operating assets and liabilities:
Receivables, net (2,923,000) (2,627,000)
Inventories (2,208,000) (1,136,000)
Prepaid royalties and licenses (617,000) (278,000)
Other current assets (194,000) 190,000
Trade accounts payable 1,334,000 1,758,000
Wages, benefits, and sales tax payable 95,000 53,000
Contracts payable 262,000 651,000
Income taxes payable (525,000) (10,000)
Foreign currency translation 60,000 (20,000)
----------- -----------
Net cash provided (used) by operating activities (1,579,000) 165,000
----------- -----------
Cash flows from investing activities:
Purchase of equipment (1,086,000) (242,000)
Capitalized software development costs -- 25,000
Acquisition of technology and assets (1,556,000) --
Other (16,000) --
----------- -----------
Net cash used by investing activities (2,658,000) (217,000)
----------- -----------
Cash flows from financing activities:
Credit line borrowings 6,170,000 1,435,000
Credit line repayments (1,855,000) (750,000)
Term loan repayments (772,000) --
Capital lease and other obligations additions 608,000 (344,000)
Capital lease and other obligations repayment (242,000) --
Proceeds from issuance of common stock 178,000 281,000
----------- -----------
Net cash provided by financing activities 4,087,000 622,000
----------- -----------
Net increase (decrease) in cash and cash equivalents (150,000) 572,000
Cash and cash equivalents at beginning of period 1,126,000 387,000
----------- -----------
Cash and cash equivalents at end of the period $ 976,000 $ 957,000
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING
INFORMATION:
Purchase of technology and assets in exchange for long-term debt $ 300,000
Purchase of technology and assets in exchange for trade payables $ 383,000
Purchase of technology and assets in exchange for notes payable $ 1,034,000
Purchase of technology and assets in exchange for common stock $ 5,240,000 --
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying interim consolidated financial statements have been prepared
from the records of International Microcomputer Software, Inc. and Subsidiaries
(the "Company") without audit. In the opinion of management, all adjustments,
which consist only of normal recurring adjustments, necessary to present fairly
the financial position, results of operations and cash flows as of and for the
periods ended December 31, 1997, and for all periods presented, have been made.
The interim consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997.
The results of operations for the three and six months ended December 31, 1997
and 1996 are not necessarily indicative of the results to be expected for the
full year. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
2. INVENTORIES
Inventories are valued at the lower of cost or market, on a first-in, first-out
basis, and consist of:
<TABLE>
<CAPTION>
December 31, 1997 June 30, 1997
----------------- -------------
<S> <C> <C>
Raw Materials $ 2,297,000 $ 1,379,000
Finished Goods 3,734,000 2,252,000
----------- -----------
6,031,000 3,631,000
Reserves for Obsolescence
(351,000) (159,000)
----------- -----------
$ 5,680,000 $ 3,472,000
=========== ===========
</TABLE>
3. ACQUISITIONS
In the quarter ended September 30, 1997, the Company acquired the rights and
related technologies to products in the CAD, diagramming and consumer categories
from Corel Corporation, for stock and notes payable valued at $5,640,000. The
total purchase price consisted of $5,000,000 in IMSI common stock (346,020
shares at $14.45 per share), and $640,000 in notes payable, which is due during
fiscal year 1998. The Company allocated the purchase price as follows:
$5,044,000 was expensed to in-process research and development during the
September 30, 1997 quarter, $517,000 to capitalized software to be amortized
over 18 months and $79,000 to goodwill to be amortized over 36 months.
In the quarter ended September 30, 1997, the Company also acquired the
technology and assets of MapLinx Corporation from Computer Concepts Corporation,
the exclusive license of selected
6
<PAGE> 7
graphics technology from Quarterdeck, Inc., and MediaPaq, Inc., valued at
$2,250,000. The total purchase price consisted of $240,000 in IMSI common stock
(20,000 shares at $12.00 per share), cash of $1,233,500, notes payable of
$233,500, which is due during fiscal year 1998, and the balance in various
assumed liabilities. The Company allocated the purchase price as follows:
$1,323,000 was expensed to in-process research and development during the
September 30, 1997 quarter, $914,000 to capitalized software to be amortized
over 18 months and $13,000 to goodwill to be amortized over 36 months.
4. NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings per Share" (SFAS 128). The
Company adopted SFAS 128 in the December 31, 1997 quarter as required, and
restated earnings per share (EPS) data for prior periods to conform with SFAS
128.
Basic EPS excludes dilution and is computed by dividing net income by the
weighted average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
In June 1997, the Financial Accounting Standard Board issued Statements of
Financial Accounting Standards No. 130 (Reporting Comprehensive Income), which
requires that an enterprise report, by major components and as a single total,
the change in its net assets during the period from non-owner sources; and No.
131 (Disclosures about Segments of an Enterprise and Related Information), which
establishes annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services, geographic areas,
and major customers. Adoption of these statements will not impact the Company's
consolidated financial position, results of operations or cash flows, and any
effect will be limited to the form and content of its disclosures. Both
statements are effective for fiscal years beginning after December 15, 1997,
with earlier application permitted.
7
<PAGE> 8
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 Form 10-K for the year ended June 30, 1997. This quarterly report on
Form 10-Q, and in particular Management's Discussion and Analysis of Financial
Condition and Results of Operations, may contain forward- looking statements
regarding future events or the future performance of the Company that involve
certain risks and uncertainties including those discussed on Form 10-K, as filed
with the Securities and Exchange Commission ("SEC"). Actual events or the actual
future results of the Company may differ materially from any forward-looking
statements due to such risks and uncertainties. The Company assumes no
obligation to update these forward-looking statements to reflect actual results
or changes in factors or assumptions affecting such forward-looking statements.
This analysis is not intended to serve as a basis for projection of future
events.
RESULTS OF OPERATIONS
SUMMARY
The Company reported net income of $1,220,000 for the quarter ended December 31,
1997, compared to net income of $706,000 for the comparable quarter of 1996,
representing an increase of $514,000 or 73%. The increase in net income was
primarily a result of higher sales coupled with new product introductions.
During the first quarter of fiscal 1998, the Company consummated four
acquisitions in which approximately $6.4 million of in-process research and
development costs were expensed. The Company reported operating income for the
quarter ended December 31, 1997 of $2,140,000 or 13% of net revenues, compared
to operating income of $1,095,000 or 9% of net revenues for the comparable
quarter last year.
NET REVENUES
Net revenues for the three and six months ended December 31, 1997 were
$16,380,000 and $28,891,000 respectively, compared to $11,791,000 and
$19,903,000 for the comparable periods in the previous year. Increased net
revenues for the six months ended December 31, 1997, were fueled by several
important releases, upgrades and continued sales from products including
MasterPublisher(TM) 97, which has a web-publishing suite and professional tools
for business desktop publishing users, FormTool(R) 97, the best-selling forms
design software, WinDelete(TM) 97, which includes Internet technology and system
management features, NetAccelerator(TM), an Internet speedup utility, as well as
TurboProject(TM) Professional, a corporate version of TurboProject with top-down
project management features. During the quarter ended December 31, 1997, IMSI
released VoiceDirect(TM), speech recognition software, Family Heritage(TM), the
genealogy software product recently acquired from Corel Corporation, and
Graphics File Converter(TM). Extending the Company's best-selling line of clip
art, IMSI began shipping its new MasterClips(R) lineup this
8
<PAGE> 9
quarter. Growth during the quarter was also a result of continued channel
penetration both in the U.S. and internationally with localized versions on most
product lines.
Net revenues from channel and OEM sales were $15,164,000 or 93% and $26,148,000
or 91% of net revenues for the three and six months ended December 31, 1997 and
$10,457,000 or 89% and $17,173,000 or 86% of net revenues for the comparable
periods in the previous year. Channel and OEM sales increased $4,707,000 or 45%
and $8,975,000 or 52% for the three and six months ended December 31, 1997 from
the comparable periods in the previous year. Net revenues from direct mail sales
were $1,216,000 or 7% and $2,743,000 or 9% of net revenues for the three and six
months ended December 31, 1997, compared to $1,334,000 or 11% and $2,730,000
or 14% of net revenues for the comparable periods in the previous year. Direct
mail sales decreased $118,000 or 9% for the three months ended December 31,
1997 from the comparable period in the previous year. Direct mail sales
remained relatively constant at $ 2.7 million for the six months ended December
31, 1997, compared with the same period in the previous year.
International net revenues were $7,480,000 or 46% and $11,707,000 or 41% of net
revenues for the three and six months ended December 31, 1997, compared to
$4,581,000 or 39% and $7,112,000 or 36% of net revenues for the comparable
periods in the previous year. The increase in international sales of $2,899,000
or 63% and $4,595,000 or 65% of net revenues for the three and six months ended
December 31, 1997 over the comparable periods in the previous year, was
primarily the result of increased sales through the retail channel,
particularly, in Germany and the United Kingdom, expansion into Latin American
markets and new product introductions.
PRODUCT COSTS
Product costs, as a percentage of net revenues were $5,932,000 or 36% and
$10,463,000 or 36% for the three and six months ended December 31, 1997,
compared to $5,124,000 or 44% and $8,120,000 or 41% for the comparable periods
in the previous year. The quarter over quarter percent decrease is primarily
attributable to the continued improvement in gross margin over the last 12 to 15
months fueled in part by purchasing efficiencies and also stronger margins on
certain sales. Amortization of capitalized software development costs and
acquired software costs, and other amortization included in product costs were
$387,000 and $647,000 for the three and six months ended December 31, 1997,
compared to $260,000 and $117,000 for the comparable periods in the previous
fiscal year.
SALES AND MARKETING
Sales and marketing expenses increased to $4,640,000 or 28% and $8,294,000 or
29% of net revenue for the three and six months ended December 31, 1997,
compared to $3,234,000 or 27% and $5,710,000 or 29% for the comparable periods
in the previous year. The quarter over previous year quarter increase of
$1,406,000 or 43% is attributed to expenses associated with an increase in
headcount.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased to $1,278,000 or 8% and $2,270,000
or 8% of net revenue for the three and six months ended December 31, 1997,
compared to $1,216,000 or 10% and $2,070,000 or 10% of net revenue for the
comparable periods in the previous year. The
9
<PAGE> 10
quarter over quarter percent decrease is primarily attributable to a higher
net revenue base, and the fixed nature of general and administrative expenses.
RESEARCH AND DEVELOPMENT
Excluding the write-off of in-process research and development, research and
development expense increased to $2,390,000 or 15% and $4,025,000 or 14% of net
revenue for the three and six months ended December 31, 1997, compared to
$1,122,000 or 10% and $2,167,000 or 11% of net revenue for the comparable
periods in the previous year. The increase can be attributed to an increase in
domestic headcount, the utilization of additional contractors and other third
party development costs relating to the development and expansion of the
Company's product offerings.
PROVISION FOR INCOME TAXES
The Company's provision (benefit) for income taxes were $686,000 and
$(1,065,000) for the three and six months ended December 31, 1997, compared to
$442,000 and $696,000 for the comparable periods in the previous year. The
Company's effective tax rate for these periods is 36% and 38%, respectively. The
reduction in tax provision percentage is primarily attributed to international
tax restructuring.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its business primarily from operating revenues,
short-term and long-term bank borrowings, capital leases and proceeds from the
sale of stock. Working capital decreased to $5,759,000 at December 31, 1997,
from $7,333,000 at June 30, 1997, resulting primarily from the increase in line
of credit borrowing.
The Company has used cash generated from its financing activities to fund its
working capital requirements and to acquire software products and capital
equipment. The Company's operating activities used cash of $1,579,000, which was
due to inventory buildup and royalty prepayments in the six months ended
December 31, 1997, and provided cash of $165,000 for the comparable period in
the previous year. The Company's investing activities used cash of $2,658,000
and $217,000 in the six months ended December 31, 1997 and 1996, respectively.
These capital expenditures were primarily for the acquisition and development of
software, trademarks and the purchase of capital equipment. At December 31,
1997, the Company had no material commitments for capital expenditures. Cash
provided by financing activities were $4,087,000 and $622,000 for the quarters
ended December 31, 1997 and 1996, respectively. Cash inflows from financing
activities, for the six months ended December 31, 1997, were primarily the
result of net line of credit borrowings of $4,315,000.
The Company had a credit agreement with a bank under which it can borrow the
lesser of $6,000,000 or 25% of eligible inventory up to a cap of $500,000 and
80% of eligible accounts receivable, at the bank's index rate (8.5% at December
31, 1997). The line of credit agreement requires the Company to maintain certain
financial ratios including net worth and working capital. This line of credit
expires on October 31, 1998. Under terms of the agreement, all assets not
subject to liens of other financial institutions have been pledged as collateral
against the line
10
<PAGE> 11
of credit. As of December 31, 1997, the Company had $4,315,000 outstanding under
this line of credit.
The Company believes that cash flow from operations, together with existing
sources of liquidity, will satisfy the Company's working capital and capital
expenditure requirements for at least the next twelve months. The Company
believes that these sources will also be sufficient to satisfy its working
capital and capital expenditure requirements beyond the next 12 months at the
Company's current level of operations. The Company's long term goal, however, is
to grow substantially. Expansion of the Company's current business may involve
significant financial risk and require significant capital investment.
Significant expansion of the Company's operations, future acquisitions of
products or companies, unexpected increases in expenses or other factors might
lead the Company to seek additional debt or equity financing. While the Company
believes it will be able to raise any necessary funds, there can be no
assurances that the Company will be able to do so, and failure to obtain
sufficient capital could have a material adverse effect on the Company or
adversely affect the Company's ability to continue to grow. In order to finance
future growth or for other reasons, the Company may consider an offering of its
equity securities within the next year or thereafter. The decision to undertake
such an offering, and the size of such an offering, would depend upon many
factors, such as the market price of the Common Stock, the working capital and
capital expenditure needs of the Company, the availability of alternative
sources of capital, and general market conditions.
QUARTERLY TRENDS
The Company's consolidated results of operations to date have not been
materially affected by seasonal trends. However, the Company believes that in
the future its results may be impacted by such factors as order deferrals in
anticipation of new product releases, delays in shipments of new products, a
slower growth rate in the software markets in which the Company operates, or
adverse general economic and industry conditions in any of the countries in
which the Company does business. In addition, with significant portions of net
revenues contributed by international operations, fluctuations of the U.S.
dollar against foreign currencies and the seasonality of the European,
Asia/Pacific, and other international markets could impact the Company's results
of operations and financial position in a particular quarter. Rapid
technological change and the Company's ability to develop, manufacture, and
market products that successfully adapt to the change may also impact results of
operations. Further, increased market competition from competitors either known
or unknown to the Company could also negatively impact the Company's results of
operations. Due to these factors, the Company's future earnings and stock price
may by subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenues or earnings from anticipated levels could have an
immediate and adverse effect on the trading price of the Company's common stock.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Form 8-K filing, September 30, 1997. Company acquired the
rights to products in the CAD, diagramming and consumer
categories from Corel Corporation.
12
<PAGE> 13
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.
DATE: February 13, 1998 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
By: /s/ MARTIN SACKS
----------------------------------------
Martin Sacks
President & Chief Executive Officer
(Principal Executive Officer)
By: /s/ KENNETH R. FINEMAN
----------------------------------------
Kenneth R. Fineman
V.P. Finance & Chief Financial Officer
(Principal Financial Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 976,000
<SECURITIES> 0
<RECEIVABLES> 14,329,000
<ALLOWANCES> 3,686,000
<INVENTORY> 5,680,000
<CURRENT-ASSETS> 20,918,000
<PP&E> 4,264,000
<DEPRECIATION> 1,791,000
<TOTAL-ASSETS> 28,007,000
<CURRENT-LIABILITIES> 15,159,000
<BONDS> 0
0
0
<COMMON> 11,870,000
<OTHER-SE> (792,000)
<TOTAL-LIABILITY-AND-EQUITY> 28,007,000
<SALES> 28,891,000
<TOTAL-REVENUES> 28,891,000
<CGS> 10,463,000
<TOTAL-COSTS> 10,463,000
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</TABLE>
