<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1995
--------------
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period to .
------------ ------------
Commission file number 0-17111
-------
PHOENIX TECHNOLOGIES LTD.
---------------------------
(Exact name of Registrant as specified in its charter)
Delaware 04-2685985
- ------------------------------------ -------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2770 De La Cruz Boulevard, Santa Clara, California 95050
--------------------------------------------------------
(Address of principal executive offices, including zip code)
408/ 654-9000
-------------
(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
------- -------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, par value $.001 13,526,770
- -------------------------------------- -------------------------------------
Class Number of shares Outstanding at
March 31, 1995
Exhibit Index is on Page 15
Page 1 of 19 pages
<PAGE>
PHOENIX TECHNOLOGIES LTD.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1995 and September 30, 1994 . . . . . . . . . . . 3
Consolidated Statements of Operations
Three and Six Months Ended March 31, 1995 and 1994. . . . . 4
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1995 and 1994. . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . 13
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 13
Page 2 of 19 pages
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
PHOENIX TECHNOLOGIES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
(unaudited)
------------- -------------
ASSETS
<S> <C> <C>
Current assets:
Cash and short-term investments (See
note 2) $ 29,340 $ 33,889
Accounts receivable, net of allowances
of $625 at March 31, 1995 and
$657 at September 30,1994 13,965 12,316
Receivable from related party -- 3,768
Inventory (See note 3) 360 849
Other current assets 2,521 1,452
-------------- --------------
Total current assets 46,186 52,274
Property and equipment, net 2,530 2,307
Computer software costs, net 3,445 3,392
Other assets 5,569 5,262
-------------- --------------
Total assets $ 57,730 $ 63,235
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Short-term borrowings $ 1,411 $ 1,241
Accounts payable 1,752 3,443
Salaries, commissions, and related
items payable 2,733 2,462
Accrued license fees and royalties 890 1,214
Other accrued liabilities 3,531 4,209
Income taxes payable 2,645 3,993
Relocation accrual (See note 4) 510 1,923
Net current liabilities of
discontinued operations 1,996 5,203
-------------- --------------
Total current liabilities 15,468 23,688
Long-term liabilities 79 101
-------------- --------------
Total liabilities 15,547 23,789
-------------- --------------
Stockholders' equity:
Preferred stock, $.10 par value,
500,000 shares authorized, none
issued and outstanding -- --
Common stock, $.001 par value, 20,000,000
shares authorized; 13,526,770 issued
at March 31, 1995 and 13,435,077 at
September 30, 1994 14 13
Additional paid-in capital 50,112 49,839
Retained earnings (accumulated deficit) (7,943) (9,843)
Less: treasury stock at cost, 30,013
shares at September 30, 1994 -- (563)
-------------- --------------
Total stockholders' equity 42,183 39,446
-------------- --------------
Total liabilities and stockholders'
equity $ 57,730 $ 63,235
-------------- --------------
-------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
Page 3 of 19 pages
<PAGE>
PHOENIX TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
-----------------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 12,204 $ 22,855 23,323 $ 42,970
Cost of revenue 1,095 10,636 1,860 19,548
--------- --------- --------- ---------
Gross margin 11,109 12,219 21,463 23,422
Operating expenses:
Research and development 4,076 2,775 7,938 5,240
Selling, marketing and support 3,549 4,205 6,980 8,454
General and administrative 1,492 2,142 2,823 4,308
Restructuring charges -- 9,095 -- 9,095
--------- --------- --------- ---------
Total operating expenses 9,117 18,217 17,741 27,097
--------- --------- --------- ---------
Operating income (loss) 1,992 (5,998) 3,722 (3,675)
Gain on Sale of Publishing Division -- 6,671 -- 6,671
Other income (expense) 486 (34) 998 (19)
--------- --------- --------- ---------
Income before income taxes 2,478 639 4,720 2,977
Provision for income taxes 740 1,037 1,413 1,827
--------- --------- --------- ---------
Income (loss) from continuing
operations 1,738 (398) 3,307 1,150
Loss from discontinued operations
(after tax benefits of $432
and $650, respectfully) -- (648) -- (976)
--------- --------- --------- ---------
Net income (loss) $ 1,738 $ (1,046) 3,307 $ 174
--------- --------- --------- ---------
--------- --------- --------- ---------
Income (loss) per common share:
Income (loss) per share from
continuing operations $ 0.12 $ (0.03) $ 0.22 $ 0.08
Loss per share from
discontinued operations -- (0.05) -- (0.07)
--------- --------- --------- ---------
Net income (loss) per common
share $ 0.12 $ (0.08) $ 0.22 $ 0.01
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average number of common
and common equivalent
shares outstanding 14,898 13,152 14,807 14,011
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
Page 4 of 19 pages
<PAGE>
PHOENIX TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,307 $ 174
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 1,329 2,777
Provision for doubtful accounts -- 176
Write-off prepaid royalties -- 6,777
Gain on sale Publishing Division option -- (6,671)
Provision for relocation -- 2,318
Equity interest in subsidiary (195) --
Change in operating assets and liabilities
Increase in accounts receivable (1,150) (2,629)
(Increase) decrease in inventory, other
current assets and other assets 3,035 (1,818)
Increase (decrease) in accounts payable
and accrued liabilities (4,794) 3,696
Increase (decrease) in accrued salaries,
commissions and related items payable 32 (195)
Increase (decrease) in income taxes payable (1,348) 365
Decrease in net liabilities of
discontinued operations (2,703) --
---------- ----------
Total adjustments (5,794) 4,796
---------- ----------
Net cash provided by (used in) operating
activities (2,487) 4,970
Cash flows from investing activities:
Purchase of property and equipment (919) (739)
Additions to computer software costs (571) (1,938)
Maturity of short-term investments 18,800 1,000
Purchase of short-term investments (17,444) (2,817)
Investment in jointly owned company -- (1,000)
---------- ----------
Net cash used in investing activities (134) (5,494)
Cash flows from financing activities:
Proceeds from exercise of common stock
options and issuance of stock under
employee stock purchase plan 1,162 478
Purchase of treasury stock (1,711) --
Repayment of loans and notes payable (22) (63)
---------- ----------
Net cash provided by (used in) financing
activities (571) 415
---------- ----------
Net increase (decrease) in cash and cash
equivalents (3,192) (109)
Cash and cash equivalents at beginning of
period 29,519 7,122
---------- ----------
Cash and cash equivalents at end of period
(See note 2) $ 26,327 $ 7,013
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
Page 5 of 19 pages
<PAGE>
PHOENIX TECHNOLOGIES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements, except for those dated as of
September 30, 1994, are unaudited and have been prepared by the Company in
accordance with generally accepted accounting principles. The year-end balance
sheet at September 30, 1994 was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments, including normal
recurring accruals, necessary for a fair presentation for the interim periods.
These financial statements should be read in conjunction with the financial
statements and related notes included in the Company's Form 10-K for the year
ended September 30, 1994. Certain amounts in the prior year's financial
statements also have been reclassified to conform to the fiscal 1995
presentation. The prior years consolidated statements of operations and related
notes have been restated to reflect the Printer Software Division as a
discontinued operation. The interim results are not necessarily indicative of
the results to be expected for the entire year.
2. CASH AND SHORT-TERM INVESTMENTS
Cash and short-term investments consist of the following:
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
---- ----
<S> <C> <C>
Cash and cash equivalents $ 26,327,000 $ 29,519,000
Short-term investments 3,013,000 4,370,000
--------------- ---------------
$ 29,340,000 $ 33,889,000
--------------- ---------------
--------------- ---------------
</TABLE>
At December 31, 1994, the Company adopted Statement of Financial Accounting
Standard No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and
Equity Securities". All short-term investments at March 31, 1995 were deemed by
management to be held-to-maturity securities and therefore are reported at
amortized cost. The adoption of SFAS 115 was not material to the financial
statements. Realized gains and losses are recorded based on specific
identification.
The Company's short-term investments were stated at cost which approximates
market value at March 31, 1995, and consisted of U.S. treasury notes and
discount notes maturing between April 1995 and August 1995.
Page 6 of 19 pages
<PAGE>
3. INVENTORIES
Inventories consist of finished goods of $360,000 and $849,000 at
March 31, 1995 and September 30, 1994, respectively.
4. RELOCATION ACCRUAL
During the quarters ended March 31, 1995 and December 31, 1994, the Company
paid approximately $879,000 and $472,000 relating primarily to relocation and
employee separation costs. The Company has not changed the estimated amount of
accrual related to relocation costs.
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing net income by the weighted
average common shares and common share equivalents outstanding during the
period.
Page 7 of 19 pages
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
INTRODUCTION
On September 30, 1994, the Company sold 80% of its Publishing Division to
Softbank Corporation of Japan ("Softbank"). Also on that date, Softbank and the
Company contributed their equity interests in the Publishing Division to a newly
formed entity (Phoenix Publishing Systems, Inc.) for 80% and 20%, respectively,
of that entity. The prior year's quarter as reported includes the results of
operation for the Publishing Division. The following are pro forma Consolidated
Statements of Operations showing what the Company's results for the three month
and six month periods ending March 31, 1994 would have been without the
Publishing Division.
PHOENIX TECHNOLOGIES LTD.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, 1994 March 31, 1994
---------------------------------------------- ----------------------------------------------
Actual Less actual Pro forma Actual Less actual Pro forma
results results of results results results of results
from and pro from from and pro from
continuing forma continuing continuing forma continuing
operations adjustments operations operations adjustments operations
for the excluding for the excluding
Publishing Publishing Publishing Publishing
Division Division Division Division
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 22,855 $ 12,711 $ 10,144 $ 42,970 $ 23,470 $ 19,500
Cost of revenue 10,636 9,454 1,182 19,548 17,448 2,100
---------- ---------- ---------- ---------- ---------- ----------
Gross margin 12,219 3,257 8,962 23,422 6,022 17,400
Operating expenses:
Research and development 2,775 146 2,629 5,240 146 5,094
Selling, marketing and support 4,205 1,381 2,824 8,454 2,640 5,814
General and administrative 2,142 523 1,619 4,308 1,069 3,239
Restructuring charges 9,095 -- 9,095 9,095 -- 9,095
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 18,217 2,050 16,167 27,097 3,855 23,242
---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss) (5,998) 1,207 (7,205) (3,675) 2,167 (5,842)
Gain on Sale of Publishing
Division 6,671 6,671 -- 6,671 6,671 --
Other income (expense) (34) -- (34) (19) 6 (25)
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 639 7,878 (7,239) 2,977 8,844 (5,867)
---------- ---------- ---------- ---------- ---------- ----------
Provision for income taxes 1,037 -- 1,037 1,827 -- 1,827
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from
continuing operations $ (398) $ 7,878 $ (8,276) $ 1,150 $ 8,844 $ (7,694)
---------- ---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- ---------- -----------
</TABLE>
Page 8 of 19 pages
<PAGE>
RESULTS OF OPERATIONS
As an aid to understanding the Company's results, the following table sets
forth, for the periods indicated, each line item of the Company's statement of
income as a percentage of revenue.
PHOENIX TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in percentage of revenue)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------------- ------------------------------------
1995 1994 1994 1995 1994 1994
---- ---- ---- ---- ---- ----
Actual Actual Pro Actual Actual Pro
------ ------ --- ------ ------ ---
forma forma
----- -----
<S> <C> <C> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue 9.0 46.5 11.7 8.0 45.5 10.8
------ ------ ------ ------ ------ ------
Gross margin 91.0 53.5 88.3 92.0 54.5 89.2
Operating expenses:
Research and development 33.4 12.1 25.9 34.0 12.2 26.1
Selling, marketing and support 29.1 18.4 27.8 29.9 19.7 29.8
General and administrative 12.2 9.4 16.0 12.1 10.0 16.6
Restructuring charges -- 39.8 89.7 -- 21.2 46.7
------ ------ ------ ------ ------ ------
Total operating expenses 74.7 79.7 159.4 76.0 63.1 119.2
------ ------ ------ ------ ------ ------
Operating income (loss) 16.3 (26.2) (71.1) 16.0 (8.6) (30.0)
Gain on Sale of Publishing Division -- 29.2 -- -- 15.5 --
Other income (expense) 4.0 ( .2) ( 0.3) 4.3 ( .1)
------ ------ ------ ------ ------ ------
Income (loss) before income taxes 20.3 2.8 (71.4) 20.3 6.9 (30.1)
Provision for income taxes 6.1 4.6 10.2 6.1 4.2 9.4
------ ------ ------ ------ ------ ------
Income (loss) from continuing
operations 14.2 ( 1.8) (81.6) 14.2 2.7 (39.5)
Loss from discontinued operations -- (2.8) ( 6.4) -- (2.3) ( 5.0)
------ ------ ------ ------ ------ ------
Net income (loss) 14.2% (4.6)% (88.0)% 14.2% .4% (44.5)%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>
Page 9 of 19 pages
<PAGE>
REVENUE
The Company's revenue for the three- and six-month periods ended March 31,
1995 decreased by 47% and 46%, respectively, to $12,204,000 from $22,855,000 for
the three-month period and to $23,323,000 from $42,970,000 for the six-month
period. These decreases are due to the inclusion of revenue from the Publishing
Division for the periods. On a pro forma basis, revenues increased 20.3% and
19.6% over the prior year's three- and six-month periods, respectively. The
fiscal 1995 increase in revenue was primarily the result of a 37.7% growth in
sales of Company's OEM software products. This increase was partially offset by
lower revenues from retail software products.
GROSS MARGIN
Gross margin decreased by $1,110,000, or 9% and $1,959,000 or 8% for the
three- and six-month periods ended March 31, 1995, respectively, as compared
with the same periods of fiscal 1994. Excluding the Publishing Division, gross
margin amounts for the periods ended March 31, 1995 increased 24.0% and 23.4%,
respectively, over the prior year periods. The increased gross margin was
realized as a result of the growth in revenues and lower cost of sales resulting
from the elimination of commissions paid to certain United Kingdom companies,
which were acquired by the Company in June 1994. This increase was partially
offset by the sale of obsolete retail software products in fiscal 1995 at or
below cost. Consequently, on a pro forma basis, total gross margin increased
from 88.3% to 91%, and from 89.2% to 92% of revenue, respectively, for the three
and six-month periods in fiscal 1995 over the same periods in fiscal 1994.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses before the capitalization of internally
developed software costs were 35.8% and 36.5% of revenue for the three- and six-
month periods ended March 31, 1995 and 13.9% and 14.2% for the same periods in
1994. The Company capitalized approximately $292,000 and $571,000 of internally
developed software costs for the three- and six-month periods ended March 31,
1995, respectively, versus $411,000 and $853,000 for the same periods in 1994.
The amount of research and development expenses, before the capitalization
of internally developed software costs, increased to $4,368,000 for the quarter
ended March 31, 1995 from $3,186,000 for the same quarter in the prior year.
For the six month period, research and development expense increased to
$8,510,000 from $6,093,000. The increased research and development is primarily
due to increased staffing and related expenses, and the additional expense of
the European operations established in June 1994.
SELLING, MARKETING AND SUPPORT EXPENSES
Costs related to selling, marketing and support decreased to $3,549,000 and
$6,980,000 for the three months and six months ended March 31, 1995 from
$4,205,000 and $8,454,000 for the same periods last year. On a pro forma
basis, selling, marketing, and support costs increased 25.7% and 20.1%, or
$725,000 and $1,166,000, over the prior year periods. The increase is
attributable to additional commissions paid on increased revenue and to the cost
of expanding into the European market. The increase was partially offset by a
reduction in advertising costs for retail software products.
Page 10 of 19 pages
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses of $1,492,000 for the second quarter of
fiscal 1995 decreased by 30.3% from $2,142,000 for the second quarter of fiscal
1994. For the six-month period ended March 31, 1995, general and
administrative expenses decreased 34.5% to $2,823,000 from $4,308,000 in the
prior year. On a pro forma basis, general and administrative expenses decreased
by 7.8% and 12.8% for the respective three- and six-month periods. This decrease
is attributable to decreased facilities and communications costs, net of
reserves, as a result of the relocation of the Company's headquarters from
Massachusetts to California.
INCOME TAXES
The Company recorded income tax provisions of $740,000 and $1,413,000 for
the quarter and six months ended March 31, 1995, respectively, as compared to
$1,037,000 and $1,827,000 for the same periods in the prior year. The fiscal
1995 and 1994 provisions reflect effective rates of 30% and 61%, respectively.
After elimination of tax effects due to the gain on the sale of the Publishing
Division, restructuring charges, and tax provisions relating to the sale of the
Printer Software Division, the effective tax rate for fiscal 1994 is 31%. The
slightly lower effective tax rate for 1995 primarily results from the
recognition of deferred tax assets for which a valuation allowance was provided
at September 30, 1994.
Page 11 of 19 pages
<PAGE>
FINANCIAL CONDITION
CHANGES IN FINANCIAL CONDITION
Current assets decreased $6,088,000 during the six months ended March 31,
1995. This decrease is comprised of a $5,852,000 decrease in the quarter ending
December 31, 1994 and a decrease of $236,000 during the quarter ended March 31,
1995. The year-to-date decrease was primarily attributable to a reduction of
inventory of $489,000 and to several large cash payments made by the Company
during the six month period including (i) approximately $2.5 million in
accrued employee compensation and other costs associated with the closing of the
sale of the Printer Software business, (ii) the final $1,000,000 installment to
IBM under the terminated SurePath distribution agreement, (iii) federal and
state income tax payments totaling approximately $1,670,000, and (iv) the
repurchase for $1,711,000 of 239,800 shares of Company common stock.
Current liabilities decreased by $8,220,000 during the six months ended
March 31, 1995 to $15,468,000 from $23,688,000. The decrease is principally
attributable to the cash payments described above and to a reduction in trade
accounts payable.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended March 31, 1995, the Company's cash and short-
term investments decreased by $4,549,000 to $29,340,000. The decrease is
attributable to the cash payments discussed above. The Company expects funding
requirements for fiscal 1995 to be met from its current cash position and future
operations. In August 1994, the Company announced that its Board had authorized
repurchase of up to 1,000,000 shares of its common stock for use in the
Company's stock option plans and for general purposes. As of March 31, 1995,
the Company had repurchased 239,800 shares pursuant to this program and retired
269,813 treasury shares. As a result of these transactions, the Company holds
no treasury stock as of March 31, 1995.
The Company has a $10,000,000 secured line of credit agreement with a
domestic commercial bank. Due to the sale of the Publishing and Printer
Software Divisions, the bank released its security interest in the assets of
these divisions. While an amendment to the credit agreement is being
negotiated, borrowings under this line of credit must be fully secured by
compensating balances at the bank. As of March 31, 1995, the Company had
approximately $1.37 million outstanding against this credit line. The amount
outstanding against the credit line is a loan in Japanese Yen. The loan balance
increased due to changes in the foreign exchange rates. The Company is
currently negotiating the amendment to the credit agreement.
Page 12 of 19 pages
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held an Annual Meeting of its Stockholders on February 7, 1995,
at which the following occurred:
ELECTION OF DIRECTORS: The stockholders elected Ronald D. Fisher and Lance
E. Hansche as Class II Directors, to serve until the 1998 Annual Meeting of
Stockholders. The other persons continuing as directors are Charles Federman,
Lawrence G. Finch and Anthony P. Morris.
ADOPTION OF 1994 EQUITY INCENTIVE PLAN: The stockholders approved the
adoption of the Company's 1994 Equity Incentive Plan under which 1,000,000
previously unreserved shares of the Company's common stock were reserved for
issuance pursuant to awards granted under the plan. The vote on the matter was
as follows:
FOR 5,610,913
AGAINST 1,843,551
ABSTAIN 119,198
BROKER NON-VOTES 3,760,125
APPOINTMENT OF INDEPENDENT AUDITORS: The stockholders ratified the
appointment of Coopers & Lybrand, L.L.P. as the Company's auditors for the year
ending September 30, 1995. The vote on the matter was as follows:
FOR 11,275,865
AGAINST 15,500
ABSTAIN 42,418
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS. See exhibit index beginning on page 15 hereof.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended March
31, 1995.
Page 13 of 19 pages
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHOENIX TECHNOLOGIES LTD.
By:/s/Robert J. Riopel
-------------------
Robert J. Riopel
Vice President, Finance and
Chief Financial Officer and
Duly authorized officer
Date: May 10, 1995
Page 14 of 19 pages
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
4.1 Series A Convertible Preferred Stock and Warrant Purchase Agreement
dated March 18, 1988 among the Registrant, Neil J. Colvin, Lance E.
Hansche, Sigma Partners and Sigma Associates, and the form of warrants
issued thereunder - filed as Exhibit 4.1 to the S-1 and incorporated
herein by this reference.
4.2 Registration Agreement dated March 18, 1988, among the Registrant, Neil
J. Colvin, Lance E. Hansche, Sigma Partners and Sigma Associates, as
amended - filed as Exhibit 4.2 to the S-1 and incorporated herein by
this reference.
4.3 Rights Agreement dated as of October 31, 1989 between the Company and
The First National Bank of Boston - filed as Exhibit 4.1 to the October
31, 1989 Form 8-K, and incorporated herein by this reference.
10.1 1986 Incentive Stock Option Plan, as amended - filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-8, Registration No. 33-
30940, and incorporated herein by this reference.
10.2 Senior Management Stock Option Plan, as amended - filed as Exhibit 4.2
to the Company's Registration Statement on Form S-8, Registration No.
33-26996 (the "February 1989 Form S-8"), and incorporated herein by this
reference.
10.3 Senior Management Nonqualified Stock Option Plan, as amended - filed as
Exhibit 4.3 to the February 1989 Form S-8 and incorporated herein by
this reference.
10.4 Lease dated June 29, 1989 between the Registrant and The Prudential
Insurance Company of America - filed as Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1989
(the "1989 Form 10-K") and incorporated herein by this reference.
10.5 Employment Agreement dated October 21, 1994 between the Company and
Judith L. Sundue - filed as Exhibit 10.5 to the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 1994 (the "1994
Form 10-K") and incorporated herein by this reference.
10.6 Letter Agreement dated December 19, 1994 between the Company and Steve
Kalman - filed as Exhibit 10.6 to the 1994 Form 10-K and incorporated
herein by this reference.
10.7 Employment Agreement dated December 28, 1988, between the Registrant and
Steve Kalman - filed as Exhibit 10.25 to the Company's 1990 Form 10-K
and incorporated herein by this reference.
10.8 Employment Agreement dated January 6, 1995 between the Company and
Ronald D. Fisher.
Page 15 of 19 pages
<PAGE>
10.9 Employment agreement dated June 9, 1994 between the Registrant and Jack
Kay - filed as Exhibit 10.9 to the Company's Quarterly Report on Form
10-Q filed on August 15, 1994 and incorporated herein by this reference.
10.10 Employment Agreement dated August 15, 1994, between the Registrant and
Robert R. Langer - filed as Exhibit 10.10 to the 1994 Form 10-K and
incorporated herein by this reference.
10.11 Line of Credit Agreement dated November 25, 1991 between the Registrant
and Silicon Valley Bank -- filed as Exhibit 10.17 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1991
(the "1991 Form 10-K") and incorporated herein by this reference.
10.12 1991 Employee Stock Purchase Plan - filed as Exhibit 28.1 to the
Company's Registration Statement on Form S-8, Registration No. 33-44211
filed on November 26, 1991 (the "1991 Employee Stock Purchase Plan") and
incorporated herein by this reference.
10.13 1992 Equity Incentive Plan - filed with the Company's preliminary proxy
materials filed on December 17, 1992 (the "1992 Equity Incentive Plan")
and incorporated herein by this reference.
10.14 Amendment dated April 15, 1993 to the Line of Credit Agreement dated
November 25, 1991 between the Registrant and Silicon Valley Bank filed
as exhibit 10.23 to the Company's Form 10-Q filed on August 16, 1993 and
incorporated herein by this reference.
10.15 Amendment dated June 28, 1993 to the Line of Credit Agreement dated
November 25, 1991 between the Registrant and Silicon Valley Bank filed
as exhibit 10.24 to the Company's Form 10-Q filed on August 16, 1993 and
incorporated herein by this reference.
10.16 Replication Agreement dated March 15, 1993 between the Company and
Microsoft Corporation and Amendments One, Two, Three and Four thereto,
filed as exhibit 10.16 to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30,1993 and incorporated herein by this
reference.
10.17 Letter Amendment dated as of December 30, 1993 to Line of Credit
Agreement dated November 25, 1991 between the Registrant and Silicon
Valley Bank filed as exhibit 10.17 to the Company's Form 10-Q filed on
February 14, 1994 and incorporated herein by this reference.
10.18 Purchase Agreement dated March 15, 1994 between the Company and Softbank
Corporation filed as exhibit 10.18 to the Company's Form 10-Q filed May
16, 1994 and incorporated herein by this reference.
Page 16 of 19 pages
<PAGE>
10.19 Amendment Number 1 to the 1992 Equity Incentive Plan filed as exhibit
10.19 to the Company's Form 10-Q filed May 16, 1994 and incorporated
herein by this reference.
10.20 Amendment Number 1 to the 1991 Employee Stock Purchase Plan filed as
exhibit 10.20 to the Company's Form 10-Q filed May 16, 1994 and
incorporated herein by this reference.
10.21 Amendment No. 1 to Purchase Agreement by and between the Registrant and
Softbank Corporation dated as of March 15, 1994 - filed as Exhibit 2.02
to the Company's Current Report on Form 8-K dated September 30,1994 and
incorporated herein by this reference.
10.22 Asset Purchase Agreement made as of September 30, 1994 by and between
the Registrant and Xionics International Holdings, Inc. - filed as
Exhibit 2.01 to the Company's Current Report on Form 8-K dated November
8, 1994 and incorporated herein by this reference.
10.23 1994 Equity Incentive Plan, as amended through December 12, 1994 - filed
as Exhibit 10.23 to the 1994 Form 10-K and incorporated herein by this
reference.
10.24 Lease dated as of May 3, 1994 between the Company and the Equitable life
Assurance Society of the United States - filed as Exhibit 10.24 to the
Company's Annual Report on Form 10-K for the fiscal year ended September
30, 1994 (the "1994 Form 10-K") and incorporated herein by this
reference.
11.1 Statement re computation of earnings per share (primary earnings per
share).
11.2 Statement re computation of earnings per share (fully diluted earnings
per share).
Page 17 of 19 pages
<PAGE>
EXHIBIT 11.1
PHOENIX TECHNOLOGIES LTD.
COMPUTATION OF EARNINGS PER SHARE
PRIMARY EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
March 31, March 31,
--------- ---------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $1,738,000 $ (398,000) $3,307,000 $ 1,150,000
Loss from discontinued operations -- (648,000) -- (976,000)
----------- ------------- ----------- -----------
Net income (loss) $1,738,000 $( 1,046,000) $3,307,000 $ 174,000
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
Weighted average number of common
shares outstanding 13,496,000 13,152,000 13,436,000 13,097,000
Weighted average number of common
equivalent shares (1) 1,402,000 -- 1,371,000 914,000
----------- ------------- ----------- -----------
Weighted average number of common and
common equivalent shares outstanding 14,898,000 13,152,000 14,807,000 14,011,000
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
Primary earnings per share: (1)
Continuing operations $ 0.12 $ (0.03) $ 0.22 $ 0.08
Discontinued operations $ 0.00 (0.05) $ 0.00 (0.07)
----------- ------------- ----------- -----------
Net income $ 0.12 $ (0.08) $ 0.22 $ 0.01
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
<FN>
_________________
(1) In a loss period, the loss per share is computed using only the weighted
average number of common shares outstanding, as the effect of common
equivalent shares would be antidilutive.
</TABLE>
Page 18 of 19 pages
<PAGE>
EXHIBIT 11.2
PHOENIX TECHNOLOGIES LTD.
COMPUTATION OF EARNINGS PER SHARE
FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
March 31, March 31,
--------- ---------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $1,738,000 $ (398,000) $3,307,000 $ 1,150,000
Loss from discontinued operations -- (648,000) -- (976,000)
----------- ------------- ----------- -----------
Net income (loss) $1,738,000 $( 1,046,000) $3,307,000 $ 174,000
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
Weighted average number of common
shares outstanding 13,496,000 13,152,000 13,436,000 13,097,000
Weighted average number of common
equivalent shares (1) 1,401,000 -- 1,380,000 1,113,000
----------- ------------- ----------- -----------
Weighted average number of common and
common equivalent shares outstanding 14,898,000 13,152,000 14,816,000 14,210,000
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
Primary earnings per share: (1)
Continuing operations $ 0.12 $ (0.03) $ 0.22 $ 0.08
Discontinued operations $ 0.00 (0.05) $ 0.00 (0.07)
----------- ------------- ----------- -----------
Net income $ 0.12 $ (0.08) $ 0.22 $ 0.01
----------- ------------- ----------- -----------
----------- ------------- ----------- -----------
<FN>
_________________
(1) In a loss period, the loss per share is computed using only the weighted
average number of common shares outstanding, as the effect of common
equivalent shares would be antidilutive.
</TABLE>
Page 19 of 19 pages
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 29,340
<SECURITIES> 0
<RECEIVABLES> 14,590
<ALLOWANCES> 625
<INVENTORY> 360
<CURRENT-ASSETS> 46,186
<PP&E> 12,361
<DEPRECIATION> 9,831
<TOTAL-ASSETS> 57,730
<CURRENT-LIABILITIES> 15,468
<BONDS> 0
<COMMON> 14
0
0
<OTHER-SE> 50,112
<TOTAL-LIABILITY-AND-EQUITY> 57,730
<SALES> 0
<TOTAL-REVENUES> 23,323
<CGS> 0
<TOTAL-COSTS> 1,860
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 4,720
<INCOME-TAX> 1,413
<INCOME-CONTINUING> 3,307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,307
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
