<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 June 30, 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
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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 13,845,305
------------------------------------- -------------------------------------
Class Number of shares Outstanding at
June 30, 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
June 30, 1995 and September 30, 1994..................3
Consolidated Statements of Operations
Three and Nine Months Ended June 30, 1995 and 1994....4
Consolidated Statements of Cash Flows
Nine Months Ended June 30, 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 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>
June 30, September 30,
1995 1994
(unaudited)
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments (Note 2) $ 30,567 $ 33,889
Accounts receivable, net of allowances of $645 at
June 30, 1995 and $657 at September 30, 1994 13,820 12,316
Receivable from related party -- 3,768
Inventory (Note 3) 258 849
Other current assets 2,756 1,452
------------- ------------
Total current assets 47,401 52,274
Property and equipment, net 2,446 2,307
Computer software costs, net 3,602 3,392
Other assets 5,680 5,262
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Total assets $ 59,129 $ 63,235
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 1,434 $ 1,241
Accounts payable 1,345 3,443
Salaries, commissions and related items payable 3,745 2,462
Accrued license fees and royalties 374 1,214
Other accrued liabilities 3,029 4,209
Income taxes payable 2,541 3,993
Relocation accrual (Note 4) 259 1,923
Net current liabilities of discontinued operations 1,342 5,203
------------- ------------
Total current liabilities 14,069 23,688
Long-term liabilities 124 101
------------- ------------
Total liabilities 14,193 23,789
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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;
13,845,305 issued at June 30, 1995 and 13,435,077 at
September 30, 1994 14 13
Additional paid-in capital 51,339 49,839
Accumulated deficit (6,417) (9,843)
Less treasury stock at cost, 30,013 shares at
September 30, 1994 -- (563)
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Total stockholders' equity 44,936 39,446
------------- ------------
Total liabilities and stockholders' equity $ 59,129 $ 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 Nine Months Ended
June 30, June 30,
------------------------- ---------------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 13,320 $ 20,872 $ 36,643 $ 63,842
Cost of revenue 771 8,513 2,631 28,061
---------- ---------- ---------- ----------
Gross margin 12,549 12,359 34,012 35,781
Operating expenses:
Research and development 4,316 3,067 12,248 8,307
Selling, marketing and support 3,665 3,933 10,647 12,387
General and administrative 2,178 2,040 5,001 6,348
Restructuring charges -- -- -- 9,095
---------- ---------- ---------- ----------
Total operating expenses 10,159 9,040 27,896 36,137
---------- ---------- ---------- ----------
Operating income (loss) 2,390 3,319 6,116 (356)
Gain on sale of Publishing Division -- -- -- 6,671
Other income, net 510 44 1,509 25
---------- ---------- ---------- ----------
Income before income taxes 2,900 3,363 7,625 6,340
Provision for income taxes 870 1,164 2,283 2,991
---------- ---------- ---------- ----------
Income from continuing operations 2,030 2,199 5,342 3,349
Loss from discontinued operations (after tax
benefits of $432 and $650, respectively) -- 816 -- 1,792
---------- ---------- ---------- ----------
Net income $2,030 $1,383 $5,342 $1,557
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Income (loss) per common share:
Income per share from continuing operations $0.13 $.16 $0.36 $0.24
Loss per share from discontinued operations -- (0.06) -- (0.13)
---------- ---------- ---------- ----------
Net income per common share $0.13 $.10 $0.36 $0.11
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of common and
common equivalent shares outstanding 15,103 14,169 14,925 13,983
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</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>
Nine Months Ended
June 30,
-----------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,342 $ 1,557
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,352 4,087
Provision for doubtful accounts 30 263
Write-off of prepaid royalties -- 6,777
Gain on sale of Publishing Division option -- (6,671)
Provision for relocation (1,664) 2,318
Equity interest in subsidiary (295) --
Change in operating assets and liabilities
Increase in accounts receivable (1,534) (5,535)
(Increase) decrease in inventory, other current assets
and other assets 2,637 (1,341)
Decrease in accounts payable and other accrued
liabilities (3,925) (1,584)
Increase (decrease) in accrued salaries, commissions
and related items payable 1,283 (478)
Increase (decrease) in income taxes payable (1,452) 654
Decrease in net liabilities of discontinued operations (3,861) --
-------- --------
Total adjustments (6,429) (1,510)
-------- --------
Net cash provided by (used in) operating activities (1,087) 47
Cash flows from investing activities:
Purchase of property and equipment (995) (1,254)
Additions to computer software costs (1,346) (2,786)
Proceeds from sale of option -- 7,500
Maturity of short-term investments 39,158 1,000
Purchase of short-term investments (37,078) (2,817)
Investment in jointly owned company -- (1,460)
-------- --------
Net cash provided by (used in) investing activities (261) 183
Cash flows from financing activities:
Proceeds from exercise of common stock options and
issuance of stock under employee stock purchase plan 2,340 979
Purchase of treasury stock (2,222) -
Repayment of loans and notes payable (12) (116)
-------- --------
Net cash provided by (used in) financing activities 106 863
-------- --------
Net increase (decrease) in cash and cash equivalents (1,242) 1,093
Cash and cash equivalents at beginning of period 29,519 7,122
-------- --------
Cash and cash equivalents at end of period (Note 2) $ 28,277 $ 8,215
-------- --------
-------- --------
</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 year's 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>
June 30, September 30,
1995 1994
---- ----
<S> <C> <C>
Cash and cash equivalents $ 28,277,000 $ 29,519,000
Short-term investments 2,290,000 4,370,000
------------- -------------
$ 30,567,000 $ 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 June 30, 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 method.
The Company's short-term investments were stated at cost which approximates
market value at June 30, 1995, and consisted of U.S. treasury notes and discount
notes maturing between October 1995 and December 1995.
Page 6 of 19 pages
<PAGE>
3. INVENTORIES
Inventories consist of finished goods of $258,000 and $849,000 at June 30,
1995 and September 30, 1994, respectively.
4. RELOCATION ACCRUAL
During the quarters ended June 30, 1995, March 31, 1995 and December 31,
1994, the Company paid approximately $193,000, $472,000, and $879,000,
respectively, 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 three- and nine-month periods 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 nine month periods ending June 30, 1994 would
have been without the Publishing Division.
PHOENIX TECHNOLOGIES LTD.
PRO FORMA RESULTS FROM CONTINUING OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, 1994 June 30, 1994
----------------------------------- ---------------------------------
Actual Less Pro forma Actual Less Pro forma
Results Publishing Results Results Publishing Results
Division(1) Division(1)
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 20,872 $ 9,866 $ 11,006 $ 63,842 $ 33,336 $ 30,506
Cost of revenue 8,513 7,277 1,236 28,061 24,725 3,336
--------- --------- --------- --------- --------- ---------
Gross margin 12,359 2,589 9,770 35,781 8,611 27,170
Operating expenses:
Research and development 3,067 -- 3,067 8,307 146 8,161
Selling, marketing and support 3,933 1,518 2,415 12,387 4,158 8,229
General and administrative 2,040 451 1,590 6,348 1,520 4,829
Restructuring charges -- -- -- 9,095 -- 9,095
--------- --------- --------- --------- --------- ---------
Total operating expenses 9,040 1,969 7,072 36,137 5,824 30,314
--------- --------- --------- --------- --------- ---------
Operating income (loss) 3,319 620 2,698 (356) 2,787 (3,144)
Gain on sale of Publishing
Division -- -- -- 6,671 6,671 --
Other income (expense), net 44 (5) 49 25 1 24
--------- --------- --------- --------- --------- ---------
Income before income taxes 3,363 615 2,747 6,340 9,459 (3,120)
Provision for income taxes 1,164 -- 1,164 2,991 -- 2,991
--------- --------- --------- --------- --------- ---------
Income (loss) from
continuing operations $2,199 $615 $ 1,583 $ 3,349 $ 9,459 $ (6,111)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<FN>
(1) Includes actual results and pro forma adjustments
</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
(percentage of revenue)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------------- ---------------------------
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 5.8 40.8 11.2 7.2 44.0 10.9
------ ------ ------ ------ ------ ------
Gross margin 94.2 59.2 88.8 92.8 56.0 89.1
Operating expenses:
Research and development 32.4 14.7 27.9 33.4 13.0 26.8
Selling, marketing and support 27.5 18.8 21.9 29.1 19.4 27.0
General and administrative 16.4 9.8 14.5 13.6 9.9 15.8
Restructuring charges -- -- -- -- 14.3 29.8
------ ------ ------ ------ ------ ------
Total operating expenses 76.3 43.3 64.3 76.1 56.6 99.4
------ ------ ------ ------ ------ ------
Operating income (loss) 17.9 15.9 24.5 16.7 (0.6) (10.3)
Gain on Sale of Publishing Division -- -- -- -- 10.5 --
Other income, net 3.8 .2 0.5 4.1 -- .1
------ ------ ------ ------ ------ ------
Income (loss) before income taxes 21.7 16.1 25.0 20.8 9.9 (10.2)
Provision for income taxes 6.5 5.6 10.6 6.2 4.7 9.8
------ ------ ------ ------ ------ ------
Income (loss) from continuing operations 15.2 10.5 14.4 14.6 5.2 (20.0)
Loss from discontinued operations -- (3.9) -- -- (2.8) (5.9)
------ ------ ------ ------ ------ ------
Net Income (loss) 15.2% 6.6% 14.4% 14.6% 2.4% (25.9)%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>
page 9 of 19 pages
<PAGE>
REVENUE
The Company's revenue for the three- and nine-month periods ended June 30,
1995 decreased by 36% and 43%, respectively, to $13,320,000 from $20,872,000 for
the three-month period and to $36,643,000 from $63,842,000 for the nine-month
period. These decreases are due to the inclusion of revenue from the Publishing
Division for the prior year periods. On a pro forma basis, revenues increased
21.0% and 20.1% over the prior year's three- and nine-month periods,
respectively. The fiscal 1995 increase in revenue was primarily the result of
29.7% (or $2,807,000), and 27.7% (or $7,215,000), increases in revenues
generated by the core PC system-level software business as compared to the prior
year's three- and nine-month periods. The OEM Consumer Software Division (OCSD)
revenues increased 114.8% over a small base of revenue for the same nine month
period in the prior year. Retail software products revenue, which results from
a channel acquired with the purchase of Eclipse technology in 1993, continues to
wind down as the Company focuses all its efforts in the OEM channel. Retail
revenue for the quarter was less than $20,000.
GROSS MARGIN
Gross margin increased by $190,000, or 2%, for the quarter ended June 30,
1995 over the corresponding quarter in 1994, and decreased by $1,769,000, or 5%,
for the nine-month period ended June 30, 1995, as compared with the same period
of fiscal 1994.
Excluding the Publishing Division, gross margin amounts for the periods
ended June 30, 1995 increased by 28.4% and 25.2%, 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 due to the elimination of commissions paid
to certain United Kingdom companies, which were acquired by the Company in June
1994. The increases were 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 88.8% to 94.2%, and from 89.1% to 92.8%
of revenue, respectively, for the three and nine-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 32.4% and 33.4% of revenue for the three- and
nine-month periods ended June 30, 1995, compared to 14.7% and 13.0% for the
fiscal 1994 periods. The amount of research and development expenses increased
to $4,316,000 for the quarter ended June 30, 1995 from $3,067,000 for the same
quarter in the prior year. For the nine month period, research and development
expense increased to $12,248,000 from $8,307,000. The increased research and
development is primarily due to increased staffing and related expenses, and the
additional expense of the European operations acquired in June 1994.
The Company capitalized approximately $482,000 and $1,053,000 of internally
developed software costs for the three- and nine-month periods ended June 30,
1995, respectively, versus $647,000 and $1,947,000 for the same periods in 1994.
Page 10 of 19 pages
<PAGE>
SELLING, MARKETING AND SUPPORT EXPENSES
Costs related to selling, marketing and support decreased to $3,665,000 and
$10,647,000 for the three months and nine months ended June 30, 1995 from
$3,933,000 and $12,387,000 for the comparable periods in the prior year. The
decreases are due to the exclusion of the Publising Division in Fiscal 1995.
On a pro forma basis, fiscal 1995 selling, marketing and support costs increased
51.8% and 29.4%, or $1,250,000 and $2,418,000, respectively, over the prior year
periods. The increases are attributable to additional commissions paid on
increased revenue and to the cost of expanding into the European market and were
partially offset by a reduction in advertising costs for retail software
products.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses of $2,178,000 for the third quarter of
fiscal 1995 increased by 6.8% from $2,040,000 for the third quarter of fiscal
1994. For the nine-month period ended June 30, 1995, general and administrative
expenses decreased 21.2% to $5,001,000 from $6,348,000 in the prior year. These
lower expenses resulted from decreased facilities and communications costs, net
of reserves, after of the relocation of the Company's headquarters from
Massachusetts to California.
INCOME TAXES
The Company recorded income tax provisions of $870,000 and $2,283,000 for
the quarter and nine months ended June 30, 1995, respectively, as compared to
$1,164,000 and $2,991,000 for the same periods in the prior year. The fiscal
1995 and 1994 provisions reflect effective rates of 30% and 47%, 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.
Due to the uncertainty of realizing the tax benefit from its deferred tax
assets in future tax returns, the current provision for income taxes reflects
only the benefit which the Company anticipates realizing in the current fiscal
year. The uncertainty is based on the fluctuations in the Company's historical
earnings, the significance of the changes associated with the restructuring in
1994, and the annual expiration of portions of the tax benefits beginning this
fiscal year. The Company reviews its valuation allowance on deferred tax assets
each quarter.
Page 11 of 19 pages
<PAGE>
FINANCIAL CONDITION
CHANGES IN FINANCIAL CONDITION
Current assets decreased $4,873,000 during the nine months ended June 30,
1995. The decrease is primarily attributable to a reduction of inventory of
$591,000 and to several large cash payments made by the Company during the nine
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
$2,222,000 of 294,300 shares of Company common stock. Current assets increased
during the third quarter due primarily to the increase in cash and short term
investments
Current liabilities decreased by $9,619,000 during the nine months ended
June 30, 1995 to $14,069,000 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 nine months ended June 30, 1995, the Company's cash and short-
term investments decreased by $3,322,000 to $30,567,000. 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 June 30, 1995, the
Company had repurchased 294,300 shares pursuant to this program and retired
324,313 treasury shares. As a result of these transactions, the Company holds
no treasury stock as of June 30, 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. The Company and the bank are negotiating an amendment to the
agreement to make it an unsecured line. As of June 30, 1995, the Company had
approximately $1.42 million outstanding against this credit line. The amount
outstanding against the credit line is a 5.1% interest loan in Japanese Yen. The
loan balance increased due to changes in the exchange rate.
Page 12 of 19 pages
<PAGE>
PART II. OTHER INFORMATION
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
June 30, 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: August 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 January 6, 1995 between the Company
and Ronald D. Fisher.
10.8 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.
Page 15 of 19 pages
<PAGE>
10.9 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.
10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 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.
10.17 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.
10.18 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.
10.19 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
Page 16 of 19 pages
<PAGE>
Company's Current Report on Form 8-K dated September 30, 1994
and incorporated herein by this reference.
10.20 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.
10.21 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.
10.22 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 Nine Months Ended
------------------ -----------------
June 30, June 30,
------- -------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income from continuing operations $2,030,000 $2,199,000 $5,342,000 $3,349,000
Loss from discontinued operations -- ( 816,000) -- ( 1,792,000)
------------- ------------- ------------- -------------
Net income $2,030,000 $1,383,000 $5,342,000 $1,557,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common
shares outstanding 13,647,000 13,287,000 13,527,000 13,160,000
Weighted average number of common
equivalent shares 1,456,000 882,000 1,398,000 823,000
------------- ------------- ------------- -------------
Weighted average number of common and
common equivalent shares outstanding 15,103,000 14,169,000 14,925,000 13,983,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Primary earnings per share:
Continuing operations $ 0.13 $ 0.16 $ 0.36 $ 0.24
Discontinued operations $ 0.00 (0.06) $ 0.00 (0.13)
------------- ------------- ------------- -------------
Net income $ 0.13 $ 0.10 $ 0.36 $ 0.11
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</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 Nine Months Ended
------------------ -----------------
June 30, June 30,
------- -------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income from continuing operations $2,030,000 $2,199,000 $5,342,000 $3,349,000
Loss from discontinued operations -- 816,000 -- 1,792,000
------------- ------------- ------------- -------------
Net income $2,030,000 $1,383,000 $5,342,000 $1,557,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common
shares outstanding 13,647,000 13,287,000 13,527,000 13,160,000
Weighted average number of common
equivalent shares 1,672,000 882,000 1,529,000 835,000
------------- ------------- ------------- -------------
Weighted average number of common and
common equivalent shares outstanding 15,319,000 14,169,000 15,056,000 13,995,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Primary earnings per share:
Continuing operations $ 0.13 $ .16 $ 0.35 $ 0.24
Discontinued operations $ 0.00 (0.06) $ 0.00 (0.13)
------------- ------------- ------------- -------------
Net income $ 0.13 $ 0.10 $ 0.35 $ 0.11
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
Page 19 of 19 pages
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 28,277
<SECURITIES> 2,290
<RECEIVABLES> 14,465
<ALLOWANCES> 645
<INVENTORY> 258
<CURRENT-ASSETS> 47,401
<PP&E> 12,618
<DEPRECIATION> 10,172
<TOTAL-ASSETS> 59,129
<CURRENT-LIABILITIES> 14,069
<BONDS> 0
<COMMON> 14
0
0
<OTHER-SE> 51,339
<TOTAL-LIABILITY-AND-EQUITY> 59,129
<SALES> 36,643
<TOTAL-REVENUES> 36,643
<CGS> 2,631
<TOTAL-COSTS> 10,159
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> 7,625
<INCOME-TAX> 2,283
<INCOME-CONTINUING> 5,342
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,342
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
</TABLE>
