<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
or
[ ] TRANSITION REPORT PURSUANT TO 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 (I.R.S. 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 15,037,063
- ---------------------------------- -------------------------------
Class Number of shares Outstanding at
March 31, 1996
Exhibit Index is on Page 13
Page 1
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PHOENIX TECHNOLOGIES LTD.
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1996 and September 30, 1995. . . . . . . . . . . . .3
Condensed Consolidated Income Statements
Three and Six Months Ended March 31, 1996 and 1995 . . . . . .4
Condensed Consolidated Statements of Cash Flows
Six Months Ended March 31, 1996 and 1995 . . . . . . . . . . .5
Notes to Condensed Consolidated Financial Statements . . . . .6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . .8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . 10
Item 6. Exhibits and Report on Form 8-K. . . . . . . . . . . . . . . 11
A. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 11
B. Report on Form 8-K . . . . . . . . . . . . . . . . . . . 11
Page 2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PHOENIX TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
March 31, September 30,
1996 1995
----------- -------------
ASSETS (unaudited)
Current assets:
Cash and short-term investments $ 43,849 $ 32,944
Accounts receivable, net of allowances of $487
at March 31, 1996 and $430 at September 30,
1995 15,266 12,064
Other current assets 3,614 3,690
--------- ---------
Total current assets 62,729 48,698
Property and equipment, net 3,505 2,625
Computer software costs, net 4,041 3,823
Non-current deferred tax asset 2,195 2,195
Other assets 4,242 5,049
--------- ---------
Total assets $ 76,712 $ 62,390
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,068 $ 1,645
Payroll related liabilities 2,276 2,536
Other accrued liabilities 4,422 4,956
Income taxes payable 3,644 2,765
--------- ---------
Total current liabilities 11,410 11,902
Other liabilities 117 70
Stockholders' equity:
Preferred stock, $0.10 par value, 500,000 shares
authorized, none issued --- ---
Common stock, $0.001 par value, 20,000,000 shares
authorized, 15,037,063 issued at March 31, 1996
and 13,927,801 at September 30, 1995 15 14
Additional paid-in capital 65,440 53,710
Accumulated deficit (135) (3,232)
Accumulated translation adjustment (135) (74)
--------- ---------
Total stockholders' equity 65,185 50,418
--------- ---------
Total liabilities and stockholders' equity $ 76,712 $ 62,390
--------- ---------
--------- ---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 3
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PHOENIX TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------ ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
License fees $ 14,289 $ 10,456 $ 26,527 $ 20,231
Services 2,615 1,748 4,622 3,092
--------- --------- --------- ---------
Total revenue 16,904 12,204 31,149 23,323
Cost of revenues:
License fees 1,911 993 3,245 1,758
Services 2,013 1,367 3,618 2,681
--------- --------- --------- ---------
Total cost of revenue 3,924 2,360 6,863 4,439
--------- --------- --------- ---------
Gross margin 12,980 9,844 24,286 18,884
Operating expenses:
Research and development 4,091 2,811 7,164 5,359
Sales and marketing 3,410 3,549 6,696 6,980
General and administrative 2,351 1,492 4,834 2,823
--------- --------- --------- ---------
Total operating expenses 9,852 7,852 18,694 15,162
--------- --------- --------- ---------
Income from operations 3,128 1,992 5,592 3,722
Interest income, net 540 434 986 746
Other income (expense), net (174) 52 (217) 252
--------- --------- --------- ---------
Income before income taxes 3,494 2,478 6,391 4,720
Provision for income taxes 1,050 740 1,850 1,413
--------- --------- --------- ---------
Net income $ 2,444 $ 1,738 $ 4,511 $ 3,307
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per common share $ 0.15 $ 0.12 $ 0.29 $ 0.22
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computation 15,896 14,898 15,602 14,807
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 4
<PAGE>
PHOENIX TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31
-----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,511 $ 3,307
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,451 1,329
Equity interest in subsidiary 170 (195)
Change in operating assets and liabilities:
Accounts receivable (3,202) (1,150)
Other current assets and other assets 101 3,035
Accounts payable (577) (4,794)
Accrued payroll (260) 32
Other accrued liabilities (547) (2,703)
Income taxes payable 879 (1,348)
-------- --------
Total adjustments (985) (5,794)
-------- --------
Net cash provided by (used in) operating activities 3,526 (2,487)
Cash flows from investing activities:
Maturities of short-term investments 11,233 18,800
Purchases of short-term investments (14,830) (17,444)
Purchases of property and equipment (1,720) (919)
Additions to computer software costs (1,217) (571)
-------- --------
Net cash used in investing activities (6,534) (134)
Cash flows from financing activities:
Proceeds from issuance of common stock 10,068 --
Proceeds from issuance of warrant 354 --
Proceeds from exercise of common stock options and
issuance of stock under employee stock purchase plan 1,898 1,162
Purchase of treasury stock (2,004) (1,711)
Repayment of loans and notes payable -- (22)
-------- --------
Net cash provided by (used in) financing activities 10,316 (571)
-------- --------
Decrease in cash and cash equivalents 7,308 (3,192)
Cash and cash equivalents at beginning of period 25,797 29,519
-------- --------
Cash and cash equivalents at end of period $ 33,105 $ 26,327
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATMENTS.
Page 5
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PHOENIX TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Phoenix Technologies Ltd. (the "Company") designs and develops
system-level and application software products and markets them to PC and
motherboard manufacturers and integrators world-wide.
The accompanying condensed consolidated financial statements of Phoenix
Technologies Ltd. and its wholly owned subsidiaries have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The information included in this report should be read in
conjunction with the Company's audited financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1995.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting only of
normal recurring adjustments) necessary to summarize fairly the Company's
financial position at March 31, 1996, and September 30, 1995, and the results of
operations and cash flows for the three and six month periods ended March 31,
1996 and 1995. All significant intercompany accounts and transactions have been
eliminated. The operating results for the three and six month periods ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1996 or for any other future period.
Certain amounts in the fiscal 1995 financial statements have been
reclassified to conform to the fiscal 1996 presentation. These
reclassifications had no effect on net income or earnings per share for 1995.
2. Cash and Short-term Investments
Cash and short-term investments consist of the following (in thousands):
March 31, September 30,
1996 1995
------------ -------------
Cash and cash equivalents $ 33,105 $ 25,797
Short-term investments 10,744 7,147
----------- -----------
$ 43,849 $ 32,944
----------- -----------
----------- -----------
Investments in certain highly liquid securities with maturities of less
than ninety days are considered cash equivalents. Investment securities consist
of U.S government and agency obligations, bankers' acceptances, and commercial
paper with original maturities generally ranging from three months to one year.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," on December 31, 1994. The adoption of Statement No. 115 had no
effect on the Company's financial position and results of operations. The
Company classifies its investment securities as held-to-maturity because, as
Page 6
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provided in Statement No. 115, it has the ability and intent to hold them until
maturity. Such securities are reported at amortized cost.
3. Net Income Per Share
Net income per share is computed using the weighted average number of
common and dilutive common stock equivalents outstanding. Dilutive common
stock equivalents include outstanding stock options and warrants using the
treasury stock method.
4. Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and trade receivables. The Company places its temporary cash investments with
high credit qualified financial institutions. The Company does not require
collateral for trade receivables, but related credit risk is limited due to the
Company's large number of customers and their geographic dispersion. As of
March 31, 1996 and September 30, 1995, no customer accounted for 10% or more of
accounts receivable.
5. Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under the asset and
liability method of Statement No. 109, deferred tax assets and liabilities are
recognized for future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities, and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under Statement No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period of enactment.
6. Stock Options
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" was issued in October 1995 and applies to fiscal years
beginning after December 15, 1995. While the Company is studying the impact of
the pronouncement, it continues to account for employee stock options under APB
Opinion No. 25, "Accounting for Stock Issued to Employees."
Page 7
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
REVENUE Revenue for the three and six month periods ended March 31, 1996
increased by $4.7 million (38%) and $7.8 million (34%), respectively, from the
same periods a year ago. The increase resulted primarily from an increase in
royalty revenue from the Company's expanding customer base as well as repeat
sales to existing customers. Revenue increased in all geographic areas.
European revenues for the quarter exceeded $2 million for the first time,
growing to 12% for the current quarter from 6% in the same quarter in the prior
year.
GROSS MARGIN Gross margin as a percent of revenue for the three and six month
periods ended March 31, 1996 decreased to 77% and 78% of net revenues,
respectively, as compared to 81% for the comparable periods a year ago
primarily due to increases in royalty expense and amortization of capitalized
computer software costs. License fees gross margin for the three and six month
periods ended March 31, 1996 decreased to 87% and 88%, respectively, as compared
to 91% for the comparable periods a year ago whereas service gross margin
increased to 23% and 22% as compared to 22% and 13% for the same periods a year
ago.
RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses for the
three and six month periods ended March 31, 1996 increased by $1.3 million (46%)
and $1.8 million (34%), respectively, from the same periods a year ago. The
increase in research and development expenses is primarily due to an increase in
the Company's engineering staff to continue development of system-level
software.
The Company capitalized approximately $0.7 million and $1.2 million of
internally developed software costs for the three and six month periods ended
March 31, 1996, respectively, as compared to $0.3 million and $0.6 million for
the same periods a year ago. Such amounts were offset by amortization of
capitalized software costs of $0.9 million and $1.4 million for the three and
six month periods ended March 31, 1996, respectively, as compared to
$0.2 million and $0.4 million for the same periods a year ago. The Company
believes that continued investment in new and evolving technologies is essential
to meet rapidly changing industry requirements.
SALES AND MARKETING EXPENSES Sales and marketing expenses for the three and
six month periods ended March 31, 1996 decreased by $0.1 million (4%) and $0.3
million (4%), respectively, from the same periods a year ago. The decrease
resulted primarily from the discontinuance in fiscal 1996 of advertising
expenses related to products marketed through the retail channel. The Company
discontinued retail distribution in the second half of fiscal 1995. The
decrease in advertising expenses from the prior year was partially offset by
additional commissions paid in the first half of 1996 on increased revenue.
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for
the three and six month periods ended March 31, 1996 increased by $0.9 million
(58%) and $2 million (71%), respectively, from the same periods a year ago. The
increase resulted primarily from increased salary and related benefits
associated with headcount growth, increased recruiting and relocation costs
associated primarily with increased engineering headcount, and increased
facility and other expenses associated with the Company's move to California.
PROVISION FOR INCOME TAXES The Company recorded income tax provisions of $1
million and $1.9 million for the quarter and six months ended March 31, 1996,
respectively, as compared to $0.7 million and $1.4 million for the same periods
in the prior year. The fiscal 1996 provision reflects an estimated annualized
effective tax rate of 29%. The effective tax rate for fiscal year 1995 was
adjusted in the fourth quarter to 26% (before adjustment to the deferred tax
asset valuation allowance). The higher tax rate in fiscal 1996 reflects the
reduction of available deferred tax assets from the prior year.
Page 8
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LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, the Company's primary
sources of liquidity included cash, cash equivalents and short-term investments
of $43.8 million and available borrowings under a bank credit facility of $10
million. There were no borrowings outstanding under the bank credit facility at
March 31, 1996. The Company believes that its existing sources of liquidity
will be sufficient to satisfy the Company's cash requirements for at least the
next twelve months.
CHANGES IN FINANCIAL CONDITION Net cash generated from operating activities
during the six month period ending March 31, 1996 was $3.5 million, resulting
primarily from cash provided by net income, adjusted for non-cash increases in
depreciation and amortization, equity interest in subsidiary, an increase in
accrued income taxes, and a decrease in other assets. This increase was
partially offset by increases in accounts receivable and decreases in accounts
payable, accrued payroll and other accrued liabilities. Net cash used in
investing activities during the first half of 1996 was $6.5 million which
consisted primarily of purchases of short-term investments of $14.8 million,
purchases of property and equipment of $1.7 million, and additions to computer
software costs for use in the Company's operations and was partially offset by
maturities of short-term investments of $11.2 million. Cash generated from
financing activities in the first half of 1996 was $10.3 million resulting from
the issuance of common stock and warrants to Intel Corporation, for $10.4
million and the exercise of common stock options and issuance of stock under
the Company's employee stock purchase plan of $1.9 million, partially offset
by $2 million of purchases of treasury stock.
The Company announced a major technology and license agreement with Intel
Corporation during the first fiscal quarter of 1996. In the second quarter of
1996, Intel purchased 894,971 newly issued, unregistered shares of Phoenix's
common stock for $10.1 million, representing 6% of post-transaction shares and a
warrant to buy 1,073,965 additional shares of Phoenix common stock for $.3
million which vests with an escalating exercise price over four years.
Net accounts receivable increased $3.2 million from September 30, 1996 primarily
due to increased sales volume.
Page 9
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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 29, 1996, at
which the following occurred:
ELECTION OF DIRECTORS: The stockholders elected Charles Federman and Jack Kay
as Class III Directors, to serve until the 1999 Annual Meeting of Stockholders.
The other persons continuing as directors are Lawrence G. Finch, Ronald D.
Fisher, Lance E. Hansche and Anthony P. Morris.
AMENDED AND RESTATED 1991 EMPLOYEE STOCK PURCHASE PLAN: The stockholders
approved the amended and restated 1991 Employee Stock Purchase Plan, which
included the reserving of an additional 150,000 previously unreserved shares of
the Company's common stock for issuance pursuant to awards granted under the
plan. The vote on the matter was as follows:
FOR 12,515,788
AGAINST 244,121
ABSTAIN 134,700
BROKER NON-VOTES 50,000
AMENDMENT TO 1994 EQUITY INCENTIVE PLAN: The stockholders approved an amendment
to the 1994 Equity Incentive Plan to increase by 500,000 the number of shares of
the Company's common stock reserved for issuance pursuant to awards granted
under the plan. The vote on the matter was as follows:
FOR 11,820,346
AGAINST 954,026
ABSTAIN 120,237
BROKER NON-VOTES 50,000
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION: The stockholders authorized
an amendment to the Company's Restated Certificate of Incorporation to increase
from 20,000,000 to 40,000,000 the number of shares of common stock authorized
for issuance. The vote on the matter was as follows:
FOR 12,498,331
AGAINST 347,417
ABSTAIN 48,861
BROKER NON-VOTES 50,000
APPOINTMENT OF INDEPENDENT AUDITORS: The stockholders ratified the appointment
of Ernst & Young, LLP as the Company's independent public accountants for the
year ending September 30, 1996. The vote on the matter was as follows:
FOR 12,878,320
AGAINST 33,025
ABSTAIN 33,264
Page 10
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Item 6. Exhibits and Report on Form 8-K.
(a) EXHIBITS. See exhibit index beginning on page 13 hereof.
(b) REPORT ON FORM 8-K
Report on Form 8-K filed on January 2, 1996, reporting under Item
4, Change in Registrant's Certifying Accountant
Page 11
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHOENIX TECHNOLOGIES LTD.
Date: May 15, 1996 By: /s/Robert J. Riopel
------------- -------------------
Robert J. Riopel
Vice President, Finance and
Chief Financial Officer
Page 12
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EXHIBIT INDEX
Exhibit
- -------
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 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.
10.5 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.
10.6 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.
10.7 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.
10.8 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.
10.9 Amendment No. 1 to Purchase Agreement by and between Phoenix
Technologies Ltd. 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.
10.10 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.
10.11 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 Report on Form 10-K for the fiscal
Page 13
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year ended September 30, 1994 - filed as Exhibit 10.16 to the
Company's Report on Form 10-K for the fiscal year ended September 30,
1995 (the "1995 10-K") and incorporated herein by this reference.
10.12 1994 Equity Incentive Plan, as amended by the Board of Directors
through September 28, 1995 and as approved by stockholders on February
29, 1996 - filed as Exhibit 10.17 to the 1995 10-K and incorporated
herein by this reference.
10.13 1991 Employee Stock Purchase Plan, as amended by the Board of
Directors through December 6, 1995 and as approved by stockholders on
February 29, 1996 - filed as Exhibit 4.10 to the Company's
registration statement on Form S-8 filed with the Commission on May 2,
1996 and incorporated herein by this reference.
10.14 Employment offer letter between the Company and Gayn B. Winters -
filed as Exhibit 10.19 to the 1995 10-K and incorporated herein by
this reference.
10.15 Amended and Restated Lease Agreement dated March 15, 1995 between The
Prudential Insurance Company of America and the Company with respect
to certain facilities located at 846 University Avenue, Norwood, MA -
filed as Exhibit 10.23 to the 1995 10-K and incorporated herein by
this reference.
10.16 Agreement dated December 18, 1995 between Intel Corporation and the
Company filed as Exhibit 10.24 to the Company's Form 10-Q for the
quarter ended December 31, 1995 (the "December 1995 10-Q") and
incorporated herein by this reference. Portions have been omitted and
filed separately with the Commission pursuant to a request for
confidential treatment.
10.17 Common Stock and Warrant Purchase Agreement dated as of December 18,
1995 by and between the Company and Intel Corporation, filed as
Exhibit 10.25 to the December 1995 10-Q.
10.18 Warrant to Purchase Shares of Common Stock of the Company dated
February 15, 1996, filed as Exhibit 2 to the Schedule 13D of Intel
Corporation dated February 23, 1996 with respect to its purchase by
Intel of shares of the Company's common stock and of a warrant to
purchase shares of the Company's common stock (the "Intel Schedule
13D") and incorporated herein by this reference.
10.19 Investor Rights Agreement, dated December 18, 1995, between the
Company and Intel Corporation, filed as Exhibit 3 to the Intel
Schedule 13D and incorporated herein by this reference.
11.1 Statement re computation of earnings per share (primary earnings per
share).
27 Financial Data Schedule
Page 14
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EXHIBIT 11.1
PHOENIX TECHNOLOGIES LTD.
COMPUTATION OF EARNINGS PER SHARE
PRIMARY EARNINGS PER SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
---------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 2,444 $ 1,738 $ 4,511 $ 3,307
------- ------- ------- --------
------- ------- ------- --------
Weighted average number of common
shares outstanding 14,538 13,496 14,253 13,436
Dilutive effect of common stock 1,358 1,402 1,349 1,371
equivalents ------- ------- ------- --------
Shares used in computation 15,896 14,898 15,602 14,807
------- ------- ------- --------
------- ------- ------- --------
Net income per share $ 0.15 $ 0.12 $ 0.29 $ 0.22
------- ------- ------- --------
------- ------- ------- --------
</TABLE>
Page 15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 33,105
<SECURITIES> 10,744
<RECEIVABLES> 15,753
<ALLOWANCES> 487
<INVENTORY> 0
<CURRENT-ASSETS> 62,729
<PP&E> 13,650
<DEPRECIATION> 10,145
<TOTAL-ASSETS> 76,712
<CURRENT-LIABILITIES> 11,410
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 65,170
<TOTAL-LIABILITY-AND-EQUITY> 76,712
<SALES> 26,527
<TOTAL-REVENUES> 31,149
<CGS> 3,245
<TOTAL-COSTS> 6,863
<OTHER-EXPENSES> 18,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 6,391
<INCOME-TAX> 1,850
<INCOME-CONTINUING> 4,511
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,511
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
