<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, 1997
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)
411 EAST PLUMERIA DRIVE, SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices, including zip code)
(408) 570-1000
(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 16,992,792
Class Number of shares Outstanding at
April 30, 1997
Exhibit Index is on Page 12
Page 1
<PAGE>
PHOENIX TECHNOLOGIES LTD.
FORM 10-Q
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1997 and September 30, 1996 .................... 3
Condensed Consolidated Income Statements
Three and Six Months Ended March 31, 1997 and 1996 ....... 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended March 31, 1997 and 1996 ................. 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 6. Exhibits and Report on Form 8-K ..................... 10
a. Exhibits .................................... 10
b. Report on form 8-K .......................... 10
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PHOENIX TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
MARCH 31, SEPTEMBER 30,
1997 1996
----------- -------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 27,390 $ 25,752
Short-term investments 28,453 31,287
Accounts receivable, net of allowances
of $524 at March 31, 1997 and $467 at
September 30, 1996 17,749 16,225
Other current assets 5,554 5,528
--------- ---------
Total current assets 79,146 78,792
Other marketable securities 16,730 21,831
Property and equipment, net 8,179 5,099
Computer software costs, net 4,578 3,694
Other assets 4,019 4,133
--------- ---------
Total assets $ 112,652 $ 113,549
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,015 $ 2,589
Payroll related liabilities 3,255 3,279
Other accrued liabilities 2,436 4,098
Income taxes payable 2,976 3,955
Discontinued operations 236 1,335
--------- ---------
Total current liabilities 11,918 15,256
Long-term obligations 6,737 8,716
Contingencies -- --
Stockholders' equity:
Preferred stock, $.10 par value, 500 shares
authorized, none issued -- --
Common stock, $.001 par value, 40,000 shares
authorized, 17,069 and 16,636 shares issued
and outstanding at March 31, 1997 and
September 30, 1996 17 17
Additional paid-in capital 70,767 68,509
Retained earnings 13,492 8,113
Unrealized gain on available-for-sale
securities 10,038 13,098
Accumulated translation adjustment (317) (160)
--------- ---------
Total stockholders' equity 93,997 89,577
--------- ---------
Total liabilities and stockholders'
equity $ 112,652 $ 113,549
--------- ---------
--------- ---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
<PAGE>
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,
---------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
License fees $ 16,095 $ 15,201 $ 33,862 $ 27,962
Services 2,905 2,734 5,714 4,780
-------- -------- -------- --------
Total revenue 19,000 17,935 39,576 32,742
Cost of revenue:
License fees 1,124 2,038 2,083 3,478
Services 2,220 2,048 4,350 3,653
-------- -------- -------- --------
Total cost of revenue 3,344 4,086 6,433 7,131
-------- -------- -------- --------
Gross margin 15,656 13,849 33,143 25,611
Operating expenses:
Research and development 6,818 4,611 13,093 7,936
Sales and marketing 3,989 3,654 8,527 7,097
General and administrative 2,584 2,255 5,845 4,746
-------- -------- -------- --------
Total operating expenses 13,391 10,520 27,465 19,779
-------- -------- -------- --------
Income from operations 2,265 3,329 5,678 5,832
Interest income, net 894 540 1,584 986
Other income (expense), net 19 (196) 647 (253)
-------- -------- -------- --------
Income before income taxes 3,178 3,673 7,909 6,565
Provision for income taxes 1,016 1,154 2,530 1,954
-------- -------- -------- --------
Net income $ 2,162 $ 2,519 $ 5,379 $ 4,611
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share $ 0.12 $ 0.15 $ 0.29 $ 0.28
-------- -------- -------- --------
-------- -------- -------- --------
Shares used in computation 18,354 17,042 18,318 16,748
-------- -------- -------- --------
-------- -------- -------- --------
</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)
SIX MONTHS ENDED
MARCH 31,
-----------------------
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 5,379 $ 4,611
Reconciliation to net cash provided by
operating activities:
Depreciation and amortization 2,672 2,476
Loss on disposal of property and equipment 145 --
Realized gain on sale of marketable securities (799) --
Equity interest in subsidiary -- 170
Changes in operating assets and liabilities:
Accounts receivable (1,654) (3,528)
Other assets (41) 40
Accounts payable 424 (501)
Payroll related liabilities 19 (141)
Other accrued liabilities (1,061) 73
Income taxes payable (901) 968
Discontinued operations (1,099) (264)
-------- --------
Total adjustments (2,295) (707)
-------- --------
Net cash provided by operating activities 3,084 3,904
Cash flows from investing activities:
Proceeds from sale of short-term investments 32,808 11,233
Purchases of short-term investments (29,974) (14,830)
Proceeds from sale of marketable securities 837 --
Purchases of property and equipment (4,353) (1,933)
Additions to computer software costs (2,532) (1,761)
Other investing activities (376) --
-------- --------
Net cash used in investing activities (3,590) (7,291)
Cash flows from financing activities:
Proceeds from stock purchases under stock
option and stock purchase plans 2,230 1,917
Proceeds from issuance of convertible debt
securities -- 706
Proceeds from issuance of common stock and
warrant -- 10,443
Purchase of treasury stock -- (2,004)
-------- --------
Net cash provided by financing activities 2,230 11,062
-------- --------
Effect of exchange rate changes on cash and cash
equivalents (86) --
-------- --------
Net increase in cash and cash equivalents 1,638 7,675
Cash and cash equivalents at beginning of period 25,752 25,824
-------- --------
Cash and cash equivalents at end of period $ 27,390 $ 33,499
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid during the period, net of refunds $ 3,626 $ 1,345
-------- --------
-------- --------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 5
<PAGE>
PHOENIX TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Phoenix Technologies Ltd. (the "Company"), designs, develops, markets
and supports standards-based system software, application software and
synthesizable cores for personal computers and other microprocessor-based
products.
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 consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1996.
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, 1997 and September 30, 1996, and the results
of operations and cash flows for the three and six month periods ended March
31, 1997 and 1996. All significant intercompany accounts and transactions
have been eliminated. The operating results for the three and six month
periods ended March 31, 1997 are not necessarily indicative of the results
that may be expected for the year ending September 30, 1997 or for any other
future period.
Certain amounts in the fiscal 1996 financial statements have been
reclassified to conform to the fiscal 1997 presentation.
2. Acquisitions and Mergers
In August 1996, the Company acquired Virtual Chips, Inc. in exchange for
1,241,842 shares of newly issued common stock. The transaction was accounted
for as a pooling of interests and financial information for the quarters and
six month period ended March 31, 1996 have been restated to include the
results of operations of Virtual Chips. Virtual Chips is a leading
supplier of synthesizable cores for the computer industry. Synthesizable
cores are pre-packaged circuit descriptions used as building blocks for
system-level application specific integrated circuits (ASICs). ASICs are
used in computers and peripheral devices to connect them using PCI, USB, and
other emerging industry standard protocols.
3. Cash and Short-term Investments
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 classifies its investment securities as
held-to-maturity because it has the ability and intent to hold them until
maturity. Such securities are reported at amortized cost.
Page 6
<PAGE>
4. Other Marketable Securities
Other marketable securities consist of the shares of Xionics Document
Technologies, Inc. ("Xionics") (NASDAQ: XION) owned by the Company and
classified as available-for-sale. The shares of Xionics common stock are
recorded at fair value based on quoted market prices. The unrealized gain on
this investment, less related deferred income taxes has been recorded as a
separate component of stockholders' equity. The recorded value of the
investment, unrealized gain and deferred income taxes are adjusted to the
current fair market value at each reporting date.
5. Net Income Per Share
Net income per share is computed using the weighted average number of
common shares and dilutive common stock equivalents outstanding. Dilutive
common stock equivalents include outstanding stock options and warrants,
which are included in the computation using the treasury stock method.
Shares used in the computation of net income per share have been
restated for the quarters and six month period ended March 31, 1996 presented
to give effect to the shares issued and options assumed by the Company for
the acquisition of Virtual Chips.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted by
the Company by September 30, 1998. At that time, the Company will be
required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
basic earnings per share, the dilutive effect of stock options will be
excluded. The impact is expected to result in an increase in primary
earnings per share for the three and six months ended March 31, 1997 of $0.01
and $0.03, respectively, while the impact for the three and six months ended
March 31, 1996 is expected to be an increase of $0.01 and $0.02 per share,
respectively. The Company has not yet determined what the impact of
Statement 128 will be on the calculation of fully diluted earnings per share.
Page 7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Phoenix Technologies Ltd. (the "Company"), designs, develops, markets and
supports standards-based system software, application software and
synthesizable cores for personal computers and other microprocessor-based
products.
In August 1996, the Company acquired Virtual Chips, Inc. in exchange for
1,241,842 shares of newly issued common stock. The transaction was accounted
for as a pooling of interests and financial information for the quarters and
six month period ending March 31, 1996 have been restated to include the
results of operations of Virtual Chips. Virtual Chips is a leading supplier
of synthesizable cores for the computer industry. Synthesizable cores are
pre-packaged circuit descriptions used as building blocks for system-level
application specific integrated circuits (ASICs). ASICs are used in
computers and peripheral devices to connect them using PCI, USB, and other
emerging industry standard protocols.
REVENUE Revenue for the three and six month periods ended March 31, 1997
increased by $1.1 million (6%) and $6.8 million (21%), respectively, from the
same periods in fiscal 1996. The increase resulted primarily from an
increase in royalty revenue from the Company's expanding customer base,
additional sales to existing customers, as well as increased revenue
associated with the growth of the special products business. Revenue in
fiscal 1997 increased over fiscal 1996 in all regions except North America.
For the three month period ended March 31, 1997 one customer accounted for
approximately 13% of revenue and another customer accounted for approximately
12% of revenue. However, no customer accounted for 10% or more of revenue
for the same period in fiscal 1996.
GROSS MARGIN Gross margin as a percent of revenue for the three and six
month periods ended March 31, 1997 increased to 82% and 84% of net revenue,
respectively, as compared to 77% and 78% for the comparable periods in
fiscal 1996. License fee gross margin for the three and six month periods
ended March 31, 1997 increased to 93% and 94% of net revenue, as compared
to 87% and 88% of net revenue for the comparable periods in fiscal 1996,
primarily due to lower third-party royalties as a result of a phaseout of a
consumer application product.
RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses for the
three and six month periods ended March 31, 1997 increased $2.2 million (48%)
and $5.2 million (65%), respectively, from the comparable periods in fiscal
1996. 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 and the creation of a new product line to develop and
market software to connect computers and peripheral devices. For the past
year, the Company's investment in research and development has trended higher
to implement the Intel alliance and to expand the Company's products beyond
the PC motherboard.
The Company capitalized $1.1 million and $2.0 million of internally developed
software costs for the three and six month periods ended March 31, 1997,
respectively, as compared to $0.7 million and $1.2 million for the same
periods in fiscal 1996. Such amounts were offset by amortization of
capitalized software costs of $1.1 million and $1.7 million for the three
and six month periods ended March 31, 1997, respectively, as compared to $0.9
million and $1.4 million for the comparable periods in fiscal 1996. 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, 1997 increased $0.3 million (9%) and $1.4
million (20%), respectively, from the comparable periods in fiscal 1996. The
increase resulted primarily from the expenses associated with increased
headcount associated with higher revenues.
Page 8
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for
the three and six month periods ended March 31, 1997 increased $0.3 million
(15%) and $1.1 million (23%), respectively, from the comparable periods in
fiscal 1996. The increase is primarily due to costs associated with
increased headcount in line with the overall growth of the Company, as well
as non-recurring charges related to the consolidation of the San Jose
corporate headquarters and Irvine facilities.
INTEREST INCOME, NET Net interest income for the three and six month periods
ended March 31, 1997 increased $0.4 (66%) and $0.6 (61%), respectively, from
the comparable periods in fiscal 1996. The increase is primarily due to the
increase in cash available for investment during the respective periods.
OTHER INCOME (EXPENSE), NET Other income, net for the three and six month
periods ended March 31, 1997 was $0.02 million and $0.6 million,
respectively, compared to $0.2 million and $0.3 million of other expense for
the comparable periods in fiscal 1996. Income for the six month period ended
March 31, 1997 was primarily due to a gain on the sale of a portion of
Xionics common stock, offset by a loss on the disposal of property and
equipment. The net expense in fiscal 1996 was comprised of the write-down of
an equity investment.
PROVISION FOR INCOME TAXES The Company recorded income tax provisions of $1.0
million and $2.5 million for the three and six month periods ended March 31,
1997, respectively, as compared to $1.2 million and $2.0 million for the
comparable periods in fiscal 1996. The fiscal 1997 provision reflect an
estimated annualized effective tax rate of 32% compared to an overall
effective tax rate of 30% in fiscal 1996. The higher tax rate in fiscal 1997
is due to the increase in nondeductible expenses and a shift of the Company's
net income to jurisdictions with higher tax rates. The Company's effective
tax rate is lower than the federal statutory rate primarily due to various
tax credits.
LIQUIDITY AND CAPITAL RESOURCES At March 31, 1997, the Company's primary
sources of liquidity included cash, cash equivalents and short-term
investments of $56 million and available borrowings of $10 million under a
revolving credit facility with a commercial bank which expires on February
27, 1998. There were no borrowings outstanding under the bank credit
facility at March 31, 1997. 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 ended March 31, 1997 was $3.1 million, resulting
primarily from cash provided by net income, adjusted for non-cash items. Net
cash used in investing activities during the six month period ended March 31,
1997 was $3.6 million which consisted primarily of purchases of property and
equipment of $4.4 million; additions to computer software costs, including
purchased software costs, of $2.5 million; and $0.5 for the acquisition of
Nihon Joho Kenkyujo K.K.; offset by net proceeds from the sale of short-term
investments of $2.8 million; proceeds from the sale of marketable securities
of $0.8 million; and other investing activities of $0.2 million. Cash
generated from financing activities during the six month period ended March
31, 1997 was $2.2 million, resulting from the exercise of common stock
options and issuance of stock under the Company's employee stock purchase
plan.
Page 9
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K.
(a) EXHIBITS. See exhibit index beginning on page 12 hereof.
(b) REPORT ON FORM 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1997.
Page 10
<PAGE>
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 12, 1997 By: /s/ Robert J. Riopel
------------------------------
Robert J. Riopel
Vice President, Finance and
Chief Financial Officer
Page 11
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-1, Registration No. 33-21793 (the
"Form S-1"))
3.2 By-laws of the Registrant as amended through February 6, 1995
(incorporated herein by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-8, Registration No. 333-03065 (the
"1996 ESPP S-8"))
3.3 Certificate of Correction to the Registrant's Restated Certificate
of Incorporation (incorporated herein by reference to Exhibit 3.3
to Amendment No. 2 to the Form S-1 ("Amendment No. 2"))
3.4 Certificate of Amendment to the Registrant's Restated Certificate of
Incorporation (incorporated herein by reference to Exhibit 3.4 to
Amendment No. 2)
3.5 Certificate of Correction to the Registrant's Restated Certificate
of Incorporation (incorporated herein by reference to Exhibit 3.5
to the Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1988 (the "1988 Form 10-K"))
3.6 Certificate of Ownership (incorporated herein by reference to
Exhibit 3.6 to the 1988 Form 10-K)
3.7 Certificate of Correction to the Registrant's Restated Certificate
of Incorporation (incorporated herein by to Exhibit 3.7 to the 1988
Form 10-K)
3.8 Rights Agreement dated as of October 31, 1989 between the
Registrant and The First National Bank of Boston (incorporated
herein by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated October 31, 1989 (the "1989 8-K"))
3.9 Certificate of Designations of the Registrant's Series A Junior
Participating Preferred Stock (incorporated herein by reference to
Exhibit 4.1 to the 1989 8-K)
3.10 Certificate of Amendment of Restated Certificate of Incorporation
filed with the Delaware Secretary of State on April 18, 1996
(incorporated by reference to Exhibit 4.11 to the 1996 ESPP S-8).
3.11 Certificate of Increase of Shares Designated as Series A Junior
Participating Preferred Stock filed with the Delaware Secretary of
State on April 18, 1996 (incorporated by reference to Exhibit 4.12
to the 1996 ESPP S-8).
4.1 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.
Page 12
<PAGE>
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 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.
10.7 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.
10.8 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.
10.9 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.
10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15 1994 Equity Incentive Plan, as amended through February 28, 1996 -
filed as Exhibit 10.17 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.
10.16 Amended and Restated Employee Stock Purchase Plan, as amended by
through February 28, 1996 - filed as Exhibit 4.10 to the 1996 ESPP
S-8 and incorporated herein by this reference.
10.17 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.
10.18 Loan Modification Agreement dated January 25, 1995 to the Line of
Credit Agreement dated November 25, 1991 between Silicon Valley
Bank and the Company - filed as Exhibit 10.20 to the 1995 10-K and
incorporated herein by this reference.
10.19 Third Amendment dated as of June 8, 1995 to the Line of Credit
Agreement dated November 25, 1991 between Silicon Valley Bank and
the Company - filed as Exhibit 10.21 to the 1995 10-K and
incorporated herein by this reference.
10.20 Amendment dated as of June 30, 1995 to the Line of Credit Agreement
dated November 25, 1991 between Silicon Valley Bank and the Company
- filed as Exhibit 10.22 to the 1995 10-K and incorporated herein
by this reference.
Page 13
<PAGE>
10.21 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.
10.22 Agreement dated December 18, 1995 between Intel Corporation and the
Company filed as Exhibit 10.24 to the Company's Report on Form 10-Q
for the quarter ended December 31, 1995 as amended by a Form
10-Q/A-1 (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.
10.23 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 and incorporated herein
by this reference.
10.24 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 the 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
10.25 Investor Rights Agreement, dated December 18, 1995, between the
Company and Intel Corporation - filed as Exhibit 3.2 to the Intel
Schedule 13D and incorporated herein by this reference.
10.26 Standard Industrial Lease - Full Net between The Equitable Life
Assurance Society of the United States as Landlord and Phoenix
Technologies Ltd. as Tenant dated as of May 15, 1996 for that
certain property located at 411 E. Plumeria Drive, San Jose,
California - filed as Exhibit 10.20 to the Company's Report on Form
10-Q for the quarter ended June 30, 1996 and incorporated herein by
this reference.
10.27 Loan Agreement dated as of February 29, 1996 by and between Silicon
Valley Bank and Phoenix Technologies Ltd filed as Exhibit 10.27 to
the 1996 Form 10-K and incorporated herein by this reference.
10.28 Industrial Lease (Single Tenant; Net) dated as of October 1, 1996
by and between The Irvine Company and Phoenix Technologies Ltd. For
that certain property located at 135 Technology Drive, Irvine,
California filed as Exhibit 10.28 to the 1996 Form 10-K and
incorporated herein by this reference.
10.29 Equity Incentive Plan, as amended through December 12, 1996
incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-8 (Registration No. 333-20447).
10.30 Loan Agreement dated as of February 28, 1997 by and between Silicon
Valley Bank and Phoenix Technologies Ltd.
Page 14
<PAGE>
Exhibit 10.30
AMENDMENT
TO
LOAN AGREEMENT
This Amendment to Loan Agreement is entered into as of February 28,
1997, by and between Silicon Valley Bank ("Bank") and Phoenix Technologies
Ltd. ("Borrower").
RECITALS
Borrower and Bank are parties to that certain Loan Agreement dated as of
February 29, 1996, as amended from time to time (the "Agreement"). Borrower
and Bank desire to extend the term of the Agreement in accordance with the
terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following term defined in Section 1.1 is amended to read as
follows:
"Maturity Date" means February 27, 1998.
2. Section 5.9 is amended to read as follows:
5.9 TANGIBLE NET WORTH. Borrower shall maintain, as of the
last day of each fiscal quarter, a Tangible Net Worth of not less
than Fifty Two Million Dollars ($52,000,000).
3. Section 6.3 is amended to read as follows:
6.3 MERGERS OR ACQUISITIONS. Without the prior written
consent of Bank, merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other
business organization, or acquire, or permit any of its Subsidiaries
to acquire, all or substantially all of the capital stock or property
of another Person where the aggregate consideration paid in any
fiscal year of the mergers, consolidations and acquisitions
exceeds Twenty Million Dollars ($20,000,000), other than Permitted
Investments.
4. Exhibit B is amended to read as Exhibit B attached hereto.
5. Unless otherwise defined, all capitalized terms in this Amendment
shall be as defined in the Agreement. Except as amended, the Agreement
remains in full force and effect.
6. Borrower represents and warrants that the Representations and
Warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.
7. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
8. As a condition to the effectiveness of this Amendment, Bank shall
receive an amount equal to the Bank Expenses (not to exceed $2,000) incurred
in connection with this Amendment.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
PHOENIX TECHNOLOGIES LTD.
By /s/ Robert J. Riopel
----------------------------
Title VP Finance
-------------------------
SILICON VALLEY BANK
By /s/ T. Vert
----------------------------
Title SVP
-------------------------
<PAGE>
CORPORATE RESOLUTIONS TO BORROW
- ------------------------------------------------------------------------------
BORROWER: PHOENIX TECHNOLOGIES LTD.
- ------------------------------------------------------------------------------
I, the undersigned Secretary or Assistant Secretary of Phoenix
Technologies Ltd. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of
Delaware.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other
duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
--------------------------------------------------------------------
Jack Kay President & CEO /s/ Jack Kay
- -------------------- ------------------------ --------------------------
VP, Finance, CEO
Robert J. Riopel Secretary & Treasurer /s/ Robert J. Riopel
- -------------------- ------------------------ --------------------------
Julie Bonner-Watson Controller /s/ Julie Bonner-Watson
- -------------------- ------------------------ --------------------------
- -------------------- ------------------------ --------------------------
- -------------------- ------------------------ --------------------------
acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers,
employees, or agents and Bank, such sum or sums of money as in their judgment
should be borrowed, without limitation, including such sums as are specified
in that certain Amendment to Loan Agreement dated as of February 28, 1997
(the "Loan Agreement").
EXECUTE NOTES. To execute and deliver to Bank the promissory note or
notes of the Corporation, on Lender's forms, at such rates of interest and on
such terms as may be agreed upon, evidencing the sums of money so borrowed or
any indebtedness of the Corporation to Bank, and also to execute and deliver
to Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, or any portion
of the notes.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Bank, or to
cause such other disposition of the proceeds derived therefrom as they may
deem advisable.
LETTERS OF CREDIT; FOREIGN EXCHANGE. To execute letters of credit
applications, foreign exchange agreements and other related documents
pertaining to Bank's issuance of letters of credit and foreign exchange
contracts.
<PAGE>
FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full
force and effect and Bank may rely on these Resolutions until written notice
of their revocation shall have been delivered to and received by Bank. Any
such notice shall not affect any of the Corporation's agreements or
commitments in effect at the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the
case may be, and occupy the positions set forth opposite their respective
names; that the foregoing Resolutions now stand of record on the books of the
Corporation; and that the Resolutions are in full force and effect and have
not been modified or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on March 13, 1997 and
attest that the signatures set opposite the names listed above are their
genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ Robert J. Riopel
-----------------------------
- ------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 27,390
<SECURITIES> 28,453
<RECEIVABLES> 18,273
<ALLOWANCES> 524
<INVENTORY> 0
<CURRENT-ASSETS> 79,146
<PP&E> 11,995
<DEPRECIATION> 3,816
<TOTAL-ASSETS> 112,652
<CURRENT-LIABILITIES> 11,918
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 93,980
<TOTAL-LIABILITY-AND-EQUITY> 112,652
<SALES> 33,862
<TOTAL-REVENUES> 39,576
<CGS> 2,083
<TOTAL-COSTS> 6,433
<OTHER-EXPENSES> 27,465
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 7,909
<INCOME-TAX> 2,530
<INCOME-CONTINUING> 5,379
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,379
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
