<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 December 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 (I.R.S. Employer
jurisdiction of 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 16,805,552
----------------------------- -------------------------------
Class Number of shares Outstanding at
December 31, 1996
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
December 31, 1996 and September 30, 1996........... 3
Condensed Consolidated Income Statements
Three Months Ended December 31, 1996 and 1995...... 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended December 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 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)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,691 $ 25,752
Short-term investments 25,303 31,287
Accounts receivable, net of allowances of $496 at
December 31, 1996 and $467 at September 30, 1996 15,429 16,225
Other current assets 5,516 5,528
--------- ---------
Total current assets 77,939 78,792
Other marketable securities 16,565 21,831
Property and equipment, net 6,677 5,099
Computer software costs, net 3,993 3,694
Other assets 5,104 4,133
--------- ---------
Total assets $ 110,278 $ 113,549
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,855 $ 2,589
Payroll related liabilities 2,721 3,279
Other accrued liabilities 3,991 4,098
Income taxes payable 2,844 3,955
Discontinued operations 285 1,335
--------- ---------
Total current liabilities 12,696 15,256
Long-term obligations 6,874 8,716
Stockholders' equity:
Preferred stock, $.10 par value, 500 shares authorized,
none issued - -
Common stock, $.001 par value, 40,000 shares authorized,
16,806 and 16,636 shares issued and outstanding at
December 31, 1996 and September 30, 1996 17 17
Additional paid-in capital 69,596 68,509
Retained earnings 11,330 8,113
Unrealized gain on available-for-sale securities 9,938 13,098
Accumulated translation adjustment (173) (160)
--------- ---------
Total stockholders' equity 90,708 89,577
--------- ---------
Total liabilities and stockholders' equity $ 110,278 $ 113,549
--------- ---------
--------- ---------
</TABLE>
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
December 31,
-------------------------
1996 1995
--------- --------
<S> <C> <C>
Revenue:
License fees $ 17,767 $ 12,761
Services 2,809 2,046
--------- ---------
Total revenue 20,576 14,807
Cost of revenue:
License fees 959 1,440
Services 2,130 1,605
--------- ---------
Total cost of revenue 3,089 3,045
--------- ---------
Gross margin 17,487 11,762
Operating expenses:
Research and development 6,275 3,325
Sales and marketing 4,538 3,443
General and administrative 3,261 2,491
--------- ---------
Total operating expenses 14,074 9,259
--------- ---------
Income from operations 3,413 2,503
Interest income, net 690 446
Other income (expense), net 628 (57)
--------- ---------
Income before income taxes 4,731 2,892
Provision for income taxes 1,514 800
--------- ---------
Net income $ 3,217 $ 2,092
--------- ---------
--------- ---------
Net income per share $ 0.18 $ 0.13
--------- ---------
--------- ---------
Weighted average number of common and
common equivalent shares outstanding 18,282 16,275
--------- ---------
--------- ---------
</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>
Three Months Ended
December 31,
-----------------------
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,217 $ 2,092
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization 1,079 1,030
Loss on disposal of property and equipment 145 -
Realized gain on sale of marketable securities (799) -
Change in operating assets and liabilities:
Accounts receivable 1,051 (800)
Other current assets and other assets (1,050) (710)
Accounts payable 246 (480)
Payroll and related liabilities (550) (476)
Other accrued liabilities 665 1,054
Income taxes payable (1,188) 649
Discontinued operations (1,050) (49)
--------- --------
Total adjustments (1,451) 218
--------- --------
Net cash provided by operating activities 1,766 2,310
Cash flows from investing activities:
Maturities of short-term investments 15,847 4,281
Purchases of short-term investments (9,863) (11,732)
Proceeds from sale of marketable securities 837 -
Purchases of property and equipment (2,288) (892)
Proceeds from sale of property and equipment 90 -
Additions to computer software costs (885) (1,015)
Other investing activities (466) -
--------- --------
Net cash provided by (used in) investing activities 3,272 (9,358)
Cash flows from financing activities:
Proceeds from stock purchases under stock option and
stock purchase plans 1,087 1,517
Proceeds from issuance of convertible debt securities - 595
Proceeds from issuance of common stock - 21
--------- --------
Net cash provided by financing activities 1,087 2,133
--------- --------
Effect of exchange rate changes on cash & cash equivalents (186) -
--------- --------
Net increase (decrease) in cash and cash equivalents 5,939 (4,915)
Cash and cash equivalents at beginning of period 25,752 25,824
--------- --------
Cash and cash equivalents at end of period $ 31,691 $ 20,909
--------- --------
--------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid during the period, net of refunds $ 2,605 $ 547
--------- --------
--------- --------
</TABLE>
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.
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 in fiscal 1996 has been
restated to include the results of operations of Virtual Chips.
Shares used in the computation of net income per share have been
restated for the quarters presented to give effect to the shares
issued and options assumed by the Company in the transaction.
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.
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, 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
December 31, and September 30, 1996, and the results of
operations and cash flows for the three-month periods ended
December 31, 1996 and 1995. All significant intercompany
accounts and transactions have been eliminated. The operating
results for the three-month period ended December 31, 1996 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. 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.
3. 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
Page 6
<PAGE>
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 taxes are adjusted to the current fair
market value at each reporting period.
4. 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. Fully diluted earnings per share are not materially
different from reported primary 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 in fiscal 1996 has been
restated to include the results of operations of Virtual Chips.
Shares used in the computation of net income per share have been
restated for the quarters presented to give effect to the shares
issued and options assumed by the Company in the transaction.
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.
In December 1996, the Company announced the acquisition of Nihon
Joho Kenkyujo K.K., a Tokyo-based company specializing in
software for information appliances. The acquisition for $1.4
million in cash, payable over two years, enhances Phoenix's
leading position in one of its key growth markets to provide
software and services to manufacturers of industrial, hand-held
and consumer information appliances. The transaction was accounted
for as a purchase.
REVENUE Revenue increased by $5.8 million (39%) to $20.6 million
in the first quarter of fiscal 1997 compared to revenue of $14.8
million for the comparable period in fiscal 1996. 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. As a percentage of revenue, international
sales increased to 67% in the first fiscal quarter of 1997 from
60% for the comparable period in fiscal 1996. The increase in
international revenue was primarily due to increased revenue in
Asia corresponding to an increase in the outsourcing of the
manufacturing of personal computers by U.S. personal computer
OEM's.
GROSS MARGIN Gross margin as a percent of revenue increased in
the first fiscal quarter of 1997 to 85% of net revenue, as
compared to 79% of revenue for the comparable period in fiscal
1996. License fee gross margin increased in the first fiscal
quarter of 1997 to 95% of net revenue, as compared to 89% of net
revenue for the comparable period in fiscal 1996, primarily due
to lower third-party royalties as a result of a ramp-down in the
Company's application software business.
RESEARCH AND DEVELOPMENT EXPENSES Research and development
expenses increased $2.9 million (89%) to $6.3 million for the
first fiscal quarter of 1997 from $3.3 million for the comparable
period 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.
The Company capitalized $0.7 million of internally developed
software costs in the first fiscal quarter of 1997 as compared to
$0.5 million for the comparable period in fiscal 1996. Such
amounts were offset by amortization of capitalized software costs
of $0.6 million in the first fiscal quarter of 1997 and $0.5
million for the comparable period 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
increased by $1.1 million (32%) to $4.5 million in the first
fiscal quarter of 1997 compared to $3.4 million for the
comparable period in fiscal 1996. The increase resulted
primarily from the expenses associated with increased headcount
to meet demands of an expanding customer base.
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative
expenses increased by $0.8 million (31%) to $3.3 million in the
first fiscal quarter of 1997 compared to $2.5 million for the
comparable period 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.
Page 8
<PAGE>
INTEREST INCOME, NET Net interest income increased by $0.2
million (55%) to $0.7 million in the first fiscal quarter of
1997 compared to $0.5 for the comparable period 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 (expense), net
increased by $0.7 million to $0.6 million of other income in
the first fiscal quarter of 1997 compared to $(0.1) million of
other expense for the comparable period in fiscal 1996. The
increase is primarily due to the gain on the sale of Xionics
stock, offset by a loss on the disposal of fixed assets. There
were no such amounts in the first fiscal quarter of 1996.
PROVISION FOR INCOME TAXES The Company recorded an income tax
provision of $1.5 million in the first fiscal quarter of 1997
compared to $0.8 million for the comparable period in fiscal
1996. The fiscal 1997 provision reflects 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 a higher tax rate. The
Company's effective tax rate is lower than the statutory rate
primarily due to various tax credits.
LIQUIDITY AND CAPITAL RESOURCES At December 31, 1996, the
Company's primary sources of liquidity included cash, cash
equivalents and short-term investments of $57 million and
available borrowings of $10 million under a revolving credit
facility with a commercial bank. There were no borrowings
outstanding under the bank credit facility at December 31, 1996.
This facility expires in February 1997, however, the Company and
the bank are negotiating a definitive agreement to extend the
credit facility. 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 in the first fiscal quarter of 1997 was $1.8
million, resulting primarily from cash provided by net income,
adjusted for non-cash items. Net cash provided by investing
activities in the first fiscal quarter of 1997 was $3.3 million
which consisted primarily of maturities of short-term investments
of $15.8 million, proceeds from the sale of marketable securities
of $0.8 million, which was partially offset by purchases of short-
term investments of $9.9 million; additions to computer software
costs, including purchased software costs, of $0.9 million for
use in the Company's operations; and $0.5 for the acquisition of
Nihon Joho Kenkyujo K.K. Cash generated from financing
activities in the first fiscal quarter of 1997 was $1.1 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 December 31, 1996.
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: February 11, 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
reference 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.
Page 13
<PAGE>
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.
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).
Page 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 31,691
<SECURITIES> 25,303
<RECEIVABLES> 15,925
<ALLOWANCES> 496
<INVENTORY> 0
<CURRENT-ASSETS> 77,939
<PP&E> 16,499
<DEPRECIATION> 9,822
<TOTAL-ASSETS> 110,278
<CURRENT-LIABILITIES> 12,696
<BONDS> 0
<COMMON> 17
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 110,278
<SALES> 17,767
<TOTAL-REVENUES> 20,576
<CGS> 959
<TOTAL-COSTS> 3,089
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<INCOME-TAX> 1,514
<INCOME-CONTINUING> 3,217
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,217
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
