<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 24, 1998
------------------------
PHOENIX TECHNOLOGIES LTD.
(Exact name of registrant as specified in Charter)
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<S> <C> <C>
DELAWARE 000-17111 04-2685985
-------- --------- ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
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411 E. PLUMERIA DRIVE
SAN JOSE, CALIFORNIA 95134
(Address of Principal Executive Offices)
(408) 570-1000
(Registrant's Telephone Number, Including Area Code)
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The undersigned Registrant hereby amends the following items, financial
statements or other portions of its Current Report on Form 8-K, originally
filed with the Securities and Exchange Commission on September 29, 1998 (the
"Form 8-K"), as set forth in the pages attached hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
THE FOLLOWING FINANCIAL STATEMENTS OF AWARD SOFTWARE
INTERNATIONAL INC. ARE INCORPORATED BY REFERENCE TO THE
REGISTRANT'S REGISTRATION STATEMENT ON FORM S-4 NO. 333-53607:
Report of Independent Accountants (at page F-2)
Balance Sheet as of December 31, 1997 and 1996, and March 31,
1998 (Unaudited) (at page F-3)
Consolidated Statement of Income for the years ended
December 31, 1997, 1996 and 1995, and for the three months ended
March 31, 1998 and 1997 (Unaudited) (at page F-4)
Consolidated Statement of Shareholders' Equity for the years
ended December 31, 1997, 1996 and 1995 and for the three
months ended March 31, 1998 (Unaudited) (at page F-5)
Consolidated Statement of Cash Flows for the years ended
December 31, 1997, 1996 and 1995, and for the three months ended
March 31, 1998 and 1997 (Unaudited) (at page F-6)
Notes to Financial Statements (at page F-7)
THE FOLLOWING FINANCIAL STATEMENTS OF AWARD SOFTWARE
INTERNATIONAL INC. ARE INCORPORATED BY REFERENCE TO THE
QUARTERLY REPORT ON FORM 10-Q OF AWARD FILED WITH THE COMMISSION
ON AUGUST 12, 1998:
Balance Sheet as of June 30, 1998 (Unaudited)
Consolidated Statement of Income for the six months ended
June 30, 1998 and 1997 (Unaudited)
Consolidated Statement of Cash Flows for the six months ended
June 30, 1998 and 1997 (Unaudited)
Notes to Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION
THE FOLLOWING FINANCIAL STATEMENTS ARE INCLUDED HEREIN AT THE
PAGE NUMBER INDICATED:
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Unaudited Pro Forma Condensed Combined Financial Statements. . . . F-1
Unaudited Pro Forma Condensed Combined Balance Sheet as of
June 30, 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
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Unaudited Pro Forma Condensed Combined Statement of Operations
for the years ended September 30, 1995, 1996 and 1997
and the nine-month periods ended June 30, 1997 and 1998 . . . . . F-3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . F-4
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(c) Exhibits in accordance with Item 601 of Regulation S-K:
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Exhibit No. Description
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2.1++ Agreement and Plan of Reorganization, dated as of April 15, 1998,
among Phoenix Technologies Ltd., Portland Acquisition Corporation
and Award Software International Inc.
2.2++ Agreement of Merger between Award Software International Inc. and
Portland Acquisition Corporation
23.1 Consent of PriceWaterhouseCoopers LLP, Independent Accountants
99.1++ Press release dated September 28, 1998.
- -------------------
++ Previously filed
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Financial Statements
have been prepared to give effect to the Merger, using the pooling-of-interests
method of accounting. Phoenix's fiscal year ends on September 30.
The Unaudited Pro Forma Condensed Combined Balance Sheet combines the
unaudited condensed consolidated balance sheet of Phoenix and the unaudited
condensed consolidated balance sheet of Award as of June 30, 1998.
The Unaudited Pro Forma Condensed Combined Statements of Operations give
effect to the Merger as if it occurred as of the beginning of the earliest year
presented and combines the historical consolidated statements of operations of
Phoenix for each of the three years ended September 30, 1997 and the nine-month
periods ended June 30, 1997 and 1998, with the historical consolidated
statements of operations of Award for each of the three years ended December 31,
1997, and the nine-month periods ended September 30, 1997 and June 30, 1998.
Phoenix and Award estimate that they will incur transaction costs of
approximately $9.8 million associated with the Merger, which will be charged to
operations when incurred. There can be no assurance that the Combined Company
will not incur additional charges to reflect costs associated with the Merger or
that management will be successful in its efforts to integrate the operations of
the two companies.
Such unaudited pro forma condensed combined financial information is
presented for illustrative purposes only and is not necessarily indicative of
the financial position or results of operations that would have actually been
reported had the Merger occurred at the beginning of the periods presented, nor
is it necessarily indicative of future financial position or results of
operations. These unaudited pro forma condensed combined financial statements
are based upon the respective historical consolidated financial statements of
Phoenix and Award and should be read in conjunction with the respective
historical consolidated financial statements and notes thereto incorporated by
reference in this Form 8-K/A, and do not incorporate, nor do they assume, any
benefits from cost savings or synergies of operations of the Combined Company.
F-1
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UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEETS
JUNE 30, 1998
(IN THOUSANDS)
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<CAPTION>
PRO FORMA PRO FORMA
PHOENIX AWARD ADJUSTMENTS COMBINED
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ASSETS
Current assets:
Cash and short-term investments $ 59,642 $26,432 $ - $ 86,074
Accounts receivable, net 22,790 4,355 (300) 26,845
Other current assets 6,539 2,614 - 9,153
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Total current assets 88,971 33,401 (300) 122,072
Other marketable securities 8,879 - - 8,879
Property and equipment, net 11,207 1,353 - 12,560
Computer software costs, net 5,303 1,158 (1,300) 5,161
Other assets 2,616 565 - 3,181
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Total assets $116,976 $36,477 $ (1,600) $151,853
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,156 $ 317 $ - $ 3,473
Payroll and related liabilities 4,207 946 - 5,153
Other accrued liabilities 4,603 933 8,200 13,736
Income taxes payable 3,463 1,594 (1,600) 3,457
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Total current liabilities 15,429 3,790 6,600 25,819
Long-term obligations 2,145 157 - 2,302
Stockholders' equity:
Common stock 17 23,028 (23,019) 26
Additional paid-in capital 72,085 - 23,019 95,104
Retained earnings 25,289 10,652 (8,200) 27,741
Unrealized gain on available-for-sale securities 3,193 - - 3,193
Accumulated translation adjustment (1,182) (1,150) - (2,332)
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Total stockholders' equity 99,402 32,530 (8,200) 123,732
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Total liabilities and stockholders' equity $116,976 $ 36,477 $ (1,600) $151,853
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</TABLE>
See accompanying notes.
F-2
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UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
1995 1996 1997 1997 1998
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Revenue:
License fees $51,521 $75,366 $89,884 $64,958 $77,422
Services 7,550 10,841 15,612 10,959 16,375
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Total revenue 59,071 86,207 105,496 75,917 93,797
Cost of revenue:
License fees 4,080 8,061 7,795 4,307 6,281
Services 6,138 7,661 10,844 7,738 11,309
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Total cost of revenue 10,218 15,722 18,639 12,045 17,590
Gross margin 48,853 70,485 86,857 63,872 76,207
Operating expenses:
Research and development 13,789 24,826 32,920 24,442 30,764
Sales and marketing 16,637 18,377 22,363 16,504 20,866
General and administrative 8,296 11,756 15,167 11,216 12,232
Cost of acquisition and restructuring -- 889 -- -- 750
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Total operating expenses 38,722 55,848 70,450 52,162 64,612
Income from operations 10,131 14,637 16,407 11,710 11,595
Interest and other income, net 2,124 2,796 13,397 4,809 4,883
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Income before income taxes 12,255 17,433 29,804 16,519 16,478
Provision for income taxes 2,275 5,501 9,469 5,328 5,083
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Income before discontinued operations 9,980 11,932 20,335 11,191 11,395
Gain on discontinued operations (after income
taxes) -- 3,752 -- -- --
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Net income $ 9,980 $ 15,684 $ 20,335 $ 11,191 $ 11,395
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Basic earnings per share:
Earnings from continuing operations $ 0.52 $ 0.53 $ 0.80 $ 0.44 $ 0.45
Earnings from discontinued operations -- 0.17 -- -- --
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Earnings per share $ 0.52 $ 0.70 $ 0.80 $ 0.44 $ 0.45
------------------------------------- -------------------------
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Weighted average number of shares 19,258 22,375 25,293 25,234 25,482
Diluted earnings per share:
Earnings from continuing operations $ 0.46 $ 0.48 $ 0.74 $ 0.41 $ 0.42
Earnings from discontinued operations -- 0.15 -- -- --
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Earnings per share $ 0.46 $ 0.63 $ 0.74 $ 0.41 $ 0.42
------------------------------------- -------------------------
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Weighted average number of shares 21,927 24,902 27,464 27,498 26,934
</TABLE>
See accompanying notes.
F-3
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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
1. The unaudited Pro Forma Condensed Combined Financial Statements reflect the
issuance of 1.225 shares of Phoenix Common Stock for each share of Award Common
Stock outstanding. The following table sets forth the pro forma share issuances
in connection with the Merger (in thousands):
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Award Common Stock Outstanding as of June 30, 1998 7,196
Exchange Ratio 1.225 : 1.00
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Number of shares of Phoenix Common Stock to be Exchanged 8,815
Number of shares of Phoenix Common Stock Outstanding as of June 30, 1998 16,862
---------------
Number of shares of Phoenix Common Stock Outstanding after completion
of the Merger 25,677
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---------------
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Additionally at the Effective Time, all outstanding options and
warrants to purchase Award Common Stock were exchanged for options and
warrants to purchase Phoenix Common Stock, based upon the exchange ratio of
1.225, and Phoenix will assume outstanding obligations under Award's Employee
Stock Purchase Plan. As of June 30, 1998, options to purchase 1,913,076
shares and warrants to purchase 395,728 shares of Award Common Stock were
outstanding.
2. The Unaudited Pro Forma Condensed Combined Statements of Operations combine
Phoenix's historical results of operations for the fiscal years ended September
30, 1995, 1996 and 1997, and for the nine-month periods ended June 30, 1997 and
1998, with Award's historical results of operations for the fiscal years ended
December 31, 1995, 1996 and 1997, and for the nine-month periods ended September
30, 1997 and June 30, 1998. Accordingly, the results of operations of Award for
the three months ended December 31, 1997, which include revenues of $7,535,000
and net income of $1,660,000, are included in the pro forma condensed combined
statements of income for both the fiscal year ended September 30, 1997 and the
nine months ended June 30, 1998. The Unaudited Pro Forma Combined Condensed
Consolidated Balance Sheet combines Phoenix's balance sheet as of June 30, 1998
with Award's balance sheet as of the same date.
3. Phoenix expects to incur charges to operations related to the Merger
currently estimated to be $9.8 million in the quarter ended September 30, 1998,
the quarter in which the Merger was consummated, and in subsequent periods.
These charges include direct transaction costs, primarily for financial advisory
services and legal fees, and costs associated with combining the operations of
the two companies, primarily related to redundant assets and facilities. An
estimated charge of $9.8 million, less estimated income tax benefits of $1.6
million, is reflected in the pro forma balance sheet but is not reflected in the
Unaudited Pro Forma Condensed Combined Statements of Operations. The amount of
estimated merger costs is preliminary and therefore subject to change.
4. Certain amounts have been reclassified to conform to the pro forma
presentation.
5. There have been no material differences between the accounting policies of
Phoenix and Award and, accordingly, no pro forma conforming adjustments are
required in the Unaudited Pro Forma Condensed Combined Statements of Operations.
F-4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHOENIX TECHNOLOGIES LTD.
Dated: November 24, 1998 By: /s/ Robert Riopel
----------------------------------
Robert Riopel
Vice President, Finance and Chief
Financial Officer
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INDEX TO EXHIBITS
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<S> <C>
EXHIBIT
NUMBER DESCRIPTION
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2.1 ++ Agreement and Plan of Reorganization, dated as of April 15,
1998, among Phoenix Technologies Ltd., Portland Acquisition
Corporation and Award Software International Inc.
2.2 ++ Agreement of Merger between Award Software International Inc.
and Portland Acquisition Corporation
23.1 Consent of PriceWaterhouseCoopers LLP, Independent Accountants
99.1 ++ Press release dated September 28, 1998.
- -------------------
++ Previously filed
</TABLE>
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Form 8-K/A of
Phoenix Technologies Ltd. amending its Form 8-K, originally filed with the
Securities and Exchange Commission on September 29, 1998, of our report dated
January 29, 1998 included in its Registration Statement on Form S-4 (No.
333-53607) dated May 26, 1998 relating to the financial statements of Award
Software International, Inc. for the three years ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
May 26, 1998
