<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, 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
incorporation or organization) Number)
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 16,810,000
- --------------------------------------- ----------------------------------
Class Number of shares Outstanding at
January 31, 1998
Exhibit Index is on Page 13
Page 1
<PAGE>
PHOENIX TECHNOLOGIES LTD.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1997 and September 30, 1997...................3
Condensed Consolidated Income Statements
Three Months Ended December 31, 1997 and 1996..............4
Condensed Consolidated Statements of Cash Flows
Three Months Ended December 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..............................11
a. Exhibits..............................................11
b. Report on form 8-K....................................11
</TABLE>
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,
1997 1997
------------- ----------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 28,518 $ 22,169
Short-term investments 33,086 25,368
Accounts receivable, net of allowances of $648 at
December 31, 1997 and $608 at September 30, 1997 18,785 23,172
Prepaid expenses and other current assets 6,288 15,823
-------- --------
Total current assets 86,677 86,532
Other marketable securities 7,811 26,524
Property and equipment, net 10,398 9,607
Computer software costs, net 4,968 4,880
Other assets 2,501 1,268
-------- --------
Total assets $112,355 $128,811
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,171 $ 2,707
Payroll related liabilities 2,788 3,434
Accrued license fees and other royalties 1,180 747
Customer advances 1,704 2,043
Other accrued liabilities 2,508 2,587
Income taxes payable 4,653 6,047
-------- --------
Total current liabilities 16,004 17,565
Long-term obligations 1,668 7,519
Stockholders' equity:
Preferred stock, $.10 par value, 500 shares authorized,
none issued -- --
Common stock, $.001 par value, 40,000 shares authorized,
16,824 and 16,895 shares issued and outstanding at
December 31, 1997 and September 30, 1997 17 17
Additional paid-in capital 71,347 71,131
Retained earnings 21,564 20,366
Unrealized gain on available-for-sale securities 2,554 12,570
Accumulated translation adjustment (799) (357)
-------- --------
Total stockholders' equity 94,683 103,727
-------- --------
Total liabilities and stockholders' equity $112,355 $128,811
-------- --------
-------- --------
</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,
------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
License fees $ 17,770 $ 17,767
Services 4,786 2,809
-------- --------
Total revenue 22,556 20,576
Cost of revenue:
License fees 1,759 959
Services 3,331 2,130
-------- --------
Total cost of revenue 5,090 3,089
-------- --------
Gross margin 17,466 17,487
Operating expenses:
Research and development 7,393 6,275
Sales and marketing 4,826 4,538
General and administrative 3,093 3,261
-------- --------
Total operating expenses 15,312 14,074
-------- --------
Income from operations 2,154 3,413
Interest income, net 881 690
Other income, net 1,107 628
-------- --------
Income before income taxes 4,142 4,731
Provision for income taxes 1,325 1,514
-------- --------
Net income $ 2,817 $ 3,217
-------- --------
-------- --------
Basic earnings per share $ 0.17 $ 0.19
-------- --------
-------- --------
Diluted earnings per share $ 0.16 $ 0.18
-------- --------
-------- --------
Common shares outstanding 16,881 16,694
-------- --------
-------- --------
Common shares outstanding assuming dilution 17,951 18,248
-------- --------
-------- --------
</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,
---------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,817 $ 3,217
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization 2,207 1,224
Realized gain on sale of other marketable securities (1,146) (799)
Change in operating assets and liabilities:
Accounts receivable 3,892 1,051
Prepaid expenses and other assets (1,738) (1,050)
Accounts payable 470 246
Payroll and related liabilities (576) (550)
Other accrued liabilities 1,291 (385)
Income taxes payable (1,323) (1,188)
-------- --------
Total adjustments 3,077 (1,451)
-------- --------
Net cash provided by operating activities 5,894 1,766
Cash flows from investing activities:
Maturity of short-term and long-term investments 20,446 15,847
Purchases of short-term and long-term investments (26,145) (9,863)
Proceeds from sale of other marketable securities 1,193 837
Purchases of property and equipment (1,480) (2,288)
Additions to computer software costs (1,608) (885)
Proceeds from the sale of minority interest in Phoenix
Publishing Systems, Inc. 9,810 --
Other investing activities -- (376)
-------- --------
Net cash provided by investing activities 2,216 3,272
Cash flows from financing activities:
Proceeds from stock purchases under stock option and
stock purchase plans 844 1,087
Repurchases of common stock (2,263) --
-------- --------
Net cash provided by (used in) financing activities (1,419) 1,087
-------- --------
Effect of exchange rate changes on cash and cash equivalents (342) (186)
-------- --------
Net increase in cash and cash equivalents 6,349 5,939
Cash and cash equivalents at beginning of period 22,169 25,752
-------- --------
Cash and cash equivalents at end of period $ 28,518 $ 31,691
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid during the period, net of refunds $ 848 $ 2,605
-------- --------
-------- --------
</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 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 financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended September 30, 1997.
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, 1997, and the results of
its operations and its cash flows for the three-month periods ended December
31, 1997 and 1996. All significant intercompany accounts and transactions
have been eliminated. The operating results for the three-month period ended
December 31, 1997 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1998 or for any other future
period.
Certain amounts in the fiscal 1997 financial statements have been
reclassified to conform to the fiscal 1998 presentation.
2. Cash Equivalents
All highly liquid securities purchased with a maturity of less than three
months are considered cash equivalents.
3. Short-term Investments and Other Marketable Securities
Short-term investment securities consist of U.S. government and agency
obligations, bankers' acceptances, corporate debt securities and commercial
paper with original maturities generally ranging from three months to one
year. Short-term investments are classified as held-to-maturity as the
Company has the intent and the ability to hold them until maturity. Such
investments are recorded at amortized cost. At December 31, and September
30, 1997, the fair value of such short-term investments approximated
amortized cost and gross unrealized holding gains and losses were not
material.
Other marketable securities consist of the shares of Xionics Document
Technologies, Inc. ("Xionics") (NASDAQ: XION) and U.S. government agency
obligations, owned by the Company. The shares of Xionics common stock are
recorded at fair value based on quoted market prices and classified as
available-for-sale. The unrealized gain on the Xionics investment, less
related deferred income taxes, has been recorded as a separate component of
stockholders' equity. The carrying value of the Xionics shares and the
related deferred income taxes and unrealized gain are adjusted to the current
market value in each period.
Page 6
<PAGE>
The U.S. government agency obligations have maturities greater than one
year, and the Company has the intent and ability to hold them until maturity.
These securities are recorded at amortized cost. At December 31, and
September 30, 1997, the fair value of such securities approximated amortized
cost and gross unrealized holding gains were not material.
4. Net Income Per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share,"
which required the Company to change the method it used to compute earnings
per share. Under SFAS 128, primary and fully diluted earnings per share have
been replaced with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per share is
very similar to the previously reported fully diluted earnings per share.
All earnings per share amounts for all periods have been restated to conform
to the new SFAS 128 requirements. The following is a reconciliation of the
numerators and denominators of the basic and diluted earnings per share
computations:
<TABLE>
<CAPTION>
(In thousands, except per share amount)
Net Income Shares Per-Share
(Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
THREE MONTHS ENDED DECEMBER 31, 1997:
Basic earnings per share $ 2,817 16,881(1) $ 0.17
-------
-------
Effect of dilutive securities:
Stock options -- 906
Warrants -- 164
------
Diluted earnings per share $ 2,817 17,951 $ 0.16
-------- ------ -------
-------- ------ -------
THREE MONTHS ENDED DECEMBER 31, 1996:
Basic earnings per share $ 3,217 16,694(1) $ 0.19
-------
-------
Effect of dilutive securities:
Stock options -- 1,338
Warrants -- 216
-------- -------
Diluted earnings per share $ 3,217 18,248 $ 0.18
-------- ------- -------
-------- ------- -------
</TABLE>
(1) Weighted Average Shares Outstanding
5. Stock Repurchase Plan
Pursuant to a share repurchase program whereby the Board of Directors
authorized the repurchase of up to 1,000,000 shares of its outstanding common
stock, the Company repurchased and retired approximately 155,000 shares at a
cost of approximately $2.3 million during the three months ended December 31,
1997. Since the inception of the plan, the Company has repurchased and
retired approximately 570,000 shares at a cost of approximately $7.7 million.
Page 7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
THIS REPORT ON FORM 10-Q, INCLUDING WITHOUT LIMITATION THIS MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF CONTINUING
OPERATIONS, CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM
THE RESULTS DISCUSSED IN THE FORWARD LOOKING STATEMENTS. FACTORS THAT MAY
CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN
PART I, ITEM 2 (MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF CONTINUING OPERATIONS) OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997 AND IN OTHER DOCUMENTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
The Company designs, develops, markets and supports standards-based system
software and synthesizable cores for personal computers and other
microprocessor-based products.
REVENUE Revenue increased by $2.0 million (10%) to $22.6 million in the
first fiscal quarter of 1998 compared to $20.6 million for the comparable
period in fiscal 1997. This was primarily due to a 70% increase in service
revenue resulting from design work that was performed under newly signed
license agreements with customers. License revenues were flat when comparing
the two quarters. Unit growth in the first fiscal quarter of 1998 was offset
by lower average selling prices.
GROSS MARGIN Gross margin as a percent of revenue decreased in the first
fiscal quarter of 1998 to 77%, as compared to 85% of revenue for the
comparable period in fiscal 1997. Service revenue, which has lower gross
margins than license fees, changed from 14% to 21% of total revenue when
comparing the first quarter of fiscal 1998 to first quarter of fiscal 1997.
License fee gross margin decreased in the first fiscal quarter of 1998 to 90%
of net revenue, as compared to 95% of net revenue for the comparable period
in fiscal 1997. The decrease was primarily due to increased amortization
charges for capitalized software of $1.3 million for the first quarter of
fiscal 1998, compared to $0.6 million for the comparable period in fiscal
1997.
RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses
increased $1.1 million (18%) to $7.4 million for the first fiscal quarter of
1998 from $6.3 million for the comparable period in fiscal 1997. The
increase in research and development expenses is primarily due to an increase
in the Company's engineering staff for the development of system-level
software and synthesizable cores for personal computers and other
microprocessor-based products.
The Company capitalized $1.3 million of internally developed software costs
in the first fiscal quarter of 1998 as compared to $0.7 million for the
comparable period in fiscal 1997. 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 $0.3
million (6%) to $4.8 million in the first fiscal quarter of 1998 compared to
$4.5 million for the comparable period in fiscal 1997. The increase resulted
primarily from the expenses associated with increased headcount to meet
demands of an expanding customer base and the building of specialized sales
forces for our information appliance and synthesizable core product lines .
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses
decreased by $0.2 million (5%) to $3.1 million in the first fiscal quarter of
1998 compared to $3.3 million for the comparable period in fiscal 1997.
General and administrative expenses for the first quarter of fiscal 1997
included non-recurring charges related to the consolidation of the San Jose
corporate headquarters and the acquisition of Nihon JK. General and
administrative expenses for the first quarter of fiscal 1998 did not
Page 8
<PAGE>
include similar charges, but did include expenses associated with increased
headcount needed to support the overall growth of the Company.
INTEREST INCOME, NET Net interest income increased by $0.2 million (28%)
to $0.9 million in the first fiscal quarter of 1998 compared to $0.7 for the
comparable period in fiscal 1998. The increase is primarily due to the
increase in cash available for investment during the respective periods.
OTHER INCOME, NET Other income, net increased by $0.5 million (76%) to
$1.1 million the first fiscal quarter of 1998 compared to $0.6 million for
the comparable period in fiscal 1997. The increase is primarily due to the
sale of more shares of Xionics stock at a higher average sales price in the
first quarter of fiscal year 1998, when compared to the first quarter of
fiscal 1997.
PROVISION FOR INCOME TAXES The Company recorded an income tax provision of
$1.3 million in the first fiscal quarter of 1998 compared to $1.5 million for
the comparable period in fiscal 1997. The fiscal 1998 and 1997 provisions
reflect an estimated annualized effective tax rate of 32%. The Company's
effective tax rate is lower than the statutory rate primarily due to various
tax credits.
THE YEAR 2000 The Year 2000 Issue is the result of computer programs using
two digits rather than four to define the applicable year. The Company's
programs that have time-sensitive software may recognize a date using "00" as
the calendar year 1900 rather than the calendar year 2000. Systems that do
not properly recognize such information could generate erroneous data or
cause a system to fail. Because the Company licenses and provides services
relating to PC software and firmware, the Company may become involved in
investigations or allegations regarding the Year 2000 Issue.
The Company is in the process of conducting a comprehensive review of its
internal computer systems to identify the systems that could be affected by
the Year 2000 Issue and is developing an enterprise-wide implementation plan
to resolve the issue. The Company also believes, with modifications to
existing operational software, the Year 2000 Issue will not pose significant
operational problems for the Company's computer systems as so modified and
converted. The Company expects to incur internal staff costs as well as
consulting and other expenses related to the enhancements necessary to
prepare the systems for the year 2000. The Company has no reasonable
estimate of the amount associated with the transitions of the Company's
remaining systems. If modifications and conversions are not completed
timely, the Year 2000 Issue may have a material impact on the Company's
operations. Furthermore, there can be no assurance that the systems of other
companies in which the Company deals with and which the Company's systems
rely on will also be timely converted or that any such failure to convert by
another company would not have a material impact on the Company's operations.
The Company believes its current products do not require modification in
light of the Year 2000 Issue, and does not anticipate any material exposures
related to the Year 2000 Issue for its products and services. The Company
cannot anticipate the degree to which it may be the subject of claims or
complaints regarding the Year 2000 Issue.
LIQUIDITY AND CAPITAL RESOURCES At December 31, 1997, the Company's primary
sources of liquidity included cash, cash equivalents and short-term
investments of $61.6 million and a $10 million revolving credit facility with
a commercial bank. There were no borrowings outstanding under the bank credit
facility at December 31, 1997. This facility expires in February 1998,
however, the Company and the bank are negotiating an agreement which would
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 1998 was $5.9 million, resulting
primarily from cash provided by net income and a reduction in accounts
receivable, adjusted for non-cash items. Net cash provided by investing
activities in the first fiscal quarter of 1998 was $2.2 million which
consisted primarily of maturities of short-term and long-term investments of
$20.4 million, proceeds from of the sale of the Company's minority interest
in Phoenix Publishing Systems, Inc. of $9.8 million, and proceeds from the
sale of marketable securities of $1.2 million, which was partially offset by
purchases of short-term and long-term investments of $26.1 million; and
additions to computer software costs, including purchased software costs, of
$3.1 million. Cash used for financing activities in the first fiscal quarter
of 1998 was $1.4, resulting from $2.3 million used for the repurchase of
common stock, partially offset by the $0.8 million received from the exercise
of common stock options and issuance of stock under the Company's employee
stock purchase plan.
Page 9
<PAGE>
The market price per share of Xionics stock decreased from $17.38 per share
on September 30, 1997 to $3.50 per share on December 31, 1997. The company
held 1.1 million shares of Xionics stock, at December 31, 1997. The decrease
in fair market value of Xionics stock was the primary reason why the balances
in other marketable securities, long-term obligations, which includes
deferred taxes, and unrealized gain on available-for-sale securities
decreased by $18.7, $5.8 and $10.0 million, respectively when comparing the
September 30, 1997 balance sheet to the December 31, 1997 balance sheet.
Page 10
<PAGE>
PART II. OTHER INFORMATION
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
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1997.
Page 11
<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, 1998 By: /s/ ROBERT J. RIOPEL
----------------- --------------------
Robert J. Riopel
Vice President, Finance and
Chief Financial Officer
Page 12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
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")).
3.6 Certificate of Ownership (incorporated herein by reference to Exhibit 3.6
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")).
3.12 Restated Certificate of Incorporation of the Registrant dated as of
December 12, 1997 - filed as Exhibit 3.12 to the Company's Report on Form
10-K for the fiscal year ended September 30, 1997 (the "1997 10-K") and
incorporated herein by this reference.
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.
10.4 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.
10.9 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.
10.13 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.
10.21 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.
Page 13
<PAGE>
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.
10.28 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. filed as Exhibit 10.30 to the
Company's Report on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herin by this reference.
27 Financial Data Schedule.
</TABLE>
Page 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 28,518
<SECURITIES> 40,897
<RECEIVABLES> 19,433
<ALLOWANCES> 648
<INVENTORY> 0
<CURRENT-ASSETS> 86,677
<PP&E> 16,278
<DEPRECIATION> 5,880
<TOTAL-ASSETS> 112,355
<CURRENT-LIABILITIES> 16,004
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 94,666
<TOTAL-LIABILITY-AND-EQUITY> 112,355
<SALES> 17,770
<TOTAL-REVENUES> 22,556
<CGS> 1,759
<TOTAL-COSTS> 5,090
<OTHER-EXPENSES> 15,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 4,142
<INCOME-TAX> 1,325
<INCOME-CONTINUING> 2,817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,817
<EPS-PRIMARY> .17
<EPS-DILUTED> .16
</TABLE>
