Merger approved. Press release follows.
Wednesday September 16, 7:01 am Eastern Time
Company Press Release
Phoenix and Award Announce Expiration of HSR Waiting Period
Combined Fourth Fiscal Quarter Results To Be Below Expectations
SAN JOSE, Calif.--(BUSINESS WIRE)--Sept. 16, 1998--Phoenix Technologies Ltd. (NASDAQ:PTEC - news) and Award Software International Inc. (NASDAQ:AWRD - news) jointly announced today that the waiting period under the pre-merger notification requirement of the Hart-Scott-Rodino Antitrust Improvements Act had expired. Consummation of the merger is now expected to occur within a few business days. Under the merger agreement, Award shareholders will receive 1.225 shares of Phoenix common stock for each Award share held. ''We are very pleased by the clearance from the Antitrust Division of the Department of Justice (DOJ). We can now focus on closing the merger and integrating the companies as soon as possible to ensure a smooth transition for our customers and employees,'' said Jack Kay, president and chief executive officer of Phoenix.
Combined Phoenix and Award revenue and earnings are expected to fall below both companies' earlier expectations. Combined revenue for the fourth quarter ending September 30, 1998 is expected to be in the range of $28.5 million to $30 million, compared to $29.6 million for the prior year as restated for the effects of the merger, which will be accounted for as a pooling of interests. Combined diluted net income per share for the fourth fiscal quarter, excluding merger costs, is expected to be in the range of $0.08 to $0.11 per share, as compared with $0.15 for the restated fourth quarter of the prior fiscal year, excluding an $0.18 gain on the sale of securities.
The principal reasons for lower than expected revenue this quarter are lower royalties on BIOS and related products as a result of lower growth in end user demand for PCs, due in part to the severe recession in Asia and Japan, shifts in market share among PC suppliers and PC supplier consolidation, and delays in certain customer development projects. ''Another factor that contributed to these lower revenue and earnings estimates was the extensive management time spent on the DOJ review of the merger,'' according to Mr. Kay.
Combined operating expenses for the quarter are expected to be approximately flat with the prior quarter, as restated for the merger. Therefore, earnings are expected to decline on a sequential basis. Restated revenue and earnings for the prior quarter were $31.9 million and $0.13, respectively. ''The merger will enable a reduction in operating expenses in response to the current market challenges, and position the combined company for improved economic and market conditions in the coming quarters,'' said Mr. Kay.
This news release contains forward looking statements that involve a number of risks and uncertainties. A number of factors, in addition to those discussed above, could cause actual results to differ materially from management's expectations. For example, quarterly revenues depend on the volume of new contracts completed (a disproportionate number of which are finalized near the end of the quarter) as well as the volume of customer shipments on existing contracts; both of these factors are generally outside of the Company's control. Another example is that revenue can be adversely affected when PC market share shifts from Phoenix or Award customers to other OEMs. Given the companies' high gross margin on software licenses, a small percentage difference in revenue can have a more material impact on net income and earnings per share. For a more complete discussion of such risk factors and uncertainties, investors are encouraged to review Phoenix's Form 10-K for the fiscal year ended September 30, 1997 and Award's Form 10-K for the year ended December 31, 1997, filed with the Securities and Exchange Commission.
About Phoenix Technologies
Phoenix Technologies is a leading innovator and supplier of enabling software and services fundamental to personal computers, servers, peripherals and information appliances. Headquartered in San Jose, CA, Phoenix has offices worldwide, including Irvine, CA and Norwood, MA, London, Munich, Taipei and Tokyo. Information on all Phoenix Technologies products is available at: www.phoenix.com.
About Award Software
Award Software International Inc. provides system enabling and management software for personal computers and embedded systems. Award's cornerstone PC product, AwardBIOS(TM), is marketed to motherboard, PC and embedded systems manufacturers. Headquartered in Mountain View, CA, Award has offices in Massachusetts, Germany, Taiwan, Hong Kong and Japan. For more information, visit Award's Web site at www.award.com.
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