Phoenix Technologies Reports Second Quarter Results
SAN JOSE, Calif.--(BUSINESS WIRE)--April 15, 1999--Phoenix Technologies Ltd. (NASDAQ:PTEC - news) - the global leader in system-level software and semiconductor IP cores for computers, system-on-chip, embedded systems, information appliances and other connected information platforms - today reported results for its second fiscal quarter ended March 31, 1999. Revenue for the quarter was $31,560,000, as compared to $31,798,000 in the second quarter of the previous fiscal year. In line with analysts' expectations, net income for the quarter was $3,584,000, or $0.13 per diluted share. This figure compares to net income of $3,375,000, or $0.13 per diluted share in the prior year, restated to include the results of Award Software International Inc., which was acquired in a pooling of interests in September 1998.
For the six-month period ended March 31, 1999, revenue was $62,101,000, approximately unchanged from the comparable period of fiscal 1998. Net income was $4,486,000 ($0.16 per diluted share) as compared to net income of $7,852,000 (or $0.29 per diluted share) in the six months ended March 31, 1998. The year-to-date decline in earnings includes a restructuring charge of $1,944,000 recorded in the prior quarter and the amortization of goodwill and other intangible assets acquired from the Company's purchase of Sand Microelectronics in September 1998.
''We are pleased with our growth in earnings from the first fiscal quarter, as operating income before restructuring charges increased more than two-fold,'' said Jack Kay, President and CEO. ''We've seen continued revenue growth in Asia, where it appears the economy has stabilized. Also, growth in the semiconductor IP and firmware business continues to be strong, and we are maximizing this trend with an increasing number of partners who distribute our products, including Fujitsu, LSI, Lucent and recently announced Toshiba.''
About Phoenix®
Phoenix's system-level software products are fundamental to the operation of hundreds of millions of electronic devices in use each day, including PCs, peripherals, mobile communications devices, telecommunications switches, consumer electronics products, industrial controllers and Internet appliances. Phoenix's solutions enable OEMs to reduce time-to-market and increase product differentiation, while optimizing their engineering resources by licensing the Company's advanced software and integration services. Founded in 1979, Phoenix Technologies Ltd. is a publicly traded international company headquartered in San Jose, California, USA. Information about Phoenix Technologies and its products is available at www.phoenix.com.
Investors are cautioned that quarterly revenues depend on completing new contracts (a disproportionate number of which are finalized near the end of each quarter), as well as the volume of customer shipments under existing contracts, a factor that is outside of the Company's control. The volume of customer shipments is influenced by overall conditions in the market for personal computers. The Company's success will also be influenced by the Company's ability to continue integrating the operations of Award and Sand while transitioning their customers to Phoenix, the Company's ability to achieve the anticipated cost savings and other benefits of the Award and Sand acquisitions, and to satisfactorily complete and market the acquired technologies. Except for historical information contained herein, the matters discussed in this news release are forward looking statements that involve risks and uncertainties that may cause actual results to differ from those anticipated by Phoenix. Investors are encouraged to review Phoenix's Form 10-K for the fiscal year ended September 30, 1998, filed with the Securities and Exchange Commission, for a more complete discussion of such risks.
Note to Editors: Phoenix Technologies is a trademark and Phoenix is a registered trademark of Phoenix Technologies Ltd. All other trademarks are the property of their respective owners.
Phoenix Technologies Ltd.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
March 31, Sept. 30,
1999 1998
Assets unaudited
Current Assets:
Cash and short-term investments $ 71,091 $ 71,297
Accounts receivable, net 33,696 28,446
Other current assets 6,298 7,120
Total current assets 111,085 106,863
Other marketable securities 9,363 7,782
Property and equipment, net 12,704 13,244
Computer software costs, net 15,494 16,575
Goodwill and other intangibles, net 11,426 12,693
Other assets 1,534 1,945
Total assets $161,606 $159,102
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 3,307 $ 6,976
Payroll and related liabilities 6,454 7,294
Other accrued liabilities 9,568 8,524
Income taxes payable 5,742 6,926
Total current liabilities 25,071 29,720
Long-term obligations 3,906 4,046
Stockholders' equity:
Preferred stock, $.10 par value,
500 shares authorized, none issued - -
Common stock, $.001 par value,
60,000 shares authorized,
26,765 and 26,286 shares
issued and outstanding
at March 31, 1999 and September 30, 1998 27 26
Additional paid-in capital 102,048 99,940
Retained earnings 29,755 25,269
Unrealized gain onavailable-for-sale
securities 1,722 2,046
Accumulated translation adjustment (923) (1,945)
Total stockholders' equity 132,629 125,336
Total liabilities and stockholders'
equity $ 161,606 $ 159,102
Phoenix Technologies Ltd.
Consolidated Statements of Income
(in thousands, except per share amounts)
unaudited
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
Revenue:
License fees $25,740 $25,859 $49,973 $50,501
Services 5,820 5,939 12,128 11,387
Total revenue 31,560 31,798 62,101 61,888
Cost of revenue:
License fees 1,327 1,770 2,445 4,622
Services 4,184 4,007 8,833 7,543
Amortization of
purchased technology 533 -- 1,066 --
Total cost of revenue 6,044 5,777 12,344 12,165
Gross margin 25,516 26,021 49,757 49,723
Operating expenses:
Research and development 9,726 10,685 19,793 19,905
Sales and marketing 7,138 7,447 14,388 13,759
General and administrative 3,368 4,138 7,626 8,214
Amortization of goodwill
and acquired intangibles 627 -- 1,252 --
Restructuring charge -- -- 1,944 --
Total operating
expenses 20,859 22,270 45,003 41,878
Income from operations 4,657 3,751 4,754 7,845
Interest and other income, net 614 1,165 1,844 3,472
Income before income taxes 5,271 4,916 6,598 11,317
Provision for income taxes 1,687 1,541 2,112 3,465
Net income $ 3,584 $ 3,375 $ 4,486 $ 7,852
Earnings per share:
Basic $ 0.13 $ 0.13 $ 0.17 $ 0.31
Diluted $ 0.13 $ 0.13 $ 0.16 $ 0.29
Shares used in earnings
per share calculation:
Basic 26,656 25,337 26,615 25,324
Diluted 27,996 26,791 28,010 26,959
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