IMSI announces 77% increase in net income for third quarter 1997; success in multiple categories continues to drive performance.

SAN RAFAEL, Calif.--(BUSINESS WIRE)--April 28, 1997--IMSI (NASDAQ:IMSI), a leading developer and publisher of premium productivity software for business and home markets, today announced its operating results for the company's third quarter ended March 31, 1997.

Net income for the quarter just ended was $621,548 or $.11 per share compared with net income of $351,167 or $.07 per share on a post-split basis in the third quarter last year, representing an increase of 77%. Net revenues increased to $10,489,199, compared with net revenues of $7,528,298 in the previous year's third quarter, marking an increase of 39%. Operating income for the quarter was $1,053,708, or 10% of revenues, compared with operating income of $663,413, or 9% of revenues, for the third quarter of fiscal 1996.

For the nine months ended March 31, 1997, net revenues were $30,392,629, compared with $18,423,246 for the same period in 1996, an increase of 65%. Net income for the nine months ended March 31, 1997, totaled $1,737,657, or $.31 per share, compared with $664,359, or $.13 per share on a post-split basis for the same period last year, an increase of 162%.

"We are very pleased with the company's performance this quarter," said Martin Sacks, President and CEO. "Our strategy of focusing on key categories continues to drive our market share, as well as overall company growth." According to the latest industry figures from PC Data, a market research organization, IMSI is ranked the 29th largest software company in the U.S. retail market, up from the 52nd position 12 months earlier.

A key contribution to the company's third quarter performance was the continued success of the master line of desktop publishing and electronic art products. In January, IMSI shipped MasterClips(R) 150,000 Premium Image Collection, the largest image collection available at retail stores worldwide and also shipped a Macintosh version of MasterClips 101,000 Premium Image Collection. According to the latest PC data figures, MasterClips Premium Image Collection is the number one best selling brand of electronic art in the U.S. retail market.

"The consumer market for electronic images is very strong," said Rob Halligan, Vice President or Marketing. "We see the popularity of low-cost desktop publishing applications, low cost color printers, digital cameras and the acceptance of email as a medium for graphical content communication, fueling consumer appetite for more and better electronic images in their graphical communications. Given our market position and experience in the category, the company is well positioned to capitalize on this dynamic and growing market."

Additionally, the company shipped two new products in its Easy Language(TM) multi-language learning line. Easy Language 17 Language Edition offers easy-to-understand vocabulary building multimedia lessons for 17 of the world's most popular languages. Easy Language Conversational Skills offer in-depth language learning including vocabulary, grammar, reading and pronunciation for English, Spanish, French, and German.

The company also saw strong revenues from its currently shipping products: TurboCAD 2D/3D -- the company's flagship computer-aided design product, WinDelete -- the Windows uninstaller with Internet management and virus protection tools, and FloorPlan Plus 3D -- the home and garden 3D design and layout product.

"The company continued to deepen distribution this past quarter with many retailers broadening the number of IMSI products carried, both from our existing line-up and from newly introduced products," said Marty Shapiro, Vice President of North American Sales.

International sales continued to play an important role in the company's distribution strategy with approximately 30% of revenue coming from sales outside North America. "In the third quarter, we signed new distribution agreements in Argentina, Venezuela, Korea, and Italy, further strengthening our global distribution network," said Bob Mayer, Executive Vice President of International Sales.

As recently reported in the Wall Street Journal, the company is planning its largest ever series of launches in the fourth fiscal quarter. New releases for the period will include both upgrades to currently shipping products as well as new products targeting new markets.

The most significant new product release planned are TurboCAD v4 and TurboCAD professional which directly target the professional and corporate markets. TurboCAD is affordable, easy-to-use desktop CAD software for anyone who needs to create, edit or view precision drawings. It is used by nearly one million people world-wide in all areas of design, including architecture, engineering and construction. TurboCAD delivers comprehensive CAD functionality, flexibility and expandability for the technical professional, as well as easy access to CAD technology for the inexperienced user. TurboCAD adheres to the Microsoft Office usability standards, is compatible with the industry standard CAD file formats and is completely programmable by third party solution vendors, making it suited for any new, existing or expanding design environment.

Editorial review of the latest versions of TurboCAD in the April issue of Windows Sources stated, "IMSI is getting into high gear in its pursuit of the serious drafter ... the Company has spent the last year refining its inexpensive CAD program and has come up with a winner." In that same issue, the publication awarded the new TurboCAD products their Stellar Award for technological excellence. TurboCAD v4 and TurboCAD v4 Professional are slated to ship in the fourth fiscal quarter of 1997.

Founded in 1983, IMSI is a leading developer and publisher of premium productivity software for business and home. The company offers a range of high quality products including TurboCAD(R), MasterClips(R) Premium Image Collections, WinDelete(R), FloorPlan Plus(R), Easy Language(TM) and FormTool(R). IMSI is headquartered in San Rafael, Calif., with wholly owned subsidiaries in the United Kingdom, France, Germany, Australia and South Africa.

For more information, contact Linda Grey at IMSI, 1895 Francisco Boulevard East, San Rafael, CA 94901-5506. Telephone: [phone], Fax: [phone], E-Mail: [e-mail] or visit IMSI's Web Site at www.imsisoft.com . -0-

Note to Editors: IMSI, TurboCAD, MasterClips, FloorPlan Plus 3D, Easy Language and FormTool are registered trademarks of IMSI. Other products and companies mentioned herein are used for identification purposes only and may or may not be trademarks of their representative companies. -0-

Forward Looking Statement: To the extent that any of the statements contained herein relating to IMSI's products are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, the development of new products, the enhancement of existing products, competitive pricing pressures, product volume and mix, timing of orders received and the introduction of competitive products having technological and/or pricing advantages. As a result, the company's operating results may fluctuate, especially when measured on a quarterly basis. For further information, refer to the risk factors included on the company's Annual Report and 10-K for the year ended June 30, 1996 as filed with the Securities and Exchange Commission. -0-

     INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS
                            (Unaudited)

                           Three months ended March 31,
                            1997                  1996


Net revenues           $10,489,199    100.0%    $7,528,298    100.0%
Product costs            4,326,072     41.2%     2,400,893     31.9%

Gross margin             6,163,127     58.8%     5,127,405     68.1%

Costs and expenses:
   Sales and marketing   2,960,971     28.2%     2,887,969     38.4%
   General and
    administrative         997,627      9.5%       630,379      8.4%
   Research and
    development          1,150,821     11.0%       945,644     12.6%
      Total operating
        expenses         5,109,419     48.7%     4,463,992     59.3%

Operating income         1,053,708     10.0%       663,413      8.8%

Other expense               32,384      0.3%        97,014      1.3%

Income before taxes      1,021,324      9.7%       566,399      7.5%

Provision for
  income taxes             399,776      3.8%       215,232      2.9%

Net income                $621,548      5.9%      $351,167      4.7%


Net income per common
  and common equivalent
  share                      $0.11                   $0.07

Average common and common
   equivalent shares used
   to compute earnings
   per share             5,649,875               5,371,461


                            Nine months ended March 31,
                            1997                    1996


Net revenues           $30,392,629    100.0%   $18,423,246    100.0%
Product costs           12,446,433     41.0      5,923,184     32.2%

Gross margin            17,946,196     59.0%    12,500,062     67.8%

Costs and expenses:
   Sales and marketing   8,670,974     28.5      7,172,297     38.9%
   General and
    administrative       3,067,567     10.1%     1,907,063     10.4%
   Research and
    development          3,317,993     10.9%     2,159,093     11.7%
      Total operating
       expenses         15,056,534     49.5%    11,238,453     61.0%

Operating income         2,889,662      9.5%     1,261,609      6.8%

Other expense               56,068      0.2%       190,062      1.0%

Income
 before taxes            2,833,594      9.3%     1,071,547      5.8%

Provision
 for income taxes        1,095,937      3.6%       407,188      2.2%

Net income              $1,737,657      5.7%      $664,359      3.6%

Net income per common
  and common equivalent
  share                      $0.31                   $0.13

Average common and common
   equivalent shares used
   to compute earnings
   per share             5,578,941               5,288,549


     INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Unaudited)

                                             March 31,    June 30,
                                               1997         1996
ASSETS

Cash and cash equivalents                  $1,133,960     $387,406
Receivables, less allowances for doubtful
 accounts and returns of $3,112,713
 and $1,301,509                             7,089,617    4,121,210
Inventories                                 3,919,975    2,538,093
Other assets                                4,423,933    4,011,669

 Total assets                             $16,567,485  $11,058,378

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities                        $9,563,420   $5,971,998
Long term debt and other obligations          553,561      564,571
Shareholders' equity                        6,450,504    4,521,809

 Total liabilities & shareholders'
  equity                                  $16,567,485  $11,058,378

CONTACT: IMSI, San Rafael

Linda Grey, 415/257-3000

[e-mail]