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INTERSOLV, INC., REPORTS THIRD QUARTER OPERATING RESULTS; EPS $0.02/SHARE BEFORE WRITE-OFF OF CAPITALIZED SOFTWARE

 ROCKVILLE, Md., Feb. 18 /PRNewswire/ -- INTERSOLV, Inc. (NASDAQ: ISLI) today reported final operating results for the third fiscal quarter ended Jan. 31, 1993. Revenue was $20 million, or down 7 percent when compared with the comparable quarter last year. Net earnings were $0.2 million, or 2 cents per share, prior to a one- time, non-cash charge to reduce capitalized software. The third quarter results included a $13.2 million pre-tax charge, or 73 cents per share after taxes, to write off certain capitalized software development costs.
 Revenue for the nine months ended Jan. 31, 1993, increased 7 percent to $59.2 million. Net earnings were $2.3 million, or 19 cents per share, prior to the charge to reduce capitalized software. The nine month results will be charged 73 cents per share for the write-off of capitalized software.
 Kevin J. Burns, INTERSOLV's president/CEO, said: "The final operating results for the third quarter are consistent with the preliminary announcement made on Feb. 4, 1993. After analyzing the final operating results for the third fiscal quarter, we concluded it was necessary to write off certain technologies on older operating systems which are not part of our client server growth strategy. Simultaneously, the company is also changing its software amortization practice from five years to three years for all new products."
 INTERSOLV is a software products company specializing in application development tools for the desktop. The company offers a broad line of products that operate on IBM, compatible PCs and Local Area Networks (LANs) under Windows, OS/2, and UNIX. Customers using INTERSOLV products can build applications for a wide variety of platforms including PCs, LANs, mainframes and client/server environments. INTERSOLV's customer base numbers 140,000 software professionals at more than 10,000 sites worldwide.
 INTERSOLV, INC.
 Quarter to Quarter Comparison - Operating Results
 Three Months Ended Jan. 31
 (dollars in thousands, except per share amounts)
 Percent
 Q3 Increase Q3
 1/31/93 (Decrease) 1/31/92
 Revenues $20,011 (7 pct.) $21,631
 Costs and Expenses:
 Cost of Sales 1,712 39 pct. 1,229
 Sales & Marketing 12,674 2 pct. 12,385
 Research & Development 2,887 -- 2,899
 General & Administrative 2,418 6 pct. 2,287
 Capitalized Software
 Charge 13,200 --
 Total Costs & Expenses 32,891 75 pct. 18,800
 Operating Income (loss) (12,880) 2,831
 Other Income, net 23 32
 Pretax Profit (loss) (12,857) 2,863
 Taxes (4,014) 859
 Net Income (loss) ($8,843) $ 2,004
 EPS ($0.71) $ 0.16
 Shares Used for EPS 12,495 12,528
 Operating Margin (64 pct.) 13 pct.
 Pretax Margin (64 pct.) 13 pct.
 Tax Rate 31 pct. 30 pct.
 Net Margin (44 pct.) 9 pct.
 First Nine Months Comparison - Operating Results
 Nine Months Ended Jan. 31
 (dollars in thousands, except per share amounts)
 Percent
 1st Nine Increase 1st Nine
 Months (Decrease) Months
 1/31/93 1/31/92
 Revenues $59,247 7 pct. $55,219
 Costs and Expenses:
 Cost of Sales 4,407 16 pct. 3,789
 Sales & Marketing 37,192 15 pct. 32,370
 Research & Development 7,615 (7 pct.) 8,218
 General & Administrative 6,539 11 pct. 5,906
 Capitalized Software
 Charge 13,200 --
 Total Costs & Expenses 68,953 37 pct. 58,283
 Operating Income (loss) (9,706) 4,936
 Other Income, net 47 274
 Pretax Profit (loss) (9,659) 5,210
 Taxes (2,898) 1,562
 Net Income (Loss) ($6,761) $ 3,648
 EPS ($0.54) $ 0.30
 Shares Used for EPS 12,454 12,246
 Operating Margin (16 pct.) 9 pct.
 Pretax Margin (16 pct.) 9 pct.
 Tax Rate 30 pct. 30 pct.
 Net Margin (11 pct.) 7 pct.
 Balance Sheet
 (in thousands)
 Jan. 31, April 30,
 1993 1992
 Assets:
 Current Assets:
 Cash and Cash Equivalents $ 5,989 $ 5,768
 Accounts Receivable, net 21,314 22,124
 Refundable Income Taxes 931 3,367
 Prepaid Expenses and Other Assets 4,033 3,585
 Total Current Assets 32,267 34,844
 Software, net 14,293 21,988
 Property and Equipment, net 8,215 8,717
 Deferred Income Taxes 2,219 --
 Notes Receivable and Other Assets 1,702 1,891
 Total Assets $58,696 $67,440
 Liabilities and Stockholders' Equity:
 Current Liabilities:
 Accounts Payable
 & Accrued Expenses $ 9,921 $12,218
 Deferred Revenue 9,033 8,344
 Total Current Liabilities 18,954 20,562
 Deferred Income Taxes -- 1,686
 Total Liabilities 18,954 22,248
 Stockholders' Equity 39,742 45,192
 Total Liabilities and
 Stockholders' Equity $58,696 $67,440
 Financial Ratios:
 Current Ratio 1.7X 1.7X
 Days Sales in Receivables 96 days 83 days
 Cash Flows
 Nine Months Ended Jan. 31
 (in thousands)
 1/31/93 1/31/92
 Cash Inflows (Outflows)
 Operating Activities
 Net Income (Loss) ($ 6,761) $ 3,648
 Non-Cash Items:
 Capitalized Software Change 13,200 --
 Depreciation and Amortization 4,878 3,206
 Deferred Income Taxes (3,905) 1,580
 Restructuring Costs (524) (10,865)
 Other Changes in Assets & Liabilities 834 (2,106)
 Net Cash Provided By (Used By)
 Operating Activities 7,722 (4,537)
 Investing Activities
 Additions to Software (7,317) (5,884)
 Additions to Property and Equipment (1,876) (2,562)
 Change in Marketable Securities -- 4,236
 Changes in Other Assets 113 307
 Net Cash Used in Investing Activities (9,080) (3,903)
 Net Provided by Financing Activities 1,609 2,272
 Effect of Exchange Rate Changes on Cash (30) (244)
 Increase (Decrease) in Cash and Cash
 Equivalents 221 (6,412)
 Cash and Cash equivalents,
 Beginning of Fiscal Year 5,768 9,725
 Cash and Cash Equivalents,
 End of Period $ 5,989 $ 3,313
 -0- 2/18/93
 /CONTACT: Kevin J. Burns, president/CEO, 301-230-3201, or Kenneth A. Sexton, VP-finance/CFO, 301-230-3210, both of INTERSOLV/
 (ISLI)


CO: INTERSOLV, Inc. ST: Maryland IN: CPR SU: ERN

TW -- DC052 -- 8124 02/18/93 17:08 EST
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Date:Feb 18, 1993
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