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KNOWLEDGEWARE ANNOUNCES FY 1993 SECOND QUARTER PROFIT

 ATLANTA, Jan. 21 /PRNewswire/ -- KnowledgeWare, Inc. (NASDAQ-NMS: KNOW) today announced revenues and net income for the quarter ended Dec. 31, 1992.
 Revenues for the second quarter of fiscal 1993 were $31,634,000, compared with $32,647,000 reported in the same period last year. Net income for the quarter totaled $858,000 or $.07 per share, compared to fiscal 1992 second quarter net profit of $1,335,000 or $.11 per share. Revenues for the six-month period ending Dec. 31, 1992 were $61,074,000 compared with $54,245,000 for the same period last year.
 Earnings for the quarter were impacted by reduction of certain expense accruals based on information obtained during due diligence relative to KnowledgeWare's acquisition of its European distributors. Earnings were also impacted by the joint marketing agreement between IBM and KnowledgeWare renewed in October 1992. Under the renewed agreement, additional KnowledgeWare products are being jointly marketed, and fees are payable on the expanded product set beginning Jan. 1, 1993. No fees were payable for the quarter ended Dec. 31, 1992.
 KnowledgeWare chairman and CEO Fran Tarkenton commented: "Given the significant investments we made this quarter in strategic initiatives, as well as continuing economic dynamics, we are very pleased that we can report earnings of $.07 for the quarter. Revenues are up 12.6 percent for the first half of our fiscal year over the same period last year. We have reported five consecutive profitable quarters while managing and investing in the considerable transition to a client/server solutions company supported by a strategic services business. We are positive about our performance the past five quarters."
 Tarkenton continued: "Strategic financial and resource investments for the quarter included the launch of our Application Development Workbench Release 2.7, the acquisition of Computer & Engineering Consultants, and analysis of the recently announced Matesys acquisition opportunity. These activities are in direct support of KnowledgeWare's vision of client/server solutions addressing enterprise, departmental, and end-user requirements."
 "We anticipate sustained or improved revenues for the third quarter as our investments in the services business and the launch of ADW Release 2.7 begin to yield results," said KnowledgeWare President Donald P. Addington. "We expect significant one-time charges in the third quarter associated with closing the acquisition of our European distributors. This acquisition will allow us to recognize retail revenues, versus wholesale revenues historically reported for European sales. We are carefully managing associated European expenses to minimize the impact of the one-time charges."
 Addington continued: "Our product and services strategy for supporting client/server development from enterprise to end user has called for a real expansion of our focus in all areas of the business. We are pleased with our financial performance during this time of transition."
 KnowledgeWare is the market leader in providing application development solutions for client/server, midrange and mainframe environments. KnowledgeWare's Application Development Workbench encyclopedia has become a de facto standard for business applications development, and is currently used by more than 4,100 companies and supported by over 70 independent software vendor and consultant products. At Dec. 31, 1992, KnowledgeWare had shipped more than 104,000 products to 32 countries.
 For more information, contact KnowledgeWare, Inc., 3340 Peachtree Road NE, Atlanta, GA 30326; 404-231-8575.
 KNOWLEDGEWARE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data) (Unaudited)
 ASSETS 12/31/92 6/30/92
 Current assets:
 Cash and cash equivalents $ 27,547 $ 40,125
 Trade accounts receivable:
 Receivable from related parties 14,316 4,636
 Other, net 22,196 20,882
 Inventories 775 685
 Prepaid expenses and other current
 assets 2,752 2,481
 Prepaid income taxes and income
 taxes receivable 2,794 3,903
 Deferred income tax benefits 5,208 5,208
 Total current assets 75,588 77,920
 Property and equipment:
 Leasehold improvements 5,250 5,208
 Furniture and fixtures 17,037 16,754
 Computers and related equipment and
 software 22,195 20,531
 Total 44,482 42,493
 Less: accumulated depreciation and
 amortization 19,429 15,787
 Total 25,053 26,706
 Other assets:
 Acquired and developed software, net 23,675 23,928
 Other long-term assets 2,787 627
 Total 26,462 24,555
 Total $127,103 $129,181
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
 Trade accounts payable $ 4,594 $ 3,888
 Deferred revenues 22,842 25,247
 Accrued expenses 10,273 11,109
 Accrued compensation and payroll taxes 5,718 6,601
 Commissions payable to related parties 99 878
 Income taxes payable 198 ---
 Total current liabilities 43,724 47,723
 Deferred income taxes 4,616 4,616
 Shareholders' equity:
 Common stock, without par value --
 100,000,000 shares authorized;
 12,021,110 and 11,814,545 shares
 issued and outstanding on Dec. 31,
 1992, and June 30, 1992, respectively 51,116 50,796
 Retained earnings 27,647 26,046
 Total shareholders' equity 78,763 76,842
 Total $127,103 $129,181
 KNOWLEDGEWARE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data) (Unaudited)
 3 mos. ended 12/31/92 12/31/91
 Revenues:
 Software product license $20,391 $24,311
 Service agreement 8,774 6,148
 Consulting and education 2,302 2,119
 Other 167 69
 Total 31,634 32,647
 Costs and expenses:
 Cost of revenues 4,684 4,426
 Selling and marketing 15,530 17,613
 General and administrative 3,188 3,722
 Research and development 7,256 5,704
 Total 30,658 31,465
 Income (loss) from operations 976 1,182
 Interest income, net 232 671
 Income (loss) before income taxes 1,208 1,853
 Provision (benefit) for income taxes 350 518
 Net income (loss) $ 858 $ 1,335
 Net income (loss) per common share $ .07 $ .11
 Weighted average number of common
 and common equivalent shares
 outstanding 12,573 12,365
 6 mos. ended 12/31/92 12/31/91
 Revenues:
 Software product license $ 39,824 $ 38,391
 Service agreement 17,118 11,914
 Consulting and education 3,807 3,802
 Other 325 138
 Total 61,074 54,245
 Costs and expenses:
 Cost of revenues 8,669 8,167
 Selling and marketing 29,364 31,435
 General and administrative 6,353 9,853
 Research and development 14,760 12,088
 Total 59,146 61,543
 Income (loss) from operations 1,928 (7,298)
 Interest income, net 460 1,293
 Income (loss) before income taxes 2,388 (6,005)
 Provision (benefit) for income taxes 787 (2,222)
 Net income (loss) $ 1,601 $ (3,783)
 Net income (loss) per common share $ .13 $ (.31)
 Weighted average number of common
 and common equivalent shares
 outstanding 12,458 12,016
 -0- 1/21/93
 /CONTACT: Rick Gossett of KnowledgeWare, 404-231-8575, ext. 2138/
 (KNOW)


CO: KnowledgeWare, Inc. ST: Georgia IN: CPR SU: ERN

CF-BN -- AT018 -- 7697 01/21/93 18:59 EST
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