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KNOWLEDGEWARE PROFITS UP 100 PERCENT IN FY 1994 FIRST QUARTER; COMPANY POSTS RECORD REVENUES FOR A FIRST QUARTER REPORTING PERIOD

 ATLANTA, Oct. 18 /PRNewswire/ -- KnowledgeWare, Inc. (NASDAQ-NMS: KNOW) today announced results of the first quarter of its fiscal year 1994.
 Revenues for the quarter ended Sept. 30 increased 14 percent to $34,144,000, compared to $29,957,000 in the same period last year. Net income for the quarter totaled $1,566,000 or $0.12 per share, compared to fiscal 1993 first quarter net income of $794,000 or $.06 per share. Income from operations was $2,030,000, an increase of 102 percent as compared to first quarter FY 1993.
 "These revenues are the highest ever for a KnowledgeWare first quarter, and they reflect the momentum we established in our record- breaking fourth quarter last year," said KnowledgeWare Chairman Francis Tarkenton. "This is our second successive quarter of record revenues, which begins to validate the restructuring and expansion KnowledgeWare initiated last year."
 Donald P. Addington, KnowledgeWare president and chief operating officer, said: "We believe these results are based on our expanded strength as a multi-product, multi-national application development solutions vendor. For example, more than 30 percent of KnowledgeWare product revenues in this first quarter are from products that have been on the market for less than 12 months."
 During the quarter the company expanded its distribution reach through a reseller program for systems integrators and consulting companies. In addition, the company announced on Sept. 20 that it intends to acquire Ernst & Young's CASE Technology Pty Ltd., based in Sydney, Australia. As a result of the pending agreement, KnowledgeWare Worldwide, the company's international operation, expects to assume direct responsibility for sales, marketing and support of KnowledgeWare products in Australia and New Zealand, as well as other areas in the Southeast Asia region. In March 1993, KnowledgeWare completed the acquisition of Ernst & Young's CASE distributor businesses in most major European countries.
 KnowledgeWare, Inc. is a worldwide leader in providing scalable application development tools and services that allow organizations to rapidly respond to changes in business needs and requirements. KnowledgeWare develops, markets and supports the Application Development Workbench, ObjectView, Flashpoint, Legacy Workbench, and associated products and services. This broad range of application development tools and services are used for developing and maintaining industrial- strength applications as well as departmental and individual support systems in open, client/server computing environments. To date, the company has shipped more than 120,000 products to 5,000 companies in 49 countries, and had revenues in its fiscal year 1993 of $128.8 million.
 NOTE: This press release refers to numerous products by their trade names. In most cases, these designations are claimed as trademarks or registered trademarks by their respective companies.
 KNOWLEDGEWARE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except share data) (Unaudited)
 3 mos. ended Sept. 30 1993 1992
 Revenues:
 Software product license $20,067 $19,950
 Service agreement 9,472 8,344
 Consulting and education 4,234 1,505
 Other 371 158
 Total $34,144 $29,957
 Costs and expenses:
 Cost of revenues 8,450 4,066
 Selling and marketing 13,046 14,013
 General and administrative 4,463 3,233
 Research and development 6,155 7,642
 Total 32,114 28,954
 Income from operations 2,030 1,003
 Interest income (expense), net (185) 228
 Income before income taxes 1,845 1,231
 Provision for income taxes 279 437
 Net income $ 1,566 $ 794
 Net income per common share $ .12 $ .06
 Weighted average number of common
 and common equivalent shares
 outstanding 13,305 13,243
 KNOWLEDGEWARE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data) (Unaudited)
 ASSETS 9/30/93 6/30/93
 Current assets:
 Cash and cash equivalents $ 9,366 $ 16,816
 Trade accounts receivable:
 Receivable from related parties 1,000 ---
 Other, net 36,084 36,894
 Inventories 277 295
 Escrow, prepaid expenses and other 7,789 6,934
 Prepaid income taxes and income
 taxes receivable 1,580 2,479
 Deferred income taxes 3,374 3,374
 Total current assets 59,470 66,792
 Property and equipment:
 Leasehold improvements 4,510 4,621
 Furniture and fixtures 17,107 16,976
 Computers and related equipment and
 software 26,755 25,062
 Total 48,372 46,659
 Less: accumulated depreciation and
 amortization 24,823 22,896
 Total 23,549 23,763
 Other assets:
 Acquired and developed software, net 23,433 22,458
 Goodwill, net 11,117 11,369
 Other long-term assets 1,278 1,299
 Total 35,828 35,126
 Total $118,847 $125,681
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
 Note payable $ 4,000 $ 2,000
 Trade accounts payable 6,552 8,863
 Deferred revenues 24,225 26,932
 Accrued exps. and other current liabs. 15,220 13,851
 Accrued compensation and payroll taxes 4,421 9,083
 Current portion of long-term debt 3,217 4,974
 Total current liabilities 57,635 65,703
 Long-term debt 3,702 3,624
 Deferred income taxes 2,622 2,622
 Shareholders' equity:
 Common stock, without par value --
 100,000,000 shares authorized;
 13,053,321 and 13,046,906 shares
 issued and outstanding on Sept. 30,
 1993, and June 30, 1993, respectively 54,153 54,124
 Retained earnings (deficit) 959 (609)
 Cumulative translation adjustments (224) 217
 Total shareholders' equity 54,888 53,732
 Total $118,847 $125,681
 -0- 10/18/93
 /CONTACT: Analysts: Rick Gossett, 404-231-3510, ext. 2138; or Media: Denese Van Dyne, 404-231-3510, ext. 2345, both of KnowledgeWare/
 (KNOW)


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

BR-BN -- AT018 -- 3613 10/18/93 17:27 EDT
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Date:Oct 18, 1993
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