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SOFTWARE TOOLWORKS REPORTS NET INCOME OF $4.3 MILLION OR 16 CENTS PER SHARE FOR ITS THIRD QUARTER

 NOVATO, Calif., Feb. 8 /PRNewswire/ -- The Software Toolworks, Inc. (NASDAQ: TWRX), a leading publisher of education, edutainment, and multimedia software, today reported revenues of $49.7 million, net income of $4.3 million and net income per share of 16 cents for its third fiscal quarter ended Dec. 31, 1992, vs. revenues of $40.9 million, net income of $1.3 million and net income per share of 5 cents for the same quarter a year ago.
 For the nine months ended Dec. 31, 1992, the company reported revenue of $91.8 million, net income of $4.0 million and net income per share of 15 cents as compared with revenue of $79.5 million, net income of $1.5 million and net income per share of 6 cents for the same period of the prior year.
 Revenues were up 21 percent for the December quarter vs. the same period a year ago. Software sales increased 64 percent spurred by shipments of both "The San Diego Zoo Presents...The Animals," a widely praised multimedia product, and "Mario is Missing," the first in a family of edutainment products based on the popular Mario Brothers.
 Revenues in the company's cartridge business were up 7 percent over the year-ago quarter, despite the fact that several titles such as "Cal Ripken Jr. Baseball," "Gods," "Outlander" and "Battleship" shipped late in the December quarter. Revenues for "The Miracle Piano Teaching System" increased 5 percent vs. the year-ago quarter as large gains in shipments of the DOS and Macintosh versions of "The Miracle" were offset by a decline in shipments of the Nintendo version. For the nine months, revenues for "The Miracle" were up 42 percent over the comparable year- ago period.
 Total international revenues were up 60 percent for the December quarter vs. the same quarter a year ago due primarily to increased Nintendo sales. International revenues as a percent of total revenues were 24 percent in the recent quarter compared with 18 percent last year.
 Gross profit increased 9 percent during the December quarter compared to the prior year. Selling, general and administrative expense declined 13
percent during the December period vs. the same period last year. Declines of 16 percent in selling and marketing expenses and 15 percent in general and administrative expenses were partially offset by an increase in research and development spending. Selling, general and administrative expenses as a percent of revenue have declined to 26 percent vs. 36 percent in the same quarter a year ago.
 Operating income jumped 222 percent in the December quarter over the comparable year-ago quarter. Operating margins in the December quarter widened to 10 percent vs. 4 percent last year.
 During the third quarter, as a result of the settlement of shareholder and underwriter claims related to events surrounding the company's July 1990 public offering, the company reversed its remaining reserves associated with the shareholder litigation which increased net income by approximately $900,000 in the quarter as these reserves were no longer deemed to be necessary.
 The company's balance sheet continued to improve during the third quarter. Cash, cash equivalents and short-term investments increased $1.4 million while bank borrowing was reduced by $4.5 million to $9.8 million. Over the same period, working capital increased by $9.3 million. The company continued to have positive cash flow from operations during the December quarter.
 "We're extremely pleased with the positive results for the December quarter in light of the tripling of profits over the prior year and continued improvement in our balance sheet," said Bob Lloyd, president of the Software Toolworks. "In particular, our edutainment and CD-ROM multimedia products were very well received."
 THE SOFTWARE TOOLWORKS, INC.
 Consolidated Statement of Operations
 (In thousands, except per-share amounts; unaudited)
 Periods ended Three months Nine months
 Dec. 31 1992 1991 1992 1991
 Revenues $49,670 $40,898 $91,768 $79,512
 Cost of revenues 32,018 24,651 60,836 50,763
 Gross profit 17,652 16,247 30,932 28,749
 Selling, general and
 administrative expenses 12,924 14,780 26,068 26,958
 Income from operations 4,728 1,467 4,864 1,791
 Other income (expense) 190 (18) (330) (72)
 Income before income taxes 4,918 1,449 4,534 1,719
 Income taxes provision 600 181 571 206
 Net income 4,318 1,268 3,963 1,513
 Net income per share $0.16 $0.05 $0.15 $0.06
 Weighted average number
 of common and common
 equivalent shares
 outstanding 27,799 29,973 27,151 25,295
 Consolidated Balance Sheets
 (In thousands; unaudited)
 ASSETS 12/31/92 3/31/92
 Current Assets:
 Cash and equivalents $4,463 $3,023
 Short-term investments 1,826 1,773
 Accounts receivable (net) 42,075 24,240
 Inventories 20,773 29,019
 Other 1,889 1,313
 Total current assets 71,026 59,368
 Property, plant and
 equipment (net) 4,451 5,117
 Software development
 costs (net) 4,675 3,895
 Royalty advances 3,415 2,613
 Other assets 377 807
 Total assets 83,944 71,800
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities:
 Bank borrowings $9,750 $14,514
 Accounts payable 23,932 12,537
 Accrued royalties payable 7,713 5,983
 Income taxes payable 600 --
 Other 2,623 2,835
 Shareholder litigation
 settlement obligations -- 5,000
 Total current liabilities 44,618 40,869
 Stockholders' Equity:
 Common stock 288 259
 Additional paid in capital 90,235 84,747
 Accumulated deficit (49,907) (53,870)
 Foreign currency translation
 adjustment (1,290) (205)
 Total stockholders' equity 39,326 30,931
 Total liabilities and
 stockholders' equity 83,944 71,800
 -0- 2/8/93
 /CONTACT: Vincent Turzo of Software Toolworks, 415-883-3000, ext. 568/
 (TWRX)


CO: Software Toolworks, Inc. ST: California IN: CPR SU: ERN

CK-SM -- NY010 -- 3873 02/08/93 07:01 EST
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