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THE SOFTWARE TOOLWORKS REPORTS PROFITABLE SEPTEMBER QUARTER AND FIRST HALF; BOB LLOYD ELECTED CHAIRMAN OF THE BOARD

 NOVATO, Calif., Nov. 3 /PRNewswire/ -- The Software Toolworks Inc. (NASDAQ: TWRX), a leading publisher of education, edutainment and multimedia software, has reported its financial results for the second fiscal quarter and six months ended Sept. 30, 1993. For the second quarter, the company reported $28,843,000 in revenue, $1,417,000 in net income and $0.05 in net income per share, versus $25,692,000, $1,574,000 and $0.06, respectively, for the comparable quarter in the prior year. For the first half, the company reported $51,963,000 in revenue, $819,000 in net income and $0.03 in net income per share, as compared with $42,099,000 in revenues and a net loss of $355,000 or $0.01 per share for the same period last fiscal year.
 Also, the company has announced that Bob Lloyd, president and chief executive officer, has been elected to the additional post of chairman of the board effective Dec. 3, 1993. Les Crane, the current chairman, will remain creative director and member of the board. Also effective Dec. 3, 1993, Bob Goldberg, currently executive vice president and chief operating officer, will be promoted to president.
 The company's September quarter and first half revenues increased 12 percent and 23 percent respectively, as compared to the year ago periods despite the fact that revenue growth was adversely impacted by a significant shortfall from planned levels in the company's European business, and the company's decision to delay shipment of two major new products until October. During the September quarter, the company's revenues from domestic business increased by 43 percent over the same quarter in the prior year while revenues from international business declined 46 percent. For the six-month period, domestic revenues increased 56 percent, while revenues for international business were down 36 percent versus the comparable year ago period. The decline in international revenues was primarily due to lower cartridge sales. The company has taken various expense measures during the September quarter to streamline its European operations to bring them into line with existing market conditions.
 Overall revenue growth was spurred by gains in Toolworks' domestic cartridge business which increased $9,236,000 and $15,650,000 for the quarter and half, respectively, versus the comparable periods last fiscal year. Sales of "Mario Is Missing" for Super NES and NES, "Captain America" for Super NES and "Wing Commander Secret Missions" for Super NES were approximately $10,700,000 during the second quarter. There were no significant new cartridge product releases in the same quarter a year ago. Software revenues were up 6 percent for the first half but down 14 percent for the September quarter due to a significant shortfall from planned levels in the company's revenues for the reasons noted above. Revenues for "The Miracle Piano Teaching System" were lower than in comparable periods last fiscal year, in line with the company's strategy for exiting from "The Miracle" hardware business.
 Gross profit margins continued to improve for both the September quarter and fiscal first half. Gross profits margins increased to 37.1 percent in the September quarter from 32.3 percent in the same quarter last year and rose to 34.9 percent in the fiscal first half from 31.5 percent in the comparable period a year ago due to the company's focus on improving gross margins and a favorable mix of new products. Operating expenses were up 41 percent for the September quarter and 26 percent for the first half due primarily to planned increases in selling, general and administrative expenses and increased R&D expenses.
 The balance sheet improved as inventory was reduced to $16,252,000 at the end of this year's September quarter from $24,185,000 at the end of the same quarter a year ago and $17,935,000 at March 31, 1993. Inventory of "The Miracle," included in the numbers above, was $8,629,000 at Sept. 30, 1993, versus $17,936,000 at Sept. 30, 1992, and $10,912,000 at March 31, 1993.
 Commenting on the financial results, Bob Lloyd, chairman and chief executive officer of the Toolworks, said, "Apart from the European market conditions during the quarter and our decision to hold two key products for several weeks to assure they satisfy our quality standards, the quarter met our internal expectations. Also, we were most pleased during the quarter with the sell through at retail of our Mario Brothers line of edutainment products."
 THE SOFTWARE TOOLWORKS INC.
 Consolidated Balance Sheets
 (In Thousands)
 (Unaudited)
 Sept. 30, March 31,
 1993 1993
 ASSETS
 CURRENT ASSETS:
 Cash and Equivalents $ 6,179 $ 5,918
 Accounts Receivable (net) 34,203 30,061
 Inventories 16,252 17,935
 Other 1,500 1,283
 Total Current Assets 58,134 55,197
 Property Plant
 and Equipment (net) 3,983 4,288
 Software Development
 Costs (net) 6,790 4,967
 Royalty Advances 4,472 3,508
 Other Assets 1,248 1,560
 Total Assets $74,627 $69,520
 LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES:
 Bank Borrowings $ 6,900 $ 4,648
 Accounts Payable 15,222 15,445
 Accrued Royalties
 Payable 5,453 6,814
 Other 2,634 2,604
 Total Current
 Liabilities 30,209 29,511
 STOCKHOLDERS' EQUITY:
 Common Stock 291 279
 Additional Paid
 in Capital 94,939 91,295
 Accumulated Deficit (49,539) (50,358)
 Foreign Currency
 Translation Adjustment (1,273) (1,207)
 Total Stockholders'
 Equity 44,418 40,009
 Total liability and
 Stockholders' Equity $74,627 $69,520
 THE SOFTWARE TOOLWORKS INC.
 Consolidated Statements of Operations
 (In thousands, except per share amounts)
 (Unaudited)
 Three Months Ended Six Months Ended
 Sept. 30, Sept. 30,
 1993 1992 1993 1992
 Revenues $28,843 $25,692 $51,963 $42,099
 Cost of revenues 18,139 17,405 33,810 28,819
 Gross Profit 10,704 8,287 18,153 13,280
 Selling, general and
 administrative 8,975 6,373 16,544 13,144
 Income from operations 1,729 1,914 1,609 136
 Other expense (312) (338) (790) (520)
 Income (loss) before
 income taxes 1,417 1,576 819 (384)
 Income taxes provision
 (benefit) -- 2 -- (29)
 Net income (loss) $ 1,417 $ 1,574 $ 819 $ (355)
 Net income (loss) per
 common and common
 equivalent share --
 primary and fully
 diluted $ 0.05 $ 0.06 $ 0.03 $ (0.01)
 Shares used in per
 share computation
 Primary 30,506 26,046 30,034 25,840
 Fully diluted 30,821 26,046 30,747 25,840
 -0- 11/3/93 R
 /CONTACT: Vincent L. Turzo of the Software Toolworks, 415-883-3000, ext. 568/
 (TWRX)


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

TM -- SF010 -- 0698 11/04/93 11:57 EST
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Date:Nov 4, 1993
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