PTEC Global X PropTech ETF

-Revenue up 25% over Q3 and 88% over Q4 of FY2006- MILPITAS, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Phoenix Technologies Ltd. (NASDAQ:PTEC) today reported its fourth quarter and full year financial results for the fiscal year ended September 30, 2007. (Logo: http://www.newscom.com/cgi-bin/prnh/20070410/SFTU048LOGO) Net revenues for the fourth quarter of fiscal year 2007 were $15.7 million, which was a 25% increase over the $12.6 million in net revenues reported for the third quarter of fiscal 2007 and an 88% increase over the $8.3 million reported for the fourth quarter of fiscal year 2006. The Company reported gross margin of $13.4 million in the quarter ended September 30, 2007, a 30% increase from the $10.2 million of gross margin reported for the third fiscal quarter and a 153% increase from the $5.3 million reported for the fourth quarter of fiscal year 2006. The Company's September quarter operating expenses (including restructuring charges) were $13.1 million, an increase of $1.7 million from the $11.4 million in operating expenses reported for the June quarter, but a decrease of $7.7 million from $20.8 million reported for the quarter ended September 30, 2006. On a GAAP basis, the Company reported a net loss in the fourth quarter of fiscal 2007 of ($0.7) million, or ($0.02) per share, which reflected a 62% improvement when compared to a net loss of ($1.8) million, or ($0.07) per share, for the third quarter of fiscal 2007 and a 95% improvement compared to the net loss of ($14.3) million, or ($0.56) per share, which had been reported for the fourth quarter of fiscal 2006. On a non-GAAP basis, in the fourth quarter of fiscal 2007, Phoenix reported a net profit of $2.7 million, or $0.10 per share, compared to a non-GAAP net loss of ($0.6) million, or ($0.02) per share for the third quarter of fiscal 2007 and a non-GAAP net loss of ($10.7) million or ($0.42) per share for the fourth quarter of fiscal year 2006. Total non-GAAP adjustments in the fourth quarter of fiscal year 2007 were $3.3 million compared to $1.2 million in the third quarter of fiscal year 2007 and $3.7 million in the fourth quarter of fiscal year 2006. The adjustments in the current quarter consist principally of $2.3 million in non-cash stock compensation expense as required according to Statement of Financial Accounting Standards (SFAS 123R) and $1.0 million of restructuring charges primarily associated with the Company's previously announced closure of its Norwood, MA office. These non-GAAP adjustments are more fully described in the attached reconciliation between net profit and loss on a GAAP basis and non-GAAP net profit and loss provided in the accompanying financial statements. The Company also reported $4.0 million in positive cash flow from operations for the quarter ended September 30, 2007 which compared to $4.4 million in positive cash flow from operations for the third quarter of fiscal year 2007 and ($9.4) million of negative cash flow from operations for the fourth quarter of fiscal year 2006. For the full fiscal year ended September 30, 2007, revenue was $47.0 million, compared with $60.5 million for the fiscal year ended September 30, 2006 (which had included $30.5 million of revenues associated with fully paid-up licenses). Loss from operations for the fiscal year ended September 30, 2007 was ($14.6) million, including restructuring charges of $4.1 million, which compared with a loss from operations of $(42.2) million in fiscal 2006 that had included restructuring charges of $4.6 million. The net loss for the fiscal year ended September 30, 2007 was ($16.4) million, or ($0.63) per share compared with net loss of ($44.0) million or ($1.74) per share in fiscal 2006. Phoenix Technologies' cash and short-term investment balances, as of September 30, 2007, were $62.7 million compared to $60.3 million at September 30, 2006. "Our new management team has successfully merged with the talented skill-base of Phoenix and as a result we have accomplished or exceeded every one of our key objectives for our first year" said Woody Hobbs, President and Chief Executive Officer, Phoenix Technologies. "In this single year, we have increased quarterly revenue by almost 90%, improved gross margins by over 150%, and have restored Phoenix to non-GAAP profitability after a period of very substantial operating deficits. Perhaps most important, we have now shown significant positive cash flow from operations for two consecutive quarters and have actually increased our cash balances during the full year even while making a significant investment in new technology. Results like these are truly a pleasure to announce." "We are now completely focused on building long term growth in revenues and profitability, and are still intent on achieving our announced target of a market capitalization of a billion dollars or more within the next four years," added Hobbs. "We expect to accomplish this by delivering long-awaited improvements to personal computers; our new computing architectures have so far been enthusiastically received by our customers and partners and we believe that consumers and enterprises of all sizes will welcome the dramatic improvements in ease-of-use and peace-of-mind that will be derived from these designs," concluded Hobbs. Conference Call The Company will conduct its regularly scheduled financial announcement conference call on Tuesday, October 23, 2007 at 5:30 a.m. PDT. Investors are invited to listen to a live audio web cast of the quarterly conference call on the investor relations section of the Company's website at http://www.phoenix.com/, which will also contain supplemental financial information related to the conference call. A replay of the web cast will be available two hours after the conclusion of the call and will be available for 30 calendar days. Alternatively investors can listen to the conference call via telephone at: 877-857-6173 (U.S/Canada) or 719-325-4801 (international). An audio replay of the conference call will also be available approximately two hours after the conclusion of the call and will be available until 8:59 p.m. PDT on Tuesday, October 30, 2007. The audio replay can be accessed by dialing 888-203-1112 (U.S./Canada) or 719-457-0820 (international) and entering conference call ID 3407308. About Phoenix Technologies Phoenix Technologies Ltd. (NASDAQ:PTEC) is the global market leader in system firmware that provides the most secure foundation for today's computing environments. The Company established industry leadership with its original BIOS product in 1983, and today has 155 technology patents, has shipped in over one billion systems, and continues to ship in over 125 million new systems each year. The PC industry's top builders and specifiers trust Phoenix to pioneer open standards and deliver innovative solutions to help them accelerate time to market, differentiate products and increase profits. Phoenix is headquartered in Milpitas, California with offices worldwide. For more information, visit http://www.phoenix.com/. Phoenix, Phoenix Technologies, and the Phoenix Technologies logo are trademarks and/or registered trademarks of Phoenix Technologies Ltd. All other trademarks are the property of their respective owners. Safe Harbor: With the exception of historical information, the statements set forth above include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the Company's business prospects and development intentions. These statements involve risk and uncertainties, including: our dependence on certain key customers; technical challenges and delays relating to our new products; our ability to successfully continue to enhance existing products and develop and market new products and technologies; our ability to increase the number of volume purchase agreements and pay-as-you-go arrangements with customers; the product and service offerings of competitors; our ability to attract and retain key personnel; market demand for our products; the ability of our customers to introduce and market new products that incorporate our products; risks associated with any acquisition strategy that we might employ, including integration risks; our ability to protect our patents and intellectual property; our ability to defend against third party infringement claims, other litigation and contingent liabilities; our ability to maintain sufficient liquidity to operate our business; any unidentified weaknesses or deficiencies in our internal controls over financial reporting; and risks relating to operating internationally. For a further list and description of risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements in this release, we refer you to the Company's filings with the Securities and Exchange Commission, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. All forward-looking statements included in this document are based upon assumptions, forecasts and information available to the Company as of the date hereof, and the Company assumes no obligation to update any such forward-looking statements. Investor Inquiry Contacts: Richard Arnold Chief Operating Officer and Chief Financial Officer Tel. +1 408 570 1256 E-mail: Erica Mannion, Sapphire Investor Relations, LLC Tel. +1 212 766 1800 E-mail: PHOENIX TECHNOLOGIES LTD. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, September 30, 2007 2006 Assets Current assets: Cash and cash equivalents $62,705 $34,743 Marketable Securities - 25,588 Accounts receivable, net of allowances of $83 and $463 at September 30, 2007 and September 30, 2006, respectively 6,383 8,434 Other current assets 3,496 4,163 Total current assets 72,584 72,928 Property and equipment, net 2,791 4,247 Purchased technology and Intangible assets, net 3,571 1,458 Goodwill 14,497 14,433 Other assets 1,037 2,094 Total assets $94,480 $95,160 Liabilities and stockholders' equity Current liabilities: Accounts payable $1,185 $3,072 Accrued compensation and related liabilities 3,922 3,844 Deferred revenue 11,805 7,584 Income taxes payable 11,733 9,041 Accrued restructuring charges - current 1,905 3,287 Other accrued liabilities 1,745 3,605 Total current liabilities 32,295 30,433 Accrued restructuring charges - noncurrent 358 1,166 Other liabilities 2,055 3,385 Total liabilities 34,708 34,984 Stockholders' equity: Preferred stock, $0.100 par value, 500 shares authorized, none issued or outstanding - - Common stock, $0.001 par value, 60,000 shares authorized, 34,396 and 32,851 shares issued, 26,982 and 25,437 shares outstanding at September 30, 2007 and September 30, 2006, respectively 28 34 Additional paid-in capital 206,800 191,519 Retained earnings / (deficit) (55,311) (38,899) Accumulated other comprehensive loss (67) (800) Less: Cost of treasury stock (7,414 shares at September 30, 2007 and 7,414 shares at September 30, 2006) (91,678) (91,678) Total stockholders' equity 59,772 60,176 Total liabilities and stockholders' equity $94,480 $95,160 PHOENIX TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three months ended September June September Twelve months ended 30, 30, 30, September 30, 2007 2007 2006 2007 2006 Revenues: License fees $13,578 $10,678 $7,000 $39,655 $55,942 Services fees 2,087 1,902 1,344 7,362 4,553 Total revenues 15,665 12,580 8,344 47,017 60,495 Cost of revenues: License fees 234 201 639 927 4,727 Services fees 1,609 1,811 2,130 7,377 10,073 Amortization of purchased technology 471 333 292 1,387 3,110 Total cost of revenues 2,314 2,345 3,061 9,691 17,910 Gross Margin 13,351 10,235 5,283 37,326 42,585 Operating expenses: Research and development 5,137 5,204 5,130 19,193 22,865 Sales and marketing 2,593 2,554 7,170 11,992 35,428 General and administrative 4,357 3,615 5,463 16,611 21,488 Amortization of acquired intangible assets - - 316 - 368 Restructuring 1,036 (14) 2,731 4,118 4,618 Total operating expenses 13,123 11,359 20,810 51,914 84,767 Income / (loss) from operations 228 (1,124) (15,527) (14,588) (42,182) Interest and other income, net 470 479 542 1,984 1,867 Loss before income taxes 698 (645) (14,985) (12,604) (40,315) Income tax expense 1,366 1,129 (664) 3,805 3,654 Net loss $(668) $(1,774) $(14,321) $(16,409) $(43,969) Loss per share: Basic and diluted $(0.02) $(0.07) $(0.56) $(0.63) $(1.74) Shares used in loss per share calculation: Basic and diluted 26,736 26,001 25,423 25,976 25,220 See notes to unaudited condensed consolidated financial statements PHOENIX TECHNOLOGIES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three months ended September June September Twelve months ended 30, 30, 30, September 30, 2007 2007 2006 2007 2006 Cash flows from operating activities: Net loss $(668) $(1,774) $(14,321) $(16,409) $(43,969) Reconciliation to net cash provided by (used in) operating activities: Depreciation and amortization 944 932 1,177 3,588 6,002 Stock-based compensation 2,311 1,169 938 6,235 4,819 Loss from disposal of fixed assets 4 24 9 55 11 Deferred income tax - - 61 851 Change in operating assets and liabilities: Accounts receivable (1,165) 1,629 2,951 2,067 14,429 Prepaid royalties and maintenance (13) 18 96 73 2,187 Other assets (235) 745 621 1,600 850 Accounts payable 305 (618) 688 (1,872) 964 Accrued compensation and related liabilities 644 162 148 (230) 258 Deferred revenue 109 1,924 (1,932) 4,257 (712) Income taxes 1,435 938 (1,404) 2,715 (2,354) Accrued restructuring charges 1,015 (910) 1,281 (2,171) 2,810 Other accrued liabilities (730) 139 314 (2,347) 34 Net cash provided by (used in) operating activities 3,956 4,378 (9,373) (2,439) (13,820) Cash flows from investing activities: Proceeds from sales of marketable securities - 1,779 56,289 105,214 283,939 Proceeds from maturities of marketable securities - 1,000 - 9,500 8,100 Purchases of marketable securities - - (42,075) (89,125) (270,604) Purchases of property and equipment (427) (274) (751) (800) (2,233) Acquisition of businesses, net of cash acquired (3,500) - - (3,500) (500) Net cash provided by investing activities (3,927) 2,505 13,463 21,289 18,702 Cash flows from financing activities: Proceeds from stock purchases under stock option and stock purchase plans 3,839 3,582 11 8,993 3,247 Repurchase of common stock - - - - (1,235) Net cash provided by financing activities 3,839 3,582 11 8,993 2,012 Effect of changes in exchange rates 83 (4) (12) 119 44 Net increase in cash and cash equivalents 3,951 10,461 4,089 27,962 6,938 Cash and cash equivalents at beginning of period 58,754 48,293 30,654 34,743 27,805 Cash and cash equivalents at end of period $62,705 $58,754 $34,743 $62,705 $34,743 See notes to unaudited condensed consolidated financial statements PHOENIX TECHNOLOGIES LTD. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND NET LOSS PER SHARE (in thousands, except per share data) (unaudited) Three months ended September June September Twelve months ended 30, 30, 30, September 30, 2007 2007 2006 2007 2006 GAAP net loss $(668) $(1,774) $(14,321) $(16,409) $(43,969) (1)Equity-based compensation expense under SFAS 123(R) 2,311 1,169 938 6,183 4,819 (2)Restructuring 1,036 (14) 2,731 4,118 4,618 (3)Severance and other related cost - - - - 855 Non-GAAP net profit (loss) $2,679 $(619) $(10,652) $(6,108) $(33,677) Non-GAAP loss per share: Basic $0.10 $(0.02) $(0.42) $(0.24) $(1.34) Diluted $0.10 $(0.02) $(0.42) $(0.24) $(1.34) Shares used in loss per share calculation: Basic 26,736 26,001 25,423 25,976 25,220 Diluted 27,681 26,001 25,423 25,976 25,220 These adjustments reconcile the Company's GAAP results of operations to the reported non-GAAP results of operations. The Company believes that presentation of net income and net income per share excluding non-cash equity-based compensation, restructuring, and severance cost provides meaningful supplemental information to investors, as well as management, that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and budgeting purposes. Equity-based compensation is excluded from non-GAAP financial results since it is a non-cash based charge. Restructuring and severance costs are excluded from non-GAAP financial results since these are infrequent and non-recurring and therefore may not be considered directly related to our on-going business operations. These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results, and may be different than non-GAAP measures used by other companies. (1) This number represents non-cash equity-based compensation expense related to the Company's adoption of SFAS No. 123(R) beginning October 1, 2005. For the three months ended September 30, 2007, non-cash equity-based compensation was $2.3 million, allocated as follows: $0.5 million to research and development, $0.3 million to sales and marketing and $1.5 million to general and administrative. For the three months ended June 30, 2007, non-cash equity-based compensation was $1.2 million, allocated as follows: $0.1 million to cost of goods sold, $0.4 million to research and development, $0.2 million to sales and marketing and $0.5 million to general and administrative. For the three months ended September 30, 2006, non-cash equity-based compensation was $0.9 million, allocated as follows: $0.1 to cost of goods sold, $0.2 million to research and development, $0.3 million to sales and marketing and $0.3 million to general and administrative. For the twelve months ended September 30, 2007, non-cash equity-based compensation was $6.2 million, allocated as follows: $0.2 million to cost of goods sold, $1.4 million to research and development, $1.0 million to sales and marketing and $3.6 million to general and administrative. For the twelve months ended September 30, 2006, non-cash equity-based compensation was $4.8 million, allocated as follows: $0.3 million to cost of goods sold, $0.9 million to research and development, $1.9 million to sales and marketing and $1.7 million to general and administrative. Management believes that it is useful to investors to understand how the expenses associated with the adoption of SFAS 123(R) are reflected in net income. (2) The Company has incurred restructuring expenses, included in its GAAP presentation of operating expense, primarily due to workforce related charges such as payments for severance and benefits and estimated costs of exiting and terminating facility lease commitments related to formal restructuring plans approved by the Board of Directors in June 2006, in September 2006, November 2006 and September 2007. For the three months ended September 30, 2007, severance and benefits totaled $0.4 million and cost related to exiting and terminating 2 facility lease totaled $0.5 million. In addition , for the three months ended September 30, 2007, the Company increased the fiscal year 2003 restructuring reserve for the Irvine facility by $0.1 million due to projected increased operating expenses over the remaining term of the lease. For the three months ended June 30, 2007, no restructuring costs were incurred, and the Company paid all remaining obligations for severance and benefits and costs of exiting and terminating facility lease commitments related to the formal restructuring plans approved by the Board of Directors in June 2006, in September 2006, and November 2006. For the three months ended September 30, 2006, restructuring costs were $2.7 million. Severance and benefits totaled $2.2 million, cost related to exiting and terminating two facility leases totaled $0.1 million and costs related to the fiscal year 2003 restructuring reserve for the Irvine facility increased by $0.5 million due to projected increased operating expenses over the remaining term of the lease. For the twelve months ended September 30, 2007, restructuring costs were $4.1 million. The severance and benefits costs totaled $2.2 million. Costs related to terminating facility leases totaled $1.9 million. For the twelve months ended September 30, 2006, severance and benefits totaled $4.0 million and cost related to exiting and terminating two facility lease totaled $0.2 million. In addition , the Company, as mentioned above in the discussion regarding the three months ended September 30, 2006, increased the fiscal year 2003 restructuring reserve for the Irvine facility by $0.5 million due to projected increased operating expenses over the remaining term of the lease. The Company believes that these items do not reflect expected future operating expenses nor does the Company believe that they provide a meaningful evaluation of current versus past operational performance. (3) For the twelve months ended September 30, 2006, the Company had incurred severance and benefits cost of $0.9 million related to the voluntary termination of the Company's prior Chairman and Chief Executive Officer, Albert E. Sisto. The Company does not believe that these items reflect expected future operating expenses nor does the Company believe that they provide a meaningful evaluation of current versus past operational performance. Net income for the three months ended September 30, 2007, June 30, 2007, and September 30, 2006, respectively, did not include similar expenses. http://www.newscom.com/cgi-bin/prnh/20070410/SFTU048LOGO http://photoarchive.ap.org/ DATASOURCE: Phoenix Technologies Ltd. CONTACT: Investor Inquiry, Richard Arnold of Phoenix Technologies Ltd., Chief Operating Officer and Chief Financial Officer, +1-408-570-1256, ; or Erica Mannion of Sapphire Investor Relations, LLC, +1-212-766-1800, , for Phoenix Technologies Ltd. Web site: http://www.phoenix.com/

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