STOCKREPORTS
Broderbund Software, Inc. Nasdaq Symbol BROD
In S&P SmallCap 600
19-JUL-97 Industry:
Computer (Software & Services)
Summary: This company develops and markets personal computer software for the home, school and small business markets.

Recent Price 24.63
52 Wk Range 35.00 - 18.75
Yield Nil
12-Mo. P/E NM

Quantitative Evaluation:
Outlook (1 Lowest - 5 Highest)
3-
Fair Value
25.00
Risk
MEDIUM
Earn/Div Rank
B
Technical Evaluation:
BULLISH since 06/97
Rel. Strength Rank (1 Lowest - 99 Highest)
33
Insider Activity
NA

Overview 03-JUL-97

Revenues are expected to remain weak in the final quarter of FY 97 (Aug.), due to competitive pricing pressures, an overall slowdown in the consumer software market and delays in the release of new products. However, the introduction of new products, including Riven, the sequel to the best-selling Myst program, should aid results in early FY 98. Margins for FY 97 should narrow on the weak pricing environment and investments in sales and marketing and, to a lesser extent, R&D programs; however, results should rebound in FY 98 on benefits from the shipment of new products. Reported earnings will be penalized by FY 97's second-quarter $0.32-a-share charge and the absence of FY 96's second-quarter $0.42 nonrecurring gain, but will benefit from the absence of a $0.40 FY 96 fourth-quarter charge. Per-share results should be aided by a stock repurchase program.

Valuation 03-JUL-97

The shares of this leading vendor of education, entertainment and personal productivity software products have declined sharply from its highs in late 1995, reflecting disappointing financial results stemming from a slowdown in the consumer software market, as well as delays in the release of new products. The fourth quarter of FY 97 (Aug.) should remain challenging, but revenue growth is expected to accelerate in FY 98, aided by the shipment of new products. Longer term, the consumer software market in which the company competes should be aided by the growth of PCs in the home. Broderbund's established brand name helps the company secure shelf space with retailers. While the company's growth should reaccelerate in FY 98, competitive pressures are likely to keep the shares moving in line with the market in the coming months.

Key Stock Statistics

S&P EPS Est. 1997 0.50
P/E on S&P Est. 1997 49.3
S&P EPS Est. 1998 0.90
Dividend Rate/Share Nil
Shs. outstg. (M) 20.8
Avg. daily vol. (M) 0.360
Tang. Bk. Value/Share 8.01
Beta 0.70
Shareholders 400
Market cap. (B) $0.511
Inst. holdings 49%
Value of $10,000 invested 5 years ago:$ 30,546

Fiscal Year Ending Aug. 31

Revenue (Million $)
1997 1996 1995 1994 1993 1992
Q1 61.49 70.96 53.09 32.80 32.60 21.50
Q2 44.32 48.04 45.21 25.35 24.36 20.00
Q3 39.29 34.99 36.11 25.72 16.44 14.90
Q4 NA 32.21 37.18 27.91 22.22 18.70
Year NA 186.2 171.6 111.8 95.58 75.10

Earning Per Share ($)
1997 1996 1995 1994 1993 1992
Q1 0.42 0.73 0.57 0.31 0.24 0.17
Q2 -0.17 0.87 0.50 0.22 0.19 0.14
Q3 Nil 0.29 0.33 -0.21 0.10 0.08
Q4 E0.25 -0.20 0.33 0.22 0.15 0.10
Year E0.50 1.71 1.72 0.55 0.68 0.50

Dividend Data: No cash dividends have been paid. A two-for-one stock split was effected in 1994.

Business Summary 03-JUL-97

Broderbund Software develops, publishes and markets personal computer software for the home, school and small business markets. Products are offered primarily in three consumer software categories: personal productivity, education and entertainment. Broderbund seeks to develop products that may be expanded into families of related sequel or complementary products.

Personal productivity products (45% of FY 96 revenues) includes the Print Shop Family, which enables users to produce, manipulate and create printed output, such as personalized signs, posters, banners, calendars, stationery, greeting cards and other personal documents. The Family Tree maker is a leading genealogy program.

Educational products (20%) include the Carmen Sandiego Family, a series of games designed to stimulate the player's interest in and knowledge of geography, history and astronomy; and the Early Learning Family, which includes The Playroom, The Treehouse, The Backyard and the Kid Pix software titles and assists children between the ages of three and 10 in acquiring basic skills and developing creativity. Living Books is a series of CD-ROM-based, interactive, animated storybooks that let children learn, listen and explore via the multimedia capabilities of personal computers.

Entertainment products (20%) include Myst, a highly animated adventure, and Prince of Persia and its sequel, Prince of Persia 2: The Shadow, and the Flame, both arcade-style adventure games.

Affiliated-label products (15%) are software titles developed by third parties, but distributed and marketed by Broderbund.

In the second quarter of FY 97, BROD acquired the remaining 50% interest in its Living Books partnership from Random House. The company recorded a pretax charge of $9.5 million resulting from the acquisition.

Important Developments

Jun. '97 The company acquired Parsons Technology from Intuit Inc. Parsons Technology is a direct-to-consumer service company, which BROD will use to market its broad product portfolio directly to the customer. Also in the third quarter of FY 97, the company released eight new titles, nine upgrades to existing products, and two international conversions in two different languages. In addition, BROD repurchased 100,000 shares of its common stock.

Capitalization

Long Term Debt: None (5/97).

Per Share Data ($)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Tangible Bk. Val. 8.01 6.25 4.09 3.27 2.38 1.77 NA NA NA NA
Cash Flow 1.84 1.83 0.70 0.82 0.54 0.40 0.38 0.17 NA NA
Earnings 1.71 1.72 0.55 0.68 0.50 0.38 0.33 0.14 0.24 0.17
Dividends Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Payout Ratio Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Prices - High 62 1/4 78 3/4 29 1/8 29 5/8 24 5/8 13 1/4 NA NA NA NA
- Low 22 42 1/4 15 3/4 14 7/8 9 1/4 5 1/2 NA NA NA NA
P/E Ratio - High 36 46 53 44 50 35 NA NA NA NA
- Low 13 25 29 22 19 15 NA NA NA NA

Income Statement Analysis (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Revs. 186 172 112 95.6 75.1 55.8 50.4 36.8 36.6 27.0
Oper. Inc. 47.2 53.7 32.1 23.4 15.2 11.7 9.7 3.9 NA NA
Depr. 2.8 2.3 3.0 2.8 1.1 0.6 0.8 0.7 NA NA
Int. Exp. Nil Nil Nil Nil Nil 0.1 NA NA NA NA
Pretax Inc. 66.6 61.8 19.8 21.9 15.5 11.6 10.2 4.3 7.3 6.3
Eff. Tax Rate 45% 41% 44% 38% 38% 39% 39% 39% 41% 49%
Net Inc. 36.8 36.2 11.1 13.6 9.7 7.1 6.2 2.6 4.3 3.2

Balance Sheet & Other Fin. Data (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Cash 151 127 75.0 54.3 31.4 29.6 18.3 NA NA NA
Curr. Assets 176 153 90.3 69.0 47.9 39.6 30.9 NA NA NA
Total Assets 200 120 97.7 77.2 56.2 42.7 32.9 30.1 25.0 16.4
Curr. Liab. 33.4 32.6 17.3 14.2 10.5 10.3 7.6 NA NA NA
LT Debt Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Common Eqty. 166 129 80.2 62.0 44.2 32.4 25.3 22.4 18.8 12.3
Total Cap. 167 129 80.2 62.7 45.3 32.4 25.3 22.4 18.8 12.3
Cap. Exp. 4.0 3.8 1.0 2.4 2.9 1.8 0.8 0.6 NA NA
Cash Flow 39.6 38.5 14.1 16.4 10.7 7.5 7.0 3.3 NA NA

Curr. Ratio 5.3 4.7 5.2 4.9 4.6 3.8 4.1 NA NA NA
% LT Debt of Cap. Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
% Net Inc.of Revs. 19.8 21.0 9.9 14.3 12.9 12.7 12.3 7.2 11.9 11.7
% Ret. on Assets 20.3 33.3 12.5 20.2 16.5 18.7 19.8 9.6 21.0 NA
% Ret. on Equity 25.0 34.6 15.3 25.4 22.5 24.5 26.1 12.8 27.8 NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--500 Redwood Blvd., Novato, CA 94948-6121. Tel--(415) 382-4400. Fax--(415) 382-4582. Website--http://www.broderbund.com Chrmn--D. G. Carlston. CEO--J. Durrett. Pres & COO--W. M. McDonagh. VP & CFO--M. Shannahan. VP & Secy--T. L. Marcus. Investor Contact--Robin E. Linstrom (415) 382-4449. Dirs--E. R. Auer, G. L. Buckmiller, D. G. Carlston, S. Cook, J. P. Durrett, W. P. Egan, D. Liddle, W. M. McDonagh, L. Wilkinson. Incorporated--in California in 1981. Empl-- 638. S&P Analyst: Brian Goodstadt


This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997