8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): June 15, 2010

PHOENIX TECHNOLOGIES LTD.

(Exact name of Registrant as specified in its charter)

Delaware	0-17111	04-2685985
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

915 Murphy Ranch Road, Milpitas, California	95035
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (408) 570-1000

Not Applicable
(Former name and former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets

As previously disclosed in a Form 8-K filed on June 4, 2010 (the “June 4, 2010 Form 8-K”), which is incorporated herein by reference, on June 4, 2010, Phoenix Technologies Ltd. (the “Company”) and Hewlett-Packard Company, a Delaware corporation (“HP”), entered into an Asset Purchase Agreement for the sale of the Company’s rights, title and interests in the assets related to HyperSpace^®, HyperCore^® and Phoenix Flip™ (the “Purchased Assets”). On June 15, 2010, the Company and HP completed such sale (the “Closing”). Pursuant to the Asset Purchase Agreement, as amended, HP paid $12 million as cash consideration for the Purchased Assets, of which the Company received approximately $9.8 million at Closing (after deducting certain fees and expenses related to the transaction), and the remaining $2.0 million was deposited into an escrow account, which will be managed and paid pursuant to the terms of the Asset Purchase Agreement and the escrow agreement. Upon the Closing the Company granted HP licenses for certain intellectual property in addition to the Purchased Assets.

On June 16, 2010, the Company announced the Closing in a press release, a copy of which is attached as Exhibit 99.2 to this Form 8-K.

The foregoing summary is qualified in its entirety by reference to the Asset Purchase Agreement, a copy of which will be filed as an exhibit to the Company’s Form 10-Q for the quarterly period ending June 30, 2010.

Item 8.01 Other Events

On June 17, 2010, the Company issued a press release, a copy of which is attached as Exhibit 99.3 to this Form 8-K, regarding the completion of the divestitures of the Company’s non-core assets and reiterating previously announced financial guidance for the second half of fiscal year 2010.

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

Unaudited pro forma financial information giving effect to the disposition discussed in Item 2.01 and related notes are included as Exhibit 99.1 to this report on Form 8-K. The unaudited pro forma condensed consolidated statement of operations for the six months ended March 31, 2010 and the year ended September 30, 2009 presents the Company’s results of operations and financial information as if the disposition had occurred on October 1, 2008. The unaudited pro forma condensed consolidated balance sheet gives effect to the disposition as if it had occurred on March 31, 2010.

(d) Exhibits.

Exhibit No.	Description
99.1	Unaudited Pro Forma Condensed Consolidated Financial Statements of Phoenix Technologies Ltd.
99.2	Press release dated June 16, 2010.
99.3	Press release dated June 17, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PHOENIX TECHNOLOGIES LTD.
Date: June 18, 2010	By:	/s/ Timothy C. Chu
		Name:	Timothy C. Chu
		Title:	Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
99.1	Unaudited Pro Forma Condensed Consolidated Financial Statements of Phoenix Technologies Ltd.
99.2	Press release dated June 16, 2010.
99.3	Press release dated June 17, 2010.

EX-99.1

Exhibit 99.1

PHOENIX TECHNOLOGIES LTD.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(in thousands)

	As of March 31, 2010
				Pro Forma
	As reported			Adjustments			Pro Forma
Assets
Current assets:
Cash and cash equivalents	$	25,324		$	9,800	(b)	$	35,124
Accounts receivable, net of allowances		4,381			—			4,381
Other assets — current		1,247			—			1,247
Assets held for sale		6,456			(57)	(d)		6,399
Total current assets		37,408			9,743			47,151
Property and equipment, net		3,046			—			3,046
Purchased technology and Intangible assets, net		2,615			—			2,615
Goodwill		17,414			—			17,414
Other assets — noncurrent		882			2,000	(c)		2,882
Total assets	$	61,365		$	11,743		$	73,108
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,058			—		$	1,058
Accrued compensation and related liabilities		3,044			—			3,044
Deferred revenue — current		14,504			—			14,504
Income taxes payable — current		1,047			—			1,047
Accrued restructuring charges — current		349			—			349
Other liabilities — current		2,813			1,325	(e)		4,138
Liabilities related to assets held for sale		2,479			—			2,479
Total current liabilities		25,294			1,325			26,619
Accrued restructuring charges — noncurrent		38			—			38
Deferred revenue — noncurrent		1,090			—			1,090
Income taxes payable — noncurrent		9,196			—			9,196
Other liabilities — noncurrent		2,881			—			2,881
Total liabilities		38,499			1,325			39,824
Stockholders’ equity:
Preferred stock		—			—			—
Common stock		36			—			36
Additional paid-in capital		258,487			—			258,487
Accumulated deficit		(142,868	)		10,418	(f)		(132,450	)
Accumulated other comprehensive loss		(663	)		—			(663	)
Less: Cost of treasury stock		(92,126	)		—			(92,126	)
Total stockholders’ equity		22,866			10,418			33,284
Total liabilities and stockholders’ equity	$	61,365		$	11,743		$	73,108

See accompanying notes to unaudited pro forma condensed consolidated financial statements

PHOENIX TECHNOLOGIES LTD.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)

	Six months ended March 31, 2010
				Pro Forma
	As reported			Adjustments			Pro Forma
Revenues:
License fees	$	25,451		$	(980)	(a)	$	24,471
Subscription fees		8			(1)	(a)		7
Service fees		4,018			—			4,018
Total revenues		29,477			(981	)		28,496
Cost of revenues:
License fees		158			(75)	(a)		83
Subscription fees		20			(13)	(a)		7
Service fees		3,497			—			3,497
Amortization of purchased intangible assets		663			(17)	(a)		646
Total cost of revenues		4,338			(105	)		4,233
Gross margin		25,139			(876	)		24,263
Operating expenses:
Research and development		16,121			(5,529)	(a)		10,592
Sales and marketing		7,973			(1,744)	(a)		6,229
General and administrative		7,222			(888)	(a)		6,334
Restructuring and asset impairment		1,236			(189)	(a)		1,047
Total operating expenses		32,552			(8,350	)		24,202
Operating (loss) income		(7,413	)		7,474			61
Interest and other income, net		107			—			107
(Loss) Income before income taxes		(7,306	)		7,474			168
Income tax (benefit) expense		(6,058	)		3,046	(g)		(3,012	)
Income (loss) from continuing operations	$	(1,248	)	$	4,428		$	3,180
Earnings (loss) per share:
Basic	$	(0.04	)				$	0.09
Diluted	$	(0.04	)				$	0.09
Shares used in earnings (loss) per share calculation:
Basic		35,027						35,027
Diluted		35,027						35,037

See accompanying notes to unaudited pro forma condensed consolidated financial statements

PHOENIX TECHNOLOGIES LTD.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)

	Year ended September 30, 2009
				Pro Forma
	As reported (h)			Adjustments			Pro Forma
Revenues:
License fees	$	55,821		$	(70)	(a)	$	55,751
Subscription fees		3,007			(1)	(a)		3,006
Service fees		8,869			—			8,869
Total revenues		67,697			(71	)		67,626
Cost of revenues:
License fees		568			(50)	(a)		518
Subscription fees		1,380			(11)	(a)		1,369
Service fees		7,695			—			7,695
Amortization of purchased intangible assets		2,921			(26)	(a)		2,895
Impairment of purchased intangible assets		11,894			—			11,894
Total cost of revenues		24,458			(87	)		24,371
Gross margin		43,239			16			43,255
Operating expenses:
Research and development		39,609			(9,492)	(a)		30,117
Sales and marketing		19,659			(3,464)	(a)		16,195
General and administrative		20,352			(561)	(a)		19,791
Restructuring and asset impairment		1,846			(141)	(a)		1,705
Impairment of goodwill		32,934			—			32,934
Total operating expenses		114,400			(13,658	)		100,742
Operating loss		(71,161	)		13,674			(57,487	)
Interest and other expenses, net		(46	)		—			(46	)
Loss before income taxes		(71,207	)		13,674			(57,533	)
Income tax (benefit) expense		4,065			5,572	(g)		9,637
Net loss	$	(75,272	)	$	8,102		$	(67,170	)
Loss per share:
Basic and diluted loss per share	$	(2.50	)				$	(2.23	)
Shares used in loss per share calculation:
Basic and diluted		30,084						30,084

See accompanying notes to unaudited pro forma condensed consolidated financial statements

PHOENIX TECHNOLOGIES LTD.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

1 – Description of Transaction

     On June 4, 2010, Phoenix Technologies Ltd. (the “Company”), entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Hewlett-Packard Company (“HP”) for the sale of the Company’s rights, title and interests in the assets related to HyperSpace^®, HyperCore^® and Phoenix Flip™ (the “Sold Assets”). On June 15, 2010, the Company and HP completed such sale (the “Asset Sale”). Pursuant to the Asset Purchase Agreement, as amended, HP paid $12.0 million as cash consideration for the Purchased Assets, of which the Company received approximately $9.8 million at closing, after deducting certain fees and expenses relating to the transaction, and the remaining $2.0 million (the “Escrow Amount”) was deposited into an escrow account, which will be managed and paid pursuant to the terms of the Asset Purchase Agreement and the escrow agreement.

2 – Pro Forma Adjustments

     The accompanying unaudited pro forma condensed consolidated financial statements are prepared to reflect the effect of the Asset Sale on the Company’s historical results of operations and financial position as described in Item 2.01 of this Current Report. The unaudited pro forma condensed consolidated statement of operations for the six months ended March 31, 2010 and the year ended September 30, 2009 presents the Company’s results of operations and financial information as if the Asset Sale had occurred on October 1, 2008. The unaudited pro forma condensed consolidated balance sheet gives effect to the Asset Sale as if the transaction had occurred on March 31, 2010. The unaudited pro forma condensed consolidated statements of operations are based on the assumptions and adjustments described in the notes below and do not reflect any adjustments for non-recurring items or changes in operating strategies arising as a result of the disposition. These unaudited pro forma condensed consolidated financial statements include no assumptions regarding the use of proceeds from the Sold Assets, which are presented as additional cash on the unaudited pro forma condensed consolidated balance sheet. Accordingly, the actual effect of the sale, due to this and other factors, could differ from the pro forma adjustments presented herein.

     The pro forma adjustments presented herein are based on estimates and certain information that is currently available and may change as additional information becomes available. The unaudited pro forma condensed consolidated financial statements have been presented for informational purposes only and are not necessarily indicative of the results of operations or the financial position that would have been achieved had the Asset Sale been completed at the beginning of or as of the periods presented, nor are they indicative of the future results of operations or future financial position of the Company. These unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended September 30, 2009, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2009, as well as in conjunction with the Company’s unaudited condensed consolidated financial statements and accompanying notes as of and for the period ended March 31, 2010, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Quarterly Report on Form 10-Q for the six months ended March 31, 2010. The adjustments are described below and are set forth in the “Pro Forma Adjustments” column.

The pro forma adjustments are as follows:

(a) These adjustments are recorded to eliminate the revenues and operating expenses that the Company believes are directly attributable to the Sold Assets and will not continue after completion of the transaction.

(b) To record the cash consideration received from HP, net of the Escrow Amount and net of transaction costs paid directly by HP.

(c) To record the portion of cash consideration received in escrow for the Escrow Amount.

(d) To eliminate the assets sold to HP that were classified as Asset held for sale as of March 31, 2010.

(e) To accrue for estimated transaction costs incurred in connection with the divestiture.

(f) To record the preliminary gain on the sale of the assets related to HyperSpace, HyperCore and Phoenix Flip as if the transaction had been consummated as of March 31, 2010.

Proceeds from sale	$	12,000
Assets sold		(57	)
Estimated transaction costs (including that paid directly by HP)		(1,525	)
Pro forma gain on sale	$	10,418

(g) An income tax benefit has been provided relating to the pretax loss from the HyperSpace^®, HyperCore^® and Phoenix Flip™ operations of the Company for the year ended September 30, 2009 and for the six months ended March 31, 2010. These adjustments are based on the Company’s statutory rate. This treatment is for purposes of reporting the disposal in accordance with Article 11 of Regulation S-X, however the ultimate treatment in the Company’s historical financial statements to be included in its Annual Report on Form 10-K for the year ending September 30, 2010 will not provide for such treatment as these operations are not presented as discontinued operations.

(h) During the quarter and six months ended March 31, 2010, the Company classified revenues and expenses related to its eSupport disposal group as discontinued operations. For the purpose of preparing accompanying unaudited pro forma condensed consolidated statement of operations for the year ended September 30, 2009 in accordance with Article 11 of Regulation S-X, the Company did not reclassify the operating results of eSupport disposal group into discontinued operations. However, the ultimate presentation of the Company’s historical financial statements for the year ended September 30, 2009 to be included in its Annual Report on Form 10-K for the year ending September 30, 2010 will not provide for such presentation as the operations of eSupport disposal group will be required to be presented as discontinued operations.

EX-99.2

Exhibit 99.2

Phoenix Technologies Completes Strategic Sale of HyperSpace Assets to HP

MILPITAS, Calif. — June 16, 2010 — Phoenix Technologies Ltd. (NASDAQ: PTEC), the global leader in core systems software (CSS), today announced it has completed the sale of the assets related to its HyperSpace^®, HyperCore^® and Phoenix Flip™ instant-on and client virtualization products to HP. Total consideration from the sale of the assets is $12.0 million, of which approximately $9.8 million was paid to Phoenix at the closing, after deducting certain fees and costs relating to the transaction, and $2.0 million which was placed into escrow to cover certain potential Company indemnification obligations.

“The completion of this transaction marks a major milestone for our Company as we refocus our efforts on our CSS business where we have a proven track record of success,” said Tom Lacey, President and CEO of Phoenix. “With this cash infusion, we are well poised to extend our CSS market leadership and improve our enterprise value.”

About Phoenix Technologies Ltd.

Phoenix Technologies Ltd. (Nasdaq: PTEC), the leader in core systems software products, services and embedded technologies, pioneers open standards and delivers innovative solutions that enable the PC industry’s top system builders and specifiers to differentiate their systems, reduce time-to-market and increase their revenues. The Company’s flagship products — SecureCore Tiano™ and Embedded BIOS^® — are revolutionizing the PC user experience by delivering unprecedented performance, security, reliability, continuity, and ease-of-use. The Company established industry leadership and created the PC clone industry with its original BIOS product in 1983. Phoenix has over 200 technology patents issued and pending, and has shipped firmware in over one billion systems. Phoenix is headquartered in Milpitas, California with offices worldwide. For more information, visit http://www.phoenix.com.

Phoenix, Phoenix Technologies, SecureCore Tiano, Embedded BIOS, and the Phoenix Technologies logo are trademarks and/or registered trademarks of Phoenix Technologies Ltd. All other marks are the marks of their respective owners.

To be added to the Company’s email distribution for future news releases, please send your request to phoenix@tpg-ir.com.

Safe Harbor

This release contains 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 our business prospects, market leadership and enterprise value, which are based on current expectations, forecasts and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include changes in demand for our products and services in adverse economic conditions; our dependence on key customers; our ability to enhance existing products and develop and market new products and technologies successfully; end-user demand for products incorporating our products; the ability of our customers to introduce and market new products that incorporate our products; and our ability to attract and retain key personnel. 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 release 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.

Contact:

The Piacente Group, Inc.
Investor Relations
Brandi Floberg
Tel. 1-212-481-2050
phoenix@thepiacentegroup.com

EX-99.3

Exhibit 99.3

Phoenix Technologies Completes Divestitures of Non-Core Assets for Total Gross Proceeds of
$20.3 Million

Company Completes Sale of eSupport

$5M in Quarterly Savings Expected from Divestitures

Company Reiterates Financial Guidance for Second Half of Fiscal 2010

MILPITAS, Calif. — June 17, 2010 — Phoenix Technologies Ltd. (NASDAQ: PTEC), the global leader in core systems software (CSS), today announced the sale of its eSupport business assets to eSupport.com, Inc., a newly-formed private entity, for an upfront cash payment of $1.0 million and $0.6 million in licensing fees to be paid annually over the next three years. Combined with the previously-announced asset sales of FailSafe and HyperSpace, the sale of eSupport marks Phoenix’s third and final non-core asset divestiture. In total Phoenix received $20.3 million in consideration from these transactions: $17.7 million in cash and $2.6 million in escrowed amounts and future licensing fees.

As a result of these transactions, the Company expects to realize approximately $16.6 million in net proceeds and to incur approximately $1.7 million in non-recurring restructuring and asset impairment charges in the third quarter of fiscal 2010. Phoenix also expects to recognize cost savings from the sale of its non-core assets of approximately $5.0 million per quarter, which it plans to use in part to support its CSS growth initiatives. These net savings are expected to be fully realized beginning in the fourth quarter of fiscal 2010.

“In addition to strengthening our balance sheet, we are now a more focused and nimble organization, well positioned to execute on our growth strategy while maintaining a cost structure that better aligns with our revenue stream,” said Tom Lacey, President and CEO of Phoenix. “We have already begun executing on our plan to recapture CSS market share and are exploring new opportunities beyond our core business where we believe we can achieve complementary growth with minimal incremental costs. In particular, we are making development progress with our plug-in product initiatives and plans to address the growing embedded market, as well as exploring the potential monetization of our extensive IP portfolio.”

In January 2010, Phoenix announced its intention to seek strategic alternatives for its non-core assets. In addition to the sale of its eSupport assets announced today, Phoenix sold its FailSafe and Freeze assets in April 2010 to Absolute Software for a cash payment of $6.9 million. In June 2010, the Company sold the assets related to its HyperSpace, HyperCore and Phoenix Flip instant-on products to HP for $12.0 million.

Phoenix expects to achieve its previously-announced guidance for second half fiscal 2010 revenue between $28.0 million to $32.0 million, and non-GAAP operating income of $1.0 million to $3.0 million.

About Phoenix Technologies Ltd.

Phoenix Technologies Ltd. (Nasdaq: PTEC), the leader in core systems software products, services and embedded technologies, pioneers open standards and delivers innovative solutions that enable the PC industry’s top system builders and specifiers to differentiate their systems, reduce time-to-market and increase their revenues. The Company’s flagship products — SecureCore Tiano™ and Embedded BIOS^® — are revolutionizing the PC user experience by delivering unprecedented performance, security, reliability, continuity, and ease-of-use. The Company established industry leadership and created the PC clone industry with its original BIOS product in 1983. Phoenix has over 200 technology patents issued and pending, and has shipped firmware in over one billion systems. Phoenix is headquartered in Milpitas, California with offices worldwide. For more information, visit http://www.phoenix.com.

Phoenix, Phoenix Technologies, SecureCore Tiano, Embedded BIOS, and the Phoenix Technologies logo are trademarks and/or registered trademarks of Phoenix Technologies Ltd. All other marks are the marks of their respective owners.

To be added to the Company’s email distribution for future news releases, please send your request to phoenix@tpg-ir.com.

Safe Harbor

The statements in this release 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, but not limited to, our financial performance, including achievement of revenue and operating income targets; our expectations for our new products; product enhancements and growth opportunities. These statements involve risk and uncertainties, including: changes in demand for our products and services in adverse economic conditions; our dependence on key customers; our ability to enhance existing products and develop and market new products and technologies successfully; our ability to achieve and maintain profitability and positive cash flow from operations; our ability to meet our capital requirements in the future; our ability to attract and retain key personnel; product and price competition in our industry and the markets in which we operate; our ability to maintain the average selling price of our core systems software; end-user demand for products incorporating our products; the ability of our customers to introduce and market new products that incorporate our products; our ability to generate additional capital on terms acceptable to us; timing of payment by our customers; risks associated with any acquisition or disposition strategy that we might employ; costs and results of litigation; failure to protect our intellectual property rights; changes in our relationship with leading software and semiconductor companies; the rate of adoption of new operating system and microprocessor design technology; the volatility of our stock price; risks associated with our international sales and operating internationally, including currency fluctuations, acts of war or terrorism, and changes in laws and regulations relating to our employees in international locations; whether future restructurings become necessary; fluctuations in our operating results and our ability to manage expenses consistent with our revenues; the effects of any software viruses or other breaches of our network security; failure to timely upgrade our information technology system; defects or errors in our products and services; consolidation in the industry in which we operate; risk associated with use of open source software; any material weakness in our internal controls over financial reporting; changes in financial accounting standards and our cost of compliance; business disruptions due to acts of war, power shortages and unexpected natural disasters; trends regarding the use of the x86 microprocessor architecture for personal computers and other digital devices; anti-takeover provisions in our charter documents; changes in our effective tax rates; and the validity of our tax positions. 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 release 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.

Contact:

The Piacente Group, Inc.
Investor Relations
Brandi Floberg
Tel. 1-212-481-2050
phoenix@thepiacentegroup.com