SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- ----------------------
Commission File Number 0-27316
Molecular Devices Corporation
(Exact name of registrant as specified in its charter)
Delaware 94-2914362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1311 Orleans Drive
Sunnyvale, California 94089
(Address of principal executive offices, including zip code)
(408) 747-1700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
As of August 9, 1999, 9,603,458 shares of the Registrant's Common Stock were
outstanding.
<PAGE>
MOLECULAR DEVICES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998................................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three and Six Months Ended June 30, 1999 and 1998................... 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1999 and 1998............................. 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................. 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK................................................... 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS ...................................... 14
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............... 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................... 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS........................................ 14
ITEM 5. OTHER INFORMATION....................................... 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 15
SIGNATURE ............................................................... 16
2
<PAGE>
<TABLE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
MOLECULAR DEVICES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 25,036 $ 32,689
Accounts receivable, net 15,908 12,958
Inventories 6,356 4,055
Deferred tax asset 2,197 1,630
Other current assets 786 688
-------- --------
Total current assets 50,283 52,020
Equipment and leasehold improvements, net 2,159 2,115
Intangible and other assets 5,031 270
-------- --------
$ 57,473 $ 54,405
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,590 $ 2,135
Accrued liabilities 2,843 4,945
Deferred revenue 1,526 1,502
-------- --------
Total current liabilities 7,959 8,582
Stockholders' equity:
Preferred stock, no par value; 3,000,000 authorized
no shares issued or outstanding - -
Common stock, $.001 par value; 30,000,000 shares
authorized; 9,568,908 and 9,476,062
shares issued and outstanding, at June 30, 1999
and December 31, 1998, respectively 9 9
Additional paid-in capital 43,067 42,391
Retained earnings 7,329 4,235
Deferred compensation (370) (586)
Accumulated and other comprehensive income (521) (226)
-------- --------
Total stockholders' equity 49,514 45,823
-------- --------
$ 57,473 $ 54,405
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
MOLECULAR DEVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------------------- -------------------
<S> <C> <C> <C> <C>
REVENUES $ 14,801 $ 11,867 $ 28,308 $ 22,213
COST OF REVENUES 5,283 4,510 10,547 8,223
--------- --------- ---------- --------
GROSS MARGIN 9,518 7,357 17,761 13,990
--------- --------- ---------- --------
OPERATING EXPENSES:
Research and development 1,780 1,488 3,369 2,871
Write-off of acquired in-process research
& development 2,037 - 2,037 -
Selling, general and administrative 4,225 3,183 8,091 6,492
--------- --------- ---------- --------
Total operating expenses 8,042 4,671 13,497 9,363
--------- --------- ---------- --------
INCOME FROM OPERATIONS 1,476 2,686 4,264 4,627
Other income, net 347 401 768 759
--------- --------- ---------- --------
INCOME BEFORE INCOME TAXES 1,823 3,087 5,032 5,386
Income tax provision (702) (1,189) (1,938) (2,074)
--------- --------- ---------- --------
NET INCOME $ 1,121 $ 1,898 $ 3,094 $ 3,312
========= ========= ========== ========
BASIC NET INCOME PER SHARE $ 0.12 $ 0.20 $ 0.32 $ 0.35
========= ========= ========== ========
DILUTED NET INCOME PER SHARE $ 0.11 $ 0.20 $ 0.31 $ 0.34
========= ========= ========== ========
SHARES USED IN COMPUTING BASIC NET INCOME PER SHARE 9,566 9,386 9,549 9,373
========= ========= ========== ========
SHARES USED IN COMPUTING DILUTED NET INCOME PER SHARE 10,013 9,710 9,990 9,724
========= ========= ========== ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
MOLECULAR DEVICES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<CAPTION>
Six Months Ended
June 30,
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 3,094 3,312
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 410 379
Write-off of acquired in-process research & development 2,037 -
Amortization of deferred compensation 216 119
Amortization of goodwill and developed technology 38 -
(Increase) decrease in assets:
Accounts receivable (2,646) (1,084)
Inventories (1,788) (203)
Deferred tax asset (567) 330
Other current assets (80) (553)
Increase (decrease) in liabilities:
Accounts payable 1,354 285
Accrued liabilities (2,152) 372
Deferred revenue 24 285
---------- ----------
Net cash (used in) provided by operating activities (60) 3,242
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (363) (370)
Acquisition of Skatron Instruments AS, net of cash acquired (7,118) -
Other assets (82) 32
---------- ----------
Net cash used in investing activities (7,563) (338)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of short term debt (226) -
Issuance of common stock, net 493 228
---------- ----------
Net cash provided by financing activities 267 228
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (297) (119)
Net (decrease) increase in cash and cash equivalents (7,653) 3,013
Cash and cash equivalents at beginning of period 32,689 26,773
---------- ----------
Cash and cash equivalents at end of period 25,036 29,786
========== ==========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
5
<PAGE>
MOLECULAR DEVICES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
the disclosures which are made are adequate to make the information presented
not misleading. These condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, as filed with the Securities and Exchange Commission on March
26, 1999.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) which
are, in the opinion of management, necessary to state fairly the results for the
periods presented. The results for the three and six month periods ended June
30, 1999 are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 1999.
Note 2. New Accounting Standard
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities". We are required to adopt SFAS No. 133 for the year
ending December 31, 2001. SFAS No. 133 establishes methods of accounting for
derivative financial instruments and hedging activities related to those
instruments as well as other hedging activities. Because we currently hold no
derivative financial instruments and do not currently engage in hedging
activities, adoption of SFAS No. 133 is expected to have no material impact on
our financial condition or results of operations.
Note 3. Comprehensive Income
Statement of Financial Accounting Standards No. 130 requires unrealized gains or
losses on the Company's foreign currency translation adjustments, which are
reported separately in stockholders' equity, to be included in other
comprehensive income. Comprehensive income was approximately $1.0 million and
$1.9 million for the three month periods ended June 30, 1999 and 1998,
respectively.
Comprehensive income was approximately $2.9 million and $3.2 million for the six
month periods ended June 30, 1999 and 1998, respectively.
6
<PAGE>
Note 4. Inventories
Inventories consist of (in thousands):
June 30, 1999 December 31, 1998
------------- -----------------
(unaudited)
Finished goods $ 3,119 $ 1,660
Work in process 879 602
Raw materials and subassemblies 2,358 1,793
-------------- -------------
$ 6,356 $ 4,055
============== =============
Note 5. Acquisition of Skatron Instruments, AS
On May 17, 1999, the Company acquired all of the outstanding stock of Skatron
Instruments AS, a Norwegian company ("Skatron") and certain assets from Skatron
Instruments Inc., a Virginia corporation and wholly-owned subsidiary of Skatron,
for a cash payment at closing of $7,118,000 (including $300,000 of acquisition
related expenses). The acquisition was accounted for as a purchase and the total
purchase price was allocated based on an independent appraisal as follows:
Acquired developed technology and goodwill $4,717,000
Acquired in-process research and development 2,037,000
Net book value of acquired assets and liabilities 364,000
----------
Total purchase price $7,118,000
==========
The purchase price allocation resulted in a $2,037,000 charge related to the
value of acquired in-process research and development in the second quarter of
1999. The value of acquired in-process research and development represents the
appraised value of technology in the development stage that had not yet reached
economic and technological feasibility. In reaching this determination, the
Company considered, among other factors, the stage of development of each
product, the time and resources needed to complete each product, and expected
income and associated risks. The developed technology and goodwill are being
amortized over periods of up to 15 years, the estimated useful lives of the
acquired assets. The results of Skatron are consolidated from May 18, 1999.
Pro forma consolidated results for the Company as if the acquisition had been
consummated January 1, 1999, excluding the charge for acquired in-process
research and development, are as follows (in thousands except per share amount):
Revenue $29,358
Net Income $4,341
Diluted Net Income per Share $0.43
The pro forma information does not purport to be indicative of the results that
actually would have occurred had the acquisition been consummated January 1,
1999, or of results which may occur in the future. In accordance with SEC
Regulation 5-X, Rule 11-02(b)(5), nonrecurring charges, such as the charge for
acquired in-process technology resulting from the acquisition, are not reflected
in the pro forma financial summary.
7
<PAGE>
Note 6. Net Income Per Share
<TABLE>
Basic net income per share is computed using the weighted average number of
shares of common stock outstanding and diluted net income per share is computed
using the weighted average number of shares of common stock outstanding and
dilutive common equivalent shares from outstanding stock options (using the
treasury stock method). Computation of earnings per share is as follows (in
thousands except per share amounts):
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
----------------- ----------------
<S> <C> <C> <C> <C>
Net Income $ 1,121 $ 1,898 $ 3,094 $ 3,312
Denominator for basic EPS - weighted average common
shares outstanding 9,566 9,386 9,549 9,373
Effect of dilutive securities - employee stock options 447 324 441 351
------- ------- ------- -------
Denominator for diluted EPS - weighted average common
shares outstanding plus dilutive securities 10,013 9,710 9,990 9,724
------- ------- ------- -------
BASIC NET INCOME PER SHARE $ 0.12 $ 0.20 $ 0.32 $ 0.35
======= ======= ======= =======
DILUTED NET INCOME PER SHARE $ 0.11 $ 0.20 $ 0.31 $ 0.34
======= ======= ======= =======
</TABLE>
8
<PAGE>
MOLECULAR DEVICES CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
words "expect," "believe," "intends," and words of similar import are intended
to identify those statements as forward-looking statements. The Company's actual
results could differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in this section, as well as those identified in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 as filed with the
Securities and Exchange Commission on March 26, 1999.
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in Part I
- - Item 1 of this Quarterly Report and the audited consolidated financial
statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations for the year ended December 31,
1998 contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 as filed with the Securities and Exchange Commission on March
26, 1999. The results for the three and six month periods ended June 30, 1999
are not necessarily indicative of the results to be expected for the entire
fiscal year ending December 31, 1999.
Results of Operations - Three and six months ended June 30, 1999 and 1998
REVENUES. Revenues for the second quarter of 1999 increased 25% to approximately
$14.8 million from approximately $11.9 million in the second quarter of 1998.
Maxline and Cell Analysis product families generated increased levels of revenue
which was partially offset by decreased Threshold revenues. Maxline revenues
increased primarily due to greater sales of new SPECTRAmax products, most
noteably the Gemini, which addresses the fluorescence plate reader market. Cell
Analysis revenues increased due to the introduction of new FLIPR products in
late 1998. Threshold revenues declined primarily as a result of decreased demand
from military customers worldwide.
Revenues for the first six months of 1999 increased 27% to approximately $28.3
million from approximately $22.2 million in the same period of 1998. Maxline and
Cell Analysis product families generated increased levels of revenue as
partially offset by decreased Threshold product family revenues based on the
same trends discussed above.
GROSS MARGIN. Gross margin increased to 64.3% in the second quarter of 1999 as
compared to 62.0% in the second quarter of 1998. This improved margin
performance was primarily due to increased sales of higher margin SPECTRAmax
products. The Gemini was a key driver for this improved performance.
Gross margin for the first six months of 1999 decreased slightly to 62.7% from
63.0% in the same period last year. This decline was directly attributable to
the first quarter 1999 margin of 61% which was lower due to a high volume of
lower margin FLIPR product shipments (384 upgrades).
RESEARCH AND DEVELOPMENT. Research and development expenses for the second
quarter of 1999 increased by 20% to approximately $1.8 million (12.0% of total
revenues) from approximately $1.5 million (12.5% of total revenues) for the
second quarter of 1998. Research and development expenses for the first six
months of 1999 increased by 17% to approximately $3.4 million (11.9% of total
revenues) from approximately $2.9 million (12.9% of total revenues) for the same
period of 1998.
9
<PAGE>
The increased spending for both periods is primarily the result of additional
personnel and increased spending on development activities both required to
support on-going development of new products.
WRITE-OFF OF ACQUIRED IN-PROCESS RESEARCH & DEVELOPMENT. The Company recorded a
charge of $2,037,000 during the second quarter of 1999 due to the write-off of
acquired in-process research and development related to the Company's
acquisition of Skatron on May 17, 1999. See Note 5 of "Notes to Condensed
Consolidated Financial Statements," included in Part I - Item 1.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the second quarter of 1999 increased by 33% to approximately $4.2
million (28.5% of total revenues) from approximately $3.2 million (26.8% of
total revenues) for the second quarter of 1998. Selling, general and
administrative expenses for the first six months of 1999 increased by 25% to
approximately $8.1 million (28.6% of total revenues) from approximately $6.5
million (29.2% of total revenues) for the same period of 1998. This increased
spending for both periods is primarily the result of additional expenditures on
marketing, sales and service related activities, including additional personnel,
as the Company continued its efforts to expand worldwide market coverage and
improve customer service.
OTHER INCOME (NET). Net other income for the second quarter of 1999 decreased by
13% to approximately $347,000 from approximately $401,000 in the second quarter
of 1998 due to a decreased average cash balance, and correspondingly lower
interest earnings, period to period as a result of the Skatron acquisition. Net
other income for the first six months of 1999 increased nominally to $768,000
from $759,000 in the same period last year. Average cash balances for these
periods were essentially equal due to the use of cash for the Skatron
acquisition in the middle of the second quarter of 1999.
INCOME TAX PROVISION. Income tax provisions of $702,000 and $1.9 million were
recorded in the second quarter and first six months of 1998, respectively, as
compared to $1.2 million and $2.1 million in the same periods of the prior year.
The effective tax rate for all periods was 38.5%. The lower overall provisions
in 1999 as compared to 1998 are due to the write-off of acquired in-process
research and development discussed above.
Liquidity and Capital Resources
The Company had cash and cash equivalents of approximately $25.0 million at June
30, 1999, compared to $32.7 million at December 31, 1999. During the first six
months of 1999, the Company used approximately $60,000 and $7.6 million,
respectively, for operating and investing activities as partially offset by
$267,000 of cash provided by financing activities. The cash used in operating
activities relates primarily to short-term working capital needs, particularly
accounts receivable and inventory and payment of current liabilities. The cash
used in investing activities relates primarily to the Skatron acquisition and,
to a lesser extent, capital spending. The cash provided by financing activities
related to stock option exercises as offset by debt repayments required as a
result of the Skatron acquisition.
The Company believes that its existing capital resources and cash expected to be
generated from future operations will be sufficient to fund its operations and
anticipated capital expenditures for the foreseeable future. However, the
Company's future liquidity and capital requirements will depend upon numerous
factors, including the resources the Company devotes to developing,
manufacturing and marketing its products, the extent to which the Company's
products generate market acceptance and demand, potential acquisition
opportunities that may arise and other factors. As such, there can be no
assurances that the Company will not require additional financing in the future
and, therefore, the Company may in the future seek to raise additional funds
through bank facilities, debt or equity offerings or other sources of capital.
Additional funding may not be available when needed or on terms
10
<PAGE>
acceptable to the Company, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Factors That May Affect Future Results
The Company's business, financial condition and results of operations are
subject to various risk factors, including those described below and elsewhere
in this report.
o Uncertainty of Future Operating Results. Future operating results will
depend on many factors, including demand for the Company's products, the
levels and timing of government and private sector funding of life sciences
research activities, the timing of the introduction of new products by the
Company or by competing companies, the integration of acquired products and
technology into manufacturing and distribution processes, the Company's
ability to control costs and its ability to attract and retain highly
qualified personnel. Furthermore, the Company's gross margins can be
significantly affected by many factors, including shifts in product mix,
the mix of direct sales as compared with sales through distributors,
competitive price pressures and quarterly fluctuations in sales levels
relative to fixed costs.
o Fluctuations in Quarterly Operating Results; Lack of Backlog. The Company
manufactures its products to forecast rather than to outstanding orders,
and products are typically shipped within 30 to 90 days of purchase order
receipt. As a result, the Company does not believe the amount of backlog at
any particular date is indicative of its future level of sales. The
Company's manufacturing procedures may in certain instances create a risk
of excess or inadequate inventory levels if orders do not match forecasts.
The Company's expense levels are based, in part, on expected future sales.
However, the timing of capital equipment purchases by customers is expected
to be uneven and difficult to predict. If sales levels in a particular
quarter do not meet expectations, the Company may not be able to adjust
operating expenses sufficiently quickly to compensate for the shortfall,
and the Company's results of operations for that quarter may be materially
adversely affected. Many of the Company's products are subject to long
customer procurement processes. In addition, a significant portion of the
Company's revenues are typically derived from sales of a small number of
relatively high-priced systems, and sales of such products may increase as
a percentage of revenue in the future. Delays in receipt of anticipated
orders of such products could lead to substantial variability from quarter
to quarter. Furthermore, the Company has historically received purchase
orders and made a significant portion of each quarter's product shipments
near the end of the quarter. If that pattern continues, even short delays
in the receipt of orders or shipment of products at the end of a quarter
could have a material adverse effect on results of operations for that
quarter. The Company typically experiences a decrease in the level of sales
in the first calendar quarter as compared to the fourth quarter of the
preceding year because of budgetary and capital equipment purchasing
patterns in the life sciences industry. The Company also typically
experiences a decrease in revenues in the third quarter compared to the
second quarter, related to seasonality primarily associated with lower
European and academic sales during the summer months. Revenues for the
third quarter of 1998 nominally exceeded second quarter 1998 revenues due
to the phasing in of new products. The Company believes that the third
quarter seasonality trend may recur in the future as the Company increases
efforts to further penetrate European Markets. Operating results in any
period should not be considered indicative of the results to be expected
for any future period.
o Dependency on New Products; Rapid Technological Change. The life sciences
instrumentation market is characterized by rapid technological change and
frequent new product introductions. The Company's future success will
depend on its ability to enhance its current products and to develop and
introduce, on a timely basis, new products that address the evolving needs
of its customers.
11
<PAGE>
o Reliance on Sole Source Suppliers. Certain components used in the Company's
products are currently purchased from single sources. Any delay in the
manufacture of such components could materially adversely affect the
Company's business, financial condition and results of operations.
o Year 2000 Compliance. The Company has a Year 2000 project in place to
address the potential exposures related to the impact on its computer
systems and scientific and manufacturing equipment containing computer
related components for the Year 2000 and beyond. The Company is currently
assessing its internal and external Year 2000 risks and continues to
monitor, validate and implement the identified corrective actions. The
Company's internal business systems have been reviewed and plans are being
defined to achieve Year 2000 compliance. Testing of the Company's business
critical application programs began in the fourth quarter of 1998 and is
scheduled to be complete by the third quarter of 1999. Any failure on the
part of the Company to identify and correct Year 2000 compliance issues
related to the Company's internal business systems could materially
adversely affect the Company's business, financial condition and results of
operation.
All of the Company's products that are currently manufactured and supported
are Year 2000 compliant. There is an installed base of Company products no
longer distributed that are not Year 2000 compliant, all of which have an
identified upgrade path which our customers can purchase to achieve
compliance.
In addition to risks associated with the Company's own computer systems,
equipment and products, the Company has relationships with, and is to
varying degrees dependent upon, a large number of third parties that
provide information, goods and services to the Company. These include
financial institutions, suppliers, vendors, governmental entities,
distributors and customers. If significant numbers of these third parties
experience failures in their computer systems or equipment due to Year 2000
non-compliance, it could affect the company's ability to process
transactions, manufacture products, or engage in similar normal business
activities. While many of these risks are outside the control of the
Company, the Company has instituted programs, including internal records
review and use of external questionnaires, to identify key third parties,
assess their level of Year 2000 compliance and address any non-compliance
issues.
At this time, the Company believes there are no significant incremental
costs anticipated to achieve both internal and external Year 2000
compliance. The total cost of the Year 2000 systems assessments and
conversions is being funded through operating cash flows and the Company is
expensing these costs as they are incurred. However, there can be no
assurances that the third parties of the Company will be in compliance and
the Company has no control over whether such third parties will be in
compliance with Year 2000 requirements. Any failure on the part of the
Company's third parties, which could include inability to deliver or
purchase product, could materially adversely affect the Company's business,
financial condition and results of operations.
Other Factors. The Company's business is affected by other factors, including:
(i) the possibility that the introduction or announcement of new products would
render existing products obsolete or result in a delay or decrease in purchase
orders for existing products; (ii) the extent to which and the timing in which
the Company's products achieve market acceptance; (iii) the capital spending
policies of the Company's customers (which depend on various factors, including
the resources available to such customers, the spending priorities among various
types of research equipment and the policies regarding capital expenditures
during recessionary periods), including those policies of universities,
government research laboratories and other institutions whose funding is
dependent on grants from government agencies; (iv) competition in the life
sciences instrumentation market which is highly competitive and expected by the
Company to increase; (v) the Company's ability to obtain and maintain patent and
other intellectual property protection for its products and technology; (vi)
compliance with governmental
12
<PAGE>
regulations, including those promulgated by the United Sates Food and Drug
Administration and similar state and foreign agencies; and (vii) the extent of
the Company's sales outside the United States, which involve certain specific
risks, including risks related to currency fluctuations, imposition of
government controls, export license requirements, restrictions on export of
critical technology, political and economic instability or conflicts, trade
restrictions, changes in tariffs and taxes and difficulties in staffing and
managing international operations and international distributor relationships.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk, including changes in interest rates and
foreign currency exchange rates. The primary objective of the Company's
investment activities is to preserve principal while at the same time maximizing
the income we receive from our investments without significantly increasing
risk. A discussion of the Company's accounting policies for financial
instruments and further disclosures relating to financial institutions is
included in the Summary of Significant Accounting Policies note in the Notes to
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998. The Company's interest
income is sensitive to changes in the general level of interest rates, primarily
U.S. interest rates. In this regard, changes in U.S. interest rates affect the
interest earned on the Company's cash equivalents. The Company invests its
excess cash primarily in demand deposits with United States banks and money
market accounts and short-term securities. These securities, consisting of
commercial paper and U.S. government agency securities, are carried at market
value (which approximate cost), typically mature or are redeemable within 90
days, and bear minimal risk. The Company is exposed to changes in exchange rates
in Europe (primarily the United Kingdom and Germany) and Canada. All export
sales, with the exception of sales into Canada, are denominated in U.S. dollars
and bear no exchange rate risk. Gains and losses resulting from foreign currency
transactions in Canada have been immaterial.
13
<PAGE>
MOLECULAR DEVICES CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company entered into employment arrangements with each of Dr. Joseph D.
Keegan, Mr. Timothy A. Harkness and Mr. John S. Senaldi pursuant to which the
Company is obligated to issue to each such officer shares of its Common Stock in
exchange for services rendered. As a result of these arrangements, the Company
issued shares of its Common Stock to these officers on the dates and amounts
indicated below in reliance on the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended.
Number of Shares Date of Issue
Dr. Keegan 3,750 06/30/99
Mr. Harkness 1,250 04/09/99
Mr. Senaldi 312 05/06/99
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Matters presented at the Annual Meeting of Stockholders on May 20, 1999, and the
voting of stockholders was as follows:
(a) Election of directors for the ensuing year:
For Authority Withheld
--- ------------------
Joseph D. Keegan, Ph.D. 8,178,458 136,870
Moshe H. Alafi 8,177,758 137,570
David L. Anderson 8,177,758 137,570
A. Blaine Bowman 8,178,758 136,570
Paul Goddard, Ph.D. 8,178,758 136,570
Andre F. Marion 8,177,337 137,991
Harden M. McConnell, Ph.D. 8,177,437 137,891
J. Allan Waitz, Ph.D. 8,177,058 138,270
14
<PAGE>
(b) Approve amendments to the Company's 1995 Stock Option Plan:
For Against Abstain
--- ------- -------
3,659,307 2,757,720 442,602
(c) Approve amendments to the Company's 1995 Non-Employee
Director's Stock Option Plan:
For Against Abstain
--- ------- -------
4,238,840 2,607,970 12,819
(d) Ratification of the appointment of Ernst & Young, LLP as
independent auditors for fiscal 1999:
For Against Abstain
--- ------- -------
8,307,303 2,300 5,725
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1(1) Stock and Asset Purchase Agreement, dated as of May 17,
1999, among Molecular Devices Corporation, a Delaware
corporation, Helge Skare, Wiel Skare, Steinar Faanes
and Sten Skare, each an individual resident in Norway,
Skatron Instruments AS, a Norwegian company, and
Skatron Instruments, Inc., a Virginia corporation (the
Disclosure Schedule has been omitted as permitted
pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC"), but will be furnished
supplementally to the SEC upon request).
2.2(1) Escrow Agreement, dated as of May 17, 1999, among
Molecular Devices Corporation, a Delaware corporation,
Helge Skare, Wiel Skare and Greater Bay Trust Company,
as Escrow Agent.
10.5 1995 Non-Employee Directors' Stock Option Plan, as
amended.
10.7 1995 Stock Option Plan, as amended.
27.1 Financial Data Schedule.
------------------
(1) Incorporated by reference to the similarly described
exhibit in the Company's Current Report on Form 8-K
filed May 26, 1999.
15
<PAGE>
(b) Reports on Form 8-K
A report on Form 8-K dated May 18, 1999 was filed on
May 26, 1999.
SIGNATURE
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 thereunto duly authorized.
MOLECULAR DEVICES CORPORATION
By: /s/ Timothy A. Harkness
-------------------------------------------------------
Vice President, Finance and Chief Financial Officer
(Duly Authorized and Principal Financial and Accounting
Officer)
Date: August 10, 1999
16
Appendix B
MOLECULAR DEVICES CORPORATION
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN ADOPTED ON
SEPTEMBER 13, 1995
APPROVED BY SHAREHOLDERS
ON DECEMBER 12, 1995
AMENDED BY THE BOARD ON JANUARY 29, 1999
AS AMENDED BY THE STOCKHOLDERS ON MAY 20, 1999
1. PURPOSE.
(a) The purpose of the 1995 Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which each director of MOLECULAR DEVICES
CORPORATION (the "Company") who is not otherwise an employee of the Company or
of any Affiliate of the Company (each such person being hereafter referred to as
a "Non-Employee Director") will be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. If the
Committee is delegated authority to amend or fix the timing or terms of options
granted under the Plan, then the composition of the Committee shall comply with
the requirements for exemption of option grants from the application of Section
16 of the Securities Exchange Act of 1934, or the terms of such options shall be
such as to qualify such options for such exemption. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
1
<PAGE>
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate three hundred forty-seven
thousand five hundred (347,500) shares of the Company's common stock. If any
option granted under the Plan shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not purchased under such option
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
(a) Options shall be granted only to Non-Employee Directors of the
Company.
5. NON-DISCRETIONARY GRANTS.
(a) Upon the date of the initial approval of the Plan by the Board (the
"Adoption Date"), each person who is then a Non-Employee Director automatically
shall be granted an option to purchase sixteen thousand five hundred (16,500)
shares of common stock of the Company on the terms and conditions set forth
herein.
(b) Each person who is, after the Adoption Date, elected for the first
time to be a Non-Employee Director automatically shall, upon the date of his
initial election to be a Non-Employee Director by the Board or shareholders of
the Company, be granted an option to purchase ten thousand (10,000) shares of
common stock of the Company on the terms and conditions set forth herein.
(c) Following the Adoption Date, each Non-Employee Director shall
automatically be granted an additional Option to purchase four thousand (4,000)
shares of common stock of the Company on the terms and conditions set forth
herein immediately following each annual meeting of stockholders.
(d) Notwithstanding anything to the contrary set forth in this Section
5, each Non-Employee Director who received a stock option grant pursuant to this
Plan in September 1998 (a "September 1998 Grant") shall not be entitled to
future grants under this Plan until the September 1998 Grant shall have fully
vested. On the date that the September 1998 Grant shall have fully vested, such
Non-Employee Director shall be treated as having been initially elected to be a
Non-Employee Director on such date and receive the stock option referenced in
Section 5(b) and, thereafter, shall be eligible to receive the stock options
referenced in Section 5(c).
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") ten (10) years from the
2
<PAGE>
date of grant. If the optionee's service as a Non-Employee Director or employee
of or consultant to the Company or any Affiliate terminates for any reason or
for no reason, the option shall terminate on the earlier of the Expiration Date
or the date three (3) months following the date of termination of all such
service; provided, however, that if such termination of service is due to the
optionee's death, the option shall terminate on the earlier of the Expiration
Date or eighteen (18) months following the date of the optionee's death. In any
and all circumstances, an option may be exercised following termination of the
optionee's service as a Non-Employee Director or employee of or consultant to
the Company or any Affiliate only as to that number of shares as to which it was
exercisable on the date of termination of such all service under the provisions
of subparagraph 6(e).
(b) Subject to subparagraph 4(b), the exercise price of each option
shall be one hundred percent (100%) of the fair market value of the stock
subject to such option on the date such option is granted.
(c) Payment of the exercise price of each option is due in full in cash
upon any exercise when the number of shares being purchased upon such exercise
is less than 1,000 shares; but when the number of shares being purchased upon an
exercise is 1,000 or more shares, the optionee may elect to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash at the time of
exercise; or
(ii) Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of shares of common stock of the Company already owned by
the optionee, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interest, which common stock shall be valued at its fair market
value on the date preceding the date of exercise; or
(iii) Payment by a combination of the methods of payment specified
in subparagraph 6(c)(i) and 6(c)(ii) above.
Notwithstanding the foregoing, this option may be exercised pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company prior to
the issuance of shares of the Company's common stock.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution, or pursuant to a domestic relations order
satisfying the requirements of Rule 16a-12 under the Securities Exchange Act of
1934 (a "DRO") and shall be exercisable during the lifetime of the person to
whom the option is granted only by such person (or by his guardian or legal
representative) or transferee pursuant to a DRO. Notwithstanding the foregoing,
the optionee may, by delivering written notice to the Company in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the optionee, shall thereafter be entitled to exercise the option.
3
<PAGE>
(e) The option shall become exercisable in installments over a period
of four years from the date of grant in equal annual installments commencing on
the date one year after the date of grant of the option, provided that the
optionee has, during the entire period prior to such vesting date, continuously
served as a Non-Employee Director or employee of or consultant to the Company or
any Affiliate of the Company, whereupon such option shall become fully
exercisable in accordance with its terms with respect to that portion of the
shares represented by that installment. For purposes of vesting under this
subparagraph 6(e), attendance at no less than two-thirds (2/3) of the Board
meetings occurring during an installment period is required in order for an
optionee serving as a Non-Employee Director to vest for such installment;
failure to satisfy this requirement during any particular installment period
shall result in an abatement of the vesting of the option during the applicable
installment period and the aggregate vesting period of such option shall be
increased by one additional year.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options.
4
<PAGE>
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(c) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.
(i) If the common stock is listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, the Fair Market Value of a share of common stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reporting in the Wall Street Journal or such
other source as the Board deems reliable;
(ii) If the common stock is quoted on the Nasdaq System (but not on
the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a share of common stock shall be the mean between the bid and asked prices for
the common stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
(iii) In the absence of an established market for the common stock,
the Fair Market Value shall be determined in good faith by the Board.
5
<PAGE>
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a merger or consolidation in which the Company
is not the surviving corporation; (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (3) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged, the
time during which options outstanding under the Plan may be exercised shall be
accelerated and the options terminated if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan,
provided, however, that except as provided in paragraph 10 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:
(i) Increase the number of shares which may be issued under the
Plan;
(ii) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to comply with the requirements of Rule 16b-3); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to comply with the
requirements of Nasdaq or any securities exchange on which the Company desires
prices for its common stock to be quoted.
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No options
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the option was granted.
6
<PAGE>
(c) The Plan shall terminate upon the occurrence of any of the events
described in subparagraph 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by the
stockholders of the Company.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
7
Appendix A
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
MOLECULAR DEVICES CORPORATION
1995 STOCK OPTION PLAN
ADOPTED OCTOBER 30, 1995
APPROVED BY SHAREHOLDERS ON DECEMBER 12, 1995
AMENDED BY THE BOARD ON JANUARY 29, 1999
AS AMENDED BY THE STOCKHOLDERS ON MAY 20, 1999
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Options issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "Company" means Molecular Devices Corporation.
(f) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided
1
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
that the term "Consultant" shall not include Directors who are paid only a
director's fee by the Company or who are not compensated by the Company for
their services as Directors.
(g) "Continuous Status as an Employee, Director or Consultant" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated. The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company, Affiliates or their successors.
(h) "Covered Employee" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(i) "Director" means a member of the Board.
(j) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" means as of any date, the value of the Common
Stock of the Company determined as follows:
(1) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a share of common stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(2) If the common stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of common stock shall be the mean between the bid and
asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(3) In the absence of an established market for the common
stock, the Fair Market Value shall be determined in good faith by the Board.
2
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
(m) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(n) "Non-Employee Director" means a Director of the Company who either
(i) is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(s) "Optionee" means an Employee, Director or Consultant who holds an
outstanding Option.
(t) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(u) "Plan" means this Molecular Devices 1995 Stock Option Plan.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
3
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Options; when and how each Option shall
be granted; whether an Option will be an Incentive Stock Option or a
Nonstatutory Stock Option; the provisions of each Option granted (which need not
be identical), including the time or times such Option may be exercised in whole
or in part; and the number of shares for which an Option shall be granted to
each such person.
(2) To construe and interpret the Plan and Options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan or an Option as provided in Section 11.
(4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Non-Employee Directors and may also be, in the
discretion of the Board, Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Notwithstanding
anything in this Section 3 to the contrary, the Board or the Committee may
delegate to a committee of one or more members of the Board the authority to
grant Options to eligible persons who (1) are not then subject to Section 16 of
the Exchange Act and/or (2) are either (i) not then Covered Employees and are
not expected to be Covered Employees at the time of recognition of income
resulting from such Option, or (ii) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate one million seven hundred fifty thousand (1,750,000)
shares of Company common stock, plus up to one million (1,000,000) shares of
Company Common Stock to the extent that such shares
4
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
previously reserved under the Company's terminated 1988 Stock Option Plan (the
"1988 Plan") (i) have not, as of the date of the adoption of this Plan,
previously been issued pursuant to the exercise of options under the 1988 Plan,
and (ii) are not, as of the date of adoption of this Plan, subject to options
outstanding under the 1988 Plan. If any Option granted under the Plan or any
stock option granted under the 1988 Plan shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the stock not acquired shall revert to and again become available for issuance
under this Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted only to Employees, Directors or
Consultants.
(b) No person shall be eligible for the grant of an Option if, at the
time of grant, such person owns (or is deemed to own pursuant to Section 424(d)
of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its Affiliates
unless the exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of such stock at the date of grant and the
Option is not exercisable after the expiration of five (5) years from the date
of grant.
(c) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options
covering more than Five Hundred Thousand (500,000) shares of the Company's
common stock in any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Option (whether and
Incentive Stock Option or Nonstatutory Stock Option) may be granted with an
option exercise price lower than that set forth above if such option is granted
pursuant to an assumption or substitution for another option in a manner
qualifying with the provisions of Section 424(a) of the Code.
5
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (C) in any other form of legal
consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) Transferability. An Option shall not be transferable except by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person. A
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution or pursuant to a domestic relations order
satisfying the requirements of Rule 16b-3 and the rules thereunder (a "DRO"),
and shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person or any transferee pursuant to a DRO. The person to
whom the Option is granted may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionee, shall thereafter be entitled to exercise the Option.
(e) Vesting. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) Securities Law Compliance. The Company may require any Optionee, or
any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any assurances
given pursuant
6
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
to such requirements, shall be inoperative if (i) the issuance of the shares
upon the exercise of the Option has been registered under a then currently
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(g) Termination of Employment or Relationship as a Director or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination) but only within
such period of time ending on the earlier of (i) the date three (3) months after
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant, or such longer or shorter period specified in the Option Agreement,
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(h) Disability of Optionee. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(i) Death of Optionee. In the event of the death of an Optionee during,
or within a period specified in the Option after the termination of, the
Optionee's Continuous Status as an Employee, Director or Consultant, the Option
may be exercised (to the extent the Optionee was entitled to exercise the Option
at the date of death) by the Optionee's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated
to exercise the option upon the Optionee's death pursuant to subsection 6(d),
but only within the period ending on the earlier of (i) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised within
the time specified herein, the Option shall
7
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(j) Early Exercise. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
(k) Withholding. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold shares from the shares of the common stock otherwise
issuable to the Optionee as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available
at all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which an
Option may first be exercised or the time during which an Option or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in
the Option stating the time at which it may first be exercised or the time
during which it will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with
8
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
respect to, any shares subject to such Option unless and until such person has
satisfied all requirements for exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate (or
to continue acting as a Director or Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment or relationship as a
Director or Consultant of any Employee, Director, Consultant or Optionee with or
without cause.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
(e) (1) The Board or the Committee shall have the authority to effect,
at any time and from time to time (i) the repricing of any outstanding Options
under the Plan and/or (ii) with the consent of the affected holders of Options,
the cancellation of any outstanding Options and the grant in substitution
therefor of new Options under the Plan covering the same or different numbers of
shares of Common Stock, but having an exercise price per share not less than
eighty-five percent (85%) of the Fair Market Value (one hundred percent (100%)
of the Fair Market Value in the case of an Incentive Stock Option or, in the
case of a ten percent (10%) stockholder (as defined in subsection 5(b)), not
less than one hundred and ten percent (110%) of the Fair Market Value) per share
of Common Stock on the new grant date.
(2) Shares subject to an Option canceled under this subsection 9(e)
shall continue to be counted against the maximum award of Options permitted to
be granted pursuant to subsection 5(c) of the Plan. The repricing of an Option
under this subsection 9(e), resulting in a reduction of the exercise price,
shall be deemed to be a cancellation of the original Option and the grant of a
substitute Option; in the event of such repricing, both the original and the
substituted Options shall be counted against the maximum awards of Options
permitted to be granted pursuant to subsection 5(c) of the Plan. The provisions
of this subsection 9(e) shall be applicable only to the extent required by
Section 162(m) of the Code.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted in the types of
securities and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the maximum number of shares subject to award to any person
during any calendar year pursuant to subsection 5(c), and the outstanding
Options will be appropriately adjusted in the
9
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
types of securities and number of shares and price per share of stock subject to
such outstanding Options.
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then to the extent permitted by applicable law: (i) any
surviving corporation shall assume any Options outstanding under the Plan or
shall substitute similar Options for those outstanding under the Plan, or (ii)
such Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute similar
options for those outstanding under the Plan, then, with respect to Options held
by persons then performing services as Employees, Directors or Consultants, then
such Options shall be terminated if not exercised prior to such event; provided,
however, that the time during which such Options may be exercised may, at the
discretion of the Board of Directors, be accelerated and the Options terminated
if not exercised prior to such event.
11. AMENDMENT OF THE PLAN AND OPTIONS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for Options under the
Plan;
(2) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code or any
Nasdaq or securities exchange listing requirements); or
(3) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3, or any
Nasdaq or securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder
10
<PAGE>
All references herein to numbers of
shares already take into account and
give effect to the 2-for-3 reverse stock
split effective on December 7, 1995.
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Option granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms
of any one or more Options; provided, however, that the rights and obligations
under any Option shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on October 29, 2005, which shall be
within ten (10) years from the date the Plan is adopted by the Board or approved
by the stockholders of the Company, whichever is earlier. No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board,
and, if required, an appropriate permit has been issued by the Commissioner of
Corporations of the State of California.
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 25,036
<SECURITIES> 0
<RECEIVABLES> 16,284
<ALLOWANCES> 376
<INVENTORY> 6,356
<CURRENT-ASSETS> 50,283
<PP&E> 7,824
<DEPRECIATION> 5,665
<TOTAL-ASSETS> 57,473
<CURRENT-LIABILITIES> 7,959
<BONDS> 0
0
0
<COMMON> 9
<OTHER-SE> 49,505
<TOTAL-LIABILITY-AND-EQUITY> 57,473
<SALES> 28,308
<TOTAL-REVENUES> 28,308
<CGS> 10,547
<TOTAL-COSTS> 10,547
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,032
<INCOME-TAX> 1,938
<INCOME-CONTINUING> 3,094
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,094
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.31
</TABLE>
