<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
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 March 31, 1997 or
( ) Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number: 0-28432
Boston Communications Group, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-3026859
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Sylvan Road, Woburn, Massachusetts 01801
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(Address of principal executive offices)
Registrant's telephone number, including area code: (617)692-7000
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______________________________________________________________________________
(Former name, former address, former fiscal year, if changed since last report)
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 ( )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
As of May 1, 1997 the Company had outstanding 12,731,162 shares of common stock,
$.01 par value per share.
1
<PAGE>
INDEX
PAGE NUMBER
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets.............................3
Consolidated Statements of Operations...................4
Consolidated Statements of Cash Flows...................5
Notes to Consolidated Financial Statements..............6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................7
Certain Factors That May Affect Future Results.........10
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings......................................12
Item 6. Exhibits and Reports on Form 8-K.......................12
2
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, MARCH 31,
1996 1997
---- ----
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 923 $ 357
Short-term investments 20,498 14,731
Accounts receivable, net of allowance for
billing adjustments and doubtful accounts
of $ 1,242 in 1996 and $ 1,191 in 1997 11,060 13,203
Inventory 1,189 2,811
Deferred income taxes 1,334 1,334
Prepaid expenses and other assets 495 710
------- -------
Total current assets 35,499 33,146
Property and equipment, net 12,906 16,053
Goodwill, net 3,159 3,051
Other assets 395 411
------- -------
Total assets $51,959 $52,661
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,371 $ 1,942
Accrued expenses 7,158 7,167
Income taxes payable 490 522
------- -------
Total current liabilities 9,019 9,631
Minority interest 47 26
Shareholders' equity:
Preferred Stock, $.01 par
value, 2,000,000 shares authorized,
0 shares issued and outstanding - -
Common Stock, voting, par value $.01 per
share, 35,000,000 shares authorized,
12,725,749 shares in 1996 and 12,777,582
shares in 1997 issued and outstanding 127 128
Additional paid-in capital 52,738 52,755
Treasury stock (46,420 shares, at cost) (372) (372)
Accumulated deficit (9,600) (9,507)
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Total shareholders' equity 42,893 43,004
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Total liabilities and shareholders'
equity $51,959 $52,661
======= =======
</TABLE>
3
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1997
---------- --------
<S> <C> <C>
Service Revenues:
Calling service revenues $ 7,214 $ 7,012
Teleservice revenues 3,847 3,789
Prepaid network service revenues - 790
System revenues 92 4,028
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11,153 15,619
Expenses:
Cost of service revenues 8,311 9,419
Cost of system revenues 37 2,640
Engineering, research and development 419 1,029
Sales and marketing 557 1,063
Related party management fees 252 -
General and administrative 482 670
Depreciation and amortization 360 890
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Total operating expenses 10,418 15,711
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Operating income(loss) 735 (92)
Interest income(expense), net (6) 262
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Income before income taxes
and minority interest 729 170
Minority interest - (21)
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Income before income taxes 729 191
Provision for income taxes 300 98
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Net income 429 93
Accretion of dividends on redeemable
preferred stock (237) -
------- -------
Net income available to common
shareholders $ 192 $ 93
======= =======
Net income available to common
shareholders per common share:
Net income $ 0.02 $ 0.01
======= =======
Shares used in computing net income
per common share 9,179 12,883
======= =======
</TABLE>
4
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 429 $ 93
Adjustments to reconcile net income to net cash
provided by(used in) operating activities:
Depreciation and amortization 360 890
Deferred income taxes 255 -
Minority interest - (21)
Changes in operating assets and liabilities,
excluding effect of business acquisition:
Accounts receivable (1,176) (2,144)
Inventory - (1,622)
Prepaid expenses and other assets (268) (250)
Accounts payable and accrued expenses 2,214 580
Income taxes payable (171) 31
------- -------
Net cash provided by(used in) operations 1,643 (2,443)
INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (497) -
Investment in non-marketable securities (35) -
Purchase of property and equipment (1,527) (3,908)
Sales of short-term investments - 5,766
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Net cash provided by(used in) in investing
activities (2,059) 1,858
FINANCING ACTIVITIES
Proceeds from exercise of stock options 16 19
Proceeds from notes payable 500 -
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Net cash provided by financing activities 516 19
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Increase(decrease) in cash and cash equivalents 100 (566)
Cash and cash equivalents at beginning of period 253 923
------- -------
Cash and cash equivalents at end of period $ 353 $ 357
======= =======
</TABLE>
5
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements have been prepared by
the Company, without audit, and reflect all adjustments which in the
opinion of management, are necessary for a fair statement of the results of
the interim periods presented. All adjustments were of a normal recurring
nature. Certain information and footnote disclosures normally included in
the annual consolidated financial statements which are prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. Accordingly, the Company believes that although the
disclosures are adequate to make the information presented not misleading,
the consolidated financial statements should be read in conjunction with
the footnotes contained in the Company's Form 10-K for the fiscal year
ended December 31, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Standard No. 128, "Earnings Per Share" which simplifies the
calculation of earnings per share (EPS) and creates a standard of
comparability to the recently issued International Accounting Standard No.
33, "Earnings Per Share". Since early application is not permitted, the
Company will adopt this standard in the fourth quarter of 1997. Its
adoption does not have a material effect on the Company's financial
position or results of operations in the first quarter of 1997.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - MARCH 31, 1996 AND 1997
- -----------------------------------------------
Service and system revenues
- ---------------------------
Total revenues increased 39.3% from $11.2 million in the three months ended
March 31, 1996 to $15.6 million in the three months ended March 31, 1997.
Calling service revenues decreased 2.9% or $212,000 from the three months ended
March 31, 1996 to the same period ended March 31, 1997. The decrease in calling
service revenues resulted from declining trends in industry-wide cellular
roaming and the decrease in the frequency of the suspension of intercarrier
roaming agreements due to improved fraud controls implemented by the carriers.
Teleservice revenues decreased $58,000 for the three month period ended March
31, 1997 compared to the same period in the prior year. The decrease resulted
primarily from the discontinuance of certain special carrier programs, offset by
the expansion of services provided to existing customers and additional service
programs provided to new carrier customers. Revenues generated from prepaid
network services for the three months ended March 31, 1997 are principally
related to usage in markets where C2C prepaid services were commercially
available. As of March 31, 1997, twenty-five C2C Network switches were deployed
in various markets throughout the United States. Of these switches, nineteen
were fully operational and processing live transactions by the end of the first
quarter. System revenues are generated by Voice Systems Technology, Inc. (VST),
acquired in February 1996, and increased $3.9 million from the three month
period ended March 31, 1996 to the same period ended March 31, 1997. The
increase resulted primarily from the sale of systems to continue the expansion
of a prepaid cellular system in Mexico and, to a lesser extent, from the full
quarter of operations of its systems division for the three months ended March
31, 1997.
Cost of service revenues
- ------------------------
Cost of service revenues consist primarily of cellular network and landline
costs in addition to the personnel costs associated with operator assisted
ROAMERplus calling service calls, teleservice calls and C2C operations. Cost of
service revenues increased from 75.1% of service revenues for the three months
ended March 31, 1996 to 81.3% of service revenues for the three months ended
March 31, 1997. The increase in cost of service revenues as a percentage of
service revenues was primarily due to the high initial operating costs as
subscribers are added and usage is generated on the C2C network.
Cost of system revenues
- -----------------------
Cost of system revenues represent the cost of prepaid and voice systems sold.
Cost of system revenues increased from 40.2% of system revenues for the three
months ended March 31, 1996 to 65.4% of system revenues for the three months
ended March 31, 1997. The increase in cost of system revenues as a percentage
of system revenues reflects the increased personnel and other overhead to
support higher sales volumes and the expansion of the Company's manufacturing
operations. In addition, lower margins were generated from the sale of systems
to continue the expansion of a prepaid cellular system in Mexico.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - MARCH 31, 1996 AND 1997 (CONTINUED)
- -----------------------------------------------------------
Engineering, research and development expenses
- ----------------------------------------------
Engineering, research and development expenses include primarily the salaries
and benefits for software development engineering personnel associated with the
development, implementation and maintenance of existing and new services.
Engineering, research and development expenses increased $610,000 or 145.6% from
the three months ended March 31, 1996 to the three months ended March 31, 1997.
The increase was principally due to the costs associated with the Company's
hiring of new personnel to support the development, implementation and
deployment of the C2C network and, to a lesser extent, additional personnel to
support the expansion of teleservices.
Sales and marketing expenses
- ----------------------------
Sales and marketing expenses include direct sales force salaries and
commissions, travel and entertainment expenses, and the cost of trade shows,
advertising and other promotional expenses. Sales and marketing expenses
increased $506,000 or 90.8% from the three months ended March 31, 1996 to the
three months ended March 31, 1997. The increase in sales and marketing expenses
was due to additional expenditures to support the more sales intensive prepaid
service business and concentrated sales and marketing efforts related to
teleservices. In addition, the acquisitions of Voice Systems Technology, Inc.
(VST) and Wireless Americas Corp. (WAC) in 1996 resulted in the Company
incurring increased expenditures to support system sales globally.
General and administrative expenses
- -----------------------------------
General and administrative expenses include salaries and benefits and other
expenses that provide administrative support to the Company. General and
administrative expenses and related party management fees decreased $64,000 or
8.7% from the three months ended March 31, 1996 compared to the three months
ended March 31, 1997. The decrease resulted from consolidation of the Company's
administrative facilities and certain related party management fees which are
attributable to engineering, research and development for the three months ended
March 31, 1997.
Depreciation and amortization expense
- -------------------------------------
Depreciation and amortization expense includes depreciation of
telecommunications systems, furniture and equipment and leasehold improvements.
The Company provides for depreciation using the straight-line method over the
estimated useful lives of the assets, which range from three to seven years.
Goodwill related to the acquisition of VST and WAC is being amortized over eight
years. Depreciation and amortization expense increased $530,000 or 147.2%
during the three month period ended March 31, 1997 compared to the same period
in the prior year. This increase was due primarily to amortization of goodwill
from the Company's two acquisitions and depreciation of additional
telecommunications equipment and software to support the Company's calling
services, carrier support teleservices and prepaid network services. In
addition, the expansion of the Company's call centers and VST assembly facility
resulted in increased depreciation of furniture and equipment and leasehold
improvements. Depreciation and amortization expense are expected to increase in
1997 due to a full year of goodwill amortization from the VST and WAC
acquisitions and
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - MARCH 31, 1996 AND 1997 (CONTINUED)
- -----------------------------------------------------------
increased depreciation of telcommunications systems associated with teleservices
and the expansion of the C2C network.
Interest income(expense), net
- -----------------------------
Interest income(expense) increased $268,000 for the three months ended March 31,
1997 as compared to the same period in the prior year. The increase resulted
primarily from interest earned on the investments of the proceeds from the
Company's initial public offering.
Provision for income taxes
- --------------------------
The Company's effective income tax rate for the three month period ended March
31, 1997 reflects an increase from the prior year due to the non-deductibility
of goodwill amortization from the acquisitions of VST and WAC. The effective
income tax rate is expected to continue to be greater than 40% for the remainder
of 1997 due to the impact of non-deductible goodwill.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash used in operating activities for the three months ended March 31, 1997
was $2.4 million and resulted from an increase of accounts receivable and
inventory offset by an increase in accounts payable and accrued expenses.
Accounts receivable increased due to the sale of systems to Mexico in the first
quarter. Inventory increased to support the increasing sales of VST systems and
the continued assembly of C2C network equipment which is expected to be deployed
in the second quarter. Accounts payable and accrued expenses increased as a
result of increases in capital expenditures and costs associated with the
overall growth of the Company.
Net cash provided by investing activities was $1.9 million for the three months
ended March 31, 1997 and consisted primarily of sales of short-term investments,
needed to meet working capital needs and the purchase of telecommunications
equipment to support the Company's C2C Network and the expansion of the
teleservices business.
The Company believes that it has the necessary liquidity and capital resources
to sustain existing operations for at least the next twelve months.
9
<PAGE>
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
This Quarterly Report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. A number of uncertainties
exist that could affect the Company's future operating results, including,
without limitation, technological changes in the Company's industry, the ability
of the Company to continue to develop and successfully deploy its C2C Network,
the Company's ability to retain existing customers and attract new customers,
increased competition and general economic factors.
Historically, a significant portion of the Company's revenues in any particular
period has been attributable to a limited number of customers. This
concentration of customers can cause the Company's revenues and earnings to
fluctuate from quarter to quarter, based on the volume of call traffic generated
through these customers or the services being performed pursuant to teleservice
programs. A significant decrease in business from any of the Company's major
customers, including a decrease in business due to factors outside of the
Company's control, would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company historically has provided all of its services to cellular carriers,
including roaming services and teleservices. Although the cellular market has
experienced significant growth in recent years, there can be no assurance that
such growth will continue at similar rates, or at all, or that cellular carriers
will continue to use the Company's services. In addition, the prepaid wireless
service and PCS markets are in their initial stages of development, and if these
markets do not grow as expected or if the carriers in these markets do not use
the Company's services, the Company's business, financial condition and results
of operations could be materially and adversely affected.
The Company's future success depends, in large part, on the continued use of its
existing services, the acceptance of new services in the wireless industry, such
as prepaid service, and the Company's ability to develop services that keep pace
with changes in the wireless telephone industry. Further, a rapid shift away
from the use of cellular in favor of other services, such as PCS, could affect
demand for the Company's service offerings and could require the Company to
develop modified or alternative service offerings addressing the particular
needs of providers of such new services. There can be no assurance that the
Company will be successful in developing or marketing its existing or future
service offerings in a timely manner, or at all.
The Company is currently devoting significant resources toward the continued
development and deployment of its wireless prepaid service, including deployment
of its C2C Network. There can be no assurance that the Company will continue to
successfully develop and deploy the C2C Network or its prepaid service in a
timely fashion, that the market for the Company's prepaid service will develop,
or that the Company's C2C Network will continue to operate successfully.
The Company has experienced fluctuations in its quarterly operating results and
anticipates that such fluctuations will continue and could intensify. The
Company's quarterly operating results may vary significantly depending on a
number of factors, including the timing of the introduction or acceptance of new
services offered by the Company or its competitors, changes in the mix of
services provided by the Company, changes in regulations affecting the wireless
industry, changes in the Company's operating expenses, personnel changes and
general economic conditions. Due to all of the foregoing factors, it is
possible that in some future quarter the Company's results of operations
10
<PAGE>
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
will be below prior results or the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock would likely
be materially adversely affected.
Recently, the Company has expanded its operations rapidly, which has created
significant demands on the Company's administrative, operational, development
and financial personnel and other resources. Additional expansion by the
Company may further strain the Company's management, financial and other
resources. There can be no assurance that the Company's systems, procedures,
controls and existing space will be adequate to support expansion of the
Company's operations. If the Company's management is unable to manage growth
effectively, the quality of the Company's services, its ability to retain key
personnel and its business, financial condition and results of operations could
be materially and adversely affected.
The market for services to wireless carriers is highly competitive and subject
to rapid change. A number of companies currently offer one or more of the
services offered by the Company. In addition, wireless carriers are providing
or can provide, in-house, the services that the Company offers. In addition,
the Company anticipates continued growth and competition in the wireless carrier
services industry and consequently, the entrance of new competitors in the
future. An increase in competition could result in price reductions and loss of
market share. Any resulting reduction in gross margins could have a material
adverse effect on the Company's business, financial condition or results of
operations.
The Company's success and ability to compete is dependent in part upon its
proprietary technology. If unauthorized copying or misuse of the Company's
technology were to occur to any substantial degree, the Company's business,
financial condition and results of operations could be materially adversely
affected. In addition, some of the software used to support the Company's
roaming services and prepaid services is licensed by the Company from single
vendors, which are small corporations. There can be no assurance that these
suppliers will continue to license this software to the Company or, if any
supplier terminates its agreement with the Company, that the Company will be
able to develop or otherwise procure software from another supplier on a timely
basis and at commercially acceptable prices.
The Company's operations are dependent on its ability to maintain its computer,
switching and other telecommunications equipment and systems in effective
working order and to protect its systems against damage from fire, natural
disaster, power loss, telecommunications failure or similar events. Any damage,
failure or delay that causes interruptions in the Company's operations could
have a material adverse effect on the Company's business, financial condition
and results of operations.
11
<PAGE>
PART II. OTHER INFORMATION:
- ---------------------------
Item 1. Legal Proceedings
On April 18, 1997, the former President of Wireless Americas Corp.
("WAC") in which the Company holds an 80% interest, filed an action in
Florida Circuit Court in Dade County against WAC and the Company,
alleging wrongful termination, breach of contract and fraudulent
inducement, in connection with the termination of his employment by
WAC on March 14, 1997. The plaintiff seeks a declaratory judgement and
damages in an unspecified amount. While the matter is in the earliest
stages of the litigation, the Company and WAC intend to contest the
matter vigorously and believe that they have meritorious defenses and
counterclaims with respect to the action.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
The exhibits listed in the Exhibit Index are part of or included in
this report.
b) Reports on Form 8-K
NONE
12
<PAGE>
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, thereunto duly authorized.
Boston Communications Group, Inc.
-------------------------------------
(Registrant)
Date: May 6, 1997 By: /s/ Paul J. Tobin
----------------------------------------
Paul J. Tobin
Chief Executive Officer
and President
Date: May 6, 1997 By: /s/ Fritz von Mering
----------------------------------------
Fritz von Mering
Vice President, Finance
and Administration
13
<PAGE>
BOSTON COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
- ------------- -----------
10.30 Registration Rights Agreement dated February 29, 1996 between
the Company and Michael J. Buchel, Zuyus Investment Company,
Peter T. Zuyus, Jr., Joseph Giegerich, Terrence G Hare III,
J. Michael Looney and John M. Freese, Sr.
10.31 Amendment, dated December 16, 1996, to the Registration Rights
Agreement, dated February 29, 1996.
10.32 Amendment, dated December 16, 1996, to the Registration Rights
Agreement, dated February 29, 1996.
11.0 Statement RE: Computation of Per Share Earnings
EX.27 Financial Data Schedule
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Agreement dated as of February 29, 1996 is entered into by and among Radio
Telephone Systems, Inc. d/b/a Boston Communications Group, a Massachusetts
corporation (the "Company"), and Michael J. Buchel, Zuyus Investment Company,
John M. Freese, Joseph Giegerich, Terence G. Hare III, J. Michael Looney and
John M. Freese, Sr.(the "Initial Stockholders").
WHEREAS, the Company and the Initial Stockholders have entered into a Merger
Agreement of even date herewith (the "Merger Agreement"); and
WHEREAS, the Company and the Initial Stockholders desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933; subject to certain pre-existing
registration rights granted by the Buyer to its current preferred stockholders;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall
-------------------
have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any other
------------
Federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.0l par value per share, of the
--------------
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
--------------
any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be
in effect.
"Registration Statement" means a registration statement filed by the
------------------------
Company with the Commission for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 4.
-----------------------
"Registrable Shares" means (i) the shares of Common Stock issued or
--------------------
issuable to the Stockholders pursuant to the Merger Agreement and any other
shares of Common Stock issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are
-------- -------
Registrable Shares shall cease to be Registrable Shares (i) upon any sale
pursuant to a Registration Statement or Rule 144 under the Securities Act
or (ii) upon any sale in any manner to a person or entity which, by virtue
of Section 12 of this Agreement, is not entitled to the rights provided by
this Agreement.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, or any
----------------
similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Stockholders" means the Initial Stockholders and any persons or entities
--------------
to whom the rights granted under this Agreement are transferred by any
Initial Stockholders, their successors or assigns pursuant to Section 12
hereof.
2. Registration Rights.
-------------------
(a) Whenever the Company proposes to file a Registration Statement at any
time and from time to time, it will, prior to such filing, give written
notice to all Stockholders of its intention to do so and, upon the written
request of a Stockholder or Stockholders given within 20 days after the
Company provides such notice, the Company shall use its best efforts to
cause all Registrable Shares which the Company has been requested by such
Stockholder or Stockholders to register to be registered under the
Securities Act; provided that the Company shall have the right to postpone
or withdraw any registration effected pursuant to this Section 2 without
obligation to any Stockholder, and that the right of the Stockholders to
participate in such a registration shall be subject to and in accordance
with the registration rights granted by the Buyer to its current preferred
stockholders prior to the date of this Agreement.
(b) In connection with any registration under this Section 2 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such registration unless the holders thereof accept the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it (provided that such terms must be consistent with this
Agreement). If in the opinion of the managing underwriter it is
appropriate because of marketing factors to limit the number of Registrable
Shares to be included in the offering, then the Company shall be required
to include in the registration only that number of Registrable Shares, if
any, which the managing underwriter believes should be included therein;
provided that no reduction in the number of Registrable Shares to be
included in the offering shall be made unless such reduction represents a
proportionate reduction which is no greater than the proportionate
reduction of shares of Common Stock requested to be included in the
registration by other holders of securities entitled to registration who
are officers of the Buyer.
3. Registration Procedures. If and whenever the Company is required by the
-----------------------
provisions of this Agreement to use its best efforts to effect the registration
of any of the Registrable Shares under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with respect to such
Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective;
(b) as expeditiously as possible prepare and file with the commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any
other offering, until the earlier of the sale of all Registrable Shares
covered thereby or 120 days after the effective date thereof;
<PAGE>
(c) as expeditiously as possible furnish to each selling Stockholder such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents as the selling Stockholder may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Stockholder; and
(d) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under
the securities or Blue Sky laws of such states as the selling Stockholders
shall reasonably request, and do any and all other acts and things that may
be necessary or desirable to enable the selling Stockholders to consummate
the public sale or other disposition in such states of the Registrable
Shares owned by the selling Stockholder; provided, however, that the
-------- -------
Company shall not be required in connection with this paragraph (d) to
qualify as a foreign corporation or execute a general consent to service of
process in any Jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall
promptly notify the selling Stockholders and, if requested, the selling
Stockholders shall immediately cease making offers of Registrable Shares
and return all prospectuses to the Company. The Company shall promptly
provide the selling Stockholders with revised prospectuses and, following
receipt of the revised prospectuses, the selling Stockholders shall be free
to resume making offers of the Registrable Shares.
4. Allocation of Expenses. The Company will pay all Registration Expenses of
----------------------
all registrations under this Agreement. For purposes of this Section 4, the
term "Registration Expenses" shall mean all expenses incurred by the Company in
Complying with this Agreement, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company, and the expense of any special audits incident to or
required by any such registration, but excluding underwriting discounts, selling
commissions and the fees and expenses of selling Stockholders' counsel.
5. Indemnification and Contribution.
--------------------------------
(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities
Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such seller, underwriter or controlling person
may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect i thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement,
or arise out of or are based upon the omission or alleged omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such
seller, underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by such seller, underwriter or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company will not be liable in
<PAGE>
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in
such Registration Statement, preliminary prospectus or final prospectus, or
any such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
seller, underwriter or controlling person specifically for use in the
preparation thereof.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors and officers and each
underwriter (if any) and each person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company, such directors and officers, underwriter or
controlling person may become subject under the Securities Act, Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under
which such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with information relating to such seller
furnished in writing to the Company by or on behalf of such seller
specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement;
provided, however, that the obligations of such Stockholders hereunder
-------- -------
shall be limited to an amount equal to the proceeds to each Stockholder of
Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided, that
--------
counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld); and, provided, further, that
-------- -------
the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Section 5. The Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall pay
-------- -------
such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other
party represented by such counsel In such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with
the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation, and
no Indemnified Party shall consent to entry of any judgment or settle such
claim or litigation without the prior written consent of the Indemnifying
Party.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for
<PAGE>
indemnification pursuant to this Section 5 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required
on the part of any such selling Stockholder or any such controlling person
in circumstances for which indemnification is provided under this Section
5; then, in each such case, the Company and such Stockholder will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportions so
that such holder is responsible for the portion represented by the
percentage that the public offering price of its Registrable Shares offered
by the Registration Statement bears to the public offering price of all
securities offered by such Registration Statement, and the Company is
responsible for the remaining portion; provided, however, that, in any such
-------- -------
case, (A) no such holder will be required to contribute any amount in
excess of the proceeds to it of all Registrable Shares sold by it Pursuant
to such Registration Statement, and (B) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person or entity
who is not guilty of such fraudulent misrepresentation.
6. Information by Holder. Each Stockholder including Registrable Shares in
---------------------
any registration shall furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Stockholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
7. "Stand-Off" Agreement. Each Stockholder, if requested by the Company and
---------------------
the managing underwriter of an offering by the company of Common Stock or other
securities of the Company pursuant to a Registration Statement, shall agree not
to sell publicly or otherwise transfer-or dispose of any Registrable Shares or
other securities of the Company held by such Stockholder for a specified period
of time (not to exceed 180 days) following the effective date of such
Registration Statement; -provided, that:
---------
(a) such agreement sh all only apply to the first Registration Statement
covering Common Stock to be sold on its behalf to the public in an
underwritten offering; and
(b) all Stockholders holding not less than the number of shares of
Common Stock held by such Stockholder (including shares of Common Stock
issuable upon the conversion of Shares, or other convertible securities, or
upon the exercise of options, warrants or rights) and all officers and
directors of the Company enter into similar agreements.
8. Rule 144 Requirements. After the earliest of (i) the closing of the sale
---------------------
of securities of the Company pursuant to a Registration Statement, (ii) the
registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
(a) comply with the requirements of Rule 144(c) under the Securities Act
with respect to current public information about the Company;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and
<PAGE>
(c) furnish to any holder of Registrable Shares upon request (i) a written
statement by the Company as to its compliance with the requirements of said
Rule 144(c), and the reporting requirements of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly report of
the Company, and (iii) such other reports and documents of the Company as
such holder may reasonably request to avail itself of any similar rule or
regulation of the Commission allowing it to sell any such securities
without registration.
9. Termination. All of the Company's obligations to register Registrable
-----------
Shares under this Agreement shall terminate on the tenth anniversary of this
Agreement.
10. Transfers of Rights. This Agreement, and the rights and obligations of
-------------------
each Initial Stockholder hereunder, may be assigned by such Initial Stockholder
to any person or entity to which Shares are transferred by such Initial
Stockholder, and such transferee shall be deemed an "Initial Stockholder" for
purposes of this Agreement; provided that the transferee provides written notice
of such assignment to the Company.
11. General.
-------
(a) Notices. All notices, requests, consents, and other communications
-------
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at Boston Communications Group, One McKinley Square, 3rd
Floor, Boston, MA 02109, Attention: Alan J. Bouffard, Esq., or at such
other address or addresses as may have been furnished in writing by the
Company to the Stockholders, with a copy to Thomas L. Barrette, Jr., Esq.,
Hale and Dorr, 60 State Street, Boston, MA 02109; or
If to a Stockholder, at his or its address set forth below his signature,
or at such other address or addresses as may have been furnished to the
Company in writing by such Stockholder, with a copy to John M. Freese, Sr.,
Esq., Freese & March, P.A., 4310 East 31st Street, Tulsa, OK 74135.
Notices provided in accordance with this Section 11(a) shall be deemed
delivered upon personal delivery or two business days after deposit in the
mail.
(b) Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to
such subject matter.
(c) Amendments and Waivers. Any term of this Agreement may be amended and
----------------------
the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of
at least 60% of the Registrable Shares; provided, that this Agreement may
--------
be amended with the consent of the holders of less than all Registrable
Shares only in a manner which affects all Registrable Shares in the same
fashion. No waivers of or exceptions to any term, condition or provision
of this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
<PAGE>
(d) Counter-parts. This Agreement may be executed in one or more
-------------
counterparts, each of which shall be deemed to be an original, but all of
which shall he one and the same document.
(e) Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts.
Executed as of the date first written above.
COMPANY:
RADIO TELEPHONE SYSTEMS, INC.
By: /s/ George K. Hertz
-----------------------------------------
Title: President and Chief Executive Officer
-----------------------------------------
INITIAL STOCKHOLDERS:
/s/ Michael J. Buchel
--------------------------------
Michael J. Buchel
Voice Systems Technology Inc.
1874 East Route 20 Suite 8
Cherry Hill, NJ 08003
Zuyus Investment Company
By: /s/ Peter T. Zuyus, Sr.
----------------------------------
Peter T. Zuyus, Sr.
Voice Systems Technology, Inc.
621 East Fourth
Tulsa, OK 74120-3017
<PAGE>
/s/ John M.Freese
----------------------------------
John M.Freese
Freese & March, P.A.
4310 East 31st Street
Tulsa, Oklahoma 74135
/s/ Peter T. Zuyus, Jr.
----------------------------------
Peter T. Zuyus, Jr.
Voice Systems Technology Inc.
621 East Fourth
Tulsa, OK 74120-3017
/s/ Joseph Giegerich
----------------------------------
Joseph Giegerich
Voice Systems Technology Inc.
1874 East Route 20, Suite 8
Cherry Hill, NJ 08003
/s/ Terrence G. Hare III
----------------------------------
Terrence G. Hare III
Voice Systems Technology Inc.
621 East Fourth
Tulsa, OK 74120-3017
/s/ J. Michael Looney
----------------------------------
J. Michael Looney
Voice Systems Technology Inc.
621 East Fourth
Tulsa, OK 74120-3017
<PAGE>
AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made this 16th day of December, 1996, by and among
Boston Communications Group, Inc. (the "Company") and Michael J. Buchel and
Zuyus Investment Company (together the "Stockholders" and individually each a
"Stockholder").
WHEREAS, the parties were parties to a Registration Rights Agreement,
dated February 29, 1996 (the "Agreement") pursuant to which the Stockholders
were granted "piggyback" registration rights; and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth:
NOW, THEREFORE, the parties do agree as follows:
1. The Company agrees that the shares now held by the Stockholders
(the "Shares") shall be registered by the Company under the Securities Act of
1933, as amended (the "Act"), pursuant to an S-3 Registration, as soon as the
Company can so register such Shares. Prior to such registration or until such
time as the Stockholder may freely transfer Shares pursuant to Rule 144 or any
other exemption from registration, the Company agrees to purchase from any
Stockholder who desires to sell some or all of his Shares, such number of Shares
as such Stockholder shall notify the Company in writing of his intent to sell.
The price upon which the Company shall purchase shall be the closing price on
the Nasdaq National Market on the day preceding the date of receipt by the
Company of the Stockholder's notice of intent to sell. The Stockholder shall
deliver to the Company a duly executed stock power with respect to such Shares
to be sold, and the Company shall thereupon make payment to the Stockholder by
certified check or bank check, or by wire transfer, of the full purchase price,
without fee or deduction therefrom.
2. The obligation of the Company to purchase Shares from a
Stockholder shall terminate upon the earlier to occur of (i) the effective date
of the registration statement registering the Shares under the Act, allowing the
Stockholder to freely transfer the Shares, or (ii) such time as the Stockholder
may freely transfer Shares pursuant to Rule 144 or any other exemption from
registration, which the parties anticipate to be February 29, 1998.
3. This repurchase agreement shall not supersede the Company's
Insider Trading Policy. This Policy applies to all employees of director level
and above, and any other employees in possession of material inside information
and prohibits purchase or sale of the Company's stock during the period from two
weeks prior to the end of any fiscal quarter until the third business day after
the public release by the Company of earnings for that quarter. (Thus, for
example, no purchase or sale of the Company's stock may be made during the
period from two weeks prior to the end of December until the third business day
after the release of earnings for the quarter, which is anticipated to
<PAGE>
Amendment to
Registration Rights
Agreement
December 16, 1996
be made in the first or second week of February, 1997. Similarly, no purchase
or sale of the Company's stock may be made during the period from two weeks
prior to the end of March until the third business day after the release of
earnings for the first quarter.) Provided, however, that if for any reason,
either Stockholder ceases to be an officer of the Company, then he or his estate
would have the right to sell his Shares free of the constraints of this Policy
to the Company or in the open market pursuant to Paragraph 1, above.
4. This agreement may be signed by the Stockholders in counterparts,
all of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
BOSTON COMMUNICATIONS
GROUP, INC.
By: /s/George K. Hertz
-----------------------
President
/s/ Michael J. Buchel
---------------------------
Michael J. Buchel
Zuyus Investment Company
By: /s/ Peter T. Zuyus, Sr.
-----------------------
Peter T. Zuyus, Sr.
2
<PAGE>
AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made this 16th day of December, 1996, by and among
Boston Communications Group, Inc. (the "Company") John M. Freese, Joseph
Giegerich, Terence G. Hare III, J. Michael Looney and Peter T. Zuyus, Jr.
(together the "Stockholders" and individually each a "Stockholder").
WHEREAS, the parties entered into a Registration Rights Agreement,
dated February 29, 1996 (the "Agreement") pursuant to which the Stockholders
were granted "piggyback" registration rights; and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth:
NOW, THEREFORE, the parties do agree as follows:
1. The Company agrees that the shares now held by the Stockholders
(the "Shares") shall be registered by the Company under the Securities Act of
1933, as amended (the "Act"), pursuant to an S-3 Registration, as soon as the
Company can so register such Shares. Prior to such registration or until such
time as the Stockholder may freely transfer Shares pursuant to Rule 144 or any
other exemption from registration, the Company agrees to purchase from any
Stockholder who desires to sell some or all of his Shares, such number of Shares
as such Stockholder shall notify the Company in writing of his intent to sell.
The price upon which the Company shall purchase shall be the closing price on
the Nasdaq National Market on the day preceding the date of receipt by the
Company of the Stockholder's notice of intent to sell. The Stockholder shall
deliver to the Company a duly executed stock power with respect to such Shares
to be sold, and the Company shall thereupon make payment to the Stockholder by
certified check or bank check, or by wire transfer, of the full purchase price,
without fee or deduction therefrom.
2. The obligation of the Company to purchase Shares from a
Stockholder shall terminate upon the earlier to occur of (i) the effective date
of the registration statement registering the Shares under the Act, allowing the
Stockholder to freely transfer the Shares, or (ii) such time as the Stockholder
may freely transfer Shares pursuant to Rule 144 or any other exemption from
registration, which the parties anticipate to be February 29, 1998.
3. The Company will accept a faxed notice of intent to sell Shares
pursuant to Paragraph 1 from any Stockholder until 11:59 p.m. on Tuesday,
December 17, 1996, or in any other interval in which trading is not prohibited
for such Stockholder by the Company's Insider Trading Policy. This Policy
applies to all employees of director level and above, and any other employees in
possession of material inside information and prohibits purchase or sale of the
Company's stock during the period from two weeks prior to the end of any fiscal
quarter until the third business day after the public release by the
<PAGE>
Amendment to
Registration Rights
Agreement
December 16, 1996
Company of earnings for that quarter. (Thus, for example, no purchase or sale
of the Company's stock may be made during the period from two weeks prior to the
end of December until the third business day after the release of earnings for
the quarter, which is anticipated to be made in the first or second week of
February, 1997. Similarly, no purchase or sale of the Company's stock may be
made during the period from two weeks prior to the end of March until the third
business day after the release of earnings for the first quarter.)
4. This agreement may be signed by the Stockholders in counterparts,
all of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
BOSTON COMMUNICATIONS
GROUP, INC.
By: /s/George K. Hertz
---------------------
President
/s/ Peter T. Zuyus, Jr.
-------------------------
Peter T. Zuyus, Jr.
/s/ Joseph Giegerich
------------------------
Joseph Giegerich
/s/ Terence G. Hare III
-------------------------
Terence G. Hare III
/s/ J. Michael Looney
-------------------------
J. Michael Looney
/s/ John M. Freese
-------------------------
John M. Freese
2
<PAGE>
EXHIBIT 11.0
------------
BOSTON COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1997
---- ----
NET INCOME PER COMMON SHARE - PRIMARY
<S> <C> <C>
Net income $ 192 $ 93
====== =======
Primary income per share:
Average common shares outstanding 3,336 12,723
Dilutive options and warrants 213 160
Other (1) 5,630 -
------ -------
Average common shares outstanding 9,179 12,883
====== =======
Net income per common share $ 0.02 $ 0.01
====== =======
NET INCOME PER COMMON SHARE - FULL DILUTION
Net income $ 192 $ 93
====== =======
Fully diluted income per share:
Average common shares outstanding 3,336 12,723
Dilutive options and warrants 213 160
Other (1) 5,630 -
------ -------
Average common shares outstanding 9,179 12,883
====== =======
Net income per common share $ 0.02 $ 0.01
====== =======
</TABLE>
(1)Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, Common Stock and stock options issued during the twelve-month period
preceding the date of the initial filing of the registration statement with an
exercise price below the initial public offering price of $14.00 per share have
been included in the calculation of common equivalent shares, using the Treasury
stock method, as if they were outstanding for all periods presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 357
<SECURITIES> 14,731
<RECEIVABLES> 13,203
<ALLOWANCES> 1,191
<INVENTORY> 2,811
<CURRENT-ASSETS> 33,146
<PP&E> 16,053
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,661
<CURRENT-LIABILITIES> 9,631
<BONDS> 0
0
0
<COMMON> 128
<OTHER-SE> 42,876
<TOTAL-LIABILITY-AND-EQUITY> 52,661
<SALES> 15,619
<TOTAL-REVENUES> 15,619
<CGS> 12,059
<TOTAL-COSTS> 15,711
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (262)
<INCOME-PRETAX> 191
<INCOME-TAX> 98
<INCOME-CONTINUING> 93
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
