<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
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 1-13317
BOX HILL SYSTEMS CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-3460176
- ------------------------------------ -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
161 Avenue of the Americas, New York, NY 10013
- ----------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(212) 989-4455
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and 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. X Yes __ No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value, 14,256,436 shares outstanding as of May 5, 1998.
- -------------------------------------------------------------------------------
<PAGE>
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
INDEX
Page
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (unaudited):
Condensed Consolidated Balance Sheets -March 31, 1998
and December 31, 1997 1
Condensed Consolidated Statements of Income --Three
months ended March 31, 1998 and 1997 2
Condensed Consolidated Statements of Cash Flows --
Three months ended March 31, 1998 and 1997 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information
Item 6. Exhibits 11
Signatures 12
<PAGE>
Item 1. Condensed Consolidated Financial Statements
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 46,416 $ 40,897
Short-term investments........................................... 4,900 9,305
Accounts receivable, net......................................... 13,708 13,866
Inventories...................................................... 8,228 7,351
Prepaid expenses and other....................................... 418 344
Deferred income taxes............................................ 721 721
--------------- ----------------
Total current assets.................................... 74,391 72,484
Property and equipment, net.......................................... 1,292 1,199
Deferred income taxes................................................ 134 134
--------------- ----------------
$ 75,817 $ 73,817
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 8,600 $ 8,088
Accrued expenses................................................. 1,807 2,000
Customer deposits................................................ 2,425 2,143
Deferred revenues................................................ 1,962 1,829
Income taxes payable............................................. 818 757
Distribution payable............................................. -- 227
--------------- ----------------
Total current liabilities.............................. 15,612 15,044
--------------- ----------------
Deferred rent........................................................ 230 225
--------------- ----------------
Shareholders' equity:................................................
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued........................................ -- --
Common stock, $.01 par value 40,000,000 shares
authorized, 14,233,806 and 14,138,871 shares issued
and outstanding, respectively.................................. 142 141
Additional paid-in capital....................................... 56,622 56,491
Retained earnings................................................ 3,211 1,916
--------------- ----------------
Total shareholders' equity............................. 59,975 58,548
--------------- ----------------
$ 75,817 $ 73,817
=============== ================
</TABLE>
The accompanying notes are an integral part of these statements.
-1-
<PAGE>
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share information)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
------------- ----------
<S> <C> <C>
Net revenues................................................................. $ 16,045 $ 15,232
Cost of goods sold............................................................ 10,519 10,019
------------- -------------
Gross profit......................................................... 5,526 5,213
------------- -------------
Operating expenses:
Shareholder officers' compensation........................................ 319 2,040
Engineering and product development..... 646 465
Sales and marketing....................................................... 1,999 1,548
General and administrative................................................ 963 626
------------- -------------
3,927 4,679
------------- -------------
Operating income..................................................... 1,599 534
Interest income............................................................... 506 11
------------- -------------
Income before income taxes........................................... 2,105 545
Income tax provision.......................................................... 810 81
------------- -------------
Net income.................................................................... $ 1,295 $ 464
============= =============
Basic net income per share.................................................... $ .09 $ .05
============ =============
Diluted net income per share.................................................. $ .09 $ .04
============ =============
The accompanying notes are an integral part of these statements.
-2-
<PAGE>
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
----------- --------
<S> <C> <C>
Operating activities:
Net income............................................................ $ 1,295 $ 464
Adjustments to reconcile net income to net cash provided by operating
activities--
Depreciation and amortization................................... 79 62
Other........................................................... 5 --
Changes in assets and liabilities--
Accounts receivable......................................... 158 (557)
Inventories................................................. (877) (1,808)
Prepaid expenses and other.................................. (74) (18)
Accounts payable............................................ 512 2,133
Accrued expenses............................................ (193) 1,605
Customer deposits........................................... 282 313
Deferred revenues........................................... 133 206
Income taxes payable........................................ 61 --
----------- ----------
Net cash provided by operating activities............. 1,381 2,400
----------- -----------
Investing activities:
Sale of short-term investments........................................ 4,405 --
Purchases of property and equipment................................... (172) (48)
----------- -----------
Net cash provided by (used in) investing activities... 4,233 (48)
----------- -----------
Financing activities:
Proceeds from exercise of stock options.............................. 57 --
Proceeds from Employee Stock Purchase Plan........................... 75 --
Distributions to S Corporation shareholders.......................... (227) --
----------- ----------
Net cash used in financing activities................. (95) --
----------- ----------
Net increase in cash and cash equivalents................................. 5,519 2,352
Cash and cash equivalents, beginning of period............................ 40,897 994
----------- -----------
Cash and cash equivalents, end of period.................................. $ 46,416 $ 3,346
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
-3-
<PAGE>
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of Box
Hill Systems Corp. and subsidiaries (the "Company"), have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for fair presentation have been included.
Operating results for the three month period ended March 31, 1998, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
2. Earnings Per Share:
Basic and diluted net income per share have been computed under the guidelines
of Statement of Financial Accounting Standards No. 128, "Earnings per Share."
Basic net income per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding for the period. Diluted net
income per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding for the period, adjusted for the
dilutive effect of common stock equivalents, consisting of dilutive common stock
options using the treasury stock method. The table below sets forth the
reconciliation of basic to diluted net income per share (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------
1998 1997
--------------- ----------
<S> <C> <C>
Net income........................................ $ 1,295 $ 464
=============== ===============
Shares used in computing basic net income per
share.............................. 14,221 9,900
Dilutive effect of options....................... 844 932
--------------- ---------------
Shares used in computing diluted net income per
share............................. 15,065 10,832
=============== ===============
</TABLE>
-4-
<PAGE>
3. Inventories:
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist principally of purchased components used as raw materials.
4. New Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," which requires that all components of comprehensive income be reported
in the financial statements. SFAS No. 130 requires reclassification of prior
period financial statements to reflect application of the provisions of the new
standard. The Company adopted SFAS No. 130 in the quarter ended March 31, 1998
and has determined that there were no items meeting the definition of
comprehensive income for the quarter ended March 31, 1998 or for the year ended
December 31, 1997.
5. Initial Public Offering of Common Stock:
The Company completed an initial public offering (the "Offering"), of its Common
Stock effective September 16, 1997. The Offering consisted of the sale of
5,500,000 shares of Common Stock at an initial public offering price of $15.00
per share, of which 3,300,000 shares were issued and sold by the Company and
2,200,000 shares were sold by individuals who were the only shareholders of the
Company prior to the Offering. Additionally, 825,000 shares of Common Stock were
purchased from the Company at $15.00 per share by the underwriters upon the
exercise of an over-allotment option. The net proceeds to the Company , after
deducting underwriting discounts and expenses, were approximately $56.6 million.
The Company did not receive any proceeds from the sale of shares by the selling
shareholders.
The Company was subject to taxation under Subchapter S of the Internal Revenue
Code from 1990 until the termination of the S Corporation status concurrent with
the Offering. Subsequent to the Offering, the Company made aggregate
distributions of $11,927,000 to its S Corporation shareholders for taxed, but
previously undistributed, S Corporation earnings.
-5-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Cautionary Statement for Forward-Looking Information
Certain statements contained in this report, including statements regarding the
anticipated development and expansion of the Company's business, the intent,
belief or current expectations of the Company, its directors or its officers,
primarily with respect to the future operating performance of the Company and
the products it expects to offer and other statements contained herein regarding
matters that are not historical facts, are "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act (the "Reform Act").
Future filings with the Securities and Exchange Commission, future press
releases and future oral or written statements made by or with the approval of
Box Hill which are not statements of historical fact, may contain
forward-looking statements under the Reform Act. Because such statements include
risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements follow.
The Open Systems storage market in which the Company operates is characterized
by rapid technological change, frequent new product introductions and evolving
industry standards. Customer preferences in that market are difficult to
predict. The introduction of products embodying new technologies and the
emergence of new industry standards could render the Company's existing products
as well as new products being introduced, obsolete and unmarketable. The Company
relies on other companies to supply certain key components of its products and
certain products which it resells that are available only from limited sources
in the quantities and quality demanded by the Company. The Company has
historically targeted industries requiring high-end storage products, and a
material portion of the Company's net revenues to date has been derived from
sales to customers in the financial services industry and the telecommunications
industry. In addition, historically, a material percentage of the Company's net
revenues in each year has been derived from a limited number of customers. The
Company's growth and expansion may place a significant strain on its
administrative, operational and financial resources and incresed demands on its
manufacturing, sales and customer service functions, especially as the Company
attempts to expand its geographic reach and becomes less reliant on the
financial services and telecommunications industries. The Company's future
operating results depend in part upon its ability to attract, train, retain and
motivate qualified management, technical, manufacturing, sales and support
personnel for its operations. The Company has no patent protection for its
products and has attempted to protect its proprietary software and other
intellectural property rights through copyrights, trade secrets and other
measures which may prove to be inadequate.
All forward-looking statements speak only as of the date on which they are made.
Box Hill undertakes no obligation to update such statements to reflect events
which occur or circumstances which exist after the date on which they are made.
Overview
Box Hill designs, manufactures, markets and supports high performance data
storage systems for the Open Systems computing environment. The Company employs
a direct marketing strategy aimed at data-intensive industries which, to date,
include financial services, telecommunications, health care, government/defense
and academia. Since its inception, Box Hill has focused exclusively on providing
storage solutions for high-end customers, primarily in the UNIX environment. The
Company initially focused on the financial services industry in response to that
industry's need for high-availability, high-performance, fault-tolerant storage
systems and high levels of customer and technical support. Box Hill leveraged
its position as a company focused exclusively on storage solutions to bring new
products to market faster than its competitors. Box Hill has historically
financed its growth primarily with cash generated from operations.
Box Hill's manufacturing operations consist primarily of assembly and
integration of components and subassemblies into the Company's products with
certain of those subassemblies manufactured by independent contractors. The
Company's cost of goods sold consists primarily of direct material costs. The
Company generally extends to its customers the warranties provided to the
Company by its suppliers. To date, the Company's suppliers have covered the
majority of the Company's warranty costs. On a quarterly and annual basis the
Company's gross margins have been and will continue to be affected by a variety
of factors, including competition, product configuration, product mix, the
availability of new products and product enhancements, and the cost and
availability of components. The Company's long-term strategy includes
maintaining or improving existing gross margins.
-6-
<PAGE>
The Company completed an initial public offering of its common stock on
September 16, 1997. The offering consisted of the sale of 5,500,000 shares of
common stock at an initial public offering price of $15.00 per share, of which
3,300,000 were issued and sold by the Company and 2,200,000 shares were sold by
individuals who were the only shareholders of the Company prior to the initial
public offering. Additionally, 825,000 shares of common stock were purchased
from the Company at $15.00 per share by the underwriters upon the exercise of an
over-allotment option. The net proceeds to the Company, after deducting
underwriting discounts and expenses, were approximately $56.6 million.
The Company was subject to taxation under Subchapter S of the Internal Revenue
Code and the New York State Tax Code from 1990 until the termination of its S
Corporation status concurrent with its initial public offering. Accordingly, the
provision for income taxes for the three months ended March 31, 1997 consists
only of New York City taxes and state franchise taxes. Additionally, subsequent
to the Offering, the Company made aggregate distributions of $11.9 million to
its S Corporation shareholders for taxed, but previously undistributed, S
Corporation earnings.
Results of Operations
The following table sets forth certain items from the Company's income
statements as a percentage of net revenues for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1998 1997
---------- --------
<S> <C> <C>
Net revenues...................................... 100.0% 100.0%
Cost of goods sold................................ 65.6 65.8
---------- ----------
Gross profit............................. 34.4 34.2
---------- ----------
Operating expenses:
Shareholder officers' compensation........... 2.0 13.4
Engineering and product development.......... 4.0 3.1
Sales and marketing.......................... 12.5 10.2
General and administrative................... 5.9 4.0
---------- ----------
Total operating expenses................. 24.4 30.7
---------- ----------
Operating income............................. 10.0% 3.5%
========== ==========
</TABLE>
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997:
Net revenue - Net revenues increased 5.3% to $16.0 million for the three months
ended March 31, 1998, from $15.2 million for the three months ended March 31,
1997. The increase resulted from an increase in volume, which was partially
offset by price reductions. For the three months ended March 31, 1998, increases
in sales of back-up products were offset by decreases in net revenues from sales
of RAID products and other traditional storage products. Net revenues from sales
of back-up products increased $3.2 million to $5.7 million for the three months
ended March 1998, compared to $2.5 million for the comparable period of
1997. The increase in net revenues from sales of back-up products is
-7-
<PAGE>
the result of the additional focus on the importance of backing-up mission
critical data by the Company's traditional customer base, and the successful
sales efforts in obtaining new customers requiring the Company's knowledge and
experience in back-up integration.
Net revenues from sales of RAID products decreased $2.1 million, or 43.8%, to
$2.7 million for the three months ended March 31, 1998, compared to $4.8 million
for the three months ended March 31, 1997. Net revenues from sales of
traditional storage products and services decreased $.3 million, or 3.8%, to
$7.6 million for the three months ended March 31, 1998, compared to $7.9 million
for the comparable period of 1997. The decrease in net revenues from sales of
RAID products and other traditional storage products is primarily due to several
of its large customers delaying purchasing decisions while reviewing new
technologies and consolidating their information systems infrastructures.
Gross profit - Gross profit increased 5.8% to $5.5 million for the three months
ended March 31, 1998, from $5.2 million for the comparable period of 1997. As a
percentage of net revenues, gross profit increased slightly from 34.2% to 34.4%.
Shareholder officers' compensation - Shareholder officers' compensation consists
of salaries and bonuses paid to three of the Company's officers who were the
only shareholders of the company prior to the Offering. Shareholder officers'
compensation decreased $1.7 million to $.3 million for the three months ended
March 31, 1998 as compared to $2.0 million for the three months ended March 31,
1997. The decrease in shareholder officers' compensation is attributable to new
employment agreements entered into with the shareholder officers in connection
with the Company's initial public offering.
Engineering and product development - Engineering and product development
expenses consist primarily of employee compensation, engineering equipment and
supply expenses and fees paid for third-party design services. To date, no
software development expenses have been capitalized since the period between
achieving technological feasibility and completion of such software is
relatively short and software development costs qualifying for such
capitalization have been relatively insignificant. Engineering and product
development increased 20% to $.6 million for the three months ended March 31,
1998 from $.5 million for the comparable period of 1997. As a percentage of net
revenues, engineering and product development increased to 4.0% for the three
months ended March 31, 1998 from 3.1% for the comparable period of 1997. The
increase in engineering and product development expenses is due to an increase
in the number of employees engaged in research and development activities.
Sales and marketing - Sales and marketing expenses consist primarily of salaries
and commissions, advertising and promotional costs and travel expenses. Sales
and marketing expenses increased 33.3% to $2.0 million for the three months
ended March 31, 1998 from $1.5 million for the three months ended March 31,
1997. As a percentage of net revenues, sales and marketing expenses increased to
12.5% for the three months ended March 31, 1998 from 10.2% for the comparable
period of 1997. The increase was primarily due to an increase in the direct
sales forces and field service staff and increased commissions based on the
increase in sales.
-8-
<PAGE>
General and administrative - General and administrative expenses consist
primarily of compensation to employees performing the Company's administrative
functions and expenditures for the Company's administrative facilities. General
and administrative expenses increased 66.6% to $1.0 million for the three months
ended March 31, 1998 from $.6 million for the three months ended March 31, 1997.
As a percentage of net revenues, general and administrative expenses increased
to 5.9% for the three months ended March 31, 1998 from 4.0% for the comparable
period of 1997. The increase is due to an increase in staff to support the
Company's growth plan.
Interest income - Interest income consists primarily of income earned on the
Company's cash and cash equivalents and short-term investments. Interest income
increased $.5 million for the three months ended March 31, 1998 from $11,000 for
the three months ended March 31, 1997. The increase is due to the investment of
the net proceeds of the September 1997 initial public offering.
Income tax provision - For the three months ended March 31, 1998, the
Company's effective income tax rate was 38.5%, reflecting federal, state and
local taxes, partially offset by research and development credits and a
favorable tax benefit from the Company's foreign sales corporation. The Company
was subject to income taxes under Subchapter "S" of the Internal Revenue Code
and the New York State Tax Code from 1990 until the termination of its S
Corporation status concurrent with its initial public offering. Accordingly, the
provision for income taxes for the three months ended March 31, 1997, consists
only of New York City taxes and state franchise taxes.
Liquidity and Capital Resources
As of March 31, 1998, the Company had $51.3 million of cash and cash equivalents
and short-term investments and no bank indebtedness. Short-term investments
generally consist of variable rate securities that provide for early redemption
within twelve months. As of March 31, 1998, working capital was $58.8 million.
In September 1997, the Company completed an initial public offering of its
Common Stock. Proceeds of the offering, after expenses, were approximately $56.6
million.
For the three months ended March 31, 1998, cash provided by operating activities
was $1.4 million compared to cash provided by operating activities of $2.4
million for the same period in 1997. The decrease was primarily due to less of
an increase in accounts payable and accrued expenses for the three months ended
March 31, 1998 as compared to the three months ended March 31, 1997.
Cash provided by investing activities of $4.2 million consists of the sale of
short-term investments of $4.4 million, offset partially by purchases of
property and equipment.
Cash used in financing activities for the three months ended March 31, 1998
consists of $227,000 of distributions to the S Corporation shareholders,
representing the final distribution for taxed, but previously undistributed, S
Corporation earnings, offset by proceeds from the exercise of stock options and
from the Company's Employee Stock Purchase Plan totaling $132,000. In 1997, the
Company made $11.7 million of distributions
-9-
<PAGE>
to S Corporation shareholders representing their estimated taxed, but
previously undistributed, S Corporation earnings.
In October 1997, the Company obtained a $10 million revolving line of credit
facility from a commercial bank. The Company has not made any borrowings under
this facility.
The Company presently expects that cash and cash equivalents and short-term
investments, cash generated from operations and availability under its revolving
line of credit, will be sufficient to meet its foreseeable operating and capital
requirements. However, the Company may need additional capital to pursue
acquisitions or significant capital improvements, neither of which is currently
contemplated.
Year 2000
Many computer systems were not designed to handle any dates beyond the year
1999, and therefore computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. The current versions of
the Company's storage and backup products support dates in the year 2000 and
beyond, however, the Company is still in the process of evaluating third party
software products sold by Box Hill for Year 2000 compliance. In the event that
any of the Company's significant suppliers or customers do not successfully
achieve Year 2000 compliance on a timely basis, the Company's business or
operations could be adversely affected. The Company has evaluated its
information technology infrastructure and has made modifications for Year 2000
compliance. The Company does not expect future costs to modify its information
technology infrastructure to be material to its financial condition or results
of operations.
-10-
<PAGE>
BOX HILL SYSTEMS CORP. AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
The Company is involved in certain legal actions and claims arising
in the ordinary course of business. Management believes that the
outcome of such litigation and claims will not have a material
adverse effect on the Company's financial position or results of
operations.
Item 2. Changes in Securities
None.
Item 3. Defaults upon senior securities
None.
Item 4. Submission of matters to a vote of security holders
None.
Item 5. Other information
None.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on behalf by the undersigned, thereunto duly authorized.
BOX HILL SYSTEMS CORP.
Date: May 12, 1998 By /s/ Philip Black
-----------------------------------
Philip Black
Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Philip Black
-----------------------------------
Philip Black
Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 1998 By /s/ R. Robert Rebmann, Jr.
-----------------------------------
R. Robert Rebmann, Jr.
Chief Financial Officer and Treasurer
(Principal Financial Officer)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in the body of the Form 10-Q and is qualified in
its entirety by reference to such Financial Statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 46,416
<SECURITIES> 4,900
<RECEIVABLES> 13,975
<ALLOWANCES> (267)
<INVENTORY> 8,228
<CURRENT-ASSETS> 74,391
<PP&E> 2,548
<DEPRECIATION> (1,256)
<TOTAL-ASSETS> 75,817
<CURRENT-LIABILITIES> 15,612
<BONDS> 0
0
0
<COMMON> 142
<OTHER-SE> 59,833
<TOTAL-LIABILITY-AND-EQUITY> 75,817
<SALES> 16,045
<TOTAL-REVENUES> 16,045
<CGS> 10,519
<TOTAL-COSTS> 14,446
<OTHER-EXPENSES> (506)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,105
<INCOME-TAX> 810
<INCOME-CONTINUING> 1,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,295
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
