<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998 Commission File Number 0-23599
MERCURY COMPUTER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2741391
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
199 RIVERNECK ROAD 01824
CHELMSFORD, MA (Zip Code)
(Address of principal executive offices)
978-256-1300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Number of shares outstanding of the issuer's classes of common stock as of
October 30, 1998:
Class Number of Shares Outstanding
- -------------------------------------- ----------------------------
Common Stock, par value $.01 per share 10,113,245
Total number of pages 14
<PAGE> 2
MERCURY COMPUTER SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1998 and June 30, 1998 3
Consolidated Statements of Operations for the Three Months Ended
September 30, 1998 and September 30, 1997 4
Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 1998 and September 30, 1997 5
Notes to Consolidated Financial Statements 6-7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-10
PART II. OTHER INFORMATION
Item 2. Use of Proceeds from Registered Securities 11
Item 6. Exhibits and Reports Filed on Form 8-K 12
SIGNATURE 13
EXHIBIT INDEX 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
MERCURY COMPUTER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
------------- --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,207 $ 6,054
Marketable securities 7,582 10,077
Trade accounts receivable, net of allowances of $267 and
$218 at September 30, 1998 and June 30, 1998, respectively 19,977 17,143
Inventory 7,568 9,125
Deferred income taxes, net 1,669 1,669
Prepaids expenses and other current assets 1,061 1,255
-------- --------
Total current assets 45,064 45,323
Marketable securities 21,696 18,889
Property and equipment, net 10,431 8,466
Capitalized software costs, net 208 104
Deferred income taxes, net 429 429
Other assets 350 358
-------- --------
Total assets $ 78,178 $ 73,569
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,935 $ 3,368
Accrued expenses 2,855 2,804
Accrued compensation 4,011 3,316
Billings in excess of revenues and customer advances 845 1,017
Income taxes payable 2,473 2,024
-------- --------
Total current liabilities 14,119 12,529
Commitments and contingencies (Note E) -- --
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized
and none issued and outstanding at September 30 and June 30,
1998, respectively (liquidation preference none) -- --
Common stock, $.01 par value: 25,000,000 shares authorized;
10,067,133 and 9,973,491 shares issued and outstanding at
September 30, 1998 and June 30, 1998, respectively 101 100
Additional paid-in capital 26,381 25,961
Retained earnings 38,012 35,483
Cumulative translation adjustment (158) (179)
Unrealized gains/(losses) on securities 48 --
Related parties notes receivable (325) (325)
-------- --------
Total stockholders' equity 64,059 61,040
-------- --------
Total liabilities and stockholders' equity $ 78,178 $ 73,569
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
3
<PAGE> 4
MERCURY COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1998 1997
------------------------
<S> <C> <C>
Net revenue $24,062 $19,039
Cost of revenue 8,460 6,661
------- -------
Gross profit 15,602 12,378
Operating expenses:
Selling, general and administrative 7,358 6,645
Research and development 4,707 3,381
------- -------
Total operating expenses 12,065 10,026
Income from operations 3,537 2,352
Interest income, net 369 231
Other income (expenses), net 45 83
------- -------
Income before income taxes 3,951 2,666
Provision for income taxes 1,422 1,060
------- -------
Net income $ 2,529 $ 1,606
======= =======
Net income per share:
Basic $ 0.25 $ 0.31
======= =======
Diluted $ 0.24 $ 0.20
======= =======
Weighted average shares outstanding:
Basic 10,026 5,217
======= =======
Diluted 10,620 7,920
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
4
<PAGE> 5
MERCURY COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1998 1997
--------------------
<S> <C> <C>
Cash flows provided from operating activities:
Net income $ 2,529 $ 1,606
Adjustments to reconcile net income to net cash
Provided by (used in) operating activities:
Depreciation and amortization 951 832
Deferred income taxes -- (332)
Changes in assets and liabilities:
Trade accounts receivable (2,798) 446
Contracts in progress -- (901)
Inventory 1,566 (591)
Prepaid expenses and other current assets 197 (260)
Other assets 9 (31)
Accounts payable 563 (485)
Accrued expenses and compensation 736 812
Billings in excess of revenues and customer advances (172) 489
Income taxes payable 448 453
------- --------
Net cash provided by operating activities 4,029 2,038
------- --------
Cash flows from investing activities:
Purchase of marketable securities (312) --
Purchases of property and equipment (2,786) (1,358)
Capitalized software development costs (225) --
------- --------
Net cash used in investing activities (3,323) (1,358)
------- --------
Cash flows from financing activities:
Net proceeds from issuance of common stock -- --
Proceeds from exercise of stock options and warrants 421 144
------- --------
Net cash provided by financing activities 421 144
------- --------
Effect of exchange rate change on cash and cash equivalents 26 18
------- --------
Net change in cash and cash equivalents 1,153 842
Cash and cash equivalents at beginning of period 6,054 15,193
------- --------
Cash and cash equivalents at end of period $ 7,207 $ 16,035
======= ========
Cash paid during the period for:
Interest $ -- $ 2
Income taxes 844 939
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
5
<PAGE> 6
MERCURY COMPUTER SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
These consolidated financial statements should be read in conjunction with the
Company's financial statements and footnotes included in the Company's Form
10-K, filed with the Securities and Exchange Commission. In the opinion of
management, the accompanying unaudited financial statements include all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the consolidated financial position, results of operations and cash flows
of Mercury Computer Systems, Inc.
B. INVENTORY
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 JUNE 30, 1998
(IN THOUSANDS) (IN THOUSANDS)
------------------ --------------
<S> <C> <C>
Raw materials $3,169 $4,707
Work in process 2,236 2,814
Finished goods 2,163 1,604
------ ------
Total $7,568 $9,125
====== ======
</TABLE>
C. NET INCOME PER COMMON SHARE
The Company has adopted Statement of Financial Accounting Standard ("SFAS") No.
128, "Earnings Per Share," which specifies the computation, presentation and
disclosure requirements for net income per common share. Basic net income per
common share is computed based on the weighted average number of common shares
outstanding during the period. Diluted net income per common share gives effect
to all diluted potential common shares outstanding during the period. Under SFAS
No. 128, the computation of diluted earnings per share does not assume the
issuance of common shares that have an antidilutive effect on net income per
common share.
Prior to the adoption of this statement, all common and common equivalent shares
issued during the twelve month period prior to the filing of the initial public
offering ("cheap stock") were included in the calculation of basic and diluted
earnings per share as if they were outstanding for all periods presented.
Adoption of this statement, and the related guidance set out in Securities and
Exchange Commission Staff Accounting Bulletin No. 98, has eliminated the
inclusion of cheap stock from the calculation of basic and diluted earnings per
share prior to issuance of the securities.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER 30,
1998 1997
(IN THOUSANDS) (IN THOUSANDS)
-------------- --------------
<S> <C> <C>
Net income $ 2,529 $1,606
Shares used in computation:
Weighted average common shares outstanding used
in computation of basic net income per share 10,026 5,217
Dilutive effect of convertible preferred stock -- 2,557
Dilutive effect of stock options 594 141
Dilutive effect of warrants -- 5
------- ------
Shares used in computation of diluted net
income per share 10,620 7,920
======= ======
Basic net income per share $ 0.25 $ 0.31
======= ======
Dilutive net income per share $ 0.24 $ 0.20
======= ======
</TABLE>
Options to purchase 83,538 and 33,928 shares of common stock were outstanding
during the three months ended September 30, 1998 and September 30, 1997,
respectively, but were not included in the calculation of diluted net income per
common share because the option price was greater than the average market price
of the common shares during the period.
6
<PAGE> 7
D. COMPREHENSIVE INCOME
Mercury's total comprehensive income was as follows (in thousands)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER 30,
1998 1997
-------------------
<S> <C> <C>
Net income $2,529 $1,606
Other comprehensive income, net of tax:
Foreign currency translation adjustments 17 23
Unrealized gains on securities 27 --
-------------------
Other comprehensive income 44 23
-------------------
Total comprehensive income $2,573 $1,629
====== ======
</TABLE>
E. INTERNAL REVENUE SERVICE AUDIT
On December 12, 1997, the Internal Revenue Service ("IRS") concluded an audit of
the Company's tax returns for the years ended June 30, 1992 through June 30,
1995, and issued a formal report reflecting proposed adjustments with respect to
the years under audit. The proposed IRS adjustments primarily relate to the
disallowance of research and development tax credits claimed by the Company, as
well as treatment of certain other items. The Company is in the process of
appealing the proposed adjustments to the Appeals Division of the IRS. While the
Company does not believe that the final outcome of the IRS audit will have a
material adverse effect on the Company's financial condition or results of
operations, no assurance can be given as to the final outcome of the audit, the
amount of any final adjustments or the potential impact of such adjustments on
the Company's financial condition or results of operations.
F. NEW ACCOUNTING PRONOUNCEMENTS
In June of 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement supercedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." This statement
includes requirements to report selected segment information quarterly and
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenues. The
statement will be effective for annual periods beginning after December 15, 1997
and the Company will adopt its provisions in fiscal 1999. Reclassification for
earlier periods is required, unless impracticable, for comparative purposes. The
Company is currently evaluating the impact this statement will have on its
financial statements; however, the Company does not expect the statement to have
a material impact on its financial position or results of operations because the
statement requires only additional disclosure.
In March 1998, the American Institute of Certified Public Accountants issued SOP
98-1, "Internal Use Software," which provides guidance on the accounting for the
costs of software developed or obtained for internal use. SOP 98-1 is effective
for fiscal years beginning after December 15, 1998. Management does not expect
the statement to have a material impact on its financial position or results of
operations.
On June 15, 1998 the FASB issued SFAS No. 133 " accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 is effective for all fiscal
quarters for all fiscal years beginning after June 15, 1999. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and the type of hedge
transaction. Management of the Company anticipates that, due to its limited use
of derivative instruments, the adoption of SFAS No. 133 will not have a material
impact on its financial position or results of operations.
7
<PAGE> 8
MERCURY COMPUTER SYSTEMS, INC.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission may contain statements which are not historical facts but
which are "forward-looking statements" which involve risks and uncertainties.
The words "may," "will," "expect," "anticipate," "continue", "estimate",
"project," "intend" and similar expressions are intended to identify
forward-looking statements regarding events, conditions and financial trends
that may affect the Company's future plans of operations, business strategy,
results of operations and financial position. These statements are based on the
Company's current expectations and estimates as to prospective events and
circumstances about which there can be no firm assurances given. Further, any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made. As it is not possible to predict every new factor that may
emerge, forward-looking statements should not be relied upon as a prediction of
actual future financial condition or results. Important factors that may cause
the Company's actual results to differ from forward-looking statements are
referenced in the Company's Form 10K filed with the Securities and Exchange
commission.
RESULTS OF OPERATIONS:
REVENUES
The Company's total revenues increased 26% from $19.0 million during the three
months ended September 30, 1997 to $24.1 million during the three months ended
September 30, 1998. Increases were realized in all areas.
Defense electronics revenues increased 17% from $15.1 million or 79% of total
revenues during the three months ended September 30, 1997 to $17.8 million or
74% of total revenues during the three months ended September 30, 1998. The
increase in revenues was due primarily to continued strong unit demand for
defense electronics products, largely comprised of, advanced military
applications in radar, sonar and airborne surveillance.
Medical imaging revenues increased 41% from $2.2 million or 12% of total
revenues during the three months ended September 30, 1997 to $3.1 million or 13%
of total revenues during the three months ended September 30, 1998. The increase
in medical imaging revenues is reflective of the Company's ongoing investment in
this business, expansion into new modalities and the resulting increased unit
demand.
Other revenues increased 91% from $1.7 million or 9% of total revenues during
the three months ended September 30, 1997 to $3.2 million or 13% of total
revenues during the three months ended September 30, 1998. The increase in
revenues was primarily due to increased unit demand by new and existing
commercial customers.
COST OF REVENUES
Cost of revenues increased 27% from $6.7 million during the three months ended
September 30, 1997 to $8.5 million during the three months ended September 30,
1998. This increase directly correlates with the corresponding revenue increase.
As a percent of total revenues, cost of revenues remained constant at 35% for
the three months ended September 30, 1997 and 1998. This constant level of cost
of revenues as a percentage of total revenues was due primarily to the stable
nature of the businesses, concerted efforts to control costs and is reflective
of gross margins historically achieved by the Company as a whole.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general, and administrative expenses increased 11% from $6.6 million
during the three months ended September 30, 1997 to $7.4 million during the
three months ended September 30, 1998. These increases reflect the hiring of
additional sales and administrative personnel, information system investments,
increased commissions and marketing related costs, all of which are associated
with higher sales volume, and to a lesser extent, continued global expansion.
8
<PAGE> 9
RESEARCH AND DEVELOPMENT
Research and development expenses increased 39% from $3.4 million during the
three months ended September 30, 1997 to $4.7 million during the three months
ended September 30, 1998. The increase was due primarily to the hiring of
additional software and hardware engineers to develop and enhance the features
and functionality of the Company's products in response to increased demand for
next generation product. Engineering expenses currently are running higher than
management's target levels as the Company is completing some major development
programs to deliver important new technology to its customers. The Company
anticipates that the higher engineering spending will continue over the next
several quarters.
INCOME FROM OPERATIONS
Income from operations increased 50% from $2.4 million during the three months
ended September 30, 1997 to $3.5 million during the three months ended
September 30, 1998. This increase is associated with higher sales volume coupled
with improved spending efficiency. Included in income from operations during the
three months ended September 30, 1998 were $562,000 in hardware and software
revenues and $894,000 in direct expenses related to the shared storage business.
Included in income from operations during the three months ended September 30,
1997 were $38,000 in hardware and software revenues and $670,000 in direct
expenses related to the shared storage business. The direct expenses include
expenses from marketing and engineering activities, primarily related to
compensation, trade shows, prototype development and direct costs related to the
sale of the product, including certain hardware costs.
INTEREST INCOME, NET
Interest income, net, increased 60% from $231,000 during the three months ended
September 30, 1997 to $369,000 during the three months ended September 30, 1998.
This increase reflects an increase in the Company's average cash balances
primarily as a result of cash received from the Company's initial public
offering. Offsetting the effect of higher average cash balances were lower
yields achieved on the Company's cash. These lower yields were the result of a
shift in investment strategy from taxable money market instruments to
non-taxable securities.
PROVISION FOR INCOME TAX
The Company recorded a tax provision of $1.4 million during the three months
ended September 30, 1998 reflecting a 36% tax rate as compared to a $1.1 million
tax provision during the three months ended September 30, 1997, reflecting a 40%
tax rate. The reduction in the effective tax rate was primarily due to the fact
that the Company feels its provision for the Internal Revenue Service audit is
adequate and, therefore, no longer needs to provide at such a high rate.
Additionally, the aforementioned shift in investment strategy from taxable money
market instruments to non-taxable securities has contributed to the reduced tax
provision.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Company had cash and marketable investments of
approximately $36.5 million. During the three months ended September 30, 1998,
the Company generated approximately $4.0 million in cash from operations
compared to $2.0 million generated during the three months ended September 30,
1997. The increase in cash generated from operations was due to several factors;
particularly, increased profitability, inventory reductions and accounts payable
increases. These cash increases were offset somewhat by an increase in accounts
receivable. Days sales outstanding increased from 58 days at September 30, 1997
to 75 days at September 30, 1998 as a disproportionate amount of revenue was
recorded at the end of the accounting period.
The Company has a line of credit agreement with a commercial bank on which the
Company can borrow up to $5.0 million at an interest rate equal to the prime
rate or, at the election of the Company, two and one quarter percentage points
above the London InterBank Offered Rate. As of September 30, 1998, there was no
outstanding borrowing on this line of credit.
During the three months ended September 30, 1998, the Company's investing
activities used cash of $3.3 million which consisted of $1.8 million related to
the development of additional office space, $957,000 for computers, furniture
and equipment, $312,000 for the purchase of marketable securities (net) and
$225,000 for capitalized software. During the three months ended September 30,
1997, the Company's investing activities used cash of $1.4 million, consisting
of $730,000 for computers, furniture and equipment and $628,000 related to the
development of additional office space.
9
<PAGE> 10
During the three months ended September 30, 1998, the Company's financing
activities provided approximately $421,000 in cash, all related to the issuance
of stock options. During the three months ended September 30, 1997, the
Company's financing activities provided $144,000 in cash from the issuance of
stock options.
The Company believes that its available cash, cash generated from operations,
and the Company's line of credit, will be sufficient to provide for the
Company's working capital and capital expenditure requirements for the
foreseeable future and any final adjustments resulting from the IRS audit
described in the notes to the financial statements. If the Company acquires one
or more businesses or products, the Company's capital requirements could
increase substantially. In the event of such an acquisition or in the event that
any unanticipated circumstances arise which significantly increase the Company's
capital requirements, there can be no assurance that necessary additional
capital will be available on terms acceptable to the Company, if at all.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. In the Company's Annual
report on Form 10K for the fiscal year ended June 30, 1998, the Company made
disclosures regarding the following matters: (i) the Company's state of Year
2000 readiness of the hardware and software products sold by the Company
("Products"), the information technology systems used in its operations ("IT
Systems"), and its non-IT Systems, such as building security, voice mail and
other systems, (ii) the expenditures expected to be incurred in connection with
identifying, evaluating and settling any Year 2000 compliance issues, (iii) the
risks associated with identified Year 2000 issues, and (iv) the Company's
intention to develop a contingency plan to address identified Year 2000
compliance issues.
State of Readiness: Since the Company's original Year 2000 disclosure, the
Company has completed reprogramming of the source code underlying its current
financial and accounting software to make it Year 2000 compliant. Testing of the
software is expected to be completed during the latter half of fiscal 1999.
However, there has not been significant progress made with respect to the other
steps being taken to achieve Year 2000 readiness. Accordingly, prior to the end
of fiscal 1999, the Company still intends to (a) complete an internal review of
the Year 2000 compliance of all prior versions of its Products, (b) circulate a
questionnaire to vendors and customers with whom the Company has material
relationships to obtain information about their Year 2000 compliance, and (c)
retain an outside consultant to assist in compiling a comprehensive list of all
IT-Systems and non-IT Systems. Until such information is obtained, the Company
will not be able to effectively evaluate whether any corrective efforts will be
required with respect to its IT Systems (except as described above), non-IT
Systems or prior versions of its Products.
Costs: The Company has not incurred any material expenditures to date in
connection with identifying or evaluating Year 2000 compliance issues.
Contingency Plan: The Company has not yet developed a Year 2000 specific
contingency plan. The Company intends to prepare a contingency plan with respect
to its financial and accounting software no later than mid-1999. In addition, if
further Year 2000 compliance issues are discovered , the Company then will
evaluate the need for one or more contingency plans relating to such issues.
10
<PAGE> 11
MERCURY COMPUTER SYSTEMS, INC.
PART II. OTHER INFORMATION
(d) Use of Proceeds from Registered Securities.
During the three months of July, August and September 1998, the Company used
approximately $1.8 million of proceeds received from the sale of the 2,000,000
shares for the construction of an additional facility as discussed in the
Company's Form 10K filed with the Securities and Exchange Commission.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) Exhibits. See as listed
Exhibit
Item #
-------
27.1 Financial Data Schedule
(b) Reports on Form 8-K. None.
12
<PAGE> 13
MERCURY COMPUTER SYSTEMS, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCURY COMPUTER SYSTEMS, INC.
Date: November 13, 1998 By: /s/ G. Mead Wyman
----------------------------------------------
G. Mead Wyman
Senior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)
13
<PAGE> 14
MERCURY COMPUTER SYSTEMS, INC.
EXHIBIT INDEX
Exhibit
ITEM #
- -------
27.1 Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 7,207
<SECURITIES> 29,278
<RECEIVABLES> 19,977
<ALLOWANCES> 267
<INVENTORY> 7,568
<CURRENT-ASSETS> 45,064
<PP&E> 23,424
<DEPRECIATION> 12,993
<TOTAL-ASSETS> 78,178
<CURRENT-LIABILITIES> 14,119
<BONDS> 0
0
0
<COMMON> 101
<OTHER-SE> 63,958
<TOTAL-LIABILITY-AND-EQUITY> 78,178
<SALES> 24,062
<TOTAL-REVENUES> 24,062
<CGS> 8,460
<TOTAL-COSTS> 8,460
<OTHER-EXPENSES> 11,651
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,951
<INCOME-TAX> 1,422
<INCOME-CONTINUING> 2,529
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,529
<EPS-PRIMARY> .25
<EPS-DILUTED> .24
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.D. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 17,188
<SECURITIES> 15,858
<RECEIVABLES> 17,371
<ALLOWANCES> 218
<INVENTORY> 9,840
<CURRENT-ASSETS> 51,445
<PP&E> 18,466
<DEPRECIATION> 11,408
<TOTAL-ASSETS> 70,393
<CURRENT-LIABILITIES> 12,177
<BONDS> 0
0
0
<COMMON> 99
<OTHER-SE> 58,117
<TOTAL-LIABILITY-AND-EQUITY> 70,393
<SALES> 22,364
<TOTAL-REVENUES> 22,364
<CGS> 7,832
<TOTAL-COSTS> 7,832
<OTHER-EXPENSES> 10,597
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,935
<INCOME-TAX> 1,496
<INCOME-CONTINUING> 2,439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,439
<EPS-PRIMARY> .29
<EPS-DILUTED> .24
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
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