==============================================================================
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 April 1, 1995 or
Transition Report Pursuant to Section 13 or 15(d)
-------- of the Securities Exchange Act of 1934
For the Transition Period from ______ to ______
Commission File Number 0-11626
LOTUS DEVELOPMENT CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2757702
------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
55 Cambridge Parkway, Cambridge, Massachusetts 02142
-----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(617) 577-8500
--------------
(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
-------- --------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class April 29, 1995
----- --------------
Common Stock, 47,594,311
$.01 par value shares
===========================================================================
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
LOTUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
April 1, 1995 April 2, 1994
------------- -------------
<S> <C> <C>
Net sales ....................................... $202,615 $246,992
Cost of sales ................................... 39,146 46,408
-------- --------
Gross margin ................................. 163,469 200,584
Expenses:
Research and development ..................... 42,067 34,484
Sales and marketing .......................... 133,075 117,820
General and administrative ................... 18,128 16,248
Other (income)/expense, net (Note D) .......... (2,449) (1,314)
-------- --------
Total expenses ............................. 190,821 167,238
Income (loss) before income taxes ............... (27,352) 33,346
Provision (benefit) for income taxes ............ (9,847) 12,005
-------- --------
Net income (loss) ........................... ($17,505) $21,341
======== ========
Net income (loss) per share ................ ($0.36) $0.45
======== ========
Shares used in calculation of
net income (loss) per share .................... 48,077 47,707
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
1
______________________________________________________________________________
LOTUS DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
April 1, 1995 December 31, 1994
------------- -----------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and short-term investments (Note B) .............. $401,145 $376,218
Accounts receivable, net of allowances of
$42,129 and $37,971 ................................. 196,307 230,977
Inventory (Note C) .................................... 19,027 20,711
Other current assets .................................. 30,597 24,452
-------- --------
Total current assets .............................. 647,076 652,358
-------- --------
Property and equipment, net of accumulated depreciation
and amortization of $195,864 and $185,286 .............. 147,421 138,664
Software and other intangibles, net of accumulated
amortization of $141,354 and $128,140 .................. 90,821 96,228
Other assets .............................................. 17,774 16,829
-------- --------
Total assets ...................................... $903,092 $904,079
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued compensation and benefits ...................... $37,425 $35,674
Accounts payable, accrued expenses and deferred revenue 207,922 189,461
Accrued and deferred income taxes ...................... 17,843 35,219
-------- --------
Total current liabilities ......................... 263,190 260,354
-------- --------
Deferred income taxes ..................................... 39,318 39,595
Long-term debt ............................................ 50,000 50,000
Stockholders' equity:
Preferred stock, $1.00 par value,
5,000 shares authorized, none issued ................ -- --
Common stock, $.01 par value,
200,000 shares authorized;
63,575 shares issued;
48,333 and 47,849 shares outstanding ................ 636 636
Additional paid-in capital ............................ 284,483 280,815
Retained earnings ..................................... 489,875 507,380
Treasury stock, 15,242 and 15,726 shares
at an average cost of $14.99 and $14.95 per share ... (228,497) (235,047)
Translation adjustment ................................ 4,087 346
-------- --------
Total stockholders' equity ........................ 550,584 554,130
-------- --------
Total liabilities and stockholders' equity ........ $903,092 $904,079
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
2
______________________________________________________________________________
LOTUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
April 1, 1995 April 2, 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) .......................................... ($17,505) $21,341
Depreciation and amortization .............................. 23,119 21,413
Change in assets and liabilities:
Decrease in accounts receivable ........................ 41,142 28,879
Decrease in inventory .................................. 4,252 4,459
Increase (decrease) in accrued compensation and benefits 983 (12,481)
Increase (decrease) in accounts payable, accrued
expenses and deferred revenue ....................... 15,366 (4,052)
Increase (decrease) in accrued and deferred income taxes (17,841) 2,472
Net change in other working capital items .............. (9,131) (7,597)
-------- --------
Net cash provided by operating activities ...................... 40,385 54,434
-------- --------
Cash flows from investing activities:
Purchases of property and equipment ........................ (18,073) (5,871)
Payments for software and other intangibles ................ (7,542) (8,177)
Purchases of short-term investments, net ................... (38,580) (8,168)
Other, net ................................................. (61) (141)
-------- --------
Net cash used for investing activities ......................... (64,256) (22,357)
-------- --------
Cash flows from financing activities:
Issuance of common stock .................................. 11,248 18,475
Purchase of common stock for treasury ...................... (1,030) --
Increase in short-term borrowings .......................... -- 1,476
-------- --------
Net cash provided by financing activities ...................... 10,218 19,951
-------- --------
Net increase (decrease) in cash and cash equivalents ........... (13,653) 52,028
Cash and cash equivalents, beginning of year ................... 209,076 164,849
-------- --------
Cash and cash equivalents, end of first quarter ................ $195,423 $216,877
======== ========
Supplemental Cash Flow Information Three Months Ended
-----------------------------
April 1, 1995 April 2, 1994
------------- -------------
Interest received .......................................... $4,947 $3,238
Interest paid .............................................. $676 $887
Income taxes paid .......................................... $7,806 $9,474
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
______________________________________________________________________________
LOTUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
A) Basis of Presentation
The accompanying unaudited consolidated balance sheets,
statements of operations, and statements of cash flows reflect
all adjustments (consisting only of normal recurring items) which
are, in the opinion of management, necessary for a fair statement
of consolidated financial position at April 1, 1995, and of
consolidated operations and cash flows for the interim periods
ended April 1, 1995 and April 2, 1994.
The accompanying unaudited condensed financial statements
have been prepared in accordance with the instructions for Form
10-Q and therefore do not include all information and footnotes
necessary for a complete presentation of operations, the
financial position, and cash flows of the Company, in conformity
with generally accepted accounting principles. The Company filed
audited consolidated financial statements which included all
information and footnotes necessary for such presentation for the
years ended December 31, 1994 and December 31, 1993 in
conjunction with its 1994 Annual Report on Form 10-K.
The results of operations for the interim period ended April
1, 1995 are not necessarily indicative of the results to be
expected for the year.
B) Cash and Short-term Investments
Cash and short-term investments consist of the following:
<TABLE>
<CAPTION>
April 1, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Cash and cash equivalents $195,423 $209,076
Short-term investments 205,722 167,142
-------- --------
Cash and short-term investments $401,145 $376,218
======== ========
</TABLE>
C) Inventory
Inventory consists of the following:
<TABLE>
<CAPTION>
April 1, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Finished goods $11,604 $13,041
Raw materials 7,423 7,670
------- -------
Total $19,027 $20,711
======= =======
</TABLE>
D) Other (income) / expense, net
Other (income) / expense, net consists of the following:
<TABLE>
<CAPTION>
Three Months Ended
April 1, 1995 April 2, 1994
------------- -------------
<S> <C> <C>
Interest income ($5,005) ($3,773)
Interest expense 854 1,762
Currency transaction (gains)/losses, net 681 223
Other, net 1,021 474
------ ------
Total ($2,449) ($1,314)
====== ======
</TABLE>
4
______________________________________________________________________________
ITEM 2:
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Revenue
The Company's revenue is derived from desktop applications
products and communications products and services. Desktop
applications products include SmartSuite (an integrated
applications suite), 1-2-3 (spreadsheets), Word Pro, formerly
Ami Pro (word processing), Freelance Graphics (presentation
graphics), Lotus Approach (end-user database), and Lotus
Organizer (personal information management). Communications
products and services include Lotus Notes (workgroup computing),
cc:Mail (electronic mail), Soft*Switch (electronic mail
switching), consulting and support services.
Revenue for the first quarter of 1995 decreased 18% over the
comparable period in 1994. The decrease in revenue contributed
to the Company's $17.5 million net loss in the first quarter of
1995. Revenue from desktop applications declined by 34%, while
revenue from communications products and services grew by 22%.
This performance generally reflects the effects of increased
competition for the Company's products in the maturing desktop
applications market and the growing momentum for the Company's
products in the expanding client-server communications market.
Desktop Applications Revenue
Revenue from desktop applications represented 58% of total
revenue in the first quarter of 1995 as compared to 72% in the
first quarter of 1994. The decline in desktop revenue is
attributable to a decrease in both DOS and Windows desktop
revenue. DOS desktop revenue, primarily from 1-2-3 for DOS,
decreased approximately $27 million in the first quarter of 1995
over the corresponding prior year period. The decline in
Windows desktop revenue, which occurred principally in the
United States and in Europe, resulted from a decrease in
SmartSuite and standalone product revenue. SmartSuite revenue
represented 44% of Windows desktop applications revenue in the
first quarter of 1995 compared to 46% in the first quarter of
1994. Although SmartSuite revenue declined slightly as a
percentage of overall Windows desktop revenue in the first
quarter of 1995 compared to the corresponding quarter in 1994,
the Company expects that SmartSuite sales will continue to
account for a growing percentage of total Windows desktop sales
and will eventually surpass aggregate sales of individual
desktop applications as a percentage of Windows desktop sales.
The 34% decline in desktop applications revenue in the first
quarter of 1995 is primarily attributable to severe competition,
delays in customer purchases in the Windows applications market
due to the anticipation of "Windows 95" (a new operating system
that Microsoft Corporation has announced it will release in
1995) and related applications, the continuing migration of
users from DOS-based to Windows-based applications and downward
pricing pressure.
The Company believes that intense competition, particularly
from its largest competitor, Microsoft Corporation, and delays
in customer buying decisions in the Windows applications market
in anticipation of the Windows 95 operating system and related
applications, resulted in a reduction of Windows market share
and Windows desktop applications revenue, particularly
SmartSuite revenue. Additionally, the Company believes that its
SmartSuite revenue was adversely affected by sales to the
reseller channel by Novell, Inc. of PerfectOffice, a recently
introduced product.
The marketplace migration from DOS to Windows adversely
affected and will continue to affect the Company's results, as
its current market share for Windows spreadsheets is lower than
that for DOS spreadsheets. However, the Company believes that
the magnitude of the decline in DOS-based revenue in 1995 should
not be as dramatic as that experienced in recent years, as
DOS-based revenue continues to represent a smaller share of
overall revenue. In the first quarter of 1995, DOS-based
revenue was 12% of total desktop revenue.
On a worldwide basis, prices for standalone Windows desktop
applications products remained relatively unchanged in the first
quarter of 1995 compared to the first quarter of 1994, while
prices for Smartsuite declined in the first quarter of 1995
compared to the first quarter of 1994. The Company anticipates
that downward pressure on pricing will continue.
During the first quarter of 1995, the Company released
SmartSuite for Windows Release 3.1, which includes the latest
versions of all of its major desktop products. The standalone
versions of 1-2-3 for Windows Release 5.0, 1-2-3 for DOS Release
4.0, Ami Pro for Windows Release 3.1, Freelance Graphics for
Windows Release 2.1, and
5
_____________________________________________________________________________
ITEM 2:
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations (continued)
Lotus Approach for Windows Release 3.0 were released in the third
quarter of 1994, and are the most recent commercially
available versions of such products. The latest version of Lotus
Organizer for Windows, Release 2.0, was released in the fourth
quarter of 1994.
Communications Products and Services Revenue
Revenue from communications products and services represented
42% of total revenue in the first quarter of 1995 as compared to
28% in the first quarter of 1994. The growth in communications
revenue is attributable to an increase in Lotus Notes and
consulting services revenue as well as the inclusion of
Soft*Switch revenue in the first quarter of 1995.
The Company believes that as the client-server market
expands and there is a greater availability of networked personal
computers, demand for networked applications, such as Notes, has
increased. In addition, end-user demand for Notes has grown
dramatically as customers have begun to understand how the
product's workgroup computing capabilities can enable them to
become more productive. As of April 1, 1995, there were
approximately 1.57 million users of Notes worldwide. The Company
has further enhanced the product's value to customers by
expanding the number of third parties, or Lotus Business
Partners, who are capable of developing Notes applications. As
of April 1, 1995, there were more than 9,000 Lotus Business
Partners offering products and services for Notes. Also
contributing to the demand for Notes is the greater availability
of Notes on different operating system platforms. As of April 1,
1995, Notes was available on the Windows, Windows NT, OS/2,
Macintosh, UNIX SCO, UNIX AIX, UNIX HP-UX and Sun Solaris
operating system platforms. The latest commercially available
Windows version of Notes is Release 3.3, which was released in
the first quarter of 1995.
Although Notes revenue increased in the first quarter of 1995
compared to the corresponding prior period, the Company believes
that revenue was adversely affected by several events during the
first quarter. The Company announced a Notes price reduction and
released a run-time version of Notes, Notes Desktop Release 1.0,
both of which had the effect of delaying sales as the Company's
sales force and customers evaluated these new offerings.
Additionally, the Company believes that strong fourth quarter
1994 sales of Notes may have depleted the sales pipeline for the
first quarter of 1995.
cc:Mail revenue declined slightly in the first quarter of 1995
compared to the first quarter of 1994. As of April 1, 1995,
there were approximately 7.0 million cc:Mail users worldwide.
Communications support revenue increased in the first quarter of
1995 compared with the corresponding prior year period. The
Company anticipates that customer support revenue from
communications products will continue to represent a growing
component of communications revenue as the installed base of
Notes, cc:Mail and Soft*Switch customers grows. Consulting
services revenue also increased in the first quarter of 1995,
fueled in part by the increase in the number of users of Notes.
International Revenue
Revenue outside the United States increased to 57% of the
Company's total revenue in the first quarter of 1995 from 55% in
the corresponding prior year period, primarily due to a decline
in desktop revenue in the United States. The impact of foreign
currency fluctuations on international revenue was insignificant.
Expenses and Profit Margins
Gross margin as a percentage of sales was 81% for the first
quarters of 1995 and 1994. Gross margin in 1995 was favorably
affected by reduced manufacturing and delivery costs resulting
from an increase in the percentage of sales in the form of
non-physical license rights, a corresponding decrease in the
percentage of sales in the form of physical units and material
cost reductions. These favorable reductions were offset by the
effect of fixed overhead costs and amortization charges on
significantly lower revenue.
The 22% increase in research and development reflects a
constant level of desktop development spending year over year
and significantly higher spending associated with the Company's
communications products. Additionally, the acquisition of
Soft*Switch in July 1994 contributed to higher research and
development expenses. Capitalized software development costs
for the first quarters of 1995 and 1994 were $7.0 million.
6
_____________________________________________________________________________
ITEM 2:
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations (continued)
Sales and marketing expenses grew 13% in the first quarter of
1995 compared with the corresponding prior year period. The
increase consists of significantly higher spending for marketing,
sales and support of communications products, partially offset
by a decrease in marketing spending for desktop products. The
Company's expansion of its communications support capability,
growth in the consulting services business and the acquisition of
Soft*Switch in July 1994 also drove higher sales and marketing
spending.
General and administrative expenses increased 12% to $18
million in the first quarter of 1995 compared to the
corresponding prior year period. The increase is largely
attributable to legal expense associated with the Company's
litigation with Borland International, Inc.
The Company intends to outsource its manufacturing operations
and is in the final stages of discussions with several possible
partners. The Company's objective is to make its cost of goods
more variable by reducing fixed costs. The Company also
recently announced its intentions to realign and reorganize
around four business units (communications, desktop, support and
services, and public networking) and to reduce costs. These
actions may result in future restructuring charges in 1995;
however, the Company can not quantify the amount of such charges
at this time.
Other income and expense also includes interest income and
expense and the effect of currency transaction gains and losses.
Interest income was higher in the first quarter of 1995 than in
the comparable prior year period because of higher average cash
and short-term investment balances and higher interest rates.
Interest expense declined primarily due to scheduled debt
repayments.
The estimated tax rate for 1995 of 36% is unchanged from the
effective tax rate for fiscal year 1994.
Issues and Risks
There are a number of business factors that, individually or
combined, may affect the future results of the Company. Some of
these issues and risks have been outlined in the Company's 1994
Annual Report to Shareholders on Form 10-K, which is available
from the Company's Investor Relations department.
Financial Condition
Cash and short-term investments increased $25 million over the
first quarter to $401 million at April 1, 1995. The two primary
sources of cash flow were $40 million of cash generated by
operations and $11 million in proceeds from the issuance of
common stock under the Company's employee stock plans. The
Company used a portion of the cash for investing and financing
activities, including $18 million for the purchase of property
and equipment, $8 million for payments for software and other
intangibles and $1 million to repurchase shares of the Company's
common stock under a previously announced buyback program.
A substantial portion of the Company's cash and short-term
investments are either deposited in financial institutions
located in Puerto Rico or held by subsidiaries outside the United
States. These investments can be readily transferred to the
United States as required, subject to income and/or withholding
taxes upon repatriation, for which taxes have already been
provided.
The Company's financial resources are represented by cash,
short-term investments and unused portions of credit facilities.
The Company believes its financial resources and funds provided
by ongoing operations are adequate to meet future liquidity
requirements.
7
_____________________________________________________________________________
PART II. OTHER INFORMATION
ITEM 1:
LEGAL PROCEEDINGS
The Company commenced an action on July 2, 1990 in the U.S.
District Court in Boston against Borland International, Inc.
("Borland") (Civ. Action No. 90-11662-K), alleging infringement
of its copyrights in the Lotus 1-2-3 software program by
Borland's "Quattro" and "Quattro Pro" software products. The
action against Borland alleged that the "1-2-3 compatible modes"
of Quattro and Quattro Pro identically recreate substantial and
significant elements of 1-2-3's user interface, including its
menu structure and command choices. The action sought an
injunction preventing further sale of the infringing products and
an award of damages, attorney's fees and costs. On July 31,
1992, the District Court found that Borland infringed the
Company's copyrights by copying the menu commands, menu command
structure, macro language and keystroke sequences of Lotus 1-2-3.
On June 30, 1993, the District Court ruled in the Company's
favor on all remaining liability issues except the Company's
claim that the macro "Key Reader" for Quattro Pro for DOS and
Quattro Pro for Windows infringes the Company's copyrights in
1-2-3. On August 19, 1993, the District Court found that the Key
Reader infringed the Company's copyrights and permanently
enjoined Borland from developing, manufacturing or selling
versions of Quattro Pro, Quattro Pro SE and Quattro Pro for
Windows that include Borland's 1-2-3 compatible modes and/or its
Key Reader facility. On March 9, 1995, the United States Court
of Appeals for the First Circuit held that the Lotus 1-2-3 menu
commands and menu command structure were not copyrightable, and
thus that Borland was not liable for having copied them. The
Company intends to appeal the decision of the Court of Appeals by
filing a petition for writ of certiorari to the United States
Supreme Court.
A suit was filed against the Company on July 27, 1989, in
the U.S. District Court in New York City by REFAC International,
Ltd. ("REFAC"). The suit alleges that the Company has committed
patent infringement with respect to a U.S. patent issued in 1983
entitled "A Process and Apparatus for Converting A Source
Program Into An Object Program". On April 11, 1995, the Court
dismissed the complaint on the ground that the patent is
unenforceable by reason of inequitable conduct before the Patent
Office.
Six complaints against the Company were filed in June and
July 1994 in the U.S. District Court in Boston, which were
subsequently consolidated under the caption "In re Lotus
Development Corporation Securities Litigation" (Civ. Action No.
94-11279 (PBS)). The consolidated amended complaint alleges
that the Company and two of its officers, Jim P. Manzi and Edwin
J. Gillis, violated Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder by failing to
disclose allegedly material adverse information concerning the
Company's anticipated revenues and earnings for the fiscal
quarter ending July 2, 1994. The amended complaint purports to
be brought on behalf of a class of persons who purchased Lotus
stock between April 20, 1994 and June 20, 1994, when the Company
made certain public disclosures concerning its anticipated
revenues and earnings. The Company has moved to dismiss the
amended complaint for failure to state a claim upon which relief
may be granted. The Company believes that the allegations of
the amended complaint are without merit and intends to defend
these actions vigorously.
8
_____________________________________________________________________________
PART II. OTHER INFORMATION
ITEM 6:
Exhibits and Reports on Form 8-K
(a) Exhibits
Part I:
Exhibit 11* - Computation of Primary and Fully Diluted Earnings
per Share - page 10
Part II:
None.
(b) Reports on Form 8-K
None.
___________________
*filed herewith
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.
LOTUS DEVELOPMENT CORPORATION
(Registrant)
By /s/ Edwin J. Gillis
---------------------------------------
Edwin J. Gillis, Senior Vice President,
Finance and Operations and Chief Financial
Officer
(Principal Financial Officer)
By /s/ William J. Sample
---------------------------------------
William J. Sample, Director of Financial
Services
(Principal Accounting Officer)
Date: May 15, 1995
______________________________________________________________________________
Exhibit 11
LOTUS DEVELOPMENT CORPORATION
COMPUTATION OF PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
April 1, 1995 April 2, 1994
------------- -------------
<S> <C> <C>
Net income (loss) .......................................... ($17,505) $21,341
======= =======
Weighted average shares outstanding during the period ..... 48,077 45,290
Common stock equivalent shares ............................ -- 2,417
------- -------
Common and common stock equivalent shares outstanding for
purpose of calculating primary net income per share ... 48,077 47,707
Incremental shares to reflect full dilution ............... -- 156
------- -------
Total shares for purpose of calculating fully diluted
net income (loss) per share ........................... 48,077 47,863
======= =======
Primary net income (loss) per share ....................... ($0.36) $0.45
======= =======
Fully diluted net income (loss) per share ................. ($0.36) $0.45
======= =======
</TABLE>
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-01-1995
<CASH> 195,423
<SECURITIES> 205,722
<RECEIVABLES> 196,307
<ALLOWANCES> 42,129
<INVENTORY> 19,027
<CURRENT-ASSETS> 647,076
<PP&E> 147,421
<DEPRECIATION> 195,864
<TOTAL-ASSETS> 903,092
<CURRENT-LIABILITIES> 263,190
<BONDS> 50,000
<COMMON> 636
0
0
<OTHER-SE> 549,948
<TOTAL-LIABILITY-AND-EQUITY> 903,092
<SALES> 202,615
<TOTAL-REVENUES> 202,615
<CGS> 39,146
<TOTAL-COSTS> 39,146
<OTHER-EXPENSES> 189,150
<LOSS-PROVISION> 817
<INTEREST-EXPENSE> 854
<INCOME-PRETAX> (27,352)
<INCOME-TAX> (9,847)
<INCOME-CONTINUING> (17,505)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,505)
<EPS-PRIMARY> (0.36)
<EPS-DILUTED> (0.36)
</TABLE>
