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 September 29, 1996, OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ended___________________ or ____________________
Commission File Number 0-15323
NETWORK EQUIPMENT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2904044
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
800 Saginaw Drive
Redwood City, CA 94063
(415) 366-4400
(Address, including zip code, and telephone number
including area code, of registrant's
principal executive offices)
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
----- -----
The number of shares outstanding of the registrant's Common Stock, $.01
par value, on September 29, 1996 was 20,839,213.
This document consists of 14 pages of which this is page 1.
<Page 2>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
INDEX
Page
Number
------
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 29, 1996 and March 31, 1996 ........................ 3
Condensed Consolidated Statements of Income - Quarter and
Six Months Ended September 29, 1996 and September 24, 1995 ... 4
Condensed Consolidated Statements of Cash Flows - Six Months
Ended September 29, 1996 and September 24, 1995 .............. 5
Notes to Condensed Consolidated Financial Statements ......... 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition .......... 7
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders .... 12
Item 6. Exhibits and Reports on Form 8-K ....................... 12
SIGNATURE........................................................... 13
EXHIBIT 11 Computation of Primary and Fully Diluted
Earnings Per Share ..................................... 14
<Page 3>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
September 29, March 31,
1996 1996
(unaudited)
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 41,463 $ 52,319
Temporary cash investments 71,287 59,892
Accounts receivable, net of allowances of $4,180 at
September 29 and $4,533 at March 31 81,449 76,966
Inventories 26,546 31,705
Deferred income taxes 11,830 11,830
Prepaid expenses and other assets 6,557 5,714
-------- --------
Total current assets 239,132 238,426
Property and equipment, net 30,255 31,040
Software production costs, net 4,388 4,146
Other assets 8,697 8,345
-------- --------
$282,472 $281,957
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,047 $ 21,559
Accrued liabilities 37,357 42,442
-------- --------
Total current liabilities 57,404 64,001
7-1/4% convertible subordinated debentures 28,821 33,526
Stockholders' equity:
Preferred stock, $.01 par value
Authorized: 5,000,000 shares,
Outstanding: none - -
Common stock, $.01 par value
Authorized: 50,000,000 shares
Outstanding: 20,839,000 shares at September 29 and
20,839,000 shares at March 31 208 208
Additional paid-in capital 169,810 165,414
Treasury Stock (2,722) -
Net unrealized loss on available-for-sale securities (13) (12)
Accumulated translation adjustment (854) (931)
Retained earnings 29,818 19,751
-------- --------
Total stockholders' equity 196,247 184,430
-------- --------
$282,472 $281,957
-------- --------
-------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<Page 4>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts - unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
Sept. 29, Sept. 24, Sept. 29, Sept. 24,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Product revenue $ 51,012 $ 53,483 $101,735 $102,981
Service and other revenue 27,386 29,475 53,132 59,586
-------- -------- -------- --------
Total revenue 78,398 82,958 154,867 162,567
-------- -------- -------- --------
Cost of sales:
Cost of product revenue 22,324 21,449 43,099 41,310
Cost of service and other revenue 18,249 19,943 34,570 40,969
-------- -------- -------- --------
Total cost of sales 40,573 41,392 77,669 82,279
-------- -------- -------- --------
Gross margin 37,825 41,566 77,198 80,288
Operating expenses:
Sales and marketing 17,917 18,379 37,217 36,108
Research and development 9,931 8,767 20,378 16,867
General and administrative 2,586 3,101 5,659 6,040
-------- -------- -------- --------
Total operating expenses 30,434 30,247 63,254 59,015
-------- -------- -------- --------
Income from operations 7,391 11,319 13,944 21,273
Other income (expense):
Interest income 1,559 1,455 2,998 2,820
Interest expense (609) (1,365) (1,242) (2,657)
Other (42) 49 (179) (98)
-------- -------- -------- --------
Income before income taxes 8,299 11,458 15,521 21,338
Income tax provision (3,154) (4,010) (5,898) (7,468)
-------- -------- -------- --------
Income before extraordinary gain 5,145 7,448 9,623 13,870
Extraordinary gain on repurchase of debentures 444 - 444 -
-------- -------- -------- --------
Net income $ 5,589 $ 7,448 $ 10,067 $ 13,870
-------- -------- -------- --------
-------- -------- -------- --------
Primary and fully diluted earnings per share:
Income before extraordinary gain $ .24 $ .36 $ .45 $ .68
-------- -------- -------- --------
-------- -------- -------- --------
Net income $ .26 $ .36 $ .47 $ .68
-------- -------- -------- --------
-------- -------- -------- --------
Shares used in computation:
Primary 21,295 20,578 21,451 20,281
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted 21,295 20,693 21,579 20,532
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<Page 5>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands - unaudited)
<TABLE>
<CAPTION>
Six Months Ended
Sept. 29, Sept. 24,
1996 1995
-------- --------
<S> <C> <C>
Cash and Cash Equivalents at Beginning of Period $ 52,319 $ 33,886
Net Cash Flows from Operating Activities:
Net income 10,067 13,870
Adjustments to reconcile net income to cash
provided by operations:
Extraordinary credit--gain on repurchase of debentures (444) -
Depreciation and amortization 8,397 7,814
Restricted stock compensation 198 170
Changes in assets and liabilities:
Accounts receivable (4,395) (12,590)
Inventories 5,198 2,164
Prepaid expenses and other assets (953) (1,758)
Accounts payable (1,527) 1,358
Accrued liabilities (3,773) 2,980
-------- --------
Net cash provided by operations 12,768 14,008
-------- --------
Cash Flows from Investing Activities:
Purchases of temporary cash investments (71,639) (53,322)
Proceeds from maturities of temporary cash investments 60,243 36,324
Purchases of property and equipment (6,418) (5,741)
Additions to software production costs (1,376) (607)
Other (323) 548
-------- --------
Net cash used for investing activities (19,513) (22,798)
-------- --------
Cash Flows from Financing Activities:
Sale of common stock 2,564 7,842
Repurchase of common stock (2,722) -
Repayments of borrowings (3,869) -
-------- --------
Net cash provided by (used for) financing activities (4,027) 7,842
-------- --------
Effect of exchange rate changes on cash (84) 363
-------- --------
Net decrease in cash and cash equivalents (10,856) (585)
-------- --------
Cash and Cash Equivalents at End of Period $ 41,463 $ 33,301
-------- --------
-------- --------
Other Cash Flow Information:
Cash paid for:
Interest $ 1,347 $ 2,577
Income taxes $ 3,557 $ 2,572
Non-cash investing and financing activities:
Income tax benefit arising from employee stock option plans $ 1,634 $ 9,555
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<Page 6>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Intercompany accounts and transactions have been
eliminated. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting only of normal recurring adjustments) considered necessary to
present fairly the financial position as of September 29, 1996, and the
results of operations and cash flows for the quarter and six months ended
September 29, 1996 and September 24, 1995. These financial statements
should be read in conjunction with the March 31, 1996 audited
consolidated financial statements and notes thereto. The results of
operations for the six months ended September 29, 1996 are not
necessarily indicative of the results to be expected for the fiscal year
ending March 31, 1997.
2. Inventories
Inventories consist of (in thousands):
<TABLE>
<CAPTION>
September 29, March 31,
1996 1996
(unaudited)
-------- --------
<S> <C> <C>
Purchased components $ 10,606 $ 14,381
Work-in-process 13,368 15,533
Finished goods 2,572 1,791
-------- --------
$ 26,546 $ 31,705
-------- --------
-------- --------
3. Earnings Per Share
Net income per share has been computed based upon the weighted average
number of common and common equivalent shares outstanding. For primary
earnings per share, common equivalent shares consist of the incremental
shares issuable upon the assumed exercise of dilutive stock options. For
fully diluted earnings per share, common equivalent shares also include,
if dilutive, the effect of incremental shares issuable upon the
conversion of the 7-1/4% convertible subordinated debentures, and net
income is adjusted for the interest expense (net of income taxes) related
to the debentures.
4. Recently Issued Accounting Standard
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). This standard defines a fair
value method of accounting for stock-based employee compensation plans.
Under this method, compensation cost is measured based on the fair value
of the stock award when granted and is recognized as an expense over the
service period. This standard became effective for the Company on April
1, 1996 and will require measurement of awards made beginning April 1,
1995. The Company has adopted the disclosure-only alternative, and,
accordingly, SFAS 123 will have no impact on the Company's results of
operations or financial position.
<Page 7>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
This discussion and analysis should be read in conjunction with Management's
Discussion and Analysis in the Company's 1996 Annual Report to Shareholders
and Part I of the Company's Form 10-K for the fiscal year ended March 31,
1996.
This Form 10-Q generally, and the following discussion and analysis by
management in particular, contains forward-looking statements. These forward-
looking statements are subject to risks and uncertainties. Actual results may
differ materially from such forward-looking statements as a result of risks
and uncertainties, including those described below and others as set forth in
the Company's fiscal 1996 Form 10-K and other reports filed with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
The following table depicts selected data derived from the Company's
Consolidated Statements of Income expressed as a percentage of revenue for the
periods presented:
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
-------------------- --------------------
Sept. 29, Sept. 24, Sept. 29, Sept. 24,
Percent of Revenue 1996 1995 1996 1995
- ------------------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
Product revenue 65.1 64.5 65.7 63.3
Service and other revenue 34.9 35.5 34.3 36.7
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
----- ----- ----- -----
Product revenue gross margin 56.2 59.9 57.6 59.9
Service and other revenue gross margin 33.4 32.3 34.9 31.2
----- ----- ----- -----
Total gross margin 48.2 50.1 49.8 49.4
Sales and marketing 22.8 22.2 24.0 22.2
Research and development 12.7 10.6 13.1 10.4
General and administrative 3.3 3.7 3.7 3.7
----- ----- ----- -----
Total operating expenses 38.8 36.5 40.8 36.3
----- ----- ----- -----
Income from operations 9.4 13.6 9.0 13.1
----- ----- ----- -----
Net income 7.1 9.0 6.5 8.5
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Revenue
Total revenue for the second quarter and first six months of fiscal 1997
decreased 5.5% and 4.7%, respectively, from the comparable periods of fiscal
1996. Product revenue for the second quarter and first six months of fiscal
1997 decreased $2.5 million, or 4.6%, and $1.2 million, or 1.2%, respectively,
from the comparable periods of the prior year. These decreases in product
revenue were a result of a decrease in domestic product sales, including a
decrease in sales through our U.S. Federal channel, offset partially by
increased product sales in the Asia Pacific/Latin American region. On a year-
to-date basis, product sales in this region have increased 84.6%. Overall
international product sales increased 21.3% to 47.8% of product revenue for
the quarter and 21.7% to 43.1% of product revenue year-to-date.
<Page 8>
Service and other revenue for the second quarter and first six months of
fiscal 1997 decreased $2.1 million and $6.5 million, respectively, from the
comparable periods of fiscal 1996. This decrease was due to a decrease in
revenue from systems integration services in support of product sales to the
U.S. government. On a year-to-date basis, systems integration revenue
decreased by $9.4 million over the prior year.
As a result of increased proposal activity, management expects increased
revenue from our North American channel for the second half of fiscal 1997 as
compared to the first half of this fiscal year; however, as a result of
expected softness in revenue from our U.S. Federal channel and other
uncertainties discussed in this Management's Discussion and Analysis, there
exists a higher level of uncertainty in projecting overall revenue levels for
the remainder of fiscal 1997.
Gross Margin
Total gross margin as a percentage of total revenue decreased to 48.2% from
50.1% in the second quarter and increased to 49.8% from 49.4% in the first six
months of fiscal 1997 from the comparable periods of fiscal 1996.
Fluctuations for both periods were a result of a decrease in product gross
margin offset by increased service and other gross margin. Product gross
margin decreased to 56.2% and 57.6% for the second quarter and first six
months of fiscal 1997 from 59.9% for both of the comparable periods of fiscal
1996. These decreases resulted primarily from increased sales in the Asia
Pacific/Latin American region, which typically have lower margins as they are
sold predominantly through distributors, as well as a higher mix of lower
margin products.
Service and other gross margin increased to 33.4% and 34.9% for the second
quarter and first six months of fiscal 1997 from 32.3% and 31.2%,
respectively, in the comparable periods of the prior year. These margins
increased as a result of a lower mix of lower margin systems integration
services provided under a U.S. government contract. Revenue for these
services has decreased 22.5% and 35.6%, respectively, for the second quarter
and first six months of fiscal 1997 from the comparable periods of fiscal
1996. The gross margin on these services decreased to 15.8% from 16.0%
quarter-over-quarter, and increased to 16.7% from 13.8% year-over-year.
Management expects service and other gross margin to continue to fluctuate as
a result of the changes in mix between systems integration services and other
service revenue.
Operating Expenses
Operating expenses in the second quarter and first six months of fiscal 1997
increased $.2 million and $4.2 million from the comparable periods of fiscal
1996, and increased as a percentage of total revenue to 38.8% from 36.5%
quarter-over-quarter and 40.8% from 36.3% year-over-year as a result of higher
expenses and lower revenues. Management expects operating expenses to
continue to increase during the remainder of fiscal 1997.
Sales and marketing expense decreased $.5 million and increased $1.1 million
in the second quarter and first six months of fiscal 1997, respectively, from
the comparable periods of fiscal 1996. As a percentage of total revenue,
sales and marketing expense increased slightly to 22.8% and 24.0% for the
second quarter and first six months of fiscal 1997 from 22.2% for both periods
of fiscal 1996. The decrease in spending quarter-over-quarter is primarily a
result of a decrease in sales commissions. The year-over-year increase in
spending is primarily the result of the addition of personnel to support
expansion of the sales infrastructure, increased travel expenses and increased
advertising and promotional expenses, offset partially by decreased sales
commissions. Management expects sales and marketing expenses to increase
during the remainder of fiscal 1997.
<Page 9>
Research and development expense increased $1.2 million and $3.5 million in
the second quarter and first six months of fiscal 1997, respectively, from the
comparable periods of fiscal 1996, and increased as a percentage of total
revenue to 12.7% and 13.1%, respectively, from 10.6% and 10.4% in the
comparable periods of fiscal 1996. The increase in spending is primarily due
to an increase in direct project funding, primarily salary-related expenses
and purchases of direct materials and capital equipment to support product
development. Management plans to continue funding research and development
efforts at levels necessary to advance product programs and therefore expects
research and development spending to continue to increase during the remainder
of fiscal 1997.
General and administrative expense decreased $.5 million and $.4 million in
the second quarter and first six months of fiscal 1997 as compared to the
prior year, and remained comparable as a percentage of total revenue, at 3.3%
and 3.7% for the second quarter and first six months of fiscal 1997,
respectively, from 3.7% for both periods of the prior year. Management
expects general and administrative expense to remain fairly flat for the
remainder of fiscal 1997.
Income from Operations
Income from operations for the second quarter and first six months of fiscal
1997 decreased to $7.4 and $13.9 million from $11.3 million and $21.3 million,
respectively, for the comparable periods of fiscal 1996. The Company expects
income from operations for the remainder of fiscal 1997 to be below operating
income for the comparable period of fiscal 1996.
Non-Operating Items
Interest income for the second quarter and first six months of fiscal 1997
increased slightly from the comparable periods of fiscal 1996. Interest
expense decreased by $.8 million quarter-over-quarter and $1.4 million year-
over-year as a result of the partial call of the Company's convertible
subordinated debentures in the third quarter of fiscal 1996.
The second quarter and first six months of fiscal 1997 included a provision
for income tax expense of $3.2 million and $5.9 million, respectively, at an
effective rate of 38%, as compared to $4.0 million and $7.5 million at an
effective rate of 35%, in the comparable periods of fiscal 1996.
The results for the second quarter and first six months of fiscal 1997 also
included an extraordinary gain of $444 thousand, or two cents per share,
arising from the repurchase of $4.7 million of convertible subordinated
debentures.
BUSINESS ENVIRONMENT AND RISK FACTORS
As mentioned above, the Company's business is subject to various risk factors
and aspects of the business environment that could lead actual future results
to differ materially from management's current projections and expectations.
Among these risks are those that are described below. This section should be
read in conjunction with the Company's fiscal 1996 Form 10-K and other filings
with the Securities and Exchange Commission.
Historically, the majority of the Company's revenue each quarter results from
orders received and shipped in that quarter, with a substantial percentage of
orders and shipments concentrated in the final weeks of the quarter. In
addition, because of the lead times necessary to manufacture certain of the
Company's products, and the Company's reliance on outside suppliers for
product components, receipt of an order in a given quarter does not
necessarily mean the Company will be in a position to ship the ordered product
prior to the end of that quarter.
Expense levels are relatively fixed and are set, in part, based on
expectations regarding future revenue and margin levels. These expectations
derive from making judgments on issues such as future technology trends,
competitive products and services, pricing and customer requirements, a
process that involves evaluation of information that is often unclear and in
conflict. All markets for the Company's products are very competitive and
dynamic and many are susceptible to changing economic conditions, regulations
and political conditions. The Company has limited visibility into factors
that could influence its revenue, product mix and other revenue sources and
margins, particularly in international markets that are served primarily by
non-exclusive resellers.
<Page 10>
The Company's products incorporate intellectual property and technology owned
by the Company or licensed from third parties. The Company's ability to
maintain and enhance the value of its intellectual property and technology and
third party licenses will affect future product and service offerings.
Moreover, the Company believes that operating results will depend on
successful development and introduction of new products and enhancements to
existing products and service offerings. There can be no assurance that the
Company will succeed in such efforts or that customers will accept new,
enhanced and existing products and services in quantities and at prices and
margins that are consistent with the Company's expectations. Competition is
intense for qualified technical personnel in Silicon Valley and for qualified
sales and marketing personnel throughout the world. The Company's success
depends on its ability to attract and retain employees necessary to support
planned product development and marketing and sales initiatives.
The Company's products include components, assemblies and subassemblies that
are currently available from single sources and, in some cases, are in short
supply. Testing and manufacturing is performed at the Company's Redwood City,
California, facility. Availability limitations, price increases or business
interruptions could adversely impact revenue, margins and earnings.
The Company has distribution, product and technology relationships with a
number of significant customers and entities that are considered by the
Company to be strategic. Most of the Company's competitors have similar
relationships with their respective customers and other parties. Changes in
the Company's relationships or changes in similar relationships among
competitors could have a material impact on competitive and other factors
described above, including the Company's operating results. Also, to the
extent that litigation or other claims are in the future asserted against the
Company based on securities, intellectual property, patent, product,
regulatory or other factors, they could materially adversely affect the
Company's business, operating results and finances.
A significant portion of the Company's revenue comes from contracts with the
U.S. government, most of which do not include purchase commitments. There can
be no assurance that orders from the U.S. government, or from other customers,
will continue at historical levels, or that the Company will be able to obtain
orders from new customers.
Because of the factors described above, as well as others that may affect the
Company's operating results, past financial results may not be an accurate
indicator of future performance.
LIQUIDITY AND CAPITAL RESOURCES
As of September 29, 1996, the Company had cash, cash equivalents and temporary
cash investments of $112.8 million, as compared to $112.2 million as of March
31, 1996. Cash provided by operations was $12.8 million during the first six
months of fiscal 1997, which was a $1.2 million decrease from the cash
provided by operations from the comparable period of the prior year. This
decrease was principally due to decreases in accounts payable and accrued
liabilities on a year-to-date basis in fiscal 1997 as compared to increases in
those balances in the prior year, offset partially by lower increases in
accounts receivable.
Net cash used for investing activities of $19.5 million for the first six
months of fiscal 1997 primarily consisted of $11.4 million in net purchases of
temporary cash investments and $6.4 million in purchases of property and
equipment.
<Page 11>
Net cash used for financing activities of $4.0 million for the first six
months of fiscal 1997 results from $3.9 million used to repurchase the
Company's convertible subordinated debentures and $2.7 million used to
repurchase the Company's Common Stock, partially offset by the issuance of
$2.6 million of Common Stock relating to the employee stock benefit plans.
During the second quarter of fiscal 1997, the Board of Directors authorized
the Company to repurchase up to 10% of the outstanding shares of its Common
Stock and to repurchase its outstanding 7-1/4% convertible subordinated
debentures. These purchases may be made on the open market from time to time
at the discretion of the Company's management and at price levels the Company
deems appropriate. The Company may discountinue its purchases at any time it
determines additional purchases are not warranted. As of September 29, 1996,
the Company had repurchased 204,600 of its shares of Common Stock at a
weighted average price of $13.27 and repurchased debentures with a face value
of $4,705,000 at a weighted average cost of 82.2% of the face value.
As of September 29, 1996 the Company had available an unsecured $10.0 million
line of credit. Borrowings under this committed facility are available
through May 1997 and would bear interest at the bank's base rate (which
approximates prime). At September 29, 1996, there were no outstanding
borrowings under this facility.
The Company believes that current cash and cash equivalents, temporary cash
investments and cash flows from operations will be sufficient to fund
operations, purchases of capital equipment and research and development
programs currently planned at least through the next twelve months.
<Page 12>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On August 13, 1996, the Company held its Annual Meeting of
Stockholders. At this meeting, the stockholders voted to elect
James K. Dutton as director. James K. Dutton received 17,350,279
votes in favor and 55,569 votes against. Continuing as directors
are Dixon R. Doll, Joseph J. Francesconi, Walter J. Gill and Hans A.
Wolf.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11: Statement re: Computation of Primary and Fully
Diluted Earnings Per Share.
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during its
fiscal quarter ended September 29, 1996.
<Page 13>
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.
(REGISTRANT) NETWORK EQUIPMENT TECHNOLOGIES, INC.
BY (SIGNATURE) /s/ Craig M. Gentner
(NAME AND TITLE) Craig M. Gentner
Senior Vice President and
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
(DATE) November 12, 1996
<PAGE>
EXHIBIT 11
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Computation of Primary and Fully Diluted Earnings Per Share
(in thousands, except per share amounts - unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
Sept. 29, Sept. 24, Sept. 29, Sept. 24,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary
Earnings:
Income before extraordinary gain $ 5,145 $ 7,448 $ 9,623 $ 13,870
Extraordinary gain on repurchase of debentures 444 - 444 -
-------- -------- -------- --------
Net income $ 5,589 $ 7,448 $ 10,067 $ 13,870
-------- -------- -------- --------
-------- -------- -------- --------
Shares:
Weighted average number of common shares
outstanding 20,828 19,430 20,861 19,161
Number of common equivalent shares assuming
exercise of dilutive stock options 467 1,148 590 1,120
-------- -------- -------- --------
21,295 20,578 21,451 20,281
-------- -------- -------- --------
-------- -------- -------- --------
Primary earnings per share:
Income before extraordinary gain $ .24 $ .36 $ .45 $ .68
-------- -------- -------- --------
-------- -------- -------- --------
Net income $ .26 $ .36 $ .47 $ .68
-------- -------- -------- --------
-------- -------- -------- --------
Fully Diluted
Earnings:
Income before extraordinary gain $ 5,145 $ 7,448 $ 9,623 $ 13,870
Extraordinary gain on repurchase of debentures 444 - 444 -
-------- -------- -------- --------
Net income $ 5,589 $ 7,448 $ 10,067 $ 13,870
-------- -------- -------- --------
-------- -------- -------- --------
Shares:
Weighted average number of common shares
outstanding 20,828 19,430 20,861 19,161
Number of common equivalent shares assuming
exercise of dilutive stock options 467 1,263 718 1,371
Number of common equivalent shares assuming
conversion of convertible securities (1) - - - -
-------- -------- -------- --------
21,295 20,693 21,579 20,532
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted earnings per share:
Income before extraordinary gain $ .24 $ .36 $ .45 $ .68
-------- -------- -------- --------
-------- -------- -------- --------
Net income $ .26 $ .36 $ .47 $ .68
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
- -------------
(1) The assumed exercise of these common stock equivalents were excluded as
they were anti-dilutive.
.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
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0
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</TABLE>
