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 December 28, 1997
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
(650) 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 December 28, 1997 was 21,381,524.
================================================================================
This document consists of 13 pages of which this is page 1.
<PAGE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
INDEX
Page
Number
------
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 28, 1997 and March 31, 1997 ............................3
Condensed Consolidated Statements of Income - Quarter
and Nine Months Ended December 28, 1997 and
December 29, 1996 ...............................................4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended December 28, 1997 and December 29, 1996 .......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 6. Exhibits and Reports on Form 8-K ...............................12
SIGNATURE....................................................................13
2
<PAGE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
December 28, March 31,
1997 1997
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 43,822 $ 39,141
Temporary cash investments 105,598 99,581
Accounts receivable, net of allowances
of $3,980 at December 28 and
$3,910 at March 31 76,755 82,986
Inventories 23,456 22,662
Deferred income taxes 7,418 7,418
Prepaid expenses and other assets 7,441 6,679
--------- ---------
Total current assets 264,490 258,467
Property and equipment, net 32,755 30,009
Software production costs, net 5,465 4,616
Other assets 10,725 8,561
--------- ---------
$ 313,435 $ 301,653
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 16,103 $ 23,758
Accrued liabilities 39,581 39,174
--------- ---------
Total current liabilities 55,684 62,932
7-1/4% convertible subordinated debentures 25,821 25,821
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: 21,382,000 shares at December 28
and 21,049,000 shares at March 31 214 210
Additional paid-in capital 175,670 172,038
Treasury stock (1,430) (2,545)
Net unrealized gain (loss) on available-for-sale
securities 165 (56)
Accumulated translation adjustment (323) (490)
Retained earnings 57,634 43,743
--------- ---------
Total stockholders' equity 231,930 212,900
--------- ---------
$ 313,435 $ 301,653
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts - unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Product revenue $ 45,154 $ 56,096 $ 148,720 $ 157,831
Service and other revenue 26,802 27,206 81,056 80,338
--------- --------- --------- ---------
Total revenue 71,956 83,302 229,776 238,169
--------- --------- --------- ---------
Cost of sales:
Cost of product revenue 17,943 23,586 57,734 66,685
Cost of service and other revenue 16,649 17,988 50,185 52,558
--------- --------- --------- ---------
Total cost of sales 34,592 41,574 107,919 119,243
--------- --------- --------- ---------
Gross margin 37,364 41,728 121,857 118,926
Operating expenses:
Sales and marketing 20,879 20,061 63,789 57,278
Research and development 10,840 10,015 31,751 30,393
General and administrative 3,083 2,914 8,826 8,573
--------- --------- --------- ---------
Total operating expenses 34,802 32,990 104,366 96,244
--------- --------- --------- ---------
Income from operations 2,562 8,738 17,491 22,682
Other income (expense):
Interest income 1,776 1,365 4,921 4,363
Interest expense (517) (537) (1,442) (1,779)
Other (179) (130) (542) (309)
--------- --------- --------- ---------
Income before income taxes 3,642 9,436 20,428 24,957
Income tax provision 1,165 2,816 6,537 8,714
--------- --------- --------- ---------
Income before extraordinary gain 2,477 6,620 13,891 16,243
Extraordinary gain on repurchase of debentures -- -- -- 444
--------- --------- --------- ---------
Net income $ 2,477 $ 6,620 $ 13,891 $ 16,687
========= ========= ========= =========
Basic earnings per share:
Income before extraordinary gain $ .12 $ .32 $ .66 $ .78
========= ========= ========= =========
Net income $ .12 $ .32 $ .66 $ .80
========= ========= ========= =========
Diluted earnings per share:
Income before extraordinary gain $ .11 $ .31 $ .63 $ .75
========= ========= ========= =========
Net income $ .11 $ .31 $ .63 $ .77
========= ========= ========= =========
Shares used in computation:
Basic 21,313 20,861 21,191 20,856
========= ========= ========= =========
Diluted 22,084 21,408 22,070 21,614
========= ========= ========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
NETWORK EQUIPMENT TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands - unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Dec. 28, Dec. 29,
1997 1996
---- ----
<S> <C> <C>
Cash and Cash Equivalents at Beginning of Period $ 39,141 $ 52,319
--------- ---------
Net Cash Flows from Operating Activities:
Net income 13,891 16,687
Adjustments to reconcile net income to cash
provided by operations:
Extraordinary credit--gain on repurchase of debentures -- (444)
Depreciation and amortization 13,975 12,830
Restricted stock compensation 270 297
Changes in assets and liabilities:
Accounts receivable 6,323 (9,477)
Inventories (761) 7,571
Prepaid expenses and other assets (763) (1,482)
Accounts payable (7,647) (1,113)
Accrued liabilities 979 (2,212)
--------- ---------
Net cash provided by operations 26,267 22,657
--------- ---------
Cash Flows from Investing Activities:
Purchases of temporary cash investments (68,828) (117,929)
Proceeds from maturities of temporary cash investments 63,032 91,814
Purchases of property and equipment (14,985) (8,863)
Additions to software production costs (2,544) (1,957)
Other (2,134) (357)
--------- ---------
Net cash used for investing activities (25,459) (37,292)
--------- ---------
Cash Flows from Financing Activities:
Sale of common stock 3,845 3,614
Repurchase of common stock -- (2,722)
Repayments of borrowings -- (3,869)
--------- ---------
Net cash provided by (used for) financing activities 3,845 (2,977)
--------- ---------
Effect of exchange rate changes on cash 28 (427)
--------- ---------
Net increase (decrease) in cash and cash equivalents 4,681 (18,039)
--------- ---------
Cash and Cash Equivalents at End of Period $ 43,822 $ 34,280
========= =========
Other Cash Flow Information:
Cash paid for:
Interest $ 1,880 $ 2,396
Income taxes $ 5,912 $ 4,252
Non-cash investing and financing activities:
Income tax benefit arising from employee stock option plans $ 636 $ 1,634
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
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 December 28, 1997, and the results of operations
and cash flows for the quarter and nine months ended December 28, 1997 and
December 29, 1996. These financial statements should be read in conjunction
with the March 31, 1997 audited consolidated financial statements and notes
thereto. The results of operations for the nine months ended December 28,
1997 are not necessarily indicative of the results to be expected for the
fiscal year ending March 31, 1998.
2. Inventories
Inventories consist of (in thousands):
December 28, March 31,
1997 1997
---- ----
(unaudited)
Purchased components $ 4,650 $ 6,710
Work-in-process 16,161 13,675
Finished goods 2,645 2,277
------- -------
$23,456 $22,662
======= =======
3. Earnings Per Share
In the third quarter of fiscal 1998, the Company implemented Statement of
Financial Accounting Standards No. 128, "Earnings per Share". This standard
replaces previous earnings per share reporting requirements and requires
restatement of prior periods. Basic earnings per share has been computed
based upon the weighted average number of common shares outstanding for the
periods presented. For diluted earnings per share, shares used in the per
share computation include weighted average common and common equivalent
shares outstanding. Common equivalent shares consist of shares issuable
upon the assumed exercise of dilutive stock options and totalled 771,000
and 547,000 for the quarters ended December 28, 1997 and December 29, 1996,
respectively, and 879,000 and 753,000 for the nine months ended December
28, 1997 and December 29, 1996, respectively.
4. Recently Issued Accounting Standard
In June 1997, the FASB adopted SFAS No. 130, "Reporting Comprehensive
Income", which requires that an enterprise report, by major components and
as a single total, the change in its net assets during the period from
nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", which establishes annual and interim
reporting standards for an enterprise's business segments and related
disclosures about its products, services, geographic areas, and major
customers. Adoption of these statements will not impact the Company's
consolidated financial position, results of operations or cash flows. Both
statements are effective for the Company beginning April 1, 1998, with
earlier application permitted.
6
<PAGE>
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 1997 Annual Report to Shareholders and
Part I of the Company's Form 10-K for the fiscal year ended March 31, 1997.
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>
<CAPTION>
- -----------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
------------- -----------------
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
Percent of Revenue 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Product revenue 62.8 67.3 64.7 66.3
Service and other revenue 37.2 32.7 35.3 33.7
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
----- ----- ----- -----
Product gross margin 60.3 58.0 61.2 57.7
Service and other revenue gross margin 37.9 33.9 38.1 34.6
----- ----- ----- -----
Total gross margin 51.9 50.1 53.0 49.9
----- ----- ----- -----
Sales and marketing 29.0 24.1 27.8 24.0
Research and development 15.1 12.0 13.8 12.8
General and administrative 4.3 3.5 3.8 3.6
----- ----- ----- -----
Total operating expenses 48.4 39.6 45.4 40.4
----- ----- ----- -----
Income from operations 3.5 10.5 7.6 9.5
----- ----- ----- -----
Net income 3.4 7.9 6.0 7.0
----- ----- ----- -----
- -----------------------------------------------------------------------------------------
</TABLE>
Revenue
Total revenue for the third quarter and first nine months of fiscal 1998
decreased 13.6% and 3.5%, respectively, from the comparable periods of fiscal
1997. Product revenue for the third quarter of fiscal 1998 decreased 19.5%, or
$10.9 million, and on a year-to-date basis decreased 5.8%, or $9.1 million, from
the comparable periods of the prior year. A decrease in sales through the North
American channel from the prior year negatively impacted both the quarter and
year-to-date periods. Decreases in international product sales, partially as a
result of the recent economic events in Asia, also had a negative impact on
third quarter revenues. During the second quarter of fiscal 1998, the Company
announced and shipped a number of new products. While sales of these new
products have added incrementally to revenue, the lower-than-expected volume
coupled with issues related to a major product transition, have contributed to
the weakness of product revenue as compared to prior year periods. Management
expects the impact of the economic events in Asia and Latin America, as well as
product transition issues, to continue to impact product revenues for at least
the remainder of fiscal 1998.
Service and other revenue decreased slightly quarter-over-quarter, and increased
$.7 million for the first nine months of fiscal 1998 from the comparable periods
of fiscal 1997. The year-over-year increase was attributable to an increase in
service revenue, partially offset by a decrease in revenue from systems
integration services in support of product sales to the U.S. government.
7
<PAGE>
Gross Margin
Total gross margin as a percentage of total revenue increased to 51.9% and 53.0%
for the third quarter and first nine months of fiscal 1998 from 50.1% and 49.9%,
respectively, for the comparable periods of fiscal 1997. Increases for both
periods resulted from improvements in both the product and service and other
gross margins. Product margins increased to 60.3% and 61.2% for the third
quarter and first nine months of fiscal 1998, respectively, from 58.0% and 57.7%
in the comparable periods of the prior year. The quarter-over-quarter increase
primarily resulted from a favorable channel mix, as an increased percentage of
the quarter's revenue represented sales through domestic channels and a
decreased percentage through the international channels. Additionally, both the
quarter and year-to-date product margins were positively impacted by a favorable
product mix.
Service and other gross margin increased to 37.9% and 38.1% in the third quarter
and first nine months of fiscal 1998 from 33.9% and 34.6%, respectively, in the
comparable periods of fiscal 1997. Contributing to the increase in these margins
were improvements in both the service margin and the margin on systems
integration services in support of product sales to the U.S. government, which
increased to 22.4% for the first nine months of fiscal 1998 from 19.0% for the
comparable period of fiscal 1997.
Management expects total gross margin as a percentage of total revenue to remain
fairly constant during the remainder of fiscal 1998.
Operating Expenses
Operating expenses in the third quarter and first nine months of fiscal 1998
increased $1.8 million and $8.1 million from the comparable periods of the prior
year, and increased as a percentage of total revenue to 48.4% from 39.6%
quarter-over-quarter and 45.4% from 40.4% year-over-year. Management expects
operating expenses to increase during the remainder of fiscal 1998.
Sales and marketing expense increased $.8 million and $6.5 million in the third
quarter and first nine months of fiscal 1998, respectively, from the comparable
periods of fiscal 1997. The increase in spending for both periods is primarily a
result of increased compensation expense in support of the marketing
infrastructure. On a year-to-date basis, the increase in spending also resulted
from increased trade show, advertising, travel and compensation expenses in
conjunction with new product launches. Management expects sales and marketing
spending to increase during the remainder of fiscal 1998.
Research and development expense increased $.8 million and $1.4 million in the
third quarter and first nine months of fiscal 1998, respectively, from the
comparable periods of fiscal 1997, and increased as a percentage of total
revenue to 15.1% from 12.0% quarter-over-quarter and 13.8% from 12.8%
year-over-year. The increase for both periods is primarily due to an increase in
costs associated with the purchase of capital equipment to support product
development and an increase in costs associated with efforts to recruit and
retain engineering personnel. Management plans to continue funding research and
development efforts at levels necessary to advance product programs and expects
research and development spending to remain fairly constant during the remainder
of fiscal 1998.
General and administrative expense increased $.2 million and $.3 million in the
third quarter and first nine months of fiscal 1998, respectively, from the
comparable periods of fiscal 1997, and increased slightly as a percentage of
total revenue. Management expects general and administrative expense to remain
fairly flat for the remainder of fiscal 1998.
In the fourth quarter of fiscal 1998 and the first half of fiscal 1999, the
Company will incur one-time charges relating to a move to new corporate
headquarters. These charges will consist principally of duplicate rent to be
paid for a period less than one year, moving costs incurred during the move, and
other costs related to abandoning the old facility. Management's current
estimate of these costs is not expected to exceed $5.0 million.
Non-Operating Items
Net interest income for the third quarter and first nine months of fiscal 1998
increased $.4 million and $.9 million from the comparable periods of fiscal
1997, primarily as a result of higher cash balances.
8
<PAGE>
The third quarter and first nine months of fiscal 1998 included a provision for
income tax expense of $1.2 million and $6.5 million, respectively, at an
effective rate of 32% as compared to $2.8 million and $8.7 million at effective
rates of 30% and 35%, respectively, for the third quarter and first nine months
of fiscal 1997. In the third quarter of fiscal 1997, the Company decreased the
year-to-date tax rate from 38% to 35%, primarily as a result of expected U.S.
tax benefits on increased export revenue. The lower effective tax rate in fiscal
1998 is primarily due to the utilization of foreign net operating loss
carryforwards.
The results for the first nine months of fiscal 1997 also incuded an
extraordinary gain of $.4 million, or two cents per share, arising from the
repurchase of $4.7 million of convertible subordinated debentures.
BUSINESS ENVIRONMENT AND RISK FACTORS
All statements in this 10-Q that are not historical are forward-looking
statements that involve risks and uncertainties including, but not limited to,
the risks and uncertainties detailed in the Company's filings with the
Securities and Exchange Commission. Actual results may differ materially from
those projected.
Historically, the majority of the Company's revenue in each quarter results from
orders received and shipped in that quarter. Because of these ordering patterns
and potential delivery schedule changes, the Company does not believe that
backlog is indicative of future revenue levels. In addition, because a large
portion of the Company's orders historically have been received and filled in
the last month of the quarter, forecasting sales during a quarter is difficult,
and there is a significant risk of excessive or inadequate inventory if orders
do not match forecast. Furthermore, if large orders do not close when forecasted
or if near-term demand weakens for the products the Company has available to
ship, the Company's operating results for that or subsequent quarters would be
adversely affected. Economic volatility in Asia and Latin America and other
parts of the world may have a significant impact on future performance.
Expense levels are relatively fixed and are set based on expectations regarding
future revenue and margin levels. These expectations derive from making
judgments on issues such as planned revenue, 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 regulations and political conditions. The Company
has limited visibility into factors that could influence its revenue, mix of
product orders and other revenue sources and margins, particularly in
international markets that are served primarily by non-exclusive resellers.
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. Products recently announced by the Company are targeted at
markets that include, and are much broader than, the Company's traditional
multiservice bandwidth manager customers. The Company's ability to maintain
profitability and to achieve revenue growth is dependent on successfully
managing this product transition by migrating existing key customers to the new
products and successfully gaining sales volume from new customers in the
expanded markets. 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. The Company's success also depends on its ability to
attract and retain employees necessary to support planned development and
growth.
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 of products designed by N.E.T. are performed at the
Company's Redwood City, California, facility. Pursuant to several types of
agreements, the Company also resells products designed or manufactured by third
parties for order fulfillment, quality control and support of their products.
Such products are generally available to end users from sources other than the
Company, and are generally sold or licensed by the Company at gross margins that
are lower than products designed and
9
<PAGE>
manufactured by the Company. There can be no assurance that these third-party
manufacturers will be able to meet the Company's future requirements for these
products, that the quality control and support provided by these manufacturers
will be adequate, or that the Company's gross margins on these products will not
be lowered further. Product 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, litigation or other claims based on
securities, intellectual property, patent, product, regulatory or other issues
or factors 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 December 28, 1997, the Company had cash, cash equivalents and temporary
cash investments of $149.4 million, as compared to $138.7 million as of March
31, 1997. Cash provided by operations was $26.3 million during the first nine
months of fiscal 1998, which was a $3.6 million increase from the cash provided
by operations from the comparable period of the prior year. This additional cash
was principally generated by a decrease in accounts receivable during the first
nine months of fiscal 1998 as compared to an increase in the comparable period
of fiscal 1997. This increase was partially offset by an increase in inventories
and a decrease in accounts payable.
Net cash used for investing activities of $25.5 million for the first nine
months of fiscal 1998 consisted primarily of purchases of property and equipment
of $15.0 million, net purchases of temporary cash investments of $5.8 million
and an increase in software production costs of $2.5 million.
Net cash provided by financing activities of $3.8 million for the first nine
months of fiscal 1998 pertains to the issuance of Common Stock relating to the
employee stock benefit plans.
10
<PAGE>
As of December 28, 1997, the Company had available an unsecured $10.0 million
line of credit. Borrowings under this committed facility are available through
May 1998 and would bear interest at the bank's base rate (which approximates
prime). At December 28, 1997, there were no outstanding borrowings under this
facility.
In April 1997, the Company entered into a 12-year operating lease agreement
pursuant to which a new corporate headquarters facility will be built in
Fremont, California. In conjunction with the project management and design and
construction of the new facility, the Company expects to incur expenditures
during the remainder of fiscal 1998, the significant portion of which it plans
to capitalize. Management expects to fund the leasehold improvements with
available cash and investments. The Company plans to move to its new
headquarters when the buildings are completed, which is expected to occur during
the first half of fiscal 1999. The Company's current headquarters' lease expires
in October 1998.
The Company believes that current cash and cash equivalents, temporary cash
investments and cash flows from operations will be sufficient to fund
operations, including costs associated with the new headquarters' facility,
purchases of capital equipment and research and development programs currently
planned at least through the next twelve months.
11
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No exhibits were required to be filed by the Company during its fiscal
quarter ended December 28, 1997.
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during its fiscal
quarter ended December 28, 1997.
12
<PAGE>
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.
NETWORK EQUIPMENT
TECHNOLOGIES, INC.
Dated: February 10, 1998 /s/ Craig M. Gentner
--------------------
Craig M. Gentner
Senior Vice President and
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
13
