<PAGE> 1
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 June 30, 1997
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 0-20698
BROOKTROUT TECHNOLOGY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2814792
---------------- ----------------
(State or other (I.R.S. employer
jurisdiction of identification
incorporation or number)
organization)
410 First Avenue
Needham, Massachusetts 02194
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number
including area code: (617) 449-4100
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
----- -----
As of August 1, 1997, 10,709,101 shares of Common Stock, $.01 par value
per share, were outstanding.
Page 1 of 17 pages
Exhibit Index Appears on Page 15
<PAGE> 2
BROOKTROUT TECHNOLOGY, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
TABLE OF CONTENTS
Page
----
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Income for
the Three Months Ended June 30, 1997 and
June 30, 1996, and the Six Months Ended
June 30, 1997 and June 30, 1996 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1997
and June 30, 1996 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three Months Ended June 30, 1997 and 1996 10
Six Months Ended June 30, 1997 and 1996 11
Liquidity and Capital Resources 12
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits 13
Signatures 14
Exhibit Index 15
<PAGE> 3
BROOKTROUT TECHNOLOGY, INC.
<TABLE>
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share data)
<CAPTION>
June 30, December 31,
1997 1996
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents ........................................... $20,865 $30,738
Marketable securities .......................................... 8,309 8,976
Accounts receivable (less allowance for doubtful
accounts of $1,100 in 1997 and $524 in 1996) ................. 11,162 7,107
Inventory ...................................................... 8,511 5,504
Other current assets ........................................... 3,020 1,625
------- -------
TOTAL CURRENT ASSETS ......................................... 51,867 53,950
------- -------
Equipment and furniture:
Computer equipment ............................................. 4,234 2,822
Furniture and office equipment ................................. 4,206 2,476
------- -------
Total ........................................................ 8,440 5,298
Less accumulated depreciation and amortization ............... (1,972) (1,438)
------- -------
EQUIPMENT AND FURNITURE - NET ................................ 6,468 3,860
Investment and other assets ...................................... 2,496 556
------- -------
TOTAL ..................................................... $60,831 $58,366
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accruals ............................ $10,996 $ 8,342
Accrued compensation and commission ............................ 1,847 1,996
Accrued income taxes ........................................... -- 204
------- -------
TOTAL CURRENT LIABILITIES .................................... 12,843 10,542
------- -------
Deferred rent .................................................... 231 232
Long term liabilities ............................................ -- --
Stockholders' equity:
Common stock, $.01 par value; authorized, 25,000,000
shares; issued and outstanding 10,707,470 shares in
1997 and 10,683,352 in 1996 .................................. 107 107
Additional paid-in capital ..................................... 31,848 31,785
Unrealized gains (losses) on marketable securities ............. 9 (8)
Retained earnings .............................................. 15,793 15,708
------- -------
STOCKHOLDERS' EQUITY ........................................... 47,757 47,592
------- -------
TOTAL .......................................................... $60,831 $58,366
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
BROOKTROUT TECHNOLOGY, INC.
<TABLE>
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUE .................................................. $14,725 $13,445 $29,795 $24,745
Cost and expenses:
Cost of product sold ................................... 6,543 5,708 13,065 10,805
Research and development ............................... 2,924 1,692 5,290 3,248
Selling, general and administrative .................... 4,448 3,254 8,513 6,238
Acquired research and development ...................... 3,746 -- 3,746 --
Acquisition related costs .............................. -- 1,236 -- 1,236
------- ------- ------- -------
Total cost and expenses ............................ 17,661 11,890 30,614 21,527
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS ............................ (2,936) 1,555 (819) 3,218
Interest income, net ..................................... 481 246 922 509
------- ------- ------- -------
Income (loss) before income tax provision ................ (2,455) 1,801 103 3,727
Income tax provision (benefit) ........................... (980) 1,107 18 1,867
------- ------- ------- -------
NET INCOME (LOSS) ........................................ $(1,475) $ 694 $ 85 $ 1,860
======= ======= ======= =======
NET INCOME (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE ....................................... $ (0.13) $ 0.07 $ 0.01 $ 0.18
======= ======= ======= =======
Weighted average number of common and
common equivalent shares outstanding ................... 11,252 10,362 11,326 10,458
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
BROOKTROUT TECHNOLOGY, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................ $ 85 $ 1,860
Adjustments to reconcile net income to cash
provided by operating activities:
Deferred income taxes ............................ (1,848) (174)
Depreciation and amortization .................... 534 214
Acquired research and development ................ 3,746 --
Amortization of net premium (discount) on
marketable securities ........................... (22) 18
Increase (decrease) in cash, excluding the effects
of an acquisition, from:
Accounts receivable ..................... (275) 19
Inventory ............................... 446 (1,958)
Other current assets .................... (959) 5
Accounts payable and accrued expenses ... (528) 3,906
-------- --------
Cash provided by
operating activities .......... 1,179 3,890
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for equipment and furniture .................. (1,279) (2,145)
Acquisition of Netaccess (net of cash acquired) ........... (10,542) --
Purchases of marketable securities ........................ (1,804) (1,801)
Maturities and sales of marketable securities ............. 2,510 2,386
-------- --------
Cash provided by (used in)
investing activities .......... (11,115) (1,560)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock .................... 63 141
Distributions to stockholders ............................. -- (12)
Repayment of long-term debt ............................... -- (6)
-------- --------
Cash provided by
financing activities .......... 63 123
-------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS ......................... (9,873) 2,453
CASH AND EQUIVALENTS, BEGINNING OF PERIOD ........................... 30,738 14,230
-------- --------
CASH AND EQUIVALENTS, END OF PERIOD ................................. $ 20,865 $ 16,683
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
BROOKTROUT TECHNOLOGY, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles and should be read in conjunction
with the audited consolidated financial statements incorporated by reference in
or included in the Company's 1996 Annual Reports on Form 10K and to the audited
supplemental consolidated financial statements included in the Company's
registration statement on Form S-3 dated August 6, 1996.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements have been prepared on the same basis as the
audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the interim periods presented.
The operating results for the interim periods presented are not
necessarily indicative of the results which could be expected for the full year.
2. Business Combination
On June 30, 1997, the Company acquired the assets of Netaccess, Inc., a
worldwide supplier of Primary Rate ISDN network interface products and multiport
modem products for open, standards-based remote access and computer telephony
systems. The purchase price was $11 million, paid in cash, and the Company
agreed to acquire all of the assets and to assume certain liabilities
aggregating $2 million.
The acquisition has been accounted for as a purchase, and accordingly,
the purchase price has been allocated, on a preliminary basis, to the assets and
other items acquired based upon their fair values. The allocation reflected in
these financial statements is preliminary and may change upon completion of
independent appraisals and other matters.
Based upon preliminary appraisals, the Company has recorded a charge of
$3.7 million ($2.3 million, net of tax benefits) representing the estimated
value of Netaccess' research and development efforts in process. Such efforts
had not yet reached technological feasibility and did not possess alternative
uses. Costs to complete the effort on these products is estimated to be $4.4
million, which will be expensed in the normal course of the Company's ongoing
product development program.
Because the acquisition closed at the end of the quarter, no revenues
and expenses of Netaccess, other than the charge for research and development
in-process discussed above, are reflected in the consolidated financial
statements. Had Netaccess been included in the Company's consolidated financials
for the entire period covered by this report, consolidated revenues, net income
(excluding the charge for research and development in-process) and earnings
(loss) per share would have been:
6
<PAGE> 7
<TABLE>
<CAPTION>
1997 1996
---- ----
3 Months 6 Months 3 Months 6 Months
Ended 6/30 Ended 6/30 Ended 6/30 Ended 6/30
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue ..................... $ 17,827,000 $ 36,842,000 $21,682,000 $35,142,000
Net income (loss) ........... $ (2,294,000) $ (1,101,000) $ 1,694,000 $ 3,427,000
Net income (loss) per share.. $ (0.20) $ (0.10) $ 0.16 $ 0.33
</TABLE>
3. Net income per share
Net income per common and per common equivalent share are computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period, using the provisions of Accounting
Principles Board Opinion No. 15, "Earnings per Share." Dilutive common
equivalent shares represent shares issuable upon exercise of stock options,
calculated using the treasury stock method.
In March 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which the Company will adopt in the fourth quarter of 1997. Had SFAS No.
128 been effective for the three months ended June 30, 1997 and 1996, and for
the six months ended June 30, 1997 and 1996, reported earnings (loss) per share
on a pro forma basis would have been as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic................................... $(0.14) $0.07 $0.01 $0.20
Diluted................................. $(0.14) $0.07 $0.01 $0.18
</TABLE>
7
<PAGE> 8
4. Inventory
Inventory is carried at the lower of cost (first-in, first-out basis)
or market and consisted of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Raw materials ........................ $3,792,000 $3,740,000
Work in process ...................... 2,116,000 1,104,000
Finished goods ....................... 2,603,000 660,000
---------- ----------
Total .............................. $8,511,000 $5,504,000
========== ==========
</TABLE>
5. Major Customers
One customer accounted for approximately 32% and 28% of net revenue for
the three months ended June 30, 1997 and 1996, respectively, and 33% and 27% for
the six months ended June 30, 1997 and 1996, respectively.
6. Marketable Securities
Marketable securities consist mainly of U.S. government securities
purchased with remaining maturities in excess of three months.
The amortized cost of these securities at June 30, 1997 was $8,299,000.
Net unrealized holding gains were $9,300 at June 30, 1997.
7. Income Taxes
A reconciliation of the statutory federal rate to the effective rate is
as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statutory tax rate 34% 34% 34% 34%
State taxes, net of
federal benefit 6 6 5 6
TSI acquisition costs and
income -- 22 -- 10
Other -- -- (22) --
--- --- --- ---
Effective tax rate 40% 62% 17% 50%
=== === === ===
</TABLE>
8
<PAGE> 9
8. International Sales
International sales, principally exported from the United States,
accounted for approximately 21% and 20% of revenue for the three months ended
June 30, 1997 and 1996, respectively, and 21% and 19% for the six months ended
June 30, 1997 and 1996, respectively.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 and 1996
Revenue during the three months ended June 30, 1997 increased by
approximately 10% to $14,725,000, up from $13,445,000 during the three months
ended June 30, 1996. This growth was primarily attributable to increased
shipments of OEM voice systems and TR Series products. The Company's voice mail
business for the quarter was bolstered by shipments of a new integrated voice
mail system. Increased sales from the TR Series products reflect the growth in
the local area network/fax market segment served by the Company.
Cost of product sold was $6,543,000, or 44% of revenue, during the
three months ended June 30, 1997, compared to $5,708,000, or 42% of revenue, for
the same period in 1996. Gross profit percentage was approximately 56% and 58%
for the three months ended June 30, 1997 and 1996, respectively. The decrease in
gross profit percentage is the result of price decreases on OEM voice systems.
Research and development expense was $2,924,000, or 20% of revenue,
compared with $1,692,000, or 13% of revenue, for the three months ended June 30,
1997 and 1996, respectively. The increase reflects the Company's continuing
development efforts for its TR Series product family, computer telephony
development tools, Boston Architecture and Brooktrout Interspeed, as well as fax
and OEM systems development. The Company intends to continue to commit
significant resources to product development.
Selling, general and administrative expense was $4,448,000 during the
three months ended June 30, 1997, compared with $3,254,000 during the same
period in 1996. This higher expense level resulted from increased staffing,
promotional activities and education and seminar expenses. As a percentage of
revenue, selling, general and administrative expense for the second quarter of
1997 was 30% of revenue, compared with 24% for the second quarter of 1996.
On June 30, 1997, the Company acquired the assets of Netaccess, Inc., a
worldwide supplier of Primary Rate ISDN network interface products and multiport
modem products for open, standards-based remote access and computer telephony
systems. The purchase price was $11 million, paid in cash, and the Company also
agreed to acquire all of the assets and to assume certain liabilities
aggregating $2 million. Based upon preliminary appraisals, the Company has
recorded a charge of $3.7 million ($2.3 million, net of tax benefits)
representing the estimated value of Netaccess' research and development efforts
in-process.
For the three months ended June 30, 1997, interest and other income was
$480,000, compared with $246,000 for the same period in 1996.
10
<PAGE> 11
The Company's effective tax rate was 40% in 1997 and 62% in 1996, based
on the Company's estimated effective tax rate for the full year.
Six Months Ended June 30, 1997 and 1996
Revenue during the six months ended June 30, 1997 increased by
approximately 20% to $29,795,000, up from $24,745,000 during the six months
ended June 30, 1996. This growth was primarily attributable to increased
shipments of OEM voice systems and TR Series products.
Cost of product sold was $13,065,000, or 44% of revenue, during the six
months ended June 30, 1997, compared to $10,805,000, or 44% of revenue, for the
same period in 1996. Gross profit percentage was approximately 56% for the six
months ended June 30, 1997 and 1996, respectively.
Research and development expense was $5,290,000, or 18% of revenue,
compared with $3,248,000, or 13% of revenue, for the six months ended June 30,
1997 and 1996, respectively. The increase reflects the Company's continuing
development efforts for its TR Series product family, computer telephony
development tools, Boston Architecture and Brooktrout Interspeed, as well as fax
and OEM systems development.
Selling, general and administrative expense was $8,513,000 during the
six months ended June 30, 1997, compared with $6,238,000 during the same period
in 1996. This higher expense level resulted from increased staffing, promotional
activities and education and seminar expenses. As a percentage of revenue,
selling, general and administrative expense for the first six months of 1997 was
29% of revenue, compared with 25% for the first six months of 1996.
For the six months ended June 30, 1997, interest and other income was
$922,000, compared with $509,000 for the same period in 1996.
The Company's effective tax rate, adjusted for significant permanent or
other differences , was 17% and 50% for the six months ended June 30, 1997
and1996, respectively. The relatively low tax rate for the six months ended June
30, 1997 is primarily due to the nominal amount of pre-tax income reported. As a
result, small changes in tax provisions or benefits booked have an unusually
large effect on the tax rate. For the full year 1997, the Company expects the
effective tax rate to approximate 39%.
11
<PAGE> 12
Liquidity and Capital Resources
For the six months ended June 30, 1997, the Company funded its
operations principally through operating revenue. In August 1997, the Company
renewed its working capital line of credit. Under the renewed line of credit,
the Company may borrow up to $10,000,000 on an unsecured basis, all of which may
be used for issuance of letters of credit, subject to compliance with certain
covenants. The line of credit will expire in July 1998 and at that time any
outstanding balances would be payable in full. Any amounts borrowed under the
line would be subject to interest at the bank's prime rate. At June 30, 1997
there were no commitments outstanding on letters of credit; no borrowings have
been made during any period presented.
The Company's working capital decreased from $43.4 million at December
31, 1996 to $39.0 million at June 30, 1997. The decrease in working capital was
caused by the payment of $10.9 million in cash to acquire the assets of
Netaccess at the end of the quarter. This decrease was offset , in part, by an
increase in working capital of approximately $4.8 million, representing the
working capital of Netaccess acquired by the Company. Other increases in working
capital represented increases in cash, receivables and inventory consistent with
the positive cash flow from operations and the growth in the business
experienced during the six months ended June 30, 1997.
During the first six months of 1997, the Company invested approximately
$1.3 million in capital equipment. The Company currently has no material
commitments for additional capital expenditures.
The Company anticipates that cash flows from operations, together with
current cash and marketable securities balances and funds available under the
Company's line of credit, will be sufficient to meet the Company's working
capital and capital equipment expenditure requirements for the foreseeable
future.
Recent Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which will be effective during the fourth quarter of 1997. SFAS No. 128
will require the Company to restate all previously reported earnings per share
information to conform with the new pronouncement's requirements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." These statements will be effective for 1998. SFAS No. 130
provides new standards for reporting items considered to be "comprehensive
income." Currently the only item reflected in the Company's financial statements
which meet the criteria are the unrealized gains or losses on marketable
securities recorded as a component of equity; SFAS No. 130 would not affect this
classification, but would require a more prominent display of changes in this
item. SFAS No. 131 establishes standards for reporting information about
operating segments of the Company. Neither of these pronouncements would have an
impact on reported net income or on the financial position of the Company.
12
<PAGE> 13
Part II. OTHER INFORMATION
Items 1 through 3.
None
Item 4 Submission of Matters to a Vote of Security Holders
On May 15, 1997, the Company held its 1997 Annual Meeting of
Stockholders (the "Annual Meeting"). At the Annual Meeting, stockholders of the
Company were asked to consider proposals (the "Proposals") (i) to elect Patrick
T. Hynes and W. Brooke Tunstall as Class II Directors of the Company to serve
until the 2000 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified, and (ii) to consider and act upon a
proposal to ratify and approve the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31, 1997.
With regard to the election of Directors, Patrick T. Hynes and W.
Brooke Tunstall were nominated to serve as Class II Directors of the Company
until the 2000 annual meeting; the other Directors of the Company whose terms of
office as directors continued after the Annual Meeting are as follows: David L.
Chapman (Class I Director), David W. Duehren (Class I Director), Eric R. Giler
(Class III Director) and Robert G. Barrett (Class III Director).
With respect to the Proposals, the stockholders of the Company voted at
the Annual Meeting as hereinafter described. By a vote of 9,058,225 votes of
Common Stock in favor of Patrick T. Hynes and 9,048,699 votes of Common Stock in
favor of W. Brooke Tunstall, in excess of a majority of the eligible votes, with
90,693 votes and 100,219 votes against each of Messrs. Hynes and Tunstall,
respectively, each of Patrick T. Hynes and W. Brooke Tunstall was elected as a
Class I Director of the Company.
The stockholders of the Company ratified and approved the selection of
Deloitte & Touche LLP as the Company's independent auditors for the current
fiscal year by a vote of 9,093,140 votes in favor, in excess of a majority of
eligible votes, with 42,841 votes against and 12,937 votes abstaining.
Item 5.
None
Item 6. Exhibits
(a) Exhibits
11. Computation of earnings per share
13
<PAGE> 14
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.
BROOKTROUT TECHNOLOGY, INC.
Date: August 12, 1997 By:__________________________________
Eric R. Giler
President
(Principal Executive Officer)
Date: August 12, 1997 By:__________________________________
Robert C. Leahy
Vice President of Finance and
Operations and Treasurer
(Principal Financial and
Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Number Exhibit Numbered Page
<S> <C> <C>
Computation of Earnings
Per Share
11(a) -For the three months ended 16
June 30, 1997 and 1996
11(b) -For the six months ended 17
June 30, 1997 and 1996
</TABLE>
15
<PAGE> 1
Exhibit 11(a)
BROOKTROUT TECHNOLOGY, INC.
COMPUTATION OF INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1997 1996
---- ----
<S> <C> <C>
Primary Income Per Share:
Weighted average number of common and
common equivalent shares outstanding
Common Stock ................................ 10,699 9,317
Common equivalent shares
resulting from options .................... 553 1,045
-------- --------
Total ................................. 11,252 10,362
======== ========
Net income (loss) ............................... ($ 1,475) $ 694
======== ========
Net income (loss) per common share .............. ($ 0.13) $ 0.07
======== ========
Fully Diluted Income Per Share:
Weighted average number of common and
common equivalent shares outstanding
Common stock ................................ 10,699 9,317
Common equivalent shares
resulting from options .................... 516 1,054
-------- --------
Total ................................. 11,215 10,371
======== ========
Net income (loss) ............................... ($ 1,475) $ 694
======== ========
Net income (loss) per common share .............. ($ 0.13) $ 0.07
======== ========
</TABLE>
<PAGE> 1
Exhibit 11(b)
BROOKTROUT TECHNOLOGY, INC.
COMPUTATION OF INCOME PER COMMON SHARE
(In thousands, except per share data, unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
------- -------
<S> <C> <C>
Primary Income Per Share:
Weighted average number of common and
common equivalent shares outstanding
Common Stock ................................... 10,693 9,509
Common equivalent shares
resulting from options ....................... 633 949
------- -------
Total .................................... 11,326 10,458
======= =======
Net income ......................................... $ 85 $ 1,860
======= =======
Net income per common share ........................ $ 0.01 $ 0.18
======= =======
Fully Diluted Income Per Share:
Weighted average number of common and
common equivalent shares outstanding
Common stock ................................... 10,693 9,509
Common equivalent shares
resulting from options ....................... 564 1,011
------- -------
Total .................................... 11,257 10,520
======= =======
Net income ......................................... $ 85 $ 1,860
======= =======
Net income per common share ........................ $ 0.01 $ 0.18
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
BROOKTROUT TECHNOLOGY, INC.'S CONDENSED CONSOLIDATED BALANCE SHEET AND
STATEMENTS OF INCOME FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) BROOKTROUT TECHNOLOGY, INC.'S 10-Q FOR THE
PERIOD ENDED JUNE 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,865
<SECURITIES> 8,309
<RECEIVABLES> 11,162
<ALLOWANCES> 1,100
<INVENTORY> 8,511
<CURRENT-ASSETS> 51,867
<PP&E> 8,440
<DEPRECIATION> 1,972
<TOTAL-ASSETS> 60,831
<CURRENT-LIABILITIES> 12,843
<BONDS> 0
0
0
<COMMON> 107
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<SALES> 14,725
<TOTAL-REVENUES> 14,725
<CGS> 6,543
<TOTAL-COSTS> 6,543
<OTHER-EXPENSES> 11,118
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,455)
<INCOME-TAX> (980)
<INCOME-CONTINUING> (1,475)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,475)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
