<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, 1998
/ / 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)
<TABLE>
<S> <C>
Massachusetts 04-2814792
------------- ----------
(State or other (I.R.S. employer
jurisdiction of identification
incorporation or number)
organization)
410 First Avenue
Needham, Massachusetts 02494-2722
---------------------- ----------
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number
including area code: (781) 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, 1998, 10,800,204 shares of Common Stock, $.01 par value
per share, were outstanding.
Page 1 of 14 pages
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BROOKTROUT TECHNOLOGY, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Income for
the Three Months Ended June 30, 1998 and
June 30, 1997, and the Six Months Ended
June 30, 1998 and June 30, 1997 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998
and June 30, 1997 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, 1998 and 1997 9
Six Months Ended June 30, 1998 and 1997 10
Liquidity and Capital Resources 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits 13
Signatures 14
</TABLE>
<PAGE> 3
BROOKTROUT TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents........................................... $31,602 $27,916
Marketable securities.......................................... 8,711 8,462
Accounts receivable (less allowance for doubtful
accounts of $1,081 in 1998 and $1,164 in 1997)............... 12,209 9,804
Inventory...................................................... 8,296 7,801
Deferred tax assets............................................ 2,484 1,861
Prepaid expenses.............................................. 790 613
------- -------
TOTAL CURRENT ASSETS........................................ 64,092 56,457
------- -------
Equipment and furniture:
Computer equipment............................................. 8,299 6,182
Furniture and office equipment................................. 4,208 3,696
------- -------
Total........................................................ 12,507 9,878
Less accumulated depreciation and amortization............... (4,630) (3,253)
------- -------
EQUIPMENT AND FURNITURE - NET................................ 7,877 6,625
Deferred tax assets............................................ 1,224 1,234
Investment and other assets.................................... 819 1,099
------- -------
TOTAL................................................. $74,012 $65,415
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accruals........................... $14,361 $10,510
Accrued compensation and commissions.......................... 3,034 2,321
Customer deposits............................................. 334 325
Accrued warranty costs........................................ 1,029 850
Accrued income taxes.......................................... 464 710
------- -------
TOTAL CURRENT LIABILITIES................................... 19,222 14,716
------- -------
Deferred rent................................................... 324 255
Stockholders' equity:
Common stock, $.01 par value; authorized, 25,000,000
shares; issued and outstanding 10,800,204 shares in
1998 and 10,741,195 in 1997................................. 108 107
Additional paid-in capital..................................... 32,328 31,978
Unrealized losses on marketable securities..................... (30) --
Retained earnings.............................................. 22,060 18,359
-------- -------
STOCKHOLDERS' EQUITY.......................................... 54,466 50,444
-------- -------
TOTAL.......................................................... $74,012 $65,415
======== =======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
BROOKTROUT TECHNOLOGY, INC.
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE......................................................... $26,104 $14,725 $50,280 $29,795
Cost and expenses:
Cost of product sold.......................................... 10,915 6,543 20,900 13,065
Research and development...................................... 5,380 2,924 10,670 5,290
Selling, general and administrative........................... 7,221 4,448 13,853 8,513
Acquired research and development............................. -- 3,746 -- 3,746
------- ------- ------- -------
Total cost and expenses................................... 23,516 17,661 45,423 30,614
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS................................... 2,588 (2,936) 4,857 (819)
Interest income, net............................................ 568 481 1,018 922
------- --- ----- ------
Income (loss) before income tax provision....................... 3,156 (2,455) 5,875 103
Income tax provision (benefit).................................. 1,168 (980) 2,174 18
------- ------- ------ -------
NET INCOME (LOSS)............................................... $1,988 ($1,475) $3,701 $85
======= ======= ======= =======
BASIC INCOME (LOSS) PER COMMON SHARE............................ $0.18 ($0.14) $0.34 $0.01
======= ======= ====== =======
SHARES FOR BASIC................................................ 10,770 10,699 10,758 10,693
======= ======= ======= =======
DILUTED INCOME (LOSS) PER COMMON SHARE.......................... $0.17 ($0.14) $0.32 $0.01
======= ======= ======= =======
SHARES FOR DILUTED.............................................. 11,561 10,699 11,489 11,050
======= ======= ======= =======
</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,
-----------------------------
1998 1997
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................................... $3,701 $85
Adjustments to reconcile net income to cash provided by operating
activities:
Deferred income taxes........................................... (613) (387)
Depreciation and amortization................................... 1,377 534
Acquired research and development............................... -- 3,746
Amortization of net premium (discount) on
marketable securities.......................................... (33) (22)
Increase (decrease) in cash, excluding the effects of an
acquisition, from:
Accounts (2,405) (275)
receivable.............................................
Inventory.............................................. (495) 247
Other current assets................................... 172 (2,854)
Accounts payable and accrued expenses.................. 4,506 (528)
-------- -------
Cash provided by
operating activities......................... 6,210 546
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for equipment and furniture................................. (2,629) (1,279)
Acquisition of Netaccess (net of cash acquired).......................... -- (9,909)
Purchases of marketable securities....................................... (3,505) (1,804)
Maturities and sales of marketable securities............................ 3,259 2,510
------- -------
Cash provided by (used in)
investing activities......................... (2,875) (10,482)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock................................... 351 63
-------- -------
Cash provided by
financing activities................... 351 63
-------- -------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS.................................. 3,686 (9,873)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD.................................... 27,916 30,738
-------- -------
CASH AND EQUIVALENTS, END OF PERIOD.......................................... $31,602 $20,865
======== =======
</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. They
should be read in conjunction with the audited consolidated financial statements
incorporated by reference in or included in the Company's 1997 Annual Report on
Form 10K.
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. Acquisition
On June 30, 1997, the Company acquired the assets and assumed certain
liabilities 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 $9.9 million, paid in cash, and the Company agreed to assume certain
liabilities aggregating $2 million. The acquisition was accounted for as a
purchase, and accordingly, the results of operations of Netaccess, Inc. were
included in the Company's consolidated financial statements from the date of
acquisition. The purchase price was allocated to the assets acquired based upon
their fair values using independent appraisals.
6
<PAGE> 7
3. Income Per Share
Basic income per share is computed using the weighted average number of
common shares outstanding during each period. Diluted income per common share
reflects the effect of the Company's outstanding options (using the treasury
stock method), except where such options would be antidilutive. A reconciliation
of shares for basic and shares for diluted is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares for basic.................... 10,770,000 10,699,000 10,758,000 10,693,000
Dilutive effect of stock options.... 791,000 -- 731,000 357,000
---------- ---------- ---------- ----------
Shares for diluted.................. 11,561,000 10,699,000 11,489,000 11,050,000
========== ========== ========== ==========
</TABLE>
4. Comprehensive Income
Effective January 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income." Currently, in addition to net income, the only items which would be
includable as other components of comprehensive income are unrealized gains or
losses on marketable securities classified as available for sale. For the three
months ended June 30, 1998 and 1997, comprehensive income (loss) totaled
$1,959,000 and ($1,466,000), respectively. For the six months ended June 30,
1998 and 1997, comprehensive income totaled $3,653,000 and $83,000,
respectively.
5. 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,
1998 1997
---- ----
<S> <C> <C>
Raw materials........................... $ 3,940,000 $ 3,268,000
Work in process......................... 1,217,000 1,606,000
Finished goods.......................... 3,139,000 2,927,000
----------- -----------
Total............................... $ 8,296,000 $ 7,801,000
=========== ===========
</TABLE>
7
<PAGE> 8
6. Major Customers
One customer accounted for approximately 21% and 32% of net revenue for
the three months ended June 30, 1998 and 1997, respectively, and 21% and 33% for
the six months ended June 30, 1998 and 1997, respectively.
7. 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, 1998 was $8,740,000. Net unrealized holding
losses of $30,000 were comprised of unrealized losses of $39,000 and unrealized
gains of $9,000 at June 30, 1998.
8. 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,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statutory tax rate 35% 34% 35% 34%
State taxes, net of
federal benefit 8 6 8 5
Other (6) -- (6) (22)
--- -- --- ----
Effective tax rate 37% 40% 37% 17%
=== === === ===
</TABLE>
9. International Sales
International sales, principally exports from the United States,
accounted for approximately 22% and 21% of revenue for the three months ended
June 30, 1998 and 1997, respectively, and 21% of revenue for the six months
ended June 30, 1998 and 1997, respectively.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 and 1997
Revenue during the three months ended June 30, 1998 increased by
approximately 77% to $26,104,000, up from $14,725,000 during the three months
ended June 30, 1997. This growth was partially attributable to increased
shipments of TR Series products. Increased sales from the TR Series products
reflect the growth in the local area network/fax market segment served by the
Company. In 1998, revenue increased due to the inclusion of sales of Primary
Rate ISDN telephone network interface products acquired through the acquisition
of Netaccess, Inc. on June 30, 1997.
Cost of product sold was $10,915,000, or 42% of revenue, during the
three months ended June 30, 1998, compared to $6,543,000, or 44% of revenue, for
the same period in 1997. Gross profit percentage was approximately 58% and 56%
for the three months ended June 30, 1998 and 1997, respectively. The increase in
gross profit percentage is the result of cost reduction efforts on the TR Series
products partially offset by product mix caused by an increased proportion of
lower margin network interface cards.
Research and development expense was $5,380,000, or 21% of revenue,
compared with $2,924,000, or 20% of revenue, for the three months ended June 30,
1998 and 1997, respectively. The increase reflects the Company's development
efforts for the next generation of Netaccess products and for continued
development of the TR Series product family, computer telephony software
development tools, Brooktrout Open Systems Telephony Architecture (BOSTon),
Interspeed, Inc. , 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 $7,221,000 during the
three months ended June 30, 1998, compared with $4,448,000 during the same
period in 1997. This higher expense level resulted from increased staffing,
promotional activities and depreciation expense. As a percentage of revenue,
selling, general and administrative expense for the second quarter of 1998 was
28% of revenue, compared with 30% for the second quarter of 1997.
During the three months ended June 30, 1997, the Company recorded a
charge of $3,746,000 reflecting the portion of the purchase price for Netaccess,
Inc. allocated to research efforts in-process.
For the three months ended June 30, 1998, interest and other income was
$568,000, compared with $480,000 for the same period in 1997.
The Company's effective tax rate was 37% in 1998 and 40% in 1997, based
on the Company's estimated effective tax rate for the full year.
9
<PAGE> 10
Six Months Ended June 30, 1998 and 1997
Revenue during the six months ended June 30, 1998 increased by
approximately 69% to $50,280,000, up from $29,795,000 during the six months
ended June 30, 1997. This growth was partially attributable to increased
shipments of TR Series products. Increased sales from the TR Series products
reflect the growth in the local area network/fax market segment served by the
Company. In 1998, revenue increased due to the inclusion of sales of Primary
Rate ISDN telephone network interface products acquired through the acquisition
of Netaccess, Inc. on June 30, 1997.
Cost of product sold was $20,900,000, or 42% of revenue, during the six
months ended June 30, 1998, compared to $13,065,000, or 44% of revenue, for the
same period in 1997. Gross profit percentage was approximately 58% and 56% for
the six months ended June 30, 1998 and 1997, respectively. The increase in gross
profit percentage is the result of cost reduction efforts on the TR Series
products partially offset by product mix caused by an increased proportion of
lower margin network interface cards.
Research and development expense was $10,670,000, or 21% of revenue,
compared with $5,290,000, or 18% of revenue, for the six months ended June 30,
1998 and 1997, respectively. The increase reflects the Company's development
efforts for the next generation of Netaccess products and for continued
development of the TR Series product family, computer telephony software
development tools, Brooktrout Open Systems Telephony Architecture (BOSTon),
Interspeed, Inc., as well as fax and OEM systems development.
Selling, general and administrative expense was $13,853,000 during the
six months ended June 30, 1998, compared with $8,513,000 during the same period
in 1997. This higher expense level resulted from increased staffing, promotional
activities and depreciation expense. As a percentage of revenue, selling,
general and administrative expense for the first six months of 1998 was 28% of
revenue, compared with 29% for the first six months of 1997.
During the six months ended June 30, 1997, the Company recorded a
charge of $3,746,000 reflecting the portion of the purchase price for Netaccess,
Inc. allocated to research efforts in-process.
For the six months ended June 30, 1998, interest and other income was
$1,018,000, compared with $922,000 for the same period in 1997.
The Company's effective tax rate, adjusted for significant permanent or
other differences, was 37% and 17% for the six months ended June 30, 1998
and 1997, 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.
10
<PAGE> 11
Liquidity and Capital Resources
For the six months ended June 30, 1998, the Company funded its
operations principally through operating revenue. The Company's working capital
increased from $43.4 million at December 31, 1997 to $44.9 million at June 30,
1998. The increase was attributable primarily to higher cash balances and
investments due to continued profitable operations and were partially offset by
higher accounts payable and other accrual balances.
In August 1998, 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 1999 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, 1998 there were no commitments outstanding on letters of
credit; no borrowings have been made during any period presented.
During the first six months of 1998, the Company invested approximately
$2.6 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
Effective January 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" and AICPA Statement of Position No. 97-2, "Software Revenue
Recognition." Adoption of these pronouncements did not have a material effect on
reported results of operations or financial position.
Effective January 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information." As allowed by that pronouncement, the
Company will provide information about its operating segments in the annual
financial statements, and will begin providing such information on an interim
basis for the first quarter of 1999.
11
<PAGE> 12
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Dismissal of Patent Infringement Lawsuit against the Company
On October 4, 1996, Syntellect Technology Corp. ("Syntellect") filed a
Complaint against the Company in the United States District Court for the
Northern District of Texas (the "Court"), alleging infringement of certain
patents held by Syntellect relating to certain aspects of "automated attendant"
technology (the "Complaint"). Syntellect's Complaint did not identify the
products of the Company which allegedly infringe Syntellect's patents. The
Complaint sought injunctive relief, damages in an unspecified amount, and
multiple damages on account of alleged willful infringement. In December 1996,
the Company filed a Motion to Dismiss the Complaint, which was denied in July
1997. In October 1997, the Company filed a Motion for Summary Judgement which
was granted by the Court on May 10, 1998. On June 10, 1998, the period for
Syntellect to appeal the dismissal of its Complaint expired. The Company is
unaware of whether Syntellect plans to pursue this litigation further.
Items 2 and 3.
None
Item 4. Submission of Matters to a Vote of Security Holders
On May 14, 1998, the Company held its 1998 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 Eric R.
Giler and Robert G. Barrett as Class III Directors of the Company to serve until
the 2001 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified, (ii) to consider and act upon a proposal to
approve an amendment to the Company's 1992 Stock Incentive Plan, as amended,
(the "1992 Plan") to increase the number of shares of the Company's common stock
subject to issuance under the 1992 Plan, (iii) to consider and act upon a
proposal to approve an amendment to the Company's Amended and Restated 1992
Stock Purchase Plan (the "Purchase Plan") to increase the number of shares of
the Company's common stock subject to issuance under the Purchase Plan and (iv)
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, 1998.
With regard to the election of Directors, Eric R. Giler and Robert G.
Barrett were nominated to serve as Class III Directors of the Company until the
2001 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), Patrick T. Hynes (Class
II Director) and W. Brooke Tunstall (Class II Director).
With respect to the Proposals, the stockholders of the Company voted at
the Annual Meeting as hereinafter described. By a vote of 9,665,707 votes of
Common Stock in favor of Eric R. Giler and 9,685,947 votes of Common Stock in
favor of Robert G. Barrett, in excess of a majority of the eligible votes, with
415,072 votes and 394,832 votes against each of Messrs. Giler and Barrett,
respectively, each of Eric R. Giler and Robert G. Barrett was elected as a Class
III Director of the Company.
12
<PAGE> 13
The stockholders of the Company approved an amendment to the 1992 Plan
by a vote of 3,079,130 votes in favor, in excess of a majority of eligible
votes, with 1,757,750 votes against, 89,029 votes abstaining and 5,154,870
broker non-votes.
The stockholders of the Company approved an amendment to the Purchase
Plan by a vote of 4,580,036 votes in favor, in excess of a majority of eligible
votes, with 261,585 votes against, 84,288 votes abstaining and 5,154,870 broker
non-votes.
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 9,993,411 votes in favor, in excess of a majority of
eligible votes, with 38,814 votes against and 48,554 votes abstaining.
Item 5.
None
Item 6. Exhibits
(a) Exhibits
None
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 11, 1998 By:/s/Eric R. Giler
_____________________________
Eric R. Giler
President
(Principal Executive Officer)
Date: August 11, 1998 By:/s/Robert C. Leahy
_____________________________
Robert C. Leahy
Vice President of Finance and
Operations and Treasurer
(Principal Financial and
Accounting Officer)
14
<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, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) BROOKTROUT TECHNOLOGY, INC.'S 10-Q FOR THE
PERIOD ENDED JUNE 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 31,602
<SECURITIES> 8,711
<RECEIVABLES> 12,209
<ALLOWANCES> 1,081
<INVENTORY> 8,296
<CURRENT-ASSETS> 64,092
<PP&E> 12,507
<DEPRECIATION> 4,630
<TOTAL-ASSETS> 74,012
<CURRENT-LIABILITIES> 19,222
<BONDS> 0
0
0
<COMMON> 108
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 74,012
<SALES> 26,104
<TOTAL-REVENUES> 26,104
<CGS> 10,915
<TOTAL-COSTS> 10,915
<OTHER-EXPENSES> 12,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,156
<INCOME-TAX> 1,168
<INCOME-CONTINUING> 1,988
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,988
<EPS-PRIMARY> .18
<EPS-DILUTED> .17
</TABLE>
