<PAGE>
================================================================================
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 quarter ended March 30, 1996 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from __________ to
__________
COMMISSION FILE NUMBER 0-18623
-------------------
IKOS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0100318
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19050 PRUNERIDGE AVE., CUPERTINO, CA 95014
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(408) 255-4567
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK $.01 PAR VALUE 7,264,000
---------------------------
(Title of Class) (Outstanding as of March 30, 1996)
================================================================================
<PAGE>
IKOS SYSTEMS, INC.
FORM 10-Q
QUARTER ENDED MARCH 30, 1996
INDEX
-----
Part I: Financial Information
<TABLE>
<CAPTION>
Item 1: Financial Statements
PAGE
<S> <C>
Consolidated Balance Sheets at
March 30, 1996 and September 30, 1995.............. 3
Consolidated Statements of Income
for the three and six months ended
March 30, 1996 and April 1, 1995................... 4
Consolidated Statements of Cash Flows
for the six months ended
March 30, 1996 and April 1, 1995................... 5
Notes to Consolidated Financial Statements........... 6
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations... 8
Part II: Other Information
Item 6: Exhibits and Reports on Form 8-K ................ 10
Signatures................................................ 12
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IKOS SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 30, September 30,
1996 1995
----------- --------------
<S> <C> <C>
(Unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents.................................... $ 13,166 $ 7,305
Short-term investments....................................... 9,616 450
Accounts receivable (net of allowances for
doubtful accounts of $221 and $171, respectively)........... 3,857 6,046
Inventories.................................................. 2,121 1,328
Prepaid expenses and other current assets.................... 280 271
-------- --------
Total current assets....................................... 29,040 15,400
Equipment and leasehold improvements:
Office and evaluation equipment.............................. 3,197 2,730
Machinery and equipment...................................... 5,131 4,985
Leasehold improvements....................................... 303 287
-------- --------
8,631 8,002
Less allowances for depreciation and amortization.......... (6,292) (6,363)
-------- --------
2,339 1,639
Other assets.................................................. 1,455 113
-------- --------
$ 32,834 $ 17,152
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................. $ 2,719 $ 1,613
Accrued payroll and related expenses......................... 1,427 1,195
Accrued commissions.......................................... 186 697
Income taxes payable......................................... 275 188
Other accrued liabilities.................................... 168 480
Deferred maintenance revenues................................ 3,971 3,030
Current portion of long-term debt............................ 450 688
-------- --------
Total current liabilities.................................. 9,196 7,891
Long-term debt, less current portion.......................... 800 1,300
Accrued rent.................................................. 248 251
Stockholders' equity:
Preferred stock, $.01 par value; 10,000 shares authorized,
none issued or outstanding.................................. -- --
Common stock, $.01 par value; 25,000 shares authorized,
7,264 and 5,886 issued and outstanding, respectively........ 73 59
Additional paid-in capital................................... 38,115 27,034
Accumulated deficit.......................................... (15,598) (19,383)
-------- --------
Total stockholders' equity................................. 22,590 7,710
-------- --------
$ 32,834 $ 17,152
======== ========
</TABLE>
(1) These amounts have been derived from audited financial statements
See notes to consolidated financial statements.
3
<PAGE>
IKOS SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
March 30, April 1, March 30, April 1,
1996 1995 1996 1995
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net revenues:
Product............................... $ 9,332 $5,504 $16,971 $10,534
Maintenance........................... 1,822 1,176 3,460 2,254
------- ------ ------- -------
Total net revenues............... 11,154 6,680 20,431 12,788
Cost of revenues:
Product............................... 2,066 1,447 3,983 2,761
Maintenance........................... 331 216 550 546
------- ------ ------- -------
Total cost of revenues........... 2,397 1,663 4,533 3,307
------- ------ ------- -------
Gross profit............................ 8,757 5,017 15,898 9,481
Operating expenses:
Research and development.............. 1,727 1,035 3,268 1,954
Sales and marketing................... 3,417 2,686 6,911 5,268
General and administrative............ 1,034 551 1,723 1,034
------- ------ ------- -------
Total operating expenses......... 6,178 4,272 11,902 8,256
------- ------ ------- -------
Income from operations.................. 2,579 745 3,996 1,225
Other income (expense):
Interest income....................... 285 26 482 49
Interest expense...................... (24) (25) (42) (63)
Other income.......................... 30 29 59 58
------- ------ ------- -------
Total other income............... 291 30 499 44
------- ------ ------- -------
Income before income taxes.............. 2,870 775 4,495 1,269
Provision for income taxes.............. 460 60 710 106
------- ------ ------- -------
Net income.............................. $ 2,410 $ 715 $ 3,785 $ 1,163
======= ====== ======= =======
Net income per share.................... $0.31 $0.12 $0.49 $0.20
======= ====== ======= =======
Common and common equivalent shares
used in computing per share amounts... 7,843 6,011 7,681 5,897
======= ====== ======= =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
IKOS SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents in thousands
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------
March 30, April 1,
1996 1995
---------- ---------
<S> <C> <C>
Operating activities:
Net income.............................................. $ 3,785 $ 1,163
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......................... 493 684
Loss on retirement of equipment........................ 19 2
Deferred rent.......................................... (3) 18
Changes in operating assets and liabilities:
Accounts receivable.................................... 2,189 (1,919)
Inventories............................................ (793) (65)
Prepaid expenses and other current assets.............. (9) (38)
Other assets........................................... (92) (12)
Accounts payable....................................... 1,106 283
Accrued payroll and other expenses..................... 232 13
Accrued commissions.................................... (511) (328)
Income taxes payable................................... 87 (20)
Other accrued liabilities.............................. (312) (58)
Deferred maintenance revenues.......................... 941 437
-------- -------
Net cash provided by operating activities............ 7,132 160
Investing activities:
Purchases of equipment and leasehold improvements....... (1,212) (418)
Investment in Virtual Machine Works, Inc................ (1,250) --
Purchase of short-term investments...................... (10,755) (14)
Maturities of short-term investments.................... 1,589 --
-------- -------
Net cash used in investing activities................. (11,628) (432)
Financing activities:
Principal payments on long-term debt.................... (738) (250)
Sale of common stock.................................... 11,095 60
-------- -------
Net cash provided by (used in) financing activities... 10,357 (190)
-------- -------
Increase (decrease) in cash and cash equivalents......... 5,861 (462)
Cash and cash equivalents at beginning of period......... 7,305 3,422
-------- -------
Cash and cash equivalents at end of period............... $ 13,166 $ 2,960
======== =======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
IKOS SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The accompanying consolidated financial statements at March 30, 1996
and for the three and six month periods ended March 30, 1996 and April 1,
1995, have been prepared in conformity with generally accepted accounting
principles, consistent with those applied in, and should be read in
conjunction with, the audited consolidated financial statements for the
year ended September 30, 1995 included in the Form 10-K as filed with the
Securities and Exchange Commission on December 22, 1995. The unaudited
interim financial information reflects all normal recurring adjustments
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods presented. The results for the three and
six month periods ended March 30, 1996 are not necessarily indicative of
results expected for the full year.
2. Revenue Recognition
Product revenues, which include licensing and software revenues, are
generally recognized on shipment provided that no significant vendor or
post-contract support obligations remain outstanding and collection of the
resulting receivable is deemed probable. Insignificant vendor and post-
support obligations are accrued upon shipment. Revenue under maintenance
contracts is recognized ratably over the term of the related contract,
generally twelve months.
3. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and consisted of (in thousands):
<TABLE>
<CAPTION>
March 30, September 30,
1996 1995
--------- --------------
<S> <C> <C>
Purchased parts $ 164 $ 347
Work-in-process 1,497 563
Finished goods 460 418
------ ------
Total inventories $2,121 $1,328
====== ======
</TABLE>
4. Net Income Per Share
Net income per share is based on the weighted average number of common
shares outstanding during the period. Common equivalent shares from
dilutive options have been included in the computation using the treasury
stock method.
5. Subsequent Event
In March 1996, the Company entered into a binding letter of intent to
acquire Virtual Machine Works Inc. (VMW), a developer of logic emulator
products. Under the terms of the letter of intent, if the deal is
consummated, the Company will pay approximately $10,000,000 in cash and
issue approximately $5,000,000 in stock and stock options to the VMW stock
and option holders plus acquisition costs. In connection with the proposed
acquisition, the Company advanced VMW approximately $1,250,000 in exchange
for a note. The advance is included in other assets in the accompanying
financial statements. The Company may advance VMW an additional $1,250,000
prior to the closing. In the event the acquisition is not completed, any
cash advances will be converted to stock of VMW. The transaction is
expected to be completed in May 1996. In connection with the acquisition,
the Company expects to write off up to $10,000,000 of the acquisition price
related to the in-process research and development being acquired.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NET REVENUES
Net revenues for the three month period ended March 30, 1996 were $11,154,000,
an increase of approximately 67% over the same quarter in fiscal 1995. Revenues
for the six month period ended March 30, 1996 were $20,431,000, representing an
increase of approximately 60% over the same period in 1995. The increase for
the three and six month periods ended March 30, 1996 is primarily the result of
the continued growth in sales of the Voyager product line (primarily the NSIM
product) and the Gemini product line which was introduced during the second half
of fiscal year 1995. These products contributed the vast majority of
product net revenues during the three and six months ending March 30,
1996.
Maintenance revenue for the three and six months ended March 30, 1996 increased
55% and 54%, respectively, over the same periods of the previous fiscal year as
a result of growth in the installed base of systems.
International sales for the three and six months ended March 30, 1996, were
$4,416,000 and $6,364,000, respectively, representing increases of approximately
102% and 64%, respectively, over the same periods in fiscal 1995. International
sales accounted for approximately 39% and 31% of total sales, respectively, for
the same current year periods.
GROSS PROFIT MARGINS
Gross profit margins improved to approximately 78% of net revenues for each of
the three and six months ended March 30, 1996, as compared to 75% and 74%,
respectively, for the same periods of fiscal 1995. The increase for the three
month period was primarily the result of a change in product mix to a greater
percentage of higher margin newer products. The increase for the six months
ended March 30, 1996 was primarily the result of increased maintenance revenues
without any significant increases in maintenance costs as well as the positive
margin impact from product revenue mix generated in the second quarter.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the three and six months ended March 30,
1996 were $1,727,000 and $3,268,000, respectively, each representing an increase
of approximately 67% over the same period of fiscal year 1995. The increase for
the three month period was primarily the result of increased headcount and
associated expenses. In addition to the increased personnel expenses, research
and development costs increased significantly during the six month period as a
result of the acquisition in the first quarter of 1996 of certain technology
that had not yet reached technological feasibility and did not have alternative
future uses. The Company expects research and development expenses to increase
in absolute dollars over the remainder of the year as the Company continues its
product enhancement, new product development and technology development
programs.
7
<PAGE>
SALES AND MARKETING EXPENSES
Sales and marketing expenses for the three and six month periods ended March 30,
1996, increased to $3,417,000 and $6,911,000, respectively, representing
increases of 27% and 31%, respectively, when compared to the same periods in
fiscal 1995. The increases are primarily the result of increased headcount,
increased commissions as a result of higher revenue levels and increased
expenses for international operations. Sales and marketing expenses are
expected to continue to increase in absolute dollars over the next two fiscal
quarters reflecting increased headcount, commission expense and marketing
expenses.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $1,034,000 and $1,723,000 for the three
and six month periods ended March 30, 1996, respectively, representing an
increase of 88% and 67%, respectively, for the same periods in fiscal 1995. The
increases are due primarily to additional headcount, increased investor
relations expenses, professional services and profit sharing expenses. General
and administrative expenses are expected to increase slightly in absolute
dollars and decrease as a percentage of net revenues over the remainder of
fiscal 1996.
INCOME TAXES
The provision for income taxes consists primarily of federal alternative minimum
tax, state and foreign taxes and Japanese withholding taxes. The tax rate is
substantially below the federal statutory rate due to the utilization of net
operating loss carryovers for which no benefit has previously been taken.
LIQUIDITY AND CAPITAL RESOURCES
As of March 30, 1996, the Company had $22,782,000 in cash, cash equivalents and
short term investments which compared to $7,755,000 as of September 30, 1995.
Net cash provided by operating activities was $7,132,000 for the six
months ended March 30, 1996 and was primarily due to net income plus
depreciation and amortization, a reduction in outstanding accounts receivable,
increased deferred maintenance revenues and accounts payable partially offset by
an increase in inventories and a decrease in accrued commissions and other
accrued liabilities.
Net cash used in investing activities was approximately $11,628,000 due
primarily to the advance to VMW of $1,250,000 and the net purchases of
approximately $9,166,000 of short-term investments and $1,212,000 of equipment,
primarily engineering workstations, during the six months ended March 30, 1996.
The Company expects additional capital expenditures throughout the remainder of
the year as expected headcount additions will require additional engineering
workstations.
Net cash provided by financing activities for the six months ended March 30,
1996 was $10,357,000 which was a result of the completion of the Company's
public stock offering in October 1995 and the exercise of options by Company
employees. Proceeds from the sale of 1,150,000 shares of common stock, net of
offering costs, were approximately $10,450,000. Offsetting the increases in
cash provided by financing activities were principal payments of approximately
$738,000 on long-term debt.
8
<PAGE>
During the quarter, the Company signed a binding letter of intent to acquire
Virtual Machine Works, Inc. (VMW). Under the terms of the letter of intent, if
the acquisition is consummated, the Company will pay approximately $10,000,000
in cash and $5,000,000 in stock and stock options to VMW stock and option
holders plus acquisition costs. In connection with the proposed acquisition,
the Company advanced VMW approximately $1,250,000 in exchange for a note. The
Company may advance VMW an additional $1,250,000 prior to the closing. In the
event the acquisition is not completed, any cash advances will be converted to
stock of VMW. As a result of the proposed acquisition, the Company is expecting
to take a one-time charge of up to $10,000,000 relating to in-process research
and development. The majority of initial expenditures are expected to be in the
research and development area as the Company attempts to get VMW products
developed and ready for sale. Such efforts may require additional capital
equipment spending and other such costs in the near-term, including anticipated
integration costs. As a result of the anticipated one-time charge and increased
research and development spending generated by the on-going VMW operations, the
Company may incur a net loss for the third quarter ending June 29, 1996 and for
the year ending September 28, 1996. The transaction is expected to be completed
in May 1996.
The Company's primary unused sources of funds at March 30, 1996, consisted of
$22,782,000 of cash, cash equivalents and short term investments. The Company
believes that its present cash position and cash generated from operations will
be sufficient to meet its anticipated financing needs for the proposed VMW
acquisition and its capital and operational needs for at least the next twelve
months. The Company's future cash requirements may also be financed through
additional equity or debt financing.
Forward-looking statements in this Quarterly Report on Form 10-Q are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that all forward-looking statements
involve risks and uncertainties, including, without limitation, a developing
market and continued acceptance of the Company's products, changes in the
marketplace and increased levels of competition for the Company, the Company's
dependence upon third-party suppliers and the Company's intellectual property
rights. Further information on potential factors which could affect the
Company's financial results are included in the Company's Annual Report on Form
10-K for the year ended September 30, 1995 and the Company's Registration
Statement on Form S-2, effective October 12, 1995.
9
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1-5. NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) INDEX TO EXHIBITS
Exh. No. Documentation Description Page
- -------- ------------------------- ----
4.1 Certificate of Amendment of Certificate of Incorporation filed May 5,
1994. (Incorporated by reference to Exhibit 4.1 of the Company's
registration statement on Form S-2 effective October 12, 1995.)
4.2 Certificate of Amendment of Certificate of Incorporation filed April 24,
1995. (Incorporated by reference to Exhibit 4.2 of the Company's
registration statement on Form S-2 effective October 12, 1995.)
4.4 Rights Agreement dated as of January 27, 1992 between the Company and
Manufacturers Hanover Trust Company of California, Rights Agent.
(Incorporated by reference to Exhibit (C)1, in the Company's current
report on Form 8-K filed February 10, 1992.)
10.1 Lease Agreement for the Company's principal facility dated March 20,
1992, between Ames Avenue Associates and the Company, as amended.
(Incorporated by reference to Exhibit 10.1 of the Company's annual report
on 10-K for the year ending September 26, 1992.)
10.2 Form of Director and Officer Indemnity Agreement. (Incorporated by
reference to Exhibit 10.6 of the Company's registration statement on
Form S-1 effective July 25, 1990.)
10.3 1988 Stock Option Plan. (Incorporated by reference to Exhibit 10.14 of
the Company's registration statement on Form S-1 effective July 25,
1990.)
10.4 Patent Cross License Agreement dated May 17, 1989 with Zycad Corporation.
(Incorporated by reference from Zycad Corporation's Annual Report
on Form 10-K filed April 2, 1990.) (Incorporated by reference to
Exhibit 10.20 of the Company's registration statement on Form S-1
effective July 25, 1990.)
10.5 International Distributorship Agreement dated April 11, 1988, with C.
Itoh & Co., Ltd. (with certain confidential portions excised).
(Incorporated by reference to Exhibit 10.24 of the Company's registration
statement on Form S-1 effective July 25, 1990.)
10.6 OEM Software License Agreement between CAD Language Systems, Inc. and
IKOS Systems, Inc. dated June 22, 1989 and amendment dated September
1991. (Incorporated by reference to Exhibit 10.18 of the Company's
Annual Report for the year ended September 28, 1991.)
10
<PAGE>
Exh. No. Documentation Description Page
- -------- ------------------------- ----
10.7 Technology Transfer and Joint Development Agreement with Racal-Redac,
Inc. dated July 1, 1993 (with certain portions excised). (Incorporated
by reference to Exhibit 10.19 of the Company's quarterly report on Form
10-Q for the quarter ended July 3, 1993.)
10.8 Settlement Agreement and Release dated March 31, 1994 between Racal
Redac, Inc. and the Company. (Incorporated by reference to Exhibit 10.13
of the Company's registration statement on Form S-2 effective
October 12, 1995.)
10.9 Software License Agreement dated December 31, 1993 between Compass Design
Automation and the Company. (Incorporated by reference to Exhibit 10.17
of the Company's quarterly report on Form 10-Q for the quarter ended
January 1, 1994.)
10.10 Agreement dated June 2, 1994, between the Company and Gerald S. Casilli.
(Incorporated by reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2, 1994.)
10.11 Agreement dated June 2, 1994, between the Company and William B.
Fazakerly. (Incorporated by reference to Exhibit 10.18 of the Company's
quarterly report on Form 10-Q for the quarter ended July 2, 1994.)
10.12 Agreement dated June 2, 1994, between the Company and Daniel R. Hafeman.
(Incorporated by reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2, 1994.)
10.13 Agreement dated June 2, 1994, between the Company and Stephen M.
McLaughlin. (Incorporated by reference to Exhibit 10.18 of the Company's
quarterly report on Form 10-Q for the quarter ended July 2, 1994.)
10.14 Agreement dated June 2, 1994, between the Company and Lawrence A.
Melling. (Incorporated by reference to Exhibit 10.18 of the Company's
quarterly report on Form 10-Q for the quarter ended July 2, 1994.)
10.15 Agreement dated June 2, 1994, between the Company and Ramon A. Nunez.
(Incorporated by reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2, 1994.)
10.16 Agreement dated June 2, 1994, between the Company and Joseph W. Rockom.
(Incorporated by reference to Exhibit 10.18 of the Company's quarterly
report on Form 10-Q for the quarter ended July 2, 1994.)
10.17 The Company's 1995 Outside Directors Stock Option Plan. (Incorporated by
reference to Exhibit 10.22 of the Company's registration statement on
Form S-2 effective October 12, 1995.)
11
<PAGE>
Exh. No. Documentation Description Page
- -------- ------------------------- ----
10.18 Development and OEM Agreement for Verilog/IKOS Co-simulation Interface
dated August 26, 1994 by and between the Company and Precedence
Incorporated. (Incorporated by reference to Exhibit 10.24 of the
Company's registration statement on Form S-2 effective October 12, 1995.)
10.19 Agreement dated June 19, 1995 by and between the Company and William B.
Fazakerly. (Incorporated by reference to Exhibit 10.20 of the Company's
annual report on Form 10-K for the year ended September 30, 1995.)
10.20 Amendment to OEM Agreement for the acquisition of certain software
technology, by and between Compass Design Automation, Inc. and the
Company dated December 27, 1995. (Incorporated by reference to Exhibit
10.19 of the Company's quarterly report on Form 10-Q for the quarter
ended December 30, 1995).
10.21 Amended and Restated Employment Agreement dated August 1, 1995 by and
between the Company and Ramon Nunez. (Incorporated by reference to
Exhibit 10.19 of the Company's quarterly report on Form 10-Q for the
quarter ended December 30, 1995).
11.1 Statements of Computation of Earnings Per Share
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K - Not applicable
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.
IKOS SYSTEMS, INC.
------------------
Registrant
Date: May 13, 1996 /s/ Joseph W. Rockom
------------ ----------------------------
(JOSEPH W. ROCKOM, CFO)
Principal Financial Officer,
Duly Authorized Officer
12
<PAGE>
Exhibit 11.1
IKOS SYSTEMS, INC.
STATEMENTS OF COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ -------------------
March 30, April 1, March 30, April 1,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income ..................... $2,410 $ 715 $3,785 $1,163
====== ====== ====== ======
Number of shares used in computing
per share amounts:
Weighted average common
stock outstanding.......... 7,154 5,521 7,020 5,515
Common equivalent shares
attributable to stock
options (treasury stock
method).................... 689 490 661 382
------ ------ ------ ------
Total weighted average
common shares outstanding.. 7,843 6,011 7,681 5,897
====== ====== ====== ======
Net income per share............. $ 0.31 $ 0.12 $ 0.49 $ 0.20
====== ====== ====== ======
</TABLE>
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-28-1996 SEP-28-1996
<PERIOD-START> DEC-31-1995 OCT-01-1995
<PERIOD-END> MAR-30-1996 MAR-30-1996
<CASH> 13,166 0
<SECURITIES> 9,616 0
<RECEIVABLES> 4,078 0
<ALLOWANCES> (221) 0
<INVENTORY> 2,121 0
<CURRENT-ASSETS> 29,040 0
<PP&E> 8,631 0
<DEPRECIATION> (6,292) 0
<TOTAL-ASSETS> 32,834 0
<CURRENT-LIABILITIES> 9,196 0
<BONDS> 0 0
0 0
0 0
<COMMON> 73 0
<OTHER-SE> 22,517 0
<TOTAL-LIABILITY-AND-EQUITY> 32,834 0
<SALES> 9,332 16,971
<TOTAL-REVENUES> 11,154 20,431
<CGS> 2,066 3,983
<TOTAL-COSTS> 2,397 4,533
<OTHER-EXPENSES> 6,178 11,902
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 24 42
<INCOME-PRETAX> 2,870 4,495
<INCOME-TAX> 460 710
<INCOME-CONTINUING> 2,410 3,785
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,410 3,785
<EPS-PRIMARY> .31 .49
<EPS-DILUTED> .31 .49
</TABLE>
