<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Quarter Ended January 28, 1995
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: 0-13351
NOVELL, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0393339
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1555 N. Technology Way
Orem, Utah 84057
(Address of principal executive offices and zip code)
(801) 429-7000
(Registrant's telephone number, including area code)
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 February 25, 1995 there were 366,352,534 shares of the
registrant's common stock outstanding.
</PAGE>
<PAGE>
<TABLE>
Part I. Financial Information, Item 1. Financial Statements
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
<C> <S> <S>
Jan. 28, Oct. 29,
Dollars in thousands, except per share data 1995 1994
- ------------------------------------------- --------- --------
ASSETS
Current assets
Cash and short-term investments $ 961,270 $ 861,809
Receivables, less allowances
($87,585 - January;
$82,934 - October) 421,592 391,342
Inventories 26,504 32,221
Prepaid expenses 57,472 69,324
Deferred income taxes 102,055 98,435
Total current assets 1,568,893 1,453,131
Property, plant and equipment, net 382,414 394,682
Other assets 104,635 115,668
Total assets $2,055,942 $1,963,481
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 94,117 $ 67,176
Accrued compensation 74,737 81,639
Accrued marketing liabilities 63,917 66,800
Other accrued liabilities 92,828 121,165
Income taxes payable 78,331 78,139
Deferred revenue 43,260 47,801
Total current liabilities 447,190 462,720
Minority interests 15,268 13,774
Shareholders' equity
Common stock, par value $.10 a share
Authorized - 400,000,000 shares
Issued - 365,575,883 shares-January
364,354,887 shares-October 36,558 36,436
Additional paid-in capital 661,348 645,419
Retained earnings 895,578 805,132
Total shareholders' equity 1,593,484 1,486,987
Total liabilities and shareholders' equity $2,055,942 $1,963,481
See notes to consolidated unaudited condensed financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF INCOME
Fiscal Quarter Ended
---------------------
<C> <S> <S>
Amounts in thousands, Jan. 28, Jan. 29,
except per share data 1995 1994
- --------------------- ---------------------
Net sales $493,225 $488,278
Cost of sales 116,875 103,777
Gross profit 376,350 384,501
Operating expenses
Sales and marketing 139,803 126,220
Product development 89,817 83,543
General and administrative 33,970 44,027
Nonrecurring charges -- 14,969
Total operating expenses 263,590 268,759
Income from operations 112,760 115,742
Other income (expense)
Investment income 9,567 10,949
Other, net 258 (247)
Other income, net 9,825 10,702
Income before taxes 122,585 126,444
Income taxes 41,066 31,984
Net income $ 81,519 $ 94,460
Weighted average shares outstanding 372,027 368,076
Net income per share $ 0.22 $ 0.26
See notes to consolidated unaudited condensed financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Fiscal Quarter Ended
--------------------
<C> <S> <S>
Jan. 28, Jan. 29,
Amounts in thousands 1995 1994
- -------------------- -------- --------
Cash flows from operating activities
Net income $ 81,519 $ 94,460
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Write-off of purchased research
and development -- 14,969
Depreciation and amortization 23,065 20,073
WordPerfect fiscal year conversion -- (39,856)
Stock plans income tax benefits 4,734 7,012
(Increase) decrease in receivables (30,250) 47,911
Decrease (increase) in inventories 5,717 (3,184)
Decrease in prepaid expenses 11,852 2,334
(Increase) in deferred income taxes (1,505) (9,248)
(Decrease) in current liabilities (15,530) (37,378)
Net cash provided from operating activities 79,602 97,093
Cash flows from financing activities
Issuance of common stock, net 7,669 4,281
Repayment of debt -- --
Other -- 7,033
Net cash provided from financing activities 7,669 11,314
Cash flows from investing activities
Expenditures for property, plant and equipment (9,372) (17,345)
(Increase) decrease in short-term investments (106,021) 573
Other 21,562 10,456
Net cash used by investing activities (93,831) (6,316)
Total (decrease) increase in cash and
cash equivalents $ (6,560) $102,091
Cash and cash equivalents - beginning of period 228,426 383,596
Cash and cash equivalents - end of period 221,866 485,687
Short-term investments - end of period 739,404 335,028
Cash and short-term investments - end of period $ 961,270 $ 820,715
See notes to consolidated unaudited condensed financial statements.
</TABLE>
</PAGE>
<PAGE>
NOVELL, INC.
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
A. Quarterly Financial Statements
The accompanying consolidated unaudited condensed financial
statements have been prepared in accordance with the
instructions to Form 10-Q but do not include all of the
information and footnotes required by generally accepted
accounting principles and should therefore, be read in
conjunction with the Company's fiscal 1994 Annual Report to
Shareholders. These statements do include all normal
recurring adjustments which the Company believes necessary for
a fair presentation of the statements. The interim operating
results are not necessarily indicative of the results for a
full year.
B. Mergers, Acquisitions, and Strategic Investments
In June 1994, the Company completed a merger with WordPerfect
Corporation (WordPerfect) whereby WordPerfect was merged
directly into Novell. Approximately 51 million shares of
Novell common stock were exchanged for all of the outstanding
common stock of WordPerfect. In addition, outstanding
employee stock options to purchase WordPerfect common stock
were converted into options to purchase approximately 8
million shares of Novell common stock. The transaction was
accounted for as a pooling of interests and therefore, all
prior period financial statements presented have been restated
as if the merger took place at the beginning of such periods.
In order to conform WordPerfect s year end to Novell s fiscal
year end, the consolidated statement of income for fiscal 1994
includes two months (November and December 1993) for
WordPerfect which are also included in the consolidated
statement of income for the fiscal year ended October 30,
1993. Accordingly, an adjustment has been made in fiscal 1994
to retained earnings for the duplication of net income of $40
million for such two month period. Other results of
operations for such two month period of WordPerfect include
net sales of $137 million, income before taxes of $35 million,
and income tax benefits of $5 million.
Additionally, in June 1994, the Company acquired from Borland
International, Inc. its Quattro Pro spreadsheet product line
for $110 million of cash and assumed liabilities of $10
million, and purchased a three year license to reproduce and
distribute up to one million copies of current and future
versions of Borland s Paradox relational database product for
$35 million of cash. The transaction was accounted for as a
purchase and, on this basis, resulted in a one-time write-off
of $114 million for purchased research and development.
C. Cash and Short-term Investments
The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities in the first quarter
of fiscal 1995. All marketable debt and equity securities are
included in cash and short-term investments and are considered
available-for-sale and carried at fair market value.
Such securities are anticipated to be used for current
operations and are therefore classified as current assets, even
though some maturities may extend beyond one year.
In accordance with SFAS No. 115, prior period financial
statements have not been restated to reflect this change in
accounting principal. The opening balance of shareholders
equity was increased by $9 million, net of $4 million of
deferred income taxes, to reflect the net unrealized holding
gains on securities classified as available-for-sale, which
were previously carried at the lower-of-cost-or-market.
The following is a summary of cash and short-term investments,
all of which are considered available-for-sale.
</PAGE>
<PAGE>
<TABLE>
<C> <S> <S> <S> <S> <S>
Gross Gross Fair
Cost at Unrealized Unrealized market value at Cost at
(Dollars in thousands) Jan. 28, 1995 Gains Losses Jan. 28, 1995 Oct. 29, 1994
- ------------------------- ------------- ----------- ---------- --------------- -------------
Cash and cash equivalents
Cash $ 82,124 $ -- $ -- $ 82,124 $101,331
Repurchase agreements 26,400 26,400 19,309
Tax exempt money market
fund 33,672 -- -- 33,672 29,394
Taxable money market
investments 19,270 -- -- 19,270 13,357
Municipal securities 60,400 -- -- 60,400 65,035
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents $221,866 $ -- $ -- $221,866 $228,426
- --------------------------------------------------------------------------------------------------
Short-term investments
Municipal securities $206,285 $ -- $ 827 $205,458 $201,491
Money market mutual funds 41,278 -- -- 41,278 104,388
Money market preferreds 387,350 -- -- 387,350 306,700
Mutual funds 77,771 201 -- 77,972 13,017
Equity securities 13,722 13,624 -- 27,346 7,787
- --------------------------------------------------------------------------------------------------
Short-term investments $726,406 $13,825 $ 827 $739,404 $633,383
- --------------------------------------------------------------------------------------------------
Cash and short-term
investments $948,272 $13,825 $ 827 $961,270 $861,809
- --------------------------------------------------------------------------------------------------
</TABLE>
During the first quarter of fiscal 1995 the Company had no
realized gains on the sale of securities compared to realized
gains in the first quarter of fiscal 1994 of $7 million and
realized losses of $1 million on the sale or disposition of
securities.
D. Income Taxes
The Company's estimated effective tax rate for the first
quarter of fiscal 1995 was 33.5%. Excluding non-tax
deductible one-time charges related to the write-off of
purchased research and development of $15 million in fiscal
1994 and adjusting fiscal 1994 to reflect a provision for
income taxes as if WordPerfect and its S corporation
subsidiaries had never been S corporations, the Company s
effective tax rate would have been 34% in fiscal 1994. The
Company paid cash amounts for income taxes of $27 million and
$15 million, in the first quarter of fiscal 1995 and 1994,
respectively.
E. Commitments and Contingencies
The Company currently has a $10 million unsecured revolving
bank line of credit, with interest at the prime rate. The
line can be used for either letter of credit or working
capital purposes. The line is subject to the terms of a loan
agreement containing financial covenants and restrictions,
none of which are expected to significantly affect the
Company s operations. At January 28, 1995 there were no
borrowings, letter of credit acceptances or commitments under
such line.
The Company has an additional $10 million credit facility with
another bank which is not subject to a loan agreement.
At January 28, 1995 standby letters of credit of approximately
$100,000 were outstanding under this agreement.
<PAGE>
On November 10, 1993, a suit was filed against Novell and
certain of its officers and directors alleging violation of
federal securities laws. Another lawsuit alleging similar
claims was filed August 26, 1994. Both lawsuits were brought
as purported class actions on behalf of purchasers of Novell
common stock. On February 22, 1995 the plaintiffs amended
November 10, 1993 lawsuit was dismissed with prejudice.
Novell does not believe that the resolution of the August 26,
1994 lawsuit will have a material adverse effect on its
financial position or results of operations.
The Company is a party to a number of additional legal
proceedings arising in the ordinary course of business. The
Company believes the ultimate resolution of the claims will
not have a material adverse effect on its financial position
or results of operations.
F. International Sales
The Company markets internationally through distributors who
sell to dealers and end users. For the fiscal quarters ended
January 28, 1995 and January 29, 1994, sales to international
customers were approximately $222 million and $217 million,
respectively. In the first quarters of fiscal 1995 and fiscal
1994, 59% and 64%, respectively, of international sales were
to European countries. No one foreign country accounted for
10% or more of total sales in either period. Except for one
multi-national distributor, which accounted for 18% of revenue
in the first quarter of 1995 and 11% of revenue in the first
quarter of fiscal 1994, no customer accounted for more than
10% of revenue in any period.
G. Net Income Per Share
Net income per share is computed using the weighted average
number of common shares outstanding during the periods,
including common stock equivalents (unless antidilutive).
Common stock equivalents consist of outstanding stock options.
</PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Introduction
Novell s business is connecting people with other people and the
information they need, enabling them to act on it anytime,
anyplace. Novell is a leading provider of networking and
application software. The Company s software products provide the
distributed infrastructure, network services, advanced network
access and network applications required to make networked
information and computing an integral part of everyone s daily
life.
Over the past several years, the Company has issued common stock or
paid cash to acquire technology companies, invested cash in other
technology companies, and formed strategic alliances with still
other technology companies. Novell undertook all of these
transactions to promote a pervasive computing environment, and in
many cases to also broaden the Company s business as a system and
application software supplier.
In June 1994, the Company completed a merger with WordPerfect
Corporation (WordPerfect), whereby WordPerfect was merged directly
into Novell. Approximately 51 million shares of Novell common
stock were exchanged for all of the outstanding common stock of
WordPerfect. In addition, the outstanding employee stock options
to purchase WordPerfect common stock were converted into options to
purchase approximately 8 million shares of Novell common stock.
The transaction was accounted for as a pooling of interests and
therefore, all prior financial statements presented herein have
been restated as if the merger took place at the beginning of such
periods.
Additionally, in June 1994, the Company acquired from Borland
International, Inc. its Quattro Pro spreadsheet product line for
$110 million of cash and assumed liabilities of $10 million, and
purchased a three year license to reproduce and distribute up to
one million copies of current and future versions of Borland s
Paradox relational database product for $35 million of cash. The
transaction was accounted for as a purchase and, on this basis,
resulted in a one-time write-off of $114 million for purchased
research and development.
The Company will continue to look for similar acquisitions,
investments or strategic alliances which it believes complement its
overall business strategy.
Results of Operations
Net Sales
Q1 Q1
1995 Change 1994
- --------------------------------------------------------------------
Net sales (millions) $493 1% $488
====================================================================
With the acquisition of WordPerfect in fiscal 1994, Novell has
redefined itself into four product groups, all within the software
industry. They are the NetWare Systems Group, the Novell
Applications Group, the UNIX Systems Group, and the Information
Access and Management Group. While revenue increased from the
first quarter of 1994 to the first quarter of 1995, analysis of the
individual product groups characterizes the changes that have
occurred.
NetWare Systems Group (NSG) revenues grew by 19% in the first
quarter of 1995 compared to the first quarter of 1994. Most of
the growth was in the NetWare 4 product family, slightly offset by
a decrease in the NetWare 3 product family.
Novell Applications Group (NAG) revenues decreased by 18% in the
first quarter of 1995 compared to the first quarter of 1994. The
decrease is the result of decreases in stand alone WordPerfect
products, somewhat offset by increases from the PerfectOffice suite
as well as GroupWare applications.
</PAGE>
<PAGE>
UNIX Systems Group (USG) revenues decreased 14% in the first
quarter of 1995 compared to the first quarter of 1994. The
decrease was attributable to lower source code revenues and to the
anticipation of a new UnixWare version to be released in the second
quarter of fiscal 1995.
Information Access and Management Group (IAMG) revenues decreased
by 13% in the first quarter of 1995 compared to the first quarter
of 1994. The decrease was a result of lower shipments of Host
Connectivity products as well as a decline in Advanced Access
Applications.
International sales represented 45% of total sales in the first
quarter of 1995 compared to 44% in the first quarter of 1994. The
Company expects that international sales will continue to grow at
least at the same rate as domestic sales in fiscal 1995.
Gross Profit
Q1 Q1
1995 Change 1994
- -------------------------------------------------------------------
Gross profit (millions) $376 -2% $385
Percentage of net sales 76% 79%
===================================================================
The gross margin percentage decreased in the first quarter of
fiscal 1995 compared to the first quarter of fiscal 1994 due to the
introduction and upgrade pricing for PerfectOffice sales and to
higher royalty costs related to the Paradox license amortization.
Future fluctuations in the gross profit margin will be primarily
attributable to price changes, changes in sales mix by product or
distribution channel, and special product promotions. The Company
expects the gross profit margin in fiscal 1995 to be relatively
flat compared to the gross profit margin in fiscal 1994.
</PAGE>
<PAGE>
<TABLE>
<C> <S> <S> <S>
Operating Expenses
Q1 Q1
1995 Change 1994
- ----------------------------------------------------------------------
Sales and marketing (millions) $140 11% $126
Percentage of net sales 28% 26%
- ----------------------------------------------------------------------
Product development (millions) $90 7% $84
Percentage of net sales 18% 17%
- ----------------------------------------------------------------------
General and administrative (millions) $34 -23% $44
Percentage of net sales 7% 9%
- ----------------------------------------------------------------------
Nonrecurring charges (millions) -- -- $15
Percentage of net sales -- 3%
- ----------------------------------------------------------------------
Total operating expenses (millions) $264 -2% $269
Percentage of net sales 53% 55%
======================================================================
</TABLE>
Sales and marketing expenses increased as a percentage of net sales
in the first quarter of fiscal 1995 compared to the first quarter
of fiscal 1994. The increase is attributable to relatively higher
corporate and product marketing expenses somewhat offset by lower
domestic and international selling expenses. Sales and marketing
expenses fluctuate as a percentage of net sales in any given period
due to product promotions, advertising or other discretionary
expenses.
Product development expenses increased as a percentage of net sales
in the first quarter of fiscal 1995 compared to the first quarter
of fiscal 1994 as a result of an effort to increase the Company's
investment in new products.
</PAGE>
<PAGE>
General and administrative expenses decreased as a percentage of
net sales in the first quarter of fiscal 1994 compared to the first
quarter of fiscal 1994. The decrease is attributable to lower
legal expenses and a reduction in headcount.
During the first quarter of 1994, the Company wrote off $15 million
of non-tax deductible purchased research and development in
connection with the acquisition of SoftSolutions.
Overall, operating expenses, excluding nonrecurring charges, have
grown more rapidly than revenues in the first quarter of fiscal
1995 compared to the first quarter of fiscal 1994 due to higher
sales and marketing expenses as well as higher product development
costs.
<TABLE>
<C> <S> <S> <S>
Q1 Q1
1995 Change 1994
- ---------------------------------------------------------------------------
Employees 7,808 -16% 9,350
Annualized revenue per employee (000's) $243 23% $197
===========================================================================
</TABLE>
</PAGE>
<PAGE>
Early in fiscal 1994 WordPerfect reduced its workforce by
approximately 1,000 employees. Subsequent to the merger between
Novell and WordPerfect, there was an additional reduction in
force of approximately 1,100. In the first quarter of 1995 an
additional 650 employees functions were outsourced as part of
the restructuring. As a result of these reductions, annualized
revenue per employee increased 23% in the first quarter of 1995
compared to the same period in 1994.
<TABLE>
<C> <S> <S> <S>
Other Income (Expense)
Q1 Q1
1995 Change 1994
- ----------------------------------------------------------------------------
Other income (expense), net (millions) $10 -9% $11
Percentage of net sales 2% 2%
============================================================================
</TABLE>
The primary component of other income (expense) is investment
income, which was $10 million in the first quarter of fiscal 1995
compared to $11 million in the first quarter of fiscal 1994. The
decrease is the result of the sale of some of the Company s
holdings in Gupta Technologies, Inc. in the first quarter of
1994. In order to achieve potentially higher returns, a limited
portion of the Company's investment portfolio is invested in
mutual funds which incur some market risk. The Company believes
that the market risk has been limited by diversification and by
use of a funds management timing service which switches funds out
of mutual funds and into money market funds when preset signals
occur.
<TABLE>
<C> <S> <S> <S>
Income Taxes
Q1 Q1
1995 Change 1994
- ---------------------------------------------------------------------
Income taxes (millions) $41 28% $32
Percentage of net sales 8% 7%
Effective tax rate 34% 25%
=====================================================================
</TABLE>
</PAGE>
<PAGE>
The Company s estimated tax rate for fiscal 1995 is 33.5%, which
is down slightly from the fiscal 1994 rate of 34%, excluding the
effect of the non-tax deductible one-time charges related to the
write-off of purchased research and development of $15 million in
the first quarter of fiscal 1994 and adjusting to reflect a
provision for income taxes as if WordPerfect and its S
corporation subsidiaries had never been S corporations.
<TABLE>
<C> <S> <S> <S>
Net Income and Net Income
Per Share
Q1 Q1
1995 Change 1994
- ---------------------------------------------------------------------
Net income (millions) $82 -13% $94
Percentage of net sales 17% 19%
Net income per share $.22 -15% $.26
=====================================================================
</TABLE>
<TABLE>
<C> <S> <S> <S>
Liquidity and Capital Resources
Q1 Q4
1995 Change 1994
- ------------------------------------------------------------------------------
Cash and short-term investments (millions) $961 11% $862
Percentage of total assets 47% 44%
===============================================================================
</TABLE>
Cash and short-term investments increased to $961 million at
January 28, 1995 from $862 million at October 29, 1994. The
major reasons for this increase were the $80 million of cash
provided by operating activities, the $8 million provided by
financing activities and the $22 million provided from other
investing activities, offset by the $9 million used for capital
asset purchases. The investment portfolio is diversified among
security types, industry groups, and individual issuers. The
Company's principal source of liquidity has been from operations.
At January 28, 1995, the Company's principal unused sources of
liquidity consisted of cash and short-term investments and
available borrowing capacity of approximately $20 million under
its credit facilities. The Company's liquidity needs are
principally for the Company's financing of accounts receivable,
capital assets, acquisitions and strategic investments and to
have flexibility in a dynamic and competitive operating
environment.
During fiscal 1995 the Company has continued to generate cash
from operations. The Company anticipates being able to fund its
current operations and capital expenditures planned for the
foreseeable future with existing cash and short-term investments
together with internally generated funds. Borrowings under the
Company's credit facilities, or public offerings of equity or
debt securities are available if the need arises. As the Company
grows, investments will continue in product development in new
and existing areas of technology. Cash may also be used to
acquire technology through purchases and strategic acquisitions.
Capital expenditures in fiscal 1995 are anticipated to be
approximately $80 million, but could be reduced if the growth of
the Company is less than presently anticipated.
</PAGE>
<PAGE>
Part II. Other Information
Except as listed below, all information required by items in Part
II is omitted because the items are inapplicable or the answer is
negative.
Item 1. Legal Proceedings.
The information required by this item is incorporated herein by
reference to Footnote E of the Company s financial statements
contained in Part I, Item 1 of this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
- ------- -----------
27* Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the
Registrant during the quarter ended January 28, 1995.
- -------------------------------
*Filed herewith
</PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Novell, Inc.
------------
(Registrant)
Date: March 10, 1995 /s/ Robert J. Frankenberg
-------------------------
Robert J. Frankenberg
Chairman of the Board,
President, Chief Executive
Officer and Director
(Principal Executive Officer)
Date: March 10, 1995 /s/ James R. Tolonen
------------------------
James R. Tolonen
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: March 10, 1995 /s/ Stephen C. Wise
------------------------
Stephen C. Wise
Senior Vice President, Finance
(Principal Accounting Officer)
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-28-1995
<PERIOD-END> JAN-28-1995
<CASH> 221,866
<SECURITIES> 739,404
<RECEIVABLES> 421,592
<ALLOWANCES> (87,585)
<INVENTORY> 26,504
<CURRENT-ASSETS> 1,568,893
<PP&E> 688,499
<DEPRECIATION> (306,085)
<TOTAL-ASSETS> 2,055,942
<CURRENT-LIABILITIES> 447,190
<BONDS> 0
<COMMON> 36,558
0
0
<OTHER-SE> 1,556,926
<TOTAL-LIABILITY-AND-EQUITY> 2,055,942
<SALES> 493,225
<TOTAL-REVENUES> 493,225
<CGS> 116,875
<TOTAL-COSTS> 116,875
<OTHER-EXPENSES> 263,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 122,585
<INCOME-TAX> 41,066
<INCOME-CONTINUING> 81,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,519
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
