<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended September 28, 1996
OR
[ ] Transition Report pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934.
For the transition period from____________to____________.
Commission File Number 0-20084
NETFRAME SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 77-0081278
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1545 Barber Lane, Milpitas, CA 95035
(Address of principal executive offices and zip code)
(408) 474-1000
(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 of 15(d) of the Securities Exchange Act
of 1934 during the proceeding 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 November 4, 1996 there were 13,835,236 shares of the registrant's common
stock outstanding.
<PAGE> 2
NETFRAME SYSTEMS INCORPORATED
FORM 10-Q
SEPTEMBER 28, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Consolidated Condensed Statements of Operations -
Three months and nine months ended
September 28, 1996 and September 30, 1995 3
Consolidated Condensed Balance Sheets -
September 28, 1996 and December 31, 1995 4
Consolidated Condensed Statements of Cash Flows - Nine months
ended September 28, 1996 and September 30, 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-12
PART II. OTHER INFORMATION
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE PAGE 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NETFRAME SYSTEMS INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
----------------------- ------------------------
Sep. 28, Sep.30, Sep. 28, Sep. 30,
1996 1995 1996 1995
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net revenue $ 18,188 $ 21,969 $ 57,067 $ 55,026
Cost of revenue 12,722 11,498 34,957 28,793
-------- -------- -------- --------
Gross profit 5,466 10,471 22,110 26,233
Operating expenses:
Research and development 3,736 3,063 11,280 9,088
Selling, general and administrative 9,636 7,629 27,006 24,582(1)
-------- -------- -------- --------
Total operating expenses 13,372 10,692 38,286 33,670
-------- -------- -------- --------
Operating loss (7,906) (221) (16,176) (7,437)
Interest and other income, net 222 (1,727)(2) 855 (1,067)(2)
-------- -------- -------- --------
Loss before income taxes (7,684) (1,948) (15,321) (8,504)
Benefit for income taxes -- -- -- (277)
-------- -------- -------- --------
Net loss ($ 7,684) ($ 1,948)(2) ($15,321) ($ 8,227)(1&2)
======== ======== ======== ========
Net loss per share ($ 0.56) ($0.14)(2) ($ 1.12) ($0.61)(1&2)
======== ======== ======== ========
Number of shares used in computing
per share amounts 13,791 13,511 13,694 13,471
======== ======== ======== ========
</TABLE>
(1) Includes a charge of $1.4 million or $0.10 per share associated with the
write-off of application software and related costs in connection with a
decision to discontinue a management information system upgrade. Net loss,
excluding this charge for the nine months ended September 30, 1995, would have
been $6.8 million or $0.50 per share.
(2) Includes a charge of $2.2 million or $0.16 per share in the third quarter of
1995 resulting from a settlement for a class action lawsuit. Net income,
excluding this charge for the third quarter of 1995, would have been $265,000 or
$0.02 per share. Net loss excluding this charge for the nine months ended
September 30, 1995, would have been $6.0 million or $0.45 per share.
See accompanying notes
3
<PAGE> 4
NETFRAME SYSTEMS INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
Sep. 28 Dec. 31
1996 1995
------- -------
Current assets: (unaudited)
<S> <C> <C>
Cash and cash equivalents $ 17,234 $ 18,340
Short-term investments 2,000 13,304
-------- --------
Total cash, cash equivalents and short-term investments 19,234 31,644
Accounts receivable, net 14,568 16,623
Inventories 11,237 10,680
Other current assets 922 1,244
-------- --------
Total current assets 45,962 60,191
Property and equipment, net 11,121 9,823
Other assets, net 1,851 1,684
-------- --------
$ 58,934 $ 71,698
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,488 $ 6,374
Accrued compensation and benefits 3,550 2,866
Accrued warranty 609 1,003
Deferred revenue 1,808 1,532
Other accrued liabilities 1,027 729
-------- --------
Total current liabilities 14,482 12,504
Commitments and contingencies
Stockholders' equity:
Common stock 14 14
Additional paid-in-capital 73,147 72,568
Accumulated deficit (28,709) (13,388)
-------- --------
Total stockholders' equity 44,452 59,194
-------- --------
$ 58,934 $ 71,698
======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 5
NETFRAME SYSTEMS INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH FLOWS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
-----------------------------
Sep. 28, 1996 Sep. 30, 1995
------------- -------------
<S> <C> <C>
Cash flows from (required for) operating activities:
Net loss ($ 15,321) ($ 8,227)
Items not requiring the current use of cash:
Amortization of deferred compensation -- 60
Loss on disposal of capital assets 416 1,375
Depreciation and amortization 6,098 3,749
Changes in items affecting operations:
Accounts receivable 2,055 8,292
Inventories (557) 133
Other current assets 322 (596)
Accounts payable 1,114 1,160
Accrued liabilities 864 3,423
--------- ---------
Cash generated from (required for) operating activities (5,009) 9,369
Cash flows from (required for) investing activities:
Acquisitions of property and equipment (5,739) (4,211)
Other assets (2,241) (355)
Purchase of available-for-sale securities (35,500) (121,800)
Maturities of available-for-sale securities 46,804 119,800
Purchase of held-to-maturity investments -- (6,241)
Sale of held-to-maturity investments -- 13,600
--------- ---------
Cash generated from investing activities 3,324 793
Cash flows from (required for) financing activities:
Payments on short-term borrowings -- (1,048)
Payments on capital lease obligations -- (69)
Payments on stockholders' notes receivable -- (15)
Issuance of common stock, net 579 731
--------- ---------
Cash generated from (required for) financing activities 579 (401)
Net increase (decrease) in cash and cash equivalents (1,106) 9,761
Cash and cash equivalents at the beginning of the period 18,340 9,748
--------- ---------
Cash and cash equivalents at the end of the period $ 17,234 $ 19,509
========= =========
Supplemental disclosures:
Cash paid during the period for:
Interest -- $ 4
Income taxes $ 25 $ 25
</TABLE>
See accompanying notes
5
<PAGE> 6
NETFRAME SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. QUARTERLY CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited consolidated 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 for complete consolidated financial statements and
should, therefore, be read in conjunction with the Company's audited
consolidated financial statements and notes thereto for the fiscal year
ended December 31, 1995 included in the Annual Report on Form 10-K. The
accompanying statements 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
the full year.
Certain reclassifications have been made to prior year amounts to conform
with the 1996 presentation.
2. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
Sep. 28, 1996 Dec. 31, 1995
------------- --------------
<S> <C> <C>
Raw materials $ 3,455 $ 1,954
Work in process 588 2,411
Finished goods 7,194 6,315
--------- ----------
$ 11,237 $ 10,680
========= ==========
</TABLE>
3. PROVISION (BENEFIT) FOR INCOME TAXES
The Company provides for income tax expense (or benefit) during interim
reporting periods based upon an estimate of the annual effective tax rate.
The rate of tax (benefit) is less than the federal statutory rate of 35%
due to the limitations controlling the timing for realization of net
operating losses and tax credits (which may carryforward to partially
offset future income taxes) established by the Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes".
4. NET LOSS PER SHARE
Net loss per share is based upon the weighted average number of outstanding
shares of common stock.
6
<PAGE> 7
NETFRAME SYSTEMS INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This section contains certain trend analysis and forward-looking statements.
Actual results may differ materially from the results described in such trend
analysis and forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in "Business
Factors".
INTRODUCTION OF CLUSTERSYSTEM 9000:
On October 21, 1996, subsequent to the end of the third quarter, the Company
announced its new server system, called the NetFRAME ClusterSystem 9000. This
new platform is based on Intel's Pentium(R) Pro processor utilizing the
industry-standard PCI protocol for input and output. The server system features
triple peer PCI architecture and an on-board LAN called Intrapulse(TM) to
monitor the basic heartbeat of the system and recover from many types of
failures automatically. The Company seeks to price its new product offering to
improve price competitiveness between its products and those of traditional
PC-based server competitors. First customer shipment is currently expected in
the fourth quarter of 1996 and volume production is expected to commence in
early 1997.
RESULTS OF OPERATIONS
NET REVENUE AND GROSS MARGIN:
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------ -------------------------
(in thousands) Sept 28, Sept 30, Sept 28, Sept 30,
1996 1995 1996 1995
------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Net Revenue $18,188 $21,969 $57,067 $55,026
Domestic Sales $17,046 $19,020 $52,228 $46,121
Percent of net revenue 94% 87% 92% 84%
Export Sales $ 1,142 $ 2,949 $ 4,839 $ 8,905
Percent of net revenue 6% 13% 8% 16%
Gross Margin 30% 48% 39% 48%
</TABLE>
Net revenue decreased 17% for the third quarter and increased 4% for the first
nine months of 1996 when compared to the same periods in the prior year. The
decrease in net revenue from the comparable quarter was primarily due to a
decrease in unit sales for the third quarter of 1996 partially offset by a shift
in product mix resulting in higher average sales prices. The increase in net
revenue for the first nine months of
7
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1996 when compared to the first nine months of 1995 was primarily due to a shift
in product mix resulting in an increase in average sales prices that was
partially offset by lower unit sales. The Company believes that it will not
achieve revenues above the levels of the first three quarters of 1996 until it
has completed full transition to next-generation products. There can be no
assurance that the Company can successfully transition to the next generation of
products, that the transition to a next generation of products will result in
increased unit sales or revenues or that customer uncertainty with respect to
the upcoming transition to next-generation products and that existing price
competition will not continue to have an adverse effect on the Company's
business, results of operations or financial condition. In addition, there can
be no assurance that many of the factors that negatively impacted operating
results in the first nine months of 1996 will not continue to have an adverse
impact on the Company's operating results going forward.
Export net revenue decreased as a percentage of total net revenue for the third
quarter and first nine months of 1996 when compared to the same periods in the
prior year. These decreases were due to a combination of factors including
significant turnover of international sales headcount and shipment delays
pending secured financing from certain international customers. Because of these
factors, there can be no assurance that the Company will be able to increase
international revenues in the near future.
The Company recognizes revenue upon shipment of product and records allowances
for estimated uncollectible accounts and sales returns. For the third quarter of
1996 when compared to the corresponding period of 1995, the Company experienced
a slightly lower level of sales returns. For the first nine months of 1996 as
compared to the same period of 1995, the Company had significantly lower
returns. While the Company has recorded and continues to record allowances for
estimated sales returns and uncollectible accounts, there can be no assurance
that such estimates regarding allowances will be adequate.
In order for the Company to increase its net revenue it must continue to develop
and introduce new products. Any delay in this process, deferral of purchases by
customers in anticipation of such new product introductions, difficulties
encountered in introducing these new products, or failure of these products to
achieve market acceptance or to compete successfully with alternatives offered
by other vendors could adversely affect net revenue and profitability.
Gross margins were 30% and 39%, respectively, for the third quarter and first
nine months of 1996 as compared to 48% for the same periods one year ago. The
decrease in gross margin for the third quarter of 1996 was primarily due to
increased provisions for potential excess or obsolete inventory related to the
Company's existing product line, sales of which may be affected by the Company's
upcoming product transition. There can be no assurance that the Company will not
experience additional inventory provisions if unit sales and net revenues
continue to decrease. For the first nine months of 1996, gross margins were also
negatively impacted by the Company's ongoing strategy of lowering end-user list
prices of certain of the components it sells. The Company expects continued
gross margin pressure through
8
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fiscal 1996 and into 1997 as a result of this pricing strategy and as a result
of the upcoming product transition.
OPERATING EXPENSES:
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------------ ---------------------
(in thousands) Sept 28, Sept 30, Sept 28, Sept 30,
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Research & development $ 3,736 $ 3,063 $11,280 $ 9,088
Percent of net revenue 21% 14% 20% 17%
Selling, general & administrative $ 9,636 $ 7,629 $27,006 $24,582
Percent of net revenue 53% 35% 47% 45%
Total Operating Expenses $13,372 $10,692 $38,286 $33,670
Percent of net revenue 74% 49% 67% 61%
</TABLE>
Research and development expense increased for both the third quarter and first
nine months ending September 28, 1996, when compared to the same periods one
year ago. Expenses for 1996 increased primarily due to consulting, product
prototype expenses and equipment leases. The Company expects that research and
development expenses will continue to increase for the remainder of fiscal 1996
as the Company continues to invest in research and development, although these
expenses can vary from period to period primarily due to variable spending on
product prototypes.
The Company operates in a rapidly changing and highly competitive marketplace
and, as a result, believes it is critical to continue to make substantial
investments in research and development activities in order to maintain its
competitive position.
The Company implemented a reduction in force during the third quarter of 1996
that affected 13% of its workforce, including both employees and contractors, in
an effort to lower its expense structure. Selling, general and administrative
expenses for the third quarter of 1996 increased to 53% of net revenue from 35%
for the same period in 1995 due to costs related to this reduction in force, a
specific bad debt provision, increased advertising and certain increased
salary-related expenses. Expenses for the first nine months of 1996 were 47% of
net revenue as compared to 45% for the comparable period in 1995. The increase
was primarily attributable to certain increased salary-related expenses,
severance costs, bad debt expense and increased advertising and promotions in
1996 that were partially offset by a one-time charge to discontinue a management
information system upgrade in the first quarter of 1995. The Company intends to
continue to invest in advertising and channel-development strategies as it
transitions to its new product platform.
9
<PAGE> 10
INTEREST AND OTHER INCOME, NET:
Interest and other income, net, increased for the third quarter and first nine
months of 1996 when compared to the same periods in the prior year due primarily
to a charge of $2.2 million in the third quarter of 1995 resulting from the
settlement of a class action lawsuit against the Company. This was offset
slightly by lower interest income due to lower cash balances in 1996.
PROVISION (BENEFIT) FOR INCOME TAX:
The Company recorded no provision for income taxes for the third quarter or the
first nine months ended September 28, 1996, and a benefit of $277,000 for the
first nine months of 1995. The Company provides for income taxes (benefits)
during interim reporting periods based upon an estimated annual effective tax
rate, applied to income (loss) before income taxes.
The rate of tax (benefit) was less than the federal statutory rate of 35% due to
the limitations controlling the timing for realization of net operating losses
and tax credits (which may carry forward to partially offset future income
taxes) established by the Statement of Financial Accounting Standards No. 109
(FAS 109), "Accounting for Income Taxes".
BUSINESS FACTORS:
In the past, the Company has experienced fluctuations in its operating results
and believes it will continue to experience fluctuations. The Company generally
fills orders shortly after receipt from customers and, therefore, backlog at the
beginning of a fiscal period represents only a small percentage of the product
sales anticipated in that period. Further, a substantial portion of the
Company's net revenue in each quarter generally results from orders received
during the last few weeks of that quarter. The absence of significant backlog
and the concentration of sales at the end of the quarter impairs the Company's
ability to control expense, production and inventory levels, which are incurred
based on forecasted revenue and are relatively fixed in the short term. If
anticipated shipments in any quarter do not occur or are delayed, expenditure
levels could be disproportionately high, and the Company's operating results for
that quarter would be materially adversely affected.
As previously noted, first customer shipment of the ClusterSystem 9000 is
currently expected in the fourth quarter of 1996 and volume production is
expected to commence in early 1997. However, the Company does not expect to
achieve significant revenue growth until the full impact of the product
transition is realized in 1997. Even though the Company is optimistic about the
prospects of its newly announced products, there can be no assurance that
significant revenue growth will be forthcoming.
10
<PAGE> 11
Any delay in the introduction or shipment of new products by the Company or the
introduction or shipment of new products by the Company's competitors, could
have a materially adverse effect on the Company's operating results. In
addition, the Company's operating results may fluctuate as a result of a number
of other factors, including variation in the size and timing of individual
transactions, the timing of introduction and the market acceptance of new and
enhanced versions of the Company's products, the mix of products sold, changes
in pricing policies by the Company, variation in the mix of sales by
distribution channel, mix in international and domestic sales, end users'
capital spending cycles, changes in pricing policies by the Company's
competitors or its suppliers, and the availability and cost of key components.
The Company's primary means of distribution is through VARs, systems integrators
and distributors. The Company's business and financial results could be
adversely affected in the event that the financial condition of the VARs and
system integrators worsens to the point that it affects their ability to sell or
pay for the Company's products. In addition, the Company is continuing its
evaluation of its distribution channels. Any changes could result in
fluctuations in net revenue, gross margins, and/or operating expenses. The
Company cannot at this time determine the ultimate effect of these or other
future distribution channel modification efforts on the Company's future
operating results.
In response to requests by certain large customers, the Company has sold
products directly to such customers. While these sales typically are at higher
average selling prices, they may require the Company to incur additional
installation and support obligations that would otherwise be provided by the
Company's VARs and system integrators. The Company cannot at this time determine
the ultimate effect on operating results of an increase or decrease in the level
of direct sales. While the Company attempts to limit these direct sales in order
to avoid conflicts with its existing distribution channels, there can be no
assurance that an increase in direct sales will not adversely affect the
Company's relationships with its VARs and system integrators. The Company
believes that it will continue to rely on VARs and system integrators as its
primary means of distribution and any disruption in these channels could have a
material adverse effect on the Company's operating results.
In the first nine months of 1996, over 90% of the products sold by the Company
utilized operating systems provided by Novell and Microsoft. Any problems in the
use of these operating systems by end users could adversely affect the Company's
sales.
The Company's products include certain components that are currently available
only from single sources or limited sources. Any availability limitations,
interruptions in supplies, or price increases relative to these components could
adversely affect the Company's financial condition, business or results of
operations.
Because of the variety and uncertainty of the factors affecting the Company's
operating results, past financial performance and historic trends may not be a
reliable
11
<PAGE> 12
indicator of future performance. These factors, as well as other
factors affecting the Company's operating performance, and the fact that the
Company participates in a highly dynamic industry, may result in significant
volatility in the Company's common stock price.
LIQUIDITY AND CAPITAL RESOURCES
At September 28, 1996, the Company had cash, cash equivalents and short-term
investments of approximately $19.2 million, a decrease of $12.4 million from
$31.6 million at December 31, 1995. During the first nine months of 1996, the
Company used $5.0 million of cash in operating activities which consisted
primarily of a net loss of $15.3 million offset by depreciation and amortization
expense of $6.1 million, a decrease in accounts receivable of $2.1 million, and
an increase in accounts payable and accrued liabilities of $2.0 million. The
decrease in accounts receivable was due to increased collections and lower
revenue trends in fiscal 1996 relative to the period ended December 31,1995, and
the increase in accounts payable resulted from working with the Company's vendor
base relative to the timing of payments.
During the first six months of 1996, the Company purchased capital equipment
totaling $5.7 million. Of this amount, $3.9 million was purchased with cash and
$1.8 million was acquired through the capitalization of inventory. Capital
equipment purchases for the remainder of 1996 are anticipated to be
approximately $1.2 million.
At September 28, 1996, the Company's principal sources of liquidity consisted of
its cash, cash equivalents and short-term investments. The Company currently
anticipates that its existing cash, cash equivalents and short-term investments
will be sufficient to satisfy the Company's cash requirements for at least
twelve months. Actual cash requirements could differ materially from those
expressed in the preceding forward-looking statements, as actual cash
requirements are dependent on many factors, including: the ability of the
Company to achieve its planned operating results and, if additional funds may be
needed, the ability of the Company to secure additional funds with acceptable
terms.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On October 24, 1996, the Board of Directors of the Company approved a
Stockholders' Rights Plan having a 15% share acquisition trigger. The Rights
Plan was executed in the form of a rights dividend with a record date of
November 15, 1996. A Form 8-A was filed with the Securities and Exchange
Commission on October 29, 1996 which included a copy of the Rights Agreement.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27.1 Financial Data Schedule
b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
28, 1996.
13
<PAGE> 14
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.
NetFRAME Systems Incorporated
Registrant
Date November 8, 1996 /s/ Robert L. Puette
---------------- ------------------------------------
Robert L. Puette
President and Chief Executive Officer
(Principal Executive Officer)
Date November 8, 1996 /s/ Dan McCammon
---------------- ------------------------------------
Dan McCammon
Vice President, Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-28-1996
<EXCHANGE-RATE> 1
<CASH> 17,234
<SECURITIES> 2,000
<RECEIVABLES> 15,653
<ALLOWANCES> 1,145
<INVENTORY> 11,237
<CURRENT-ASSETS> 45,962
<PP&E> 29,966
<DEPRECIATION> 18,845
<TOTAL-ASSETS> 58,934
<CURRENT-LIABILITIES> 14,482
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 44,438
<TOTAL-LIABILITY-AND-EQUITY> 58,934
<SALES> 49,474
<TOTAL-REVENUES> 57,067
<CGS> 29,558
<TOTAL-COSTS> 34,957
<OTHER-EXPENSES> 38,286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (855)
<INCOME-PRETAX> (15,321)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,321)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,231)
<EPS-PRIMARY> (1.12)
<EPS-DILUTED> (1.12)
</TABLE>
