<PAGE> 1
UNITED STATES
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.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission file number: 0-21432
AUSPEX SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 93-0963760
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
5200 GREAT AMERICA PARKWAY
SANTA CLARA, CA 95054
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER: (408) 986-2000
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
REQUIREMENT FOR THE PAST 90 DAYS.
YES [X]
NO [ ]
NUMBER OF SHARES OF COMMON STOCK, $.001 PAR VALUE, OUTSTANDING AS OF OCTOBER 31,
1997: 25,121,871.
<PAGE> 2
- --------------------------------------------------------------------------------
FORM 10-Q
AUSPEX SYSTEMS, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
ITEM 1.
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Unaudited Consolidated Financial Statements 4-5
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-9
PART II. OTHER INFORMATION
ITEM 5. Other Information 10
ITEM 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
EXHIBIT INDEX 11
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AUSPEX SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 JUNE 30, 1997
------------------ -------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 32,404 $ 25,056
Short-term investments 31,811 35,830
Trade receivables, net 36,774 43,130
Inventories, net 24,869 18,096
Prepaid expenses and other 11,274 12,158
-------- -------
Total current assets 137,132 134,270
Property and Equipment, net 20,723 20,036
Other Assets 2,615 2,846
-------- -------
Total assets $160,470 $157,152
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, 1997 JUNE 30, 1997
Current Liabilities: ------------------ -------------
Current portion of capital
lease obligations $ 80 $ 95
Accounts payable 8,765 6,906
Accrued liabilities 11,990 12,280
Income tax payable 564 64
Deferred revenue 8,552 9,491
-------- -------
Total current liabilities 29,951 28,836
Stockholders' Equity 130,519 128,316
-------- -------
Total liabilities and
stockholders' equity $160,470 $157,152
======== ========
</TABLE>
See notes to condensed consolidated financial statements
Page 1
<PAGE> 4
AUSPEX SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SEPTEMBER 30, SEPTEMBER 30,
THREE MONTHS ENDED 1997 1996
------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) (UNAUDITED)
Revenues:
Product revenue $42,720 $38,469
Service revenue 5,868 4,543
------- -------
Total revenues 48,588 43,012
------- -------
Cost of Revenues:
Cost of product revenue 19,277 16,019
Cost of service revenue 4,049 3,081
------- -------
Total cost of revenues 23,326 19,100
------- -------
Gross profit 25,262 23,912
------- -------
Operating Expenses:
Selling, general and administrative 15,660 12,622
Research and development 7,254 5,166
------- -------
Total operating expenses 22,914 17,788
Income from operations 2,348 6,124
Other Income, net 408 496
------- -------
Income before provision for income taxes 2,756 6,620
Provision for income taxes 965 2,350
------- -------
Net Income $ 1,791 $ 4,270
======= =======
Net Income per Share $ 0.07 $ 0.17
======= =======
Weighted average Common Shares and Equivalents 25,642 25,582
======= =======
See notes to condensed consolidated financial statements
Page 2
<PAGE> 5
AUSPEX SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
THREE MONTHS ENDED 1997 1996
---------- ----------
(IN THOUSANDS) (UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from Operating Activities:
Net income $ 1,791 $ 4,270
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,389 2,918
Changes in assets and liabilities:
Decrease in trade receivables 6,356 691
Increase in inventories (6,773) (1,034)
Decrease in prepaid expenses and other 884 1,009
Increase (decrease) in accounts payable 1,859 (624)
Decrease in accrued liabilities (290) (2,626)
Increase (decrease) in income tax payable 500 (344)
Increase (decrease) in deferred revenue (939) 1,186
-------- -------
Net cash provided by operating activities 6,777 5,446
-------- -------
Cash Flows from Investing Activities:
Purchases of available-for-sale short-term investments (8,767) (12,068)
Proceeds from sales/maturities of available-for-sale short-term investments 12,829 12,328
Purchases of property and equipment (3,937) (2,416)
Decrease in other assets 92 85
-------- -------
Net cash used in investing activities 217 (2,071)
-------- -------
Cash Flows from Financing Activities:
Principal payments on capital lease obligations (15) (39)
Proceeds from sale of common stock, net 527 783
-------- -------
Net cash provided by financing activities 512 744
-------- -------
Effect of Exchange Rate Changes on Cash (158) 5
-------- -------
Net Increase in Cash and Cash Equivalents 7,348 4,124
Cash and cash equivalents, beginning of period 25,056 22,169
-------- -------
Cash and Cash Equivalents, End of Period $ 32,404 $ 26,293
======== ========
</TABLE>
See notes to condensed consolidated financial statements
Page 3
<PAGE> 6
AUSPEX SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying interim consolidated financial statements and
related notes should be read in conjunction with the financial statements and
related notes included in the Company's 1997 Annual Report to Stockholders.
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements
reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial position
as of the dates and results of operations for the periods indicated.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission rules and regulations. Additionally, the preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reported period. While
management makes its best effort to achieve its estimates, actual results could
differ from estimates.
The results of operations for the three months ended September 30,
1997 are not necessarily indicative of the results for the entire fiscal year
ending June 30, 1998. (See "Factors That May Affect Future Operating
Performance" in Management's Discussion and Analysis of Financial Condition and
Results of Operations.)
2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Substantially all cash equivalents consist of investments in
certificates of deposit, money market deposits, and municipal bonds with
original maturities of three months or less. Substantially all short-term
investments consist of municipal bonds which the Company intends to hold between
three and twelve months.
3. REVENUE RECOGNITION
Product revenue includes hardware sales and software license fees.
Effective July 1, 1997, the Company changed its revenue recognition policy on
system sales to end users such that revenues from system sales are generally
recognized upon shipment. Previously, the Company generally recognized system
sales to end users when the equipment had been shipped, installed and accepted
by the end user. The reason for this change was to better conform the Company's
policy with industry practices. The installation of the Company's systems is not
considered a significant obligation and acceptance by the customer is not
considered a significant uncertainty. As of June 30, 1997, the cost of systems
that had been shipped to customers but that were not recognized as revenue
pending installation and acceptance was approximately $1.5 million. Revenues
from upgrade sales are generally recognized at the time the equipment is
shipped. Provisions for product sales returns and allowances are recorded in the
same period as the related revenue. Revenues earned under software license
agreements with end users are generally recognized when the software has been
shipped and there are no significant obligations remaining.
Service revenue includes installation, maintenance and training, and
is recognized ratably over the contractual period or as the services are
provided.
Page 4
<PAGE> 7
4. NET INCOME PER SHARE
Net income per share is computed using the weighted average number
of shares of Common Stock, and dilutive common equivalent shares from stock
options using the treasury stock method. Fully diluted net income per share is
substantially the same as primary net income per share.
In February 1997, the Financial Accounting Standards Board issued
the Statement on Financial Accounting Standards No. 128 (SFAS 128), "Earnings
per Share," which is required to be adopted by the Company on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating earnings per share, primary earnings per share will
be replaced with basic earnings per share and fully diluted earnings per share
will be replaced with diluted earnings per share. Under basic earnings per
share, the dilutive effect of stock options will be excluded. Under SFAS 128,
basic earnings per share for the first quarters ended September 30, 1997 and
1996 would have been $0.07 and $0.17 per share, respectively. Diluted net
earnings per share is substantially the same as the current primary net earnings
per share.
5. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market, and include material, labor and manufacturing overhead costs. Finished
goods inventories include systems shipped to customers and awaiting acceptance.
Inventories consist of the following:
<TABLE>
<CAPTION>
(In thousands)
September 30, 1997 June 30, 1997
------------------ -------------
<S> <C> <C>
Purchased materials $14,886 $ 6,382
Systems in process 8,055 7,885
Finished goods 1,928 3,829
------- -------
Total inventories $24,869 $18,096
======= =======
</TABLE>
Inventories contained components and assemblies in excess of the Company's
current estimated requirements and were fully reserved at September 30, 1997 and
June 30, 1997.
Certain of the Company's products contain critical components supplied by a
single or limited number of third parties. The Company has an inventory of these
critical components so as to ensure an available supply of products for its
customers. Any significant shortage of these components or the failure of the
third party suppliers to maintain or enhance these components could materially
adversely affect the Company's results of operations.
6. REPORTING COMPREHENSIVE INCOME
In July 1997, the Financial Accounting Standards Board issued the
Statement on Financial Accounting Standards No. 130 "Reporting Comprehensive
Income," which is effective for fiscal years ending after December 15, 1997. The
adoption is not expected to have a material effect on the financial statements.
Page 5
<PAGE> 8
AUSPEX SYSTEMS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the first quarter of fiscal 1998, ended September
30, 1997, were $48.6 million, an increase of 13% over total revenues of $43.0
million in the first quarter of fiscal 1997.
Product revenues for the first quarter of fiscal 1998 were $42.7
million or 88% of total revenues. Revenues from system sales accounted for 49%
of product revenues during the first quarter of fiscal 1998 and 48% for the
first quarter of fiscal 1997, while revenues from upgrades, add-on options and
software license agreements comprised 51% of product revenues during the first
quarter of fiscal 1998 and 52% for the first quarter of fiscal 1997. Service
revenues for the first quarter of fiscal 1998 were $5.9 million or 12% of total
revenues compared to 11% in the first quarter of fiscal 1997. Geographically,
North America accounted for 66% and 62% of total revenues in the first quarters
of fiscal 1998 and 1997, respectively, the Pacific Rim accounted for 18% and 24%
in the first quarters of fiscal 1998 and 1997, respectively, and Europe
accounted for 16% and 14% in the first quarters of fiscal 1998 and 1997,
respectively. The increased revenues in North America primarily relate to
increased system shipments and higher average selling prices on the Company's
highly configured enterprise class systems. The decrease in revenues from the
Pacific Rim during the first quarter of fiscal 1998 was attributable to weakness
in the Japanese economy and to the continuing effects of a reorganization of a
major OEM partner.
Gross margin was 52% of net revenues in the first quarter of fiscal
1998 as compared with 56% in the first quarter of fiscal 1997. Product gross
margin decreased to 55% in the first quarter of fiscal 1998 from 58% in the
first quarter of fiscal 1997. The decline in margin relates to lower gross
margins on product upgrade sales as a result of lower average selling prices on
disk drives.
Selling, general and administrative expenses during the first
quarter of fiscal 1998 totaled $15.7 million, an increase of 24% from $12.6
million in the corresponding period of the prior fiscal year, and comprised 32%
and 29% of total revenues, respectively. The increase in absolute dollars and
as a percentage of revenues primarily relates to increased staffing in direct
sales operations and facilities' costs to support the Company's growth.
Research and development expenses incurred during the first quarter
of fiscal 1998 were $7.3 million, an increase of 40% from $5.2 million in the
corresponding period of the prior fiscal year, and comprised 15% and 12% of
total revenues, respectively. The increase in absolute dollars and as a
percentage of revenues primarily relates to new product development efforts and
the Company's new research and development facility as a result of the
Alphatronix, Inc. acquisition (See the Company's 1997 Form 10-K for a discussion
on Alphatronix acquisition).
Income from operations for the first quarter of fiscal 1998 was $2.3
million, a decrease of 62% from $6.1 million in the first quarter of fiscal
1997. Income from operations was 5% and 14% of total revenues for the quarters
ended September 30, 1997 and 1996, respectively. The decline in operating
profits relates to a decrease in margin contribution and an increase in
operating expenses reflecting the Company's investment across the organization
in support of new products and technologies for the UNIX and NT markets.
The Company's tax rate for the first quarter of fiscal 1998 was
35.0% as compared with 35.5% in the first quarter of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 1997, the Company's cash,
cash equivalents and short-term investments increased by $3.3 million to $64.2
million. The Company's working capital increased during the first three months
ended September 30, 1997 by $1.8 million to $107.2 million.
Based on its current operating plans, the Company believes that
its existing cash, cash equivalent and short-term investment and cash flow from
operations will be sufficient to meet its working capital and capital
expenditure requirements at least through the next 12 months.
Page 6
<PAGE> 9
FACTORS THAT MAY AFFECT FUTURE OPERATING PERFORMANCE
The last paragraph under the section entitled "Liquidity and Capital
Resources" contains a forward-looking statement. The Company may also make oral
forward-looking statements from time to time. Actual results may differ
materially from those projected in any such forward-looking statements due to a
number of factors, including those set forth below. The Company undertakes no
obligation to update such information.
POTENTIAL SIGNIFICANT FLUCTUATIONS IN QUARTERLY RESULTS
The Company's operating results may fluctuate significantly from
quarter to quarter due to a combination of factors. These factors include the
timing of orders, the timing of new product introductions by the Company or its
competitors and the mix of distribution channels through which the Company's
products are sold. The Company generally realizes higher gross margins on sales
of systems to end users and on single system sales than on systems sold through
distributors and OEMs and on multiple system sales. In addition, given the
Company's focus on highly configured enterprise class systems, the loss or delay
in a given quarter of a relatively limited number of system sales could
adversely affect the Company's revenues. Historically, the Company has often
recognized a substantial portion of its revenues in the last month of any given
quarter. Because the Company's operating expenses are based on anticipated
revenue levels and because a high percentage of the Company's expenses are
relatively fixed, a small variation in the timing of the recognition of revenues
could cause significant variations in operating results from quarter to quarter.
INTENSELY COMPETITIVE MARKET
The market for the Company's products is intensely competitive. The
Company experiences substantial competition, principally from Sun Microsystems,
Hewlett-Packard Company and Silicon Graphics, Inc., among others. Some companies
have introduced proprietary products to provide network attached storage. In
addition, several companies have introduced products at the low end of the
Company's target markets. Most of the Company's competitors are better known and
have substantially greater financial, technological, production and marketing
resources than the Company. While the Company believes that the
price/performance characteristics of its products are competitive, price
competition in the markets for the Company's products is intense. Any material
reduction in the price of the Company's products without corresponding decreases
in manufacturing costs or increases in unit volume would negatively affect gross
margins, which could in turn have a materially adverse effect on the Company's
business, financial condition and results of operations. The Company also
derives a significant portion of its revenues from sales of product upgrades to
its installed base, including additional processors, memory and disk drives.
Increased competition for the Company's products that results in lower product
sales could also adversely impact the Company's upgrades sales. In addition,
decisions by customers not to increase the capacity of their current systems
could adversely impact the Company's revenues and results of operations. The
Company's ability to maintain its competitive position will depend upon, among
other factors, its success in anticipating industry trends, investing in product
research and development, developing new products with improved
price/performance characteristics and effectively managing the introduction of
new products into targeted markets.
DEPENDENCE ON KEY PERSONNEL
Competition for employees with highly technical, management and
other skills is intense in the computer industry and is particularly intense in
the San Francisco Bay Area. The Company has in the past encountered some
difficulties in fulfilling its hiring needs and retaining key employees in this
employment market, and there can be no assurance that the Company will be
successful in hiring and retaining qualified employees in the future. The
Company's failure to retain the services of key personnel or to attract
additional qualified employees could have a materially adverse effect on the
Company's business, financial condition and results of operations.
Page 7
<PAGE> 10
SOFTWARE PRODUCT RISKS
With the release of its DriveGuard(TM) and FastBackup(TM) software
products, along with current software products, ServerGuard(TM) and
DataGuard(TM), the Company now markets software products in addition to its line
of network file servers. The Company also expects to release enhancements and
new features for these products from time to time. Although the Company performs
extensive testing prior to releasing software products, such products may
contain undetected errors or bugs when first released. These may not be
discovered until the product has been used by customers in different application
environments. Failure to discover product deficiencies or bugs could delay
product introductions, require design modifications to previously shipped
products, cause unfavorable publicity or negatively impact system shipments, any
of which could result in a materially adverse effect on the Company's business,
financial condition and results of operations.
NEW PRODUCTS
New product introductions by the Company or its competitors carry
the risk that customers could delay or cancel orders for existing products
pending shipment of the new products. The Company's strategy is to continue to
introduce new products and upgrades to existing products on an ongoing basis.
There can be no assurance that the Company will not experience difficulties that
delay or prevent the successful development, introduction or marketing of these
products and enhancements or that these new products and enhancements will
adequately address market requirements and achieve market acceptance. Any delays
in the launch or availability of new products could have a materially adverse
effect on the Company's business, financial condition and results of operations.
DEPENDENCE ON ESTABLISHED STANDARDS
The rapid emergence of new or alternate standards such as NT which
replace or diminish the market acceptance of UNIX operating systems or the
Network File System, on which the Company's products are currently based, could
materially adversely affect the Company's results of operations unless the
Company is able to incorporate any such standards in the Company's products in a
timely manner.
DEPENDENCE ON CERTAIN CUSTOMERS/DISTRIBUTORS
For the first three months of fiscal years 1998 and 1997, direct
sales of products and services to Intel Corporation ("Intel") represented
approximately 19% and 7%, respectively, of the Company's revenues. In addition
to direct purchases from the Company, Intel or its affiliates have from time to
time made significant purchases of the Company's products through channels. A
significant reduction in product sales to Intel could adversely affect the
Company's business, financial condition and results of operations.
DEPENDENCE ON CERTAIN SUPPLIERS
Certain of the Company's products contain critical components
supplied by a single or limited number of third parties. While the Company has
an inventory of these critical components, any significant or prolonged shortage
of these components or the failure of the third party suppliers to maintain or
enhance these components could materially adversely affect the Company's results
of operations.
EXCESS OR OBSOLETE INVENTORY
Managing the Company's inventory of components and finished products
is a complex task. A number of factors -- including the need to maintain a
significant inventory of certain components which are in short supply or which
must be purchased in bulk to obtain favorable pricing, the general
unpredictability of demand for specific products and customer requests for quick
delivery schedule -- may result in the Company maintaining excess inventory.
Other factors -- including changes in market demand and technology -- may cause
inventory to become obsolete. Any excess or obsolete inventory could result in
price reductions and/or inventory write-downs, which in turn could adversely
affect the Company and its results of operations.
Page 8
<PAGE> 11
RISK OF INTERNATIONAL SALES; EUROPEAN AND JAPANESE MARKETS RISKS
During the first three months of fiscal years 1998 and 1997,
approximately 34% and 38%, respectively, of the Company's total revenues were
derived from markets outside of North America. The Company expects that sales to
the Pacific Rim and Europe will continue to represent a significant portion of
its business. However, there can be no assurance that the Company's Pacific Rim
or European operations will continue to be successful. The Company's
international business may be affected by changes in demand resulting from
localized economic and market conditions. For example, the Company experienced a
decrease in revenues from the Pacific Rim during the first quarter of fiscal
1998 due to a weakness in the Japanese economy and the continuing effects of a
reorganization of a major OEM partner. In addition, the Company's international
business may be affected by fluctuations in currency exchange rates and currency
restrictions. The Company purchases the majority of its materials and services
in U.S. Dollars, and most of its foreign sales are transacted in U.S. Dollars.
An increase in the value of the U.S. Dollar relative to foreign currencies could
make the Company's products sold internationally less competitive. The Company
has offices in a number of foreign countries, the operating expenses of which
are also subject to the effects of fluctuations in foreign exchange rates.
Financial exposure may result due to the timing of transactions and movement of
exchange rates. The Company's international business may further be affected by
risks such as trade restrictions, increases in tariff and freight rates and
difficulties in obtaining necessary export licenses and meeting appropriate
local regulatory standards. For example, the Company has had to modify its
products in minor respects in Japan to comply with local electromagnetic
emissions standards, and must also comply with corresponding European Economic
Community standards. In marketing its products to the European Economic
Community, the Company also must face the challenges posed by a fragmented
market complicated by local distribution channels and local cultural
considerations. For international sales, the Company has largely relied on
distributors or OEMs, most of whom are entitled to carry products of the
Company's competitors.
STOCK MARKET FLUCTUATIONS
In recent years, the stock market in general, and the market for
technology stocks in particular, including the Company's Common Stock, have
experienced extreme price fluctuations. The market price of the Company's Common
Stock may be significantly affected by various factors such as quarterly
variations in the Company's operating results, changes in revenue growth rates
for the Company as a whole or for specific geographic areas or products, changes
in earnings estimates by market analysts, the announcements of new products or
product enhancements by the Company or its competitors, speculation in the press
or analyst community and general market conditions or market conditions specific
to particular industries. There can be no assurance that the market price of the
Company's Common Stock will not experience significant fluctuations in the
future.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS; PENDING LITIGATION
The Company currently relies on a combination of patent, copyright,
trademark and trade secret laws and contractual provisions to protect its
proprietary rights in its hardware and software products. The Company currently
holds six U.S. patents and has filed applications for additional patents. The
Company also has filed applications for counterpart patents in foreign
countries, including Japan. There can be no assurance that the Company's present
or future competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technology. Further, there
can be no assurance that the Company's patent applications will result in issued
patents, or that the Company's issued patents will be upheld if challenged.
Additionally, there can be no assurance that third parties will not assert
intellectual property infringement claims against the Company in the future with
respect to current or future projects or that any such assertions may not
require the Company to refrain from the sale of its products, enter into royalty
arrangements or undertake costly litigation.
The Company's adherence to industry standards with respect to its
products limits the Company's opportunities to provide proprietary features
which may be protected. In addition, the laws of various countries in which the
Company's products may be sold may not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States.
Page 9
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27 Financial Data Schedule.
b. Report on Form 8-K
No report on Form 8-K was filed during the current period.
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.
AUSPEX SYSTEMS, INC.
DATE November 13, 1997 /s/ KENT L. ROBERTSON
----------------- --------------------------------------
Kent L. Robertson
Vice President of Finance and Chief
Financial Officer
(Principal Financial Officer)
Page 10
<PAGE> 13
AUSPEX SYSTEMS, INC.
EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
Sequentially
Exhibit # Description Numbered Page
- --------- ----------- -------------
27 Financial Data Schedule
Page 11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 32,404
<SECURITIES> 31,811
<RECEIVABLES> 37,995
<ALLOWANCES> 1,221
<INVENTORY> 24,869
<CURRENT-ASSETS> 137,132
<PP&E> 66,514
<DEPRECIATION> 45,791
<TOTAL-ASSETS> 160,470
<CURRENT-LIABILITIES> 29,951
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 130,494
<TOTAL-LIABILITY-AND-EQUITY> 160,470
<SALES> 42,720
<TOTAL-REVENUES> 48,588
<CGS> 19,277
<TOTAL-COSTS> 23,326
<OTHER-EXPENSES> 22,894
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 2,756
<INCOME-TAX> 965
<INCOME-CONTINUING> 1,791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,791
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
