UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-18643
LUNAR CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 3845 39-1200501
(State of (Primary Standard Industry (IRS Employer
Incorporation) Classification Code Number) Identification No.)
313 West Beltline Highway
Madison, Wisconsin 53713
608-274-2663
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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 January 31, 1998, 8,782,685 shares of the registrant's Common Stock, $0.01
par value, were outstanding.
LUNAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
For the quarterly period ended December 31, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1. Financial statements
Consolidated Balance Sheets
December 31, 1997, and June 30, 1997 3
Consolidated Statements of Income Three
and Six Months Ended December 31, 1997
and 1996 5
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1997
and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- ------------------------------------------------------------------------------
Assets
- ------------------------------------------------------------------------------
December 31, June 30,
1997 1997
(Unaudited) (Audited)
- ------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 4,698,203 $ 14,417,155
Marketable securities 7,754,646 5,891,350
Receivables:
Trade, less allowance for doubtful accounts
of $2,670,000 at December 31, 1997
and $2,602,000 at June 30, 1997 25,963,510 25,468,881
Other 777,142 1,061,558
- ------------------------------------------------------------------------------
26,740,652 26,530,439
Inventories 13,355,409 9,373,490
Deferred income taxes 1,350,000 2,291,000
Other current assets 396,689 84,790
- ------------------------------------------------------------------------------
Total Current Assets 54,295,599 58,588,224
Property, Plant and Equipment--At Cost:
Buildings and improvements 2,394,843 2,376,763
Furniture and fixtures 689,823 680,413
Machinery and other equipment 5,877,279 5,276,267
- ------------------------------------------------------------------------------
8,961,945 8,333,443
Less accumulated depreciation and amortization 4,568,105 3,889,838
- ------------------------------------------------------------------------------
4,393,840 4,443,605
Land 138,858 138,858
- ------------------------------------------------------------------------------
4,532,698 4,582,463
Long-term trade accounts receivable 2,057,642 2,485,022
Long-term marketable securities 26,990,541 16,592,053
Patents and other intangibles, net of
accumulated amortization of $1,380,132 at
December 31, 1997 and $1,185,613 at
June 30, 1997 730,507 850,867
Other 179,988 183,954
- ------------------------------------------------------------------------------
$88,786,975 $83,282,583
==============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
- ------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- ------------------------------------------------------------------------------
December 31, June 30,
1997 1997
(Unaudited) (Audited)
- ------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 4,025,615 $ 4,209,485
Customer advances and deferred income 812,901 639,707
Income taxes payable 2,685,632 2,375,955
Accrued liabilities:
Commissions payable 2,280,135 2,146,189
Compensation payable 329,276 290,913
Property, payroll, and other taxes 242,632 141,906
Accrued warranty and installation expenses 3,117,000 2,984,000
Other 307,947 251,036
- ------------------------------------------------------------------------------
Total Current Liabilities 13,801,138 13,039,191
Shareholders' Equity:
Common stock--authorized 25,000,000 shares
of $.01 par value; issued and outstanding
8,773,985 shares at December 31, 1997 and
8,721,425 at June 30, 1997 87,740 87,214
Capital in excess of par value 26,461,556 26,500,942
- ------------------------------------------------------------------------------
26,549,296 26,588,156
Retained earnings 48,447,862 43,706,139
Unrealized appreciation in
marketable securities 94,786 34,220
Cumulative translation adjustment (106,107) (85,123)
- ------------------------------------------------------------------------------
74,985,837 70,243,392
- ------------------------------------------------------------------------------
$88,786,975 $83,282,583
==============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three months ended Six months ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
- ------------------------------------------------------------------------------
Revenues $ 21,583,633 $20,516,096 $40,416,062 $39,430,735
- ------------------------------------------------------------------------------
Operating Expenses
Cost of sales 9,919,032 9,031,731 18,705,757 17,409,209
Research and
development 1,746,807 1,424,599 3,366,517 2,584,877
Selling and
marketing 4,678,250 4,405,687 9,223,412 8,374,020
General and
administrative 1,065,042 1,106,264 2,199,290 2,226,024
- ------------------------------------------------------------------------------
17,409,131 15,968,281 33,494,976 30,594,130
- ------------------------------------------------------------------------------
Income From Operations 4,174,502 4,547,815 6,921,086 8,836,605
- ------------------------------------------------------------------------------
Other Income (Expense):
Interest income 477,404 365,026 955,902 707,847
Settlement of lawsuit - 1,828,905 - 1,828,905
Other (603,176) 150,742 (839,265) (46,907)
- ------------------------------------------------------------------------------
(125,772) 2,344,673 116,637 2,489,845
- ------------------------------------------------------------------------------
Income Before
Income Taxes 4,048,730 6,892,488 7,037,723 11,326,450
Income Tax Expense 1,320,000 2,347,000 2,296,000 3,880,000
- ------------------------------------------------------------------------------
Net Income $ 2,728,730 $ 4,545,488 $ 4,741,723 $ 7,446,450
==============================================================================
Basic Earnings Per Share $0.31 $0.53 $0.54 $0.87
==============================================================================
Diluted Earnings Per Share $0.30 $0.50 $0.52 $0.82
==============================================================================
Weighted Average Number of
Common Shares 8,759,643 8,555,430 8,737,739 8,534,661
==============================================================================
Weighted Average Number of
Common and Dilutive
Potential Common Shares 9,109,849 9,076,316 9,111,073 9,073,781
==============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
- ------------------------------------------------------------------------------
Six months ended
December 31, December 31,
1997 1996
- ------------------------------------------------------------------------------
Cash Flows From Operating Activities:
Net income $4,741,723 $7,446,450
Adjustments to Reconcile Net Income to
Net Cash Provided By (Used In)
Operating Activities:
Depreciation and amortization 1,089,283 667,386
Changes in assets and liabilities:
Receivables 221,133 8,696,558
Inventories (3,981,919) (1,160,440)
Other current assets (311,899) (208,148)
Deferred income taxes 941,000 (273,000)
Accounts payable (204,854) 647,821
Customer advances and deferred income 173,194 12,750
Accrued liabilities 462,946 (53,615)
Income taxes payable 309,677 1,170,620
- ------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 3,440,284 16,946,382
- ------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Purchases of marketable securities (14,512,714) (1,000,000)
Sales and maturities of marketable securities 2,095,000 851,600
Additions to property, plant and equipment (628,502) (862,392)
Patents and other intangibles (74,159) (68,330)
- ------------------------------------------------------------------------------
Net Cash Used In Investing Activities (13,120,375) (1,079,122)
- ------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from exercise of stock options 380,043 375,316
Income tax benefit from stock option exercises 659,221 1,057,477
Repurchase of common stock (1,078,125) -
- ------------------------------------------------------------------------------
Net Cash Provided by (Used In)
Financing Activities (38,861) 1,432,793
- ------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (9,718,952) 17,300,053
Cash and cash equivalents at
beginning of period 14,417,155 8,001,582
- ------------------------------------------------------------------------------
Cash and Cash Equivalents at end of period $ 4,698,203 $25,301,635
==============================================================================
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 413,000 $ 2,170,000
==============================================================================
See accompanying notes to consolidated financial statements
LUNAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements of Lunar Corporation (the "Company")
presented herein, without audit except for balance sheet information at June 30,
1997, have been prepared pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended June 30,
1997, included in the Company's Form 10-K as filed with the Securities and
Exchange Commission on September 26, 1997.
The consolidated balance sheet as of December 31, 1997, the consolidated
statements of income for the three and six months ended December 31, 1997 and
1996, and the consolidated statements of cash flows for the six months ended
December 31, 1997 and 1996 are unaudited but, in the opinion of management,
include all adjustments (consisting of normal, recurring adjustments) necessary
for a fair presentation of results for these interim periods. The Company has
reclassified the presentation of certain prior year information to conform with
the current presentation format.
The results of operations for the three and six months ended December 31,
1997, are not necessarily indicative of the results to be expected for the
entire fiscal year ending June 30, 1998.
(2) INVENTORIES
Inventories are stated at the lower of cost or market; cost is determined
principally by the first-in, first-out method. Inventories are broken down as
follows:
- ------------------------------------------------------------------------------
December 31, June 30,
1997 1997
(Unaudited) (Audited)
- ------------------------------------------------------------------------------
Finished goods and work in progress $ 5,839,882 $2,909,854
Materials and purchased parts 7,515,527 6,463,636
--------------------------
$13,355,409 $9,373,490
==========================
(3) SHAREHOLDERS' EQUITY
On April 22, 1997, the Company approved a stock repurchase program pursuant
to which it may repurchase up to 1,000,000 shares of its common stock from time
to time based upon market conditions and other factors. The Company has
repurchased 55,000 shares under this program as of February 13, 1998.
(4) EARNINGS PER COMMON SHARE
Effective December 31, 1997, the Company has adopted the provisions of
Statement of Financial Accounting Standards No. 128, Earnings per Share.
Statement No. 128 replaces the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Basic earnings
per share are computed by dividing net income by the weighted average number of
shares of common stock outstanding during the period. Diluted earnings per
share are computed by dividing net income by the weighted average number of
shares of common stock outstanding plus the number of additional common shares
that would have been outstanding if common shares had been issued for
outstanding stock options, calculated according to the treasury stock method.
All earnings per share amounts for all periods presented have been restated to
conform to the requirements of Statement No. 128.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Equipment sales and other revenue increased 5% to $21,584,000 in the three
months ended December 31, 1997 from $20,516,000 in the three months ended
December 31, 1996. For the six months ended December 31, 1997 equipment sales
and other revenue increased 2% to $40,416,000 from $39,431,000 in the six months
ended December 31, 1996. Sales by product line are summarized as follows:
Revenues by Product
(in thousands)
Three Months Ended Six Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
------------------------- -------------------------
X-ray densitometry $16,253 $16,902 $29,110 $32,187
Ultrasound densitometry 1,381 1,597 2,708 2,786
Orthopedic Imaging 2,180 1,085 4,874 2,266
Service Revenue 1,361 614 2,768 1,417
Other 409 318 956 775
------------------------- -------------------------
$21,584 $20,516 $40,416 $39,431
========================= =========================
The decrease in x-ray densitometry sales may have been influenced by
customer uncertainty in the United States over Medicare reimbursement rates.
The preliminary 1998 axial reimbursement rates that were published in mid-1997
were significantly lower than the 1997 rates. However, when the final 1998
rates were published, the Health Care Financing Administration (HCFA) actually
increased the 1998 rates to $131 from $121 in 1997. The increase in Orthopedic
Imaging sales is primarily due to increased unit sales of Artoscan dedicated MRI
and Orthopedic C-Arm (ORCA) systems. The increase in service revenue is
primarily due to the growing installed base of densitometers in the United
States.
Cost of sales as a percentage of equipment sales averaged approximately 46%
in the three and six month periods ended December 31, 1997, compared to 44% in
the three and six month periods ended December 31, 1996. The increase is the
result of a higher mix of orthopedic imaging equipment which have lower gross
profit margins and a somewhat lower average sell price for densitometers.
Research and development expenditures increased to $1,747,000 in the three
months ended December 31, 1997 from $1,425,000 in the three months ended
December 31, 1996 and increased to $3,367,000 in the six months ended December
31, 1997 from $2,585,000 in the six months ended December 31, 1996. The Company
increased research and development expenditures for ultrasound and peripheral
X-ray densitometry products during the three and six month periods ended
December 31, 1997.
Sales and marketing expenses were $4,678,000 in the three months ended
December 31, 1997, compared to $4,406,000 in the three months ended December 31,
1996, representing an increase to 22% from 21% as a percentage of equipment
sales. For the six months ended December 31, 1997, sales and marketing expenses
were $9,223,000 compared to $8,374,000 for the six month ended December 31,
1996, representing an increase to 23% from 21% as a percentage of equipment
sales. These increases are primarily the result of a higher mix of sales
directly to international end-users, whereby the Company pays agent commissions.
General and administration expenses decreased to $1,065,000 in the three
months ended December 31, 1997 from $1,106,000 in the three months ended
December 31, 1996, and decreased to $2,199,000 in the six months ended December
31, 1997 from $2,226,000 in the six months ended December 31, 1996.
Interest income was $477,000 and $956,000 in the three and six months ended
December 31, 1997, respectively, compared to $365,000 and $708,000 in the three
and six months ended December 31, 1996, respectively. This increase is
primarily the result of increased investments in marketable securities partially
offset by decreases in the amount of financed receivables.
The effective tax rate averaged 33% in the three and six month periods
ended December 31, 1997 compared to 34% in the three and six month period ended
December 31, 1996. The effective tax rate is lower in the three and six month
periods ended December 31, 1997 versus the comparable prior year period due to
increased tax exempt interest income. The rate for the three and six month
periods ended December 31, 1997 is below the 34% federal statutory rate as a
result of tax-exempt interest income and the benefit of the foreign sales
corporation, offset by the provision for state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $9,719,000 to $4,698,000 in the six
months ended December 31, 1997 primarily due to the purchase of marketable
securities. Additionally, the Company has a laddered portfolio of high-grade
municipal bonds with various maturities not exceeding 48 months. The Company
owned approximately $34,745,000 in municipal securities as of December 31, 1997,
which are readily marketable.
The Company's trade accounts receivable decreased $217,000 to $28,798,000
at December 31, 1997 from $29,015,000 at June 30, 1997. This decrease is
attributable to the sale of approximately $4,232,000 of accounts receivable from
selected customers in Latin America to a leasing company in December, 1997. The
Company continues to have recourse of approximately 10% of the sales price in
the event non-payment of the underlying accounts receivable should occur.
Inventories increased 42% to $13,355,000 at December 31, 1997 from
$9,373,000 at June 30, 1997. The increase in finished goods is primarily
attributable to increases in Artoscan MRI units.
The Company purchased a 25-acre parcel of land in January, 1998 at a price
of $1,949,000 for the future construction of an assembly, warehouse and office
building. The Company plans to begin construction of this new facility in March
1998. Total costs of the building are expected to be approximately $8,000,000.
The Company does not have any other pending material commitments for capital
expenditures.
Management believes the current level of cash and short-term investments is
adequate to finance the Company's operations for the foreseeable future.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code field. To distinguish 21st
century from 20th century dates, these date code fields must be able to accept
four-digit entries. The Company has reviewed its existing financial and other
business information systems and believes that its computer systems will be able
to manage and manipulate all material data involving the transition from 1999 to
2000 without functional or data abnormality and without inaccurate results
related to such data.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
PART II - OTHER INFORMATION
LUNAR CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings
PATENT LITIGATION: On March 5, 1996, the Company and University of Alabama -
Birmingham Research Foundation (UAB) (collectively the co-plaintiffs) sued EG&G
Astrophysics (EG&G) of Long Beach, California, in the United States District
Court for the Western District of Wisconsin for infringement of U.S. Patent
4,626,688 (the '688 Patent) by EG&G's dual-energy baggage scanners. A trial of
the matter in December of 1996 concluded with a verdict in favor of the
co-plaintiffs. The Company and UAB were awarded $4.2 million in damages which
was divided between the co-plaintiffs after deducting legal expenses. The
co-plaintiffs also entered into a Settlement and License Agreement with EG&G
whereby EG&G was licensed under the '688 patent and a related U.S. patent. The
license agreement provides for payment of royalties to the co-plaintiffs on
EG&G's dual-energy baggage scanners manufactured or sold in the United States.
The license agreement ends on December 2, 2003.
The Company is presently co-defendant and counterclaim co-plaintiff with the UAB
in two declaratory judgment actions filed in the United States District Court
for the Central District of California. Both actions seek a determination of
non-infringement and invalidity of the '688 Patent. The first declaratory
judgment action was filed on January 21, 1997 by RapiScan Security Systems,
Inc.("RapiScan"). RapiScan manufactures and sells baggage scanning equipment
and is a competitor of EG&G. The second declaratory judgment action was filed
on February 26, 1997 by Osteometer Meditech A/S ("Osteometer"), a competitor of
the Company. Osteometer manufactures and sells bone densitometry products and
is located in Denmark. The Company intends to vigorously defend against these
lawsuits. The Company does not believe these lawsuits will have a material
effect on the results of operations or financial condition of the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 1997 Annual Meeting of Shareholders ("Annual Meeting") of the Company
was held on November 21, 1997. The total number of shares of the Company's
common stock, $0.1 par value per share, outstanding as of October 10, 1997, the
record date of the Annual Meeting, was 8,737,535. Management of the Company
solicited proxies pursuant to Section 14 of the Securities Exchange Act of 1934,
as amended, and Regulation 14A promulgated thereunder for the Annual Meeting.
Two (2) directors, Malcolm R. Powell and John J. McDonough were elected to serve
until the 2000 Annual Meeting of Shareholders. The directors were elected by a
vote of 7,301,266 votes "FOR" and 17,830 votes "WITHHELD AUTHORITY". On
November 22, 1997, Mr. McDonough resigned from the Board of Directors to pursue
other business opportunities. On December 12, 1997, James W. Nellen, II was
appointed as a Director of the Company to fill the vacancy created by the
resignation of Mr. McDonough. Mr. Nellen is formally a Vice President and
the Corporate General Counsel for Fort Howard Corporation.
An amendment to the Lunar Corporation Amended and Restated Stock Option Plan to
increase the number of shares available under the plan was also approved. The
increase was approved by a vote of 5,215,096 votes "FOR", 649,857 votes
"AGAINST", and 132,088 votes "ABSTAIN". The selection of KPMG Peat Marwick LLP
as the Company's independent auditors was also approved. The selection was
approved by a vote of 7,306,626 votes "FOR", 6,296 votes "AGAINST", and 6,174
votes "ABSTAIN".
Item 5. Other Information
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: Certain statements in this filing, and elsewhere (such as in other
filings by the Company with the Securities and Exchange Commission, press
releases, presentations by the Company or its management, and oral statements)
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance, or achievements of the Company to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, regulation, technical risks associated with the development
of new products, regulatory policies in the United States and other countries,
reimbursement policies of public and private health care payors, introduction
and acceptance of new drug therapies, competition from existing products and
from new products or technologies, and market and general economic factors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits furnished:
(11) Statement Re: Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1997.
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.
LUNAR CORPORATION
(Registrant)
Date: February 13, 1998 /s/ Richard B. Mazess
Richard B. Mazess
President
(Principal Executive Officer)
Date: February 13, 1998 /s/ Robert A. Beckman
Robert A. Beckman
Vice President of Finance
and Treasurer
(Principal Financial and
Accounting Officer)
LUNAR CORPORATION AND SUBSIDIARIES
Exhibit Index
For the Quarterly Period Ended December 31, 1997
No. Description Page
11 Statement Regarding Computation of Earnings Per Share 16
27 Financial Data Schedule 17
Exhibit 11
LUNAR CORPORATION AND SUBSIDIARIES
Statement Regarding Computation of Earnings Per Share
(Unaudited)
Three months ended Six months ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
------------------------------------------------------
Net income $ 2,728,730 $ 4,545,488 $ 4,741,723 $ 7,446,450
Weighted average number
of common shares 8,759,643 8,555,430 8,737,739 8,534,661
Stock options calculated
according to the treasury
stock method 350,206 520,886 373,334 539,120
------------------------------------------------------
Weighted average number
of common and potential
common shares 9,109,849 9,076,316 9,111,073 9,073,781
======================================================
Basic earnings per share $0.31 $0.53 $0.54 $0.87
======================================================
Diluted earnings per share $0.30 $0.50 $0.52 $0.82
======================================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the three months ended
December 31, 1997, and is qualified in its entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 4,698
<SECURITIES> 34,745
<RECEIVABLES> 31,468
<ALLOWANCES> 2,670
<INVENTORY> 13,355
<CURRENT-ASSETS> 54,296
<PP&E> 9,101
<DEPRECIATION> 4,394
<TOTAL-ASSETS> 88,787
<CURRENT-LIABILITIES> 13,801
<BONDS> 0
<COMMON> 88
0
0
<OTHER-SE> 74,898
<TOTAL-LIABILITY-AND-EQUITY> 88,787
<SALES> 40,416
<TOTAL-REVENUES> 40,416
<CGS> 18,706
<TOTAL-COSTS> 33,495
<OTHER-EXPENSES> 839
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,038
<INCOME-TAX> 2,296
<INCOME-CONTINUING> 4,742
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,742
<EPS-PRIMARY> .54
<EPS-DILUTED> .52
</TABLE>
