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
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-18805
ELECTRONICS FOR IMAGING, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3086355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2855 Campus Drive, San Mateo, CA 94403
(Address of principal executive offices, including zip code)
(415) 286-8600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
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 [ ]
The number of shares of Common Stock outstanding as of March 31, 1997 was
51,776,942.
An Exhibit Index can be found on Page 13.
<PAGE>
<TABLE>
ELECTRONICS FOR IMAGING, INC.
INDEX
<CAPTION>
Page No.
<S> <C>
PART I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Income
Three Months Ended March 31, 1997 and 1996 ............................................3
Condensed Consolidated Balance Sheets
March 31, 1997 and December 31, 1996 .............................................4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 .......................................5
Notes to Condensed Consolidated Financial Statements ..................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................................................7
Item 3. Not Applicable............................................................................12
PART II - Other Information
Items 1 - 5. Not Applicable ...........................................................................13
Item 6. Exhibits and Reports on Form 8-K .........................................................13
Signatures .................................................................................................15
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
ELECTRONICS FOR IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
-----------------------------------------
March 31, March 31,
1997 1996
-------------- -------------
<S> <C> <C>
Revenue $ 91,006 $ 63,649
Cost of revenue 41,093 33,243
-------------- -------------
49,913 30,406
-------------- -------------
Operating expenses:
Research, development and contract costs 8,126 4,155
Sales and marketing 9,558 5,860
General and administrative 2,873 2,366
-------------- -------------
20,557 12,381
-------------- -------------
Income from operations 29,356 18,025
Other income, net 2,563 1,659
-------------- -------------
Income before income taxes 31,919 19,684
Provision for income taxes 11,491 7,087
-------------- -------------
Net income $ 20,428 $ 12,597
============== =============
Net income per share $ 0.37 $ 0.23
============== =============
Shares used in computing net income per share 55,740 53,986
============== =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
ELECTRONICS FOR IMAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
March 31, December 31,
1997 1996
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 93,806 $ 71,946
Short-term investments 142,115 140,154
Accounts receivable 47,937 40,875
Inventories 12,955 11,004
Other current assets 32,572 22,970
---------- ---------
Total current assets 329,385 286,949
Property and equipment, net 10,743 10,640
Other assets 1,357 1,364
---------- ---------
Total assets $ 341,485 $ 298,953
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,936 $ 16,355
Accrued and other liabilities 28,763 25,980
Income taxes payable 16,282 7,248
---------- ----------
Total current liabilities 69,981 49,583
---------- ----------
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares
authorized; none issued and outstanding -- --
Common Stock, $.01 par value, 150,000,000 shares
authorized; 51,776,942 and 51,503,314 shares issued
and outstanding, respectively 518 515
Additional paid-in capital 114,363 112,660
Retained earnings 156,623 136,195
---------- ----------
Total stockholders' equity 271,504 249,370
---------- ----------
Total liabilities and stockholders' equity $ 341,485 $ 298,953
========== ==========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
ELECTRONICS FOR IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 20,428 $ 12,597
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,441 786
Changes in operating assets and liabilities:
Accounts receivable (7,062) (9,261)
Inventories (1,951) 1,132
Other current assets (9,602) (616)
Accounts payable and accrued liabilities 11,364 7,675
Income taxes payable 9,034 3,832
-------------- -------------
Net cash provided by operating activities 23,652 16,145
-------------- -------------
Cash flows from investing activities:
Purchase of short-term investments (36,097) (73,918)
Sales and maturities of short-term investments 34,136 50,004
Purchases of property and equipment, net (1,544) (1,670)
Other assets 7 (64)
-------------- --------------
Net cash used for investing activities (3,498) (25,648)
-------------- -------------
Cash flows from financing activities:
Issuance of common stock related to stock plans 1,706 335
-------------- -------------
Net cash provided by financing activities 1,706 335
-------------- -------------
Net change in cash and cash equivalents 21,860 (9,168)
Cash and cash equivalents at beginning of period 71,946 46,006
-------------- -------------
Cash and cash equivalents at end of period $ 93,806 $ 36,838
============== =============
Supplemental disclosure - cash paid for income taxes $ 2,473 $ 3,057
============== =============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
ELECTRONICS FOR IMAGING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
1. Basis of Presentation
The unaudited interim condensed consolidated financial statements of
Electronics for Imaging, Inc. (the Company) as of and for the interim
period ended March 31, 1997, have been prepared on the same basis as
the audited consolidated financial statements as of and for the year
ended December 31, 1996, contained in the Company's Annual Report to
Stockholders, and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary
to present fairly the financial position of the Company and the results
of its operations and cash flows, in accordance with generally accepted
accounting principles. The interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto referred to above.
The preparation of the interim condensed consolidated financial
statements in conformity with generally accepted accounting principles
for such financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities as of the date of
the interim condensed consolidated financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from these estimates.
The interim results of the Company are subject to fluctuation. As a
result, the Company believes the results of operations for the interim
period ended March 31, 1997 are not necessarily indicative of the
results to be expected for any other interim period or the full year.
2. Stock Split
The Company effected on February 20, 1997, a two-for-one stock split in
the form of a stock dividend payable to stockholders of record as of
February 10, 1997. All references in the condensed consolidated
financial statements to weighted average numbers of shares outstanding
and per share amounts have been restated to reflect the stock split.
6
<PAGE>
<TABLE>
3. Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share." This statement is effective for the Company's fiscal year
ending December 31, 1997. The Statement redefines earnings per share
under generally accepted accounting principles. Under the new standard,
primary earnings per share is replaced by basic earnings per share and
fully diluted earnings per share is replaced by diluted earnings per
share. If the Company had adopted this Statement as of the beginning of
1996, earnings per share for the three month period ended March 31,
1997 and March 31, 1996 would have been as follows:
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1996 March 31, 1997
-------------- -------------
<S> <C> <C>
Basic earnings per share $0.25 $0.40
Diluted earnings per share $0.23 $0.37
</TABLE>
<TABLE>
4. Inventory Composition
<CAPTION>
March 31, December 31,
1997 1996
-------------- -------------
<S> <C> <C>
Raw materials $ 10,061 $ 6,696
Work-in-process 1,277 3,374
Finished goods 1,617 934
-------------- -------------
$ 12,955 $ 11,004
=============== ==============
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
audited consolidated financial statements of Electronics for Imaging, Inc. (the
Company) and related notes thereto contained in the Company's 1996 Annual Report
to Stockholders. All assumptions, anticipations, expectations and forecasts
contained herein are forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. For a more complete discussion of factors which might impact the
Company's results, please see the section entitled "Factors that Could Adversely
Affect Performance" below and the section entitled "Risk Factors" in the
Company's 1996 Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission. The Company periodically reviews such factors to ensure
their appropriateness.
Results of Operations
Revenue
The Company's revenue was $91.0 million in the first quarter of 1997, compared
to $63.6 million in the corresponding quarter of 1996. The substantial majority
of the Company's revenue to date is attributable to the sale of Fiery, Fiery XJ
Color Servers and Fiery XJe Controllers. The increase in revenue reflects
continued market acceptance of the Company's Fiery XJ Color Server and Fiery XJe
Controller products, the expansion of the Company's sales and marketing
organizations, and increased revenue from the Company's OEM sales channels due
to the above-mentioned market acceptance and an increase in the number of the
Company's OEM partners. Substantially all of the Company's sales in the first
quarter of 1997 and 1996 were to its OEM partners. No assurance can be given
that the Company's relationships with these OEM partners will continue; in the
event that any of such relationships is discontinued or scaled back, the Company
could experience a significant negative impact on its consolidated financial
position and results of operations.
The Company completed in the fourth quarter of 1995 an agreement with Canon Inc.
for the purchase of Fiery XJ Color Servers. The agreement provides Canon
exclusive distribution rights for Fiery XJ Color Servers designed for Canon's
proprietary color copiers. The agreement effectively replaced the Company's
existing distribution channel through the Canon dealer and distributor network
beginning in April 1995 with shipments to Canon under the terms of a letter of
intent preceding the agreement. This arrangement has resulted to some extent in
lower associated selling and marketing costs. During the first quarter of 1997,
the agreement with Canon expired, but the parties have extended the agreement
for an additional quarter. The Company expects to finalize the terms of the new
agreement in due course and is continuing the relationship with Canon under the
terms of the original agreement. No assurance can be given that the Company will
be able to successfully complete the agreement under terms considered favorable
to the Company. If the agreement with Canon is not signed, the Company's
operating results could be adversely affected, as it would have to transition
back to sales through Canon dealers and distributors worldwide. The Company
sells Fiery XJ Color Server products to each of its significant OEM partners
under similar agreements.
8
<PAGE>
The Company completed agreements in the first quarter of 1996 with Canon and
Digital Equipment Corporation, and in the second quarter of 1996 with IBM
Corporation, under which these companies are producing desktop color laser
printers using the Company's Fiery XJe Controller. The Fiery XJe Controller is
an embedded controller which, when combined with a specified color laser engine,
results in a desktop color laser printer with superior speed and output quality.
International revenue continued to grow in the first quarter of 1997, and was
affected by sales mix and certain OEM product requirements. Direct sales into
Japan accounted for approximately 20% and 14% of revenue in the first quarter of
1997 and 1996, respectively. This increase is partly due to a greater level of
purchases by the Company's OEM partners of Fiery XJ products and is also a
result of sales of Fiery XJe product to Canon in Japan. Sales into Europe
accounted for approximately 25% and 24% of revenue in the first quarter of 1997
and 1996, respectively. Further, shipments to some of the Company's OEM partners
are made to centralized purchasing and manufacturing locations which in turn
sell through to foreign locations. As a result of these factors, the Company
believes that sales of its products into Europe and Japan may actually be
higher, though accurate data is difficult to obtain. The Company expects that
international revenue will continue to represent a significant portion of its
total revenue.
During 1996, the Company introduced new generations of its Fiery XJ platform,
including the Fiery XJ+ series of color servers, and broadened its product
lines, including a Fiery XJ+ 500 series of high-speed servers for 40
pages-per-minute color copiers, the Fiery XJ-W, a server for wide-format
printers, and a low-end Fiery SI series for the under-$10,000 market. These
product offerings were introduced in the latter half of 1996 and, while the
initial response has been favorable, it is too soon to assess the extent of
market acceptance. The Company continues to work on the development of products
utilizing the Fiery XJ architecture and other products and intends to continue
to introduce new generations of Fiery Products and other new product lines in
1997.
Cost of Revenue
The substantial majority of the Company's cost of revenue to date has been
attributable to the sale of Fiery and Fiery XJ Color Servers. Fiery XJ Color
Servers are manufactured by third-party manufacturers who purchase most of the
necessary components. The Company sources directly proprietary memory and
certain ASIC components, and software licensed from various sources, including
PostScript interpreter software, which the Company licenses from Adobe Systems,
Inc. The Company's gross margin was 54.8% in the first quarter of 1997, up from
47.8% in the corresponding quarter of 1996. Overall gross margin in the first
quarter of 1997 continued to be supported by low market prices for DRAM
components used in the Company's products and other reductions in manufacturing
costs. Further, gross margin was favorably impacted by the mix of products sold.
9
<PAGE>
The Company's gross margin depends in part on prices it is able to attain on
Fiery XJ Color Servers, Fiery XJe Controllers and future products. The lower
manufacturing costs of the Fiery XJ Color Servers have given the Company
flexibility to offer products with a broad range of prices. In addition, as the
Company continues to introduce new Fiery products, it may continue to lower
prices on existing products. Embedded Fiery Controllers for desktop color
printers will continue to have lower margins than the Company's other products,
reflecting the different distribution and marketing practices employed for
desktop color laser printers. Accordingly, if embedded Fiery Controllers for
desktop color printers increase as a percentage of revenue, the Company's
overall gross margin is expected to decline, all other things being equal. In
general, gross margin will continue to be impacted by a variety of factors
including, among others, the availability and pricing of key components
(including DRAMs and PostScript interpreter software), product, channel and
geographic mix, the success of the Company's product transitions and new
products, competition, and general economic conditions. The Company expects to
continue to take steps to reduce product costs, expand product offerings and
control operating expenses; however, no assurance can be given that these
efforts will be successful.
Operating Expenses
Research and Development. Expenses for research and development consist
primarily of personnel expenses and, to a lesser extent, consulting services,
costs of prototype materials and technology, and depreciation. Research and
development expenses were $8.1 million or 8.9% of revenue in the first quarter
of 1997, compared to $4.2 million or 6.5% of revenue in the corresponding
quarter of 1996. Research and development expenses increased primarily due to
incremental costs related to the number of engineers employed. The Company
believes that the development of new products and enhancement of existing
products is essential to its continued success, and management intends to
continue to devote substantial resources to research and new products. The
Company expects that its research and development expenses may increase in
absolute dollars and possibly also as a percentage of revenue.
Sales and Marketing. Such expenses include personnel expenses, tradeshows and
promotional expenses, sales commissions, travel, public relations, and
depreciation and facility costs associated with offices in the United States,
Europe and Japan. Sales and marketing expenses were $9.6 million or 10.5% of
revenue in the first quarter of 1997, compared to $5.9 million or 9.2% of
revenue in the corresponding quarter of 1996. Sales and marketing expenses
increased as a percentage of total revenue due primarily to increases in
employee headcount and costs required for the promotion and support of the
Company's existing and new products. The Company expects that its sales and
marketing expenses may increase in absolute dollars and also as a percentage of
revenue as it continues to actively promote its products, launch new Fiery
models and other products, and continue to build its sales and marketing
organization.
General and Administrative. Such expenses consist primarily of personnel
expenses and, to a lesser extent, professional fees, expenses required of a
public company, and depreciation and facility costs. General and administrative
expenses were $2.9 million or 3.2% of revenue in the first quarter of 1997,
compared to $2.4 million or 3.7% of revenue in the corresponding quarter of
1996. While general and administrative expenses decreased as a percentage of
total revenue, these expenses have increased in absolute dollars. The increases
were primarily due to the addition of personnel to support the Company's
operations. The Company expects that its general and administrative expenses may
increase in absolute dollars and possibly also as a percentage of revenue in
order to support any growth in operations.
10
<PAGE>
Income Taxes
The Company's effective tax rate was 36.0% for the first quarter of 1997 and
1996. In each period the Company benefited from increased tax-exempt interest
income, increases in foreign sales and to a lesser extent the utilization of
research and development credits in achieving a consolidated effective tax rate
lower than that prescribed by the respective taxing authorities. The Company
anticipates that these benefits will continue to have a favorable impact on the
Company's consolidated effective tax rate.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments increased to $235.9 million as
of March 31, 1997, up from $212.1 million as of December 31, 1996. Working
capital increased to $259.4 million as of March 31, 1997, up from $237.4 million
as of December 31, 1996. Net cash provided by operating activities was $23.7
million and $16.1 million for the three-month periods ended March 31, 1997 and
1996, respectively, primarily as a result of profitable operations in both
periods. The Company purchased approximately $1.5 million of capital equipment
and furniture during the three month period ended March 31, 1997, compared to
purchases of $1.7 million in the corresponding period of 1996.
The Company is working with the City of Foster City to purchase land for a
corporate campus on a 35-acre parcel in Foster City. The anticipated purchase
price of this parcel is approximately $24.5 million. The Company anticipates
funding this purchase during 1997.
The Company believes that its existing capital resources together with cash
generated from continuing operations will be sufficient to fund its operations
and meet capital requirements through at least 1998.
Factors That Could Adversely Affect Performance
The following may impact the Company's future performance and financial results:
Product Transitions. Delays in the launch or availability of new product models
could have an adverse effect on the Company's financial results. Product
transitions also carry the risk that customers will delay or cancel orders for
existing models pending shipments of new models. If the Company is not able to
successfully manage future product transitions or cannot guarantee the
availability of products, its results of operations could be adversely affected.
New Product Introductions. The Company continues to look at opportunities to
develop product lines distinct from the Fiery XJ Color Server. Such new products
may require the investment of capital for the development of new distribution
and marketing channels, at an unknown cost to the Company. There can be no
guarantee that the Company would be successful the development of such channels
or that any new products will gain market acceptance. Further, new products may
directly impact the sales of the Company's Fiery XJ products. If the Company is
not able to successfully manage the introduction of new products, its results of
operations could be adversely affected.
11
<PAGE>
Competition. The Company has seen competition in the market from companies and
products that provide similar functionality and believes that such competition
will continue and may intensify. There can be no assurance that the Company will
be able to continue to successfully compete against other companies' product
offerings.
Fiery XJe. The Company is currently selling the Fiery XJe Controller to Canon,
IBM and Digital under OEM agreements. No assurance can be given that the Company
will continue to recognize significant revenue from such sales or that the
Company will be successful in further marketing this product to other OEM
partners or other parties.
Reliance on OEM Partners. No assurance can be given that the Company will
continue to supply products to each of its current OEM partners. In the event
that an OEM partner discontinues or reduces its level of purchases of Fiery XJ
Color Servers, the Company would experience a significant negative impact on its
consolidated financial position and results of operations.
Fluctuations in Operating Results. Operating results may fluctuate due to
factors such as demand for the Company's products, success and timing of the
introduction of new products, price reductions by the Company and its
competitors, delay, cancellation or rescheduling of orders, product performance,
seasonal purchasing patterns of its OEM partners, performance of third-party
manufacturers, product inventory levels, availability of key components for the
Company's products, the status of the Company's relationships with its OEM
partners and Adobe, among others, the Company's ability to develop and market
new products, the timing and amount of sales and marketing expenditures, and the
general demand for color copiers and color laser printers.
Limited Backlog. The Company typically does not obtain long-term volume purchase
contracts from its customers, and a substantial portion of the Company's backlog
is scheduled for delivery within 90 days or less. Customers may cancel orders
and change volume levels or delivery times without penalty. Quarterly sales and
operating results therefore depend on the volume and timing of the backlog as
well as bookings received during the quarter. A significant portion of the
Company's operating expenses are fixed, and planned expenditures are based
primarily on sales forecasts and product development programs. If sales do not
meet the Company's expectations in any given period, the adverse impact on
operating results may be magnified by the Company's inability to adjust
operating expenses sufficiently or quickly enough to compensate for such a
shortfall.
Volatility of Stock Price. Due to various factors, including those noted above,
the Company's future earnings and stock price may be subject to significant
volatility, particularly on a quarterly basis. Any shortfall in revenue or
earnings from levels expected by securities analysts could have an immediate and
significant adverse effect on the trading price of the Company's common stock in
any given period. The Company participates in a highly dynamic industry, which
often results in significant volatility for the Company's common stock price.
ITEM 3. NOT APPLICABLE
12
<PAGE>
PART II OTHER INFORMATION
ITEMS 1 - 5.
There is no applicable information to report under Part II, Items 1 - 5 during
the period covered by this report.
<TABLE>
<CAPTION>
ITEM 6. Exhibits and Reports on Form 8-K
<S> <C>
(a) Exhibits
Exhibit 11.1 Statement re Computation of per Share Earnings.............. Page 14
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the three-month period ended March 31, 1997.
</TABLE>
13
<PAGE>
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.
ELECTRONICS FOR IMAGING, INC.
Date: May 7, 1997
By /s/ Dan Avida
----------------------------------------
Dan Avida
President and Chief Executive Officer
and Acting Principal Financial Officer
By /s/ Eric Saltzman
----------------------------------------
Eric Saltzman
Vice President, Strategic Relations
and Duly Authorized Officer
14
EXHIBIT 11.1
<TABLE>
ELECTRONICS FOR IMAGING, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (1)
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
------------------------------
1997 1996 (2)
------------- --------------
<S> <C> <C>
Net income for purposes of computing net income per share $ 20,428 $ 12,597
============= ==============
Weighted average common shares outstanding 51,640 50,074
Weighted common equivalent shares from options (3) 4,100 3,912
------------- --------------
Weighted average common shares and equivalents 55,740 53,986
============= ==============
Net income per share $ 0.37 $ 0.23
============= ==============
<FN>
(1) This Exhibit should be read in conjunction with "Summary of Significant
Accounting Policies - Net Income per Share" in Note 1 of Notes to
Consolidated Financial Statements, contained in the Company's 1996 Annual
Report to Stockholders.
(2) All per share data and shares used in computing net income per share have
been restated to reflect the Company's two-for-one stock split. See Note
2 of Notes to Condensed Consolidated Financial Statements.
(3) Computed using the treasury stock method. The difference between primary
net income per share and fully diluted net income per share is not
significant.
</FN>
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the condensed balance sheet, condensed statement of operations and
condensed statement of cash flows included in the Company's Form
10-Q for the three month period ended March 31, 1997 and is
qualified in its entirety by reference to such financial statements
and the notes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 93,806
<SECURITIES> 142,115
<RECEIVABLES> 49,765
<ALLOWANCES> 1,828
<INVENTORY> 12,955
<CURRENT-ASSETS> 329,385
<PP&E> 27,353
<DEPRECIATION> 16,610
<TOTAL-ASSETS> 341,485
<CURRENT-LIABILITIES> 69,981
<BONDS> 0
0
0
<COMMON> 518
<OTHER-SE> 270,986
<TOTAL-LIABILITY-AND-EQUITY> 341,485
<SALES> 91,006
<TOTAL-REVENUES> 91,006
<CGS> 41,093
<TOTAL-COSTS> 41,093
<OTHER-EXPENSES> 20,557
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,919
<INCOME-TAX> 11,491
<INCOME-CONTINUING> 31,919
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,919
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.37
</TABLE>
