<PAGE>
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the quarterly period ended July 27, 1996
Commission File Number 0-19558
CENTIGRAM COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2418021
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
91 East Tasman Drive
San Jose, California 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: (408) 944-0250
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
----- -----
The number of outstanding shares of the Registrant's Common Stock as of August
23, 1996 was 6,888,000.
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Centigram Communications Corporation
Consolidated Balance Sheets
(In thousands, except share and per share data)
July 27, October 28,
1996 1995
----------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $ 9,752 $ 10,633
Short-term investments 31,398 45,082
Accounts and notes receivable, net 27,285 18,330
Inventories 10,236 5,821
Deferred taxes, net 2,103 2,103
Other current assets 2,163 1,505
----------- ----------
Total current assets 82,937 83,474
Property and equipment, net 14,276 12,013
Intangible assets, net 2,097 2,379
Deposits and other assets 1,197 1,151
----------- ----------
$ 100,507 $ 99,017
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,364 $ 6,953
Accrued compensation 3,604 4,092
Accrued expenses and other liabilities 7,045 7,940
----------- ----------
Total current liabilities 19,013 18,985
Capital lease and long-term obligations 118 232
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value,
25,000,000 authorized; 6,887,000
and 6,679,000 outstanding 7 7
Note receivable from officer (300) ---
Additional paid-in capital 87,966 85,808
Accumulated deficit (6,086) (5,992)
Unrealized loss on investments (182) (14)
Cumulative translation adjustment (29) (9)
----------- ----------
Total stockholders' equity 81,376 79,800
----------- ----------
$ 100,507 $ 99,017
----------- ----------
----------- ----------
See accompanying notes.
2
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CENTIGRAM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts-unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
July 27, July 29, July 27, July 29,
1996 1995 1996 1995
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net revenue $ 26,500 $ 17,570 $ 75,046 $ 48,936
Costs and expenses:
Costs of goods sold 9,411 6,242 27,566 15,639
Research and development 5,114 3,814 14,649 10,831
Selling, general and administrative 11,875 9,666 34,550 26,845
---------- ---------- --------- ---------
26,400 19,722 76,765 53,315
---------- ---------- --------- ---------
Operating income (loss) 100 (2,152) (1,719) (4,379)
Other income, net 610 549 1,681 1,606
---------- ---------- --------- ---------
Income (loss) before income taxes 710 (1,603) (38) (2,773)
Provision for income taxes 0 80 56 0
---------- ---------- --------- ---------
Net income (loss) $ 710 $ (1,683) $ (94) $ (2,773)
---------- ---------- --------- ---------
---------- ---------- --------- ---------
Net income (loss) per share $ 0.10 $ (0.26) $ (0.01) $ (0.42)
---------- ---------- --------- ---------
---------- ---------- --------- ---------
Common and common equivalent shares
used in computing per share amounts 6,958 6,590 6,800 6,535
---------- ---------- --------- ---------
</TABLE>
See accompanying notes
3
<PAGE>
Centigram Communications Corporation
Consolidated Statements of Cash Flows
(In thousands--unaudited)
Nine Months Ended
July 27, July 29,
1996 1995
---------- ----------
Cash and equivalents, beginning of period $ 10,633 $ 10,836
Cash flows from operations:
Net loss (94) (2,773)
Depreciation and amortization 5,500 3,844
Accounts and notes receivable (8,955) 5,684
Inventories (4,415) 404
Other assets (704) (173)
Accounts payable 1,411 (849)
Accrued expenses and other liabilities (1,357) (150)
---------- ----------
(8,614) 5,987
---------- ----------
Cash flows from investing:
Purchase of short-term investments (62,134) (41,826)
Proceeds from sales and maturities of
short-term investments 75,650 44,964
Purchase of property and equipment (7,501) (6,268)
Purchase of intangible assets - (1,350)
---------- ----------
6,015 (4,480)
---------- ----------
Cash flows from financing:
Proceeds from sale of common stock, net of
issuance costs 2,158 2,344
Note receivable from officer (300) -
Principal payments on capital leases
and long-term obligations (140) (300)
---------- ----------
1,718 2,044
---------- ----------
Cash and equivalents, end of period $ 9,752 $ 14,387
---------- ----------
---------- ----------
See accompanying notes.
4
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Centigram Communications Corporation
Notes to Consolidated Financial Statements
(unaudited)
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by the
Company without audit and reflect all adjustments (consisting of normal
recurring adjustments) which are, in the opinion of management, necessary to
reflect a fair statement of the results for the interim periods. For further
information, refer to the audited Consolidated Financial Statements and
footnotes thereto incorporated by reference in the Company's Annual Report on
Form 10-K for the fiscal year ended October 28, 1995.
On August 1, 1995 the Company changed its fiscal year from a fiscal year-end on
the Saturday following September 30 to a fiscal year of 52 or 53 weeks ending on
the Saturday nearest October 31. Because of this change, results for the third
quarter and first nine months of fiscal 1995 previously reported on Form 10-Q
have been restated to the three month and nine month periods ended July 29,
1995.
The results of operations for the quarter and nine months ended July 27, 1996
may not necessarily be indicative of the results for the fiscal year ending
November 2, 1996 or any future period.
INVENTORIES
Inventories consisted of (in thousands):
July 27, October 28,
1996 1995
--------- ----------
Raw materials $ 3,354 $ 2,516
Work-in-process 3,446 2,010
Finished goods 3,436 1,295
--------- ----------
$ 10,236 $ 5,821
--------- ----------
--------- ----------
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Centigram Communications Corporation
RESULTS OF OPERATIONS
Net revenue for the third quarter of fiscal 1996 ended July 27, 1996 was 51%
higher than net revenue for the corresponding quarter of fiscal 1995 and 8%
above net revenue for the second quarter of 1996. The increase in net revenue
from the third quarter of 1995 reflects higher sales in all segments, including
higher sales to both service provider and customer premises equipment (CPE)
customers, higher sales of large system products, higher sales of system upgrade
and expansion products, and higher sales to both domestic and export customers.
Export sales involve certain risks. (see Certain Trends and Uncertainties) Net
revenue for the quarter also included significant sales of the Company's
recently introduced Series 6 product line, offset in part by lower sales of
earlier generations of products. The increase in net revenue from the second
quarter of fiscal 1996 reflects higher sales of system upgrade and expansion
products and higher sales to export and service provider customers, offset in
part by lower sales to domestic and CPE customers.
Net revenue for the first nine months of fiscal 1996 was 53% higher than net
revenue for the comparable 1995 period reflecting higher sales of both large and
small system products, higher sales to both CPE and service provider customers,
and higher domestic and export sales. There can be no assurance that the market
for voice processing products will grow in future periods at its historical
percentage rate or that certain market segments will not decline. Further,
there can be no assurance that the Company will be able to increase or maintain
its market share in the future or to achieve historical growth rates. (See
Certain Trends and Uncertainties)
Gross margin was 64% of net revenue in the third quarter of fiscal 1996 and the
corresponding quarter of 1995, and was 60% in the second quarter of 1996. The
comparison with the third quarter of 1995 reflects higher margins on small
system products and a higher percentage of sales being represented by large
system products which carry higher margins than smaller system products. These
factors were offset by lower margins on large system products, a higher
percentage of sales being represented by small system products (which typically
carry lower margins), higher duty costs related to the Company's export
business, and higher provisions for obsolete inventory. The higher gross margin
in the third quarter of 1996 as compared to the second quarter of 1996 reflects
higher margins on system upgrade and expansion products and lower retrofit
provisions, offset in part by lower margins on large system products and higher
provisions for obsolete inventory. Gross margin for the first nine months of
fiscal 1996 was 63% of net revenue as compared to 68% in the first nine months
of 1995. This comparison reflects lower margins on large system products and
higher charges for warranty, retrofit and duties, offset in part by higher
margins and a lower sales mix of small system products.
6
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The Company's gross margin can be affected by a number of factors, including
changes in product or distribution channel mix, cost and availability of parts
and components, and competitive pressures on pricing. The Company has
experienced increasing pricing pressure in all market segments, in particular
competition with its smaller product configurations from PC-based systems, as
well as increasing price competition with its larger system configurations in
recent periods. The Company expects this pricing pressure to continue. In
addition, the Company anticipates continuing to offer price incentives for
customers to upgrade from prior generations of the Company's products to Series
6 products. Further, distributors purchase products at discounts, and the
Company's margins can therefore vary depending upon the mix of distributor and
direct end user sales in any particular fiscal period. The Company anticipates
that this mix will continue to fluctuate in future periods. Gross margins are
also dependent on discounts selectively provided to customers in competitive
sales situations. As a result of the above factors, gross margin fluctuations
are difficult to predict, and gross margins may decline from current levels in
future periods. (See Certain Trends and Uncertainties)
Research and development (R&D) expenses increased 34% in the third quarter of
fiscal 1996 as compared to the corresponding quarter of 1995 and were 3% above
R&D expenses for the second quarter of 1996. The increases in R&D expenses
reflect general expansion of the Company's product development programs
including staffing and depreciation. The same factors resulted in R&D expenses
for the first nine months of 1996 increasing 35% above the comparable 1995
period. R&D expenses represented 19%, 22%, and 20% of net revenue,
respectively, in the third quarter of 1996, the third quarter of 1995, and the
first nine months of 1996. The Company believes that ongoing development of
new products and features is required to maintain and enhance its competitive
position. The Company is continuing major product development programs that
have caused substantial increases in R&D expenses, and the Company expects such
higher expense levels to continue, notwithstanding the level of revenue realized
in future quarters. Accordingly, while the Company intends to seek to control
expenses where possible in forthcoming quarters, its R&D expenses may continue
to increase.
Selling, general and administrative (SG&A) expenses for the third quarter of
fiscal 1996 were 23% above SG&A expenses in the third quarter of 1995 and 1%
above such expenses in the second quarter of 1996 and for the first nine months
of 1996 were 29% above the comparable period in 1995. These increases in SG&A
expenses reflect increased sales and general expansion of the Company's support
programs, including increases in salaries, commissions and travel, offset in
part as compared to the 1995 periods by lower litigation expenses. SG&A
expenses represented 45%, 55%, and 46% of net revenue, respectively in the third
quarter of 1996, the third quarter of 1995, and the first nine months of 1996.
The Company believes that continued investments in sales, marketing and customer
support, particularly in export markets, are essential to maintaining its
competitive position. Accordingly, while the Company intends to seek to control
expenses where possible in forthcoming quarters, SG&A expenses may increase in
future periods.
The Company did not record a tax provision for the third quarter of fiscal 1996
because on a cumulative basis the Company incurred losses through the first nine
months of fiscal 1996. The Company did not record a tax benefit at the
statutory rate for the loss before income taxes
7
<PAGE>
incurred for the first nine months of fiscal 1996 and 1995 because deferred tax
assets based on recoverable income taxes were recorded in prior periods.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of fiscal 1996, the Company used $8,614,000 in cash
for operating activities, primarily for higher receivables and inventories,
offset in part by income before depreciation and amortization and higher
accounts payable. The Company generated $5,987,000 in cash from operations in
the first nine months of 1995, primarily from lower accounts receivable. The
Company used $3,503,000 in cash for operating activities in the third quarter of
fiscal 1996, primarily for accounts receivable and inventories and lower
accounts payable, offset in part by income before depreciation and amortization.
The sum of cash and equivalents and short-term investments declined $14,565,000
during the first nine months of fiscal 1996, reflecting cash used for operating
activities and purchases of property and equipment, offset in part by proceeds
from employee stock programs. At July 27, 1996 the Company had $41,150,000 in
cash and equivalents and short-term investments.
The Company has a $10,000,000 unsecured bank line of credit that expires May 1,
1997. Any borrowings under this line would bear interest at the bank's
reference rate (8.25% at July 27, 1996). The loan agreement requires the
Company to maintain certain financial ratios, minimum working capital, minimum
tangible net worth, and financial performance, and requires the bank's consent
for the payment of cash dividends. There were no borrowings outstanding under
the line as of July 27, 1996.
The Company currently expects to spend a total of approximately $10,000,000 for
capital equipment and leasehold improvements during fiscal 1996. The Company
may finance a portion of these expenditures through leasing arrangements.
The Company currently believes, notwithstanding its loss and accumulated
deficit, that cash generated from operations and available under its line of
credit, together with its existing cash and equivalents and short-term
investments, will be sufficient to support the Company's working capital and
capital equipment purchase requirements at least through the next 12 months.
CERTAIN TRENDS AND UNCERTAINTIES
The Company has in the past experienced and will likely in the future experience
substantial fluctuations in quarterly operating results. The Company generally
has no long-term order commitments from its customers, and a significant portion
of bookings and shipments in any quarter has historically occurred near the end
of the quarter. Accordingly, the Company has historically operated with very
little backlog, and revenue has been difficult to predict. In addition, the
portion of backlog shippable in the next quarter varies over time and the
Company's backlog declined during each of the first three quarters of fiscal
1996. As a result, revenue in future quarters will depend largely on the level
of orders received during such quarters. The
8
<PAGE>
Company has committed to significant investments in new product and channel
development, and has increased its expense levels in these areas notwithstanding
recent revenue levels. Accordingly, there can be no assurances that the Company
will achieve profitability in fiscal 1996.
If new order bookings do not meet expected levels, or if the Company experiences
delays in shipments at the end of a quarter, operating results would be
adversely affected, and these developments may not become apparent to the
Company until near or at the end of a quarter. Net revenue can also be affected
by product sales mix, distribution mix, the size and timing of customer orders
and shipments, customer returns and reserves provided therefore, competitive
pricing pressures, the effectiveness of key distributors in selling the
Company's products, changes in distributor inventory levels, the timing of new
product introductions by the Company and its competitors, regulatory approvals,
and the availability of components for the Company's products, each of which is
difficult to predict accurately. Each of such factors has in the past affected
the Company's quarterly revenue.
A significant portion of the Company's net revenue is attributable to a limited
number of customers. The Company's top five customers, representing a
combination of major distributors and service providers, accounted for
approximately 36%, 42% and 42% of the Company's net revenue in the third quarter
of fiscal 1996, the third quarter of fiscal 1995, and all of fiscal 1995,
respectively, although the Company's five largest customers were not the same in
the three periods. Any material reduction in orders from one or more such
customers or the cancellation or deferral of any significant portion of backlog
could have an adverse effect on net revenue and operating results. Such
concentration of sales typically results in a corresponding concentration of
accounts receivable. Although the Company has established reserves for
uncollectible accounts, the inability of any large customer to pay the Company
could have a material adverse impact on the Company's financial position,
results of operations and cash flows.
Approximately 31% of the Company's sales in the nine months ended July 27, 1996
consisted of sales outside of the United States. The Company's international
sales are subject to a number of risks generally associated with international
sales, including the effect on demand for the Company's products in
international markets as the results of any strengthening or weakening of the
U.S. dollar, the effect of currency fluctuations on consolidated multinational
financial results, state imposed restrictions on the repatriation of funds,
import and export duties and restrictions, the need to modify products for local
markets, and the logical difficulties of managing multinational operations.
The Company's gross margin can be affected by a number of factors, including
changes in product, distribution channel and customer mix, cost and availability
of parts and components, royalty obligations to suppliers of licensed software,
provisions for warranty, retrofits, and excess and obsolete inventory, customer
returns, and competitive pressures on pricing. The Company has experienced
increasing competitive pricing pressure in all markets and expects this pricing
pressure to continue. In fiscal 1994 and fiscal 1995, the Company experienced a
change in product mix in favor of CPE sales, which typically generate lower
gross margins than sales to service providers. Further, distributors purchase
products at discounts, and the Company's
9
<PAGE>
margins can therefore vary depending upon the mix of distributor and direct end
user sales in any particular fiscal period. The Company anticipates that its
sales mix will continue to fluctuate in future periods. Further, sales of the
Company's recently released Series 6 product line have and may continue to
adversely affect gross margins because of additional costs typically associated
with introducing a new product line into manufacturing and pricing incentives
directed at encouraging customers to upgrade to Series 6 products from prior
generations of Company products. As a result of the above factors, gross margin
fluctuations are difficult to predict, and gross margins may decline from
current levels in future periods.
The Company's future success will depend in part upon the ability of the Company
to continue to introduce new features and products as the Company's markets
evolve, new technologies become available, and customers demand additional
functionality. The Company's competitors continue to add functionality to their
products, and any failure by the Company to introduce in a timely manner new
products and features that meet customer requirements would adversely affect the
Company's operating results and cash flows. The Company's ability to develop
such new features and products depends in large measure on its ability to hire
and retain qualified technical talent and outside contractors in highly
competitive markets for such services. There can be no assurance that the
Company's product development efforts will be successful, or that it will be
able to introduce new products in a timely manner. In this regard, the Company
has recently released its Series 6 platform, a significant new product, after
experiencing delays in its introduction. Any material additional delays in the
introduction and market acceptance of such products would be adverse to the
Company's business. Moreover, customers' expectations of the introduction of
new products by the Company or its competitors can adversely affect sales of
current products. In addition, upon the introduction of new products, the
Company could be subject to higher customer returns with respect to prior
generations of products, which could adversely affect financial position,
operating results and cash flows.
The Company's future operating results are dependent to a considerable extent
upon the success of its recently announced Series 6 product line. The Company
faces multiple risks in this regard. If the Company were to experience delays in
completing the development of certain features of the Series 6 product line
which have not yet been completed; if the Series 6 product line were not to
achieve widespread acceptance in the Company's markets; if the Company were to
experience manufacturing problems with Series 6 products that inhibited its
ability to manufacture such products reliably, cost-effectively and in high
volume, the Company's financial position, operating results and cash flows would
be adversely and materially affected. Such effect would be particularly
significant because the introduction of Series 6 products has materially reduced
sales of the Company's prior generations of products. In addition, the Series 6
product line has experienced certain software errors which the Company is
working to correct. These errors have resulted in a delay in acceptance of
certain customer shipments (and therefore have resulted in a delay of
recognition of certain revenue). Although the Company is working to resolve the
software errors identified to date, there can be no assurance that such errors
will be resolved in a timely manner or that additional technical problems will
not arise in the future. Any failure to resolve the current software errors in
a timely manner or any further difficulties experienced in the future could have
a material adverse affect on market acceptance of the Series 6 product line and
the Company's financial results.
10
<PAGE>
The Company presently uses third parties to perform printed circuit board and
subsystem assembly. In addition, although the Company has not experienced
significant problems with third-party manufacturers in the past, there can be no
assurance that such problems will not develop in the future. Although the
Company generally uses standard parts and components for its products, certain
microprocessors, line cards, application cards and other semiconductor devices
and other components are available from sole sources. Other components,
including power supplies, disk drives, certain other semiconductor devices and
subcontracted line card assemblies, are presently available or acquired from a
single source or from limited sources. The Company has been notified by
suppliers that certain components will no longer be manufactured. To date, the
Company has been able to obtain adequate supplies of these components in a
timely manner from existing sources or, when necessary, from alternative sources
of supply although such alternatives have resulted in increased costs to the
Company. However, the inability to develop such alternative sources if and as
required in the future, to obtain sufficient sole or limited source components
as required, or to locate alternatives to discontinued parts would have a
material adverse affect on the Company's operating results and cash flows. In
addition, the Company's products are dependent on the QNX software operating
system, a multitasking, real-time operating system for Intel microprocessor-
based computers. In future periods, the Company's products may become
increasingly dependent on software licensed from third party suppliers. There
can be no assurance such licenses will continue to be available to the Company
as needed or at commercially reasonable prices.
In recent years, stock markets have experienced extreme price and volume trading
volatility. This volatility has had a substantial effect on the market prices
of securities of many high technology companies for reasons frequently unrelated
to the operating performance of the specific companies. These broad markets
fluctuations may adversely affect the market price of the Company's common
stock. In addition, the trading price of the Company's common stock could be
subject to wide fluctuations in response to quarter-to-quarter variations in
operating results, announcements of new products or technological innovations by
the Company or its competitors, and general conditions in the computer and
communications industries.
From time to time the Company may make statements in both oral and/or written
communications, including this Form 10-Q. Such statements are just predictions
and actual events or results may differ materially. The reader is referred to
the documents the Company files from time to time with the Securities and
Exchange Commission, specifically the Company's last filed Form 10-K and this
Form 10-Q, particularly pages 6 through 11. These documents contain and
identify important factors that could cause the actual results to differ
materially from those contained in the Company's projections or forward-looking
statements.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In June 1995, Gilbarco, Inc. (Gilbarco) sued the Company, seeking an injunction
and unspecified damages based on allegations that the Company's products
infringe a certain Gilbarco patent. The Company believes it does not infringe a
valid and enforceable Gilbarco patent.
Gilbarco had filed suit against Octel Communications Corporation (Octel) in
1994, asserting that Octel was infringing the same Gilbarco patent. Both cases
have been pending before the U.S. District Court for the Northern District of
California (the Court).
On February 15, 1996, the Court issued an order in the Octel case, finding
Gilbarco's patent unenforceable due to inequitable conduct. This holding of
unenforceability means the patent cannot be enforced against Octel or the
Company, even though the Company was a third-party to the Octel case in which
the order was issued. However, such order is not final and may be reconsidered
by the Court or, failing reconsideration, Gilbarco may exercise its right to
have the order reviewed (and potentially reversed) upon appeal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Statement of Computation of Net Income (Loss) Per Share.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the quarter ended July
27, 1996.
12
<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.
CENTIGRAM COMMUNICATIONS CORPORATION
(Registrant)
Date: August 30, 1996 By: /s/ George H. Sollman
--------------------------------------
George H. Sollman
President and Chief Executive Officer
Date: August 30, 1996 By: /s/ Anthony R. Muller
--------------------------------------
Anthony R. Muller
Sr. V.P. Operations and Administration and
Chief Financial Officer
13
<PAGE>
EXHIBIT 11.1
Centigram Communications Corporation
Statement of Computation of Net Income (Loss) Per Share
(In thousands, except per share data--unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
July 27, July 29, July 27, July 29,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $ 710 $ (1,683) $ (94) $ (2,773)
--------- --------- --------- ---------
Computation of common and common
equivalent shares outstanding:
Common stock 6,866 6,590 6,800 6,535
Stock options 92 - - -
--------- --------- --------- ---------
Common and common equivalent shares
used in computing per share amounts 6,958 6,590 6,800 6,535
--------- --------- --------- ---------
Net income (loss) per share $ 0.10 $ (0.26) $ (0.01) $ (0.42)
--------- --------- --------- ---------
</TABLE>
- --------------------
Fully diluted computation not presented since such amount differs by
less than 3% of the net income (loss) per share amounts shown above.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-Q FOR THE YEAR TO DATE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-START> OCT-29-1995
<PERIOD-END> JUL-27-1996
<CASH> 9,752
<SECURITIES> 31,398
<RECEIVABLES> 28,066
<ALLOWANCES> 781
<INVENTORY> 10,236
<CURRENT-ASSETS> 82,937
<PP&E> 34,015
<DEPRECIATION> 19,739
<TOTAL-ASSETS> 100,507
<CURRENT-LIABILITIES> 19,013
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> 81,369
<TOTAL-LIABILITY-AND-EQUITY> 100,507
<SALES> 75,046
<TOTAL-REVENUES> 75,046
<CGS> 27,566
<TOTAL-COSTS> 27,566
<OTHER-EXPENSES> 49,199
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (38)
<INCOME-TAX> 56
<INCOME-CONTINUING> (94)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
