================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
________________________________
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 September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 000 - 19462
ARTISOFT, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 86-0446453
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS employer identification number)
incorporation)
2202 North Forbes Boulevard
Tucson, Arizona 85745
(520) 670-7100
---------------------------------------------------
(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 the
filing requirements for at least the past 90 days.
Yes x No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (November 12, 1996).
Common stock, $.01 par value: 14,535,682 shares
================================================================================
<PAGE>
Artisoft Inc. and Subsidiaries
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets-
September 30, 1996 and June 30, 1996 3
Consolidated Statements of Operations-
Three Months Ended
September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows-
Three Months Ended September 30, 1996
and 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
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 by Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBITS
11 Computation of Net Income (Loss) Per Share 14
27 Financial Data Schedule
2
<PAGE>
Artisoft, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1996 1996
------------- --------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,852 $ 15,325
Receivables:
Trade accounts, net 13,364 16,768
Income taxes 706 1,635
Notes and other 875 1,405
Inventories 3,432 2,998
Prepaid expenses 1,410 906
Deferred income taxes 6,297 4,426
-------- --------
Total current assets 41,936 43,463
-------- --------
Property and equipment 14,215 13,690
Less accumulated depreciation and amortization (6,672) (6,166)
-------- --------
Net property and equipment 7,543 7,524
-------- --------
Deferred income taxes 3,141 3,141
Other assets 3,452 3,584
-------- --------
$ 56,072 $ 57,712
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,175 $ 3,333
Accrued liabilities 3,659 2,640
Income taxes payable 450 577
Current portion of capital lease obligations 79 85
-------- --------
Total current liabilities 8,363 6,635
-------- --------
Capital lease obligations, net of current portion 76 96
Commitments and Contingencies - -
Shareholders' equity:
Common stock, $.01 par value. Authorized 50,000,000 shares;
issued 27,815,182 shares at September 30,
1996 and 27,807,890 at June 30, 1996 278 278
Additional paid-in capital 96,112 96,075
Retained earnings 20,923 24,308
Less treasury stock, at cost, 13,287,500 shares (69,680) (69,680)
-------- --------
Total shareholders' equity 47,633 50,981
-------- --------
$ 56,072 $ 57,712
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
Artisoft, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Net sales $ 11,120 $ 14,980
Cost of sales 3,930 5,548
-------- --------
Gross profit 7,190 9,432
-------- --------
Operating expenses:
Sales and Marketing 7,005 6,412
Product development 2,390 1,253
General and administrative 1,438 1,357
Restructuring cost 1,805 -
-------- --------
Total operating expenses 12,638 9,022
-------- --------
Income (loss) from operations (5,448) 410
Other income, net 192 339
-------- --------
Income (loss) before income taxes (5,256) 749
Income taxes (benefit) (1,871) 285
-------- --------
Net income (loss) $ (3,385) $ 464
======== ========
Net income (loss) per common and
equivalent share $ (.23) $ .03
======== ========
Shares used in per share calculation 14,524 14,853
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
Artisoft, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------
1996 1995
-------- -------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (3,385) $ 464
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 718 615
(Gain) loss from disposition of property and equipment (1) 34
Deferred income taxes (1,871) 285
Change in accounts receivable and inventory allowances (1,718) (1000)
Tax benefit of disqualifying dispositions 14 70
Changes in assets and liabilities,
Trade accounts receivable 4,482 498
Income taxes receivable 929 -
Notes and other receivables 530 (50)
Inventories 206 (52)
Prepaid expenses (504) (202)
Other assets (67) 23
Accounts payable and accrued liabilities 1,861 149
Income taxes payable (127) -
-------- --------
Net cash provided by operating activities 1,067 834
-------- --------
Cash flows from investing activities:
Purchases of investments - (3,300)
Sales of investments - 7,577
Proceeds from sales of property and equipment 13 -
Purchases of property and equipment (550) (971)
-------- --------
Net cash provided by (used in) investing activities (537) 3,306
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 23 596
Principal payments on capital lease obligations (26) -
-------- --------
Net cash provided by (used in) financing activities (3) 596
-------- --------
Net increase in cash and cash equivalents 527 4,736
Cash and cash equivalents at beginning of period 15,325 16,551
-------- --------
Cash and cash equivalents at end of period $ 15,852 $ 21,287
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
Artisoft, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements include the accounts of Artisoft,
Inc. and its five wholly-owned subsidiaries: Triton Technologies, Inc., Artisoft
Europe B.V., Artisoft "FSC". Ltd. (which has elected to be treated as a foreign
sales corporation), NodeRunner, Inc., and Artisoft Japan, K.K. All significant
intercompany balances and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the accompanying financial statements
include all adjustments (of a normal recurring nature) which are necessary for a
fair presentation of the financial results for the interim periods presented.
Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted pursuant to such rules and
regulations. Although the Company believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
financial statements be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's 1996 Annual Report to
Shareholders and report on Form 10-K. The results of operations for the three
months ended September 30, 1996 are not necessarily indicative of the results to
be expected for the full year.
(2) Restructuring Cost
During the quarter ended September 30, 1996, primarily in response to
lower than expected sales of LANtastic network operating system (NOS) products
during the quarter and the attendant uncertainty as to future sales levels of
NOS products, the Company elected to take two principal actions; first, to
realign the resources of the Company to accelerate the develpment, delivery and
potential customer adoption of new computer telephony and communications
products and, second, to significantly reduce the Company's operating break-even
point through a reduction in operating expenses. As a result of these actions,
the Company recorded a pre-tax restructuring charge of $1,805,000 in the quarter
ended September 30, 1996 to cover severance costs associated with a 50 person
headcount reduction and other related costs.
(3) Inventories
Inventories consist of the following (in thousands):
September 30, June 30,
1996 1996
------------- --------
Raw materials $ 2,157 $ 2,167
Work-in-process 653 584
Finished goods 1,547 1,812
------- --------
4,357 4,563
Less allowance for inventory obsolescence (925) (1,565)
------- --------
$ 3,432 $ 2,998
======== ========
6
<PAGE>
(4) Property and Equipment
Property and Equipment consists of the following (in thousands):
September 30, June 30,
1996 1996
---- ----
Land $ 807 $ 807
Buildings and Improvements 1,992 1,991
Furniture and Fixtures 1,059 1,058
Computers and other equipment 10,231 9,741
Leasehold improvements 126 93
------- -------
14,215 13,690
Accumulated depreciation and
amortization 6,672 6,166
------- -------
$ 7,543 $ 7,524
======= =======
(6) Other Assets
Other assets consist of the following (in thousands):
September 30, June 30,
1996 1996
---- ----
Trademarks and patents, net of
accumulated amortization $ 269 $ 285
Purchased technology, net of
accumulated amortization 2,990 3,172
Recoverable deposits and other 193 127
--------- -------
$ 3,452 $ 3,584
========= =======
7
<PAGE>
Artisoft, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net Sales. The Company's net sales for the quarter ended
September 30, 1996 were $11.1 million, a decrease of 26% from sales of $15
million for the corresponding quarter of the previous fiscal year, and a
decrease of 33% from the previous quarter's sales of $16.5 million. The decrease
in net sales as compared to the corresponding quarter in fiscal 1996, was
primarily due to reduced sales of the Company's LANtastic network operating
system (NOS) products partially offset by sales attributable to the Company's
acquisition of three software companies during the second and third quarters of
fiscal 1996.
The sequential decrease in net sales from the quarter ended June 30,
1996 is attributed to the following factors: a reduction in U.S. and European
distribution channel inventories; seasonal market softness experienced in the
U.S. as well as Europe and; a slower than expected sales ramp for LANtastic 7.0.
The reduction in channel inventories resulted from the continued impact of the
transition of the LANtastic NOS product line to LANtastic 7.0 (released in June
1996) and the anticipated stocking of the U.S. distribution channel with new
products in the quarter ending December 31, 1996. This action should also allow
more flexibilty in managing incentive and other programs with distributors.
The Company distributes its products in both the U.S. and international
markets. U.S. sales decreased 25% to $7.9 million (71% of net sales), for the
first quarter ended September 30, 1996 from $10.5 million (70% of net sales),
for the same quarter a year ago.
Gross Profits. The Company's gross profits were $7.2 million and $9.4
million for the quarters ended September 30, 1996 and 1995, respectively (65%
and 63% of net sales, respectively). The net increase in gross profit margin for
the first quarter of fiscal 1997 as compared to the corresponding quarter in
fiscal 1996 was primarily the result of higher average gross margins in the
Company's product lines offset significantly by the impact on gross margins of
the quarter over quarter decrease in net sales of $3.9 million. The higher
average gross profit margins in the Company's existing product lines is the
result of higher margin software products acquired in connection with the
purchase of three software companies during fiscal 1996 and software components
comprising an increasing percentage of LANtastic NOS products sales. The quarter
over quarter decrease in net sales reduced gross profit margins as fixed
components of cost of goods sold, principally production overhead and
amortization of purchased technology and localization costs, were absorbed by
lower sales. Gross margins may fluctuate from quarter to quarter due to changes
in net sales, product mix, pricing actions and changes in sales and inventory
allowances.
The sequential decrease in gross profit margin from 70% for the quarter
ended June 30, 1996 to 65% for the quarter ended September 30, 1996 is the
result of the sequential decrease in net sales of $5.3 million. The gross profit
margin mix in the Company's product lines was consistent between the quarters.
Sales and Marketing. Sales and marketing expenses were $7.0 million and
$6.4 million for the quarters ended September 30, 1996 and 1995, respectively,
(63% and 43% of net sales, respectively). The increase in aggregate dollars for
sales and marketing expenses for the first quarter of fiscal 1997 as compared to
the corresponding quarter in fiscal 1996, is due primarily to activities related
to the introduction of LANtastic 7.0 to the Company's existing extensive VAR
network. The increase in sales and marketing expenses as a percentage of net
sales for the first quarter of fiscal 1997 over the
8
<PAGE>
corresponding period in fiscal 1996, is principally due to the decrease in net
sales.
Product Development. Product development expenses were $2.4 million and
$1.3 million for the quarters ended September 30, 1996 and 1995, respectively,
representing 21% and 8% of net sales, respectively. The change in product
development expenses as a percentage of net sales is due principally to the
decrease in net sales. The increase in aggregate dollars for the first quarter
of fiscal 1997 as compared to the corresponding quarter in fiscal 1996 is
principally attributable to the addition of product development personnel in the
Computer Telephony and Communications product group, both in connection with the
acquisitions of the three software companies in fiscal 1996 and subsequent
thereto to accelerate development efforts in this segment.
General and Administrative. General and administrative expenses were
$1.4 million for both the quarters ended September 30, 1996 and 1995. General
and administrative expenses represented 13% of net sales for the first quarter
of fiscal year 1997 and 9% of net sales for the first quarter of fiscal year
1996. General and administrative expenses as a percentage of net sales for the
first quarter of fiscal 1997 as compared to the corresponding period in fiscal
1996, increased solely as a result of the decrease in net sales.
Restructuring Cost. During the quarter ended September 30, 1996,
primarily in response to lower than expected sales of LANtastic network
operating system (NOS) products during the quarter and the attendant uncertainty
as to future sales levels of NOS products, the Company elected to take two
principal actions; first, to realign the resources of the Company to accelerate
the development, delivery and customer adoption of new computer telephony and
communications products and, second, to significantly reduce the Company's
operating break-even point through a reduction in operating expenses. The effect
of the realignment was to increase the Company's investment in product
development, marketing and channel development in the high growth computer
telephony and communications segments of the business and thereby bring more
focus to the delivery of products in these areas, as well as to support
continuing differentiation for LANtastic in the future. As a result of these
actions, the Company recorded a pre-tax restructuring charge of $1,805,000 in
the quarter ended September 30, 1996 to cover severance costs associated with a
50 person headcount reduction and other related costs.
Other Income, Net. For the quarter ended September 30, 1996 other
income, net, decreased to $192,000 from $339,000 in the same period in fiscal
1996. This decrease resulted principally from a reduction in the investment
income earned from investments. Investment and cash balances decreased from
$38.3 million at September 30, 1995 to $15.9 million at September 30, 1996 due
to the acquisition of three software companies in fiscal year 1996.
Liquidity and Capital Resources
The Company had cash and cash equivalents of $15.9 million at September
30, 1996 compared to $15.3 million at June 30, 1996 and working capital of $34
million at September 30, 1996 and $37 million at June 30, 1996. The increase in
cash and cash equivalents was principally a result of the receipt of a federal
tax refund, partially offset by severance payments associated with the Company's
organizational realignment effected at the end of the quarter. Days sales
outstanding in trade accounts receivable at September 30, 1996 increased to 108
days from 97 days at June 30, 1996 due principally to the quarter over quarter
decrease in net sales. The Company believes that its allowances for returns and
doubtful accounts are adequate.
The Company funds its working capital requirements primarily through
cash flows from operations and existing cash balances. While the Company
anticipates that existing cash balances and cash flows from operations will be
adequate to meet the Companys current and expected cash requirements for at
least the next year, additional investments by the Company to acquire new
technologies and products may necessitate that the Company seek additional debt
or equity capital.
9
<PAGE>
Risk Factors
The PC industry is highly competitive and is characterized by rapidly
changing technology and evolving industry standards. The Company's products
compete with products available from numerous companies, many of which have
substantially greater financial, technological, production and marketing
resources than those of the Company. Competition in the PC industry is likely to
intensify as current competitors expand their product lines, more features are
included in operating systems (e.g., Windows 95), and as new companies enter the
markets or segments in which the Company currently competes. The industry is
also characterized by a high degree of consolidation which favors companies with
greater resources than those of the Company. There can be no assurance that the
Company's products will be able to compete successfully with other products
offered presently or in the future by other vendors.
The Company is exposed to the risk of product returns and rotations
from its distributors and volume purchasers, which are recorded by the Company
as a reduction in sales. Although the Company attempts to monitor and manage the
volume of its sales to distributors and volume purchasers, overstocking by its
distributors and volume purchasers or changes in inventory policies or practices
by distributors and volume purchasers may require the Company to accept returns
above historical levels. In addition, the risk of product returns may increase
if the demand for new products introduced by the Company is lower than the
Company anticipates at the time of introduction. Although the Company believes
that it provides an adequate allowance for sales returns, there can be no
assurance that actual sales returns will not exceed the Company's allowance. Any
product returns in excess of recorded allowances could result in a material
adverse effect on net sales and operating results. As the Company introduces
more new products, the predictably and timing of sales to end users and the
management of returns to the Company of unsold products by distributors and
volume purchasers becomes more complex and could result in material fluctuations
in quarterly sales and operating results.
The Company is also exposed to its distributors for price protection
for list price reductions by the Company on its products held in such
distributors' inventories. The Company provides its distributors with price
protection in the event that the Company reduces the list price of its products.
Distributors and volume purchasers are usually offered some credit for the
impact of a list price reduction on the expected revenue from the Company's
products in the distributors' inventories at the time of the price reduction.
Although the Company believes that it has provided an adequate allowance for
price protection, there can be no assurance that the impact of actual list price
reductions by the Company will not exceed the Company's allowance. Any price
protection in excess of recorded allowances could result in a material adverse
effect on sales and operating results. As the Company introduces new products,
the predictability and timing of sales to end-users and returns to the Company
of unsold products by distributors and volume purchasers becomes more complex
and could result in material fluctuations in quarterly sales and operating
results.
Substantially all of the Company's revenue in each fiscal quarter
results from orders booked in that quarter. A significant percentage of the
Company's bookings and sales to major customers on a quarterly basis
historically has occurred during the last month of the quarter and are
concentrated in the latter half of that month. Orders placed by major customers
are typically based upon customers' forecasted sales levels for Company products
and inventory levels of Company products desired to be maintained by those major
customers at the time of the orders. Moreover, orders may also be based upon
financial practices by major customers designed to increase the return on
investment or yield on the sales of the Company's products to VARs or end-users.
Major distribution customers receive market development funds from the Company
for purchasing Company products and from time-to-time may also receive
negotiated cash rebates or extended terms, in accordance with industry practice,
depending upon competitive conditions. Changes in purchasing patterns by one or
more of the Company's major customers related to customer
10
<PAGE>
forecasts of future sales of Company products, customer policies pertaining to
desired inventory levels of Company products, negotiations of market development
funds and rebates, or otherwise, or in the Company's ability to anticipate in
advance the mix of customer orders, or to ship large quantities of products near
the end of a fiscal quarter, could result in material fluctuations in quarterly
operating results. Expedited outsourcing of production and component parts to
meet unanticipated demand could also adversely affect gross margins.
The Company believes that there is a trend among major distribution
customers and volume purchasers to reduce their inventory levels of computer
products, including the Company's products. This trend could have a significant,
adverse effect on the Company's operating results during the period or periods
that customers initiate such inventory reductions or at such times as customers
elect to further reduce channel inventories.
Microsoft, a significant competitor of the Company, today offers, and
is expected in the future to offer, Windows- and NT-based products which include
features competitive with certain features found in products offered by the
Company. Because of the dominance and market visibility of Microsoft in the
personal computer software market, the presence of the Microsoft products in the
market may affect the sales of the Company's products and, depending upon the
degree of such effect, could have a significant adverse effect on the Company's
operating results. In addition, as a result of its dominant position in the
market for personal computer operating systems, the Microsoft operating system
products are frequently installed at no additional charge on the hard drives of
new personal computers and thereby placed directly into the hands of the
end-user customer. Such distribution provides a favorable market advantage for
the features of its products, to the potential detriment of the Company's
product sales.
During the third fiscal quarter of 1996, the Company announced its
INSYNC brand of remote communications products, which includes CoSession Remote,
a remote control software product, and Modem Share, a telephone line sharing
software product. These products were introduced to the Company's worldwide
sales channels late in the third quarter. These products have not previously
been broadly distributed through these channels. Currently, several competitors
offer similar products through similar sales channels. Although the Company
believes these new products to be functionally comparable and competitively
priced relative to competitors products, there can be no assurance of the future
success of these products.
During the first fiscal quarter of 1997, the Company experienced
significantly lower than expected sales of its LANtastic NOS products. While
management believes that seasonal market softness in the U.S. marketplace, as
well as Europe, and a slower than expected transition from LANtastic 6.0 to
LANtastic 7.0 were the principal reasons for the shortfall, there can be no
assurance that LANtastic sales will improve or that LANtastic sell-through will
not trend downward from current levels.
Due to the foregoing, and other factors affecting the Company's
operating results, past financial performance should not be considered to be a
reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995
This Form 10-Q may contain forward-looking statements that involve
risks and uncertainties, including, but not limited to, the impact of
competitive products and pricing, product demand and market acceptance risks,
the presence of competitors with greater financial resources, product
development and commercialization risks, costs associated with the integration
and administration of acquired operations, capacity and supply constraints or
difficulties, the results of financing efforts and other risks detailed from
time to time in the Company's Securities and Exchange Commission filings.
11
<PAGE>
Artisoft, Inc. and Subsidiaries
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is subject to lawsuits and other claims arising in the
ordinary course of its operations. In the opinion of management, based on
consultation with legal counsel, the effects of such matters will not have a
materially adverse effect on the Company's financial position.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
No. 11 - Computation of Net Income Per Share
No. 27 - Financial Data Schedule for Form 10-Q dated November 6,
1996
(c) Reports on Form 8-K
There were no reports filed on Form 8-K during the three months
ended September 30, 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 hereunto duly authorized.
ARTISOFT, INC.
Date: November 12, 1996 By /s/ William C. Keiper
---------------------------------------
William C. Keiper
Chairman and Chief Executive Officer
By /s/ Gary R. Acord
---------------------------------------
Gary R. Acord
Vice President and Chief Financial Officer
(Principal Financial Officer)
13
Artisoft, Inc. and Subsidiaries
EXHIBIT 11. COMPUTATION OF NET INCOME (LOSS) PER SHARE
(in thousands, except per share amounts)
Three Months Ended
September 30,
------------------
1996 1995
---- ----
Net Income (loss) $ (3,385) $ 464
======== ========
Weighted Average Shares:
Common shares outstanding 14,524 14,440
Common Equivalent shares representing
shares issuable upon exercise of stock
options (1) - 413
-------- --------
Total weighted average shares -
primary 14,524 14,853
Incremental common equivalent shares
(calculated using the higher of end of
period or average market value) (2) - -
-------- --------
Total weighted average shares - fully
diluted 14,524 14,853
======== ========
Primary net income (loss) per common and
equivalent share $ (.23) $ .03
======== ========
- ------
Notes:
(1) Amount calculated using the treasury stock method and fair market values.
(2) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
Incremental amounts are zero; calculation is shown for presentation
purposes only.
(3) Primary and fully diluted net income per common and equivalent shares are
the same
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 15,852
<SECURITIES> 0
<RECEIVABLES> 13,364
<ALLOWANCES> 0
<INVENTORY> 3,432
<CURRENT-ASSETS> 41,936
<PP&E> 14,215
<DEPRECIATION> 6,672
<TOTAL-ASSETS> 56,072
<CURRENT-LIABILITIES> 8,363
<BONDS> 0
0
0
<COMMON> 278
<OTHER-SE> 47,355
<TOTAL-LIABILITY-AND-EQUITY> 56,072
<SALES> 11,120
<TOTAL-REVENUES> 11,312
<CGS> 3,930
<TOTAL-COSTS> 3,930
<OTHER-EXPENSES> 12,638
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,256)
<INCOME-TAX> (1,871)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,385)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
