UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 28, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ______ to ______
Commission File Number 0-24918
SHIVA CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2889151
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization
28 Crosby Drive, Bedford, MA 01730
(Address of principal executive offices, including Zip Code)
(617) 270-8300
(Registrant's telephone number, including area code)
____________________________
Indicate 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. [X] YES [ ] NO
The number of shares outstanding of the registrant's Common Stock as of
September 28, 1996 was 28,676,927.
Total Number of Pages: 13
<PAGE>
SHIVA CORPORATION
INDEX
-----
PART 1 Financial Information
Item 1 Consolidated Financial Statements
Consolidated Balance Sheet
September 28, 1996 and December 30, 1995
Consolidated Statement of Operations
Three and nine months ended September 28, 1996
and September 30, 1995
Consolidated Statement of Cash Flows
Nine months ended September 28, 1996 and
September 30, 1995
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K
Signature
<PAGE>
<TABLE>
Shiva Corporation
Consolidated Balance Sheet
(in thousands, except share related data)
<CAPTION>
September 28, December 30,
1996 1995
------------- -----------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 69,750 $ 93,203
Short-term investments 25,689 9,125
Accounts receivable, net of allowances of
$6,897 at September 28, 1996 and $5,252
at December 30, 1995 49,088 22,982
Inventories 14,130 7,846
Prepaid expenses and other current assets 4,667 2,351
------- -------
Total current assets 163,324 135,507
Property, plant and equipment, net 19,945 12,965
Deferred income taxes 4,219 548
Other assets 1,640 1,103
------- -------
Total assets 189,128 150,123
======= =======
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations $ 438 $ 700
Accounts payable 15,086 9,032
Accrued compensation and benefits 5,721 5,367
Accrued expenses 15,009 7,509
Deferred revenue 2,650 3,523
------- -------
Total current liabilities 38,904 26,131
Long-term debt and capital lease obligations 127 452
Other long-term liabilities 389 401
Deferred income taxes 237 235
------- -------
Total liabilities 39,657 27,219
------- -------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized, none issued - -
Common stock, $.01 par value; 100,000,000 and
50,000,000 shares authorized, 28,676,927 and
27,960,580 shares issued and outstanding at
September 28, 1996 and December 30, 1995,
respectively 287 280
Additional paid-in capital 144,650 133,457
Unrealized gain on investments 58 137
Cumulative translation adjustment (481) (586)
Retained earnings (accumulated deficit) 4,957 (10,384)
--------- ------------
Total stockholders' equity 149,471 122,904
--------- ------------
Total liabilities and stockholders' equity $ 189,128 $ 150,123
========= ===========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
Shiva Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
<CAPTION>
Three months ended Nine months ended
--------------------------- --------------------------
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues $ 57,109 $ 30,033 $ 151,903 $ 82,147
Cost of revenues 23,761 12,370 62,543 34,628
------ ------ ------ ------
Gross profit 33,348 17,663 89,360 47,519
------ ------ ------ ------
Operating
expenses:
Research and
development 5,974 3,878 16,630 10,234
Selling, general
and administrative 18,338 11,418 49,844 31,450
Merger expenses - 13,986 1,987 13,986
------ ------ ------ ------
Total operating
expenses 24,312 29,282 68,461 55,670
------ ------ ------ ------
Income (loss) from
operations 9,036 (11,619) 20,899 (8,151)
Interest income 836 445 3,167 1,425
Interest expense (85) (103) (383) (565)
------ -------- ------- -------
Income (loss) before
income taxes 9,787 (11,277) 23,683 (7,291)
Income tax provision 3,760 275 8,342 1,906
----- -------- ------ -------
Net income (loss) 6,027 (11,552) 15,341 (9,197)
===== ======== ====== =======
Net income (loss)
per share 0.19 (0.46) 0.49 (0.35)
===== ======== ====== =======
Shares used in
computing net
income (loss)
per share 31,906 25,015 31,499 26,633
====== ====== ====== ======
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
Shiva Corporation
Consolidated Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
<CAPTION>
Nine Months Ended
____________________________
September 28, September 30,
1996 1995
------------- -------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income(loss) $ 15,341 $ (9,197)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Merger expenses - 3,766
Depreciation and amortization 4,603 2,712
Gain on sale of property, plant and
equipment (50) (44)
Deferred income taxes (1,511) 97
Changes in assets and liabilities:
Accounts receivable (25,940) (4,605)
Inventories (6,277) (1,390)
Prepaid expenses and other current
assets (472) 96
Accounts payable 5,999 (1,024)
Accrued compensation and benefits 339 697
Accrued expenses 12,000 4,872
Deferred revenue (854) 1,629
Other long term liabilities (15) (18)
------- --------
Net cash provided (used) by operating
activities 3,163 (2,409)
------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (10,851) (4,689)
Capitalized software development costs (843) (429)
Purchases of short-term investments (24,502) (10,344)
Proceeds from sales of short-term investments 7,858 550
Change in other assets (279) (139)
-------- --------
Net cash used by investing activities (28,617) (15,051)
-------- --------
Cash flows from financing activities
Net repayments under short-term debt - (1,885)
Principal payments on long-term debt and capital
lease obligations (590) (3,926)
Proceeds from exercise of stock options and warrants 2,732 1,359
Dividends paid - (58)
------ -------
Net cash provided (used) by financing activities 2,142 (4,510)
------ -------
Effects of exchange rate changes on cash and cash
equivalents (141) (12)
-------- --------
Net decrease in cash and cash equivalents (23,453) (21,982)
Cash and cash equivalents, beginning of period 93,203 36,068
Elimination of Spider net cash activity for the
three months ended April 1, 1995 - (998)
------- --------
Cash and cash equivalents, end of period 69,750 13,088
======= ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
SHIVA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, and have been
prepared by the Company in accordance with generally accepted accounting
principles. In the opinion of management, these unaudited consolidated
financial statements contain all adjustments, consisting only of those of a
normal recurring nature, necessary for a fair presentation of the Company's
financial position, results of operations and cash flows at the dates and for
the periods indicated. While the Company believes that the disclosures
presented are adequate to make the information not misleading, these
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 30, 1995 and in
the Company's Registration Statement on Form S-3 dated August 23, 1996.
The results of operations for the three-month and nine-month periods ended
September 28, 1996 are not necessarily indicative of the results expected
for the full fiscal year.
In June 1996, the Company issued approximately 691,587 shares of its common
stock in exchange for all the outstanding shares of AirSoft, Inc.
(the "AirSoft Acquisition"). AirSoft, Inc. ("AirSoft") designs, manufactures
and sells performance enhancement software products. The AirSoft Acquisition
has been accounted for as a pooling of interests, and therefore the
consolidated financial statements for all periods prior to the AirSoft
Acquisition have been restated to include the accounts and operations of
AirSoft with those of the Company.
Certain amounts have been reclassified with regard to presentation of the
financial information of the two companies. Revenues and net income (loss)
for each of the previously separate companies for the periods prior to the
AirSoft Acquisition are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended Three Months Ended
------------------------------------ ------------------
December 30, December 31, January 1, March 30, April 1,
1995 1994 1994 1996 1995
------------ ------------ ---------- --------- --------
(Fiscal 95) (Fiscal 94) (Fiscal 93)
<S> <C> <C> <C> <C> <C>
Revenues:
Shiva $117,721 $80,971 $61,259 $42,513 $25,703
AirSoft 860 87 3 796 34
-------- ------- ------- ------- -------
$118,581 $81,058 $61,262 $43,309 $25,737
======== ======= ======= ======= =======
Net Income (loss):
Shiva $ (2,879) $ 3,881 $ 909 $ 4,366 $ 2,157
AirSoft (1,973) (1,841) (493) (27) (775)
--------- -------- -------- -------- --------
$ (4,852) $ 2,040 $ 416 $ 4,339 $ 1,382
========= ======== ======== ======== ========
</TABLE>
In connection with the AirSoft Acquisition, the Company incurred charges to
operations of $1,987,000 in the quarter ended June 29, 1996, the quarter in
which the acquisition was consummated. Such charges include: (a) transaction
costs to effect the acquisition, consisting of financial advisor fees of
$1,350,000 plus $325,000 for legal, regulatory and accounting expenses and
(b) employee severance payments and other miscellaneous expenses of $312,000.
2. NET INCOME (LOSS) PER SHARE:
Net income per share is calculated based on the weighted average number of
common shares and common equivalent shares assumed outstanding during the
period. Net loss per share excludes common equivalent shares because the
effect is antidilutive.
3. COMMON STOCK:
On April 2, 1996, the Company's Board of Directors declared a two-for-one
stock split, payable in the form of a stock dividend, on all shares of its
common stock, which was paid on April 22, 1996 to stockholders of record on
April 12, 1996. These financial statements and related notes have been
retroactively adjusted, where appropriate, to reflect this two-for-one stock
split.
At the Annual Meeting of Stockholders on May 15, 1996, the stockholders of
the Company approved (1) an increase in the number of authorized shares of
common stock of the Company from 50,000,000 to 100,000,000 shares and (2) an
increase in the number of shares available for issuance under the Company's
Amended and Restated 1988 Stock Plan from 8,200,000 to 9,700,000 shares.
4. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents, and those
with maturities of greater than three months to be short-term investments.
At September 28, 1996, the Company had $25,689,000 of short-term investments,
including an unrealized gain of $58,000 recorded as a separate component of
stockholders' equity in accordance with Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The Company's short-term investments at September 28, 1996,
classified as available-for-sale, consisted of municipal and U.S. Treasury
securities with various maturity dates through September 1998. Realized
gains or losses on the sale of securities are calculated using the specific
identification method. The Company has had no realized gains or losses on
its securities to date.
5. INVENTORIES:
Inventories consist of the following:
(in thousands)
<TABLE>
<CAPTION>
September 28, December 30,
1996 1995
------------- ------------
<S> <C> <C>
Raw materials $ 6,179 $3,137
Work-in-process 1,281 1,037
Finished goods 6,670 3,672
------- ------
$14,130 $7,846
======= ======
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three-Month Period Ended September 28, 1996 Compared with the Three-Month
Period Ended September 30, 1995.
Results of Operations
Revenues. Revenues increased by 90%, to $57,109,000 for the three-month
period ended September 28, 1996, from $30,033,000 in the comparable period
in fiscal 1995. This increase was principally due to higher revenues from
the Company's remote access products. Remote access product revenues
increased by 144%, to $52,690,000, in the three-month period ended September
28, 1996 from $21,579,000 during the comparable period in fiscal 1995,
principally due to higher revenues from the Company's LanRover(R) product
family, including the LanRover Access Switch[TM]. Sales to OEM customers
accounted for 28% and 11% of revenues in the three-month periods ended
September 28, 1996 and September 30, 1995, respectively. These increases
were partially offset by a 54% decline in revenues from the Company's other
communications products. The Company anticipates that revenues from other
communications products will continue to decline and will account for a
decreasing percentage of revenue in future periods. The Company provides
its distributors and resellers with product return rights for stock balancing
and product evaluation. Revenues were reduced by provisions for product
returns of $3,326,000 and $2,013,000 in the three month periods ended
September 28, 1996 and September 30, 1995, respectively, representing 6% of
gross revenues in each period. International revenues increased to
$17,148,000 or 30% of revenues, in the three-month period ended September 28,
1996 from $13,798,000, or 46% of revenues, in the comparable period in fiscal
1995. The decrease in international revenues as a percentage of total
revenues was primarily due to increased revenues from OEM customers which are
classified as domestic.
Gross Profit. Gross profit decreased as a percentage of revenues to 58% in
the three-month period ended September 28, 1996, compared to 59% for the
comparable period in fiscal 1995. This decrease was primarily attributable
to increased revenues from the Company's OEM remote access products, which
carry lower gross margins than the Company's other remote access products.
Research and Development. Research and development expenses increased to
$5,974,000, or 11% of revenues, in the three-month period ended September 28,
1996 from $3,878,000, or 13% of revenues, during the comparable period in
fiscal 1995. The absolute increase in these expenses was primarily due to
the hiring of additional research and development staff. Research and
development expenses during the three-month period ended September 28, 1996
related primarily to continued enhancements and development of the Company's
remote access products, including the LanRover Access Switch and the Shiva
AccessPort[TM]. Customer-funded development fees reimbursed to the Company,
which are reflected as an offset to research and development expenses, were
$536,000 in the three-month period ended September 28, 1996 compared to
$199,000 for the comparable period in fiscal 1995. Capitalized software
development costs were $251,000 in the three-month period ended September
28, 1996 compared with $166,000 in the comparable period in fiscal 1995.
Capitalized software development costs are amortized to cost of goods sold
over the economic useful lives of the related products, typically eighteen
months. The Company anticipates continued significant investment in
research and development.
Selling, General and Administrative. Selling, general and administrative
expenses increased to $18,338,000 for the three-month period ended September
28, 1996 from $11,418,000 for the comparable period in fiscal 1995. These
expenses represented 32% and 38% of revenues in the three-month periods ended
September 28, 1996 and September 30, 1995, respectively. The absolute increase
in expenses was primarily due to expansion of the Company's sales, marketing
and administrative operations necessary to support the Company's growth and
new products. The Company plans to further invest in its distribution channels
in order to continue its global market penetration.
Interest Income and Expense. Interest income increased to $836,000 during
the three-month period ended September 28, 1996 due to higher investment
balances related to funds generated by the Company's secondary public offering
in November 1995. Interest expense decreased due to the Company's repayment
of a portion of the outstanding debt of Spider Systems, Ltd. ("Spider")
assumed as part of the Spider Acquisition in the third quarter of fiscal
1995.
Merger Expenses. In connection with the Spider Acquisition, the Company
incurred charges to operations of approximately $13,986,000 in the quarter
ended September 30, 1995, the quarter in which the Spider Acquisition was
consummated. Such charges include: (a) transaction costs to effect the
acquisition, consisting of $2,619,000 for financial advisor fees plus
$3,656,000 for legal, regulatory and accounting fees, printing expenses and
other miscellaneous expenses; (b) employee severance payments of $1,482,000
and phantom stock compensation of $2,644,000 and (c) $3,585,000 for the
integration of operational activities of the companies, including elimination
of duplicative assets, employee relocation and travel, and the marketing
costs related to the introduction of the combined entity.
Income Tax Provision. The Company's effective tax rate was 38% for the three-
month period ended September 28, 1996. The Company had an income tax
provision of $275,000 in the three-month period ended September 30, 1995,
despite a pre-tax loss, primarily due to non-tax deductible merger expenses
incurred in connection with the Spider Acquisition.
Nine-Month Period Ended September 28, 1996 Compared with the Nine-Month
Period Ended September 30, 1995.
Results of Operations
Revenues. Revenues increased by 85%, to $151,903,000 for the nine-month
period ended September 28, 1996, from $82,147,000 in the comparable period
in fiscal 1995. This increase was principally due to higher revenues from
the Company's remote access products. Remote access product revenues
increased by 139%, to $131,706,000, in the nine-month period ended September
28, 1996 from $55,077,000 during the comparable period in fiscal 1995,
principally due to higher revenues from the Company's LanRover product family,
including the LanRover Access Switch[TM]. Sales to OEM customers accounted
for 23% and 7% of revenues in nine-month periods ended September 28, 1996 and
September 30, 1995, respectively. These increases were partially offset by a
33% decline in revenues from the Company's other communications products.
The Company anticipates that revenues from other communications products will
continue to decline and will account for a decreasing percentage of revenue
in future periods. The Company provides its distributors and resellers with
product return rights for stock balancing and product evaluation. Revenues
were reduced by provisions for product returns of $7,304,000 and $6,090,000
in the three month periods ended September 28, 1996 and September 30, 1995,
respectively, representing 5% and 7% of gross revenues, respectively.
International revenues increased to $54,395,000 or 36% of revenues, in the
nine-month period ended September 28, 1996 from $41,057,000 or 50% of revenues,
in the comparable period in fiscal 1995. The decrease in international
revenues as a percentage of total revenues was primarily due to increased
revenues from OEM customers which are classified as domestic.
Gross Profit. Gross profit increased as a percentage of revenues to 59% in
the nine-month period ended September 28, 1996, compared to 58% for the
comparable period in fiscal 1995. This increase was primarily attributable
to increased revenues from the Company's LanRover product family, which carry
higher gross margins than the Company's other products, partially offset by
increased revenues from lower margin OEM remote access products.
Research and Development. Research and development expenses increased to
$16,630,000, or 11% of revenues, in the nine-month period ended September 28,
1996 from $10,234,000, or 12% of revenues, during the comparable period in
fiscal 1995. The absolute increase in these expenses was primarily due to the
hiring of additional research and development staff. Research and
development expenses during the nine-month period ended September 28, 1996
related primarily to continued enhancements and development of the Company's
remote access products, including the LanRover Access Switch and the Shiva
AccessPort[TM]. Customer-funded development fees reimbursed to the Company,
which are reflected as an offset to research and development expenses, were
$1,387,000 in the nine-month period ended September 28, 1996 compared to
$714,000 for the comparable period in fiscal 1995. Capitalized software
development costs were $844,000 in the nine-month period ended September 28,
1996 compared with $430,000 in the comparable period in fiscal 1995.
Capitalized software development costs are amortized to cost of goods sold over
the economic useful lives of the related products, typically eighteen months.
The Company anticipates continued significant investment in research and
development.
Selling, General and Administrative. Selling, general and administrative
expenses increased to $49,844,000 for the nine-month period ended September
28, 1996 from $31,450,000 for the comparable period in fiscal 1995. These
expenses represented 33% and 38% of revenues in the nine-month periods ended
September 28, 1996 and September 30, 1995, respectively. The absolute increase
in expenses was primarily due to expansion of the Company's sales, marketing
and administrative operations necessary to support the Company's growth and
new products. The Company plans to further invest in its distribution
channels in order to continue its global market penetration.
Interest Income and Expense. Interest income increased to $3,167,000 during
the nine-month period ended September 28, 1996 due to higher investment
balances related to funds generated by the Company's secondary public
offering in November 1995. Interest expense decreased due to the Company's
repayment of a portion of the outstanding debt assumed as part of the Spider
Acquisition in the third quarter of fiscal 1995.
Merger Expenses. In connection with the AirSoft Acquisition, the Company
incurred charges to operations of $1,987,000 in the quarter ended June 29,
1996, the quarter in which the AirSoft Acquisition was consummated. Such
charges include (a) transaction costs to effect the acquisition, consisting
of financial advisor fees of $1,350,000 plus $325,000 for legal, regulatory
and accounting expenses and (b) employee severance payments and other
miscellaneous expenses of $312,000. In connection with the Spider
Acquisition, the Company incurred charges to operations of $13,986,000 in the
quarter ended September 30, 1995, the quarter in which the Spider Acquisition
was consummated. Such charges include: (a) transaction costs to effect the
acquisition, consisting of $2,619,000 for financial advisor fees plus
$3,656,000 for legal, regulatory and accounting fees, printing expenses and
other miscellaneous expenses; (b) employee severance payments of $1,482,000
and phantom stock compensation of $2,644,000 and (c) $3,585,000 for the
integration of operational activities of the companies, including elimination
of duplicative assets, employee relocation and travel, and the marketing
costs related to the introduction of the combined entity.
Income Tax Provision. The Company's effective tax rate was 35% for the nine-
month period ended September 28, 1996. This effective rate differs from the
combined federal and state statutory rate primarily due to tax-exempt
interest income and a reduction in the net deferred tax asset valuation
allowance as a result of certain net operating losses that have been
realized, partially offset by non-deductible merger expenses. The Company
had an income tax provision of $1,906,000 in the nine-month period ended
September 30, 1995, despite a pre-tax loss, primarily due to non-tax
deductible merger expenses incurred in connection with the Spider Acquisition.
Foreign Currency Fluctuations
A substantial portion of the Company's international revenues is denominated
in currencies other than the U.S. dollar and is consequently subject to
foreign exchange fluctuations. The net income impact of such fluctuations,
however, is offset to the extent expenses of the Company in international
operations are incurred in the same currencies as its revenues. Foreign
currency fluctuations did not have a significant impact on the comparison of
results of operations in the three-month and nine-month periods ended
September 28, 1996 with those comparable periods in fiscal 1995.
Liquidity and Capital Resources
As of September 28, 1996, the Company had $69,750,000 of cash and cash
equivalents and $25,689,000 of short-term investments. Working capital
increased to $124,420,000 at September 28, 1996 from $109,376,000 at
December 30, 1995.
Net cash provided by operations totaled $3,163,000 for the nine-month period
ended September 28, 1996 compared with net cash used by operations of
$2,409,000 during the comparable period in fiscal 1995. Net cash provided by
operations during the nine-month period ended September 28, 1996 consisted
primarily of net income adjusted for non-cash expenses including depreciation
and amortization, and increased current liabilities, partially offset by
increased accounts receivable and inventories. The increase in accounts
receivable was due to increased revenue levels and the timing of quarterly
shipments. The increase in inventories is necessary to support the Company's
revenue growth and the introduction of the Company's LanRover Access Switch
product. Cash used by operations for the nine-month period ended September
30, 1995 consisted primarily of net loss due to expenses associated with the
Spider Acquisition, partially offset by increased accrued expenses,
depreciation and amortization, and non-cash merger expenses.
Net cash used by investing activities totaled $28,617,000 for the nine-month
period ended September 28, 1996, compared to $15,051,000 during the comparable
period in fiscal 1995. Investment activity during the nine-month period
ended September 28, 1996 consisted primarily of purchases of short-term
investments as well as property, plant and equipment to support the Company's
growth, partially offset by proceeds from short-term investments upon
maturity. Investment activity in the comparable period in fiscal 1995
consisted primarily of purchases of short-term investments and property,
plant and equipment.
Net cash provided by financing activities totaled $2,142,000 for the nine-
month period ended September 28, 1996, compared to net cash used by financing
activities of $4,510,000 during the comparable period in fiscal 1995. Net
cash provided by financing activities in the nine-months ended September 28,
1996 consisted of proceeds from stock option exercises, partially offset by
principal payments on long-term debt and capital lease obligations. Net cash
used by financing activities in the nine-months ended September 30, 1995
consisted primarily of principal payments on the Company's debt assumed as a
result of the Spider Acquisition, partially offset by proceeds from stock
option exercises.
The Company has a $5,000,000 unsecured revolving credit facility with a bank
which expires in June 1997. Borrowings under the revolving credit facility
bear interest at the bank's prime rate. The terms of the credit facility
require the Company to maintain a minimum level of profitability and
specified financial ratios. The Company had no borrowings outstanding under
this line at September 28, 1996. The Company also has a foreign credit
facility of approximately $1,563,000. There were no borrowings available under
this foreign credit facility at September 28, 1996. Available borrowings
under this facility are decreased by the value of the outstanding debt
payable to the European Coal and Steel Community Fund and guarantees on
certain foreign currency and other transactions. The terms of the foreign
credit facility require the Company to maintain a minimum level of
profitability and specified financial ratios. There were no borrowings
outstanding under this foreign credit facility at September 28, 1996.
The Company enters into forward exchange contracts to hedge against certain
foreign currency transactions for periods consistent with the terms of the
underlying transactions. The forward exchange contracts have maturities that
do not exceed one year. At September 28, 1996, the total amount of forward
exchange transactions covered by hedging contracts was $19,179,000.
The Company believes that its existing cash and short-term investment
balances, together with borrowings available under the Company's bank line of
credit, will be sufficient to meet the Company's cash requirements for the
foreseeable future.
Factors That May Affect Future Results
From time to time, information provided by the Company or statements made by
its employees may contain 'forward-looking' information which involve risks
and uncertainties. In particular, statements contained in the Management's
Discussion and Analysis of Financial Condition and Results of Operations
which are not historical facts (including, but not limited to, statements
concerning anticipated operating expense levels and the availability of funds
to meet cash requirements) may be 'forward-looking' statements. The Company's
actual future results may differ significantly from those stated in any for-
ward looking statements. Factors that may cause such differences are
discussed more fully in the Company's Annual Report to Stockholders,
Form 10-K and the Company's other Securities and Exchange Commission filings.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
<S> <C>
11 Statement of Computation of Earnings per share included
herein on page 12.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
On July 9, 1996, the Company filed a report on Form 8-K/A amending certain
financial information with respect to AirSoft, Inc. and Shiva Corporation
that was included in the Form 8-K dated June 27, 1996.
On August 13, 1996, the Company filed a report on Form 8-K/A amending certain
financial information with respect to AirSoft, Inc. and Shiva Corporation
that was included in the Form 8-K dated June 27, 1996.
<PAGE>
<TABLE>
Exhibit 11
Shiva Corporation
Computation of Earning Per Share (1)
<CAPTION>
Three months ended Nine months ended
--------------------------- ---------------------------
September 28, September 30, September 28, September 30,
1996 1995 (2) 1996 1995 (2)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted Average
Common and Common
Equivalent Shares:
Weighted Average
Common Shares
Outstanding During
the Period 28,581,648 25,014,919 28,317,851 24,579,539
Weighted Average
Common Equivalent
Shares 3,324,775 - 3,181,488 2,053,544
---------- ---------- ---------- ----------
31,906,423 25,014,919 31,499,339 26,633,083
========== ========== ========== ==========
Net Income (Loss) $6,027,000 ($11,552,000) $15,341,000 ($9,197,000)
Primary Net Income
(Loss) Per Share $0.19 ($0.46) $0.49 ($0.35)
<FN>
(1) Fully diluted net income per share has not been separately presented, as
the amounts would not be materially different from primary net income per
share
<FN>
(2) Retroactively adjusted to reflect the one-for-one stock dividend on all
shares of the Company's common stock declared by the Company's Board of
Directors on April 2, 1996. The stock dividend was paid on April 22,
1996, to all stockholders of record on April 12, 1996.
</TABLE>
<PAGE>
SIGNATURE
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.
SHIVA CORPORATION
Date: November 12, 1996 by: /s/ Cynthia M. Deysher
Cynthia M. Deysher
Senior Vice President Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-28-1996
<CASH> 69,750
<SECURITIES> 25,689
<RECEIVABLES> 55,985
<ALLOWANCES> 6,897
<INVENTORY> 14,130
<CURRENT-ASSETS> 163,324
<PP&E> 31,667
<DEPRECIATION> 13,296
<TOTAL-ASSETS> 189,128
<CURRENT-LIABILITIES> 38,904
<BONDS> 127
<COMMON> 287
0
0
<OTHER-SE> 149,184
<TOTAL-LIABILITY-AND-EQUITY> 189,128
<SALES> 151,903
<TOTAL-REVENUES> 151,903
<CGS> 62,543
<TOTAL-COSTS> 62,543
<OTHER-EXPENSES> 68,461
<LOSS-PROVISION> 540
<INTEREST-EXPENSE> 383
<INCOME-PRETAX> 23,683
<INCOME-TAX> 8,342
<INCOME-CONTINUING> 15,341
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,341
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
</TABLE>
