<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997.
[ ] 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 0-19955
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MOLECULAR DYNAMICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3050031
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
928 EAST ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices and zip code)
(408) 773-1222
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
As of October 26, 1997, 10,351,426 shares of Common Stock of the Registrant
were outstanding.
1
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MOLECULAR DYNAMICS, INC.
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements Page(s)
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<S> <C>
Condensed Consolidated Balance Sheets
September 30, 1997 and December 31, 1996............................... 3
Condensed Consolidated Statements of Income
Three and nine months ended September 30, 1997 and 1996................ 4
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996.......................... 5
Notes to Interim Condensed 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 6. Exhibits and Reports on Form 8-K....................................... 12
Signatures....................................................................... 13
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
1997 1996
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,957 $ 8,024
Securities available-for-sale 11,404 12,617
Trade accounts receivable, net 11,927 11,002
Other accounts receivable 4,299 1,559
Inventories 9,445 6,869
Prepaids and other current assets 579 347
--------- --------
Total current assets 48,611 40,418
Property and equipment, net 4,654 2,997
Other assets, net 2,772 2,628
--------- --------
Total assets $ 56,037 $ 46,043
--------- --------
--------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,407 $ 3,264
Accrued expenses 4,512 5,073
Factoring liability 644 1,124
Unearned revenue and customer advances 5,840 3,068
--------- --------
Total current liabilities 15,403 12,529
--------- --------
Stockholders' equity:
Common stock and additional paid-in capital 39,247 39,964
Retained earnings (deficit) 1,543 (2,425)
Cumulative translation adjustment (165) (88)
Unrealized gain on securities available-for-sale 9 5
Less 0 and 445,800 shares of common
stock in treasury in 1997 and 1996,
respectively, at cost - (3,943)
--------- --------
Total stockholders' equity 40,634 33,514
--------- --------
Total liabilities and stockholders' equity $ 56,037 $ 46,043
--------- --------
--------- --------
SEE ACCOMPANYING NOTES.
3
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MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales and other revenue $ 14,368 $ 12,910 $ 41,254 $ 35,945
Cost of sales and other revenue 6,607 5,800 18,303 15,741
--------- --------- --------- ---------
Gross profit 7,731 7,110 22,951 20,204
--------- --------- --------- ---------
Operating expenses:
Research and development 1,519 1,513 5,203 4,859
Sales and marketing 3,654 3,615 10,539 11,078
General and administrative 1,294 975 3,492 2,661
--------- --------- --------- ---------
Total operating expenses 6,467 6,103 19,234 18,598
--------- --------- --------- ---------
Operating income 1,294 1,007 3,717 1,606
Interest income, net 273 212 790 583
Other income (4) (12) 2 16
--------- --------- --------- ---------
Income before income taxes 1,563 1,207 4,509 2,205
Income taxes 188 139 541 220
--------- --------- --------- ---------
Net income $ 1,375 $ 1,068 $ 3,968 $ 1,985
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per share $ .12 $ .10 $ .35 $ .19
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used to compute earnings per share 11,535 10,629 11,274 10,668
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities 2,010 3,918
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,699) (944)
Capitalized software development costs (568) (360)
Purchases of securities available-for-sale (30,631) (14,842)
Maturities and sales of securities available-for-sale 31,852 16,997
Other assets (98) (69)
-------- --------
Net cash (used in) provided by investing activities (2,144) 782
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employee stock purchase plans
and option exercises 921 -
Purchase of treasury stock - (1,519)
Reissuance of treasury stock 2,303 976
Net decrease in factoring liability (480) -
-------- --------
Net cash provided by (used in) financing activities 2,744 (543)
-------- --------
Effect of exchange rate changes on cash 323 241
-------- --------
Net increase in cash and cash equivalents 2,933 4,398
Cash and cash equivalents at beginning of period 8,024 2,727
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,957 $ 7,125
-------- --------
-------- --------
SEE ACCOMPANYING NOTES.
5
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MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheets of Molecular
Dynamics, Inc. and subsidiaries (Molecular Dynamics or the Company) as of
September 30, 1997 and December 31, 1996 and the related condensed
consolidated statements of operations for the three and nine month periods
ended September 30, 1997 and 1996 and condensed consolidated statements of
cash flows for the nine months ended September 30, 1997 and 1996 have been
prepared on substantially the same basis as are the annual consolidated
financial statements. In the opinion of management, the financial statements
reflect all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position, operating
results and cash flows for those periods presented. The results of
operations for the three and nine months ended September 30, 1997 are not
necessarily indicative of results to be expected for the entire year. These
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements, and notes thereto, for the year
ended December 31, 1996 included in the Company's Form 10-K/A.
For clarity of presentation the Company has indicated that its third
quarters ended September 30 and its fiscal year ended December 31, whereas in
fact, the Company's third quarters for fiscal years 1997 and 1996 ended on
September 28, 1997 and September 29, 1996, respectively, and its fiscal year
ended December 29, 1996.
NOTE 2 - INVENTORIES
Inventories consisted of (in thousands):
September 30, December 31,
1997 1996
---- ----
Raw material $ 4,905 $ 3,045
Work-in-process 2,534 1,786
Finished goods 2,006 2,038
-------- --------
$ 9,445 $ 6,869
-------- --------
-------- --------
NOTE 3 - NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" (SFAS No.128),
which requires the presentation of basic earnings per share (EPS) and, for
companies with complex capital structures, diluted EPS. SFAS No. 128 is
effective for annual and interim periods ending after December 15, 1997;
earlier application is not permitted. The Company expects that basic EPS
will be higher than primary earnings per share as presented in the
accompanying consolidated financial statements, although the two amounts may
round to the same number. The Company has not yet analyzed how the
calculation of diluted earnings per share will compare to primary or fully
diluted earnings per share amounts. All prior period earnings per share
amounts will be restated upon adoption.
6
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NOTE 4. - COLLABORATION WITH AFFYMETRIX, INC.
In the third quarter of 1994, a consortium led by Affymetrix, Inc. and the
Company was awarded funding from the Advanced Technology Program of the
National Institute of Standards and Technology (NIST). The Company and its
partner, Affymetrix, collaborate with researchers at several academic and
research institutions in an effort to develop miniaturized DNA diagnostic
systems. The two companies will receive up to $31 million in matching funds
to be divided approximately 33% to the Company and 67% to Affymetrix over the
five years of the grant beginning in January 1995, for research and
development in the field of DNA diagnostic devices with a total shared
project cost of $63 million. Approximately $12 million of the $31 million
was available for the first two years of the grant period, which ended in
January 1997. The Company has received notification from NIST that funding
has been authorized for the remaining term of the grant, which ends in
January 2000. The additional funding will allow the Company to work toward
developing new fluorescence detection technologies and DNA separation devices
and apply these to the expanding field of molecular genetics. In the third
quarter and first nine months of 1997, the Company reduced research and
development expenses by approximately $392,000 and $1.8 million,
respectively, representing support from the grant, compared to $449,000 and
$1.4 million, respectively, in the prior year periods. In addition, in the
third quarter and first nine months of 1997, the Company reduced its
capitalized software by approximately $118,000 and $366,000, respectively,
compared to $74,000 and $233,000 in the prior year periods, respectively,
representing support from the grant.
NOTE 5. - STOCK REPURCHASE PROGRAM
In May 1994, the Board of Directors authorized the purchase of up to
1,000,000 shares of the Company's common stock in the open market, and in
February 1997 the Board increased this amount by 500,000 shares. The Company
has purchased approximately 1,000,000 shares under this program as of
September 30, 1997. Of these, approximately 1,000,000 shares were reissued
under the Company's Stock Option and Employee Stock Purchase Plans, of which
approximately 446,000 shares were reissued during the first nine months of
1997.
NOTE 6. - TECHNOLOGY ACCESS PROGRAM
The Company and Amersham Life Science Ltd. are developing systems for
fluorescence analysis of DNA in microarrays. The two companies are pursuing
agreements with genomics, pharmaceutical and biotechnology companies to
provide them with microarray systems prior to their release to the general
market, in exchange for funding and collaborative expertise. In November
1996, the Company entered into one agreement for early access to this
technology. During the first nine months of 1997, the companies entered into
six additional agreements. Subsequent to September 28,1997 one additional
agreement has been signed. Research and development expenses for the third
quarter and first nine months of 1997 were reduced by $566,000 and $799,000,
respectively, of credits representing amortization of fees from clients
participating in the Company's technology access program.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the fiscal year
ended December 31, 1996.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS DOCUMENT ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE
CERTAIN RISKS AND UNCERTAINTIES, INCLUDING THE RISKS AND UNCERTAINTIES SET
FORTH BELOW UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS". SUCH FORWARD
LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND ACTUAL RESULTS MAY
DIFFER MATERIALLY.
RESULTS OF OPERATIONS
SALES AND OTHER REVENUE. The Company's third quarter 1997 sales and other
revenue of $14.4 million increased 11.3% from sales and other revenue of
$12.9 million in the third quarter of 1996. This increase resulted primarily
from increases in sales of the Company's MegaBACE-TM- 1000 high-throughput
sequencing instruments to test-site customers and recognition of revenue
pursuant to agreements for early access to systems and technology for the
analysis of DNA in microarrays, partially offset by decreases in sales of its
scanner product line. Additionally, sales and other revenue for the nine
months ended September 30, 1997 were $41.3 million, an increase of 14.8% from
sales and other revenue of $35.9 million in the comparable prior year period.
This increase resulted from increases in sales of the MegaBACE-TM- 1000
high-throughput sequencing instruments to test-site customers, recognition of
revenue pursuant to agreements for early access to systems and technology for
the analysis of DNA in microarrays and increases in sales of its scanner
product line. The Company sells its products through direct sales operations
in North America, the United Kingdom, Germany, France, Japan and Australia.
Changes in foreign currency exchange rates had the effect of decreasing the
Company's sales and other revenue by approximately $957,000 for the nine
months ended September 30, 1997 compared to the prior-year period. Foreign
currency fluctuations for the third quarter of 1997 had the effect of
decreasing the Company's sales and other revenue by approximately $345,000
compared to the prior year period.
GROSS MARGINS. Gross margins for the third quarter and first nine months of
1997 were 54.0% and 55.6%, respectively, compared to 55.1% and 56.2% in each
of the respective prior year periods. The decrease in gross margins between
the third quarters is primarily due to increased sales of lower-margin
instruments and pre-production microarray systems compared to total sales.
Although similar factors impacted the comparable nine-month periods, such
factors were offset by the technology access fees associated with the
Company's technology access program for microarray systems, with no
associated cost of revenue.
RESEARCH AND DEVELOPMENT. Research and development expenses for the third
quarter and first nine months of 1997 were $1.5 and $5.2 million,
respectively, compared to $1.5 and $4.9 million in the respective prior year
periods. The increase in the first nine months of 1997 compared to the prior
year period resulted from the expansion of major development programs, offset
by credits to expense representing recognition of fees from clients
participating in the Company's program for early access to technology for the
analysis of DNA in microarrays, and a slight increase in support from the
Company's NIST Grant. Research and development expenses decreased as a
percentage of sales and other revenue to 10.6% and 12.6% in the third quarter
and first nine months of 1997, respectively, compared to 11.7% and 13.5% in
the third quarter and first nine months of 1997, respectively, primarily due
to the increase in sales and other revenue between the
8
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two periods. Research and development expenses for the third quarter and
first nine months of 1997 were reduced by $392,000 and $1.8 million,
respectively, of credits representing support from the Company's NIST grant,
compared to $449,000 and $1.4 million, respectively, of credits in the prior
year periods. Research and development expenses for the third quarter and
first nine months of 1997 were also reduced by $566,000 and $799,000,
respectively, of credits representing amortization of fees from clients
participating in the Company's technology access program. In addition, in
the third quarter and first nine months of 1997, the Company reduced its
capitalized software by approximately $118,000 and $366,000, respectively,
representing support from the grant, compared to $95,000 and $360,000,
respectively, for the comparable prior-year periods.
SALES AND MARKETING. Sales and marketing expenses for the third quarter and
first nine months of 1997 were $3.7 and $10.5 million as compared to $3.6 and
$11.1 million in the respective prior year periods. The decrease between the
nine-month periods is primarily the result of improved resource allocations
within the Company's sales and marketing departments, changes in foreign
currency rates and improved efficiency. As a percentage of sales and other
revenues, sales and marketing expenses decreased to 25.4% and 25.5% for the
third quarter and first nine months of 1997, respectively, from 28.0% and
30.8% in the respective prior year periods, due primarily to the increase in
sales and other revenues. Changes in foreign currency exchange rates had the
effect of decreasing the Company's sales and marketing expenses by
approximately $348,000 for the first nine months of 1997 compared to the
prior-year period. Foreign currency fluctuations for the third quarter of
1997 had the effect of decreasing the Company's sales and marketing expenses
by approximately $106,000 compared to the prior year period.
GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
third quarter and first nine months of 1997 were $1.3 million and $3.5
million, as compared to $1.0 million and $2.7 million in the respective prior
periods. As a percentage of revenue, general and administrative expenses
increased to 9.0% and 8.5% for the third quarter and first nine months of
1997, respectively, from 7.6% and 7.4% in the respective prior periods.
These increases were primarily due to legal expenses associated with patent
and general litigation issues, not completely offset by increases in sales
and other revenues.
PROVISION FOR INCOME TAXES. During the third quarter and first nine months
of 1997, the Company recorded tax expense utilizing an annual effective tax
rate of 12.0% as compared to a rate of 10.0% for the third quarter and first
nine months of 1996. The increased tax rates in 1997 are attributable to the
anticipated complete utilization of federal and several state net operating
loss carryovers during 1997, resulting in federal Alternative Minimum Taxes
and state regular taxes, while the low tax rates in 1996 are attributable to
usage of net operating loss carryovers, and consist of state and federal
Alternative Minimum Taxes. The Company has remaining federal and state tax
credits available to offset future regular federal and state income tax
liabilities.
EARNINGS PER SHARE. The Company generated earnings per share of $.12 and
$.35, respectively, in the third quarter and first nine months of 1997 as
compared to earnings per share of $.10 and $.19 in the respective comparable
periods of 1996. This improvement is due primarily to the increase in sales
and other revenue and expense controls. Weighted average shares outstanding
used in computing earnings per share were 11.5 and 11.3 million shares for
the third quarter and first nine months of 1997, respectively, as compared to
10.6 and 10.7 million shares for the comparable periods in 1996
FACTORS THAT MAY AFFECT FUTURE RESULTS
9
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The Company believes that results of operations in any quarterly period may
be impacted by factors such as delays in the introduction or shipment of new
products, in the timing of the signing of agreements for early access to
technology, the timing of the recognition of fees from such agreements,
difficulty in acquiring critical product components of acceptable quality and
in required quantity, the effect of announcements of new competitive
products, increases in legal expenses, increased competition, changes in the
Company's product mix, a slower growth rate in the Company's target markets,
order deferrals in anticipation of new product releases, or lack of market
acceptance of new products, reduction or delay of government and private
sector funding of research activities, or adverse changes in economic
conditions in any of the countries in which the Company does business. Also,
during periods when a significant portion of net sales and net income are
contributed by international operations, fluctuations of the U.S. dollar
against foreign currencies such as those that have occurred in the past could
affect the Company's results of operations and financial condition in a
particular quarter. There can be no assurance that the Company will be able
to grow in future periods or continue profitability on a quarterly basis.
Due to the factors noted above, the Company's future earnings and stock price
may be subject to significant volatility, particularly on a quarterly basis.
Any shortfall in revenues or earnings from levels expected by securities
analysts could have an immediate and significant adverse effect on the
trading price of the Company's common stock. The Company typically
recognizes a substantial portion of sales near the end of a quarter.
Therefore, the Company may not become aware of such shortfalls until late in
a quarter, which may result in an adverse effect on the trading price of the
Company's common stock.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of September 30, 1997 was $33.2 million, compared to $27.9
million at December 31, 1996. During the first nine months of this fiscal
year, the issuance of treasury stock for employee stock option and purchase
plans was the source of approximately $2.3 million of working capital, and
working capital was used to purchase approximately $2.7 million in fixed
assets, primarily related to expansion of the Company's facilities.
The Company's principal commitments at September 30, 1997 consisted of
obligations under operating leases for facilities and equipment. Long term
cash requirements, other than normal operating expenses, are anticipated for
development of new products, enhancement of existing products, financing
continued growth, and possible acquisition of products, technologies or
businesses complementary to the Company's business. The Company believes its
cash, securities available-for-sale, and cash flows from operating activities
will be sufficient to satisfy its working capital requirements for the
foreseeable future.
NEW ACCOUNTING STANDARDS. In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128
"Earnings Per Share" (SFAS No.128), which requires the presentation of basic
earnings per share (EPS) and, for companies with complex capital structures,
diluted EPS. SFAS No. 128 is effective for annual and interim periods ending
after December 15, 1997; earlier application is not permitted. The Company
expects that basic EPS will be higher than primary earnings per share as
presented in the accompanying consolidated financial statements, although the
two amounts may round to the same number. The Company has not yet analyzed
how the calculation of diluted earnings per share will compare to primary or
fully diluted earnings per share amounts. All prior period earnings per share
amounts will be restated upon adoption.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS
130) which will be effective for financial statements for periods beginning
after December 15, 1997, and establishes standards for reporting and
10
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display of comprehensive income and its components in a full set of general
purpose financial statements. Earlier application is permitted. The Company
will make the required reporting of comprehensive income in its consolidated
financial statements for the fiscal year ending December 31, 1998.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 "Disclosures about Segments of a
Business Enterprise" (SFAS 131) which will be effective for financial
statements beginning after December 15, 1997, and establishes standards for
disclosures about segments of an enterprise. Earlier application is
encouraged. The Company will make the required disclosures under SFAS 131 in
its consolidated financial statements for the year ended December 31, 1998.
11
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PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit 11.1 - Statement re Computation of Earnings Per Share
(b) Exhibit 27 - Financial Data Schedule
(c) There were no reports on Form 8-K during the quarter ended
September 30, 1997.
12
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MOLECULAR DYNAMICS, INC.
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.
MOLECULAR DYNAMICS, INC.
(Registrant)
Date: November 11, 1997 By: /s/ Jay Flatley
----------------- ------------------------------------------
Jay Flatley
President, Chief Executive
Officer & Chief Financial Officer
Date: November 11, 1997 By: /s/ Lynne R. Wagoner
----------------- ------------------------------------------
Lynne R. Wagoner
Director of Finance
(Principal Accounting Officer)
13
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EXHIBIT INDEX
(a) Exhibit 11.1 - Statement re Computation of Earnings Per Share
(b) Exhibit 27 - Financial Data Schedule
<PAGE>
EXHIBIT 11.1
MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 1,375 $ 1,068 $ 3,968 $ 1,985
-------- -------- -------- --------
Weighted average shares outstanding:
Common stock 10,269 10,074 10,122 10,100
Common stock equivalents - options 1,266 555 1,152 568
-------- -------- -------- --------
11,535 10,629 11,274 10,668
-------- -------- -------- --------
Earnings per share $ 0.12 $ 0.10 $ 0.35 $ 0.19
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOLECULAR
DYNAMIC INC.'S QUARTERLY REPORT ON FORM 10Q FOR THE PERIOD ENDED SEPTEMBER 30,
1997 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> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,957
<SECURITIES> 11,404
<RECEIVABLES> 12,202
<ALLOWANCES> (275)
<INVENTORY> 9,445
<CURRENT-ASSETS> 48,611
<PP&E> 10,386
<DEPRECIATION> (5,732)
<TOTAL-ASSETS> 56,037
<CURRENT-LIABILITIES> 15,403
<BONDS> 0
0
0
<COMMON> 39,247
<OTHER-SE> 1,387
<TOTAL-LIABILITY-AND-EQUITY> 56,037
<SALES> 41,254
<TOTAL-REVENUES> 41,254
<CGS> 18,303
<TOTAL-COSTS> 18,303
<OTHER-EXPENSES> 19,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,509
<INCOME-TAX> 541
<INCOME-CONTINUING> 3,968
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,968
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
