<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[X] Quarterly Report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1998
[ ] Transition Report pursuant to section 13 or 15(d) of the Securities
Exchange Act.
For the transition period from _______________ to ______________
Commission file number 0-25678
MRV Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware 06-1340090
(State of other jurisdiction (IRS Employer
of incorporation or organization) identification no.)
8917 Fullbright Ave., Chatsworth, CA 91311
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (818) 773-9044
Check whether the issuer:(1)has filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months ( or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes /X/ No / /
As of March 31, 1998, there were 26,426,355 shares of Common Stock, $.0034 par
value per share, outstanding.
<PAGE> 2
MRV COMMUNICATIONS, INC.
Form 10-Q/A March 31, 1998
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1: Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1998
(unaudited) and December 31, 1997 (audited) 3
Condensed Consolidated Statements of Operations (unaudited)
for the Three Months ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows (unaudited)
for the Three Months ended March 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION 10
Item 1. Legal Proceedings. 10
Item 2: Changes in Securities. 10
Item 6: Exhibits and Reports on Form 8-K 10
SIGNATURE 11
</TABLE>
As used in this Report, "MRV" or the "Company" refers to MRV Communications,
Inc. and its consolidated subsidiaries.
2
<PAGE> 3
MRV COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
March 31, December 31,
1998 1997
(unaudited) (audited)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash & cash equivalents $ 15,077 $ 19,428
Short-term investments 24,948 36,413
Accounts receivable, net of reserves of
$5,125 in 1998 and $4,252 in 1997 59,472 47,258
Inventories 44,604 41,689
Deferred income taxes 7,334 2,280
Other current assets 7,969 7,248
- ---------------------------------------------------------------------------------------------------
Total current assets 159,404 154,316
PROPERTY AND EQUIPMENT - At cost, net of depreciation
and amortization 20,480 8,183
OTHER ASSETS:
Investments 25,130 62,382
Intangible assets, including goodwill 30,838 5,077
Deferred income taxes 6,112 6,231
Other 83 47
- ---------------------------------------------------------------------------------------------------
$ 242,047 $ 236,236
- ---------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of financing lease obligations $ 140 $ 111
Accounts payable 28,594 30,439
Accrued liabilities 18,431 8,429
Accrued restructuring costs 16,474 --
Deferred revenue 4,320 293
Income taxes payable 1,623 3,485
- ---------------------------------------------------------------------------------------------------
Total current liabilities 69,582 42,757
LONG-TERM LIABILITIES
Capital lease obligations, net of current portion 795 788
Deferred income taxes 422 --
Other long-term liabilities 1,715 2,065
- ---------------------------------------------------------------------------------------------------
Total long term liabilities 2,932 2,853
MINORITY INTERESTS 2,617 657
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value:
1,000 shares authorized no shares
outstanding -- --
Common stock, $0.0034 par value:
40,000 shares authorized and 26,426
shares outstanding in 1998 and 26,360
shares outstanding in 1997 88 88
Additional paid-in capital 183,122 175,874
Retained (deficit) earnings (15,586) 14,635
Cumulative translation adjustments (708) (628)
- ---------------------------------------------------------------------------------------------------
Total stockholders' equity 166,916 189,969
- ---------------------------------------------------------------------------------------------------
$ 242,047 $ 236,236
- ---------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
3
<PAGE> 4
MRV COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
- -------------------------------------------------------------------------------------
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES, net $ 60,826 $ 35,564
- -------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of goods sold 34,005 20,176
Research and development expenses 5,243 2,748
Selling, general and administrative expenses 11,600 5,775
Purchased technology in progress 20,633 --
Restructuring costs 23,194 --
- -------------------------------------------------------------------------------------
Operating (loss) income (33,849) 6,865
Interest expense related to convertible
debentures and acquistion -- 408
Other income (expense), net 684 (166)
(Credit) provision for
income taxes (3,168) 1,938
Minority interests 224 10
- -------------------------------------------------------------------------------------
NET (LOSS) INCOME $(30,221) $ 4,343
- -------------------------------------------------------------------------------------
NET (LOSS) INCOME PER SHARE - BASIC $ (1.15) $ 0.20
NET (LOSS) INCOME PER SHARE - DILUTED $ (1.15) $ 0.18
- -------------------------------------------------------------------------------------
SHARES USED IN PER - SHARE CALCULATION - BASIC 26,387 22,188
SHARES USED IN PER - SHARE CALCULATION - DILUTED 26,387 24,795
- -------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
4
<PAGE> 5
MRV COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (30,221) $ 4,343
Adjustments to reconcile net income
(loss) to net cash used in operating activities:
Depreciation and amortization 1,351 347
Interest related to convertible debentures and acquisition -- 408
Purchased technology in progress 20,633 --
Minority interests' share of income 224 10
Changes in assets and liabilities, net
of effects from acquisitions
Decrease (increase) in:
Accounts receivable 8,681 (4,575)
Inventories 6,124 (2,769)
Deferred income taxes (4,406) 34
Other assets 1,241 513
Increase (decrease) in:
Accounts payable (19,482) 5,529
Accrued liabilities (3,842) (646)
Accrued restructuring 16,474 (788)
Income taxes payable (3,917) 138
Deferred revenue 382 (679)
Accrued severance pay (475) (25)
------- -------
Net cash (used in) provided by operating activities (7,233) 1,840
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (4,028) (215)
Purchases of investments -- (13,918)
Proceeds from sale of investments 48,717 7,033
Cash used in acquisitions, net of cash received (41,936) --
------- -------
Net cash provided by (used in) investing activities 2,753 (7,100)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 248 2,118
Repurchase of common stock -- (4,230)
Principal payments on capital lease obligations (58) (111)
------- -------
Net cash provided by (used in) financing activities 190 (2,223)
------- -------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS (61) --
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,351) (7,483)
CASH AND CASH EQUIVALENTS,
beginning of period 19,428 14,641
------- -------
CASH AND CASH EQUIVALENTS,
end of period $ 15,077 $ 7,158
======= =======
</TABLE>
5
<PAGE> 6
MRV COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Basis of Presentation - The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with the requirements of
Form 10-Q and, therefore, do not include all information and footnotes which
would be presented if such financial statements were prepared in accordance with
generally accepted accounting principles. These statements should be read in
conjunction with the audited financial statements presented in the Company's
Annual Report or Form 10-K for the year ended December 31, 1997.
In the opinion of management, these interim financial statements reflect all
normal and recurring adjustments necessary for a fair presentation of the
financial position and results of operations for each of the periods presented.
The results of operations and cash flows for such periods are not necessarily
indicative of results to be expected for the full year.
2. PURCHASED TECHNOLOGY IN PROGRESS
Although MRV Communications, Inc. reported its first, second and third quarter
results of 1998 in accordance with established accounting practice and
valuations of purchased technology in progress provided by independent
valuators, these valuations have been reconsidered in light of very recent
Securities and Exchange Commission guidance regarding valuation methodology.
Based on this new valuation methodology, the value of the purchased technology
in progress related to the Xyplex acquisition has been reduced to $20,633,000
and the amount of goodwill has been increased by $9,938,000.
3. NET EARNINGS (LOSS) PER SHARE
The following schedule summarizes the information used to compute net income
per common share for the three months ended March 31, 1998 and 1997
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1998 1997
------ -------
<S> <C> <C>
Weighted number of common shares used to compute
basic earnings (loss) per share 26,387 22,188
Weighted common share equivalents -- 2,607
------ ------
Weighted number of common shares and common share
equivalents used to compute diluted earnings
(loss) per share 26,387 24,795
====== ======
</TABLE>
4. COMPREHENSIVE INCOME
On January 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income". For year end financial statements SFAS 130 requires that comprehensive
income, which is the total of net income and all other non-owner changes in
equity, be displayed in a financial statement with the same prominence as other
consolidated financial statements. In addition, the standard encourages
companies to display the components of other comprehensive income below the
total for net income. The following schedule summarizes comprehensive income
for the three months ended March 31, 1998 and 1997 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1998 1997
-------- -------
<S> <C> <C>
Net (loss) income $(30,221) $ 4,343
Translation adjustment (80) (306)
-------- -------
Comprehensive (loss) income $(30,301) $ 4,037
======== =======
</TABLE>
5. PRO FORMA FINANCIAL DATA
On January 30, 1998, MRV completed an acquisition from Whittaker Corporation
("Whittaker") of all of the outstanding capital stock of Whittaker Xyplex, Inc.
a Delaware corporation (the "Xyplex Acquisition"). Whittaker Xyplex, Inc.,
(whose name the Company has since changed to NBase Xyplex, Inc.) is a holding
corporation owning all of the outstanding capital stock of Xyplex, Inc., a
Massachusetts corporation ("Xyplex"). Xyplex is a leading provider of access
solutions between enterprise networks and wide area network and/or Internet
service providers ("ISPs"). The purchase price paid to Whittaker consisted of
$35,000,000 in cash and three-year warrants to purchase up to 500,000 shares
of Common Stock of the Company at an exercise price of $35 per share.
As a result of the acquisition, the Company adopted a restructuring plan in
March 1998. The plan calls for reduction of workforce, closing of certain
facilities, elimination of particular product lines, settlement of
distribution agreements and other costs. The Company provided $23,194,000
for the costs of the restructuring.
Management estimates that $20,633,000 of the purchase price represents purchased
technology in process that has not yet reached technological feasibility and has
no alternative future use. Accordingly, this amount was expensed in the
Consolidated Statement of Operations upon consummation of the acquisition.
The following unaudited pro forma summary sets forth results of operations
excluding the non-recurring charges for purchased technology in progress and
restructuring, resulting from the Xyplex Acquisition as if the acquisition took
place at the beginning of each period presented:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
SELECTED PRO FORMA INFORMATION
(prior to non-recurring charges) Three Months Ended
- ---------------------------------------------------------------------------------
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------
<S> <C> <C>
OPERATING INCOME $ 9,978 $ 6,865
NET INCOME $ 7,339 $ 4,751
------- -------
NET INCOME PER SHARE - BASIC $ 0.28 $ 0.21
NET INCOME PER SHARE - DILUTED $ 0.26 $ 0.19
------- -------
SHARES USED IN PER - SHARE CALCULATION - BASIC 26,387 22,188
SHARES USED IN PER - SHARE CALCULATION - DILUTED 28,582 24,795
------- -------
</TABLE>
6
<PAGE> 7
ITEM 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, statements of
operations data of the Company expressed as a percentage of revenues.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Three Months Ended
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------
<S> <C> <C>
REVENUES, net 100.0 % 100.0 %
- --------------------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of goods sold 55.9 56.7
Research and development expenses 8.6 7.7
Selling, general and administrative expenses 19.1 16.2
Purchased technology in progress 33.9 --
Restructuring costs 38.1 --
Operating (loss) income (55.6) 19.3
Interest expense related to convertible
debentures and acquisition -- 1.1
Other income (expense), net 1.1 (0.5)
(Credit) provision for
income taxes (5.2) 5.4
Minority interests 0.4 0.0
- --------------------------------------------------------------------------------
NET (LOSS) INCOME (49.7)% 12.2 %
- --------------------------------------------------------------------------------
</TABLE>
Revenues
Revenues for the three months ended March 31, 1998 were $60,826,000 as compared
to revenues for the three months ended March 31, 1997 of $35,564,000. The change
represented increases of $25,262,000 or 71% for the quarter ended March 31, 1998
over the quarter ended March 31, 1997. Revenues increased as a result of a
larger sales force, greater marketing efforts and greater market acceptance of
the Company's products, both domestically and internationally. International
sales accounted for approximately 63% of revenues for the quarter ended March
31, 1998 as compared to 57% of revenues for the quarter ended March 31, 1997.
International sales, as a percentage of total revenues, increased mainly because
of increased sales, marketing and support resources in place in Europe. Sales of
networking products represented approximately 82% of total sales during the
quarter ended March 31, 1998 compared to approximately 75% for the quarter ended
March 31, 1997.
7
<PAGE> 8
Gross Profit
Gross profit for the quarter ended March 31, 1998 was $26,821,000 compared to
gross profit of $15,388,000 for the quarter ended March 31, 1997. The changes
represented increases of $11,433,000 or 74.3% for the quarter ended March 31,
1998 over the quarter ended March 31, 1997. Gross Profit as a percentage of
revenues increased from 43.3% during the quarter ended March 31, 1997 to 44.1%
during the quarter ended March 31, 1998 as a result of increased sales of higher
margin products.
Research and Development
Research and development ("R&D") expenses were $5,243,000 and represented 8.6%
of revenues for the quarter ended March 31, 1998. R&D expenses were $2,748,000
and represented 7.7% of revenues for the three months ended March 31, 1997. The
90.8% increase in R&D spending during the quarter ended March 31, 1998 over the
comparable period in 1997 was attributable to the continued development as well
as for new projects of the Company's networking and fiber optic products. The
Company intends to continue to invest in the research and development of new
products. Management believes that the ability of the Company to develop and
commercialize new products is a key competitive factor.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses increased to $11,600,000
for the quarter ended March 31, 1998 from $5,775,000 for the quarter ended March
31, 1997. As a percentage of revenues, SG&A increased from 16.2% for the quarter
ended March 31, 1997 to 19.1% for the quarter ended March 31, 1998. The
increases in SG&A expense, both in dollar amounts and as a percentage of sales,
are due primarily to substantially increased marketing efforts as well as
increased personnel and overhead costs in expanded locations.
Purchased Technology in Progress and Restructuring Costs.
Purchased technology in progress for the quarter ended March 31, 1998 was
$20,633,000 and related to R&D projects of Xyplex in progress at the time of the
Xyplex Acquisition on January 30, 1998. Restructuring costs during the quarter
ended March 31, 1998 were $23,194,000. The restructuring costs in the first
quarter of 1998 were associated with a plan adopted by the Company in March,
1998 calling for the reduction of workforce, closing of certain facilities,
elimination of particular product lines, settlement of distribution agreements
and other costs. The Company did not incur these charges in the comparable
period of 1997.
Net Loss (Income).
The Company incurred a net loss of $30,221,000 during the three months ended
March 31, 1998 compared to net income of $4,343,000 during the three months
ended March 31, 1997. Net income for the three months ended March 31, 1998 would
have been $7,339,000, excluding $43,827,000 of charges, associated with the
Xyplex Acquisition, as compared to net income of $4,751,000, excluding unusual
charges relating to interest expenses attributable to financing the Fibronics
Acquisition for the three months ended March 31, 1997. Excluding these
non-recurring charges, net income increased by $2,588,000, or 54.5% for the
three months ended March 31, 1998 over the three months ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
In September 1997, the Company completed a follow-on public offering of
2,785,000 shares of Common Stock raising net proceeds of $93,320,000 (the "1997
Public Offering").
Net cash used in operating activities for the quarter ended March 31, 1998 was
$7,233,000. The funds were used primarily to purchase technology in progress and
for restructuring costs in connection with the Xyplex Acquisition. Net cash
provided by investing activities for the three months ended March 31, 1998 was
$2,753,000. The cash provided by
8
<PAGE> 9
investing activities primarily resulted from the sale of investments in U.S.
Government securities to finance the Xyplex Acquisition.
Accounts receivable were $59,472,000 at March 31, 1998 as compared to
$47,258,000 at December 31, 1997. The increase in accounts receivable was
primarily attributable to the increase in overall sales in Europe where terms of
sale are traditionally longer than in the U.S.
Inventories were $44,604,000 at March 31, 1998 as compared to $41,689,000 at
December 31, 1997. The increase in inventories was primarily attributable to the
Company's decision to add larger inventories to shorten lead times for customers
and the Xyplex Acquisition. Management believes that MRV's inventory levels at
various points in time may not necessarily be comparable to those of many other
companies in its industry. This is because MRV conducts significant in-house
manufacturing of various components used in its products and thus carries
substantial raw materials and work-in-progress in addition to finished products
in its inventories. In contrast, many competitors outsource to turnkey contract
manufacturers substantial portions of their production requirements and thus do
not include material amounts of raw materials or work in progress in inventories
and may in some circumstances not even include finished products in inventory if
the contract manufacturer ships directly to the competitors' customers.
EFFECTS OF INFLATION AND CURRENCY EXCHANGE RATES
The Company believes that the relatively moderate rate of inflation in the
United States over the past few years has not had a significant impact on the
Company's sales or operating results or on the prices of raw materials. However,
in view of the Company's expansion of operations in Israel which has
experienced substantial inflation, there can be no assurance that inflation in
Israel will not have a materially adverse effect on the Company's operating
results in the future.
The Company's sales are currently denominated in U.S. dollars and to date its
business has not been significantly affected by currency fluctuations or
inflation. However, the Company conducts business in several different countries
and thus fluctuations in currency exchange rates could cause the Company's
products to become relatively more expensive in particular countries, leading to
a reduction in sales in that country. In addition, inflation in such countries
could increase the Company's expenses. To date, the Company has not hedged
against currency exchange risks. In the future, the Company may engage in
foreign currency denominated sales or pay material amounts of expenses in
foreign currencies and, in such event, may experience gains and losses due to
currency fluctuations. The Company's operating results could be adversely
affected by such fluctuations or as a result of inflation in particular
countries where material expenses are incurred.
YEAR 2000
Many existing computer programs, including some programs used by the Company,
use only two digits to identify a year in the date field. These programs were
designed without considering the impact of the upcoming change in the century.
If not corrected, these computer applications and systems could fail or create
erroneous results by, at, or after the year 2000. Based on the Company's
investigation to date, management does not anticipate that the Company will
incur material operating expenses or be required to incur material costs to be
year 2000 compliant. To the extent the Company's systems are not fully year 2000
compliant, there can be no assurance that potential systems interruptions or the
cost necessary to update software would not have a material adverse effect on
the Company's business, financial condition, results of operations and business
prospects.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As previously reported, on December 27, 1996, Datapoint Corporation
("Datapoint") brought an action against NBase Communications, Inc., a
subsidiary of the Company ("NBase") and several other defendants in the United
States District Court for the Eastern District of New York alleging infringement
of two of Datapoint's patents related to LANs, more particularly to claimed
improved LANs which interoperatively combines additional enhanced capability
and/or which provides multiple different operational capabilities. In the same
lawsuit, Datapoint alleged that other defendants including Dayna Communications,
Inc., Sun Microsystems, Inc., Adaptec, Inc., International Business Machines
Corporation, Lantronix and SVEC America Computer Corporation have infringed the
same two patents. The Company has been advised that several other companies,
including Intel Corporation and Cisco Systems, Inc. have also had actions
brought against them by Datapoint with respect to the same two patents. The
action against NBase and its codefendants seeks, among other things, an
injunction against the manufacture or sale of products which embody the
inventions set forth in the two patents and single and treble damages for the
alleged infringement. Datapoint's complaint also seeks to have the court
determine that the named defendants shall serve as representatives of a
defendant class of manufacturers, vendors and users of products allegedly
infringing on Datapoint's claimed patents from which defendant class Datapoint
seeks the same relief as from the individual defendants. The Company is
cooperating with several of the defendants in pursuit of common defenses and
believes it has meritorious defenses to this action. If a conclusion unfavorable
to the Company is reached, however, Datapoint's claim could materially affect
the business, operating results and financial condition of the Company.
Item 2. Change in Securities
(a) Not applicable
(b) Not applicable
(c) On January 30, 1998, as part of the consideration for the Xyplex
Acquisition, the Company issued to Whittaker three-year warrants (the
"Warrants") to purchase up to 500,000 shares of Common Stock of the
Company at an exercise price of $35 per share.
The issuance of the Warrants was not effected through a broker-dealer, and no
underwriting discounts or commissions were paid in connection with such
issuance. Exemption from registration requirements is claimed under the
Securities Act of 1933 (the "Securities Act") in reliance on Section 4(2) of the
Securities Act or Regulation D promulgated thereunder. Whittaker represented its
intention to acquire the securities for investment only and not with a view to,
or for sale in connection with, any distribution thereof and appropriate legends
were affixed to the certificates evidencing the securities in such transaction.
Whittaker had adequate access to information about the Company.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
Current Report on Form 8-K dated February 13, 1998 reporting on Items 2
and 7.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant certifies that it has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized on March 9, 1999.
MRV COMMUNICATIONS, INC.
By: /s/ EDMUND GLAZER
---------------------------------------------------
Edmund Glazer
Vice President of Finance and Administration and
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,077
<SECURITIES> 50,078
<RECEIVABLES> 64,597
<ALLOWANCES> 5,125
<INVENTORY> 44,604
<CURRENT-ASSETS> 159,404
<PP&E> 24,190
<DEPRECIATION> 3,710
<TOTAL-ASSETS> 242,047
<CURRENT-LIABILITIES> 69,581
<BONDS> 0
0
0
<COMMON> 88
<OTHER-SE> 166,828
<TOTAL-LIABILITY-AND-EQUITY> 242,047
<SALES> 60,826
<TOTAL-REVENUES> 94,675
<CGS> 34,005
<TOTAL-COSTS> 104,475
<OTHER-EXPENSES> 460
<LOSS-PROVISION> 873
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33,389)
<INCOME-TAX> (3,168)
<INCOME-CONTINUING> (30,221)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,221)
<EPS-PRIMARY> (1.15)
<EPS-DILUTED> (1.15)
</TABLE>
