<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
--------- ---------
Commission file number 0-28180
-------
SPECTRALINK CORPORATION
(Exact name of registrant as specified in charter)
Delaware 84-1141188
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1650 38th Street, Suite 202E, Boulder, Colorado 80301
(Address of principal executive office) (Zip code)
303-440-5330
(Issuer's telephone number)
N.A.
(Former name, former address and former fiscal year, if changed from last
report)
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years: N.A.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No N.A.
--- ---
Applicable only to corporate issuers:
As of June 30, 1996 there were outstanding 18,915,366 shares of SpectraLink
Corporation Common Stock - par value $.01.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
1
<PAGE> 2
SPECTRALINK CORPORATION
INDEX
<TABLE>
<CAPTION>
Part I Financial Information Page
<S> <C> <C>
Item 1 Financial Statements
Balance Sheets at
Quarter ended June 30, 1996 and year ended December 31, 1995 3
Statements of Operations
Three months and six months ended June 30, 1996 and 1995 4
Statements of Cash Flows
Six months ended June 30, 1996 and 1995 5
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
</TABLE>
Cautionary Statement pursuant to Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995 11
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Form 8-K
None.
2
<PAGE> 3
SPECTRALINK CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 13,192 $ 1,729
Short-term investments 16,820 524
Trade accounts receivable, net of allowance of approximately
$262 at June 30, 1996 and $225 at December 31, 1995, respectively,
for uncollectible accounts 5,434 4,285
Inventory 2,273 2,239
Other 454 117
----------- ----------
Total current assets 38,173 8,894
----------- ----------
PROPERTY AND EQUIPMENT, at cost: 2,893 2,258
Less - Accumulated depreciation (1,296) (1,176)
----------- ----------
1,596 1,082
----------- ----------
OTHER 37 50
----------- ----------
TOTAL ASSETS $ 39,806 $ 10,026
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 316 $ 428
Accrued payroll, commissions, and employee benefits 904 593
Accrued warranty expenses 274 184
Other accrued expenses 517 380
Current portion of long-term debt 89 118
----------- ----------
Total current liabilities 2,100 1,703
LONG-TERM DEBT, net of current portion 89 319
----------- ----------
Total liabilities 2,189 2,022
----------- ----------
STOCKHOLDERS' EQUITY:
Convertible preferred stock 0 75
Common stock 189 38
Additional paid-in capital 47,923 20,430
Accumulated deficit (10,495) (12,539)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY 37,617 8,004
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,806 $ 10,026
=========== ==========
</TABLE>
3
<PAGE> 4
SPECTRALINK CORPORATION
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 6,210 $ 3,940 $ 11,761 $ 7,279
COST OF SALES 2,209 2,032 4,492 3,674
--------- ---------- ----------- ----------
Gross profit 4,001 1,908 7,269 3,605
OPERATING EXPENSES
Research and development 804 460 1,353 945
Marketing and selling 1,740 1,092 3,343 2,053
General and administrative 370 242 707 423
--------- ---------- ----------- ----------
Total operating expenses 2,914 1,794 5,403 3,421
--------- ---------- ----------- ----------
INCOME FROM OPERATIONS 1,087 114 1,866 184
INVESTMENT INCOME AND OTHER, net 266 33 286 75
--------- ---------- ----------- ----------
INCOME BEFORE INCOME TAXES 1,353 147 2,152 259
INCOME TAX EXPENSE 68 4 108 5
--------- ---------- ----------- ----------
NET INCOME $ 1,285 $ 143 $ 2,044 $ 254
========= ========== =========== ==========
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARES $ 0.07 $ 0.01 $ 0.12 $ 0.02
========= ========== =========== ==========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 18,590 15,630 17,250 15,630
========= ========== =========== ==========
</TABLE>
4
<PAGE> 5
SPECTRALINK CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,044 $ 254
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 278 108
Changes in assets and liabilities
Increase in accounts receivable, net (1,149) (45)
Increase in inventory (34) (306)
(Increase) decrease in other assets (324) 108
Decrease in accounts payable (111) (52)
Increase in other accrued liabilities 537 30
--------- -----------
Net cash provided by operating activities 1,241 96
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (793) (249)
Purchases of short-term investments (16,296) -
Maturity of short-term investments - 2,000
--------- -----------
Net cash provided by (used in) investing activities (17,089) 1,751
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit and notes payable 275 -
Repayments on line of credit and notes payable (499) -
Payments on capital lease obligations (35) (34)
Proceeds from exercise of incentive common stock options 54 13
Proceeds from issuance of common stock, net of expenses 27,515 -
--------- -----------
Net cash provided by (used in) financing activities 27,310 (20)
--------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 11,463 1,827
CASH AND CASH EQUIVALENTS, beginning of period 1,729 140
--------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 13,192 $ 1, 968
========= ===========
</TABLE>
5
<PAGE> 6
SPECTRALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
UNAUDITED
1. Basis of Presentation
The accompanying financial statements as of June 30, 1996 and 1995 and for the
quarters then ended have been prepared from the books and records of the
Company and are unaudited. In management's opinion, these financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation. Interim results are not necessarily
indicative of results for a full year.
The financial statements should be read in conjunction with the audited
financial statements for the year ended December 31, 1995 presented in the
Company's Prospectus dated April 26, 1996 relating to its Registration
Statement on Form SB-2. The accounting policies utilized in the preparation of
the financial statements herein presented are the same as set forth in the
Company's annual financial statements.
2. Initial Public Offering
On May 1, 1996 the Company received $24,924,000 in proceeds from an initial
public offering of 3,350,000 shares of common stock. Approximately $937,000 of
the proceeds were used to cover the expenses of the public offering and
$488,000 to pay off the equipment purchase line of credit. The remaining
funds were invested primarily in investment- grade debt securities. Concurrent
with the closing of the offering, (a) all outstanding shares of preferred stock
were automatically converted to common stock at a ratio of one (1) share of
preferred stock to one and a half (1.5) shares of common stock and (b) all
outstanding warrants converted into shares of common stock. On May 20, 1996,
the IPO underwriters exercised their option to purchase an additional 455,100
shares from the Company for $3,386,000; the Company also invested these
proceeds in investment grade securities. The Company intends to use the
proceeds from the public offering to fund capital expenditures, provide
adequate working capital, and finance the Company's expansion for at least the
immediate future.
3. Inventories
Inventories include the cost of raw materials, direct labor and manufacturing
overhead, and are stated at the lower of cost (first-in, first-out) or market.
Inventories at June 30, 1996 and December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
Unaudited
---------
<S> <C> <C>
Raw materials $ 1,256 $ 1,413
Work in process 5 11
Finished Goods 1,012 815
------- -------
$ 2,273 $ 2,239
======= =======
</TABLE>
4. Debt
Long-term debt at June 30, 1996 and December 31, 1995 consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
---- ----
Unaudited
---------
<S> <C> <C>
Note payable to lessor and other $ 110 $ 334
Capital lease obligations on leases to finance equipment 68 102
----- -----
178 437
Less ---- current portion (89) (118)
----- -----
$ 89 $ 319
===== =====
</TABLE>
The note payable to lessor was paid off on July 1, 1996.
6
<PAGE> 7
SPECTRALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
UNAUDITED
5. Net Income per Common and Common Equivalent Share
Net income per common and common equivalent share has been computed using the
weighted average number of shares of common stock, common equivalent shares
from the convertible preferred stock (using the if converted method at date of
issuance ) and common stock equivalent shares from stock options and warrants
outstanding (using the treasury stock method). Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83, common stock and common
stock equivalent shares issued by the Company at prices significantly below the
assumed public offering price during the twelve month period prior to the
proposed offering date (using the treasury stock method) have been included in
the calculation as if they were outstanding for all periods presented.
7
<PAGE> 8
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECTRALINK CORPORATION
OVERVIEW
SpectraLink commenced operations in April 1990 to design, manufacture and
sell unlicensed digital wireless telephone communication systems for
businesses. The Company sold its first commercial system in June of 1992.
SpectraLink's primary sales efforts are currently focused on hospitals, nursing
homes, retail stores, distribution centers, manufacturing facilities, and
corporate offices. SpectraLink sells its systems in the United States and
Canada through its direct sales force, telecommunications equipment
distributors, and specialty dealers.
Since inception, the Company has expended considerable effort and
resources developing its wireless telephone systems, building its direct and
indirect channels of distribution, and managing the effects of rapid growth.
This rapid growth has required it to significantly increase the scale of its
operations, including the hiring of additional personnel in all functional
areas, and has resulted in significantly higher operating expenses. The
Company anticipates that its operating expenses will continue to increase.
RESULTS OF OPERATIONS
The following table sets forth certain income and expense items as a
percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
==================================================================================================================
Three Months Ended June 30, Six Months Ended June 30,
==================================================================================================================
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
- ------------------------------------------------------------------------------------------------------------------
Net Sales 100.0% 100.0% 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------------------
Cost of Sales 35.6% 51.6% 38.2% 50.5%
- ------------------------------------------------------------------------------------------------------------------
Gross Profit 64.4% 48.4% 61.8% 49.5%
- ------------------------------------------------------------------------------------------------------------------
Operating Expenses:
- ------------------------------------------------------------------------------------------------------------------
Research and Development 12.9% 11.7% 11.5% 13.0%
- ------------------------------------------------------------------------------------------------------------------
Marketing and Selling 28.0% 27.7% 28.4% 28.2%
- ------------------------------------------------------------------------------------------------------------------
General and Administrative 6.0% 6.1% 6.0% 5.8%
- ------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 46.9% 45.5% 45.9% 47.0%
- ------------------------------------------------------------------------------------------------------------------
Income from Operations 17.5% 2.9% 15.9% 2.5%
- ------------------------------------------------------------------------------------------------------------------
Investment Income and Other, net 4.3% 0.8% 2.4% 1.0%
- ------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 21.8% 3.7% 18.3% 3.6%
- ------------------------------------------------------------------------------------------------------------------
Income Tax Expense 1.1% 0.1% .9% 0.1%
- ------------------------------------------------------------------------------------------------------------------
Net Income 20.7% 3.6% 17.4% 3.5%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
SPECTRALINK CORPORATION
QUARTERS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
Net Sales. The Company derives its revenue principally from the sale,
installation and service of wireless, on- premises telephone systems. Net
sales increased by 58% to $6,210,000 for the second quarter 1996 from
$3,940,000 in the second quarter 1995. Net sales for the six months ended June
30, 1996 increased by 62% to $11,761,000 from $7,279,000 for the comparable six
months in 1995. These increases were predominantly due to the growing
acceptance of SpectraLink systems in the marketplace.
Gross Profit. The Company's cost of sales consists primarily of direct
material, direct labor, service expenses and manufacturing overhead. Gross
profit increased by 110% to $4,001,000 in the second quarter 1996 from
$1,908,000 in the second quarter 1995. For the six months ended June 30, 1996
gross profit increased by 102% to $7,269,000 from $3,605,000 for the same
period last year. The Company's gross profit margin (gross profit as a
percentage of net sales) increased to 64.4% in the second quarter 1996 from
48.4% in the second quarter 1995. For the six months ended June 30, 1996 gross
profit margin increased to 61.8% from 49.5% in the same period last year. The
increase in gross profit margins for both periods was primarily due to
decreasing unit material, labor, and overhead costs. The lower unit material
costs were due to improved pricing, increased component integration, and
quantity discounts. The lower unit labor costs were due to an improved
manufacturing process resulting in better through-put per direct labor hour.
The lower unit overhead costs were primarily a result of increased volume.
Unit service costs improved for both periods as a result of product design
improvements that enhanced reliability.
Research and Development. Research and development expenses consist primarily
of employee costs, professional services, and supplies necessary to develop,
enhance and reduce the cost of the Company's systems. Research and development
expenses increased by 75% to $804,000 in the second quarter 1996 from $460,000
in the second quarter 1995, representing 12.9% and 11.7%, respectively, of net
sales. For the six months ended June 30, 1996 research and development
increased by 43% to $1,353,000 from $945,000 for the same period last year.
Research and development expenses in the six months ended June 30, 1995 were
associated with the introduction of a new generation of pocket telephone and
the Series 150 system. In the six months ended June 30, 1996, the Company's
research and development efforts were concentrated primarily on new product
development, improvements to existing products, and manufacturing process
improvements. The Company expects to increase its dollar spending on research
and development for the fiscal year 1996.
Marketing and Selling. Marketing and Selling expenses consist primarily of
salaries and other expenses for personnel, commissions, travel, advertising,
trade shows, and market research. These expenses increased by 59% to
$1,740,000 in the second quarter 1996 from $1,092,000 in the second quarter
1995, representing 28.0% and 27.7%, respectively, of net sales. For the six
months ended June 30, 1996 sales and marketing expenses increased by 63% to
$3,343,000 from $2,053,000 for the same period last year, representing 28.4%
and 28.2% , respectively, of net sales. These increases in dollar expense for
both periods were primarily due to adding sales and marketing personnel to
increase sales.
General and Administrative. General and administrative expenses consist
primarily of salaries and other expenses for management, finance, accounting,
contract administration, order processing, and human resources as well as legal
and other professional services. General and administrative expenses increased
by 53% to $370,000 in the second quarter 1996 from $242,000 in the second
quarter 1995, representing 6.0% and 6.1%, respectively, of net sales. For the
six months ended June 30, 1996 general and administrative expenses increased by
67% to $707,000 from $423,000 for the same period last year, representing 6.0%
and 5.8% , respectively, of net sales. The increases in expenses were
primarily associated with the higher volume of production and sales and with
becoming a public company.
Investment Income and Other (Net). Investment income is the result of the
Company's investment in money market, investment-grade debt securities, and
short-term government securities. Other income is generated primarily from
purchase discounts. The increase in this category from 1995 to 1996 was
primarily due to interest income from investment activities associated with net
proceeds of approximately $27 million dollars from the public offering
completed in May, 1996.
9
<PAGE> 10
SPECTRALINK CORPORATION
QUARTERS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
Income Tax. The Company has available tax loss carryforwards to offset
estimated 1996 taxable income. The Company's tax provision in 1996 consists of
an accrual for state and federal alternative minimum taxes estimated at 5% of
income before taxes.
The Company's operating expenses are based in part on its expectations of
future sales, and the Company's expense levels are generally committed in
advance of sales. The Company currently plans to continue to expand and
increase its operating expenses in an effort to generate and support additional
future revenue. If sales do not materialize in a quarter as expected, the
Company's results of operations for that quarter would be adversely affected.
Net income may be disproportionately affected by a reduction of revenues
because only a small portion of the Company's expenses vary with its revenue.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private sales of equity securities, raising a total of $20,100,000
between June 1990 and November 1993. On May 2, 1996 the Company paid off its
credit facility with Silicon Valley Bank of approximately $488,000 with
proceeds from the public offering (see Initial Public Offering).
Operating activities provided net cash of $1,241,000 and $96,000 in the
six months ended June 30, 1996 and June 30, 1995, respectively. From June
30, 1995 to June 30, 1996, accounts receivable increased by $2,594,000 while
inventory increased by $446,000. These increases were primarily due to higher
net sales as compared to the corresponding prior period. Investing activities
consisted of equipment acquisitions mainly for engineering, manufacturing,
computer and phone equipment of $793,000 in the six months ended June 30, 1996
and $249,000 in the six months ended June 30, 1995. Short-term investment
purchases in the six months ended June 30, 1996 were $16,296,000, compared
to none for the six month period ended June 30, 1995. No short-term
investments matured in the six months ended June 30, 1996 and $2,000,000
matured in the six months ended June 30, 1995. In the six months ended June
30, 1996 the financing activities consisted of net proceeds from the IPO of
$27,515,000 and from the exercise of stock options of $54,000. Financing
activities included the proceeds from the exercise of stock options of
$13,000 in the six months ended June 30, 1995. In the six months ended June
30, 1996, the bank line of credit was paid off entirely, resulting in a net
repayment of $224,000. There were also payments on capital lease obligations
of $35,000 in the six months ended June 30, 1996 and $34,000 in the six months
ended June 30, 1995.
As of June 30, 1996, the Company had working capital of $36,073,000
compared to $7,191,000 as of December 31, 1995. Working capital as of June 30,
1996 included $30,012,000 in cash and short-term investments, $5,434,000 in
accounts receivable and $2,273,000 in inventory. As of June 30, 1996, the
Company's current ratio (ratio of current assets to current liabilities) was
18.2:1, compared with a current ratio of 5.2:1 as of December 31, 1995.
The Company believes that cash generated from operations and the net
proceeds to the Company of the initial public offering will be sufficient to
fund necessary capital expenditures, to provide adequate working capital and to
finance the Company's expansion for at least the immediate future.
INITIAL PUBLIC OFFERING
On May 1, 1996 the Company received $24,924,000 in proceeds from a
public offering of 3,350,000 shares of common stock. Of the proceeds,
approximately $937,000 were used to cover the expenses of the initial public
offering and an additional $488,000 to pay off the equipment purchase line of
credit. The remaining funds were invested primarily in investment-grade debt
securities. Concurrent with the closing of the offering, (a) all outstanding
shares of preferred stock were automatically converted to common stock at a
ratio of one (1) share of preferred stock to one and a half (1.5) shares of
common stock and (b) all outstanding warrants converted into shares of common
stock. On May 20, 1996, the IPO underwriters exercised their option to
purchase an additional 455,100 shares from the Company for $3,386,000; the
Company also invested these proceeds in investment-grade securities.
Subsequent to the completion of the offering and the underwriters' exercise of
their overallotment option, the Company had 18,915,366 shares of common stock
outstanding as of June 30, 1996.
10
<PAGE> 11
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION ACT OF
1995 SPECTRALINK CORPORATION
This report contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Investors are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such statements,
investors should specifically consider the various factors which could cause
actual results to differ materially from those indicated in such
forward-looking statements. The most important factors that could cause actual
results to differ from those expressed in the forward- looking statements
include, but are not limited to the following:
o The failure of the market for on-premises wireless telephone systems
to grow or to grow as quickly as the Company anticipates.
o The intensely competitive nature of the wireless communications
industry.
o The ability of the Company's distributors to develop and execute
effective marketing and sales strategies.
o The Company's reliance on sole or limited sources of supply for many
components and equipment used in its manufacturing process.
o The risk of business interruption arising from the Company's
dependence on a single manufacturing facility.
o The Company's dependence on a single product line.
o The Company's ability to manage potential expansion of operations.
o The Company's ability to attract and retain key personnel.
o The Company's ability to respond to rapid technological changes
within the on-premises wireless telephone industry.
o Changes in rules and regulations of the Federal Communications
Commission.
o The Company's ability to protect its intellectual property rights.
o Changes in economic conditions affecting the Company's customers.
11
<PAGE> 12
SPECTRALINK CORPORATION
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPECTRALINK CORPORATION
Date: August 12, 1996 By: /s/ WILLIAM R. MANSFIELD
-----------------------------------
William R. Mansfield,
Vice-President - Administration,
Chief Financial Officer and Secretary
(on behalf of the Registrant and as Principal
Financial and Accounting Officer)
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,192
<SECURITIES> 16,820
<RECEIVABLES> 5,434
<ALLOWANCES> 262
<INVENTORY> 2,273
<CURRENT-ASSETS> 38,173
<PP&E> 2,893
<DEPRECIATION> 1,296
<TOTAL-ASSETS> 39,806
<CURRENT-LIABILITIES> 2,100
<BONDS> 0
<COMMON> 189
0
0
<OTHER-SE> 37,428
<TOTAL-LIABILITY-AND-EQUITY> 39,806
<SALES> 11,761
<TOTAL-REVENUES> 11,761
<CGS> 4,492
<TOTAL-COSTS> 4,492
<OTHER-EXPENSES> 5,403
<LOSS-PROVISION> 37
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> 2,152
<INCOME-TAX> 108
<INCOME-CONTINUING> 2,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,044
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
