<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended June 30, 1997
Commission File Number 0-23282
Natural MicroSystems Corporation
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 04-2814586
______________________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
100 Crossing Boulevard, Framingham, MA 01702
______________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(508) 620-9300
______________________________________________________________________________
(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.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 10,457,184 shares of Common
Stock, $.01 par value, outstanding at July 31, 1997.
The Index to Exhibits appears on Page: 14
Total Number of Pages with Exhibits: 15
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Page
-------
Item 1. Financial Statements and Notes
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flow 5
Notes to Consolidated Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 10
PART II OTHER INFORMATION 11 - 15
ITEMS 1 - 5
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits
No. 11.1 - Statement of Computation of
Earnings Per Share
No. 27.1 - Financial Data Schedule
2
<PAGE>
NATURAL MICROSYSTEMS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN $000'S)
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1997
----------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,578 $ 7,281
Marketable securities 26,767 23,980
Accounts receivable, net of allowance for uncollectible
accounts of $685 and $706, respectively 13,403 17,619
Inventories 5,419 4,955
Prepaid expenses and other assets 1,357 2,040
Income tax receivable 130 455
Deferred tax asset 306 298
----------------- ------------
Total current assets 53,960 56,628
----------------- ------------
Property and equipment, net of accumulated depreciation
of $3,305 and $4,373, respectively 3,908 8,073
License agreements, net of accumulated amortization
of $245 and $637, respectively 1,665 1,570
Other assets 1,708 1,810
Intangible asset 655 584
Deferred tax asset 766 776
----------------- ------------
Total Assets $ 62,662 $ 69,441
================= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt 58 85
Accounts payable 5,222 5,879
Accrued expenses and other liabilities 4,153 4,492
----------------- ------------
Total current liabilities 9,433 10,456
----------------- ------------
Refundable advance 347 222
Stockholders' equity:
Preferred stock, 3,000,000 shares authorized, none issued Common stock;
$.01 par value; 15,000,000 and 45,000,000
shares authorized at December 31, 1996 and June 30, 1997 respectively,
9,936,414 and 10,379,960 issued and outstanding at
December 31, 1996 and June 30, 1997, respectively 99 104
Additional paid-in capital 53,604 55,863
Retained earnings (accumulated deficit) (926) 2,993
Other equity 19 19
Foreign currency translation adjustment 86 (216)
----------------- ------------
Total stockholders' equity 52,882 58,763
----------------- ------------
Total liabilities and stockholders' equity $ 62,662 $ 69,441
================= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
3
<PAGE>
NATURAL MICROSYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN $000'S EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 12,203 $ 18,058 $ 22,553 $ 33,926
Cost of revenues 4,723 6,317 8,715 11,961
----------- ----------- ----------- -----------
Gross profit 7,480 11,741 13,838 21,965
Operating expenses:
Selling, general and administrative 3,582 5,235 6,646 9,751
Research and development 2,265 3,536 4,354 6,874
Purchased in-process research and development 4,426 -- 4,426 --
----------- ----------- ----------- -----------
Total operating expenses 10,273 8,771 15,426 16,625
----------- ----------- ----------- -----------
Operating income (loss) (2,793) 2,970 (1,588) 5,340
Interest income 466 382 564 706
Interest expense 32 54 51 80
Other expense, net 10 60 11 49
----------- ----------- ----------- -----------
Other income, net 424 268 502 577
----------- ----------- ----------- -----------
Income (loss) before income taxes (2,369) 3,238 (1,086) 5,917
Income tax expense 694 1,095 1,124 1,998
=========== =========== =========== ===========
Net income (loss) $ (3,063) $ 2,143 $ (2,210) $ 3,919
=========== =========== =========== ===========
Net income (loss) per common share $ (0.31) $ 0.20 $ (0.25) $ 0.36
=========== =========== =========== ===========
Weighted average common shares outstanding 9,774,302 10,944,213 8,849,350 10,873,836
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE>
NATURAL MICROSYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
(IN $000'S)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1997
-------- --------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ (2,210) $ 3,919
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:
Depreciation and amortization 558 1,334
Write down of purchased in process research & development 4,426
Deferred tax asset (69) 4
Changes in assets and liabilities:
Accounts receivable (1,186) (4,590)
Inventories (1,253) 270
Prepaid expenses and other assets (441) (827)
Income tax receivable 55 (327)
Accounts payable (85) 801
Accrued expenses and other liabilities (759) 1,021
-------- --------
Cash provided by (used in) operating activities (964) 1,605
-------- --------
Cash flow from investing activities:
Additions to property and equipment (1,073) (5,393)
Additions to license agreements (29)
Purchases of marketable securities (21,341) (14,950)
Proceeds from the sale of marketable securities 6,354 17,683
Purchase of PSR Systems, Inc. and Tek-Nique, Inc., net of
cash acquired (3,232)
-------- --------
Cash used in investing activities (19,292) (2,689)
-------- --------
Cash flow from financing activities:
Payments of capital lease obligations (23)
Payments of long term debt (159)
Payments of refundable advances (19) (52)
Proceeds from bank line of credit 504
Proceeds from issuance of common stock 31,529 1,752
Non-statutory stock options 9 10
-------- --------
Cash provided by financing activities 31,841 1,710
-------- --------
Effect of exchange rate changes on cash (100) 77
Net increase in cash and cash equivalents 11,485 703
Cash and cash equivalents, beginning of period 6,729 6,578
======== ========
Cash and cash equivalents, end of period $ 18,214 $ 7,281
======== ========
Noncash Transactions:
Issuance of common stock related to the purchase of PSR Systems, Inc.
and Tek-Nique, Inc. $ 1,339 $ 500
Accrued acquisition expenses 784
Assets and Liabilities recognized upon acquisition of PSR Systems, Inc. and
Tek-Nique, Inc.:
Accounts receivable 122
Inventory 136
Other current assets 74
Property and Equipment 409
Purchased in process research and development 4,426
Intangible 757
Notes payable 55
Accounts payable 264
Accrued expenses and other liabilities 250
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
5
<PAGE>
NATURAL MICROSYSTEMS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1997 and December 31, 1996 and the
consolidated statements of operations for the three and six months ended June
30, 1997 and 1996 and consolidated statements of cash flow for the six months
ended June 30, 1997 and 1996 include the accounts of Natural MicroSystems
Corporation and its wholly owned subsidiaries (the "Company").
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position, results
of operations and cash flow for all periods presented have been made. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reported periods.
Actual results could differ from those estimates. The operating results for the
six month period ended June 30, 1997 are not necessarily indicative of the
operating results to be expected for the full fiscal year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The financial statements should be read in
conjunction with the consolidated financial statements of the Company as of and
for the year ended December 31, 1996.
B. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1997
<S> <C> <C>
Raw materials $1,231 $1,882
Work in progress 2,390 1,848
Finished goods 1,798 1,225
------ ------
$5,419 $4,955
</TABLE>
C. STOCKHOLDERS' EQUITY (000's):
<TABLE>
<CAPTION>
Common Stock Additional Foreign
-------------- Paid In Retained Other Translation
Shares Amount Capital Earnings Equity Adjustment Total
------ ------ ---------- -------- ------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 9,936 $ 99 $53,604 $ (926) $ 19 $ 86 $52,882
Exercise of common stock options 396 5 1,165 1,170
Employee Stock Purchase Plan 33 584 584
Contingent stock issue 15 500 500
Grant of non-statutory options 10 10
Net Income for the six months
ended June 30, 1997 3,919 3,919
Foreign Translation Adjustment (302) (302)
------ ------ ---------- -------- ------ ------------ ------
Balance at June 30, 1997 10,380 $104 $55,863 $ 2,993 $ 19 $(216) $58,763
====== ====== ========== ======== ====== ============ ======
</TABLE>
Pursuant to stockholder approval at the Company's Annual Meeting of Stockholders
on April 17, 1997, the Company's Certificate of Incorporation
6
<PAGE>
has been amended to increase the number of authorized shares of the Common Stock
from 15 million to 45 million.
D. NET INCOME PER COMMON SHARE
Fully diluted net income per common share is computed based upon the weighted
average number of common shares and common share equivalents outstanding using
the treasury stock method.
The Financial Accounting Standards Board issued Statement No. 128 "Earnings per
Share", ("SFAS 128"), which modifies the way in which earnings per share ("EPS")
is calculated and disclosed. Currently, the Company discloses fully diluted EPS.
Upon adoption of this standard for the fiscal year ending December 31, 1997, the
Company will disclose basic and diluted EPS for fiscal 1997 and will restate all
prior period EPS data presented. Basic EPS excludes dilution and is computed by
dividing net income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS, similar to
fully diluted EPS, reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the Company. If the Company had adopted SFAS 128 for the
three and six months ended June 30, 1996 and 1997, basic and diluted EPS would
have been as follows:
<TABLE>
<CAPTION>
For the three month period ended June 30,
1996 1997
------- ------
<S> <C> <C>
Basic Earnings per Share $(0.31) $0.21
Diluted Earnings per Share (0.31) 0.20
<CAPTION>
For the six month period ended June 30,
1996 1997
------- ------
<S> <C> <C>
Basic Earnings per Share $(0.25) $0.38
Diluted Earnings per Share (0.25) 0.37
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Revenues
Revenues of $18.1 million for the three months ended June 30, 1997, increased
48.0% from $12.2 million for the three months ended June 30, 1996. Revenues of
$33.9 million for the six months ended June 30, 1997, increased 50.4% from $22.6
million for the six months ended June 30, 1996. The increases for both periods
of 1997 over 1996 were primarily due to shipment of greater unit volumes of
Alliance Generation(R) ("AG") and VOX products and increased manufacturing
license revenues.
Revenues of $5.5 million for the three months ended June 30, 1997 from customers
located outside of North America increased 57.1% from $3.5 million of revenues
for the three months ended June 30, 1996, and represented 30.3% and 28.9% of
revenues, respectively. Revenues of $10.2 million for the six months ended June
30, 1997 increased 30.8% from $7.8 million for the six months ended June 30,
1996, and represented 30.0% and 34.5% of total revenues, respectively. The
dollar increases in revenues for 1997 over 1996 were due to continuing increases
in unit sales primarily to customers in Asia and Latin America. The percentage
decrease in sales to customers located outside North America for the six months
ended June 30, 1997 versus the six months ended June 30, 1996 was attributable
to more rapid growth in the North American market.
Gross Profit
Gross profit of $11.7 million for the three months ended June 30, 1997 increased
57.0% from $7.5 million for the three months ended June 30, 1996, and
represented 65.0% and 61.3% of total revenues, respectively. Gross profit of
$22.0 million for the six months ended June 30, 1997 increased 58.7% from $13.8
million for the six months ended June 30, 1996, and represented 64.7% and 61.4%
of total revenues, respectively. These increases as a percent of revenues for
1997 are primarily attributable to increased unit sales of AG products which
have higher gross margins, higher overall manufacturing license revenues, and
increased overall sales volume without a corresponding increase in manufacturing
overhead. Gross profit for both periods in 1996 were impacted by revenues
realized from a European customer with lower margins associated with a system
contract.
Selling, General and Administrative
Selling, general and administrative expenses of $5.2 million for the three
months ended June 30,1997 increased 46.1% from $3.6 million for three months
ended June 30, 1996 and represented 29.0% and 29.4% of revenues, respectively.
Selling, general and administrative expenses of $9.8 million for the six months
ended June 30,1997 increased 46.7% from $6.6 million for the six months ended
June 30,1996 and represented 28.7% and 29.5% of revenues, respectively. These
increases were due to costs associated with increased selling activity as well
as increased expenditures for marketing, international operations, and technical
support. Costs associated with the Company's new headquarters facilities
occupied in April, 1997 increased selling, general and administrative cost for
the three months ending June 30, 1997. The Company expects that its selling,
general and administrative expenditures will continue to increase, but may vary
as a percentage of future product revenues in future periods.
Research and Development
Research and development expenditures of $3.5 million for the three months ended
June 30, 1997 increased 56.1% from $2.3 million for three months ended June 30,
1996, and were 19.6% and 18.6% of revenues, respectively. Research and
development expenditures of $6.9 million for the six months ended June 30, 1997
increased 57.9% from $4.4 million for six months ended June 30, 1996, and were
20.3% and 19.3% of revenues, respectively. The increases were due to increased
personnel and development project related costs for both periods and the
8
<PAGE>
acquisition of TEKnique in June 1996, whose personnel are predominantly engaged
in technical functions. The Company expects that its research and development
expenditures will continue to increase, but may vary as a percentage of future
product revenues in future periods.
In-Process Research and Development
The acquisition of TEKnique was accounted for as a purchase and, accordingly,
the purchase price has been allocated to assets purchased and liabilities
assumed based on the fair values at the date of acquisition. In connection with
the merger $4.4 million of purchased in-process research and development costs
were charged to expense in the three and six months ended June 30, 1996.
Other Income, Net
Other income, net was $268,000 and $424,000 for the three months ended June
30, 1997 and 1996, respectively. Other income, net was $577,000 and $502,000,
for the six months ended June 30, 1997 and 1996, respectively. Increased
interest income in 1996 and 1997 resulted from higher cash balances as a result
of the Company's February 1996 follow-on stock offering.
Income Tax Expense
Income tax expense was $1.1 million and $694,000 for the three months ended June
30, 1997 and 1996, respectively. Income tax expense was $2.0 million and
$1.1 million for the six months ended June 30, 1997 and 1996, respectively.
Income taxes were provided based on an effective tax rate which differed from
the U. S. federal statutory rate primarily due to state and foreign income taxes
and income tax credits for all periods presented. Income taxes were reduced for
both periods of 1996 due to the effect of net operating loss carry forwards.
Operating and Net Income (Loss)
As a result of the foregoing, operating income (loss) was $3.0 million and
($2.8) million for the three months ended June 30, 1997 and 1996, respectively.
Net income, (loss) was $2.1 million and ($3.1) million for the same periods,
respectively. Operating income (loss) was $5.3 million and ($1.6) million for
the six months ended June 30, 1997 and 1996, respectively. Net income (loss)
was $3.9 million and ($2.2) million for those same periods, respectively.
LIQUIDITY AND CAPITAL RESOURCES:
Cash provided by (used in) operations for the six months ended June 30, 1997 and
1996 was $1.6 million and ($964,000), respectively. Cash was provided in 1997 by
increased net income and depreciation, a reduction in inventories and increased
accounts payable offset by increased accounts receivable associated with
increased revenues. Cash was used in operations in 1996 due to the net loss,
increased accounts receivable and inventory, and a reduction in accrued expenses
offset by an increase in accounts payable.
Cash used in investing activities for the six months ended June 30, 1997 and
1996 was $2.7 million and $19.3 million, respectively. For both periods cash
was used to purchase property and equipment of $5.4 million and $1.1 million,
respectively. Property and equipment purchases increased significantly for 1997
related to the Company's new headquarters facilities. For 1996, cash of $3.2
million was used to purchase TEKnique.
Cash provided by financing activities in the six months ended June 30, 1997 and
1996 was $1.7 and $31.8 million, respectively. In 1996 the Company's follow-on
stock offering provided approximately $30.1 million, net of costs of $1.2
million. Cash was provided by financing activities in both periods of $1.8
million and $830,000, respectively including the issuance's of common stock
under the Company's employee stock option and stock purchase plans.
9
<PAGE>
Current assets at June 30, 1997 were $56.6 million, 4.9% more than current
assets of $53.9 million at December 31, 1996. Current liabilities at June 30,
1997 were $10.5 million, 10.8% less than current liabilities of $9.4 million at
December 31, 1996.
The Company has a $2.5 million bank line of credit through August 1997, all of
which was available. Borrowings under the line of credit bear interest at the
bank's prime rate and are subject to covenants requiring maintenance of certain
profitability and equity levels and leverage and liquidity ratios. At June 30,
1997, the Company was in compliance with its debt covenants. The Company has a
2.0 million French franc line of credit with a bank for its European operations,
all of which was available. The Company has a research and development funding
grant from a branch of the French government, the balance of which was $307,000
at June 30, 1997.
For U. S. federal income tax purposes the Company has net operating loss
carryforwards available to reduce future income of approximately $4.4 million at
June 30, 1997. These carryforwards expire beginning in 2002. Utilization of
net operating loss carryforwards are subject to an annual limitation of
approximately $750,000 under Internal Revenue Code section 382.
OTHER
The Financial Accounting Standards Board issued Statement No. 128, "Earnings per
Share" ("SFAS 128"), which modifies the way in which earnings per share ("EPS")
is calculated and disclosed. Currently, the Company discloses fully diluted EPS.
Upon adoption of this standard for the fiscal year ending December 31, 1997, the
Company will disclose basic and diluted EPS for fiscal 1997 and will restate all
prior period EPS data presented. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company.
CAUTIONARY STATEMENT
When used anywhere in this Form 10-Q and in future filings by the Company with
the Securities and Exchange Commission, in the Company's press releases and in
oral statements made with the approval of an authorized executive officer of the
Company, the words or phrases "will likely result", "the Company expects", "will
continue", "is anticipated", "estimated", "project", or "outlook" or similar
expressions (including confirmations by an authorized executive officer of the
Company of any such expressions made by a third party with respect to the
Company) are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any such forward-
looking statements, which speak only as of the date made. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. Such risk factors are set forth in Part I of the Company's annual
report on Form 10-K for the year ended December 31, 1996. The Company
specifically declines any obligation to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
10
<PAGE>
PART II - OTHER INFORMATION
ITEMS 1 - 5
Not applicable.
ITEM 6. EXHIBITS
A. Exhibits and Reports on Form 8-K
No. 11.1 - Statement of Computation of Earnings Per Share
No. 27.1 - Financial Data Schedule
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Natural MicroSystems Corporation
Dated: August 14, 1997 By: /s/ Robert P. Schechter
--------------------------------------
Robert P. Schechter
President and Chief Executive Officer
Dated: August 14, 1997 By: /s/ John F. Kennedy
--------------------------------------
John F. Kennedy
Chief Financial Officer
12
<PAGE>
NATURAL MICROSYSTEMS CORPORATION
EXHIBIT INDEX
Page
----
No. 11.1 Statement of Computation of Earnings Per Share 14
No. 27.1 Financial Data Schedule 15
13
<PAGE>
NATURAL MICROSYSTEMS CORPORATION
EXHIBITS
NO. 11.1 STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(IN $000'S EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
6 Months Ended 3 Months Ended
-------------- --------------
June 30, 1996 June 30, 1997 June 30, 1996 June 30, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Income (Loss) $ (2,210) $ 3,919 $ (3,063) $ 2,143
=============== ============== ============== ==============
Weighted average common shares outstanding 8,849 10,211 9,774 10,327
Common shares attributable to
dilutive options and warrants -- 470 -- 367
--------------- --------------- --------------- ---------------
Weighted average shares 8,849 10,681 9,774 10,694
=============== ============== ============== ==============
Primary net income (loss) per share $ (0.25) $ 0.37 $ (0.31) $ 0.20
=============== ============== ============== ==============
<CAPTION>
6 Months Ended 3 Months Ended
June 30, 1996 June 30, 1997 June 30, 1996 June 30, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Income (Loss) $ (2,210) $ 3,919 $ (3,063) $ 2,143
=============== ============== ============== ==============
Weighted average common shares outstanding 8,849 10,211 9,774 10,327
Common shares attributable to
dilutive options and warrants -- 663 -- 617
--------------- --------------- --------------- ---------------
Weighted average shares 8,849 10,874 9,774 10,944
=============== ============== ============== ==============
Fully diluted net income (loss) per share $ (0.25) $ 0.36 $ (0.31) $ 0.20
=============== ============== ============== ==============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-01-1997
<CASH> 0 7,281
<SECURITIES> 0 23,980
<RECEIVABLES> 0 18,325
<ALLOWANCES> 0 706
<INVENTORY> 0 4,955
<CURRENT-ASSETS> 0 56,628
<PP&E> 0 12,446
<DEPRECIATION> 0 4,373
<TOTAL-ASSETS> 0 69,441
<CURRENT-LIABILITIES> 0 10,456
<BONDS> 0 0
0 0
0 0
<COMMON> 0 104
<OTHER-SE> 0 19
<TOTAL-LIABILITY-AND-EQUITY> 0 69,441
<SALES> 18,058 33,926
<TOTAL-REVENUES> 18,058 33,926
<CGS> 6,317 11,961
<TOTAL-COSTS> 6,317 11,961
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 31 36
<INCOME-PRETAX> 3,238 5,917
<INCOME-TAX> 1,095 1,998
<INCOME-CONTINUING> 2,143 3,919
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,143 3,919
<EPS-PRIMARY> 0 0
<EPS-DILUTED> .20 .36
</TABLE>
