UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1994
For the transition period from _______ to ________
Commission file number 0-23970
NETWORK PERIPHERALS INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0216135
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1371 McCarthy Boulevard
Milpitas, California 95035
(Address, including zip code, of principal executive offices)
(408) 321-7300
(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 No X
---- ----
The number of shares of the Registrant's Common Stock, $0.001 par value,
outstanding as of September 30, 1998 was 12,292,304.
This quarterly report on Form 10-Q consists of 14 pages of which this is page 1.
The Exhibit Index starts on page 13.
1
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
INDEX TO FORM 10-Q
For the quarter ended
September 30, 1998
<CAPTION>
PART I. FINANCIAL INFORMATION
Item Page
<S> <C> <C>
1. Financial Statements (unaudited):
Consolidated Balance Sheets - September 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations - Three and Nine Months Ended
September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6-8
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-12
PART II. OTHER INFORMATION
6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NETWORK PERIPHERALS INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands, except share data)
<CAPTION>
September 30, December 31,
1998 1997
----------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,308 $16,094
Short-term investments 16,600 14,371
Accounts receivable, net of allowance for doubtful accounts and
returns of $697 and $1,184, respectively 3,323 5,170
Inventories 3,996 1,417
Income tax refund receivable 22 3,983
Prepaid expenses and other current assets 515 614
----------------- ---------------
Total current assets 33,764 41,649
Property and equipment, net 4,906 3,876
Other assets 447 364
----------------- ---------------
$39,117 $45,889
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,776 $ 1,415
Accrued liabilities 2,971 5,795
----------------- ---------------
Total current liabilities 6,747 7,210
----------------- ---------------
Stockholders' equity:
Preferred Stock, $0.001 par value, 2,000,000 shares authorized;
no shares issued or outstanding - -
Common Stock, $0.001 par value, 20,000,000 shares authorized;
12,292,000 and 12,252,000 shares issued and outstanding,
respectively 12 12
Additional paid-in capital 64,060 63,878
Accumulated deficit (31,702) (25,211)
----------------- ---------------
Total stockholders' equity 32,370 38,679
----------------- ---------------
$39,117 $45,889
================= ===============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(in thousands, except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 6,423 $ 5,578 $21,693 $28,221
Cost of sales 3,818 9,286 12,778 21,869
-------------- -------------- --------------- --------------
Gross profit 2,605 (3,708) 8,915 6,352
-------------- -------------- --------------- --------------
Operating expenses:
Research and development 2,893 2,526 9,420 6,398
Marketing and selling 1,333 3,212 4,727 11,051
General and administrative 752 728 2,437 4,074
Acquired research and
development in process and
product integration costs - - - 6,462
Restructuring expense - 3,662 - 3,662
-------------- -------------- --------------- --------------
Total operating expenses 4,978 10,128 16,584 31,647
-------------- -------------- --------------- --------------
Loss from operations (2,373) (13,836) (7,669) (25,295)
Interest income 372 418 1,178 1,201
-------------- -------------- --------------- --------------
Loss before income taxes (2,001) (13,418) (6,491) (24,094)
Benefit from income taxes - 1,912 - 3,526
-------------- -------------- --------------- --------------
Net loss $(2,001) $(11,506) $(6,491) $(20,568)
============== ============== =============== ==============
Net loss per share:
Basic $ (0.16) $ (0.94) $ (0.53) $ (1.69)
============== ============== =============== ==============
Diluted $ (0.16) $ (0.94) $ (0.53) $ (1.69)
============== ============== =============== ==============
Weighted average common shares:
Basic 12,292 12,191 12,277 12,140
============== ============== =============== ==============
Diluted 12,292 12,191 12,277 12,140
============== ============== =============== ==============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
NETWORK PERIPHERALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
Nine Months Ended
--------------------
1998 1997
-------- --------
Cash flows from operating activities:
Net loss $ (6,491) $(20,568)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,450 1,853
Amortization of goodwill 30 1,340
Acquired research and development in process - 6,462
Changes in assets and liabilities:
Accounts receivable 1,847 3,259
Inventories (2,579) 6,680
Income tax refund receivable 3,961 -
Prepaid expenses and other assets (14) (2,181)
Accounts payable 2,361 (271)
Accrued liabilities (2,368) (1,291)
-------- --------
Net cash used in operating activities (1,803) (4,717)
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (2,480) (2,538)
Purchases of short-term investments (2,229)
Proceeds from sales of short-term investments - 15,350
Cash paid for acquisition, net of cash acquired - (6,449)
Holdback amount from acquisition (456) -
-------- --------
Net cash provided by (used in) investing activities (5,165) 6,363
-------- --------
Cash flows from financing activities:
Proceeds from issuance of Common Stock 182 729
-------- --------
Net cash provided by financing activities 182 729
-------- --------
Effect of exchange rate changes on cash - (160)
-------- --------
Net increase (decrease) in cash and cash equivalents (6,786) 2,215
Cash and cash equivalents, beginning of period 16,094 23,523
-------- --------
Cash and cash equivalents, end of period $ 9,308 $ 25,738
======== ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes $53 $87
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NETWORK PERIPHERALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not contain
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, the accompanying unaudited consolidated financial
statements reflect all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the
Company's financial condition as of September 30, 1998 and December 31,
1997, and the results of its operations for the three and nine-month
periods ended September 30, 1998 and September 30, 1997, and its cash
flows for the nine-month periods ended September 30, 1998 and 1997.
These financial statements should be read in conjunction with the
audited consolidated financial statements of the Company as of December
31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, including notes thereto, included in the Company's
Annual Report on Form 10-K (Commission File No. 0-23970).
Operating results for the three and nine-month periods ended September
30, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998 or for any other future
period.
2. NET LOSS PER SHARE
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share," requires dual presentation of basic earnings per share ("EPS")
and diluted EPS on all statements of earnings issued after December 15,
1997 for all entities with complex capital structures. Basic EPS is
computed as net earnings divided by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common shares issuable through
stock-based compensation including stock options, restricted stock
awards, warrants, and other convertible securities using the treasury
stock method.
For the three and nine months ended September 30, 1998 and 1997, the
Company incurred net losses, such that the inclusion of potential
common shares would result in an antidilutive per share amount.
Accordingly, no adjustment is made to basic EPS to arrive at the
diluted EPS.
3. INVENTORIES
The components of inventories consist of the following (in thousands):
September 30, 1998 December 31, 1997
----------------- -----------------
Raw materials $1,339 $ 158
Work-in-process 745 898
Finished goods 1,912 361
----------------- -----------------
$3,996 $1,417
================= =================
6
<PAGE>
NETWORK PERIPHERALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following (in thousands):
September 30, 1998 December 31, 1997
----------------- -----------------
Computer and equipment $7,970 $ 6,918
Furniture and fixtures 1,339 895
Leasehold improvements 304 303
----------------- -----------------
9,613 8,116
Accumulated depreciation (4,707) (4,240)
----------------- -----------------
$4,906 $ 3,876
================= =================
5. ACCRUED LIABILITIES
The components of accrued liabilities consist of the following (in
thousands):
September 30, 1998 December 31, 1997
----------------- -----------------
Salaries and benefits $1,054 $ 1,750
Reserve for contract settlements - 1,000
Royalty 500 746
Warranty 415 513
Holdback amount from acquisition - 456
Restructuring expense - 597
Other 1,002 733
----------------- -----------------
$2,971 $5,795
================= =================
6. RESTRUCTURING
In the third quarter of 1997, the Company announced and began to
implement a restructuring plan aimed at reducing costs and restoring
profitability to the Company's operations. The restructuring plan was
necessitated by decreased demand for the Company's products and the
Company's adoption of a new strategic direction. These actions resulted
in a net charge of approximately $3.7 million to the consolidated
statement of operations in 1997. The restructuring actions principally
consisted of termination of approximately 70 employees, closure of
certain sales and manufacturing facilities, cancellation of the related
leases, and write-off of excess manufacturing equipment and goodwill.
The Company completed the restructuring in the second quarter of 1998.
The following table lists the restructuring accrual activities from
July 1, 1997 to September 30, 1998 (in thousands):
7
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<CAPTION>
Write-off Reduction Closure Write-off
of in Work of of Excess
Goodwill Force Facilities Assets Other Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reserve provided $ 962 $ 500 $ 200 $1,500 $500 $3,662
Reserve utilized in third
quarter (962) - (100) - - (1,062)
Reserve utilized in fourth
quarter - (373) (8) (1,122) (500) (2,003)
-------------------------------------------------------------------
Balance at December 31, 1997 - 127 92 378 - 597
Reserve utilized in first
quarter - (354) (22) - - (376)
Reserve utilized in second
quarter - (221) - - - (221)
-------------------------------------------------------------------
Balance at September 30, 1998 $ - $(448) $ 70 $ 378 $ - $ -
===================================================================
</TABLE>
7. ACQUISITION
Effective April 29, 1997, the Company acquired NetVision Corporation
("NetVision"), a privately held company engaged in the development of
very high bandwidth LAN switching and Gigabit Ethernet technologies, at
a cost of $6.5 million, including payments to NetVision stockholders,
the assumption of certain liabilities, and transaction expenses. The
transaction was accounted for using the purchase method, and the
purchase price was allocated to the assets acquired and liabilities
assumed based on the estimated fair market values at the date of
acquisition. The research and development in process represented the
estimated current fair market value of specified technologies, which
had not reached technological feasibility and had no future uses. The
results of the operations acquired were included with those of the
Company from the date of acquisition. The allocation of the purchase
price was as follows (in thousands):
Research and development, in process $6,462
Goodwill 200
Assets 44
Liabilities assumed (257)
------------
Total $6,449
============
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The forward-looking statements contained in the following discussion are made in
reliance upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The future events described in such statements involve risks
and uncertainties, including:
o the timely development and market acceptance of new products;
o the market demand by customers for the Company's existing products,
including demand by OEM customers for custom products;
o competitive actions, including pricing actions and the introduction of new
competitive products, that may affect the volume of sales of the Company's
products;
o uninterrupted supply of key components, including semiconductor devices and
other materials, some of which may be sourced from a single supplier;
o uninterrupted service by subcontractors;
o the ability of the Company to recruit, train and retain key personnel,
including engineers and other technical professionals;
o the development of new technologies rendering existing technologies and
products obsolete;
o the economies of countries where the Company's products are distributed;
and
o general market conditions.
In evaluating these forward-looking statements, consideration should also be
given to the Business Risks discussed in a subsequent section of this interim
report.
Results of Operations
Net Sales
Net sales for the three months ended September 30, 1998 (the quarter) were $6.4
million, compared to $5.6 million for the three months ended September 30, 1997
(the comparable quarter). For the nine months ended September 30, 1998 (the
nine-month period) and September 30, 1997 (the comparable period), net sales
were $21.7 million and $28.2 million, respectively. The increase in net sales
for the quarter from the comparable quarter was due to increased shipments of
higher priced FDDI adapters to OEM customers, as well as increased unit
shipments of Fast Ethernet switching products. However, net sales in the
nine-month period declined from the comparable period reflecting an overall
decrease in demand for products based on FDDI technology in a matured market.
Sales to OEM customers increased by 14% for the quarter to $4.2 million from the
comparable quarter, but decreased by 17% for the nine-month period to $14.8
million from the comparable period. The quarterly increase primarily reflected
the addition of the Fast Ethernet commodity products introduced in 1998
targeting OEM customers. The descending nine-month trend was attributed to the
general decline in demand for FDDI products, which was partially offset by
shipments of the Fast Ethernet commodity products.
Distribution sales were $2.2 million for the quarter, an increase of 17% from
the comparable quarter, and $6.9 million for the nine-month period, a decrease
of 34% from the comparable period.
Sales in the North America region during the quarter increased to $4.6 million
in the quarter from $3.3 million in the comparable quarter, while sales to the
Asia and Europe regions decreased to $1.8 million in the quarter from $2.2
million in the comparable quarter. For the nine-month period, sales in the North
America region and sales in the Asia and Europe regions declined to $15.1
million and $6.6 million, respectively, from $20.8 million and $7.4 million in
the corresponding periods in 1997.
Adjustments to inventory levels by North America distributors in the comparable
quarter accounted for the increase in quarterly sales in the distribution
channel and the North America region. The maturity of the markets in which the
Company's products are sold, as well as the downturn of the Asian economies,
were primary contributors for the decline in sales for the nine-month period.
9
<PAGE>
The Company expects the declining sales of FDDI products and the competitive
price pressures on the current Fast Ethernet products to be partially offset by
shipments of its newly introduced DS and DH series products, which offer added
features, including full management and auto-sensing capabilities, and lower
prices. However, until shipment of the Company's next generation of
Gigabit-class switches, NuWave, commences in the first quarter of 1999, the
Company does not expect significant growth in sales, if any.
Gross Profit/Margin
Gross margin for the quarter and for the nine-month period was 41%, compared to
negative 66% and 23% in the comparable quarter and period, respectively. The
negative gross margin in the comparable quarter was primarily due to a write-off
of slow-moving and obsolete inventories totaling $5.1 million and one-time
charges associated with the transfer of production of FDDI products to external
turnkey manufacturers. Accordingly, these charges had a significant negative
impact to the gross margin in the comparable period. The Company expects the
gross margin for the fourth quarter of 1998 to be relatively consistent with the
quarter.
Research and Development
Research and development expense was $2.9 million for the quarter and $2.5
million in the comparable quarter, representing 45% of net sales in both
periods. For the nine-month period and the comparable period, expenses were $9.4
million, or 43% of net sales, and $6.4 million (net of $217,000 in contract
funding), or 23% of net sales, respectively. The increase in expenses was the
result of resources expended in the development of the Company's next generation
of switching products, designated as NuWave. Expenses included outside
consultant fees, non-recurring engineering costs, increased staffing,
facilities, and other overhead costs. In addition, the Company incurred
approximately $500,000 during the quarter in connection with the elimination of
certain non-critical personnel in research and development, in an effort to
further streamline the operations. The Company expects expenditures on research
and development in the fourth quarter of 1998 to remain comparable in absolute
dollars with the quarter, as reduction in personnel costs is likely to be offset
by the planned increase in non-recurring engineering costs.
Marketing and Selling
Marketing and selling expense was $1.3 million, or 21% of net sales, for the
quarter and $3.2 million, or 58% of net sales, in the comparable quarter. For
the nine-month period and the comparable period, expenses were $4.7 million, or
22% of net sales, and $11.1 million, or 39% of net sales, respectively. The
decrease in expense was achieved by the reduction in staff and closure of sales
offices as part of the Company's restructuring in the third quarter of 1997. The
restructuring effort was in alliance with the Company's strategy to refocus on
the broadening of its OEM customer base, which requires less sales and marketing
resources. The Company expects expenditures on marketing and selling in the
fourth quarter of 1998 to remain comparable in absolute dollars with the
quarter.
General and Administrative
General and administrative expense was $752,000, or 12% of net sales, for the
quarter and $728,000, or 13% of net sales, in the comparable quarter. For the
nine-month period and the comparable period , expenses were $2.4 million, or 11%
of net sales, and $4.1 million, or 14% of net sales, respectively. The decrease
in expenditures for the nine-month period, as compared to the comparable period,
reflected a reduction in staff and a diminished utilization of outside
consultants. The Company expects general and administrative expenditures in the
fourth quarter of 1998 to remain comparable in absolute dollars with the
quarter.
As a result of completing the implementation of an ERP system, and enhancements
made to the information system infrastructure in 1997, the Company's systems in
Milpitas (the Company's headquarters) are substantially year 2000 compliant. The
Company is in the process of assessing the compliance of its remote sites in
Asia, Europe and New York, as well as the compliance of its vendors. The
remaining cost to fully complete the conversion is expected to be immaterial.
10
<PAGE>
Acquired Research and Development in Process
Effective April 29, 1997, the Company acquired NetVision Corporation for $6.5
million in cash, using purchase method accounting. The in-process research and
development costs of $6.5 million were expensed in the quarter ended June 30,
1997.
Restructuring
During the third quarter of 1997, the Company incurred a charge of $3.7 million
for the restructuring of its business. The restructuring consisted of a
reduction in work force, closure of certain sales and manufacturing facilities,
cancellation of the related leases, and write-off of excess manufacturing
equipment and goodwill.
Interest Income
Interest income for the quarter and the nine-month period were $372,000 and $1.2
million, respectively, compared to $418,000 and $1.2 million, respectively, in
the corresponding periods in 1997. The decrease in interest income for the
quarter, compared to the comparable quarter, was due to overall lower rate of
return on investments and lower invested fund balance in 1998. The Company
earned comparable interest income for the nine-month period in 1998 and the
comparable period in 1997, despite lower funds invested in 1998. This higher
rate of return reflected the shift of short-term investments in tax-exempt
securities to taxable corporate securities in July 1997.
Income Taxes
The Company did not record a tax benefit for the quarter or for the nine-month
period, as the tax benefit associated with the net operating loss carryback
credits was completely utilized in 1997 and the realization of net operating
loss carryforward credits is uncertain.
Liquidity and Capital Resources
Cash used in operating activities for the nine-month period was $1.8 million and
was primarily attributable to the net loss for the nine-month period of $6.5
million and an increase in inventories of $2.6 million, partially offset by the
collection of income tax refunds of approximately $4 million, a decrease in
accounts receivable of $1.8 million, and non-cash charges of depreciation of
$1.4 million. The increase in inventories reflected the decrease in sales as
well as the build-up of inventories for transitioning turnkey manufacturers.
Cash used in investing activities for the nine-month period was $5.2 million and
was attributable to purchases of capital equipment for engineering purposes of
$2.5 million, purchases of short-term investments of $2.2 million, and the final
payment of $456,000 for the acquisition of NetVision Corporation.
As of September 30, 1998, the Company's principal sources of liquidity were its
cash, cash equivalents and short-term investments of $25.9 million in total and
its $5 million bank line of credit. As of September 30, 1998, there were no
borrowings outstanding under the line of credit. The Company believes that its
existing cash, cash equivalent and short-term investment balances and the bank
line of credit will be sufficient to meet the Company's capital and operating
requirements for the foreseeable future.
Business Risks
In addition to the factors addressed in the preceding sections, certain
characteristics and dynamics of the Company's markets, technologies and
operations create risks to the Company's long-term success and to predictable
quarterly results. These risks will also affect the Company's ability to achieve
the results anticipated by the forward-looking statements contained in this
report. The Company's quarterly results have in the past varied and are expected
in the future to vary significantly as a result of factors such as the timing
and shipment of significant orders, new product introductions or technological
advances by the Company and its competitors, market acceptance of new or
enhanced versions of the Company's products, changes in pricing policies by the
Company and its competitors, the mix of distribution channels through which the
Company's products are sold, the mix of products sold, the accuracy of
11
<PAGE>
resellers' and OEM's forecast of end-user demand, the ability of the Company to
obtain sufficient supplies of sole or limited source components for the
Company's products, the ability of turnkey manufacturers to meet the Company's
demand, and general economic conditions. In response to competitive pressures or
new product introductions, the Company may take certain pricing or marketing
actions that could materially and adversely affect the Company's operating
results. In the event of a reduction in the prices of its products, the Company
has committed to providing retroactive price adjustments on inventories held by
its distributors, which could have the effect of reducing margins and operating
results. In addition, changes in the mix of products sold and the mix of
distribution channels through which the Company's products are sold may cause
fluctuations in the Company's gross margins. The Company's expense levels are
based, in part, on its expectations of its future revenue and, as a result, net
income would be disproportionately affected by a reduction in revenue. Due to
the potential quarterly fluctuation in operating results, the Company believes
that quarter-to-quarter comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as indicators of future
performance.
The markets for the Company's products are characterized by rapidly changing
technology, evolving industry standards, frequent new product introductions and
short product life cycles. These changes can adversely affect the business and
operating results of industry participants. The Company's success will depend
upon its ability to enhance its existing products and to develop and introduce,
on a timely and cost-effective basis, new products that keep pace with
technological developments and emerging industry standards and address
increasingly sophisticated customer requirements. The inability to develop and
manufacture new products in a timely manner, the existence of reliability,
quality or availability problems in the products or their component parts, the
failure to obtain reliable subcontractors for volume production and testing of
mature products, or the failure to achieve market acceptance would have a
material adverse effect on the Company's business and operating results.
The markets in which the Company competes are also characterized by intense
competition. Several of the Company's competitors have significantly broader
product offerings and greater financial, technical, marketing and other
resources and finished installed bases than the Company. These larger
competitors may also be able to obtain higher priority for their products from
distributors and other resellers that carry products of many companies. A number
of the Company's competitors were recently acquired, which is likely to permit
these competitors to devote significantly greater resources to the development
and marketing of competitive products. These competitive pressures could
adversely affect the Company's business and operating results.
12
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Description of Document
-------- ------------------------
27 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
None
13
<PAGE>
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.
NETWORK PERIPHERALS INC.
Date: November 4, 1998 By: \s\ Wilson Cheung
------------------------
Wilson Cheung
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Sep-30-1998
<CASH> 9,308
<SECURITIES> 16,600
<RECEIVABLES> 4,020
<ALLOWANCES> (697)
<INVENTORY> 3,996
<CURRENT-ASSETS> 33,764
<PP&E> 9,613
<DEPRECIATION> (4,707)
<TOTAL-ASSETS> 39,117
<CURRENT-LIABILITIES> 6,747
<BONDS> 0
<COMMON> 12
0
0
<OTHER-SE> 32,358
<TOTAL-LIABILITY-AND-EQUITY> 39,117
<SALES> 21,693
<TOTAL-REVENUES> 21,693
<CGS> 12,778
<TOTAL-COSTS> 12,778
<OTHER-EXPENSES> 16,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,491)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,491)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,491)
<EPS-PRIMARY> (0.53)
<EPS-DILUTED> (0.53)
</TABLE>
