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 June 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 X No ____
The number of shares of the Registrant's Common Stock, $0.001 par value,
outstanding as of July 31, 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.
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
INDEX TO FORM 10-Q
For the quarter ended
June 30, 1998
<CAPTION>
PART I. FINANCIAL INFORMATION
- ------------------------------
Item Page
- ---- ----
<S> <C>
1. Financial Statements (unaudited):
Consolidated Balance Sheets - June 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations - Three and Six Months Ended
June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows - Six Months Ended
June 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
- ---------------------------
4. Submission of Matters to a Vote of Security Holders 13
6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
<TABLE>
NETWORK PERIPHERALS INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands, except share data)
<CAPTION>
June 30, December 31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,080 $ 16,094
Short-term investments 15,028 14,371
Accounts receivable, net of allowance for doubtful accounts and
returns of $765 and $1,184, respectively 4,917 5,170
Inventories 2,903 1,417
Income tax refund receivable 3,546 3,983
Prepaid expenses and other current assets 615 614
-------- --------
Total current assets 38,089 41,649
Property and equipment, net 4,356 3,876
Other assets 483 364
-------- --------
$ 42,928 $ 45,889
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,231 $ 1,415
Accrued liabilities 3,326 5,795
-------- --------
Total current liabilities 8,557 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 64,059 63,878
Accumulated deficit (29,700) (25,211)
-------- --------
Total stockholders' equity 34,371 38,679
-------- --------
$ 42,928 $ 45,889
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
3
</TABLE>
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(in thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 7,250 $ 10,637 $ 15,270 $ 22,643
Cost of sales 4,309 6,513 8,961 12,583
-------------- -------------- --------------- --------------
Gross profit 2,941 4,124 6,309 10,060
-------------- -------------- --------------- --------------
Operating expenses:
Research and development 3,669 2,376 6,527 4,762
Marketing and selling 1,621 3,986 3,394 7,839
General and administrative 819 1,184 1,683 2,455
Acquired research and
development in process and
product integration costs - 6,462 - 6,462
-------------- -------------- --------------- --------------
Total operating expenses 6,109 14,008 11,604 21,518
-------------- -------------- --------------- --------------
Loss from operations (3,168) (9,884) (5,295) (11,458)
Interest income 424 369 806 783
-------------- -------------- --------------- --------------
Loss before income taxes (2,744) (9,515) (4,489) (10,675)
Benefit from income taxes - 1,208 - 1,614
-------------- -------------- --------------- --------------
Net loss $ (2,744) $ (8,307) $ (4,489) $ (9,061)
============== ============== =============== ==============
Net loss per share:
Basic $ (0.22) $ (0.68) $ (0.37) $ (0.75)
============== ============== =============== ==============
Diluted $ (0.22) $ (0.68) $ (0.37) $ (0.75)
============== ============== =============== ==============
Weighted average common shares:
Basic 12,282 12,153 12,269 12,114
============== ============== =============== ==============
Diluted 12,282 12,153 12,269 12,114
============== ============== =============== ==============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
<CAPTION>
Six Months Ended
------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(4,489) $(9,061)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 941 1,208
Amortization of goodwill 20 283
Acquired research and development in process - 6,462
Changes in assets and liabilities:
Accounts receivable 253 (321)
Inventories (1,486) (7)
Income tax refund receivable 437 -
Prepaid expenses and other assets (140) (605)
Accounts payable 3,816 (1,072)
Accrued liabilities (2,013) (2,343)
---------------- ----------------
Net cash used in operating activities (2,661) (5,456)
---------------- ----------------
Cash flows from investing activities:
Purchases of property and equipment (1,421) (1,561)
Purchases of short-term investments (657) -
Proceeds from sales of short-term investments - 6,022
Cash paid for acquisition, net of cash acquired - (6,449)
Holdback amount from acquisition (456) -
---------------- ----------------
Net cash used in investing activities (2,534) (1,988)
---------------- ----------------
Cash flows from financing activities:
Proceeds from issuance of Common Stock 181 667
---------------- ----------------
Net cash provided by financing activities 181 667
---------------- ----------------
Effect of exchange rate changes on cash - 21
---------------- ----------------
Net decrease in cash and cash equivalents (5,014) (6,756)
Cash and cash equivalents, beginning of period 16,094 23,523
---------------- ----------------
Cash and cash equivalents, end of period $11,080 $16,767
================ ================
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes $ 47 $ -
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
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 June 30, 1998 and December 31,
1997, and the results of its operations for the three and six-month
periods ended June 30, 1998 and June 30, 1997, and its cash flows for
the six-month periods ended June 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 six-month periods ended June 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
Statements 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 six months ended June 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):
June 30, December 31,
1998 1997
--------------- -----------------
Raw materials $ 577 $ 158
Work-in-process 1,465 898
Finished goods 861 361
--------------- -----------------
$2,903 $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):
June 30, December 31,
1998 1997
--------- ------------
Computer and equipment $ 7,371 $ 6,918
Furniture and fixtures 860 895
Leasehold improvements 305 303
--------- ------------
8,536 8,116
Accumulated depreciation (4,180) (4,240)
--------- ------------
$ 4,356 $ 3,876
========= ============
5. ACCRUED LIABILITIES
The components of accrued liabilities consist of the following (in
thousands):
June 30, December 31,
1998 1997
--------- ------------
Salaries and benefits $ 1,015 $ 1,750
Reserve for contract settlements - 1,000
Royalty 750 746
Warranty 510 513
Holdback amount from acquisition - 456
Restructuring expense - 597
Other 1,051 733
--------- ------------
$ 3,326 $ 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 June 30, 1998 (in thousands):
7
<PAGE>
<TABLE>
NETWORK PERIPHERALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<CAPTION>
Write-off
Write-off Reduction Closure Excess
of in Work of Assets Other Total
Goodwill Force Facilities
----------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Reserve provided $ 962 $ 500 $ 200 $ 1,500 $ 500 $ 3,662
Reserve utilized in third (962) - (100) - - (1,062)
quarter
Reserve utilized in fourth - (373) (8) (1,122) (500) (2,003)
quarter
----------- ------------ ---------- ---------- ---------- ----------
Balance at December 31, 1997 - 127 92 378 - 597
Reserve utilized in first - (354) (22) - - (376)
quarter
Reserve utilized in second - (221) - - - (221)
quarter
----------- ------------ ---------- ---------- ---------- ----------
Balance at June 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 June 30, 1998 (the quarter) were $7.3
million, compared to $10.6 million for the three months ended June 30, 1997 (the
comparable quarter). For the six months ended June 30, 1998 (the six month
period) and June 30, 1997 (the comparable period), net sales were $15.3 million
and $22.6 million, respectively. The decreases for the quarter and the six month
period were due to decreased shipments of FDDI adapters, as well as price
pressures on Fast Ethernet switching products. The reduction of FDDI adapter
shipments reflected a decrease in the demand for products based on FDDI
technology in a matured market. Although unit shipments of Fast Ethernet
switching products have increased in the six month period from the comparable
period, these products have reached the commodity stage in the market, resulting
in lower selling prices.
Sales to OEM customers were $5.3 million for the quarter, or 72% of net sales,
reflecting a 16% decrease from prior year. For the six month period, OEM sales
were $10.6 million, or 69% of net sales, reflecting a 25% decrease from prior
year. The balance of the sales was to the distribution channel. For the quarter
and the six month period, respective distribution sales were $2.0 million and
$4.7 million, reflecting decreases of 54% and 45%, respectively, from prior
year. The quarter's shipments to North America and International customers
declined to $5.4 million and $1.8 million, respectively, from $8.5 million and
$2.2 million in the corresponding periods in 1997. For the six month period,
shipments declined to $10.5 million and $4.7 million, respectively, from $17.5
million and $5.2 million in the corresponding periods in 1997. The declines in
the OEM and distribution channels and in the geographic regions were attributed
to the downturns in the Asia economies, as well as the maturity of the markets
in which the Company's products are sold.
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.
9
<PAGE>
Gross Profit/Margin
Gross margin for the quarter and for the six month period were 41%, compared to
39% and 44% in the corresponding periods in 1997. Competitive price pressures on
existing products combined with the introduction of new commodity-like products
resulted in the lower margin for the six month period. The Company expects the
gross margin for the remainder of 1998 to be relatively consistent with or
slightly lower than the current quarter.
Research and Development
Research and development expense for the quarter was $3.7 million, or 51% of net
sales, and $2.4 million (net of $168,000 in contract funding), or 22% of net
sales, in the comparable quarter. For the six month period in 1998 and 1997,
expenses were $6.5 million, or 43% of net sales, and $4.8 million (net of
$217,000 in contract funding), or 21% of net sales, respectively. The increase
in expense is the result of resources expended in the development of the
Company's next generation of switching products, designated as NuWave. Expenses
included outside consultants, non-recurring engineering costs, increased
staffing, facilities, and other overhead costs. As a result of the 1998
restructuring (see "Restructuring" below), and as the resources allocated to
NuWave have reached their planned level, the Company expects expenditures on
research and development for the remainder of 1998 to decrease moderately from
the current quarter.
Marketing and Selling
Marketing and selling expense for the quarter was $1.6 million, or 22% of net
sales, and $4.0 million, or 37% of net sales, in the comparable quarter. For the
six month period in 1998 and 1997, expenses were $3.4 million, or 22% of net
sales, and $7.8 million, or 35% 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. With the restructuring actions of 1997, combined with further
anticipated expense reduction in 1998, the Company expects expenditures on
marketing and selling for the remainder of 1998 to decline from current quarter
levels.
General and Administrative
General and administrative expense for the quarter was $819,000, and $1.2
million in the comparable quarter, representing 11% of net sales in both
periods. For the six month period in 1998 and 1997, expenses were $1.7 million,
and $2.5 million, respectively, or 11% of net sales in both periods. The
decrease in expenditures reflected a reduction in staff and a diminished
utilization of outside consultants. The Company expects general and
administrative expenditures for the remainder of 1998 to remain comparable in
absolute dollars with the current quarter.
Interest Income
Interest income for the quarter and six month period were $424,000 and $806,000,
respectively, compared to $369,000 and $783,000, respectively, in the
corresponding periods in 1997. The increased return on investments reflects the
shift of invested funds from tax exempt securities to quality short-term
corporate securities, partially offset by a decrease in the amount of funds
invested due to the acquisition of NetVision in 1997.
Income Taxes
The Company did not record a tax benefit for the quarter or for the six month
period as the benefit associated with net operating loss carryback credits was
completely utilized in 1997 and the realization of carry-forward credits is
uncertain.
10
<PAGE>
Restructuring
Effective in the three month period ending September 30, 1998, the Company
expects to decrease operating expenses, primarily through a reduction in work
force of approximately 13% affecting all functions. The cost of the
restructuring is anticipated to be approximately $500,000. At the time of filing
this Form 10-Q, details of the restructuring have not been finalized.
Acquisition
Effective April 29, 1997, the Company acquired NetVision Corp. 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.
Liquidity and Capital Resources
Cash used in operating activities for the six month period was $2.7 million and
was primarily due to the net loss and an increase in inventory, partially offset
by an increase in current liabilities. The increase in inventory reflected the
decreased sales as well as the temporary build-up of inventory for transitioning
turn-key manufacturers. Accordingly, the increase in inventory contributed to
the increase in current liabilities.
Cash used in investing activities for the six month period was $2.5 million and
included the purchase of $1.4 million in capital equipment for engineering
purposes, the final payout in the NetVision acquisition, and the purchase of
short-term securities.
At June 30, 1998, the Company's principal sources of liquidity were its cash,
cash equivalents and short-term investments of $26.1 million and its $10 million
bank line of credit. As of June 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
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.
11
<PAGE>
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 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Stockholders on May 26,
1998.
(b) The election of a Class I director, Joseph Marengi, of the
Company for a term expiring in the year 2001 was voted at the
Annual Meeting. There were 11,455,104 shares of Common Stock
represented in person and by proxy: 10,742,772 votes for, 0
votes against, and 712,332 votes abstained. William Tai, a
Class I director due for re-election at the Annual Meeting,
chose not to stand for re-election. Subsequent to the Annual
Meeting of Stockholders, Michael Gardner was appointed by the
Company's Board of Directors to replace William Tai as a
member of the Board of Directors; and Pauline Lo Alker and
Kenneth Levy have resigned from the Board of Directors.
(c) On a proposal to approve an amendment to the Company's 1997
Stock Plan to increase the number of shares of Common Stock
reserved for issuance thereunder by 1,000,000 shares,
3,869,953 shares were voted for the proposal, 1,208,403 shares
were voted against the proposal, and 6,376,748 shares
abstained. Broker non-votes were counted as abstentions.
(d) On a proposal to ratify the appointment of Price Waterhouse
LLP as the Company's independent accountants for the fiscal
year ending December 31, 1998, 11,304,647 shares were voted
for the proposal, 107,921 shares were voted against the
proposal, and 42,536 shares abstained. Broker non-votes were
counted as abstentions.
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: August 13, 1998 By: \s\ Robert Hersh
------------------
Robert Hersh
Vice President of Operations and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 11,080
<SECURITIES> 15,028
<RECEIVABLES> 5,682
<ALLOWANCES> (765)
<INVENTORY> 2,903
<CURRENT-ASSETS> 38,089
<PP&E> 8,536
<DEPRECIATION> (4,180)
<TOTAL-ASSETS> 42,928
<CURRENT-LIABILITIES> 8,557
<BONDS> 0
12
0
<COMMON> 0
<OTHER-SE> 34,359
<TOTAL-LIABILITY-AND-EQUITY> 43,928
<SALES> 15,270
<TOTAL-REVENUES> 15,270
<CGS> 8,961
<TOTAL-COSTS> 8,961
<OTHER-EXPENSES> 11,604
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,489)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,489)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,489)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
