<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
COMMISSION FILE NUMBER 0-25494
REMEDY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 77-0265675
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1505 SALADO DRIVE, MOUNTAIN VIEW, CA 94043
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(415) 903-5200
(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__
There were 13,125,703 shares of the Company's Common Stock, par value
$.00005, outstanding on April 30th, 1996.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 -- Financial Information:
Condensed Balance Sheets as of March 31, 1996 and December 31, 1995....... 3
Condensed Statements of Income for the Three Months Ended March 31, 1996
and March 31, 1995........................................................ 4
Condensed Statements of Cash Flows for the Three Months Ended March 31,
1996 and March 31, 1995................................................... 5
Notes to Condensed Financial Statements................................... 6
Item 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations..................................................... 7
PART II OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K................................ 12
SIGNATURE............................................................................ 13
</TABLE>
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REMEDY CORPORATION
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
MARCH 31,
1996
---------
(UNAUDITED)
---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $32,178 $ 31,452
Short-term investments............................................. 30,943 24,734
Accounts receivable, net of allowance for doubtful accounts of $523
and $541, respectively.......................................... 7,820 11,590
Income taxes receivable............................................ 1,847 2,669
Prepaid expenses and other current assets.......................... 1,102 561
Deferred tax assets................................................ 1,039 1,039
------- -------
Total current assets....................................... 74,929 72,045
Property and equipment, net.......................................... 2,991 2,688
------- -------
$77,920 $ 74,733
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 790 $ 1,168
Accrued compensation and related liabilities....................... 1,505 3,550
Other accrued liabilities.......................................... 2,490 1,734
Deferred revenue................................................... 5,207 4,732
Current portion of obligations under capital leases................ 105 94
------- -------
Total current liabilities.................................. 10,097 11,278
Noncurrent portion of obligations under capital leases............... 326 324
Stockholders' equity:
Common stock and Additional paid-in capital........................ 53,996 51,942
Notes receivable from stockholders................................. (60) (60)
Deferred compensation.............................................. (389) (434)
Retained earnings.................................................. 13,950 11,683
------- -------
Total stockholders' equity................................. 67,497 63,131
------- -------
$77,920 $ 74,733
======= =======
</TABLE>
See accompanying notes.
3
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REMEDY CORPORATION
CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
Revenue:
Products............................................................... $ 9,338 $ 4,521
Maintenance and service................................................ 3,663 1,843
------- -------
Total revenue.................................................. 13,001 6,364
Costs and expenses:
Cost of product revenue................................................ 557 441
Cost of maintenance and service revenue................................ 1,938 1,029
Research and development............................................... 2,312 1,378
Sales and marketing.................................................... 3,797 1,719
General and administrative............................................. 1,357 504
------- -------
Total costs and expenses....................................... 9,961 5,071
Income from operations................................................... 3,040 1,293
Interest income, net..................................................... 503 22
------- -------
Income before provision for income taxes................................. 3,543 1,315
Provision for income taxes............................................... 1,276 513
------- -------
Net income............................................................... $ 2,267 $ 802
======= =======
Net income per common and common equivalent share........................ $ 0.15 $ 0.07
======= =======
Shares used in computing per share amounts............................... 14,793 11,724
======= =======
</TABLE>
See accompanying notes.
4
<PAGE> 5
REMEDY CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 2,267 $ 802
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization...................................... 352 214
Amortization of deferred compensation.............................. 45 42
Changes in assets and liabilities:
Accounts receivable.............................................. 3,770 1,661
Prepaid expenses and other current assets........................ (541) (312)
Deferred tax asset............................................... -- 110
Accounts payable................................................. (378) (466)
Accrued compensation and related liabilities..................... (2,045) (556)
Income taxes..................................................... 2,608 (214)
Other accrued liabilities........................................ 756 208
Deferred revenue................................................. 475 382
-------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES............................... 7,309 1,871
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments..................................... (36,644) --
Maturities of short-term investments.................................... 30,435 --
Capital expenditures.................................................... (617) (443)
-------- -------
Net cash used in investing activities................................... (6,826) (443)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations...................... (25) (12)
Proceeds from issuance of common stock.................................. 268 43,622
-------- -------
Net cash provided by financing activities............................... 243 43,610
-------- -------
Net increase in cash and cash equivalents............................... 726 45,038
Cash and cash equivalents at beginning of period........................ 31,452 3,007
-------- -------
Cash and cash equivalents at end of period.............................. $ 32,178 $48,045
======== =======
</TABLE>
See accompanying notes.
5
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REMEDY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITIED)
1. BASIS OF PRESENTATION
The condensed balance sheet as of March 31, 1996, and the condensed
statements of income and cash flows for the three months ended March 31, 1996
and 1995, have been prepared by the Company, without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at March 31, 1996 and for all periods presented have been made. The
condensed balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission rules and regulations. These condensed financial statements should be
read in conjunction with the audited financial statements and notes thereto
included in the Company's 1995 Annual Report and Report on Form 10-K filed with
the Securities and Exchange Commission.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of results that may be expected for any other interim
period or for the full fiscal year.
2. INITIAL PUBLIC OFFERING
On March 24, 1995, the Company completed its initial offering of stock to
the public. A total of 2,070,000 shares of Common Stock was sold for net
proceeds to the Company of approximately $43.5 million, after deducting expenses
of the offering of approximately $750,000 and underwriters' discounts and
commissions. Upon completion of the offering, all outstanding shares of
Preferred Stock (a total of 3,020,000 shares) were converted into shares of
Common Stock on a one-for-one basis.
3. STOCK SPLIT
The Company authorized a three-for-two stock split in the form of a stock
dividend, effective March 25, 1996. Prior period amounts have been restated to
reflect the effect of the stock split.
4. PER SHARE INFORMATION
Net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Dilutive common equivalent shares consist of shares issuable upon the exercise
of stock options, using the treasury stock method.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Remedy Corporation (the "Company") develops, markets and supports highly
adaptable, client/server applications software for support and business
processes. The Company was founded in November 1990 and made its initial product
shipments in December 1991. The Company has had sixteen consecutive profitable
quarters, beginning with the quarter ended June 30, 1992. There can be no
assurance, however, that the Company will remain profitable on a quarterly or
annual basis in the future.
This Report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in the
"Risk Factors" section of the Company's 1995 Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
The Company's revenue and operating results can vary significantly from
quarter to quarter. License revenue is difficult to forecast because the
Company's sales depend on factors such as the size and timing of transactions,
changes in customers' budget constraints and general economic conditions. The
license revenue in any quarter is predominantly dependent upon orders booked and
shipped in that quarter. The recognition of maintenance and support revenue
ratably over the term of the contract and the relative seasonality and lag of
consulting and training revenue contribute to the variability of service
revenues. However, a high percentage of the Company's operating expenses are
fixed and are based on anticipated revenue levels. Consequently, a small
variation in the timing of the recognition of revenue can result in significant
variations in operating results from quarter to quarter.
The following table sets forth, as a percentage of total revenue, statement
of income data for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenue:
Products......................................................... 72 % 71 %
Maintenance and service.......................................... 28 29
--- ---
Total revenue............................................ 100 100
Costs and expenses:
Cost of product revenue.......................................... 5 7
Cost of maintenance and service revenue.......................... 15 16
Research and development......................................... 18 22
Sales and marketing.............................................. 29 27
General and administrative....................................... 10 8
--- ---
Total costs and expenses................................. 77 80
Income from operations............................................. 23 20
Interest income, net............................................... 4
--- ---
Income before provision for income taxes........................... 27 21
Provision for income taxes......................................... 10 8
--- ---
Net income......................................................... 17 % 13 %
=== ===
</TABLE>
REVENUE
The Company's revenue is derived from two sources: product licenses and
fees for services. License revenue is derived from product licensing fees, while
service revenue is derived from maintenance support
7
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services, training and consulting. The Company recognizes revenue in accordance
with the Statement of Position on Software Revenue Recognition ("SOP 91-1"),
issued by the American Institute of Certified Public Accountants. Product
revenue is recognized upon delivery only if no significant vendor obligations
remain and collection of the resulting receivable is deemed probable. Delivery
is defined in certain contracts as delivery of the product master or first copy
for noncancelable product licensing arrangements under which the customer has
certain software reproduction rights. Service revenue from customer maintenance
fees for ongoing customer support and product updates is recognized ratably over
the term of the maintenance contract, which is typically twelve months. Service
revenue from training and consulting is recognized when the services are
performed. Fees for such services are charged separately from the Company's
software products. The Company's license agreements generally do not provide a
right of return. However, reserves are maintained for return allowances and
potential credit losses, which have not been significant to date.
The Company distributes the majority of its products through its
headquarters-based direct sales force that is complemented by indirect sales
channels, including value-added resellers ("VARs"), system integrators and
original equipment manufacturers ("OEMs"). Sales derived through indirect
channels accounted for approximately 40% of the Company's total billings for the
quarter ended March 31, 1995 and 45% in the comparable 1996 period. The Company
expects that sales derived through indirect channels, which have lower average
selling prices and gross margins than direct sales, will increase as a
percentage of total revenue. As a result, the Company expects that its gross
margins on product sales may decline if sales through indirect channels
increase.
Product Revenue. The Company currently derives substantially all of its
product revenue from licenses of the Action Request System and related products.
Revenue from product licenses increased by 107% from $4.5 million in the quarter
ended March 31, 1995 to $9.3 million in the comparable 1996 period. The increase
in license fees was primarily attributable to increased market acceptance, both
domestic and international, of the Company's Action Request System, as well as
the introduction of several related products. International sales accounted for
approximately 33% of the Company's total revenue for the quarter ended March 31,
1995 and 38% in the comparable 1996 period. Substantially all of the
period-to-period growth in product revenue was due to higher unit sales volumes.
The prices of the Company's products have remained relatively constant from 1993
through March 31, 1996. Broad market acceptance of the Company's products is
critical to the Company's future success. The Company expects that both market
penetration and competition will increase, and, as a result, that prior growth
rates of the Company's product revenue may not be sustainable in the future.
Maintenance and Service Revenue. Revenue from services increased by 99%
from $1.8 million in the quarter ended March 31, 1995 to $3.7 million in the
comparable 1996 quarter. This growth is primarily due to increased licensing
activity, which has resulted in increases in revenue from services related to
maintenance and support, training and consulting. Renewal of maintenance
contracts after the initial one-year term also contributes to the growth rate.
The Company expects that as market penetration and competition increase, prior
growth rates of the Company's installed base and, consequently, in the Company's
service revenue, may not be sustainable in the future.
COST OF PRODUCT REVENUE
Cost of Product Revenue. Cost of product revenue consists primarily of the
costs of royalties paid to third-party vendors, product media and duplication,
manuals, packaging materials, personnel-related costs and shipping expenses.
Cost of product revenue increased from $441,000 for the quarter ended March 31,
1995 to $557,000 for the comparable 1996 period, representing 10% and 6% of the
related product revenue in such periods, respectively. The increases in the
dollar amount of cost of product revenue is primarily due to the higher volumes
of product shipped during the quarter. The decrease in cost as a percentage of
the related product revenue from March 31, 1995 to the comparable 1996 period is
primarily due to economies of scale realized as a result of shipping greater
quantities of product in the quarter ended March 31, 1996. Because all
development costs incurred in the research and development of software products
and enhancements to existing software products have been expensed as incurred,
cost of product revenue includes no amortization of capitalized software
development costs. Cost as a percentage of product revenue may fluctuate from
quarter to
8
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quarter due to seasonality of revenue offset by cost of sales containing some
fixed costs such as personnel costs and royalties.
Cost of Maintenance and Service Revenue. Cost of maintenance and service
revenue consists primarily of personnel-related costs incurred in providing
telephone support, consulting and training to customers. Cost of maintenance and
service revenue increased from $1.0 million for the quarter ended March 31, 1995
to $1.9 million for the comparable 1996 period, representing 56% and 53% of the
related maintenance and service revenue for the respective quarters. Cost of
maintenance and service revenue increased significantly in absolute dollars from
the quarter ended March 31, 1995 to the quarter ended March 31, 1996 primarily
due to increased personnel-related costs as the Company continued to build its
customer support and training organizations. In addition, such costs increased
from quarter to quarter due to the Company's increased partnering with
third-party service providers to deliver consulting services to its customers.
The Company believes that cost of maintenance and service revenue will increase
in dollar amounts and may increase as a percentage of total revenue in the
future.
OPERATING EXPENSES
Research and Development. Research and development expenses were $1.4
million and $2.3 million, or 22% and 18% of total revenue, for the quarters
ended March 31, 1995 and March 31, 1996, respectively. The increase in dollar
amounts in research and development expenses was primarily attributable to
increased staffing and associated support for software engineers required to
expand and enhance the Company's product line. The Company believes that
research and development expenses will continue to increase in dollar amounts
and may increase as a percentage of total revenue in the future.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses of sales and marketing personnel as well as
promotional expenses. Sales and marketing expenses were $1.7 million and $3.8
million, or 27% and 29% of total revenue for the quarters ended March 31, 1995
and March 31, 1996, respectively. The increase in sales and marketing expenses
in both absolute dollar amounts and in percentages was primarily due to the
expansion of sales and marketing resources and increased marketing activities,
including trade shows and promotional activities. The Company believes that such
expenses will increase in dollar amounts and may increase as a percentage of
total revenue in the future as the Company expands its sales and marketing
staff.
General and Administrative. General and administrative expenses were
$504,000 and $1.4 million, or 8% and 10% of total revenue for the quarters ended
March 31, 1995 and March 31, 1996, respectively. The increase in dollar amounts
was primarily the result of increased staffing and associated expenses necessary
to manage and support the Company's growth. The Company believes that its
general and administrative expenses will increase in dollar amounts and may
increase as a percentage of total revenue in the future as the Company expands
its staffing.
Interest Income, net. Interest income, net was $22,000 and $503,000 for
the quarters ended March 31, 1995 and March 31, 1996, respectively. The increase
in interest income, net for the quarter ended March 31, 1996 is primarily due to
the investment of proceeds from the Company's March 1995 initial public
offering.
PROVISION FOR INCOME TAXES
The Company had recorded $1.0 million in net deferred tax assets at March
31, 1996. No valuation allowance has been provided on this amount based on
management's assessment that current levels of taxable income in future years
will be sufficient to realize the net deferred tax assets. The effective tax
rate of 36% for the quarter ended March 31, 1996 differs from the federal
statutory rate primarily due to state income taxes, offset by tax-exempt
interest income.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1995 and March 31, 1996, the
Company's cash provided by operating activities was $1.9 million and $7.3
million, respectively, of which net income and collections of
9
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accounts receivable were significant components in each period. From December
31, 1995 to March 31, 1996, accounts receivable, net of allowances, decreased
from $11.6 million to $7.8 million, primarily due to the collections of
receivables during the quarter exceeding the billings during the quarter.
During the three months ended March 31, 1995 and March 31, 1996, the
Company's investing activities have consisted of purchases of short-term
investments and property and equipment. Purchases of short-term investments
exceeded maturities by $6.2 million in the quarter ended March 31, 1996,
primarily due to investment of cash provided by operating activities during the
period. To date, the Company has not invested in derivative securities or any
other financial instruments that involve a high level of complexity or risk.
Management expects that, in the future, cash in excess of current requirements
will continue to be invested in investment grade, interest-bearing securities.
Cash used to purchase property and equipment was $443,000 and $617,000
during the months ended March 31, 1995 and March 31, 1996, respectively,
primarily for computer workstations and file servers for the Company's growing
employee base. The Company expects that the rate of purchases of property and
equipment will remain constant or increase as the Company's employee base grows.
The Company's principal commitments consist primarily of leases on its
headquarters facilities and its telephone system.
At March 31, 1996, the Company had $32.2 million in cash and cash
equivalents, $30.9 million in short-term investments and $64.8 million of
working capital. On March 24, 1995, the Company completed its initial offering
of stock to the public. A total of 2,070,000 shares of Common Stock were sold
for net proceeds to the Company of approximately $43.5 million, after deducting
expenses of the offering of approximately $750,000 and underwriters' discounts
and commissions. The Company also has available a $5.0 million unsecured bank
line of credit that expires in June 1996. There were no borrowings outstanding
under this line of credit as of March 31, 1996.
The Company believes that its current cash and short-term investments
balances, cash available under its line of credit and cash flow from operations
will be sufficient to meet its working capital and capital expenditure
requirements for at least the next 12 months. Although operating activities may
provide cash in certain periods, to the extent the Company experiences growth in
the future, the Company anticipates that its operating and investing activities
may use cash. Consequently, significant future growth may require the Company to
obtain additional equity or debt financing.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS:
Although the Company has experienced significant percentage growth in
revenue and net income in recent years, the Company does not believe prior
growth rates are sustainable or indicative of future operating results. There
can be no assurance that the Company will remain profitable on a quarterly or
annual basis. In addition, the Company's limited operating history makes the
prediction of future operating results difficult or impossible. The Company
currently derives substantially all of its revenue from licenses of the Action
Request System and related products and services. Broad market acceptance of the
Action Request System is critical to the Company's future success. As a result,
a decline in demand for or failure to achieve broad market acceptance of the
Action Request System as a result of competition, technological change or
otherwise, would have a material adverse effect on the business, operating
results and financial condition of the Company.
The Company intends to continue to hire a significant number of additional
sales personnel in 1996 and beyond, which is required if the Company is to
achieve significant revenue growth in the future. Competition for such personnel
is intense and there can be no assurance that the Company can retain its
existing sales personnel or that it can attract, assimilate or retain additional
highly qualified sales persons in the future. If the Company is unable to hire
such personnel on a timely basis, the Company's business, operating results and
financial condition could be adversely affected.
Due to factors noted above, the Company's future earnings and stock price
may be subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenue or earnings from levels anticipated by securities analysts
could have an immediate and significant adverse effect on the trading price of
the Company's Common Stock. The Company typically receives and fulfills a
majority of its orders within the quarter, with a substantial portion occurring
in the third month of the fiscal quarter. As a result, the Company
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may not learn of revenue shortfalls until late in a fiscal quarter, which could
result in an even more immediate and adverse effect on the trading price of the
Company's Common Stock.
The Company's business entails a variety of additional risks, which are set
forth in the "Risk Factors" section of the Company's 1995 Report on Form 10-K
filed with the Securities and Exchange Commission.
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PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
- - ------ --------------------------------------------------------------------
<C> <S>
11.1 Computation of Net Income per Common and Common Equivalent Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K : None
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SIGNATURE
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.
Dated: May 10, 1996
REMEDY CORPORATION
/s/ George A. de Urioste
George A. de Urioste
Vice President, Finance and Chief
Financial Officer
(Duly Authorized Officer and Principal
Financial and
Accounting Officer)
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EXHIBIT 11.1
REMEDY CORPORATION
COMPUTATION OF NET INCOME
PER COMMON AND COMMON EQUIVALENT SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
PRIMARY
Weighted average number of common shares outstanding................... 12,950 5,744
Convertible preferred shares, as if converted.......................... -- 3,775
Incremental common shares attributable to shares issuable
under employee stock plans.......................................... 1,843 2,205
------- -------
Total shares................................................... 14,793 11,724
======= =======
Net income:
Amount................................................................. $ 2,267 $ 802
======= =======
Per share.............................................................. $ 0.15 $ 0.07
======= =======
FULLY DILUTED
Weighted average number of common shares outstanding................... 12,950 5,744
Convertible preferred shares, as if converted.......................... -- 3,775
Incremental common shares attributable to shares issuable
under employee stock plans.......................................... 1,949 2,278
------- -------
Total shares................................................... 14,899 11,797
======= =======
Net income:
Amount................................................................. $ 2,267 $ 802
======= =======
Per share.............................................................. $ 0.15 $ 0.07
======= =======
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed financial statements included in the Company's Form 10-Q and is
qualified in its entirety by reference to such condensed financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 32,178
<SECURITIES> 30,943
<RECEIVABLES> 8,343
<ALLOWANCES> 523
<INVENTORY> 0
<CURRENT-ASSETS> 74,929
<PP&E> 5,088
<DEPRECIATION> 2,097
<TOTAL-ASSETS> 77,920
<CURRENT-LIABILITIES> 10,097
<BONDS> 0
0
0
<COMMON> 53,996
<OTHER-SE> (449)
<TOTAL-LIABILITY-AND-EQUITY> 77,920
<SALES> 9,338
<TOTAL-REVENUES> 13,001
<CGS> 557
<TOTAL-COSTS> 2,495
<OTHER-EXPENSES> 2,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 3,543
<INCOME-TAX> 1,276
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,267
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
