<PAGE>
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 June 30, 1996
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-25832
------------------------------------------------------
MAXIS, INC.
(Exact name of registrant as specified in its charter)
------------------------------------------------------
DELAWARE 94-3128369
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2121 NORTH CALIFORNIA BLVD., SUITE 600
WALNUT CREEK, CA 94596-3572
(Address of principal executive offices)
TELEPHONE NUMBER (510) 933-5630
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
--- ---
As of July 31, 1996 there were 11,137,822 shares of the Registrant's Common
Stock, $.0001 par value, outstanding.
____________
Page 1
<PAGE>
MAXIS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. Financial Information Page
----
Item 1. Condensed Consolidated Financial Statements (unaudited)
<S> <C>
Condensed Consolidated Balance Sheets
At June 30, 1996 and March 31, 1996....................... 3
Condensed Consolidated Statements of Operations
Three months ended June 30, 1996 and 1995................. 4
Condensed Consolidated Statements of Cash Flows
Three months ended June 30, 1996 and 1995................. 5
Notes to Condensed Consolidated Financial Statements....... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.......................... 12
Signature.......................................................... 13
</TABLE>
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAXIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS June 30, 1996 March 31, 1996
- ------ ------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................... $13,144 $20,102
Marketable securities........................ 22,718 22,788
Accounts receivable, less allowance for
returns and doubtful accounts of
$5,320 and $5,607........................... 6,795 6,991
Inventories.................................. 2,033 1,543
Income taxes refundable...................... 1,908 227
Deferred income taxes........................ 2,808 2,808
Other current assets......................... 1,095 872
------- -------
Total current assets.......................... 50,501 55,331
Furniture and equipment, net.................. 4,035 3,243
Deferred income taxes......................... 2,023 2,023
Long-term marketable securities............... 7,185 6,119
Other assets.................................. 703 584
------- -------
$64,447 $67,300
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable............................. $ 1,139 $ 1,607
Payable to affiliate partners................ 605 631
Royalties payable............................ 945 1,373
Accrued compensation......................... 1,498 1,685
Accrued advertising.......................... 1,662 1,538
Other accrued liabilities.................... 1,344 2,585
Accrued rent................................. 614 647
------- -------
Total current liabilities..................... 7,807 10,066
------- -------
Commitments
Stockholders' equity:
Common stock, $.0001 par value; authorized
shares, 40,000,000; issued and outstanding,
11,069,322 and 10,989,906................... 51,286 50,514
Notes receivable from stockholders........... (261) (269)
Retained earnings............................ 5,712 7,128
Deferred compensation........................ (97) (139)
------- -------
Total stockholders' equity.................... 56,640 57,234
------- -------
$64,447 $67,300
======= =======
</TABLE>
See accompanying notes.
Page 3
<PAGE>
MAXIS, INC.
===========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
June 30
------------------
<S> <C> <C>
1996 1995
------- -------
Net revenues................................. $ 8,108 $11,332
Cost of revenues........................... 2,980 3,590
------- -------
Gross profit................................. 5,128 7,742
------- -------
Operating expenses:
Research and development................... 2,785 1,797
Sales and marketing........................ 3,621 2,904
General and administrative................. 1,460 1,440
------- -------
Total operating expenses..................... 7,866 6,141
------- -------
Income (loss) from operations................ (2,738) 1,601
Interest income.............................. 434 195
------- -------
Income (loss) from operations before taxes... (2,304) 1,796
Provision (benefit) for income taxes......... (888) 664
------- -------
Net income (loss)............................ (1,416) 1,132
------- -------
Net income (loss) per share.................. $(.13) $.12
======= =======
Shares used in per share calculations........ 11,031 9,798
======= =======
</TABLE>
See accompanying notes.
Page 4
<PAGE>
MAXIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
June 30
--------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income (loss)....................................... $ (1,416) $ 1,132
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Provision for returns and doubtful accounts.......... (287) 629
Depreciation......................................... 285 192
Deferred income taxes................................ -- (696)
Amortization of deferred compensation................ 42 127
Changes in operating assets and liabilities.......... (4,289) 505
--------- -------
Net cash (used in) provided by operating activities.... (5,665) 1,889
INVESTING ACTIVITIES
Purchases of held-to-maturity securities................ (2,066) --
Maturities of held-to-maturity securities............... 1,000 --
Sales of available-for-sale securities................. -- 980
Additions to fixed assets, net.......................... (1,077) (247)
Other................................................... 70 46
--------- -------
Net cash (used in) provided by investing activities.... (2,073) 779
--------- -------
FINANCING ACTIVITIES
Proceeds from exercise of stock options................. 84 --
Net proceeds from issuance of common stock.............. -- 35,493
Tax benefit from exercise of stock options.............. 696 --
Repayment of notes receivable from stockholders......... -- 18
Repurchase of common stock.............................. -- (3)
--------- -------
Net cash provided by financing activities.............. 780 35,508
--------- -------
Net (decrease) increase in cash and cash equivalents... (6,958) 38,176
Cash and cash equivalents at beginning of period........ 20,102 2,610
--------- -------
Cash and cash equivalents at end of period.............. $ 13,144 $40,786
========= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Accretion of preferred stock........................... $ -- $ 87
========= =======
Conversion of preferred stock to common stock.......... $ -- $11,450
========= =======
Forgiveness of note receivable from stockholder........ $ (8) $ --
========= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income tax payments.................................... $ 97 $ 329
========= =======
</TABLE>
See accompanying notes.
Page 5
<PAGE>
MAXIS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The condensed consolidated financial statements for the three months ended
June 30, 1996 and 1995 are unaudited and reflect all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair presentation of the results for the interim periods.
These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto in Maxis' Annual
Report on Form 10-K for the year ended March 31, 1996. The results of
operations for the three months ended June 30, 1996 are not necessarily
indicative of the results for the entire year.
Per share data
Per share data is based on the weighted average number of common shares and
dilutive common stock equivalents outstanding for the period. Common shares
outstanding includes weighted average common equivalent shares as if all
shares of preferred stock were converted into common stock on their respective
dates of issuance. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 83, options to purchase common stock (using the
treasury stock method) granted by the Company during the 12 months immediately
preceding the initial public offering date have been included in the
calculation of weighted average number of common shares outstanding as if the
underlying shares were outstanding during the quarter ended June 30, 1995.
2. Issuance of Common Stock
------------------------
On June 1, 1995, the Company consummated an initial public offering of
3,450,000 shares of common stock which raised approximately $35.5 million, net
of expenses. Of the 3,450,000 shares of common stock, 2,450,000 shares were
sold by the Company and 1,000,000 shares were sold by selling stockholders.
Immediately prior to the offering, all outstanding shares of preferred stock
were converted into 2,093,750 shares of common stock.
3. Marketable Securities
---------------------
At June 30, 1996, the Company's held-to-maturity and available-for-sale debt
securities consist of the following (in thousands):
<TABLE>
<CAPTION>
Held-to-maturity securities
-------------------------------------------
Gross Gross Estimated
unrealized unrealized fair
Cost gains losses value
------- ---------- --------- -------
<S> <C> <C> <C> <C>
Municipal bonds.................... $22,902 $ 254 $ -- $23,156
------- ---------- --------- -------
Municipal notes.................... 2,001 23 -- 2,024
------- ---------- --------- -------
$24,903 $ 277 $ -- $25,180
======= ========== ========= =======
Available-for-sale securities
-------------------------------------------
Gross Gross Estimated
unrealized unrealized fair
Cost gains losses value
------- ---------- --------- -------
U.S. corporate securities.......... $15,100 $ 8 $ -- $15,108
Money market funds................. 329 -- -- 329
------- ---------- --------- -------
$15,429 $ 8 $ -- $15,437
======= ========== ========= =======
Total.............................. $40,332 $ 285 $ -- $40,617
======= ========== ========= =======
</TABLE>
Page 6
<PAGE>
MAXIS, INC.
----------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
3. Marketable Securities - (continued)
-----------------------------------
Such debt and equity securities have been recorded as cash and cash
equivalents ($10,429,000), short-term marketable securities ($22,718,000),
and long-term marketable securities ($7,185,000). The contractual maturities
of held-to-maturity and available-for-sale debt securities at June 30, 1996
are all two years or less. Realized gains and losses on sales of available-
for-sale securities have not been material.
4. Inventories
-----------
Inventories consist primarily of software media, manuals and related packaging
materials as follows (in thousands):
<TABLE>
<CAPTION>
June 30 March 31
1996 1996
------- --------
<S> <C> <C>
Raw materials and work in process... $ 686 $ 356
Finished goods...................... 1,347 1,187
------ ------
$ 2,033 $1,543
======= ======
</TABLE>
Page 7
<PAGE>
MAXIS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the consolidated
financial statements and the notes thereto and in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1996. The operating results for any quarter are not
necessarily indicative of results for any future period.
Overview
Maxis was founded in 1987 to develop software for the consumer entertainment
market. In North America, Maxis currently sells its software products,
including affiliate partner products, through software distributors, major
computer and software retailing organizations, consumer electronics stores,
discount warehouse stores and mail order companies. Internationally, the
Company sells its products through a combination of distribution, direct
retail and licensing arrangements. Maxis' products are available for multiple
platforms, including Windows, Windows 95, DOS and Macintosh. The Company has
also adapted certain of its products for new platforms, including the Sega
Saturn and Sony PlayStation.
The following table sets forth, as a percentage of net revenues, consolidated
statement of operations data for the periods indicated:
<TABLE>
<CAPTION>
Three months ended
June 30
------------------
1996 1995
---- ----
<S> <C> <C>
Net revenues................................ 100.0% 100.0%
Cost of revenues........................ 36.8 31.7
------ -----
Gross profit................................ 63.2 68.3
------ -----
Operating expenses:
Research and development................ 34.3 15.8
Sales and marketing..................... 44.7 25.6
General and administrative.............. 18.0 12.7
------ -----
Total operating expenses.................... 97.0 54.1
------ -----
Income (loss) from operations............... (33.8) 14.2
Interest income............................. 5.4 1.7
------ -----
Income (loss) from operations before taxes.. (28.4) 15.9
Provision (benefit) for income taxes........ (10.9) 5.9
------ -----
Income (loss) from continuing operations.... (17.5)% 10.0%
====== =====
</TABLE>
Page 8
<PAGE>
MAXIS, INC.
Net Revenues
The Company's net revenues were $8,108,000 in the first quarter of fiscal
1997, a decrease of 28.5% from net revenues of $11,332,000 in the first
quarter of fiscal 1996. The lower revenues in fiscal 1997 were due to several
factors. The Company experienced lower revenues from SimCity 2000 on the PC
format, a product originally released for DOS in October 1993. The declining
sales of SimCity 2000 for PCs was partially, but not completely, offset by
sales of SimCity 2000 for game consoles, specifically the Sega Saturn and the
Sony Playstation. During the first quarter of fiscal 1997, the Company's
product introductions included SimCity 2000 for the Sony Playstation, SimCity
2000 Network Edition and SimIsle for Windows and Macintosh. These products
shipped late in the quarter and, therefore, the Company received no reorders
during the period. Furthermore, in April 1995, the Company released SimTower
for Windows which was the Company's best-selling new release during the first
quarter of fiscal 1996. This contributed to higher revenues in the first
quarter of fiscal 1996 as compared to the same period in fiscal 1997.
CD-ROM (vs. floppy disk) products in first quarter of fiscal 1997 accounted
for 76% of the Company's revenues, compared with 72% in the same quarter last
year.
Cost of Revenues
Cost of revenues includes all costs of media, manuals, duplication, packaging
materials, assembly and freight. In addition, royalties are included in cost
of revenues. Gross profit as a percentage of net revenues was 63.2% in the
first quarter of fiscal 1997, a decrease from 68.3% in the first quarter of
fiscal 1996. The decrease in gross profit is due primarily to a higher
percentage of net revenues from affiliate partners during the first quarter of
fiscal 1997. Sales of affiliate products represented 16% of net revenues in
the first quarter of fiscal 1997 as compared to 5% in the same quarter last
year. Gross profit for affiliate products is lower than gross profit for
Maxis-published products because the Company's services for its affiliate
partners are generally limited to sales and distribution and, in some cases, a
manufacturing function. Also, cost of goods sold for game console products is
generally higher than for PC-based Maxis products. Due primarily to the
introduction of SimCity 2000 for the Sony Playstation, the percentage of
revenues from game consoles was 15% during the first quarter of fiscal 1997.
There were no revenues from products for game consoles in the same quarter
last year. The Company expects that the gross profit percentage will continue
to fluctuate on a quarterly basis.
Research and Development
Research and development expenses consist primarily of personnel and equipment
costs required to conduct the Company's development efforts and to fund third-
party software development costs. Third-party software development costs may
include advance product development payments, which are expensed as paid. The
Company increased research and development expenses 55.0% from $1,797,000 in
the first quarter of fiscal 1996 to $2,785,000 in the first quarter of fiscal
1997. As a percentage of net revenues, research and development increased
from 15.8% for the first quarter of fiscal 1996 to 34.3% for the first quarter
of fiscal 1997. The increase in research and development expenses was due
primarily to hiring additional employees and the associated salaries, benefits
and facilities costs. In addition, ongoing development costs related to
Cinematronics were included in the Company's results of operations for the
entire first quarter of fiscal 1997. There were no such costs in the same
period last year because the Company acquired Cinematronics in March 1996.
The Company believes that significant investment in research and development
is required to remain competitive and intends to continue to increase its
investment in this area. Therefore, the Company expects research and
development expenses to increase in absolute dollars.
Page 9
<PAGE>
MAXIS, INC.
Sales and Marketing
The Company increased its sales and marketing expenses, which include customer
support services, from $2,904,000 in the first quarter of fiscal 1996 to
$3,621,000 in the first quarter of fiscal 1997. As a percentage of net
revenues, sales and marketing expenses increased from 25.6% in the first
quarter of fiscal 1996 to 44.7% in the first quarter of fiscal 1997. The
increase in sales and marketing expenses is due to expansion of the Company's
sales and marketing organizations, both in the United States and Europe.
Also, during the first quarter of fiscal 1997, the Company opened a sales,
marketing and development office in Tokyo, Japan. There were no comparable
costs during the same quarter last year. In addition, the Company increased
expenditures for advertising, trade shows and marketing programs with
customers.
The Company believes that competition for retail shelf space has significantly
increased over the prior year, due in part to an overall increase in the
number of new products. The Company expects to continue aggressive marketing
and sales programs in order to continue to distinguish Maxis and its products
in the marketplace. Therefore, the Company expects marketing and sales
expenses to increase in absolute dollars.
General and Administrative
General and administrative expenses, in absolute dollars, remained relatively
constant from the first quarter of fiscal 1997 compared to the same period
last year. Due to lower revenues in the first quarter of fiscal 1997, general
and administrative expenses as a percentage of revenues increased from 12.7%
in the first quarter of fiscal 1996 to 18.0% in the first quarter of fiscal
1997.
Interest income
Interest income as a percentage of net revenues increased to 5.4% for the
first quarter of fiscal 1997 from 1.7% for same quarter last year due to
higher invested cash balances resulting from the proceeds of the Company's
issuance of Common Stock in its initial public offering in June 1995 and due
to lower revenues in the first quarter of fiscal 1997 as compared to the first
quarter of fiscal 1996.
Liquidity and Capital Resources
As of June 30, 1996, the Company's principal sources of liquidity included
cash and short-term investments of approximately $35.9 million and an
available bank line of credit in the amount of $1,000,000, which the Company
has not used to date. The line of credit expires on August 30, 1996. The
Company also has longer-term investments totaling approximately $7.2 million.
The Company's cash, short-term investments and unused bank line of credit are
available to meet seasonal working capital requirements. The Company uses its
working capital to finance ongoing operations, fund the development and
introduction of new products and acquire capital equipment. The Company's
operating activities used cash of $5,665,000 and provided cash of $1,889,000
in the first quarters of fiscal 1997 and 1996, respectively.
From time to time, the Company evaluates acquisitions of businesses, products
or technologies that complement the business of Maxis. The Company has no
present understandings, commitments or agreements with respect to any material
acquisitions of other businesses, products or technologies. Any such
transactions, if consummated, may use a portion of the Company's working
capital or require the issuance of equity.
Page 10
<PAGE>
MAXIS, INC.
Liquidity and Capital Resources (Cont.)
The Company believes that existing working capital and cash from operations
will satisfy the Company's liquidity and capital requirements for at least the
next year.
Risk Factors Affecting Future Earnings and Stock Price
Sections of this Report, particularly the third and fourth paragraphs on page
9, the second paragraph on page 10 and the statements under Liquidity and
Capital Resources contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of many factors,
including the risk factors set forth below and elsewhere in this Report.
The Company has experienced, and expects to continue to experience,
significant fluctuations in operating results due to a variety of factors,
including the size and rate of growth of the consumer software market, market
acceptance of the Company's products and those of its competitors, development
and promotional expenses relating to the introduction of new products or new
versions of existing products, seasonality, projected and actual changes in
computing platforms, the timing and success of product introductions, product
returns, changes in pricing policies by the Company or its competitors, the
accuracy of retailers' forecasts of consumer demand, the timing of orders from
major customers and order cancellations.
The Company's operating results may also fluctuate significantly due to
changes in product plans or delays in completing and shipping products. For
example, in April 1996, the Company decided to reevaluate The Mindwarp, an
action game it had planned to ship during fiscal 1997. In July 1996, the
Company completed its re-evaluation and decided to discontinue the development
of The Mindwarp. In connection with this decision, the Company decided to
close its Utah development office. Such risks apply to all of the Company's
products under development.
The consumer software business is highly seasonal. Net revenues are typically
significantly higher during the third fiscal quarter, due primarily to the
increased demand for consumer software during the calendar year-end holiday
buying season. Net revenues in other quarters are generally lower and vary
significantly as a result of new product introductions and other factors. The
Company expects its net revenues and operating results to continue to reflect
significant seasonality and further expects the second quarter of fiscal 1997
to result in losses due to increased operating expenses, weakness in the
retail market for consumer entertainment software products, seasonality, and
the cancellation of The Mindwarp. There can be no assurance that the Company
will achieve consistent profitability on a quarterly or annual basis.
In response to competitive pressures, the Company may take certain pricing or
marketing actions that could materially adversely affect the Company's
business, operating results and financial condition. The Company may be
required to pay fees in advance or to guarantee royalties, which may be
substantial, to obtain licenses to intellectual properties from third parties
before products incorporating such properties have been introduced or achieved
market acceptance.
Products are generally shipped as orders are received, and accordingly the
Company operates with little backlog. The Company's expense levels are based,
in part, on its expectations regarding future sales and, as a result,
operating results would be disproportionately adversely affected by a decrease
in sales or a failure to meet the Company's sales expectations. Defective
products may result in higher customer support costs and product returns.
Page 11
<PAGE>
MAXIS, INC.
Risk Factors Affecting Future Earnings and Stock Price (Cont.)
The Company's gross profit is affected by the mix of sales among products that
are developed or licensed by Maxis and affiliate partner products that are
developed by third parties and distributed by the Company. Gross profit and
operating expenses are significantly lower on affiliate partner products
because the Company's services are generally limited to sales, distribution
and related functions. Effective April 1, 1996, the Company changed the
offered terms of its affiliate partner program granting, among other things, a
greater share of receipts on affiliate sales to affiliate partners. There can
be no assurance that the Company's current share of receipts on affiliate
sales for distribution services or the current mix of affiliate partner sales
will be sustained.
The market price of the Company's Common Stock could be subject to significant
fluctuations in response to variations in quarterly operating results and
other factors, such as announcements of new products by the Company or its
competitors and changes in financial estimates by securities analysts or other
events. The stock market and many technology companies have recently been
trading at or near historic highs and reflect price/earning ratios above
historic norms. Moreover, the stock market has experienced extreme volatility
that has particularly affected the market prices of equity securities of many
high technology companies and that has often been disproportionate to the
operating performance of such companies. Broad market fluctuations, as well
as economic conditions generally and in the software industry specifically,
may adversely affect the market price of the Company's Common Stock. There
can be no assurance that the Company's stock price will remain at or near its
current level.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Statement of Computation of Earnings per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
Page 12
<PAGE>
MAXIS, INC.
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.
MAXIS, INC.
(Registrant)
Date: August 13, 1996 By: /s/ Fred M. Gerson
------------------
Vice President,
Chief Financial Officer
Page 13
<PAGE>
MAXIS, INC.
INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBIT NUMBERED PAGE
------ ---------------------- -------------
11.1 Statement of Computation of Earnings per Share 15
27.1 Financial Data Schedule 16
Page 14
<PAGE>
EXHIBIT 11.1
MAXIS, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------
1996 1995
--------- -------
<C> <C>
Net income (loss)........................................ $(1,416) $1,132
Computations of weighted average common and common
equivalent shares outstanding:
Weighted average common shares outstanding........... 11,031 6,681
Common equivalent shares from stock options issued
during the twelve-month period prior to the Com-
pany's initial public offering..................... -- 993
Common equivalent shares attributable to:
Redeemable preferred stock (if-converted method)..... -- 2,094
Stock options (treasury stock method)................ -- 30
------- ------
Shares used in computing net income (loss) per share..... 11,031 9,798
======= ======
Net income (loss) per share.............................. $ (.13) $ .12
======= ======
</TABLE>
Page 15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS, AND NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,144
<SECURITIES> 22,718
<RECEIVABLES> 12,115
<ALLOWANCES> 5,320
<INVENTORY> 2,033
<CURRENT-ASSETS> 50,501
<PP&E> 6,604
<DEPRECIATION> 2,569
<TOTAL-ASSETS> 64,447
<CURRENT-LIABILITIES> 7,807
<BONDS> 0
0
0
<COMMON> 51,286
<OTHER-SE> 5,354
<TOTAL-LIABILITY-AND-EQUITY> 64,447
<SALES> 6,491
<TOTAL-REVENUES> 8,108
<CGS> 2,565
<TOTAL-COSTS> 2,980
<OTHER-EXPENSES> 7,866
<LOSS-PROVISION> 972
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,304)
<INCOME-TAX> (888)
<INCOME-CONTINUING> (1,416)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,416)
<EPS-PRIMARY> ($0.13)
<EPS-DILUTED> ($0.13)
</TABLE>
