===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number 0-26212
------------------------------
PURE SOFTWARE INC.
(Exact name of registrant specified in its charter)
DELAWARE 94-3141575
- - -------------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1309 South Mary Avenue
Sunnyvale, California 94087
(Address of principal executive offices)
Telephone: (408) 720-1600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
17,610,240 shares of Common Stock, $.0001 par value, as of May 2, 1996
This report on Form 10-Q, including all exhibits, contains 14 pages. The exhibit
index is located on page 13 of this report.
================================================================================
<PAGE>
PURE SOFTWARE INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995........................... 2
Condensed Consolidated Statements of Operations
For the three months ended
March 31, 1996 and 1995........................................ 3
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 1996 and 1995............. 4
Notes to Condensed Consolidated Financial Statements............. 5
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................................ 11
SIGNATURES................................................................... 12
INDEX TO EXHIBITS............................................................ 13
1
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PURE SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
March 31, December 31,
1996 1995
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ......................................... $8,229 $5,835
Short term investments ............................................ 31,775 31,600
Accounts receivable, net .......................................... 14,532 11,913
Prepaid expenses and other assets ................................. 1,133 1,030
Deferred tax assets ............................................... 705 705
---------------- ----------------
Total current assets ........................................... 56,374 51,083
Property and equipment, net ........................................ 6,503 5,288
Other assets, net .................................................. 1,635 1,731
---------------- ----------------
Total assets ................................................... $64,512 $58,102
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of bank borrowings and capital lease obligations .. $257 $321
Accounts payable .................................................. 2,706 996
Accrued payroll and related expenses .............................. 2,365 3,075
Accrued merger and integration expenses............................ 426 1,887
Other accrued expenses ............................................ 1,663 1,264
Deferred revenue .................................................. 11,286 8,591
Income taxes ...................................................... 3,011 2,134
---------------- ----------------
Total current liabilities ...................................... 21,714 18,268
Stockholders' equity:
Common stock ................................................... 5 2
Additional paid-in capital ..................................... 49,582 48,379
Cumulative translation adjustment .............................. (167) (150)
Accumulated deficit............................................. (6,622) (8,397)
---------------- ----------------
Total stockholders' equity ..................................... 42,798 39,834
---------------- ----------------
Total liabilities and stockholders' equity.......................... $64,512 $58,102
================ ================
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
2
</TABLE>
<PAGE>
<TABLE>
PURE SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<CAPTION>
Three Months Ended
March 31,
---------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Product ................................... $10,524 $6,057
Maintenance and other ..................... 4,604 2,188
----------------- ----------------
Total revenues ......................... 15,128 8,245
----------------- ----------------
Cost of revenues:
Product ................................... 408 109
Maintenance and other ..................... 884 490
----------------- ----------------
Total cost of revenues ................. 1,292 599
----------------- ----------------
Gross margin ........................... 13,836 7,646
----------------- ----------------
Operating expenses:
Sales and marketing ....................... 7,508 4,020
Research and development .................. 2,631 1,598
General and administrative ................ 1,367 938
In-process research and development ....... -- 10,100
----------------- ----------------
Total operating expenses ............... 11,506 16,656
----------------- ----------------
Income (loss) from operations .............. 2,330 (9,010)
Other income ............................... 307 122
----------------- ----------------
Income (loss) before income taxes ...... 2,637 (8,888)
Income taxes ............................... 862 200
----------------- ----------------
Net income (loss) ...................... $1,775 $(9,088)
================= ================
Net income per share ....................... $0.09
=================
Shares used in per share computation ....... 19,905
=================
Pro forma income before nonrecurring charges
and pro forma income taxes ............... $1,087
Pro forma income taxes ..................... 421
----------------
Pro forma income before nonrecurring charges
after pro forma income taxes .............. $666
================
Pro forma income per share before non-
recurring charges ........................ $0.04
================
Shares used in per share computation ....... 17,239
================
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
PURE SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ............................................. $1,775 $(9,088)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization ................................ 822 303
In-process research and development .......................... -- 10,100
Changes in operating assets and liabilities:
Accounts receivable ......................................... (2,619) (1,518)
Prepaid expenses and other current assets ................... (103) (75)
Deferred tax assets ......................................... -- (86)
Accounts payable ............................................ 1,710 283
Accrued merger and integration .............................. (1,461) --
Accrued payroll and related expenses ........................ (710) 117
Other accrued expenses ...................................... 399 (151)
Deferred revenue ............................................ 2,695 569
Income taxes ................................................ 877 52
--------------- ---------------
Net cash provided by operating activities .................. 3,385 506
--------------- ---------------
Cash flows from investing activities:
Purchases of property and equipment ........................... (1,867) (860)
Other assets .................................................. (74) (14)
Acquisition of QualTrak Corporation, net of cash acquired ..... -- (1,439)
Purchases of short-term investments ........................... (175) --
--------------- ---------------
Net cash used for investing activities ..................... (2,116) (2,313)
--------------- ---------------
Cash flows from financing activities:
Repayment of bank borrowings, net ............................. (64) (55)
Proceeds from issuance of common stock, net ................... 1,206 4
--------------- ---------------
Net cash provided by financing activities .................. 1,142 (51)
--------------- ---------------
Effect of foreign currency exchange rate changes on cash ....... (17) --
--------------- ---------------
Change in cash and cash equivalents ............................ 2,394 (1,858)
Cash and cash equivalents, beginning of period ................. 5,835 8,995
--------------- ---------------
Cash and cash equivalents, end of period ....................... $8,229 $7,137
=============== ===============
Redeemable convertible preferred stock issued in
connection with acquisition of QualTrak Corporation ........ -- $9,904
============== ==============
Cash paid during the period for:
Interest ...................................................... $7 $16
============== ==============
Taxes ......................................................... $12 $238
============== ==============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
4
</TABLE>
<PAGE>
PURE SOFTWARE INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The unaudited condensed consolidated financial statements included
herein reflect all adjustments, consisting only of normal recurring adjustments
which in the opinion of management are necessary to fairly state the Company's
and its subsidiaries' condensed consolidated financial position, the results of
their operations, and their cash flows for the periods presented. These
financial statements should be read in conjunction with the Company's audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995. The consolidated results of
operations for the period ended March 31, 1996 are not necessarily indicative of
the results to be expected for any subsequent quarter or for the entire fiscal
year ending December 31, 1996.
(2) Net Income Per Share and Pro Forma Income Per Share Before Nonrecurring
Charges
Net income per share is computed using the weighted average number of
common shares outstanding and dilutive common equivalent shares from options to
purchase common stock (using the treasury stock method).
Pro forma income per share before nonrecurring charges is computed
using pro forma income before nonrecurring charges and after pro forma income
taxes and is based on the weighted average number of shares outstanding of
common stock and dilutive common equivalent shares from stock options using the
treasury stock method. In accordance with certain Securities and Exchange
Commission (SEC) Staff Accounting Bulletins, such computations include all
common and common equivalent shares issued within 12 months of the initial
public offering date as if they were outstanding for all prior periods presented
using the treasury stock method and the initial public offering price.
The difference between primary and fully diluted net income (loss) per
share is either not significant or anti-dilutive in all periods presented.
(3) Acquisitions
QualTrak Corporation
On March 17, 1995, the Company acquired QualTrak Corporation
("QualTrak"), a provider of quality assurance software tools. Pursuant to the
acquisition, all of the shares of outstanding common stock of QualTrak and
options therefor were exchanged for (i) 822,363 shares of the Company's Series D
redeemable convertible preferred stock or options therefor; (ii) $2,000,000 in
cash or the right to receive cash and (iii) a contingent right to receive
additional shares of the Company's common stock, which right has subsequently
terminated.
The acquisition was accounted for as a purchase with the results of
QualTrak included from the acquisition date. The total purchase price of
$11,904,000 was assigned to the fair value of the net assets acquired, including
$543,000 to the net tangible assets acquired, $10,100,000 to in-process research
and development, $591,000 to goodwill, $420,000 to purchased software and
$250,000 to a royalty arrangement. The value of the in-process research and
development was charged to operations on the acquisition date. Goodwill,
purchased software and prepaid royalties will be amortized on a straight-line
basis over 5 years, 18 months, and 3 years, respectively.
5
<PAGE>
The pro forma results included herein exclude the $10,100,000
nonrecurring charge for in-process research and development resulting from the
acquisition. The pro forma results are not necessarily indicative of what would
have occurred if the acquisition had been in effect for the periods presented.
In addition, they are not intended to be a projection of future results and do
not reflect any synergies that might be achieved from combined operations.
Performix, Inc.
On November 21, 1995, the Company acquired Performix, Inc.
("Performix"), a provider of client/server load and performance testing tools.
Pursuant to the acquisition, all of the shares of outstanding common stock of
Performix were exchanged for 1,591,475 shares of the Company's common stock. Of
the shares issued, 187,476 shares of the Company's common stock were placed in
escrow, to be held as security for any losses incurred by the Company in the
event of certain breaches by Performix of covenants, representations and
warranties contained in the Agreement and Plan of Reorganization. All options to
purchase Performix common stock then outstanding were assumed by the Company.
Each assumed option continues to have, and is subject to, the same terms and
conditions set forth in the respective option agreement applicable to such
option immediately prior to the date of acquisition, subject to adjustment of
the number of shares and exercise price thereof to reflect the exchange ratio of
Performix shares for the Company's shares.
The acquisition was accounted for as a pooling of interests, and
accordingly, the Company's Unaudited Condensed Consolidated Financial Statements
have been restated to include the financial position and results of Performix
for all periods presented.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company operates in a rapidly changing environment that involves a number of
risks and uncertainties, including those set forth in this discussion under
"Potential Fluctuations in Quarterly Results" and other risks detailed from time
to time in the Company's SEC reports, including the Annual Report on Form 10-K
for the year ended December 31, 1995.
Results of Operations
Revenues
The Company's revenues are derived from license fees for its software
products, from software maintenance fees and from other sources. Product
revenues are derived from product licensing fees. Maintenance and other revenues
are derived from software maintenance fees, from training fees, from consulting
fees and from royalties for technology licenses. Fees for maintenance, training
and consulting are generally billed separately from licenses for the Company's
products. The Company recognizes revenue in accordance with the provisions of
American Institute of Certified Public Accountants Statement of Position No.
91-1, Software Revenue Recognition. Product revenues from the sale of software
licenses are recognized upon shipment to an end-user if collection is probable
and remaining vendor obligations are insignificant. Product returns and sales
allowances are estimated and provided for at the time of sale. Maintenance
revenues from ongoing customer support and product upgrades are recognized
ratably over the term of the maintenance agreement. Payments for maintenance
fees are generally received in advance and are nonrefundable. Revenues for
training and consulting are recognized when the services are performed. Revenues
from royalties for technology licenses are recognized when earned and when
collection is probable.
Total revenues increased 83% to $15.1 million for the three months
ended March 31, 1996 from $8.2 million for the three months ended March 31,
1995. Total revenues increased primarily due to increased unit sales of software
licenses and increased maintenance, training and consulting fees resulting from
a larger installed base. The Company distributes the majority of its products
through its direct sales force and continues to expand its multi-channel
distribution strategy as well as expand international operations.
Product Revenues. Revenues from product licenses increased 74% to $10.5
million for the three months ended March 31, 1996 from $6.1 million for the
three months ended March 31, 1995. Substantially all of the period-to-period
growth in product revenues was due to higher unit sales of software licenses
that resulted primarily from an increase in the number of direct sales personnel
worldwide thereby achieving greater market penetration.
Maintenance and Other Revenues. Maintenance and other revenues
increased 110% to $4.6 million for the three months ended March 31, 1996 from
$2.2 million for the three months ended March 31, 1995. The growth was primarily
attributable to a larger installed base requiring incremental maintenance,
training and consulting.
International Revenues. International revenues as a percentage of total
revenues increased from 25% for the three months ended March 31, 1995 to 32% for
the three months ended March 31, 1996. The increase was primarily due to the
increase in the number of direct sales and marketing personnel.
7
<PAGE>
Cost of Revenues
Cost of Product Revenues. Cost of product revenues consists primarily
of product media and duplication, manuals, packaging materials and shipping
expenses. Cost of product revenues increased 274% from $109,000 for the three
months ended March 31, 1995 to $408,000 for the three months ended March 31,
1996, representing 2% and 4% of the related product revenues for each respective
period. The increase in dollar amount and as a percentage of related product
revenue was primarily due to the higher volume of products shipped and the
amortization of certain intangible assets capitalized in connection with the
QualTrak acquisition. In connection with the acquisition of QualTrak, purchased
software of $420,000 and prepaid royalties of $250,000 were capitalized and are
amortized as a cost of product revenues over 18 months and three years,
respectively. For the three months ended March 31, 1996, the Company amortized
$21,000 of prepaid royalties and $70,000 of purchased software.
Cost of Maintenance and Other Revenues. Cost of maintenance and other
revenues consists primarily of costs incurred in providing telephone support,
shipment of product upgrades and training and consulting to customers. Cost of
maintenance and other revenues increased 80% from $490,000 for the three months
ended March 31, 1995 to $884,000 for the three months ended March 31, 1996,
representing 22% and 19% of related maintenance and other revenue for each
period, respectively. The increase in dollar amount was primarily due to the
increase in the number of customer support, training and consulting personnel
and related overhead costs necessary to support a larger installed base and
expanded product line.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses of sales and marketing personnel and
promotional expenses. Sales and marketing expenses increased 87% from $4.0
million for the three months ended March 31, 1995 to $7.5 million for the three
months ended March 31, 1996, representing 49% and 50%, respectively, of total
revenues. The increase in sales and marketing expenses in dollar amount and as a
percentage of total revenues for each period was primarily due to the domestic
and international expansion of the Company's sales force and related travel
expenses and increased marketing activities, including trade shows, seminars and
promotional expenses.
Research and Development. Research and development expenses increased
65% from $1.6 million for the three months ended March 31, 1995 to $2.6 million
for the three months ended March 31, 1996, representing 19% and 17%
respectively, of total revenues. The increase in research and development
expense in dollar amount was primarily due to increased staffing and associated
support for software engineers required to expand and enhance the Company's
product line.
General and Administrative. General and administrative expenses
increased 46% from $938,000 for the three months ended March 31, 1995 to $1.4
million for the three months ended March 31, 1996, representing 11% and 9%,
respectively, of total revenues. The increase in dollar amount was primarily due
to increased staffing and associated expenses necessary to manage and support
the Company's growth. The Company has recorded $720,000 in goodwill associated
with the acquisition of QualTrak which was capitalized and is being amortized
over five years. For the three months ended March 31, 1996, the Company
amortized $37,000 of goodwill.
In-Process Research and Development. On March 17, 1995, the Company
acquired QualTrak for a purchase price of $11.9 million, of which $10.1 million
was allocated to in-process research and development and expensed at the time of
acquisition.
8
<PAGE>
Other Income
Other income consists of the net effect of interest income, interest
expense and miscellaneous income and expense items. Other income was $122,000
for the three months ended March 31, 1995 as compared to $307,000 for the three
months ended March 31, 1996. The increase in other income for each period
primarily resulted from interest income generated from higher average cash
balances.
Income Taxes
The Company's effective income tax rate for the three month period
ended March 31, 1996 was 33% and was 2% for the three month period ended March
31, 1995. These rates differ from the statutory rate primarily due to state
income tax in 1996 and nonrecurring charges incurred in connection with the
acquisition of QualTrak in 1995. Income tax expense for the three months ended
March 31, 1996 was $862,000. The Company incurred income tax expense of $200,000
for the three months ended March 31, 1995 despite its operating loss because the
in-process research and development expense incurred in connection with the
acquisition of QualTrak was not deductible for tax purposes.
Potential Fluctuations In Quarterly Results
The Company's quarterly operating results have in the past and may in
the future fluctuate significantly depending on factors such as demand for the
Company's products, the size and timing of orders, the number, timing and
significance of new product announcements by the Company and its competitors,
the ability of the Company to develop, introduce and market new and enhanced
versions of the Company's products on a timely basis, the level of product and
price competition, changes in operating expenses, changes in average selling
prices and product mix, changes in the Company's sales incentive strategy, sales
personnel changes, the mix of direct and indirect sales, product returns and
general economic factors, among others. The Company's products are typically
shipped shortly after orders are received and consequently, order backlog at the
beginning of any quarter typically represents only a small portion of that
quarter's expected revenues. Furthermore, the Company has often recognized a
substantial portion of its revenues in the last month of a quarter, with these
revenues frequently concentrated in the last weeks or days of a quarter. As a
result, product revenues in any quarter are substantially dependent on orders
booked and shipped in that quarter, and revenues for any future quarter are not
predictable with any significant degree of accuracy. Product revenues are also
difficult to forecast because the market for software quality products is
rapidly evolving and the Company's sales cycle, from initial evaluation to
multiple license purchases and the provision of support services, varies
substantially from customer to customer. The Company's expense levels, however,
are based in significant part on the Company's expectations of future revenues
and therefore are relatively fixed in the short run. If revenue levels are below
expectations, operating results are likely to be adversely affected. Net income
may be disproportionately affected by an unanticipated decline in revenue for a
particular quarter because a relatively small amount of the Company's expenses
varies with its revenue in the short run. As a result, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as any indication of future
performance. Due to all of the foregoing factors, it is likely that in some
future quarter the Company's operating results will be below the expectations of
public market analysts and investors. In such event, the price of the Company's
Common Stock would likely be materially adversely affected. The Company was
incorporated in October 1991 and did not begin shipping products until January
1992. The Company's limited operating history makes the prediction of future
operating results difficult or impossible. Although the Company has experienced
growth in revenues in recent years, there can be no assurance that, in the
future, the Company will sustain revenue growth or remain profitable on a
quarterly or annual basis.
The Company's business historically has not experienced significant
seasonality. However, as international sales increase, the Company expects
increased seasonality in customers' buying patterns, particularly as a result of
sales to Europe and Asia.
9
<PAGE>
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily
through the sale of stock and cash generated from operations. Cash and cash
equivalents totaled $8.2 million at March 31, 1996 compared to $5.8 million at
December 31, 1995. The increase in cash and cash equivalents was primarily due
to cash generated by operations and proceeds from the issuance of common stock,
partially offset by capital additions related to the expansion of operations. As
of March 31, 1996, the Company had short-term investments of $31.8 million with
a maturity date of greater than three months from the date of purchase.
In the three months ended March 31, 1996 and in the three months ended
March 31, 1995, $3.4 million and $500,000, respectively, was generated by
operations. For the three months ended March 31, 1996, net cash was provided by
operations primarily as a result of the net income and deferred revenue
generated during the period. For the three months ended March 31, 1995, net cash
was provided by operations primarily because the net loss of $9.1 million
included a non-cash charge of $10.1 million related to in-process research and
development in connection with the QualTrak acquisition. In each period, the
Company experienced significant growth in receivables, accompanying the
Company's increased sales volumes, which was partially offset by increases in
accounts payables and deferred revenue. For the three months ended March 31,
1996, there was a reduction in the merger and integration accrual of $1.5
million as the result of payment of certain costs related to the Performix
acquisition.
In the three months ended March 31, 1996 and in the three months ended
March 31, 1995, the Company utilized $1.9 million and $860,000, respectively, of
cash to purchase property and equipment. The purchases of property and equipment
were primarily for computer hardware and software to support the Company's
growing employee base. In the three months ended March 31, 1995, the Company
also used cash of $1.4 million in connection with the acquisition of QualTrak.
The Company expects that the rate of purchases of property and equipment will
remain constant or increase.
Net cash provided by financing activities in the three months ended
March 31, 1996 consisted primarily of $1.2 million from the issuance of common
stock though the employee stock purchase plan and exercise of stock options. In
the three months ended March 31, 1995 net cash was used primarily for repayment
of bank borrowings.
From time to time, the Company evaluates acquisitions of businesses,
products or technologies that complement the Company's business. 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 additional debt or equity instruments.
The Company believes that its current cash balances, short-term
investments, and anticipated cash flow from operations will be sufficient to
meet its working capital and capital expenditure requirements for at least the
next twelve months.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits.
11.1 Statement Regarding Computation of Net Income
and Pro Forma Income Per Share Before
Nonrecurring Charges.
b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended March 31, 1996.
11
<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.
Date: May 10, 1996 PURE SOFTWARE INC.
By:/s/ Chuck Bay
------------------------
Chuck Bay
Vice President, Finance, Chief
Financial Officer, General Counsel
and Secretary (Duly Authorized
Officer and Principal Financial
Officer)
12
<PAGE>
INDEX TO EXHIBITS
Exhibit
No.
11.1 Statement Regarding Computation of Net Income and Pro Forma Income
Per Share Before Nonrecurring Charges
27 Financial Data Schedule
13
<PAGE>
Exhibit 11.1
PURE SOFTWARE INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND PRO FORMA INCOME PER SHARE
BEFORE NONRECURRING CHARGES(1)
(in thousands, except per share amounts)
Three Months Ended
March 31,
---------
1996 1995
---- ----
Net income $ 1,775 --
=======
Pro forma income before nonrecurring charges
and after pro forma income taxes............ -- $ 666
=======
Weighted average number of common
shares outstanding........................... 17,431 8,098
Weighted average number of preferred
shares outstanding on an as if
converted basis.............................. -- 6,189
Number of common stock equivalents
as a result of stock options
outstanding using the treasury stock
method....................................... 2,474 2,734
Number of common shares issued and stock options
granted in accordance with
Staff Accounting Bulletin
No. 83 (2)................................... -- 218
------- -------
Shares used in per share computation................ 19,905 17,239
------- -------
Per share amounts................................... $ 0.09 $ 0.04
======= =======
- - --------------
(1) This exhibit presents the primary and fully diluted per share computations.
There is no material difference in the per share amounts when applying
either method.
(2) Common shares issued by the Company during the twelve months immediately
preceding the initial public offering date plus the number of common
equivalent shares which were issued during the same period pursuant to the
grant of stock options (using the treasury stock method and offering price)
have been included in the calculation of common equivalent shares pursuant
to Securities and Exchange Commission Staff Accounting Bulletin No. 83.
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,229,000
<SECURITIES> 31,775,000
<RECEIVABLES> 14,532,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,374,000
<PP&E> 6,503,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 64,512,000
<CURRENT-LIABILITIES> 21,714,000
<BONDS> 0
<COMMON> 5,000
0
0
<OTHER-SE> 49,582,000
<TOTAL-LIABILITY-AND-EQUITY> 64,512,000
<SALES> 10,524,000
<TOTAL-REVENUES> 15,128,000
<CGS> 408,000
<TOTAL-COSTS> 1,292,000
<OTHER-EXPENSES> 11,506,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,637,000
<INCOME-TAX> 862,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,775,000
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
