UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1996
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1994
For the transition period from _______ to ________
Commission file number 0-23970
NETWORK PERIPHERALS INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0216135
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1371 McCarthy Boulevard
Milpitas, California 95035
(Address, including zip code, of principal executive offices)
(408) 321-7300
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of the Registrant's Common Stock, $0.001 par value,
outstanding as of April 26, 1996 was 11,789,773.
This quarterly report on Form 10-Q consists of 15 pages of which this is page 1.
The Exhibit Index begins on page 15.
NETWORK PERIPHERALS INC.
INDEX TO FORM 10-Q
For the quarter ended March 31, 1996
PART I. FINANCIAL INFORMATION
Item Page
- ---- ----
1. Financial Statements:
a. Condensed Balance Sheets -- March 31, 1996 and
December 31, 1995, unaudited 3
b. Condensed Statements of Operations -- Three Months Ended
March 31, 1996 and 1995, unaudited 4
c. Condensed Statements of Cash Flows -- Three Months Ended
March 31, 1996 and 1995, unaudited 5
d. Notes to Condensed Financial Statements 6-7
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8-11
PART II. OTHER INFORMATION
6. Exhibits and Reports on Form 8-K 12-13
Signatures 14
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NETWORK PERIPHERALS INC.
CONDENSED BALANCE SHEETS - Unaudited
(in thousands, except share and per share data)
March 31, December 31,
1996 1995
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $7,532 $ 27,210
Short-term investments 36,664 24,931
Accounts receivable, net of allowance for doubtful
accounts and returns of $1,303 and $738, respectively 6,867 5,364
Inventories 8,411 6,420
Deferred income taxes 2,189 2,189
Prepaid expenses and other current assets 1,992 1,557
------------ ------------
Total current assets 63,655 67,671
Property and equipment, net 2,737 2,280
Deferred income taxes and other assets 1,846 160
------------ ------------
$ 68,238 $ 70,111
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,267 $ 956
Accrued liabilities 7,199 3,446
------------- -------------
Total current liabilities 10,466 4,402
------------- -------------
Stockholders' equity :
Preferred Stock, $0.001 par value, 2,000,000 shares
authorized; no shares issued or outstanding - -
Common Stock, $0.001 par value, 20,000,000
shares authorized; 11,782,921 and 11,268,161,
shares issued and outstanding, respectively 12 11
Additional paid-in capital 61,970 56,579
Notes receivable from stockholders (10) (14)
Retained earnings (accumulated deficit) (4,200) 9,133
------------- -------------
Total stockholders' equity 57,772 65,709
------------- -------------
$ 68,238 $ 70,111
============= =============
<FN>
The accompanying notes are an integral part of these condensed
financial statements.
</FN>
3
NETWORK PERIPHERALS INC.
CONDENSED STATEMENTS OF OPERATIONS - Unaudited
(in thousands except per share data)
Three Months Ended
March 31,
----------------------
1996 1995
-------- ------
Net sales
Cost of sales $ 10,128 $ 13,215
6,198 7,115
-------- --------
Gross profits 3,930 6,100
-------- --------
Operating expenses:
Research and development, in-process 13,032 --
Research and development 1,612 1,365
Marketing and selling 2,745 1,557
General and administrative 591 523
-------- --------
Total operating expense 17,980 3,445
-------- --------
Income (loss) from operations (14,050) 2,655
Interest income, net 555 553
-------- --------
Income (loss) before income taxes (13,495) 3,208
Benefit from (provision for) income taxes 162 (1,122)
-------- --------
Net income (loss) $(13,333) $ 2,086
======== =========
Net income (loss) per share $(1.17) $ 0.18
======== =========
Weighted average common and
common equivalent shares 11,348 11,764
======== =========
The accompanying notes are an integral part of these condensed
financial statements
4
NETWORK PERIPHERALS INC.
CONDENSED STATEMENTS OF CASH FLOWS - Unaudited
Increase (decrease) in cash and Cash Equivalents
Three Months Ended
March 31,
------------------------------
1996 1995
------------- ------------
Cash flows from operating activities:
Net income (loss) $ (13,333) $ 2,086
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 272 273
Research and development, in-process 13,032 --
Changes in assets and liabilities (net of effect of
NuCom acquisition)
Accounts receivable (353) 397
Inventories (846) (872)
Prepaid expenses and other current assets 2,410 73
Accounts payable 463 (2,004)
Accrued liabilities 1,254 857
--------- --------
Net cash provided by operating activities 2,899 810
--------- --------
Cash used in investing activities:
Cash paid for NuCom acquisition (11,758) --
Holdback Amount from acquisition 1,116 --
Purchases of short-term investments (11,733) (2,954)
Purchases of property and equipment (252) (566)
-------- --------
Net cash used in investing activities (22,627) (3,520)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of Common Stock 46 5
Payment of Common Stock issuance costs -- (20)
Repayment of stockholders' notes receivable 4 10
Repayment of capital lease obligation -- (37)
-------- --------
Net cash provided by (used in) financing activities 50 (42)
-------- --------
Net decrease in cash and cash equivalents (19,678) (2,752)
Cash and cash equivalents at beginning of period 27,210 21,068
-------- --------
Cash and cash equivalents at end of period $ 7,532 $ 18,316
======== ========
Supplemental disclosure of cash flow information:
Income taxes paid $ 113 $ 300
======== ========
Supplemental disclosure of noncash investing activity:
Common Stock used for acquisition of NuCom $ 5,342 --
======== ========
<FN>
The accompanying notes are an integra part of these condensed
financial statements
</FN>
5
NETWORK PERIPHERALS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
condensed financial statements reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation of the
Company's financial condition as of March 31, 1996 and December 31, 1995, the
results of operations and the cash flows for the three month periods ended March
31, 1996 and 1995. These financial statements should be read in conjunction with
the audited financial statements of the Company as of December 31, 1994 and 1995
and for each of the three years in the period ended December 31, 1995, including
notes thereto, included in the Company's Annual Report on Form 10-K (Commission
File No. 0-23970).
Operating results for the three month period ended March 31, 1996 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1996 or for any other future period.
2. NET INCOME PER SHARE
Net income per share is computed using the weighted average number of
common and common equivalent shares outstanding during the periods. Common
equivalent shares consist of stock options (using the treasury stock method).
Common equivalent shares from stock options are excluded from the computation if
their effect is antidilutive.
3. INVENTORIES
The components of inventory consist of the following (in thousands):
March 31, December 31,
1996 1995
------------ ----------------
Raw material $ 4,390 $ 3,629
Work-in-process 2,737 1,894
Finished goods 1,284 897
============ ================
$ 8,411 $ 6,420
============ ================
6
NETWORK PERIPHERALS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS--Continued
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
March 31, December 31,
1995 1995
----------- ------------
Computer and test equipment $ 4,777 $ 4,085
Furniture and fixtures 924 607
Leasehold improvements 346 346
----------- ------------
6,047 5,038
Less: accumulated depreciation (3,310) (2,758)
=========== ============
$ 2,737 $ 2,280
=========== ============
5. ACQUISITION OF NUCOM
Effective March 21, 1996 the Company completed its acquisition of NuCom
Systems, Inc. (NuCom), a Taiwan-based company, by purchasing all the outstanding
shares of NuCom in exchange for $11,158,134 in cash, and 440,748 shares of
Network Peripheral's common stock valued at $5,341,866, for an aggregate
purchase price of $17.1 million. The transaction was accounted for using the
purchase method; accordingly, the purchase price was allocated to the assets
acquired and liabilities assumed based on their estimated fair market values at
the date of acquisition. The research and development in process represents the
estimated current fair market value, using a risk-adjusted income approach, of
specifically identified technologies which had not reached technological
feasibility and had no future uses. The results of operations of NuCom will be
included in those of the Company beginning with the quarter ending June 30,
1996. The allocation of the purchase price is as follows (in thousands):
Research and development, in process $ 13,032
Other intangible assets 1,716
Current assets 4,495
Non-current assets 613
Property and equipment 479
Current liabilities Assumed (3,235)
--------------
$ 17,100
==============
The total purchase price is derived as follows:
Cash payment $ 11,158
Issuance of common stock 5,342
Other expenses 600
==============
17,100
==============
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The forward-looking statements included in the succeeding paragraphs
are made in reliance upon the safe harbor provisions of the Private Securities
Lititgation Reform Act of 1995. The future events described in such statements
involve risks and uncertainties, including:
* the timely development and market acceptance of new products;
* the market demand by customers for the Company's existing products,
including demand by OEM customers for custom products, and the distribution
channels through which such demand is satisfied;
* competitive actions, including pricing actions and the introduction of new
competitive products, that may affect the volume of sales of the Company's
products;
* the resources expended in integrating the acquisition of NuCom and the time
required to complete that integration;
* uninterrupted supply of key components, including semiconductor devices an
other materials, some of which are sourced from a single supplier;
* the cost of materials and components;
* the ability of the Company to recruit, train and retain key personnel,
including engineers and other technical professionals;
* the development of new technologies rendering existing technologies and
products obsolete; and
* general market conditions.
In evaluating these forward-looking statements, consideration should also be
given to the Business Risks discussed below in this interim report.
Net Sales
Net sales for the three months ended March 31, 1996 were $10.1 million
compared to $13.2 million for the three months ended March 31, 1995. This
decrease was attributable to a decline in shipments of FDDI LAN switching
products, offset in part by a slight increase in the shipments of FDDI adapters.
During the quarter ended March 31, 1996, sales to the North America distribution
channel decreased to $1.5 million from $3.6 million for the comparable quarter
in 1995. This decrease reflected the Company's actions to re-balance the
inventory mix in the North America distribution channel to allow for shipment of
the Company's newly introduced Fast Ethernet line of LAN switching products.
Sales to OEM customers declined to $7.9 million for the quarter ended March 31,
1996 from $9.0 million in the comparable quarter in 1995, primarily due to lower
sales of custom FDDI switching products.
Gross Profit/Margin
Gross margin for the three months ended March 31, 1996 was 38.8%
compared to 46.2% for the three months ended March 31, 1995. The decrease was
attributed to nonrecurring charges in the most recent quarter associated with
start-up costs for several of the newly introduced Fast Ethernet products,
extraordinary costs to expedite production to meet shipping requirements for
certain OEM customers, and inventory valuation adjustments associated with
excess inventory for FDDI products. The Company does not believe the gross
margin for the first quarter of 1996 is indicative of gross margins for future
periods. However, continued changes in the product mix and the channel mix,
variables in the development, introduction and marketing of a new product line,
fluctuations in the cost of materials and components, as well as competitive
factors, may have an adverse impact on the future gross margin.
Research and Development, In-Process
For quarter ended March 31, 1996 the Company incurred a one-time charge
of $13.0 million for in-process research and development costs related to the
acquisition of NuCom (refer to Note 5 and "Acquisition" below).
8
Research and Development
Research and development expenses for the three months ended March 31,
1996 were $1.6 million, or 15.9% of net sales, compared to $1.4 million, or
10.3% of net sales, for the corresponding period in 1995. This increase
reflected the Company's expenditures to bring certain Fast Ethernet products to
market in the first quarter of 1996 and the Company's continued investments in
network adapter and LAN switching products, as well as investments in new
technologies, including ATM. The Company expects the dollar level of research
and development expense, net of contract funding, to increase for future periods
of 1996 due to the addition of staff, facilities, equipment and project costs
resulting from the acquisition of NuCom. Research and development expense in the
1996 period was net of contract funding of $150,000. No contract funding was
recorded in the comparable 1995 quarter.
Marketing and Selling
Marketing and selling expenses for the three months ended March 31,
1996 were $2.7 million, and included a $700,000 one-time charge for product
integration costs related to the aquisition of NuCom. Excluding this
nonrecurring charge, marketing and selling expenses for the first quarter of
1996 were $2.0 million, or 20.2% of net sales, compared to $1.6 million, or
11.8% of net sales, in the corresponding period in 1995. This increase was the
result of the Company's continued execution of its marketing strategy to expand
the distribution and value added reseller channels, to penetrate the global
market and establish brandname recognition. The costs include trade shows,
advertising, and direct mail activity to promote the Company's products. The
Company expects the dollar level of marketing and selling expenses to increase
for future periods of 1996 due to the addition of staff, facilities, equipment
and program costs resulting from the acquisition of NuCom and the introduction
of new products.
General and administrative
General and administrative expenses for the three months ended March
31, 1996 were $591,000, or 5.8% of net sales, compared to $523,000, or 4.0% of
net sales, in the corresponding period in 1995. The increase was primarily
attributable to the addition of staff to support the increased activity of the
Company. The Company expects the dollar level of general and administrative
expenses to increase for future periods of 1996 due to the addition of staff,
facilities and equipment resulting from the acquisition of NuCom.
Interest Income
Interest income for the three months ended March 31, 1996 was $555,000,
compared to $553,000 in the corresponding period in 1995. The Company expects
interest income to decrease in future periods of 1996 as a result of the reduced
level of invested funds.
Income Taxes
The Company recorded a tax benefit, using an effective tax rate of 35%
for the three months ended March 31, 1996. The rate was unchanged from the rate
applied throughout 1995 and is less than the statutory rate of 40% due
principally to the effects of tax exempt interest and tax credits available to
the Company.
Liquidity and Capital Resources
For the quarter end March 31, 1996, the Company recorded a net loss of
$13.3 million due principally to a nonrecurring charge for in-process research
and development costs associated with the acquisition of NuCom.
Cash provided by operating activities for the three months ended March
31, 1996 was $2.9 million, primarily due to an increase in current liabilities
and a net increase in prepaid expenses and current assets. The increases in
current liabilities is attributable principally to a low level of accounts
payable at the end of the prior quarter.
9
Cash used in investing activities for the three months ended March 31,
1996 was $22.6 million, of which $11.8 million was attributed to the acquisition
of NuCom, offset by $1.1 million retained from the transaction. The remainder of
the cash used was for the purchase of short-term investments and for the
purchase of computer equipment for use primarily in research and development.
At March 31, 1996, the Company's principal sources of liquidity were
its cash, cash equivalents and short-term investments of $44.2 million and its
$5 million bank line of credit. As of March 31, 1996, there were no borrowings
outstanding under the line of credit. The Company believes that its existing
cash balances, the bank line of credit, and funds provided by future operating
activities will be sufficient to meet the Company's capital and operating
requirements for the foreseeable future.
Acquisition
Effective March 21, 1996, pursuant to an Acquisition Agreement, dated
January 31, 1996, among Network Peripherals Inc., Network Peripheral
International, Ltd., NuCom Systems, Inc., a Taiwan-based company, and the
shareholders of Nucom the Company purchased all of the outstanding shares of
NuCom. The Company acquired NuCom for an aggregate purchase price of $17.1
million, of which $11,158,134 was paid in the form of cash and $5,341,866 was
paid in the form of 440,748 shares of the Company's newly issued Common Stock to
the shareholders of NuCom. The remainder of the purchase price was for related
transaction costs. The sources of funds used in the acquisition were the
Company's existing cash and short-term investments, and its authorized unissued
stock.
NuCom develops, markets and manufactures Ethernet and Fast Ethernet
network products. Subsequent to the acquisition, NuCom will operate as a
wholly-owned subsidiary of the Registrant.
Business Risks
In addition to the factors addressed in the preceding sections, certain
characteristics and dynamics of the Company's markets, technologies and
operations create risks to the Company's long-term success and to predictable
quarterly results. These risks will also affect the Company's ability to achieve
the results anticipated by the forward-looking statements contained in this
interim report. The Company's quarterly results have in the past varied, and are
expected in the future to vary significantly as a result of factors such as the
timing and shipment of significant orders, new product introductions or
technological advances by the Company and its competitors, market acceptance of
new or enhanced versions of the Company's products, changes in pricing policies
by the Company and its competitors, the mix of distribution channels through
which the Company's products are sold, the mix of products sold, the accuracy of
resellers' forecast of end-user demand, the ability of the Company to obtain
sufficient supplies of sole or limited source components for the Company's
products and general economic conditions. In response to competitive pressures
or new product introductions, the Company may take certain pricing or marketing
actions that could materially and adversely affect the Company's operating
results. In the event of a reduction in the prices of its products, the Company
has committed to providing retroactive price adjustments on inventories held by
its distributors, which could have the effect of reducing margins and operating
results. In addition, changes in the mix of products sold and the mix of
distribution channels through which the Company's products are sold may cause
fluctuations in the Company's gross margins. The Company's expense levels are
based, in part, on its expectations of its future revenue and, as a result, net
income would be disproportionately affected by a reduction in revenue. The
absence of significant Company experience with new products limits the Company's
ability to plan for production, market demand and sales and may adversely affect
operating results if the Company
10
misallocates resources to a new product. Due to the potential quarterly
fluctuation in operating results, the Company believes that quarter-to-quarter
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as indicators of future performance.
The markets for the Company's products are characterized by rapidly
changing technology, evolving industry standards, frequent new product
introductions and short product life cycles. These changes can adversely affect
the business and operating results of industry participants. The Company's
success will depend upon its ability to enhance its existing products and to
develop and introduce, on a timely and cost-effective basis, new products that
keep pace with technological developments and emerging industry standards and
address increasingly sophisticated customer requirements. The inability to
develop and manufacture new products in a timely manner, the existence of
reliability, quality or availability problems in the products or their component
parts, the failure to obtain reliable subcontractors for volume production and
testing of mature products, or the failure to achieve market acceptance would
have a material adverse effect on the Company's business and operating results.
The markets in which the Company competes are also characterized by
intense competition. Several of the Company's competitors have significantly
broader product offerings and greater financial, technical, marketing and other
resources and finished installed bases than the Company. These larger
competitors may also be able to obtain higher priority for their products from
distributors and other resellers that carry products of many companies. A number
of the Company's competitors were recently acquired, which is likely to permit
these competitors to devote significantly greater resources to the development
and marketing of competitive products. These competitive pressures could
adversely affect the Company's business and operating results.
11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(1) A Amended and Restated Certificate of Incorporation.
3.2(1) By-Laws.
4.1(1) Fourth Amended and Restated Investor Rights Agreement
dated July 15, 1993.
10.1(1)* Form of Indemnity Agreement for directors and
officers.
10.2(1)* Amended and Restated 1993 Stock Option Plan and forms
of agreement thereunder.
10.3(1)* 1994 Employee Stock Purchase Plan.
10.4(1)* 1994 Outside Directors Stock Option Plan and form of
agreement thereunder.
10.6(1) Business Loan Agreement, and collateral agreements,
with Silicon Valley Bank dated August 9, 1991, as
amended May 5, 1992, April 15, 1993, February 1, 1994
and April 4, 1994 and Warrant dated August 10, 1991.
10.9(1) Facilities Lease dated August 8, 1991 with John
Arrillaga, Trustee, or his Trustee, or his Successor
Trustee UTA dated 7/20/77, as amended, and Richard T.
Peery, Trustee, or his Successor Trustee UTA dated
7/20/77, as amended.
10.10(1)(2) Corporate Purchasing Agreement with Ungermann-Bass,
Inc. dated June 10, 1991.
10.11(1)(2) Product Development Agreement with Ungermann-Bass,
Inc. dated June 10, 1991.
10.12(1)(2) OEM Purchase Agreement with Network General
Corporation dated March 4, 1991.
10.13(1)(2) Authorized Distributor Agreement with Westcon, Inc.
dated March 4, 1993.
10.14(3) Amendment No. 1 to Facilities Lease dated June 1, 1994
with John Arrillaga, Trustee, or his Successor Trustee
UTA dated 7/20/77, as amended, and Richard T. Peery,
Trustee, or his Successor Trustee UTA dated 7/20/77,
as amended.
10.15(3) Facilities Lease dated June 1, 1994 with John
Arrillaga, Trustee, or his Successor Trustee UTA
dated 7/20/77, as amended, and Richard T. Peery,
Trustee, or his Successor Trustee UTA dated 7/20/77,
as amended.
10.16(4) Salary continuation agreement dated as of March 22,
1995 with Pauline Lo Alker.
10.17(4) Salary continuation agreement dated as of March 22,
1995 with Darrell R. Scherbarth.
10.18(5) Purchase Agreement among Network Peripherals Inc.,
Network Peripherals, Ltd., NuCom Systems, Inc., and
the shareholders of NuCom, dated January 31, 1996.
11.1 Statement regarding computation of net income per
share.
23.1 Consent of Price Waterhouse LLP.
12
(1) Incorporated by reference to the corresponding Exhibit previously filed
as an Exhibit to the Registrant's Registration Statement on Form S-1
filed April 28, 1994 (File No. 33-78350).
(2) Confidential treatment has been granted as to part of this Exhibit.
(3) Incorporated by reference to the corresponding Exhibit previously
filed as an Exhibit to the Registrant's Quarterly Report on Form 10-Q
for the period ended June 30, 1994 (File No. 0-23970).
(4) Incorporated by reference to the corresponding exhibit in the
Registrant Annual reports on Form 10-K for the year ended
December 31, 1995 (File No. 0-23970)
(5) Incorporated by reference to the registrants report on Form 8-K file
on March 31, 1996 (File No. 0-23970)
(b) Reports on Form 8-K
Current Report on Form 8-K, dated March 21, 1996 (filed March 31, 1996)
reported under item 2. the Company's acquisition of Nu Com Systems, Inc.
13
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NETWORK PERIPHERALS INC.
Date: May 13, 1996 By: \s\ TRUMAN COLE
-----------------------------------------
Truman Cole
Vice President, Finance
Chief Financial Officer
(Principal Financial and Accounting
Officer)
14
INDEX TO EXHIBITS
Exhibit
Number Description of Document
- ------- -----------------------
3.1(1) Amended and Restated Certificate of Incorporation.
3.2(1) By-Laws.
4.1(1) Fourth Amended and Restated Investor Rights Agreement dated
July 15, 1993.
10.1(1)* Form of Indemnity Agreement for directors and officers.
10.2(1)* Amended and Restated 1993 Stock Option Plan and forms of
agreement thereunder.
10.3(1)* 1994 Employee Stock Purchase Plan.
10.4(1)* 1994 Outside Directors Stock Option Plan and form of agreement
thereunder.
10.6(1) Business Loan Agreement, and collateral agreements, with Silicon
Valley Bank dated August 9, 1991, as amended May 5, 1992,
April 15, 1993, February 1, 1994 and April 4, 1994 and Warrant
dated August 10, 1991.
10.9(1) Facilities Lease dated August 8, 1991 with John Arrillaga,
Trustee, or his Trustee, or his Successor Trustee UTA dated
7/20/77, as amended, and Richard T. Peery, Trustee, or his
Successor Trustee UTA dated 7/20/77, as amended.
10.10(1)(2) Corporate Purchasing Agreement with Ungermann-Bass, Inc. dated
June 10, 1991.
10.11(1)(2) Product Development Agreement with Ungermann-Bass, Inc. dated
June 10, 1991.
10.12(1)(2) OEM Purchase Agreement with Network General Corporation dated
March 4, 1991.
10.13(1)(2) Authorized Distributor Agreement with Westcon, Inc. dated
March 4, 1993.
10.14(3) Amendment No. 1 to Facilities Lease dated June 1, 1994 with
John Arrillaga, Trustee, or his Successor Trustee UTA dated
7/20/77, as amended, and Richard T. Peery, Trustee, or his
Successor Trustee UTA dated 7/20/77, as amended.
10.15(3) Facilities Lease dated June 1, 1994 with John Arrillaga,
Trustee, or his Successor Trustee UTA dated 7/20/77, as amended
and Richard T. Peery, Trustee, or his Successor Trustee UTA
dated 7/20/77, as amended.
10.16(4) Salary continuation agreement dated as of March 22, 1995 with
Pauline Lo Alker.
10.17(4) Salary continuation agreement dated as of March 22, 1995 with
Darrell R. Scherbarth.
10.18(5) Purchase Agreement among Network Peripherals Inc., Network
Peripherals, Ltd., NuCom Systems, Inc., and the shareholders of
NuCom, dated January 31, 1996.
11.1 Statement regarding computation of net income per share.
23.1 Consent of Price Waterhouse LLP.
15