UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 August 6, 1999 was 12,676,336.
NETWORK PERIPHERALS INC.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets as of June 30, 1999 and
December 31, 1998 3
Consolidated Statements of Operations for Three and Six Months
Ended June 30, 1999 and 1998 4
Consolidated Statements of Cash Flows for Six Months Ended
June 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8-12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NETWORK PERIPHERALS INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands, except share data)
June 30, December 31,
1999 1998
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 7,445 $ 5,537
Short-term investments 10,967 17,814
Accounts receivable, net of allowance for doubtful accounts and
returns of $396 and $523, respectively 2,437 3,430
Receivable from sale of assets 1,220 --
Inventories 2,955 3,124
Prepaid expenses and other current assets 624 742
-------- --------
Total current assets 25,648 30,647
Property and equipment, net 4,297 4,560
Other assets 327 342
-------- --------
$ 30,272 $ 35,549
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,399 $ 2,450
Accrued liabilities 1,532 2,127
-------- --------
Total current liabilities 2,931 4,577
-------- --------
Stockholders' equity:
Preferred Stock, $0.001 par value, 2,000,000 shares authorized;
no shares issued or outstanding -- --
Common Stock, $0.001 par value, 20,000,000 shares authorized;
12,674,000 and 12,292,000 shares issued and outstanding,
respectively 13 12
Additional paid-in capital 65,640 64,060
Accumulated deficit (38,312) (33,100)
-------- --------
Total stockholders' equity 27,341 30,972
-------- --------
$ 30,272 $ 35,549
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
3
NETWORK PERIPHERALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
-------- -------- -------- --------
Net sales $ 3,393 $ 7,250 $ 7,176 $ 15,270
Cost of sales 2,954 4,309 6,072 8,961
-------- -------- -------- --------
Gross profit 439 2,941 1,104 6,309
-------- -------- -------- --------
Operating expenses:
Research and development 1,938 3,669 3,330 6,527
Marketing and selling 1,575 1,621 2,906 3,394
General and administrative 879 819 1,654 1,683
Gain on sale of assets (1,055) -- (1,055) --
-------- -------- -------- --------
Total operating expenses 3,337 6,109 6,835 11,604
-------- -------- -------- --------
Loss from operations (2,898) (3,168) (5,731) (5,295)
Interest income 252 424 519 806
-------- -------- -------- --------
Loss before income taxes (2,646) (2,744) (5,212) (4,489)
Income taxes -- -- -- --
-------- -------- -------- --------
Net loss $ (2,646) $ (2,744) $ (5,212) $ (4,489)
======== ======== ======== ========
Net loss per share:
Basic $ (0.21) $ (0.22) $ (0.42) $ (0.37)
======== ======== ======== ========
Diluted $ (0.21) $ (0.22) $ (0.42) $ (0.37)
======== ======== ======== ========
Weighted average common shares:
Basic 12,620 12,282 12,466 12,269
======== ======== ======== ========
Diluted 12,620 12,282 12,466 12,269
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
4
NETWORK PERIPHERALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
Six Months Ended
June 30,
--------------------------
1999 1998
-------- --------
Cash flows from operating activities:
Net loss $ (5,212) $ (4,489)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 901 961
Gain on sale of assets (1,055) --
Changes in assets and liabilities:
Accounts receivable 993 253
Inventories 169 (1,486)
Income tax refund receivable -- 437
Prepaid expenses and other assets 133 (140)
Accounts payable (1,051) 3,816
Accrued liabilities (595) (2,013)
-------- --------
Net cash used in operating activities (5,717) (2,661)
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (987) (1,421)
Proceeds from sale of assets, net of expenses 184 --
Proceeds from sales of short-term investments 6,847 --
Purchases of short-term investments -- (657)
Holdback amount from acquisition -- (456)
-------- --------
Net cash provided by (used in) investing activities 6,044 (2,534)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of Common Stock 1,581 181
-------- --------
Net cash provided by financing activities 1,581 181
-------- --------
Net increase (decrease) in cash and cash equivalents 1,908 (5,014)
Cash and cash equivalents, beginning of period 5,537 16,094
-------- --------
Cash and cash equivalents, end of period $ 7,445 $ 11,080
======== ========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes $ 47 $ 47
======== ========
Noncash investing activities:
Receivable from sale of assets $ 1,220 $ --
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
5
NETWORK PERIPHERALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Network
Peripherals Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not contain all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation
of the Company's financial condition as of June 30, 1999 and December 31,
1998, the results of its operations for the three-month and the six-month
periods ended June 30, 1999 and 1998, and its cash flows for the six-month
periods ended June 30, 1999 and 1998. These financial statements should be
read in conjunction with the audited consolidated financial statements of
the Company as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998, 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 and the six-month periods ended June
30, 1999 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1999 or for any other future period.
2. NET LOSS PER SHARE
Basic earnings per share ("EPS") are computed as net income divided by the
weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock-based compensation, including stock options,
restricted stock awards, warrants, and other convertible securities using
the treasury stock method. For the three and the six months ended June 30,
1999 and 1998, the Company incurred net losses, and the inclusion of
potential common shares would result in an antidilutive per share amount.
Accordingly, no adjustment is made to basic EPS to arrive at diluted EPS.
3. INVENTORIES
The components of inventories consist of the following (in thousands):
June 30, December 31,
1999 1998
------ ------
Raw materials $ 798 $ 882
Work-in-process 802 572
Finished goods 1,355 1,670
------ ------
$2,955 $3,124
====== ======
6
NETWORK PERIPHERALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following (in thousands):
June 30, December 31,
1999 1998
------- -------
Computer and equipment $ 8,292 $ 8,267
Furniture and fixtures 1,041 920
Leasehold improvements 305 306
------- -------
9,638 9,493
Accumulated depreciation (5,341) (4,933)
------- -------
$ 4,297 $ 4,560
======= =======
5. ACCRUED LIABILITIES
The components of accrued liabilities consist of the following (in
thousands):
June 30, December 31,
1999 1998
------ ------
Salaries and benefits $ 578 $ 973
Warranty 375 450
Co-op advertising and market development funds 357 386
Other 222 318
------ ------
$1,532 $2,127
====== ======
6. SALE OF ASSETS
In June 1999, the Company sold its research and development office located
in Hsin Chu, Taiwan, for a total of $1,620,000, of which $400,000 and
$500,000 were received in June and July 1999, respectively, and the
remaining balance is to be received in July 2000. In connection therewith,
the Company recorded a net gain of $1,055,000, after accounting for a
write-off of related assets of $349,000 and payments of broker fees and
severance of $216,000.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following forward-looking statements are made in reliance upon the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
future events described in such statements involve risks and uncertainties,
including:
o the timely development and market acceptance of new products;
o the market demand by customers for the Company's existing products,
including demand by OEM customers for custom products;
o competitive actions, including pricing actions and the introduction of new
competitive products, that may affect the volume of sales of the Company's
products;
o uninterrupted supply of key components, including semiconductor devices and
other materials, some of which may be sourced from a single supplier;
o the ability of the Company to recruit, train and retain key personnel,
including engineers and other technical professionals;
o the development of new technologies rendering existing technologies and
products obsolete;
o the economies of countries where the Company's products are distributed;
and
o general market conditions.
In evaluating these forward-looking statements, consideration should also be
given to the Business Risks discussed below in this interim report.
RESULTS OF OPERATIONS
Net Sales
Net sales for the three months ended June 30, 1999 (the "quarter") were $3.4
million, compared to $7.3 million for the three months ended June 30, 1998 (the
"comparable quarter"). Net sales for the six months ended June 30, 1999 (the
"six-month period") were $7.2 million, compared to $15.3 million for the six
months ended June 30, 1998 (the "comparable period"). The decrease in net sales
for the quarter and for the six-month period was primarily due to decreased
shipments of products based on FDDI technology. Such decrease reflected a
continued decline in the overall demand for FDDI products and a significant
reduction of orders from a major OEM customer. Net sales of FDDI products for
the quarter decreased to $1.9 million from $4.6 million for the comparable
quarter, while net sales for the six-month period decreased to $3.6 million from
$9.3 million for the comparable period. The balance of the decrease in total net
sales was attributed to a decrease in sales of Layer 2 Fast Ethernet switching
products, which continue to experience price competition in the commodity-like
market.
Sales to OEM customers were $1.8 million for the quarter, reflecting a 66%
decrease from the comparable quarter. For the six-month period, sales to OEM
customers were $3.8 million, reflecting a 65% decrease from the comparable
period. The balance of the sales was made to distribution channels. Distribution
sales were $1.6 million and $3.4 million for the quarter and the six-month
period, respectively, reflecting a decrease of 20% and 27% from 1998.
Categorizing sales by geography, sales to North America and international
customers during the quarter decreased to $2.1 million and $1.3 million,
respectively, from $5.4 million and $1.9 million for the comparable quarter. For
the six-month period, sales to North America and international customers
declined to $4.0 million and $3.2 million, respectively, from $10.6 million and
$4.7 million for the comparable period.
The decrease in sales to OEM customers and customers in North America was
primarily attributed to decreased shipments of FDDI products as discussed above.
The decrease in distribution sales, as well as international sales, reflected
the saturation of the Layer 2 Fast Ethernet products in general.
8
The Company does not expect any noticeable growth in sales until volume shipment
of NuWave products, which are Layer 3 gigabit Ethernet switches. The Company
currently expects such shipment to commence in the fourth quarter of 1999.
Gross Profit/Margin
Gross margin was 13% for the quarter and 15% for the six-month period, compared
to 41% for both the corresponding periods in 1998. The gross margin was
exceptionally low in 1999 primarily due to significant decrease in sales of
higher-margin FDDI products, compounded with competitive pricing on Layer 2 Fast
Ethernet switching products. The Company expects the quarterly gross margin to
improve from the current level when volume shipment of NuWave products
commences.
Research and Development
Research and development expenses were $1.9 million, or 57% of net sales, for
the quarter, compared to $3.7 million, or 51% of net sales, for the comparable
quarter. For the six-month period and the comparable period, research and
development expenses were $3.3 million, or 46% or net sales, and $6.5 million,
or 43% of net sales, respectively. The decrease in expenses in 1999 reflected a
significant reduction in payroll and overhead costs as a result of eliminating
certain non-critical personnel in the third quarter of 1998. In addition,
consultant fees and non-recurring engineering charges decreased from the 1998
level, in alliance with certain development activities relating to NuWave ASICs
(Application-Specific Integrated Circuits).
The Company continues to invest a substantial amount of its resources in
developing NuWave family of products. The Company expects that research and
development expenses will be higher in the third quarter than the current level;
however, such expenses are expected to gradually decline after volume shipment
of NuWave products commences.
Marketing and Selling
Marketing and selling expenses were $1.6 million for both the quarter and the
comparable quarter. As a percentage of net sales, marketing and selling expenses
increased to 46% for the quarter from 22% for the comparable quarter. For the
six-month period and the comparable period, expenses were $2.9 million, or 41%
of net sales, and $3.4 million, or 22% of net sales, respectively. Marketing and
selling expenses for the quarter remained consistent with the same period in
1998, as an increase in marketing expenses was offset by a decrease in selling
expenses. An increase in marketing expenses was due to increased spending in
advertising and other marketing activities in preparing for the launch of NuWave
products, while a decrease in selling expenses was related to a decrease in
commission and promotional expenses due to lower sales. For the six-month
period, marketing and selling expenses decreased from the comparable period
primarily because of a decrease in commission and promotional expenses due to
lower sales.
The Company continues to increase its spending in marketing and selling
activities from the current level in order to launch NuWave products and to
establish a leadership presence within the industry through various advertising
campaigns, direct mailings and trade show exhibitions.
General and Administrative
General and administrative expenses were $879,000, or 26% of net sales, for the
quarter, compared to $819,000, or 11% of net sales, for the comparable quarter.
For the six-month and the comparable periods, expenses were $1.7 million for
both periods, or 23% and 11% of net sales, respectively. The Company expects
general and administrative expenditures to increase moderately in the third
quarter from the current level due to relocation of facilities.
Gain on sale of assets
In connection with the sale of its research and development office in Hsin Chu,
Taiwan, which was completed in June 1999, the Company recorded a gain on sale of
assets of $1,055,000, net of a write-off of fixed assets and payments of broker
9
fees and severance totaling $565,000. The divestiture of this office was
completed in an effort to reduce the Company's investment in its legacy products
(FDDI and Layer 2 Fast Ethernet switching products) and to focus its resources
on the commercialization of NuWave products.
Interest Income
Interest income for the quarter and the six-month period were $252,000 and
$519,000, respectively, compared to $424,000 and $806,000 in the corresponding
periods in 1998. The decrease was primarily due to a lower aggregate balance of
cash, cash equivalents and short-term investments.
Income Taxes
The Company did not record a tax benefit associated with the net loss incurred
in 1999 and 1998, as the realization of deferred tax assets is deemed uncertain
based on evidence currently available. Accordingly, a full valuation allowance
has been provided.
Year 2000 Compliance
Many computer systems were designed using two digits rather than four digits to
define a specific year. Thus as the Year 2000 approaches, the improper
identification of the year could result in system failures or erroneous
calculations. To address this issue, the Company is conducting a program (the
Program) to assess and address Year 2000 issues for its products, information
systems, operational infrastructure, and suppliers.
The Company has completed an assessment of its current and installed base of
products. The Company believes that substantially all products manufactured on
or after August 1, 1997 are Year 2000 compliant, with the exception of the EIFO
family of switches, which sold minimally in 1997 and 1998. For the older
products and the EIFO products, which are deemed not in compliance, the Company
believes they will continue to perform all essential and material functions
after the year 2000; but in limited circumstances, they may incorrectly display
or report the date within the network management software. Given that the
installed base of non-compliant products has diminished as time elapsed and that
the non-compliant products will perform their standard functions, the Company
expects most of its end-users will not have issue with the year 2000.
The Company has substantially completed its assessment and remediation of its
information systems. With the recent implementation of an ERP (enterprise
resource planning) software system and standardization of its network and
desktop applications completed in 1998, the Company believes its information
systems in its headquarters are in compliance with year 2000. Similarly, the
Company's remote locations in New York, the Netherlands, and Taiwan have
completed an update of their information systems and are also in compliance.
In 1998, the Company purchased and put into operation a new SMT (surface mount
technology) line in its manufacturing facility where substantially all of its
manufacturing will be performed in 2000 and beyond. The manufacturer of the
equipment has certified that such equipment is Year 2000 compliant.
The Company's telecommunication systems, security system, electrical power
system and other mission critical systems in its operational infrastructure in
all locations are currently being assessed for compliance. Completion of this
phase of the Program is expected in August 1999.
The Company has completed a survey of all its critical suppliers and third
parties for their year 2000 readiness. All respondents have declared that they
are prepared for year 2000.
A contingency plan is being established and is expected to be completed by
September 1999. As the Company's Program is substantially complete, the
incremental cost to fully complete the Program in 1999 is expected to be
immaterial.
Despite the Company's efforts (1) to identify the Year 2000 compliance of its
products and the effects of any non-compliance, (2) to assess and mitigate
non-compliance of its information systems and its operational infrastructure,
and (3) to address suppliers readiness, the Company cannot be certain that all
10
areas have been identified or that the solution implemented to address
non-compliance will be successful. There remains a risk that the failures and
difficulties encountered in the Program may disrupt operations and cause
material adverse effects on the Company's results of operations and financial
condition.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $22.7 million and $26.1 million at June 30,
1999 and December 31, 1998, respectively, and the current ratio (ratio of
current assets to current liabilities) was 8.8 to 1 and 6.7 to 1, respectively.
The aggregate balance of cash, cash equivalents and short-term investments
decreased to $18.4 million at June 30, 1999 from $23.4 million at December 31,
1998. Such decrease was primarily related to net cash used in financing the
Company's operations and capital expenditures, partially offset by $1.6 million
of proceeds from issuance of its Common Stock upon exercise of stock options by
employees.
For the six months ended June 30, 1999, net cash used in operating activities
was $5.7 million, which was principally attributed to the net loss of $5.2
million and a decrease in accounts payable and accrued liabilities of $1.6
million, partially offset by a decrease in accounts receivable of $993,000. For
the six months ended June 30, 1998, net cash used in operating activities was
$2.7 million, which was attributed to the net loss of $4.5 million, partially
offset by a net increase in accounts payable and accrued liabilities of $1.8
million. The Company expects the deficiency in cash flows from operations to
continue until after the volume shipment of NuWave products starts in the fourth
quarter of 1999 and overall sales begin to improve.
The Company's capital expenditures totaled $987,000 and $1.4 million for the six
months ended June 30, 1999 and 1998, respectively, and were related to purchases
of equipment used in production and development activities and other computer
software and equipment for the upgrade and enhancement of the information
systems. In 1999, the Company plans to incur capital expenditures of
approximately $1.5 million.
The Company's principal sources of liquidity are its cash, cash equivalents and
short-term investments. The Company also has a revolving line of credit
agreement, which provides for borrowings up to $5 million, none of which has
been drawn down. The Company was in compliance with all financial covenants
under the line-of-credit agreement. The Company believes that its current
balance of cash, cash equivalents, and short-term investments and its borrowing
capacity are sufficient to satisfy the Company's working capital and capital
expenditure requirements for the next 12 months.
BUSINESS RISKS
In addition to the factors addressed in the preceding sections, certain
characteristics and dynamics of the Company's markets, technologies and
operations create risks to the Company's long-term success and to predictable
quarterly results. These risks will also affect the Company's ability to achieve
the results anticipated by the forward-looking statements contained in this
report. The Company's quarterly results have in the past varied and are expected
in the future to vary significantly as a result of factors such as the timing
and shipment of significant orders, new product introductions or technological
advances by the Company and its competitors, market acceptance of new or
enhanced versions of the Company's products, changes in pricing policies by the
Company and its competitors, the mix of distribution channels through which the
Company's products are sold, the mix of products sold, the accuracy of
resellers' and OEM's forecast of end-user demand, the ability of the Company to
obtain sufficient supplies of sole or limited source components for the
Company's products, and general economic conditions. In response to competitive
pressures or new product introductions, the Company may take certain pricing or
marketing actions that could materially and adversely affect the Company's
operating results. In the event of a reduction in the prices of its products,
the Company has committed to providing retroactive price adjustments on
inventories held by its distributors, which could have the effect of reducing
margins and operating results. In addition, changes in the mix of products sold
and the mix of distribution channels through which the Company's products are
sold may cause fluctuations in the Company's gross margins. The Company's
expense levels are based, in part, on its expectations of its future revenue
and, as a result, net income would be disproportionately affected by a reduction
in revenue. Due to the potential quarterly fluctuation in operating results, the
11
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,
failure by its foundry to fabricate and supply proprietary ASICs, 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 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
acquired by larger companies in the past few years, and one competitor recently
had an initial public offering of its common stock. As a result, these
competitors are able 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no changes in financial market risk as originally discussed in
the Company's Annual Report on Form 10-K for the year ended December 31, 1998.
12
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Stockholders on April
29, 1999.
(b) The election of two Class II directors, William Rosenberger
and Steve Bell, of the Company for a three-year term expiring
in the year 2002 was voted at the Annual Meeting. There were
11,589,280 shares of Common Stock represented in person and by
proxy, and the final tabulation of votes was as follows:
William Rosenberger, 11,529,920 votes for and 59,360 votes
against; Steve Bell, 11,532,120 votes for and 57,160 votes
against.
(c) On a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending December 31, 1999,
11,519,713 shares were voted for the proposal, 50,600 shares
were voted against the proposal, and 18,967 shares abstained.
Broker non-votes were counted as abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Description of Document
-------- -----------------------
3.1(1) Amended and Restated Certificate of Incorporation.
3.2(1) By-Laws.
10.45 Agreement for Purchase and Sale of Assets dated June
14, 1999.
27 Financial Data Schedule.
(1) Incorporated by reference to the corresponding
exhibit in the Registrant's Registration
Statement on Form S-1.
(b) Reports on Form 8-K
None
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: August 11, 1999 By: \s\ Wilson Cheung
-----------------------------------
Wilson Cheung
Vice President of Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14