DELAWARE		94-3065014
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

Class		Outstanding at October 31, 2002
Common Stock, $.001 par value		28,492,218 shares

PART I.    FINANCIAL INFORMATION				Page
Item 1.		Financial Statements
		Condensed Consolidated Balance Sheets		3
		Condensed Consolidated Statements of Income		4
		Condensed Consolidated Statements of Cash Flows		5
		Notes to Condensed Consolidated Financial Statements		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.		Quantitative and Qualitative Disclosures About Market Risks		22
Item 4.		Controls and Procedures		22
PART II.    OTHER INFORMATION
Item 1.		Legal Proceedings		23
Item 2.		Changes in Securities and Use of Proceeds		23
Item 3.		Defaults upon Senior Securities		23
Item 4.		Submission of Matters to Vote of Security Holders		23
Item 5.		Other Information		23
Item 6.		Exhibits and Reports on Form 8-K		23
SIGNATURES				24

		September 30, 2002				December 31, 2001
		(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	74,756			$	62,141
Short-term investments			28,866				14,724
Accounts receivable			8,800				5,124
Inventories			13,196				23,622
Deferred tax assets			5,346				5,346
Prepaid expenses and other current assets			2,254				1,526
Total current assets			133,218				112,483
PROPERTY AND EQUIPMENT, net			20,320				23,182
		$	153,538			$	135,665
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of capitalized lease obligations		$	240			$	440
Accounts payable			6,475				4,641
Accrued payroll and related expenses			3,662				3,164
Taxes payable and other accrued liabilities			5,083				1,604
Deferred income on sales to distributors			2,133				1,798
Total current liabilities			17,593				11,647
LONG TERM LIABILITIES:
Capitalized lease obligations, net of current portion			94				275
Deferred rent			672				441
Total long term liabilities			766				716
STOCKHOLDERS’ EQUITY:
Common stock			28				28
Additional paid-in capital			87,579				81,758
Stockholder notes receivable			—				(38	)
Cumulative translation adjustment			(116	)			(117	)
Retained earnings			47,688				41,671
Total stockholders’ equity			135,179				123,302
		$	153,538			$	135,665

		Three Months Ended September 30,						Nine Months Ended September 30,
		2002			2001			2002			2001
NET REVENUES:
Product sales		$	27,712		$	22,710		$	77,963		$	69,516
License fees and royalties			456			293			1,023			930
Total net revenues			28,168			23,003			78,986			70,446
COST OF REVENUES			16,328			13,092			45,454			37,766
GROSS PROFIT			11,840			9,911			33,532			32,680
OPERATING EXPENSES:
Research and development			3,561			3,586			10,817			10,828
Sales and marketing			3,756			3,797			10,803			11,146
General and administrative			1,600			1,537			4,581			4,273
Total operating expenses			8,917			8,920			26,201			26,247
INCOME FROM OPERATIONS			2,923			991			7,331			6,433
OTHER INCOME, net			365			325			1,265			1,419
INCOME BEFORE PROVISION FOR INCOME TAXES			3,288			1,316			8,596			7,852
PROVISION FOR INCOME TAXES			986			395			2,579			2,389
NET INCOME		$	2,302		$	921		$	6,017		$	5,463
EARNINGS PER SHARE:
Basic		$	0.08		$	0.03		$	0.21		$	0.20
Diluted		$	0.08		$	0.03		$	0.20		$	0.19
SHARES USED IN PER SHARE CALCULATION:
Basic			28,451			27,758			28,298			27,622
Diluted			29,074			29,339			29,494			28,748

		Nine Months Ended September 30,
		2002				2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	6,017			$	5,463
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			5,013				4,873
Deferred rent			231				349
Provision for accounts receivable and other allowances			—				229
Tax benefit associated with employee stock plans and stock compensation to non-employees			1,486				1,305
Change in operating assets and liabilities:
Accounts receivable			(3,676	)			(318	)
Inventories			10,426				(2,743	)
Prepaid expenses and other current assets			(728	)			2,654
Accounts payable			1,834				(1,235	)
Accrued liabilities			3,977				(2,615	)
Deferred income on sales to distributors			335				(768	)
Net cash provided by operating activities			24,915				7,194
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(2,150	)			(6,931	)
Purchases of short-term investments			(36,575	)			(24,750	)
Proceeds from sales and maturities of short-term investments			22,433				27,303
Net cash used in investing activities			(16,292	)			(4,378	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock			4,335				3,773
Proceeds from stockholder note repayment			38