<PAGE>   1
 
--------------------------------------------------------------------------------
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                             ---------------------
 
                                   FORM 10-Q
 
<TABLE>
<C>                  <S>
    (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, 1999
 
                                                  OR
 
       [  ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
 
                     FOR THE TRANSITION PERIOD FROM __________ TO __________
</TABLE>
 
                        COMMISSION FILE NUMBER 000-21669
 
                            DIGITAL LIGHTWAVE, INC.
             (Exact name of registrant as specified in its charter)
 
                             ---------------------
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                      95-4313013
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
</TABLE>
 
                             15550 LIGHTWAVE DRIVE
                           CLEARWATER, FLORIDA 33760
                                 (727) 442-6677
        (Address, including zip code, of principal executive offices and
              Registrant's telephone number, including area code)
 
                             ---------------------
 
     Indicate by check mark whether 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 report (s)), and (2) has been subject to
such filing requirements for the past 90 days.
 
                             YES  [X]       NO  [ ]
 
     The number of shares outstanding of the Registrant's Common Stock as of May
11, 1999 was 26,558,776.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2
 
                            DIGITAL LIGHTWAVE, INC.
 
                         QUARTERLY REPORT ON FORM 10-Q
                      FOR THE PERIOD ENDED MARCH 31, 1999
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       ----
<S>      <C>                                                           <C>
                       PART I FINANCIAL INFORMATION
Item 1.  Financial Statements:
         Consolidated Balance Sheets -- March 31, 1999 and December
         31, 1998....................................................    1
         Consolidated Statements of Operations -- Three Months Ended
         March 31, 1999 and March 31, 1998...........................    2
         Consolidated Statements of Cash Flows -- Three Months Ended
         March 31, 1999 and March 31, 1998...........................    3
         Notes to Consolidated Financial Statements..................    4
         Management's Discussion and Analysis of Financial Condition
Item 2.  and Results of Operations...................................    8
 
                         PART II OTHER INFORMATION
Item 1.  Legal Proceedings...........................................   16
Item 6.  Exhibits and Reports on Form 8-K............................   17
SIGNATURES...........................................................   18
</TABLE>
<PAGE>   3
 
                                     PART I
 
                             FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS
 
                            DIGITAL LIGHTWAVE, INC.
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                               MARCH 31,    DECEMBER 31,
                                                                 1999           1998
                                                              -----------   ------------
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
                                         ASSETS
Current assets:
  Cash and cash equivalents.................................    $ 3,907       $ 3,848
  Accounts receivable, net..................................      6,343         7,152
  Inventories...............................................      4,407         5,476
  Prepaid expenses and other current assets.................      1,335           748
                                                                -------       -------
          Total current assets..............................     15,992        17,224
Property and equipment, net.................................      9,341         9,274
Other assets................................................      1,155         1,060
                                                                -------       -------
          Total assets......................................    $26,488       $27,558
                                                                =======       =======
                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities..................    $ 7,382       $ 6,468
  Accrued settlement charges................................      8,112         8,489
                                                                -------       -------
          Total current liabilities.........................     15,494        14,957
Long-term liabilities.......................................        262           281
                                                                -------       -------
          Total liabilities.................................     15,756        15,238
                                                                -------       -------
Stockholders' equity:
Common stock................................................          3             3
Additional paid-in capital..................................     57,973        57,927
Accumulated deficit.........................................    (47,244)      (45,610)
                                                                -------       -------
          Total stockholders' equity........................     10,732        12,320
                                                                -------       -------
          Total liabilities and stockholders' equity........    $26,488       $27,558
                                                                =======       =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                        1
<PAGE>   4
 
                            DIGITAL LIGHTWAVE, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                (IN THOUSANDS, EXCEPT SHARE AND PER-SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                      MARCH 31,
                                                              --------------------------
                                                                 1999           1998
                                                              -----------    -----------
<S>                                                           <C>            <C>
Net sales...................................................  $     8,112    $     5,432
Cost of goods sold..........................................        3,186          2,103
                                                              -----------    -----------
Gross profit................................................        4,926          3,329
Operating expenses:
  Engineering and development...............................        2,748          3,309
  Sales and marketing.......................................        2,741          1,942
  General and administrative................................        1,116          1,899
  Reorganization charges....................................           --          1,018
                                                              -----------    -----------
  Total operating expenses..................................        6,605          8,168
                                                              -----------    -----------
Operating loss..............................................       (1,679)        (4,839)
Other income, net...........................................           45            279
                                                              -----------    -----------
Loss before income tax......................................       (1,634)        (4,560)
Provision for income taxes..................................           --             --
                                                              -----------    -----------
          Net loss..........................................  $    (1,634)   $    (4,560)
                                                              ===========    ===========
Per share of common stock:
  Basic and diluted loss per share of common stock..........  $     (0.06)   $     (0.17)
                                                              ===========    ===========
  Weighted average common shares outstanding................   26,539,760     26,441,775
                                                              ===========    ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                        2
<PAGE>   5
 
                            DIGITAL LIGHTWAVE, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                    FOR THE
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
                                                                  (UNAUDITED)
<S>                                                           <C>        <C>
Cash flows from operating activities:
  Net loss..................................................  $(1,634)   $(4,560)
  Adjustments to reconcile net loss to cash used by
     operating activities:
     Depreciation and amortization..........................      611        507
  Changes in operating assets and liabilities:
     Decrease (increase) in accounts receivable.............      696     (3,031)
     Decrease (increase) in inventories.....................    1,150     (1,558)
     Increase in prepaid expenses and other assets..........     (681)      (733)
     Increase in accounts payable and accrued expenses......      627        531
     Decrease in accrued settlement charges.................     (377)        --
                                                              -------    -------
          Net cash provided (used) by operating
           activities.......................................      392     (8,844)
                                                              -------    -------
Cash flows from investing activities:
     Purchase of property and equipment.....................     (410)      (779)
                                                              -------    -------
          Net cash used in investing activities.............     (410)      (779)
                                                              -------    -------
Cash flows from financing activities:
     Proceeds from sale of common stock, net of expense.....       46         57
     Payments received-lease receivables....................      112          8
     Principal payments-capital lease obligations...........      (81)        (8)
                                                              -------    -------
          Net cash provided by financing activities.........       77         57
                                                              -------    -------
Net increase (decrease) in cash and cash equivalents........       59     (9,566)
Cash and cash equivalents at beginning of period............    3,848     24,031
                                                              -------    -------
Cash and cash equivalents at end of period..................  $ 3,907    $14,465
                                                              =======    =======
Other supplemental disclosures:
  Cash paid for interest....................................  $    16    $     2
Noncash investing and financing activities:
  Capital lease obligations incurred........................  $   155    $    --
  Fixed asset additions included in accounts payable........      194        352
  Accounts receivable related to capital leases.............      245         53
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                        3
<PAGE>   6
 
                            DIGITAL LIGHTWAVE, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. BASIS OF PRESENTATION
 
     The accompanying unaudited consolidated financial statements of Digital
Lightwave, 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 Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, these statements include all adjustments, consisting of normal and
recurring adjustments, considered necessary for a fair presentation of results
for such periods. The results of operations for the three month period ended
March 31, 1999, are not necessarily indicative of results which may be achieved
for the full fiscal year or for any future period. The unaudited interim
financial statements should be read in conjunction with the financial statements
and notes thereto contained in Digital Lightwave's Form 10-K for the period
ended December 31, 1998, File No. 000-21669.
 
     For comparative purposes, certain amounts previously disclosed in the
financial statements have been reclassified to conform to the current
presentation. These reclassifications had no effect on the results of operations
for the periods presented.
 
2. INITIAL PUBLIC OFFERING
 
     Effective February 5, 1997, the Company sold 3,658,860 shares of common
stock, $.0001 par value, in connection with an Initial Public Offering. Gross
proceeds to the Company approximated $40,800,000.
 
3. INVENTORIES
 
     Inventories at March 31, 1999 and December 31, 1998 are summarized as
follows:
 
<TABLE>
<CAPTION>
                                                              MARCH 31,   DECEMBER 31,
                                                                1999          1998
                                                              ---------   ------------
                                                                   (IN THOUSANDS)
<S>                                                           <C>         <C>
Raw materials...............................................   $1,997        $2,166
Work-in-process.............................................    1,579         1,443
Finished goods..............................................      831         1,867
                                                               ------        ------
                                                               $4,407        $5,476
                                                               ======        ======
</TABLE>
 
4. COMPUTATION OF NET LOSS PER SHARE
 
     Basic loss per share is based on the weighted average number of common
shares outstanding during the periods presented. For the quarters ended March
31, 1999 and 1998, diluted loss per share, which includes the effect of
incremental shares from common stock equivalents using the treasury stock
method, is not included in the calculation of net loss per share as the
inclusion of such equivalents would be anti-dilutive. The table below shows the
calculation of basic weighted average common shares outstanding and the
incremental number of shares arising from common stock equivalents under the
treasury stock method:
 
<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                     MARCH 31,
                                                              -----------------------
                                                                 1999         1998
                                                              ----------   ----------
<S>                                                           <C>          <C>
Weighted average common stock outstanding used in net per
  share calculation.........................................  26,539,760   26,441,775
Weighted average common stock equivalents outstanding.......     374,858           --
                                                              ----------   ----------
Shares including effect of common stock equivalents
  outstanding...............................................  26,914,618   26,441,775
                                                              ==========   ==========
</TABLE>
 
                                        4
<PAGE>   7
                            DIGITAL LIGHTWAVE, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
5. REORGANIZATION CHARGES
 
     The Company streamlined its management structure and eliminated 20
positions which resulted in a one-time charge of approximately $1.0 million
during the quarter ended March 31, 1998.
 
6. LEGAL PROCEEDINGS
 
     As of April 9, 1998, 23 class action complaints (which were subsequently
consolidated into a single action) for violations of the Federal Securities Laws
during certain periods in 1997 and 1998 had been filed in the United States
District Court for the Middle District of Florida, on behalf of purchasers of
the Company's Common Stock. The complaints named as defendants the Company,
Bryan J. Zwan, the Company's Chairman, Steven H. Grant, the Company's Executive
Vice President, Finance, Chief Financial Officer and Secretary, and other former
corporate officers. The complaints allege that the Company and certain officers
during the relevant time period violated Sections 10(b) and 20(a) of the
Securities Exchange Act by, among other things, issuing to the investing public
false and misleading financial statements and press releases concerning the
Company's revenues, income and earnings, which artificially inflated the price
of the Company's Common Stock.
 
     On July 23, 1998, the Company entered into a memorandum of understanding
for the settlement of these class action complaints. In late October 1998, a
Stipulation of Settlement was filed with the court and on December 21, 1998, the
court preliminarily approved the settlement. The settlement consists of $4.3
million in cash, to be paid to plaintiffs primarily by a claim on the Company's
directors and officers liability insurance policy, and the issuance of up to 1.8
million shares of Common Stock. The Company recorded a one-time charge of $8.5
million during 1998 as a result of the settlement. On March 12, 1999, the court
indicated that it would grant final approval of the settlement of the class
action complaints.
 
     On November 5, 1997, Hugh Brian Haney ("Plaintiff"), an early stage
investor, commenced an action in the United States District Court for the
Southern District of Ohio against Dr. Bryan J. Zwan, the Company's Chairman of
the Board and then Chief Executive Officer, and the Company ("Defendants"). An
amended complaint filed December 15, 1997 alleged violations of Section 10(b) of
the Securities Exchange Act, violations of state corporation statutes, and
various common law violations by Defendants in connection with Plaintiff's sale
to the Company's predecessor in November 1995, pursuant to a previously granted
option exercisable by Dr. Zwan and/or the Company's predecessor, of 4,900 shares
of stock in the Company's predecessor, an amount equivalent to 19,215,686 shares
of the Company's common stock. The amended complaint sought, among other things,
(1) rescission of the sale of the shares transferred by Plaintiff and (2)
damages of $235 million, together with interest. On October 20, 1998, the
Company and Dr. Zwan entered into an agreement with Plaintiff to settle the
action. The settlement agreement provided, among other things, for dismissal of
the action with prejudice, for a $500,000 payment by the Company to Plaintiff
for his attorneys' fees and granted Plaintiff an option, for 10 years, to
purchase for $1 per share 2 million shares of Dr. Zwan's stock in the Company.
Pursuant to that agreement, the action was dismissed with prejudice on November
13, 1998. The Company recorded a $3.0 million charge to earnings consisting of
the cash payment and the valuation of the options upon settlement.
 
     The Company from time to time is involved in lawsuits arising in the
ordinary course of business. With respect to these matters, management believes
that it has adequate legal defenses and/or provided adequate accruals for
related costs. The Company is not aware of any additional lawsuits (other than
the action filed on April 21, 1999 discussed at Note 8 -- Subsequent Events)
that were pending that could have a material adverse effect on the Company's
business, financial condition and results of operations.
 
                                        5
<PAGE>   8
                            DIGITAL LIGHTWAVE, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7. FINANCING TRANSACTIONS
 
     The Company entered into an accounts receivable agreement dated December
28, 1998 with EAB Leasing Corp. ("EAB") providing for the sale of the Company's
accounts receivable to EAB. The aggregate maximum amount the Company can borrow
at one time under this agreement is $2.9 million through June 28, 1999, with a
maximum of $2.0 million available on a monthly basis. In connection with this
agreement, the Company has granted EAB a security interest in its accounts,
accounts receivables, contract rights, equipment, chattel paper, general
intangibles, instruments, inventory and all proceeds of the foregoing. The
annual interest rate equivalent charged to the Company under this agreement is
the prime rate plus 1.5%. The agreement also provides that the Company pay a
minimum monthly service fee in the amount of $10,000. As of March 31, 1999,
there were no borrowings outstanding under this agreement.
 
     On March 31, 1999, the Company entered into a financing agreement with
certain investors pursuant to which the Company has agreed to issue $3.0 million
of 9% Secured Bridge Notes due January 17, 2000. These notes will be
collateralized by all of the Company's assets and will be subordinated to the
accounts receivable agreement with EAB and the proposed line of credit agreement
with Emergent Business Capital described in the following paragraph. In
connection with the financing agreement, the Company agreed to issue warrants to
purchase an aggregate of 550,000 shares of the Company's common stock at an
exercise price of $2.75 per share, the market price of the stock on the date
prior to the issuance of the warrants. The warrants will have a term of five
years from the date of issuance. The Company has agreed to register the warrants
and the common stock issuable upon exercise thereof under the Securities Act of
1933.
 
     On March 31, 1999, the Company entered into a Letter of Commitment with
Emergent Business Capital pursuant to which Emergent Business Capital would
provide the Company with a $5.0 million line of credit (the "Emergent Line of
Credit"). Under the Emergent Line of Credit, the Company would be entitled to
borrow up to $5.0 million, subject to certain borrowing limitations based on
amounts of the Company's accounts receivable and other assets. The Emergent Line
of Credit will have a term of two years. All indebtedness outstanding under the
Emergent Line of Credit Agreement will be collateralized by substantially all of
the Company's assets.
 
8. SUBSEQUENT EVENTS
 
     On April 6, 1999, the Company issued the Secured Bridge Notes described in
Note 7 -- Financing Agreements.
 
     On April 19, 1999, the Company filed a registration statement with the
Securities and Exchange Commission relating to a public offering of $20.0
million of Convertible Subordinated Notes. The Convertible Subordinated Notes
will be convertible into shares of the Company's common stock. The Company will
grant the underwriter a 30-day option to purchase up to an additional $3.0
million of Convertible Subordinated Notes for the purpose of covering
over-allotments. C.E. Unterberg, Towbin is the underwriter of this offering. The
Company intends to use the net proceeds from this offering to repay indebtedness
and for working capital and general corporate purposes.
 
                                        6
<PAGE>   9
                            DIGITAL LIGHTWAVE, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On April 21, 1999, Hugh Brian Haney ("Plaintiff"), an early stage investor,
filed an action in the United States District Court for the Southern District of
Ohio against the Company and Dr. Bryan J. Zwan alleging that the terms of the
settlement agreement entered into between the parties had been breached and
requesting that the settlement agreement be specifically enforced and that
damages in excess of $75,000 be awarded, or, alternatively, that the settlement
agreement be set aside. The Company believes that it has fulfilled its
obligations under the settlement agreement and that the claims made by Plaintiff
against the Company in this action are without merit. The parties are currently
in discussion regarding a possible settlement of this action. There can be no
assurance, however, that the Company will succeed in defending or settling this
action or that the action will not have a material adverse effect on the
Company.
 
     On April 30, 1999, the court in the Federal Securities Law class action
lawsuits granted the final order approving the settlement of the actions. The
final order is subject to appeal.
 
                                        7
<PAGE>   10
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
 
     This report contains certain statements of a forward-looking nature
relating to future events or the future performance of the Company. Prospective
and current investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements as well as the future prospects of the Company generally, such
investors should specifically consider various factors identified in the
Company's Annual Report on Form 10-K for the period ended December 31, 1998,
including the matters set forth therein under the caption "Factors That May
Affect Operating Results," which could cause actual results to differ materially
from those indicated by such forward-looking statements. Factors that may affect
the Company's results of operations include but are not limited to the Company's
limited operating history and cumulative losses, dependence on limited products,
uncertain market acceptance of planned products, rapid technological change,
dependence on new product introductions, competition, expansion of manufacturing
operations, dependence on contract manufacturing and sole or limited source
suppliers, dependence on key personnel, management of growth, anticipated
fluctuations in operating results, dependence on proprietary technology,
customer concentration, product certifications, control by principal
stockholder, factors inhibiting takeover, shares eligible for future sale,
possible volatility of stock price, success in defending significant litigation,
liquidity risks and future capital needs, potential year 2000 problems and
government regulations. The Company participates in a highly concentrated
industry, and has limited visibility with regard to customer orders and the
timing of such orders. The Company may also encounter difficulty obtaining
sufficient supplies to staff and meet production schedules. As a result,
quarter-to-quarter and year-to-year financial performance is highly dependent
upon the timely receipt of orders from its customers during fiscal periods. The
Company disclaims any obligation to update any such factors or announce publicly
revisions to such statements to reflect events or developments.
 
OVERVIEW
 
     The Company designs, develops, markets and supports network analysis
equipment for monitoring, maintaining and managing fiber optic networks. The
Company's products provide telecommunications service providers and equipment
manufacturers with capabilities to cost-effectively deploy and manage fiber
optic networks to address the rapidly increasing demand for bandwidth.
 
     From inception in 1990 through 1996, the Company focused its primary
activities on developing the necessary technology and infrastructure required to
launch its first product, the Network Information Computer. In 1998, the Company
commenced limited sales of the Network Access Agent.
 
     The Company's sales are generated from sales of its products, less an
estimate for customer returns. Sales are recognized when products are shipped to
a customer. The Company expects that the average selling price ("ASP") of its
Network Information Computers will fluctuate based on a variety of factors,
including product configuration, potential volume discounts to customers, the
timing of new product introductions and enhancements and the introduction of
competitive products. Fluctuations in the ASP may have a material adverse effect
on the Company's results of operations.
 
     The Company sells its products through a direct sales force to
telecommunications service providers and equipment manufacturers. The sales
cycle for new customers tends to be long. In addition, the telecommunications
industry historically has had a limited number of competitors. Given long sales
cycles and few industry participants, sales of the Company's products have
tended to be concentrated, and the Company expects that sales will continue to
be concentrated in the future.
 
     To date, the Company has not entered into long-term agreements or blanket
purchase orders for the sale of its products, but generally obtains purchase
orders for immediate shipment and other cancelable purchase commitments. As a
result, the Company does not expect to carry substantial quarterly backlog from
quarter to quarter in the future. The Company's sales during a particular
quarter are, therefore, highly dependent upon orders placed by customers during
the quarter. Consequently, sales may fluctuate significantly from quarter-
to-quarter and year-to-year due to the timing and amount of orders from
customers, among other factors. Because most of our expenses, particularly
employee compensation and rent, are relatively fixed and cannot be
 
                                        8
<PAGE>   11
 
reduced in response to decreased revenues, quarterly fluctuations in sales have
a significant effect on net income.
 
     Since inception the Company has incurred substantial net operating losses
as a result of significant investment in research and development, sales and
marketing and administrative expenses. The Company intends to continue to build
its organization in anticipation of growth and believes that its operating
expenses will continue to increase accordingly due to a variety of factors
including: (1) increased research and development expenses associated with the
completion of the products in development and the continued enhancement of
existing products; and (2) increased selling, general and administrative
expenses associated with continued expansion of sales and marketing
capabilities, product advertising and promotion. There can be no assurance that
the Company will achieve profitability, or that if profitability is achieved
that it will be sustained.
 
     In January 1998, the Company restated its revenues from the second and
third quarters of fiscal 1997. The Company's decision to restate the 1997
results of operations resulted from the discovery of certain errors in the
timing of revenue recognition and a review of related accounting policies and
procedures. A committee consisting of the outside members of the Company's board
of directors was established to review the policies, procedures and
circumstances which may have been factors in the restatement of revenue and made
recommendations regarding the adoption of appropriate revenue recognition
policies and procedures. In April 1998, 23 class action lawsuits (which were
subsequently consolidated into a single action) were filed against the Company
arising out of such restatement and alleged violations of the federal securities
laws. On July 23, 1998, the Company entered into a memorandum of understanding
for the settlement of these class action lawsuits. The Company recorded a charge
of $8.5 million in the second quarter of 1998 as a result of the proposed
settlement. Pursuant to the terms of the settlement, the Company will pay
approximately $4.3 million in cash, which payment will be primarily funded by
the Company's directors' and officers' liability insurance policy, and issue 1.8
million shares of Common Stock of the Company, all of which may be freely
tradable. In late October 1998, a Stipulation of Settlement was filed with the
court and on December 21, 1998, the court preliminarily approved the settlement.
On April 30, 1999, the court granted final approval of the settlement. The
settlement is subject to appeal.
 
     During February 1995, the Company entered into a Stock Purchase Option (the
"Option") with Hugh Brian Haney ("Plaintiff"), an early stage investor, to
repurchase the 19,215,686 shares of the then outstanding class of common stock
held by Plaintiff for a purchase price of $2.5 million. The purchase price was
subsequently reduced to $800,522. On November 30, 1995, the Company exercised
the Option and retired the shares of treasury stock acquired. In November 1997,
Plaintiff commenced an action in the United States District Court for the
Southern District of Ohio (the "Court") against Dr. Bryan J. Zwan, the Company's
Chairman and then Chief Executive Officer, and the Company alleging violations
of Section 10(b) of the Securities Exchange Act, violations of state corporation
statutes, and various common law violations in connection with the exercise of
the Option. On October 20, 1998, the Company and Dr. Zwan entered into an
agreement with Plaintiff to settle the action. The settlement agreement
provided, among other things, for dismissal of the action with prejudice, for a
$500,000 payment by the Company to Plaintiff for his attorneys' fees and granted
Plaintiff an option, for 10 years, to purchase for $1 per share 2 million shares
of Dr. Zwan's stock in the Company. Pursuant to that agreement, the action was
dismissed with prejudice on November 13, 1998. The Company recorded a $3.0
million charge to earnings consisting of the cash payment and the valuation of
the options upon settlement. On April 21, 1999, Plaintiff filed an action in the
Court against the Company and Dr. Zwan alleging that the terms of the settlement
agreement had been breached and requesting that the settlement agreement be
specifically enforced and that damages in excess of $75,000 be awarded, or,
alternatively, that the settlement agreement be set aside. The Company believes
that it has fulfilled its obligations under the settlement agreement and that
the claims made by Plaintiff against the Company in this action are without
merit. The parties are currently in discussion regarding a possible settlement
of this action. There can be no assurance, however, that the Company will
succeed in defending or settling this action or that the action will not have a
material adverse effect on the Company.
 
     In order to decrease costs and improve operating efficiencies, the Company
began streamlining its management and operating structure in February 1998 and
eliminated 20 full time positions resulting in a one-
                                        9
<PAGE>   12
 
time charge of $1.0 million in connection with this restructuring. Additionally,
the Company eliminated approximately 55 full time positions in August 1998 which
did not result in a significant charge to earnings. During 1998, the Company
also significantly enhanced its management team by hiring new executives,
including a new President and Chief Executive Officer hired at the end of the
year.
 
RESULTS OF OPERATIONS
 
     The following is a discussion of significant changes in the results of
operations of the Company which occurred in the quarter ended March 31, 1999
compared to the quarter ended March 31, 1998. The following tables summarize the
approximate changes in selected operating items and include dollar changes,
percentage changes and percent of net sales to facilitate the discussions that
follow.
 
<TABLE>
<CAPTION>
                                                  QUARTER ENDED
                                              ---------------------   AMOUNT    PERCENT     PERCENT OF
                                                                      CHANGE    CHANGE      NET SALES
                                              MARCH 31,   MARCH 31,    FAV/      FAV/      ------------
                                                1999        1998      (UNFAV)   (UNFAV)    1999    1998
                                              ---------   ---------   -------   -------    ----    ----
                                                               (IN MILLIONS, EXCEPT %)
<S>                                           <C>         <C>         <C>       <C>        <C>     <C>
Net sales...................................    $ 8.1       $ 5.4      $ 2.7       50%     100%    100%
Cost of goods sold..........................     (3.2)       (2.1)      (1.1)     (52)      39      39
                                                -----       -----      -----               ---     ---
Gross profit................................      4.9         3.3        1.6       49       61      61
Engineering and development expenses........     (2.8)       (3.3)       0.5       14       35      61
Sales and marketing expenses................     (2.7)       (2.0)      (0.7)     (37)      34      37
General and administrative expenses.........     (1.1)       (1.9)       0.8       41       14      35
Reorganization charges......................       --        (1.0)       1.0       --       --      19
                                                -----       -----      -----               ---     ---
          Total operating expenses..........     (6.6)       (8.2)       1.6       19       83     152
                                                -----       -----      -----               ---     ---
Operating loss..............................     (1.7)       (4.9)       3.2       66      (22)    (91)
Other income, net...........................      0.1         0.3       (0.2)     (52)       2       5
                                                -----       -----      -----               ---     ---
Pre-tax income..............................     (1.6)       (4.6)       3.0       64      (20)    (86)
Income taxes................................       --          --         --       --       --      --
                                                -----       -----      -----               ---     ---
Net loss....................................    $(1.6)      $(4.6)     $ 3.0      (64)%    (20)%   (86)%
                                                =====       =====      =====               ===     ===
</TABLE>
 
  Net Sales
 
     Sales include total revenues from customer purchases of Network Information
Computers, net of accrual for product returns. Net sales for the quarter
increased $2.7 million to $8.1 million from $5.4 million in the year ago
quarter. Sales to existing customers during the quarter represented 84% of
sales, or $6.8 million as compared to 52% of sales, or $2.9 million in the year
ago quarter. During the quarter, the Company shipped 228 units in varying
configurations of the Network Information Computer to a total of 44 customers
(including 12 new customers) at an ASP of $35,580, as compared to 174 units to a
total of 21 customers (including 11 new customers) at an ASP of $31,221 in the
year ago quarter.
 
     Sales to existing customers continue to represent a large portion of the
Company's net sales. The Company believes repeat sales to an existing customer
are an important measure of growing product acceptance in the highly
concentrated telecommunications industry. While this longer-term trend may not
continue, management believes that new product offerings including upgrades of
existing products offer the Company's existing customers an opportunity to
continue to extend the life of their initial investment in the Company's
products.
 
     The increase in ASP for the quarter as compared to the year ago quarter is
primarily due to the higher selling price associated with the Company's higher
speed optical configuration, OC-48, which was not available in the first quarter
of 1998.
 
                                       10
<PAGE>   13
 
  Cost of Goods Sold
 
     Costs of goods sold principally includes inventory, labor and overhead,
management costs, facility rental and depreciation of equipment. Cost of goods
sold for the quarter increased by $1.1 million to $3.2 million from $2.1 million
in the year ago quarter. The primary reason for the increase in cost of goods
sold is the increase in the volume of units sold.
 
  Gross Profit
 
     Gross profit for the quarter increased by $1.6 million to $4.9 million from
$3.3 million in the year ago quarter. As a percentage of sales, gross margin for
the quarter decreased to 60.7% from 61.3%.
 
     The increase in gross profit is directly related to the increase in sales
for the quarter ended March 31, 1999. Despite the increase in sales, gross
margin percentages have decreased for the quarter. The primary reasons for the
decline were volume discounts, customer incentives in the form of upgrades
performed at a loss, and a write-off of scrap.
 
  Engineering and Development
 
     Engineering and development expenses principally include compensation
attributable to engineering and development personnel, depreciation of fixed
assets, outside consulting fees and other development expenses. Engineering and
development expenses for the quarter decreased by $0.5 million to $2.8 million
from $3.3 million in the year ago quarter.
 
     The decrease is primarily due to the Company's efforts to lower overhead
costs and streamline its operating structure by eliminating certain full time
and consultant positions. This resulted in a savings of $0.9 million in salaries
and related benefits over the same quarter last year. However, this was
partially offset by a disproportionate share of overhead expenses which could
not be capitalized as part of inventory costs due to a lower level of production
activity during the quarter.
 
  Sales and Marketing
 
     Sales and marketing expenses principally include salaries and commissions
paid on sales of products, travel expenses, tradeshow costs, and costs of
promotional materials and customer incentives. Sales and marketing expenses for
the quarter increased by $0.7 million to $2.7 million from $2.0 million in the
year ago quarter. The dollar increase is directly related to a larger sales
force, higher commissions resulting from the increased sales activity, and an
increase in marketing related expenses.
 
  General and Administrative
 
     General and administrative expenses principally include professional fees,
facility rentals, compensation, and information systems related to general
management functions. General and administrative expenses for the quarter
decreased by $0.8 million to $1.1 million from $1.9 million in the year ago
quarter.
 
     The decrease primarily reflects higher professional fees in 1998. In
addition, there were significant savings related to the streamlining of the
Company's operating structure and a curtailment in recruiting activities.
 
  Reorganization Charges
 
     During the quarter ended March 31, 1998, the Company streamlined its
management structure and eliminated 20 positions which resulted in a one-time
charge of $1.0 million.
 
  Other Income, net
 
     Other income for the quarter ended March 31, 1999, decreased by $0.2
million to $0.1 million from $0.3 million in the same quarter last year. The
decrease is the result of the utilization of cash reserves to fund the Company's
operations which caused a decrease in interest earned on invested cash balances.
 
                                       11
<PAGE>   14
 
  Net Loss
 
     Net loss for the quarter decreased by $3.0 million to a net loss of $1.6
million or $.06 per share, from a net loss of $4.6 million or $.17 per share in
the year ago quarter.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     From its inception through December 31, 1998, the Company has financed its
operations primarily through private sales of its Common Stock, cash from
operations and the initial public offering of 3,658,860 shares of its Common
Stock. The Company completed its IPO in February 1997, resulting in net proceeds
to the Company of $39.6 million. During 1997, the Company used the net proceeds
to fund the repayment of notes payable for approximately $0.8 million, to
purchase computer equipment, software, test equipment and other assets for
approximately $6.0 million and to fund product research and development for
approximately $5.3 million. In addition, approximately $3.5 million was used to
fund the Company's expansion in the form of additional manufacturing and
administrative space and a significant increase in engineering, production and
financial management personnel to support the Company's growth.
 
     Cash and cash equivalents at March 31, 1999 were approximately $3.9 million
compared to approximately $3.8 million at December 31, 1998. As of March 31,
1999, the Company's working capital was approximately $0.5 million as compared
to $2.3 million at December 31, 1998. The decrease was primarily associated with
cash used in operations during the quarter ended March 31, 1999, as detailed in
the Company's Consolidated Statements of Cash Flows, and the settlement of
litigation previously discussed. For the three months ended March 31, 1999,
capital expenditures were approximately $0.4 million. Future capital
expenditures will depend on several factors including timing of introductions of
new products and enhancements to existing products as well as continued product
development efforts.
 
     The Company entered into an accounts receivable agreement dated December
28, 1998 with EAB Leasing Corp. ("EAB") providing for the sale of the Company's
accounts receivable to EAB. The aggregate maximum amount the Company can borrow
at one time under this agreement is $2.9 million through June 28, 1999 with a
maximum of $2.0 million available on a monthly basis. In connection with this
agreement, the Company has granted EAB a security interest in its accounts,
accounts receivable, contract rights, equipment, chattel paper, general
intangibles, instruments, inventory and all proceeds of the foregoing The annual
interest rate equivalent charged to the Company under this agreement is the
prime rate plus 1.5%. The agreement also provides that the Company pay a minimum
monthly service fee in the amount of $10,000. As of March 31, 1999, there were
no borrowings outstanding under this agreement.
 
     On March 31, 1999, the Company entered into a financing agreement with
certain investors pursuant to which the Company agreed to issue $3.0 million of
9% Secured Bridge Notes due January 17, 2000. On April 6, 1999, the Company
issued the Secured Bridge Notes. These notes are collateralized by all of the
Company's assets and are subordinated to the accounts receivable agreement with
EAB and the proposed line of credit agreement with Emergent Business Capital
described below. In connection with the financing agreement, the Company issued
warrants to purchase an aggregate of 550,000 shares of the Company's common
stock at an exercise price of $2.75 per share, the market price of the stock on
the date prior to the issuance of the warrants. The warrants have a term of five
years from the date of issuance. The Company has agreed to register the warrants
and the common stock issuable upon exercise thereof under the Securities Act of
1933.
 
     On March 31, 1999, the Company entered into a Letter of Commitment with
Emergent Business Capital pursuant to which Emergent Business Capital would
provide the Company with a $5.0 million line of credit (the "Emergent Line of
Credit"). Under the Emergent Line of Credit, the Company would be entitled to
borrow up to $5.0 million, subject to certain borrowing limitations based on
amounts of the Company's accounts receivable and other assets. The Emergent Line
of Credit will have a term of two years. All indebtedness outstanding under the
Emergent Line of Credit Agreement will be collateralized by substantially all of
the Company's assets.
 
                                       12
<PAGE>   15
 
     On April 19, 1999, the Company filed a registration statement with the
Securities and Exchange Commission relating to a public offering of $20.0
million of Convertible Subordinated Notes. The Convertible Subordinated Notes
will be convertible into shares of the Company's common stock. The Company will
grant the underwriter a 30-day option to purchase up to an additional $3.0
million of Convertible Subordinated Notes for the purpose of covering
over-allotments. C.E. Unterberg, Towbin is the underwriter of this offering. The
Company intends to use the net proceeds from this offering to repay indebtedness
and for working capital and general corporate purposes.
 
     The Company anticipates that its existing cash and cash equivalents and
anticipated cash flow from operations together with funds provided from the
above mentioned financing agreements will be sufficient to fund the Company's
working capital and capital expenditure requirements for at least the next 12
months. The anticipated cash flow from operations assumes the Company achieves a
level of sales that is significantly higher than those of earlier quarters. In
the event that these sales levels are not attained, the Company will be required
to supplement its working capital with additional funding in order to meet
shorter or longer term liquidity needs. There can be no assurance, however, that
the Company will achieve the assumed or increased sales levels or that adequate
additional financing will be available when needed or, if available, on terms
acceptable to the Company.
 
YEAR 2000 READINESS DISCLOSURE
 
  Year 2000 Issues and State of Readiness
 
     The Company is aware of the issues associated with existing
computer-controlled systems properly recognizing and processing information
relating to dates in and after the Year 2000. Systems that cannot adequately
process dates beyond the year 1999 could generate erroneous data or cause a
system to fail. The problem may affect internal information technology ("IT")
systems used by the Company for product development, accounting, distribution
and planning. The problem may also affect non-IT embedded systems such as
building security systems, machine controllers, and other equipment. The Company
has made a preliminary assessment of its Year 2000 readiness for its operations
relating to (1) the Company's software products, (2) the Company's internal IT
and non-IT systems and (3) third party customers, vendors and others with whom
the Company does business.
 
     The Company believes that the current versions of its products (ASA 312
Network Information Computer software versions 3.500 and later and Network
Access Agents) are Year 2000 compliant. The Company's products use time and
dates only as a "time stamp" for data-logging events, for file dates, for
display of elapsed time, and setting the test duration. The products' internal
system calendar years are entered as a 2-digit number in the range of "95" (for
1995) through "94" (for 2094). Since there is never a reason for "back dating,"
this provides an unambiguous means of entry for the year. The date is displayed
in a 4-digit year format (e.g., 01-Jan-1998) to enhance understandability. Based
on the foregoing, it is not expected that the Company's current products will be
adversely affected by date changes in the Year 2000.
 
     Certain customers of the Company may be running earlier versions of the
Company's products that are not Year 2000 compliant. These earlier software
versions, like the compliant versions, rely on time and dates only as a "time
stamp" for data-logging events, for file dates, for display of elapsed time, and
setting the test duration and do not prohibit function of the equipment. The
Company has made its policy statement regarding its product line available on
the Internet as well as providing written copies at customer request. This
alerts customers to the noncompliance of earlier versions of the ASA 312
software. Of these earlier versions, 3.100 through prior to 3.500 partially
comply, although if allowed to run past 1999 and into January 1, 2000, the date
after power-down will be incorrectly set to 1980. Instructions regarding
correcting this are provided both on the Internet and via customer inquiry. This
leaves only versions lower than 3.100 which are truly non-compliant. The
suggested solution for these products is an upgrade to a more recent, compliant
version of the software at the cost of the Company. The Company has evaluated
the number of customers still operating with these non-compliant versions. Of
these customers, it is estimated that approximately half have already received
the desired upgrades. As of March 26, 1999, the cost to upgrade the remaining
units is estimated to
 
                                       13
<PAGE>   16
 
total $36,000 which would not have a material adverse impact on the Company's
business, operating results or financial condition.
 
     With respect to IT systems, the Company has inventoried its internal
software and electronic hardware devices currently in use to determine which of
these devices rely on a valid date in order to function. Of these, certain
operating, accounting, and telephony systems were identified as critical.
Resources required to make these systems Year 2000 compliant were evaluated
based on availability and cost of the related upgrade. In general, the Company
is obtaining Year 2000 compliant versions from third party software vendors and
modifying these systems, which the Company expects to complete during the second
quarter of 1999. Total costs of such remediation are estimated at $21,000.
Non-IT embedded systems, consisting primarily of security systems, the emergency
power generator, HVAC controls and elevators have also been reviewed. These
systems were found to be year 2000 compliant.
 
     The Company also has certain key relationships with suppliers and
subcontractors. We are preparing to contact certain third-party suppliers of key
components or services regarding their Year 2000 readiness. Following completion
of contacting these vendors, the Company will be better able to make a complete
evaluation of the costs associated with identifying alternative vendors if the
need arises.
 
  Risks Associated with Year 2000 and Contingency Plan
 
     Based on information currently available to the Company, the Company
believes that the most reasonably likely worst case Year 2000 scenarios with
respect to the Company relate to the potential failure of third party suppliers,
subcontractors and customers to become Year 2000 compliant. The inability of
suppliers and subcontractors to complete their Year 2000 remediation processes
in a timely fashion could result in delays in introducing new products, reduced
sales of new or existing products and disruptions in any future strategic
relationships. The failure of these entities to become Year 2000 compliant could
in turn have a material and adverse effect on the Company's results of
operations and financial condition. The effect of non-compliance by suppliers,
subcontractors and customers is not reasonably quantifiable.
 
     The Company believes that the purchasing patterns of customers and
potential customers may be affected by Year 2000 issues. Many companies are
expending significant resources to correct or upgrade their current systems for
Year 2000 compliance. These expenditures may result in reduced funds available
to purchase testing products such as those offered by the Company. This could
have a material adverse effect upon the Company's business, operating results
and financial condition.
 
     The Company anticipates that generally throughout the computer industry
substantial litigation may be brought against software vendors of non-compliant
operating environments. The Company believes that any such claims against the
Company, with or without merit, could have a material adverse effect on the
Company's business, operating results and financial condition.
 
     The Company currently does not have any Year 2000 contingency plan. The
most significant aspect of any such plan would involve the ability of the
Company to identify alternative vendors if the need arose. The Company believes
it has that ability.
 
     The Company is not aware of any Year 2000 compliance problems relating to
its current products or its IT or non-IT systems that would have a material
adverse effect on the Company's business, results of operations and financial
condition. However, the Company may discover Year 2000 problems in its products
that will require substantial revisions. In addition, third-party software or
hardware incorporated into the Company's products and material IT and non-IT
systems may need to be revised or replaced, all of which could be time consuming
and expensive. If material Year 2000 problems are discovered, the failure of the
Company to fix its products or fix or replace third-party software, third party
software incorporated into its products and in its IT systems could result in
lost revenues, increased operating costs, the loss of customers and other
business interruptions, any of which could have a material adverse effect on the
Company's business, results of operations and financial conditions.
 
                                       14
<PAGE>   17
 
  Expenses Related to Year 2000 Compliance
 
     The total cost of the Year 2000 preparedness effort is funded through
operating cash flows and the Company is expensing these costs. The Company has
not established any specific reserves for these costs. The Company has not
incurred significant expense in becoming Year 2000 compliant as both the
majority of our product software and the infrastructure of our internal systems
were developed after the Year 2000 risks were realized. Future costs related to
Year 2000 compliance are not expected to have a material adverse effect on the
Company's results of operations or financial condition. However, the Company may
experience serious unanticipated negative consequences and/or material costs
caused by undetected errors or defects in the technology used in its internal
systems, which are composed predominantly of third party software and hardware
technology with embedded software, and the Company's own products.
 
                                       15
<PAGE>   18
 
                                    PART II
 
                               OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS:
 
     As of April 9, 1998, 23 class action complaints (which were subsequently
consolidated into a single action) for violations of the Federal Securities Laws
during certain periods in 1997 and 1998 had been filed in the United States
District Court for the Middle District of Florida, on behalf of purchasers of
our Common Stock. The complaints named as defendants the Company, Bryan J. Zwan,
the Company's Chairman, Steven H. Grant, the Company's Executive Vice President,
Finance, Chief Financial Officer and Secretary, and other former corporate
officers. The complaints allege that the Company and certain officers during the
relevant time period violated Sections 10(b) and 20(a) of the Securities
Exchange Act by, among other things, issuing to the investing public false and
misleading financial statements and press releases concerning the Company's
revenues, income and earnings, which artificially inflated the price of our
Common Stock.
 
     On July 23, 1998, the Company entered into a memorandum of understanding
for the settlement of these class action complaints. In late October 1998, a
Stipulation of Settlement was filed with the court and on December 21, 1998, the
court preliminarily approved the settlement. The settlement consists of $4.3
million in cash, to be paid to plaintiffs primarily by a claim on the Company's
directors and officers liability insurance policy, and the issuance of up to 1.8
million shares of Common Stock. The Company recorded a one-time charge of $8.5
million during 1998 as a result of the settlement. On April 30, 1999, the court
granted final approval of the settlement. The settlement is subject to appeal.
 
     In addition, the Company is aware of a related informal investigation by
the Securities and Exchange Commission, which was commenced in March 1998. The
Company believes that the investigation relates to the circumstances underlying
the restatement of its financial results. The investigation is ongoing. The
Company is unable to predict the outcome of the investigation. There can be no
assurance that such investigation will not have a material adverse effect on the
business, financial condition or results of operations of the Company.
 
     On November 5, 1997, Hugh Brian Haney ("Plaintiff") an early stage
investor, commenced an action in the United States District Court for the
Southern District of Ohio (the "Court") against Dr. Bryan J. Zwan, the Company's
Chairman of the Board and then Chief Executive Officer, and the Company
("Defendants"). An amended complaint filed December 15, 1997 alleged violations
of Section 10(b) of the Securities Exchange Act, violations of state corporation
statutes, and various common law violations by Defendants in connection with
Plaintiff's sale to the Company's predecessor in November 1995, pursuant to a
previously granted option exercisable by Dr. Zwan and/or the Company's
predecessor, of 4,900 shares of stock in the Company's predecessor, an amount
equivalent to 19,215,686 shares of the Company's common stock. The amended
complaint sought, among other things, (1) rescission of the sale of the shares
transferred by Plaintiff and (2) damages of $235 million, together with
interest. On October 20, 1998, the Company and Dr. Zwan entered into an
agreement with Plaintiff to settle the action. The settlement agreement
provided, among other things, for dismissal of the action with prejudice, for a
$500,000 payment by the Company to Plaintiff for his attorneys' fees and granted
Plaintiff an option, for 10 years, to purchase for $1 per share 2 million shares
of Dr. Zwan's stock in the Company. Pursuant to that agreement, the action was
dismissed with prejudice on November 13, 1998. The Company recorded a $3.0
million charge to earnings consisting of the cash payment and the valuation of
the options upon settlement.
 
     On April 21, 1999, Plaintiff filed an action in the Court against the
Company and Dr. Zwan alleging that the terms of the settlement agreement had
been breached and requesting that the settlement agreement be specifically
enforced and that damages in excess of $75,000 be awarded, or, alternatively,
that the settlement agreement be set aside. The Company believes that it has
fulfilled its obligations under the settlement agreement and that the claims
made by Plaintiff against the Company in this action are without merit. The
parties are currently in discussion regarding a possible settlement of this
action. There can be no assurance,
 
                                       16
<PAGE>   19
 
however, that the Company will succeed in defending or settling this action or
that the action will not have a material adverse effect on the Company.
 
ITEM 6.  EXHIBIT AND REPORTS ON FORM 8-K
 
     (a) Exhibits
 
EXHIBIT   DESCRIPTION
 
27.0 -- Financial Data Schedule (for SEC use only).
 
     (b) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Report.
 
                                       17
<PAGE>   20
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
 
                                          Digital Lightwave, Inc.
 
                                          By:      /s/ GERRY CHASTELET
                                            ------------------------------------
                                            Gerry Chastelet
                                            Chief Executive Officer and
                                              President
                                            (Principal Executive Officer)
 
                                            Date: May 14, 1999
 
                                          By:      /s/ STEVEN H. GRANT
                                            ------------------------------------
                                            Steven H. Grant
                                            Executive Vice President -- Finance
                                              & Chief Financial Officer
                                            (Principal Financial and Accounting
                                              Officer)
 
                                            Date: May 14, 1999
 
                                       18