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PHYSIO-CONTROL INTERNATIONL CORPORATION 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
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(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- - -
Act of 1934
FOR THE QUARTER ENDED JUNE 30, 1996
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
- - -
Act of 1934
COMMISSION FILE NUMBER: 0-27242
PHYSIO-CONTROL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 91-1673799
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11811 WILLOWS ROAD N.E.
REDMOND, WASHINGTON 98052
(Address of principal executive offices)
(206) 867-4000
(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
_ _
As of July 19, 1996, there were 16,766,502 shares of the Registrant's
Common Stock outstanding.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 2
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FORM 10-Q
JUNE 30, 1996
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INDEX PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
. Consolidated Statements of Operations for the three months
ended June 30, 1996 and 1995 and for the six months ended
June 30, 1996 and 1995.......................................................3
. Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995........................................................4
. Consolidated Statement of Changes in Stockholders' Equity
for the six months ended June 30, 1996.......................................5
. Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and 1995.................................................6
. Notes to Consolidated Financial Statements...................................7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...........................................................9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings..............................................................12
ITEM 4. Submission of Matters to a Vote of Security Holders............................12
ITEM 6. Exhibits and Reports on Form 8-K...............................................12
</TABLE>
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 3
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)
.......................................................................................................
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $42,923 $36,817 $85,678 $73,538
Cost of sales 20,715 16,993 42,147 34,864
-------------- ------------- ------------- -------------
Gross profit 22,208 19,824 43,531 38,674
-------------- ------------- ------------- -------------
Research and development 4,569 4,740 9,207 8,792
Sales and marketing 8,042 7,677 15,837 14,198
General and administrative 3,077 2,643 6,119 6,348
Management consulting fees -- 984 -- 1,967
-------------- ------------- ------------- -------------
Operating expense 15,688 16,044 31,163 31,305
-------------- ------------- ------------- -------------
Interest expense (448) (716) (874) (1,537)
Interest income 2 51 10 119
Other expense, net (184) (314) (468) (355)
-------------- ------------- ------------- -------------
Income before income taxes 5,890 2,801 11,036 5,596
Income tax expense (2,003) (979) (3,753) (1,956)
-------------- ------------- ------------- -------------
Net income $3,887 $1,822 $7,283 $3,640
-------------- ------------- ------------- -------------
Net earnings per common and
common equivalent shares $0.22 $0.41
Weighted average number of common
and common equivalent shares
outstanding 17,934,734 17,901,956
Pro forma net earnings per common
and common equivalent shares $0.12 $0.24
Pro forma weighted average number
of common and common equivalent
shares outstanding 15,759,194 15,406,218
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</TABLE>
...........................................................................
The accompanying notes are an integral part of these financial statements.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 4
<TABLE>
<CAPTION>
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CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
..............................................................................................................
June 30, 1996 December 31, 1995
----------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $4,784 $4,575
Accounts receivable, net 32,577 27,130
Inventories 30,894 30,208
Prepaid income taxes --- 2,637
Prepaid expenses 1,414 1,044
Deferred income taxes 2,790 2,790
----------------- -----------------
Total current assets 72,459 68,384
Noncurrent Assets
Debt issue costs 128 151
Other assets 1,852 1,127
Deferred income taxes 3,124 3,124
Property, plant and equipment, net 8,947 5,714
----------------- -----------------
Total assets $86,510 $78,500
----------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $10,076 $10,109
Accrued liabilities 17,778 23,103
Income taxes payable 189 ---
----------------- -----------------
Total current liabilities 28,043 33,212
----------------- -----------------
Noncurrent Liabilities
Long-term debt 22,344 16,211
Unfunded pension obligations 2,096 2,396
----------------- -----------------
Total noncurrent liabilities 24,440 18,607
----------------- -----------------
Commitments and contingencies (Note 5)
Stockholders' Equity
Preferred stock, par value $0.01 per share, 5,000,000
shares authorized, no shares issued or outstanding --- ---
Common stock, voting, par value $0.01 per share, 40,000,000 shares
authorized; 16,766,502 shares issued and outstanding 168 168
Additional paid-in capital 23,797 23,615
Retained earnings 10,042 2,759
Equity adjustment from foreign currency translation 20 139
----------------- -----------------
Total stockholders' equity 34,027 26,681
----------------- -----------------
Total liabilities and stockholders' equity $86,510 $78,500
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</TABLE>
...........................................................................
The accompanying notes are an integral part of these financial statements.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 5
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(dollars in thousands, except share data)
...............................................................................................................................
(Unaudited)
Equity
Common Stock Adjustment
(Voting) Additional from Foreign
------------------------ Paid-In Retained Currency
Shares Dollars Capital Earnings Translation Total
---------- ------- ------------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 16,754,909 $168 $23,615 $2,759 $139 $26,681
Issuance of common shares 5,293 --- 106 --- --- 106
Stock issued upon exercise
of options 6,300 --- 76 --- --- 76
Equity adjustment from
foreign currency translation --- --- --- --- (119) (119)
Net income --- --- --- 7,283 --- 7,283
---------- ------- ------------- -------- ------------ -----------
BALANCE AT JUNE 30, 1996 16,766,502 $168 $23,797 $10,042 $20 $34,027
- - ---------------------------------------------- ------- ------------- -------- ------------ -----------
</TABLE>
............................................................................
The accompanying notes are an integral part of these financial statements.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 6
<TABLE>
<CAPTION>
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
...............................................................................................................
(Unaudited)
Six Months Ended June 30,
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $7,283 $3,640
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and amortization 630 791
Decrease (increase) in receivables (5,447) 19,223
Decrease (increase) in inventories (686) 2,550
Decrease in prepaid income taxes 2,637 ---
Increase in prepaid expense and other assets (1,181) (186)
Decrease in accounts payable (33) (3,200)
Decrease in accrued and other liabilities (5,625) (4,455)
Increase (decrease) in income taxes payable 189 (5,989)
------------ -------------
Net cash provided by (used in) operating activities (2,233) 12,374
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of net assets, net of cash acquired --- (2,044)
Purchases of property, plant and equipment (3,754) (1,839)
------------- -------------
Net cash used in investing activities (3,754) (3,883)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock 182 ---
Repayment of term debt --- (1,131)
Borrowings under revolving debt 35,924 9,000
Repayments on revolving debt (29,791) (18,250)
------------- -------------
Net cash provided by (used in) financing activities 6,315 (10,381)
------------ -------------
Effect of exchange rate changes (119) 7
------------- ------------
Increase (decrease) in cash and cash equivalents 209 (1,883)
Cash and cash equivalents at beginning of period 4,575 5,229
------------ ------------
Cash and cash equivalents at end of period $4,784 $3,346
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</TABLE>
............................................................................
The accompanying notes are an integral part of these financial statements.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 7
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(dollars in thousands)
................................................................................
(Unaudited)
NOTE 1. GENERAL
The consolidated financial statements of Physio-Control International
Corporation (the "Company") at June 30, 1996 and for the three and six month
periods then ended are unaudited and reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results for the
interim period. The consolidated financial statements should be read in
conjunction with the Company's Annual Report to Shareholders incorporated by
reference on Form 10-K for the fiscal year ended December 31, 1995. The results
of operations for the three and six month periods ended June 30, 1996 are not
necessarily indicative of the results for the entire fiscal year ending December
31, 1996.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Earnings Per Share
Net earnings per common and common equivalent share is computed using the
weighted average number of shares outstanding adjusted for the incremental
shares attributed to outstanding options to purchase common stock. Fully diluted
net earnings per common and common equivalent share is not materially different
from primary net earnings per common and common equivalent share and is
therefore not presented.
As a result of the changes in the Company's capital structure effective with
the initial public offering in December 1995, historical earnings per common
share amounts would not be meaningful and therefore, have not been presented in
these financial statements for the three and six month periods ended June 30,
1995.
Pro forma Earnings Per Share
For purposes of calculating pro forma net earnings per share, the weighted
average number of shares outstanding has been calculated giving retroactive
effect to the equity recapitalization described in Note 11 of the Company's
Annual Report to Shareholders incorporated by reference on Form 10-K for the
fiscal year ended December 31, 1995.
Recent Accounting Pronouncement
During October 1995, the Financial Accounting Standards Board issued FAS 123,
"Accounting for Stock-Based Compensation", which established financial
accounting and reporting standards for stock-based employee compensation plans
and for the issuance of equity instruments to acquire goods and services from
nonemployees. The Company has not determined its method of adoption for the
fiscal year ended December 31, 1996.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 8
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NOTE 3. INVENTORIES
Inventories consist of the following:
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June 30, 1996 December 31, 1995
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Finished products $19,942 $16,504
Purchased parts and assemblies in process 6,967 7,884
Service parts 8,700 9,507
-------------------- -----------------
35,609 33,895
Less-Inventory allowances (4,715) (3,687)
-------------------- -----------------
Total inventories $30,894 $30,208
-------------------- -----------------
</TABLE>
NOTE 4. STOCK OPTIONS
On January 30, 1996, the Company authorized the granting of 474,000 stock
options with an exercise price of $20.50 to 188 employees under the 1996 Stock
Incentive Plan. All option grants were at the fair-market value on that date and
vest in equal installments over a five-year period. In addition, on May 23,
1996, the Company authorized the granting of 24,000 stock options with an
exercise price of $19.75 to certain other employees. All option grants were at
the fair-market value on that date and vest in equal installments over a five
year period.
NOTE 5. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company has been named as a defendant in several product and employment
lawsuits. The Company has provided for its estimated exposure, including costs
of litigation with respect to all liability claims. The Company's estimates of
these expenses are based primarily on historical claims experience. The Company
expects the cash amounts related to these accruals to be paid out over the next
several years. The majority of the costs associated with defending and
disposing of these suits are covered by insurance. The Company's estimates of
insurance recoveries are based on existing deductibles and coverage limits.
Further, product liability claims may be asserted in the future for events not
currently known by management. Although the ultimate liability from these
potential claims cannot be ascertained at June 30, 1996, management does not
anticipate that any related settlement, after consideration of potential
insurance recovery, would have a material adverse effect on the Company's
financial position, operating results or cash flows.
On November 13, 1995, the Company initiated litigation in Washington State Court
against Heartstream, Inc. ("Heartstream"), a company recently formed to develop
defibrillators and certain individuals who were formally employed by the Company
and are founders of and current employees of Heartstream. The Company's claims
are based on its belief that Heartstream and such individuals have, among other
things, misappropriated certain of the Company's intellectual property and that
such individuals have breached contractual obligations to the Company. The
Company received an answer to its complaint from Heartstream during December
1995. In its answer, Heartstream denies the Company's claims and alleges
certain counterclaims against the Company for, among other things,
monopolization of the industry and tortuous interference with business
opportunities and seeks monetary damages in excess of $10 million. The parties
are currently conducting discovery in this litigation. If the Company does not
prevail in this litigation or otherwise successfully resolve its claims, its
ability to design and market certain future products may be adversely affected.
In addition, if a court were to find in favor of Heartstream on its
counterclaims, the Company could be held liable for significant damages.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
The Company reported worldwide sales of $42.9 million during the second quarter
of 1996, reflecting an increase of $6.1 million or 17% from the comparable 1995
period. Domestic sales for the 1996 quarter aggregated $33.2 million, up 30%
from the comparable 1995 quarter; however, international sales totaling $9.7
million were down 14% from 1995 (an unusually large Danish order shipped during
the comparable prior year period). The overall increase in revenue is due to
increased product orders, an increase in service revenue resulting from the
Company's ever increasing installed base, as well as higher sales of supplies
which include disposable and accessory sales.
During the second quarter of 1996, the Company reported product orders of $32.3
million, up $2.6 million or 9% from the comparable 1995 period. The increase in
product orders resulted primarily from domestic market share gains as well as a
strong continuing demand for the Company's LIFEPAK(R) 11 products. In late
December 1995, the Company received clearance from the FDA to market the LIFEPAK
11 defibrillator/pacemaker and began shipping the device during 1996.
Gross profit increased $2.4 million or 12% during the second quarter of 1996
from $19.8 million in the comparable 1995 period to $22.2 million. As a
percentage of sales, gross profit decreased, from 54% in the comparable prior
year period to 52% during the current period. The decrease in gross margin is
primarily attributed to the Company's aggressive marketing approach aimed at
capturing additional market share as well as a changing product mix.
Research and development ("R&D") expenditures for the second quarter of 1996
decreased 4% to $4.6 million from $4.8 million in the comparable 1995 period.
The decrease was primarily due to a reduction in the use of temporary labor by
the Company during the second quarter of 1996. Other R&D expenses remained
consistent with the comparable 1995 period as the Company continued to develop
new products and conduct ongoing research for the development of future
products.
Selling, general and administrative ("SG&A") expenses in the second quarter of
1996 increased $0.8 million or 8% from the comparable prior year period. The
increase resulted from costs incurred to further develop and expand the
Company's direct sales and service operations in Europe. As a percentage of
sales, however, SG&A expenses decreased from 28% during the comparable 1995
period to 26% during the current quarter as domestic SG&A expenses remained
relatively constant over both periods despite an increase in consolidated
revenues in 1996.
Management consulting fees payable to Bain Capital, Inc. decreased $1.0 million
from the comparable quarter of 1995. The management consulting agreement was
terminated during 1995 and the fees associated with the contract are not
applicable during 1996.
Other expenses decreased $0.4 million to $0.6 million, from $1.0 million during
the comparable 1995 period. The decrease was primarily due to lower interest
expense resulting from (i) reduction of the Company's debt in December 1995, and
(ii) lower interest rates obtained as a result of refinancing the Company's
debt in December 1995.
As a result of the above factors, 1996 second quarter net income was $3.9
million, an increase of $2.1 million, or 113% from the comparable 1995 period.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 10
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SIX MONTHS ENDED JUNE 30, 1996 AND 1995
For the six months ended June 30, 1996, the Company reported worldwide sales of
$85.7 million compared with sales of $73.5 million in the comparable 1995
period, an increase of $12.2 million or 17%. Domestic sales were up $12.4
million while international sales were down slightly ($0.3 million or 1.5%)
from the comparable 1995 period due primarily to an unusually large 1995 Danish
order.
Overall, sales were higher in the current six month period due primarily to
increased demand for the Company's family of LIFEPAK products, an overall
increase in service revenue, and a significant increase in sales of supplies
which include accessories and disposable products.
During the six months ended June 30, 1996, product orders totaled $67.8 million,
an increase of 11% over the comparable prior year period. The increase resulted
from market share gains and strong demand for the LIFEPAK 11 product
(defibrillator introduced in early 1996).
Gross profit increased $4.9 million or 13% for the six month period ended June
30, 1996 to $43.6 million from $38.7 million during the comparable 1995 period.
As a percentage of sales, gross profit decreased from 53% in the prior year
period to 51% in the 1996 period, largely as a result of the Company's
aggressive trade-in programs aimed at increasing market share and changes in
product mix.
R&D expenses for the six months ended June 30, 1996 increased $0.4 million or 5%
over the comparable period in 1995. As a percentage of sales, R&D expenses
declined to 11% in 1996 from 12% in 1995.
SG&A expenses for the first half of 1996 increased over the comparable 1995
period by $1.4 million, or 7%. As a percentage of sales, SG&A expenses decreased
from 28% in the prior year period to 26% in the six months ended June 30, 1996.
The increase is attributable to costs incurred to further develop the Company's
direct sales and service operations in Europe, as well as selling expense
related to higher sales volume in the current six month period.
Management consulting fees payable to Bain Capital, Inc. decreased $2.0 million
from the comparable 1995 period. During 1995, the management consulting
agreement was terminated and the fees associated with the contract are not
applicable in 1996.
Other expenses decreased $0.5 million to $1.3 million during the six months
ended June 30, 1996 from $1.8 million in the comparable 1995 period. This
decrease was primarily due to lower interest expense resulting from (i)
reduction of the Company's debt and (ii) lower interest rates obtained as a
result of refinancing the Company's debt in December 1995.
As a result of the above factors, 1996 net income increased $3.7 million, or
100% from the comparable prior year period, from $3.6 million to $7.3 million
during the six months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1996, the Company used $2.2 million in cash to
finance operations. The use of working capital funds was primarily attributable
to increased sales volume, evidenced by the increase in accounts receivable,
partially offset by the increase in net income.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 11
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Cash used for investing activities for the six months ended June 30, 1996
totaled $3.8 million which relates to capital expenditures. Consistent with the
first quarter of 1996, primary capital expenditures during the current quarter
included purchases of computer equipment, research equipment, and tooling for
new products. The Company currently has no capital commitments outside the
ordinary course of business. The Company's principal working capital
requirements are financing accounts receivable and inventories. At June 30,
1996, the company had net working capital of $44.4 million, including accounts
receivable of $32.6 million, inventories of $30.9 million, accounts payable of
$10.1 million, and other accruals of $17.8 million.
During December 1995, the Company refinanced its existing indebtedness and
entered into the Amended and Restated Credit Agreement ("the Credit Agreement"),
which provides for a revolving credit facility ("the Revolver") not to exceed
$30.0 million. The revolver bears interest, at the Company's option, at either
(i) the lender's base rate (the higher of such lender's prime rate or the
federal funds rate plus 0.5%) or (ii) LIBOR plus 1.0%. Such rates are subject to
increase in the event that the Company does not meet certain leverage and
interest coverage ratios. At June 30, 1996, the average interest rate on amounts
outstanding under the Revolver was 6.25%. The Company's indebtedness under the
Revolver is secured by a first priority interest in and lien on all of the
assets of Physio-Control Corporation ("PCC"), a pledge by the Company on all of
the outstanding common stock of PCC and 65% of the outstanding stock of PCC's
subsidiaries and other guaranties and pledges as defined in the Credit
Agreement. The Credit Agreement includes various affirmative and negative
covenants which require, among other things, that the Company maintain certain
debt to equity and net worth ratios, limitations on capital expenditures,
restrictions on the declaration and payment of dividends and minimum earnings
before income taxes, depreciation and amortization. At June 30, 1996, the
Company had borrowing availability of approximately $10.2 million under the
Revolver and was in compliance with all related loan covenants of the Credit
Agreement.
In addition, the Company has subordinated notes payable to Eli Lilly and Company
totaling $2.5 million which originated in the acquisition of Physio-Control
Corporation and certain foreign operations. Notes with a principal balance
totaling $1.5 million mature on January 31, 2001 and bear interest at LIBOR plus
3.25%. A note with a principal balance of $1.0 million matures November 15,
1998 and bears interest at LIBOR plus 3.0%.
The Company believes that, based upon current levels of operations and
anticipated growth, funds generated from operations, together with other
available sources of liquidity, including borrowings under the Revolver, will be
sufficient over the next twelve months for the Company to make anticipated
capital expenditures and fund working capital requirements.
Approximately 25% of the Company's sales in the first half of 1996 were to
international customers and the Company expects that sales to international
customers will continue to represent a material portion of its sales. Certain
of the Company's international receivables are denominated in foreign
currencies, and exchange rate fluctuations impact the carrying value of these
receivables. Historically, fluctuations in foreign currency exchange rates have
not had a material effect on the Company's results of operations and the Company
does not expect such fluctuations to be material in the foreseeable future.
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PHYSIO-CONTROL INTERNATIONAL CORPORATION 12
PART II. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
There have been no material changes in the litigation reported in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, filed on March
29, 1996 except as reflected in the discussion under Note 5 of the Notes to
Consolidated Financial Statements in Part I, Item 1, above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders held on May 23, 1996, the
following actions were taken:
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1. Election of Nominated Directors: For: 14,325,246 Withheld: 182,760
---------- -------
2. Ratification of Price Waterhouse
as Independent Auditors For: 14,503,748 Against: 1,545 Abstain: 2,713
---------- ----- -----
</TABLE>
No other matters were submitted to or actions taken by the shareholders at said
Annual Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit No. Description of Exhibit
- - ---------- ----------------------
27.1 Financial Data Schedule
No reports on Form 8-K were filed during the quarter ended June 30, 1996.
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 to sign on behalf of the registrant and as
the principal financial officer thereof.
Dated: August 12, 1996
PHYSIO-CONTROL INTERNATIONAL CORPORATION
By /s/ Joseph J. Caffarelli
-------------------------------------
Joseph J. Caffarelli
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,784
<SECURITIES> 0
<RECEIVABLES> 32,577
<ALLOWANCES> 0
<INVENTORY> 30,894
<CURRENT-ASSETS> 72,459
<PP&E> 8,947
<DEPRECIATION> 0
<TOTAL-ASSETS> 86,510
<CURRENT-LIABILITIES> 28,043
<BONDS> 0
0
0
<COMMON> 168
<OTHER-SE> 33,859
<TOTAL-LIABILITY-AND-EQUITY> 86,510
<SALES> 85,678
<TOTAL-REVENUES> 85,678
<CGS> 42,147
<TOTAL-COSTS> 42,147
<OTHER-EXPENSES> 31,163
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 874
<INCOME-PRETAX> 11,036
<INCOME-TAX> 3,753
<INCOME-CONTINUING> 7,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,283
<EPS-PRIMARY> .41
<EPS-DILUTED> 0
</TABLE>
