<PAGE>
SECURITIES AND EXCHANGE COMMISSIONSECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number: 0-21393
SEACHANGE INTERNATIONAL, INC.
(Exact name of registration as specified in its charter)
Delaware 04-3197974
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
124 Acton Street, Maynard, MA 01754
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (508) 897-0100
________________________________________________________________________________
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 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 _____ NO __X__
The number of shares outstanding of the registrant's Common Stock on September
30, 1996 was 9,632,356.
________________________________________________________________________________
1
Exhibit Index at Page 13
<PAGE>
SEACHANGE INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet
at December 31, 1995 and September 30, 1996 .................... 3
Consolidated Statement of Operations
Three and Nine months ended September 30, 1996 and 1995 ........ 4
Consolidated Statement of Cash Flows
Three and Nine months ended September 30, 1996 and 1995 ........ 5
Notes to Consolidated Financial Statements ..................... 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations ............... 8-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ....................... 11
SIGNATURES ............................................................... 12
EXHIBIT INDEX ............................................................ 13
EXHIBIT .................................................................. 14
</TABLE>
2
<PAGE>
Item 1: Consolidated Financial Statements
SEACHANGE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share-related data)
<TABLE>
<CAPTION>
Pro forma
December 31, September 30 September 30,
1995 1996 1996
-------- -------- --------
<S> <C> <C> <C>
Assets (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 6,184 $ 2,049 $ 26,449
Accounts receivable, net of allowance for doubtful accounts
of $40 at December 31, 1995 and $173 at September 30, 1996 3,335 5,394 5,394
Inventories 2,439 7,506 7,506
Prepaid expenses 28 109 109
Deferred income taxes 151 597 597
-------- -------- --------
Total current assets 12,137 15,655 40,055
Property and equipment, net 1,433 3,931 3,931
Other assets 25 577 577
======== ======== ========
$ 13,595 $ 20,163 $ 44,563
======== ======== ========
Liabilities, Redeemable Convertible Preferred Stock and
Stockholders' Equity
Current liabilities:
Accounts payable $ 3,140 $ 5,849 $ 5,849
Accrued expenses 1,935 1,440 1,440
Customer deposits 2,082 4,249 4,249
Deferred revenue 767 1,600 1,600
Income taxes payable 720 217 217
-------- -------- --------
Total current liabilities 8,644 13,355 13,355
-------- -------- --------
Series B redeemable convertible preferred stock, $.01 par value;
1,000,000 shares of preferred stock authorized; 650,487 shares
designated, issued and outstanding at December 31, 1995 and
September 30, 1996, at issuance price, net of issuance costs; none
outstanding on a pro forma basis at September 30, 1996 4,008 4,008 --
-------- -------- --------
Stockholders' Equity:
Series A convertible preferred stock, $.01 par value;
1,000,000 shares of preferred stock authorized: 30,000 shares
designated, 11,808 shares issued at December 31, 1995
and September 30, 1996: at issuance price; none outstanding
on a pro forma basis at September 30, 1996 -- -- --
Common stock, $.01 par value; 15,000,000 shares authorized; 9,625,740
shares, 9,632,356 shares and 13,703,212 shares issued at December 31,
1995, September 30, 1996 and September 30, 1996 on a pro
forma basis, respectively 96 96 137
Additional paid-in capital 374 415 28,782
Retained earnings 1,272 4,820 4,820
Treasury stock, 424,950 shares of common at December 31, 1995;
856,200 shares of common and 1,286 shares of Series A convertible
preferred at September 30, 1996 and on a pro forma basis at
September 30,1996, respectively, at cost (4) (2,531) (2,531)
Notes receivable from stockholders (795) -- --
-------- -------- --------
Total stockholders' equity 943 2,800 31,208
-------- -------- --------
$ 13,595 $ 20,163 $ 44,563
======== ======== ========
</TABLE>
3
<PAGE>
SEACHANGE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited; In thousands, except share-related data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------- -------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Systems $ 5,340 $ 11,738 $ 16,355 $ 34,644
Services 281 1,188 843 2,636
----------- ----------- ----------- -----------
5,621 12,926 17,198 37,280
----------- ----------- ----------- -----------
Cost of revenues:
Systems 3,598 6,665 10,650 21,095
Services 480 1,055 1,029 2,871
----------- ----------- ----------- -----------
4,078 7,720 11,679 23,966
----------- ----------- ----------- -----------
Gross profit 1,543 5,206 5,519 13,314
----------- ----------- ----------- -----------
Operating expenses:
Research and development 626 1,256 1,673 3,242
Selling and marketing 356 1,125 1,137 3,035
General and administrative 234 648 635 1,510
----------- ----------- ----------- -----------
1,216 3,029 3,445 7,787
----------- ----------- ----------- -----------
Income from operations 327 2,177 2,074 5,527
Interest income, net 11 37 58 137
----------- ----------- ----------- -----------
Income before income taxes 338 2,214 2,132 5,664
Provision for income taxes 125 788 790 2,116
=========== =========== =========== ===========
Net income $ 213 $ 1,426 $ 1,342 $ 3,548
=========== =========== =========== ===========
Net income per share $ 0.02 $ 0.12 $ 0.11 $ 0.31
=========== =========== =========== ===========
Weighted average common shares and
equivalent common shares outstanding 12,207,985 11,590,450 12,003,464 11,587,933
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
SEACHANGE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH FLOWS
(Unaudited; In thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------
1995 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,342 $ 3,548
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 146 1,022
Inventory valuation allowance -- 794
Compensation expense associated with stock options -- 36
Deferred income taxes 10 (446)
Changes in assets and liabilities:
Accounts receivable (2,199) (2,059)
Inventories (1,358) (8,107)
Prepaid expenses and other assets 6 (91)
Accounts payable 433 2,709
Accrued expenses 1,383 (695)
Customer deposits (843) 2,167
Deferred revenue 316 833
Income taxes payable 577 (503)
------- -------
Net cash used in operating activities (187) (792)
------- -------
Cash flows from investing activities
Purchase of software -- (450)
Purchases of property and equipment (311) (1,166)
------- -------
Net cash used in investing activities (311) (1,616)
------- -------
Cash flows from financing activities
Repayment of notes payable (8) --
Proceeds from issuance of common stock 7 5
Purchase of treasury stock -- (2,022)
Repayments of note receivable from stockholders -- 290
------- -------
Net cash used in financing activities (1) (1,727)
------- -------
Net decrease in cash and cash equivalents (499) (4,135)
Cash and cash equivalents, beginning of period 871 6,184
------- -------
Cash and cash equivalents, end of period $ 372 $ 2,049
------- -------
Supplemental disclosure of noncash activity:
Transfer of items originally classified as inventories
to fixed assets $ 46 $ 2,246
Purchase of treasury stock in lieu of cash payment
of notes receivable from stockholders -- $ 505
</TABLE>
5
<PAGE>
SEACHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED; IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. The Company
believes that the unaudited consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments), necessary
for a fair presentation of the Company's financial position, results of
operations and cash flows at the dates and for the periods indicated. The
results of operations for the three-month and nine-month periods ended
September 30, 1996 are not necessarily indicative of results expected for
the full fiscal year or any other future periods. The unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes for the six months
ended June 30, 1996 and for the year ended December 31, 1995, included in
the Company's Registration Statement on Form S-1 (No. 333-12233) filed on
September 18, 1996, as amended.
Unaudited Pro Forma Information
The unaudited pro forma information at September 30, 1996 included in the
unaudited consolidated balance sheet reflects the issuance of 1,810,000
shares of the Company's common stock in exchange for $24,400, net of
estimated stock issuance costs, in connection with the closing of the
Company's initial public offering on November 8, 1996. The unaudited pro
forma information also reflects the automatic conversion of the Series A
and Series B preferred stock into 2,260,856 shares of common stock that
occurred upon the closing of the Company's initial public offering.
2. NET INCOME PER SHARE
Net income per share was determined by dividing net income by the weighted
average number of common shares and common share equivalents outstanding
during the period. Common share equivalents are comprised of common stock
options and convertible preferred stock. Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83, common share
equivalents issued at prices below the initial public offering price in the
twelve months preceding the initial public offering have been included in
the calculation for all periods presented.
3. COMMON STOCK
On September 6, 1996, the Board of Directors authorized a 3-for-2 stock
split of the Company's common stock, which became effective on October 30,
1996. All shares of common stock, common stock options and per share
amounts included in the accompanying unaudited consolidated financial
statements have been adjusted to give retroactive effect to the stock split
for all periods presented.
6
<PAGE>
SEACHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED; IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- -------------
<S> <C> <C>
Components and assemblies $ 2,261 $ 5,403
Finished products 178 2,103
--------- ---------
$ 2,439 $ 7,506
========= =========
</TABLE>
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES. The Company's systems revenues consist of sales of its
digital video insertion products. Systems revenues increased by 119.8% to
$11,738,000 for the quarter ended September 30, 1996, from $5,340,000 in the
comparable quarter in 1995. Systems revenues increased by 111.8% to $34,644,000
for the nine-month period ended September 30, 1996, from $16,355,000 in the
comparable period in 1995. The increased systems revenues reflect the Company's
introduction, in January 1996, of the second generation of its digital video
insertion system which significantly improved the scalability and performance of
the Company's products, and the subsequent increase in the number of systems
sold.
The Company's services revenues consist of fees for installation,
training, product maintenance and technical support services. The Company's
services revenues increased by 322.8% to $1,188,000 for the quarter ended
September 30, 1996, from $281,000 in the comparable quarter in 1995. The
Company's services revenues increased by 212.7% to $2,636,000 for the nine-month
period ended September 30, 1996, from $843,000 in the comparable period in 1995.
These increases in services revenues primarily resulted from the increase in
product sales and renewals of maintenance and support contracts related to the
growing installed base of systems.
For the quarter and nine-month periods ended September 30, 1996 and 1995,
certain customers accounted for more than 10% of the Company's total revenues.
Individual customers accounted for 35.9% and 11.5% of total revenues in the
quarter ended September 30, 1996 and 44.6%, 15.8% and 15.8% of total revenues in
the quarter ended September 30, 1995. Individual customers accounted for 30.2%,
12.6%, and 11.0% of total revenues in the nine-month period ended September 30,
1996 and 30.1%, 27.4%, and 13.2% of total revenues in the nine-month period
ended September 30, 1995.
International revenues accounted for approximately 7.6% and 7.3% of total
revenues in the quarter ended and in the nine-month period ended September 30,
1996, respectively. There were no international sales prior to 1996.
GROSS PROFIT. Systems gross profit as a percentage of systems revenues was
43.2% and 32.6% for the quarters ended September 30, 1996 and 1995,
respectively. Systems gross profit as a percentage of systems revenues was 39.1%
and 34.9% for the nine-month periods ended September 30, 1996 and 1995,
respectively. These increases in systems gross profit resulted from design
improvements in the second generation video insertion product, lower costs of
certain purchased components and subassemblies and the Company achieving certain
manufacturing efficiencies as a result of increased volume. These increases
were partially offset by increases of $794,000 and $380,000 in the Company's
inventory valuation allowance in the nine-month period and the quarter ended
September 30, 1996, respectively. The Company evaluates inventory levels and
expected usage on a periodic basis and provides a valuation allowance for
estimated inactive, obsolete and surplus inventory.
Services gross profit as a percentage of services revenues was 11.2% for
the quarter ended September 30, 1996 compared to a loss of 70.8% for the quarter
ended September 30, 1995. Costs of services revenues exceeded services revenue
by 8.9% and 22.1% for the nine-month periods ended September 30, 1996 and 1995,
respectively, primarily as a result of the costs associated with the Company
building a service organization to support the installed base of systems.
Improvements in services gross profit resulted from the growing installed base
of systems with ongoing product maintenance and support agreements.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of compensation of development personnel, depreciation of equipment,
and an allocation of related facility expenses. Research and development
expenses increased to $1,256,000, or 9.7% of total revenues in the quarter ended
September 30, 1996, from $626,000, or 11.1% of total revenues in the comparable
quarter in 1995. Research and development expenses increased to $3,242,000, or
8.7% of total revenues in the nine-month period ended September 30, 1996, from
$1,673,000, or 9.7% of total revenues in the comparable period in 1995. These
increases were primarily attributable to the hiring of additional development
8
<PAGE>
personnel. All software development costs were expensed in the three and nine-
month periods ended September 30, 1996. The Company anticipates that it will
continue to devote substantial resources to its research and development
efforts.
SELLING AND MARKETING. Selling and marketing expenses consist primarily of
compensation expenses, including sales commissions and travel expenses and
certain promotional expenses. Selling and marketing expenses increased to
$1,125,000, or 8.7% of total revenues in the quarter ended September 30, 1996,
from $356,000, or 6.3% of total revenues in the comparable quarter in 1995.
Selling and marketing expenses increased to $3,035,000, or 8.1% of total
revenues for the nine-month period ended September 30, 1996, from $1,137,000, or
6.6% of total revenues in the comparable period in 1995. The increases in the
dollar amounts as well as the percentages of total revenues were attributable to
hiring of additional selling and marketing personnel, expanded promotional
activities, and an increase in commissions relating to increased revenues. The
Company expects that selling and marketing expenses will continue to increase in
dollar amount as the Company hires additional personnel and expands selling and
marketing activities for the remainder of 1996 and in 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of compensation of executive, finance, human resource and
administrative personnel, legal and accounting services as well as an allocation
of related facility expenses. General and administrative expenses increased to
$648,000, or 5.0% of total revenues in the quarter ended September 30, 1996,
from $234,000, or 4.2% of total revenues in the comparable quarter in 1995.
General and administrative expense increased to $1,510,000, or 4.1% of total
revenues for the nine-month period ended September 30, 1996, from $635,000, or
3.7% of total revenues in the comparable period in 1995. The increases in the
dollar amount as well as the percentages of total revenues were attributable to
increased staffing to support the Company's growth. The Company believes that
its general and administrative expenses will continue to increase as a result of
an expansion of the Company's administrative staff to support its growing
operations and as a result of expenses associated with being a public company.
PROVISION FOR INCOME TAXES. The Company's effective tax rate was 35.6% and
37.0% for the quarters ended September 30, 1996 and 1995, respectively. The
Company's effective tax rate was 37.4% and 37.1% for the nine months ended
September 30, 1996 and 1995, respectively. The decrease in the effective tax
rate in 1996 was due to benefits of foreign sales corporation exempt income in
1996 and the reinstatement of the research and development tax credit, effective
July 1996.
LIQUIDITY AND CAPITAL RESOURCES
Through November 1996, the Company funded its operations primarily through
cash provided by operations and the private sale of equity securities. In
November 1996, in connection with the initial public offering of the Company's
common stock, the Company issued 1,810,000 shares of its common stock in
exchange for approximately $24,400,000, net of estimated issuance costs.
As of September 30, 1996, the Company had cash and cash equivalents of
$2,049,000, a $4,135,000 decrease from the $6,184,000 on hand at December 31,
1995. Working capital decreased to $2,300,000 at September 30, 1996 from
$3,493,000 at December 31, 1995.
Net cash used in operating activities was $792,000 for the nine months
ended September 30, 1996 compared with net cash used in operating activities of
$187,000 during the comparable period in 1995. Net cash used in operating
activities during the nine month period September 30, 1996 consisted of cash
provided by net income adjusted for non-cash expenses including depreciation and
amortization and increased current liabilities, offset by increased accounts
receivable and inventories. Accounts receivable increased from $3,335,000 at
December 31, 1995 to $5,394,000 at September 30, 1996, an increase of
$2,059,000, or 61.7%. The increase in accounts receivable is primarily
attributable to the increased revenue levels. Total revenues recognized in the
quarter ended December 31, 1995 were $6,004,000, compared to $12,926,000 in the
quarter ended September 30, 1996, a 115.3% increase. The inventories increased
from $2,439,000 at December 31, 1995 to $7,506,000 at September 30, 1996, an
increase of $5,067,000, or
9
<PAGE>
207.8%. The increase in inventories is attributable to additional inventory to
support the Company's revenue growth, the increase in systems shipped to
customers for which revenue was not yet recognized and the growing installed
base of systems.
Net cash used in investing activities was $1,616,000 for the nine months
ended September 30, 1996 compared with net cash used in investing activities of
$311,000 during the comparable period in 1995. Investment activity consisted
primarily of purchases of property and equipment to support the Company's
growth. In addition, in June 1996 the Company paid $450,000 for a software
license. Investment activity for the comparable period in 1995 consisted of
purchases of property and equipment.
Net cash used in financing activities was $1,727,000 for the nine months
ended September 30, 1996 compared with net cash used in financing activities of
$1,000 during the comparable period in 1995. For the nine months ended
September 30, 1996, cash used in financing activities consisted primarily of the
repurchase of shares of the Company's common stock and Series A convertible
preferred stock from certain employees and directors of the Company, net of the
repayment of notes receivable from stockholders.
The Company has a $6.0 million revolving line of credit and a $1.5 million
equipment line of credit with a bank. The revolving line of credit expires in
September 1997 and the equipment line expires in March 1997. Borrowings under
the lines of credit are secured by substantially all of the Company's assets.
The loan agreement relating to the lines of credit requires that the Company
provide the bank with certain periodic financial reports and comply with certain
financial ratios. As of September 30, 1996, the Company had not borrowed
against either of these lines.
The Company believes that its existing cash, together with the net proceeds
of $24,400,000 from the initial public offering of the Company's common stock
and available borrowings under the lines of credit, are sufficient to meet the
Company's requirements for the foreseeable future.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Any statements contained in this Form 10-Q that do not describe historical
facts may constitute forward looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Any forward looking
statements contained herein are based on current expectations, but are subject
to a number of risks and uncertainties. The factors that could cause actual
future results to differ materially from current expectations include the
following: fluctuations in customer demand; the Company's ability to manage its
growth; the risk of new product introductions and customer acceptance of new
products; the rapid technological change which characterizes the Company's
markets; the Company's significant concentration of customers; the risks
associated with international sales as the Company expands its markets; and the
ability of the Company to compete successfully in the future, as well as other
risks identified in the Company's Securities and Exchange Commission filings,
including but not limited to those appearing under the caption "Risk Factors" in
the Company's Prospectus dated November 4, 1996.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11: Computation of Net Income Per Share.
Exhibit 27: Financial Data Schedule (For SEC Edgar
Filing Only; Intentionally Omitted)
(a) Reports on Form 8-K
No reports on Form 8-K were filed during the period.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
SeaChange International, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: December 3, 1996
SEACHANGE INTERNATIONAL, INC.
by:
/s/ William C. Styslinger, III
---------------------------------
William C. Styslinger, III
President, Chief Executive Officer,
Chairman of the Board and Director
/s/ Joseph S. Tibbetts, Jr.
------------------------------
Joseph S. Tibbetts, Jr.
Vice President, Finance and Administration,
Chief Financial Officer, and Treasurer
(Principal Financial and Accounting Officer)
12
<PAGE>
SEACHANGE INTERNATIONAL, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
- ---------------- ---------------- ----
<S> <C> <C>
11 Computation of Net Income Per Share 14
27 Financial Data Schedule (For SEC Edgar
Filing Only; Intentionally Omitted)
</TABLE>
13
<PAGE>
EXHIBIT 11
SEACHANGE INTERNATIONAL, INC.
COMPUTATION OF NET INCOME PER SHARE (1)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- -------------------------
1995 1996 1995 1996
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Weighted average common and common
equivalent shares:
Weighted average common shares
outstanding during the
period................................ 9,206,025 8,588,490 9,098,775 8,585,973
Weighted average common equivalent
shares ............................... 1,771,200 1,771,200 1,771,200 1,771,200
Dilutive effect of common equivalent
shares issued subsequent to September
1995 (2) ............................. 1,230,760 1,230,760 1,133,489 1,230,760
----------- ----------- ----------- -----------
12,207,985 11,590,450 12,003,464 11,587,933
=========== =========== =========== ===========
Net income $ 212,967 $ 1,425,965 $ 1,342,094 $ 3,548,042
Primary net income per share $ 0.02 $ 0.12 $ 0.11 $ 0.31
</TABLE>
(1) Fully diluted net income per share has not been separately presented, as
the amounts would not be materially different from primary net income per
share.
(1) Common share equivalents issued subsequent to September 1995 are comprised
of common stock options and Series B convertible preferred stock and have
been included in the calculation pursuant to Securities and Exchange
Commission Staff Accounting Bulletin No. 83. Common share equivalents
issued at prices below the initial public price of $15.00 in the twelve
months preceding the initial public offering have been included in the
calculation for all periods presented.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,049
<SECURITIES> 0
<RECEIVABLES> 5,567
<ALLOWANCES> (173)
<INVENTORY> 7,506
<CURRENT-ASSETS> 109
<PP&E> 5,074
<DEPRECIATION> (1,143)
<TOTAL-ASSETS> 20,163
<CURRENT-LIABILITIES> 13,355
<BONDS> 0
4,008<F1>
0
<COMMON> 96
<OTHER-SE> 5,235<F2>
<TOTAL-LIABILITY-AND-EQUITY> 20,163
<SALES> 34,644
<TOTAL-REVENUES> 37,280
<CGS> 21,095
<TOTAL-COSTS> 23,966
<OTHER-EXPENSES> 7,674
<LOSS-PROVISION> 113
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,664
<INCOME-TAX> 2,116
<INCOME-CONTINUING> 3,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,548
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
<FN>
<F1>(PREFERRED)
Series B redeemable convertible preferred
stock, $.01 par value; 1,000,000 shares of
preferred stock authorized; 650,487 shares
designated, issued and outstanding at
September 30, 1996, at issuance price, net
of issuance costs:............................. 4,008 --
------ -----
Stockholders' Equity:
Series A convertible preferred stock, $.01 par
value; 1,000,000 shares of preferred stock
authorized; 30,000 shares designated, 11,808
shares issued at September 30, 1996, at
issuance price................................. -- --
<F2>(OTHER - SE)
Additional paid-in capital .................... 415
Retained earnings.............................. 4,820
</FN>
</TABLE>
