FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 26, 1997
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 1-5631
WATKINS-JOHNSON COMPANY
-----------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-1402710
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3333 Hillview Avenue, Palo Alto, California 94304-1223
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(Address of principal executive offices) (Zip Code)
(415) 493-4141
-------------------------------------------------------------
(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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X. No .
--- ---
Common stock, no par value, outstanding as of September 26, 1997 8,244,000
shares
Page 1
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
The interim financial statements are unaudited; however,
Watkins-Johnson Company believes that all adjustments necessary to a
fair statement of results for such interim periods have been included
and all such adjustments are of a normal recurring nature. The results
for the nine months ended September 26, 1997, are not necessarily
indicative of the results for the full year 1997.
Supplementary information to the financial statements:
A dividend of twelve cents per share was declared and paid during
the third quarter of 1997 and 1996.
Net income per share is computed based on the weighted average
number of common and common equivalent shares (dilutive stock
options) outstanding during the period, see Exhibit 11.
Recently issued accounting standards:
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" (SFAS 128). The company is required to adopt SFAS 128
in the fourth quarter of 1997 and will restate at that time
earnings per share (EPS) data for prior periods to conform with
SFAS 128. Early application is not permitted.
SFAS 128 replaces current EPS reporting requirements and requires
a dual presentation of basic and diluted EPS. Basic EPS excludes
dilution and is computed by dividing net income by the weighted
average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted
into common stock.
If SFAS 128 had been in effect during the current and prior year
periods, basic EPS would have been $0.44 and $0.34 for the
quarters ended September 26, 1997 and September 27, 1996,
respectively, and basic EPS would have been $1.11 and $1.17 for
the nine months ended September 26, 1997 and September 27, 1996,
respectively. Diluted EPS would not have been significantly
different than fully diluted EPS currently reported for the
periods.
In June 1997, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income", which requires that an
enterprise report, by major components and as a single total, the
change in its net assets during the period from nonowner sources;
and No. 131, "Disclosures about Segments of an Enterprise and
Related Information", which establishes annual and interim
reporting standards for an enterprise's business segments and
related disclosures about its products, services, geographic
areas, and major customers. Adoption of these statements will not
impact the company's consolidated financial position, results of
operations or cash flows, however, SFAS 131 may result in
reclassification to the amounts previously reported in the
company's segment information. Both statements are effective for
1998, however, early adoption is permitted.
The consolidated financial statements required by Rule 10-01 of
Regulation S-X are included in this report beginning on the next page.
Page 2
<PAGE>
<TABLE>
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS*
For the periods ended September 26, 1997 and September 27, 1996
<CAPTION>
Three Months Ended Nine Months Ended
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 100,376 $ 94,962 $ 286,971 $ 344,151
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of goods sold 63,941 60,921 187,563 222,712
Selling and administrative 18,810 16,535 52,144 62,428
Research and development 12,048 13,629 34,022 44,661
- -----------------------------------------------------------------------------------------------------------------------------------
94,799 91,085 273,729 329,801
- -----------------------------------------------------------------------------------------------------------------------------------
Income from operations 5,577 3,877 13,242 14,350
Interest and other income (expense)--net (16) 784 1,067 768
Interest expense (358) (556) (1,048) (1,169)
- -----------------------------------------------------------------------------------------------------------------------------------
Income from operations before Federal and
foreign income taxes 5,203 4,105 13,261 13,949
Federal and foreign income taxes (1,613) (1,273) (4,111) (4,325)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,590 $ 2,832 $ 9,150 $ 9,624
====================================================================================================================================
Fully diluted net income per share
(difference between fully diluted and
primary earnings per share is not $ .42 $ .33 $ 1.07 $ 1.12
material)
Average common and equivalent shares
outstanding 8,528,000 8,458,000 8,572,000 8,560,000
<FN>
*Unaudited
</FN>
</TABLE>
Page 3
<PAGE>
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of September 26, 1997 and December 31, 1996
- --------------------------------------------------------------------------------
(Dollars in thousands) 1997* 1996
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and equivalents $ 43,418 $ 15,702
Receivables 71,695 95,717
Inventories:
Finished goods 4,414 4,005
Work in process 31,937 35,000
Raw materials and parts 32,116 30,153
Deferred income taxes 18,440 17,795
Other 4,417 5,471
- --------------------------------------------------------------------------------
Total current assets 206,437 203,843
- --------------------------------------------------------------------------------
Property, plant, and equipment 228,538 231,318
Accumulated depreciation and amortization (125,587) (127,748)
- --------------------------------------------------------------------------------
Property, plant, and equipment--net 102,951 103,570
- --------------------------------------------------------------------------------
Other assets 3,465 6,960
- --------------------------------------------------------------------------------
$ 312,853 $ 314,373
================================================================================
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Payables $ 18,449 $ 18,960
Accrued liabilities 60,160 61,901
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Total current liabilities 78,609 80,861
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Long-term obligations 36,858 38,801
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Shareowners' equity:
Common stock 40,191 38,998
Retained earnings 157,195 155,713
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Total shareowners' equity 197,386 194,711
- --------------------------------------------------------------------------------
$ 312,853 $ 314,373
================================================================================
*Unaudited
Page 4
<PAGE>
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS*
For the periods ended September 26,1997 and September 27, 1996
- --------------------------------------------------------------------------------
Nine Months Ended
(Dollars in thousands) 1997 1996
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net Income $ 9,150 $ 9,624
Reconciliation of net income to cash flows
Depreciation and amortization 11,999 8,782
Net changes in:
Receivables 26,204 (17,002)
Inventories 700 (3,579)
Other assets (395) 1,043
Accruals and payables (4,837) 9,828
- --------------------------------------------------------------------------------
Net cash provided by operating activities 42,821 8,696
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions of property, plant, and equipment (13,038) (43,774)
Restricted plant construction funds 3,738 (9,878)
Other 447 289
- --------------------------------------------------------------------------------
Net cash used in investing activities (8,853) (53,363)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Long-term and line-of-credit borrowings 31,185
Long-term debt and line-of-credit repayments (914) (9,966)
Proceeds from issuance of stock 2,339 3,482
Repurchase of common stock (5,748)
Dividends paid (2,973) (2,973)
Other (111) 3,155
- --------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (7,407) 24,883
- --------------------------------------------------------------------------------
Effect of exchange rate changes on cash 1,155
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 27,716 (19,784)
Cash and equivalents at beginning of period 15,702 34,556
- --------------------------------------------------------------------------------
Cash and equivalents at end of period $ 43,418 $ 14,772
================================================================================
*Unaudited
Page 5
<PAGE>
PART I--FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Condition
During the first three quarters of 1997, cash and equivalents increased
by $27.7 million, from $15.7 million to $43.4 million. Although
year-to-date 1997 net income was $9.2 million, net cash provided by
operations was $42.8 million, due mostly to collection efforts on
accounts receivables and lower working capital needs from the peak
levels of last year.
The company invested $13 million in new capital equipment during the
first three quarters of 1997, which is well below our $25 million
budget for the year.
The company reactivated its stock repurchase program during the first
quarter and, year-to-date, has repurchased 204,200 shares of its common
stock for $5.7 million. Our repurchasing activities have successfully
maintained the share count fairly level, even with the higher stock
price. Our goal is to buy and retire about the same number of shares
added by the exercise of options. During the first three quarters of
1997, the company paid approximately $3 million in dividends which was
partially offset by $2.3 million in proceeds from stock option
exercises.
On September 2, 1997, the company announced that it reached a
definitive agreement with Mentmore Holdings Corporation, a privately
held investment company headquartered in New York, to acquire WJ's Palo
Alto, Calif.-based defense-electronics business for $103 million. The
divestiture, which is expected to be completed by October 31, 1997,
will enable Watkins-Johnson to concentrate its resources on its two
chosen areas of technology: semiconductor-manufacturing equipment and
wireless communications products.
Successful completion of the divestiture of our Palo Alto defense
operations and the sale of the lease of two of our Palo Alto buildings
is expected to further improve our balance sheet. We anticipate cash
will be about $100 million at the end of the year and book value is
estimated to reach about $28 to $29 per share if both transactions are
completed. The 14-acre vacant lot in San Jose, California, is still in
contract negotiation for its sale. We had earlier expected to report
that the sale would have been completed by now. However, the fees that
the City of San Jose expects for traffic mitigation in developing the
property are not settled at this time and we are working through the
issues with the buyer and the City. It is difficult to tell when we
will close the sale of the San Jose land. Closing of the San Jose land
sale should add about $1 or so to the book value per share.
Current Operations and Business Outlook
The company operates in three industry segments. Operations in the
Semiconductor Equipment segment involve the development, production,
sales and service of chemical-vapor-deposition equipment used in the
manufacture of semiconductor products. Operations in the Wireless
Communications segment involve the design, development, manufacture and
sale of advanced wireless telecommunication products for cellular
service providers, personal communication systems, and other wireless
product manufacturers. Operations in the Government Electronics segment
include the design, development, manufacture and sale of advanced
electronic systems and devices for guided-missile programs,
communications intelligence, and other government agency applications.
Page 6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
As we mentioned earlier, the company announced that it reached a
definitive agreement with Mentmore Holdings Corporation to acquire WJ's
Palo Alto, Calif.-based defense-electronics business for $103 million.
The businesses being divested, Tactical Subsystems and Microwave
Devices sectors, are currently reported for business segment reporting
purposes as part of the Government Electronics and Wireless
Communications segments. The divested businesses will operate as
Stellex Microwave Systems, Inc. We anticipate transferring
approximately $77 million of the third quarter Government Electronics
and Wireless Communications backlog to Stellex Microwave. On a going
forward basis, we intend to combine the remaining East Coast
communications intelligence receivers operation into the Wireless
Communications reporting segment.
The divested operations and staff will remain virtually intact, and the
business will remain a WJ customer for GaAs devices and thin-film
substrates. We will share the Palo Alto facility for two or more years
as Mentmore seeks to build or buy a facility in the Silicon Valley
area. The divestiture, which is expected to be complete by October 31,
1997, will enable Watkins-Johnson to concentrate its resources more
narrowly on only two chosen areas of technology:
semiconductor-manufacturing equipment and wireless-infrastructure
products. The sale offers a win-win solution for all of the
stakeholders: WJ shareowners, both companies, the employees, our
customers, and venders.
Management currently estimates that the businesses being divested
generated approximately $65 million to $70 million of sales for the
first nine months of 1997 and produced pre-tax operating profit of
about $10 million. The operations offered for sale are business units
of the company; consequently these estimates have been derived from the
consolidated financial statements and accounting records of the
company, and reflect significant assumptions and allocations. Moreover,
the business units rely on the company and its other business units for
administrative, management and other services. These estimates could
differ from those that would have resulted had the business units
operated autonomously or as an entity independent of the company.
Semiconductor Equipment Group
Third-quarter revenues were slightly over $50 million, representing
about 50% of the company total. At this level, operating profit for the
Group is positive as we are maintaining the tight cost controls we have
established. Orders were $33 million during the third quarter, up 32%
from the $25 million for the same period last year, but orders declined
on a sequential quarter basis compared to the $44 million of last
quarter. As we discussed earlier this year, these order rates mean that
we are below the long term goal of a 5-month backlog. At this level, we
are able to service the order requirements of our customers rapidly,
and they continue to take advantage of the shorter lead time. This
quicker service is contributing to the lumpy orders patterning we are
seeing. Looking forward, we expect continued orders growth through the
next few quarters. We had two large Korean orders in negotiation at the
end of the quarter and we believe we are on track for strong
fourth-quarter orders. It does seem, however, that we are having a
repeat of the activity of last year when third quarter orders were low
and fourth quarter orders were high.
During the third quarter, WJ produced two WJ-2000 single-wafer cluster
platforms for delivery to Asia. We were pleased to announce
Taiwan-based United Semiconductor Corp. (USC) ordered a WJ-2000H
high-density plasma (HDP) chemical-vapor-deposition (CVD) system for
use at its wafer-fabrication facility in the Science Park of Hsinchu,
Taiwan. This system is now shipped and is currently being installed in
USC's facility. A second HDP system is up and running at WJ's Asian
Technology Center in Kawasaki, Japan. It is being used as a
process-development and evaluation tool for both intermetal-
Page 7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
dielectric (IMD) and shallow-trench-isolation (STI) device structures
by the company's customers in the Asia/Pacific region. We currently
have several systems operating in Scotts Valley, California, doing
customer wafer samples and performing the marathon testing needed by
any production system. The WJ-2000 systems are operating well. In terms
of throughput and like performance parameters, we believe we have
equivalent performance to the competition and our film characteristics
are excellent. Customers are beginning to see that also. We are also
moving along well on the 300 mm Roadmap for the WJ-2000H.
Our successful shallow trench isolation (STI) process was instrumental
in winning business for us in the third quarter and shows promise of
more wins. At quarter-end, following an exhaustive competition among
all leading CVD-equipment manufacturers, Watkins-Johnson's
atmospheric-pressure CVD process was selected by Atmel to perform
challenging STI steps at that company's 150mm fabrication facilities in
the United States and its new 200mm facility in France. Our newest
process combines the gap fill capability of our TEOS process with the
high throughput characteristic of our silane SiO2 as a sacrificial
topcoat. The process dramatically decreases the cost of ownership and
complements the subsequent CMP polishing step that customers
incorporate.
The long range industry forecasts for the semiconductor industry remain
bright, more than doubling by 2002, and semiconductor integrated
circuit demand is increasing in dollar terms over last year. While
factory utilization figures are improving, the semiconductor industry,
especially the DRAM sector, basically remains in an overcapacity
situation. Although the equipment spending trend is slowly upward and
may be improving, we do want to emphasize the slowness of it.
Wireless Communications
Third-quarter revenues were over $20.7 million, representing 21% of the
company total, and are 81% above the $11.4 million for the same period
last year and 26% above the $16.4 million of the second quarter 1997.
Orders for the third quarter 1997 totaled approximately $11 million,
compared to $10 million for the same period last year. The business
segment is entering the fourth quarter with a backlog totaling
approximately $28 million.
High-volume production rates on WJ's wireless CDMA and TDMA
subassemblies returned to an elevated level in the third quarter, and
expansion of the PCS market suggests a promising future for these
commodity parts. Last year we had up and down orders action on the CDMA
and TDMA subassemblies for PCS stations that we build for Lucent
Technologies. Looking forward, with improving PCS infrastructure build
in the US, we expect revenues for these converters to continue to be
better than they were a year ago.
Our hopes for major US business for the Base2 system did not come to
fruition when our customer was unable to get their major supplier to
open their switching specification to WJ. Both WJ and our customer were
disappointed. However, the installation in China of the first system is
going very well. The Telecommunications Group management team has just
returned from a week trip to China as part of a US Trade delegation.
They were present in Dalian as the first WJ station was placed into
service. We are re-emphasizing the international marketing of the
system. The international customers seem more willing to work with the
open-systems switches, such as the Excel switch which we are using.
WJ unveiled a new family of cell-extender products at the Personal
Communications Showcase, PCS `97, during September. These cell-extender
products--repeaters, power amplifiers and tower-top amplifiers--are
aimed at personal communications services (PCS) applications to
increase the geographic coverage of existing cells for service
providers. The repeater system, based on our proprietary ultralinear
GaAs components, is undergoing testing for FCC Part 24 compliance.
These tests should complete during the first quarter of 1998 and we are
anticipating shipping by the second half of 1998.
Page 8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Government Electronics
Third-quarter revenues were over $29 million, compared to $25 million
for the same period last year. Orders were strong for the third quarter
of 1997, totaling $36 million, compared to $31 million for the same
period last year. Backlog at the end of the third quarter totaled
approximately $102 million.
As we mentioned earlier, once the divestiture of the company's Palo
Alto based Government Electronics business is completed, we intend to
combine the remaining East Coast communications intelligence receivers
operation into the Wireless Communications segment for business segment
reporting purposes, restating prior periods, and report the divested
Government Electronics business as discontinued operations.
Third Quarter 1997 Compared to Third Quarter 1996
Wireless Communications and Government Electronics sales increased 81%
and 18%, respectively, while Semiconductor Equipment Group sales
decreased 14%, resulting in an overall company increase of 6%. A
primary improvement in Wireless Communications sales is in the shipping
rate of the PCS converters sold to Lucent Technologies. The decrease in
Semiconductor Equipment Group sales is due primarily to the world-wide
overcapacity in DRAMs, as we discussed in previous quarters. Gross
margins remained flat at about 36%. Selling and administrative expenses
as a percentage of sales increased slightly compared to the same period
last year but remain within planned levels year-to-date. Research and
development expenses decreased from 14% to 12% of sales, remaining
slightly below our budget. Research and development activities are now
focused on certain new Semiconductor Equipment Group and Wireless
Communications products entering the production stage. Operating income
was $5.6 million, compared to the $3.9 million operating profit of the
same period last year. Due to the above factors, third quarter 1997 net
income increased to $3.6 million, compared to $2.8 million reported for
the same period in 1996.
Third Quarter Year-to-Date 1997 Compared to Third Quarter Year-to-Date
1996
Wireless Communications and Government Electronics sales increased 69%
and 13%, respectively, while Semiconductor Equipment Group sales
decreased 38%, resulting in an overall company decrease of 16%. By the
third quarter last year, we were seeing the drop in semiconductor
equipment shipments. Gross margins remained flat at about 35%. Selling
and administrative expenses decreased 16%, due mostly to the decreased
volume and cost-cutting efforts, but remained flat as a percentage of
sales. Research and development expenses decreased from 13% to 12% of
sales, remaining within planned levels as the company continues its
efforts in developing next generation products for the Semiconductor
Equipment Group and Wireless Communications segment. Research and
development is budgeted at about 12-1/2% of planned sales for 1997.
With our business model of spending 15% of Semiconductor Equipment
revenues and 10% of Wireless Communications revenues on R&D, this
percentage will increase following the divestiture since the sector we
are selling runs with a lower R&D percent of sales than our other
businesses. Due to the above factors, net income decreased 5% from $9.6
million in 1996 to $9.2 million in 1997.
Risks and Uncertainties That May Affect Future Results
Statements included in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are not historical
facts are forward-looking statements that involve risks and
uncertainties that may affect future results, including but not limited
to: product demand and market acceptance risks, the effect of economic
conditions, the impact of competitive products and pricing, product
development, commercialization and technological difficulties, capacity
and supply constraints or difficulties, business cycles, the results of
financing efforts, actual purchases under agreements, the effect of the
company's accounting policies, U.S. Government export policies, natural
disasters and other risks. Future results can differ materially.
Page 9
<PAGE>
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a. A list of the exhibits required to be filed as part of this
report is set forth in the Exhibit Index, which immediately
precedes such exhibits. The exhibits are numbered according to
Item 601 of Regulation S-K. Exhibits incorporated by reference to
a prior filing are designated by an asterisk.
b. No reports on Form 8-K were required to be filed during the
quarter.
Page 10
<PAGE>
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.
WATKINS-JOHNSON COMPANY
-----------------------
(Registrant)
Date: October 24, 1997 By: /s/ W. Keith Kennedy, Jr.
----------------- -----------------------------------
W. Keith Kennedy, Jr.
President and Chief Executive Officer
Date: October 24, 1997 By: /s/ Scott G. Buchanan
----------------- -----------------------------------
Scott G. Buchanan
Vice President and Chief Financial Officer
Page 11
<PAGE>
EXHIBIT INDEX
The Exhibits below are numbered according to Item 601 of Regulation S-K.
Exhibits incorporated by reference to a prior filing are designated by an
asterisk.
Exhibit
Number Exhibit
------ -------
11 Statement re Computation of Per Share Earnings.
27 Financial Data Schedule
Page 12
<TABLE>
EXHIBIT 11
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(Dollars in thousands, except per share amounts)
The following table illustrates the potential dilution of outstanding stock
options on net income per share computations:
<CAPTION>
Three Months Ended Nine Months Ended
- ------------------------------------------------------------------------------------------------------------------------------------
Sept. 26, 1997 Sept. 27, 1996 Sept. 26, 1997 Sept. 27, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
For primary net income per share:
Weighted average shares outstanding 8,221,000 8,321,000 8,259,000 8,242,000
Equivalent shares--dilutive stock
options--based on treasury stock
method using average market price
307,000 137,000 254,000 315,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total 8,528,000 8,458,000 8,513,000 8,557,000
====================================================================================================================================
For fully diluted net income per share:
Weighted average shares outstanding 8,221,000 8,321,000 8,259,000 8,242,000
Equivalent shares--dilutive stock
options--based on treasury stock
method using greater of closing
market price or average price 307,000 137,000 313,000 318,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total 8,528,000 8,458,000 8,572,000 8,560,000
====================================================================================================================================
Net income $ 3,590 $ 2,832 $ 9,150 $ 9,624
====================================================================================================================================
Primary net income per share $ .42 $ .33 $ 1.07 $ 1.12
====================================================================================================================================
Fully diluted net income per share $ .42 $ .33 $ 1.07 $ 1.12
====================================================================================================================================
</TABLE>
This calculation is submitted in accordance with Regulation S-K, Item
601(b)(11).
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUN-28-1997
<PERIOD-END> SEP-26-1997
<CASH> 43,418
<SECURITIES> 0
<RECEIVABLES> 71,695
<ALLOWANCES> 0
<INVENTORY> 68,467
<CURRENT-ASSETS> 206,437
<PP&E> 228,538
<DEPRECIATION> 125,587
<TOTAL-ASSETS> 312,853
<CURRENT-LIABILITIES> 78,609
<BONDS> 36,858
0
0
<COMMON> 40,191
<OTHER-SE> 157,195
<TOTAL-LIABILITY-AND-EQUITY> 312,853
<SALES> 100,376
<TOTAL-REVENUES> 100,376
<CGS> 63,941
<TOTAL-COSTS> 63,941
<OTHER-EXPENSES> 30,874
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 358
<INCOME-PRETAX> 5,203
<INCOME-TAX> 1,613
<INCOME-CONTINUING> 3,590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,590
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
