<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Commission file number: 000-25867
DIRECT FOCUS, INC.
(Exact name of registrant as specified in its charter)
Washington 943002667
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2200 NE 65th Avenue
Vancouver, Washington 98661
(Address of principal executive offices, including zip code)
(360) 694-7722
(Issuer'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 Exchange Act during the past 12 months
(or for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X] No [ ]
Number of shares of issuer's common stock outstanding as of March 31,
2000: 10,405,035
Page 1 of 15
Exhibit Index on Page 15
1
<PAGE>
DIRECT FOCUS, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIRECT FOCUS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------------ ------------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 46,127,947 $ 35,703,457
Trade receivables (less allowance for doubtful accounts of:
2000, $367,684 and 1999, $304,727) 2,921,649 4,744,213
Inventories 10,469,642 9,167,554
Prepaid expenses and other assets 2,057,854 1,863,951
Current deferred tax asset 87,051 820,789
------------------ ------------------
Total current assets 61,664,143 52,299,964
------------------ ------------------
PROPERTY, PLANT AND EQUIPMENT (less accumulated
depreciation of: 2000, $1,490,163 and 1999, $1,088,239) 10,994,511 10,644,838
LONG-TERM DEFERRED TAX ASSETS 670,213 -
OTHER ASSETS (less accumulated amortization of:
2000, $331,731 and 1999, $272,183) 4,309,916 4,364,963
------------------ ------------------
TOTAL ASSETS $ 77,638,783 $ 67,309,765
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 6,919,347 $ 5,871,369
Accrued liabilities 3,948,282 4,051,540
Income taxes payable 5,327,755 2,177,236
Royalty payable to stockholders 1,002,574 893,563
Customer deposits 1,231,435 1,097,748
------------------ -----------------
Total current liabilities 18,429,393 14,091,456
------------------ -----------------
LONG-TERM DEFERRED TAX LIABILITY - 187,484
------------------ -----------------
STOCKHOLDERS' EQUITY:
Common stock - authorized, 50,000,000 shares of no par value;
Outstanding, 2000: 10,405,035 shares, 1999: 10,444,148 shares 15,862,543 18,602,420
Retained earnings 43,346,847 34,428,405
------------------ -----------------
Total stockholders' equity 59,209,390 53,030,825
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 77,638,783 $ 67,309,765
================== =================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
DIRECT FOCUS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended March 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
NET SALES $ 42,906,865 $ 26,112,530
COST OF SALES 10,758,296 7,389,196
------------ ------------
Gross profit 32,148,569 18,723,334
------------ ------------
EXPENSES:
Selling and marketing 15,816,575 10,088,754
General and administrative 1,959,368 1,101,372
Royalties 1,013,987 625,921
------------ ------------
Total operating expenses 18,789,930 11,816,047
------------ ------------
INCOME FROM OPERATIONS 13,358,639 6,907,287
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 615,517 61,923
State business tax and other - net (39,147) (78,114)
------------ ------------
Total other income (expense) - net 576,370 (16,191)
------------ ------------
INCOME BEFORE INCOME TAXES 13,935,009 6,891,096
------------ ------------
INCOME TAX EXPENSE 5,016,567 2,411,883
------------ ------------
NET INCOME $ 8,918,442 $ 4,479,213
============ ============
BASIC EARNINGS PER SHARE $ 0.85 $ 0.47
============ ============
DILUTED EARNINGS PER SHARE $ 0.83 $ 0.45
============ ============
Basic shares outstanding 10,491,001 9,517,579
Diluted shares outstanding 10,738,102 9,902,037
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
DIRECT FOCUS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31,
---------------------------------------
2000 1999
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 8,918,442 $ 4,479,213
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 461,471 261,813
Deferred income taxes 48,403 (361,567)
Changes in:
Trade receivables 1,822,564 (294,263)
Inventories (1,302,088) (1,977,977)
Prepaid expenses and other current assets (193,903) 272,646
Trade payables 1,047,978 1,924,813
Income taxes payable 3,150,519 2,123,450
Accrued liabilities and royalty payable to stockholders 5,753 294,608
Customer deposits 133,687 207,719
----------------- -----------------
Net cash provided by operating activities 14,092,826 6,930,455
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (751,597) (383,177)
Additions to other assets (4,500) -
Acquisition cost of Nautilus - (16,747,241)
----------------- -----------------
Net cash used in investing activities (756,097) (17,130,418)
CASH FLOWS FROM FINANCING ACTIVITIES:
Prepaid public offering cost - (168,959)
Proceeds from exercise of stock options, net 136,414 45,458
Funds used for stock repurchase (3,048,653) -
----------------- -----------------
Net cash used in financing activities (2,912,239) (123,501)
----------------- -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 10,424,490 (10,323,464)
----------------- -----------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,703,457 18,910,675
----------------- -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 46,127,947 $ 8,587,211
================= =================
SUPPLEMENTAL DISCLOSURE OF INFORMATION:
Cash paid for interest $ - $ -
Cash paid for income taxes 1,998,500 650,000
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING TRANSACTIONS:
Tax benefit of exercise of nonqualified options 172,362 -
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
DIRECT FOCUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Direct
Focus, Inc. (the "Company") have been prepared in accordance with accounting
principles generally accepted in the United States of America and pursuant to
Securities and Exchange Commission rules and regulations. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.
These financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's annual report
for the fiscal year ended December 31, 1999.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for interim periods
presented. The results of operations for the three months ended March 31, 2000
are not necessarily indicative of the results to be expected for the full year.
CONSOLIDATION - The consolidated financial statements of the Company
include Direct Focus, Inc., Nautilus HPS, Inc., Nautilus, Inc., DFI Properties,
LLC, BFI Advertising, Inc., DFI Sales, Inc., and Nautilus Fitness Products, Inc.
All intercompany transactions have been eliminated.
<TABLE>
<CAPTION>
2. INVENTORIES
MARCH 31, 2000 DECEMBER 31, 1999
<S> <C> <C>
Finished goods $ 6,461,623 $ 4,682,659
Work in process 1,284,770 1,141,803
Parts and components 2,723,249 3,343,092
-------------------- ------------------
Total $ 10,469,642 $ 9,167,554
==================== ==================
</TABLE>
3. STOCK OPTIONS
There were 77,087 options exercised at prices ranging from $.96 to
$4.62 per share during the three months ended March 31, 2000. There were 49,000
new options at an exercise price of $23.56 granted during that period.
4. OPERATING SEGMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 131, "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION," which establishes standards for reporting information regarding an
entity's operating activities. SFAS No. 131 requires that operating segments be
defined at the same level and in a similar manner as management evaluates
operating performance.
6
<PAGE>
The following table presents information about the Company's two operating
segments (in thousands):
<TABLE>
<CAPTION>
NAUTILUS
DIRECT PRODUCTS PRODUCTS TOTAL
---------------- ---------------- -----------------
PERIOD ENDED MARCH 31, 2000
<S> <C> <C> <C>
Revenues from external customers $ 38,530 $ 4,377 $ 42,907
================ ================ =================
Net income (loss) 9,096 (178) 8,918
================ ================ =================
PERIOD ENDED MARCH 31, 1999
Revenues from external customers $ 22,139 $ 3,974 26,113
================ ================ =================
Net income 4,674 (195) 4,479
================ ================ =================
</TABLE>
5. EARNINGS PER SHARE
Basic and diluted earnings per share are reconciled as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
--------------------------------------- ---------------------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to common
Shareholders $ 8,918,442 10,491,001 $ 0.85 $ 4,479,213 9,517,579 $ 0.47
========= ========
Effect of dilutive securities:
Stock options - 247,101 - 384,458
------------ ----------- ------------ ----------
Diluted EPS:
Income available to common
share-holders plus assumed stock
options $ 8,918,442 10,738,102 $ 0.83 $ 4,479,213 9,902,037 $ 0.45
============ =========== ========= ============ ========== ========
</TABLE>
6. STOCK REPURCHASE PROGRAM
In the first quarter, the Board of Directors authorized the
expenditure of up to $8 million to purchase shares of Direct Focus, Inc.
common stock in open market transactions until April 30, 2000. During the
first quarter, the Company repurchased a total of 116,200 shares of common
stock in open market transactions for an aggregate purchase price of $3.0
million.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Statements in this Form 10-Q that Direct Focus considers to be
forward-looking are denoted with an asterisk ("*"), and the following
cautionary language applies to all such statements, as well as any other
statements in this Form 10-Q that the reader may consider to be
forward-looking. Investors are cautioned that all forward-looking statements
involve risks and uncertainties and various factors could cause actual
results to differ materially from those in the forward-looking statements.
Direct Focus, from time to time, may make forward-looking statements relating
to its financial performance, including the following:
- Anticipated revenues, expenses and gross margins;
- Anticipated earnings;
- New product introductions; and
- Future capital expenditures.
Numerous factors could affect our actual results, including the
following:
- Our reliance on a limited product line;
- Market acceptance of our existing and future products;
- Growth management challenges;
- Our limited experience in marketing Nautilus Sleep Systems;
- A decline in consumer spending due to unfavorable economic conditions;
- Government regulatory action;
- Our ability to effectively identify and negotiate any future
strategic acquisitions as well as to integrate any acquired businesses
into our operations; and
- Unpredictable events and circumstances relating to international
operations, including our use of foreign manufacturers.
We describe certain of these and other key risk factors elsewhere in
this Form 10-Q. Readers are further cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this form 10-Q.
We undertake no obligation to update publicly any forward-looking statements to
reflect new information, events or circumstances after the date of this form
10-Q or to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
We believe that period-to-period comparisons of our operating results
are not necessarily indicative of future performance. You should consider our
prospects in light of the risks, expenses and difficulties frequently
encountered by companies experiencing rapid growth and, in particular, rapidly
growing companies that operate in evolving markets. We may not be able to
successfully address these risks and difficulties. Although we have experienced
net sales growth in recent years, our net sales growth may not continue, and we
cannot assure you of any future growth or profitability.
8
<PAGE>
STATEMENT OF OPERATIONS DATA - THREE MONTHS ENDED MARCH 31
The following table presents certain financial data regarding our first
quarter operations in 2000 and 1999, as a percentage of total revenues:
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
2000 1999
------ ------
STATEMENT OF OPERATIONS DATA
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 25.1 28.3
------ ------
Gross profit 74.9 71.7
Operating expenses
Selling and marketing 36.9 38.6
General and administrative 4.6 4.2
Royalties 2.3 2.4
------ ------
Total operating expenses 43.8 45.2
Operating income 31.1 26.5
Other income (expense) 1.3 0.0
------ ------
Income before income taxes 32.4 26.5
Income tax expense 11.6 9.3
------ ------
Net income 20.8% 17.2%
====== ======
</TABLE>
COMPARISON OF THE QUARTERS ENDED MARCH 31, 2000 AND MARCH 31, 1999
NET SALES
Net sales grew by 64.4% to $42.9 million in the first quarter of
2000 from $26.1 million in the first quarter of 1999. Sales within our direct
products segment increased by 74.2% over prior year first quarter levels and
accounted for $38.5 million, or 89.7%, of our aggregate net sales in the
quarter. Sales within our Nautilus products segment accounted for $4.4
million or 10.3% of our net sales.
Sales growth in the first quarter of 2000 primarily resulted from
expanded direct marketing of products within our direct marketing business.
Within our direct products segment, with respect to both our Bowflex products
and our Nautilus Sleep Systems, we intend to further expand our use of spot
television commercials and infomercials during 2000 by increasing our
presence in existing television markets and entering new television markets.*
We intend to increase sales within our Nautilus products segment by
developing new products and expanding our sales efforts both domestically and
internationally.*
Notwithstanding our product diversification efforts, we anticipate
that sales of our Bowflex Power Pro will continue to account for a
substantial portion of our net sales for the foreseeable future.* Any
significant diminished consumer interest in this product line would
9
<PAGE>
sharply reduce our net sales and profitability. In addition, the success of each
of our products depends substantially on how consumers decide to spend their
money. Unfavorable economic conditions may depress consumer spending, especially
for premium priced products like ours.
During the first quarter of 2000, we experienced unusually strong
consumer demand compared to the first quarter of 1999 for our Bowflex
products. We believe this stronger than normal growth rate will not continue
in future years.* In prior years, first and third quarter sales of our
Bowflex products were strong, while the second quarter reflected seasonal
weakness. Our direct marketing business is largely dependent upon national
cable television advertising, and we are finding that second quarter
influences on television viewership, such as the broadcast of national
network season finales and seasonal weather factors, are causing our spot
television commercials on national cable television to be marginally less
effective than in other periods of the year.*
We believe sales within our Nautilus products segment, although
stronger than the first quarter of 1999, will typically be lower in the first
half of the year than in the second half.* We believe the principal reason
for this trend is the commercial fitness industry's preparation for the
impact of New Year's fitness resolutions in the fourth quarter, and retail
store purchases of fitness equipment in preparation for the Christmas buying
season and New Year fitness resolutions in the third and fourth quarters.*
GROSS PROFIT
Gross profit grew 71.7% to $32.1 million in the first quarter of
2000, from $18.7 million in the same period a year ago. Our gross profit
margin increased 3.2% to 74.9% in the first quarter of 2000, from 71.7% in
the first quarter of 1999. This increase was mainly attributable to the net
sales of direct products as a percentage of total net sales. The margin
within our direct products segment was 78.6% in the first quarter of 2000,
while there was a 42.3% margin within our Nautilus products segment for the
first quarter of 2000. Sales of our direct products generated 89.7% of net
sales in the first quarter of 2000 compared with 84.7% in the first quarter
of 1999. This increase in percentage of direct products sold resulted in the
higher profit margin for the first quarter of 2000.
We expect a lower percentage gross profit margin contribution from
our Nautilus Sleep Systems as we continue our direct marketing campaign for
this product.* At least initially, we expect the domestic production and
relatively lower sales volume of our Nautilus Sleep Systems will result in
lower gross profit margins than our Bowflex products.* Similar to our Bowflex
products, with the anticipated future higher sales volume of Nautilus Sleep
Systems, we expect to take advantage of overseas production to strengthen the
margins for these products.*
OPERATING EXPENSES
SELLING AND MARKETING
Selling and marketing expenses grew to $15.8 million in the first
quarter of 2000 from $10.1 million in the same period a year ago, an increase
of 56.4%. This increase in selling and marketing expenses resulted primarily
from the expansion of our direct marketing campaign for
10
<PAGE>
Bowflex products and Nautilus Sleep Systems and variable costs associated with
our sales growth.
As a percentage of net sales, selling and marketing expenses
decreased to 36.9% in the first quarter of 2000 from 38.6% in the first
quarter of 1999. We believe the percentage for the first quarter of 1999 is
more typical of the results we will experience.* Overall, we expect that our
selling and marketing expenses will continue to increase in real dollar terms
and as a percentage of net sales,* as we:
- Continue to expand our Bowflex direct marketing campaign;*
- Expand the direct marketing campaign for our Nautilus Sleep Systems;*
- Integrate the marketing and distribution infrastructure for our
Nautilus line of fitness equipment;* and
- Expand marketing for our new home fitness equipment products and
fitness accessories under the Nautilus brand name.*
GENERAL AND ADMINISTRATIVE
General and administrative expenses grew to $2.0 million in the first
quarter of 2000 from $1.1 million in the same period a year ago, an increase of
81.8%. Our direct marketing business accounted for $0.7 million of the increase,
due primarily to increased staffing and infrastructure expenses necessary to
support our anticipated growth. Our Nautilus operations accounted for the
remaining increase of $0.2 million. As a percentage of net sales, general and
administrative expenses increased to 4.6% in the first quarter of 2000 from 4.2%
in the same period a year ago. The increase in general and administrative
expenses as a percentage of our net sales resulted primarily from our efforts to
integrate the Nautilus business into our operations and expand our
administrative staff and other resources to manage anticipated growth.* We
believe that our general and administrative expenses will continue to increase
in future periods in real dollar terms, but not materially as a percentage of
net sales.*
ROYALTY
Royalty expense grew to $1.0 million in the first quarter of 2000 from
$0.6 million in the same period a year ago, an increase of 66.7%. The increase
in our royalty expenses is attributable to the increased sales of our Bowflex
products in the quarter. Our royalty expenses will increase if sales of our
Bowflex products continue to increase.*
OTHER INCOME (EXPENSE)
In the first quarter of 2000, other income was $0.6 million compared to
an expense of $16,000 for the same period a year ago. The increase resulted
primarily from interest earned on invested cash and cash equivalents. We expect
other income to increase if invested cash balances increase.*
11
<PAGE>
INCOME TAX EXPENSE
Income tax expense increased by $2.6 million for the first quarter of
2000 because of the growth in our income before taxes. We expect our income tax
expense to increase in line with increases of our income before taxes.*
NET INCOME
For the reasons discussed above, net income grew to $8.9 million in the
first quarter of 2000 from $4.5 million in the same period a year ago, an
increase of 97.8%.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our growth primarily from cash
generated by our operating activities. During the first quarter of 2000, our
operating activities generated over $14.1 million in net cash, which
contributed to an aggregate $46.1 million balance in cash and cash
equivalents. We anticipate that our working capital requirements will
increase as a result of increased inventory and accounts receivable related
to our Nautilus operations.* We also expect to materially increase our cash
expenditures on spot commercials and infomercials as we expand the direct
marketing campaigns for our Bowflex products and Nautilus Sleep Systems.* To
accommodate our anticipated growth, we plan to build a distribution center in
Las Vegas, Nevada and purchase a building in Vancouver, Washington to
consolidate our Washington operations.
On April 1, 2000, we increased our line of credit with Bank of
America to $10.0 million. The line of credit is secured by our general assets
and contains certain financial covenants. As of the date of this filing we
are in compliance with all material covenants applicable to the line of
credit, and there is no outstanding balance under the line.
We believe our existing cash balances, combined with our line of
credit, will be sufficient to meet our capital requirements for at least the
next 12 months.*
USE OF PROCEEDS
We received approximately $17.9 million in net proceeds from the sale
of 975,000 shares of common stock in our May 1999 initial U.S. public offering,
which includes proceeds from the overallotment option exercised by the managing
underwriters. During 1999, we applied $3.7 million of the net proceeds toward
stock repurchases and $1.3 million toward computer and related technology
upgrades. We also used approximately $5.0 million of the net proceeds for
working capital purposes, including increased direct marketing expenditures and
increases in inventory and accounts receivable balances due to the growth of our
business. During the first quarter of 2000, we used $3.0 million for additional
stock repurchases. We have invested all unexpended net proceeds in an interest
bearing depository account with Bank of America, pending anticipated application
of proceeds in fiscal 2000 toward such purposes as further stock repurchases,
the construction of a distribution center in Las Vegas, Nevada, the purchase of
a building in Vancouver, Washington to consolidate our Washington operations,
and any of the other purposes described in our registration statement on Form
S-1.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DIRECT FOCUS, INC
(Registrant)
MAY 9, 2000 BY: /s/ BRIAN R. COOK
- ----------- -----------------------------
Date Brian R. Cook, President and Chief
Executive Officer
MAY 9, 2000 BY: /s/ ROD W. RICE
- ----------- -----------------------
Date Rod W. Rice, Chief Financial Officer,
Treasurer and Secretary (Principal Financial
and Accounting Officer)
14
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER TITLE
27 Financial Data Schedule
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 46,128
<SECURITIES> 0
<RECEIVABLES> 2,922
<ALLOWANCES> (368)
<INVENTORY> 10,470
<CURRENT-ASSETS> 61,664
<PP&E> 12,485
<DEPRECIATION> (1,490)
<TOTAL-ASSETS> 77,639
<CURRENT-LIABILITIES> 18,429
<BONDS> 0
0
0
<COMMON> 15,863
<OTHER-SE> 43,347
<TOTAL-LIABILITY-AND-EQUITY> 77,639
<SALES> 42,907
<TOTAL-REVENUES> 42,907
<CGS> 10,758
<TOTAL-COSTS> 10,758
<OTHER-EXPENSES> 18,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,935
<INCOME-TAX> 5,017
<INCOME-CONTINUING> 8,918
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,918
<EPS-BASIC> .85
<EPS-DILUTED> .83
</TABLE>
