UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: January 31, 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: 0-11552
-------
TeleVideo Systems, Inc.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2383795
- -------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2345 Harris Way, San Jose, California 95131
-------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 954-8333
----------------------------
___________________________
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
--- ---
The number of shares outstanding of registrant's Common Stock, as of March
12, 1997 is: 45,404,745.
----------
<PAGE>
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS.
TELEVIDEO SYSTEMS, INC.
-----------------------
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
1997 and 1996 Quarterly Data
- ----------------------------
The condensed consolidated financial statements included herein have been
prepared by the management of TeleVideo Systems, Inc. (the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, pursuant to such rules and
regulations, although the Company believes the disclosures which are made are
adequate to make the information presented not misleading. Further, the
condensed consolidated financial statements reflect, in the opinion of
management, all adjustments (which included only normal recurring adjustments)
necessary to present fairly the financial position and results of operations as
of and for the periods indicated.
It is suggested that these condensed consolidated financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's Report on Form 10-K for the fiscal year ended October 31, 1996.
The results of operations for the three-month period ended January 31,
1997, are not necessarily indicative of the results to be expected for the
entire fiscal year ending October 31, 1997.
[The remainder of this page is intentionally left blank.]
1
<PAGE>
TELEVIDEO SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Jan. 31, Oct. 31,
ASSETS 1997 1996
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (including restricted cash of $2,500) $ 9,035 $ 4,496
Accounts receivable, less allowance of $971 in 1997 and $888 in 1996 3,323 4,394
Receivables from related parties,
net of allowance of $298 in 1997 and $391 in 1996 -- --
Inventories 4,183 5,834
Prepayments and other 163 62
Note receivable from sale of building -- 5,000
-------- --------
Total current assets 16,704 19,786
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 890 890
Building 1,035 1,035
Production equipment 1,227 1,263
Office furniture and equipment 1,753 1,753
Building improvements 1,105 1,105
-------- --------
6,010 6,046
Less accumulated depreciation and amortization 3,053 2,968
-------- --------
Property, plant and equipment, net 2,957 3,078
INVESTMENTS IN AFFILIATES 376 226
-------- --------
Total assets $ 20,037 $ 23,090
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 530 $ 3,080
Accrued liabilities 864 855
Income taxes 611 611
-------- --------
Total current liabilities 2,005 4,546
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
Authorized--75,000,000 shares
Outstanding--45,404,745 shares in 1997 and 45,402,245
shares in 1996 454 454
Additional paid-in capital 95,635 95,634
Accumulated deficit (78,057) (77,544)
-------- --------
Total stockholders' equity 18,032 18,544
-------- --------
Total liabilities and stockholders' equity $ 20,037 $ 23,090
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TELEVIDEO SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JANUARY 31, 1997 AND JANUARY 31, 1996
(In thousands, except per share amounts)
1997 1996
-------- --------
NET SALES $ 4,463 $ 5,199
COST OF SALES 3,858 4,505
-------- --------
GROSS PROFIT 605 694
OPERATING EXPENSES:
Sales and Marketing 774 886
Research and development 186 370
General and administration 292 292
-------- --------
Total operating expenses 1,252 1,548
-------- --------
Loss from operations (647) (854)
GAIN ON SALES OF INVESTMENTS IN
UNCONSOLIDATED AFFILIATES -- 187
INTEREST INCOME, net 155 123
OTHER INCOME, net (21) 236
-------- --------
Net loss $ (513) $ (308)
======== ========
Net loss per share $ (0.01) $ (0.01)
======== ========
Average shares outstanding 45,405 45,171
======== ========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TELEVIDEO SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 1997 AND JANUARY 31, 1996
(In thousands)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (513) $ (308)
Charges (credits) to operations not affecting cash:
Depreciation and amortization 85 70
Changes in operating assets and liabilities:
Accounts receivable 1,071 (1,136)
Inventories 1,651 531
Prepayments and other 4,899 (1,175)
Accounts payable (2,550) (1,109)
Accrued liabilities and royalties 9 (18)
Current and deferred income taxes -- --
------- -------
Net cash provided by (used in) operating activities 4,652 (3,145)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net retirements of (additions to) property, plant and equipment 36 (16)
Investment in marketable securities -- (1)
Investments in affiliate (150) (145)
Payments received on notes receivable from affiliate and other -- 1,350
------- -------
Net cash provided by (used in) investing activities (114) 1,188
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1 17
------- -------
Net cash provided by financing activities 1 17
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,539 (1,940)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 4,496 5,145
------- -------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 9,035 $ 3,205
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
TELEVIDEO SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Principles of Consolidation
---------------------------
The condensed consolidated financial statements include the accounts of the
Company and certain of its majority owned subsidiaries, after elimination of
intercompany accounts and transactions. The Company's investments in joint
ventures in the Commonwealth of Independent States, some of which represent a
majority interest in the joint venture, are not consolidated due to the lack
of reliable financial information from the entity. Such investments are
carried at cost.
Translation
-----------
The Company applies Statement of Financial Accounting Standards No. 52 for
purposes of translating foreign currency financial statements of its foreign
subsidiaries. Translation gains and losses resulting from the translation of
foreign currency financial statements are deferred and classified as
adjustments to stockholders' equity.
Use of Estimates
----------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements, as well as revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Approximately $2.5 million,
invested in short term certificates of deposit, are pledged as security under
letter of credit agreements.
Inventories
-----------
Inventories are stated at the lower of cost or market. Costs are computed on
a currently adjusted standard basis (which approximates average cost) for
both finished goods and work-in-process and includes material, labor and
manufacturing overhead costs. The cost of purchased parts is determined on a
first-in, first-out basis. Amounts shown are net of reserves for obsolescence
of $782,000 and $663,000 in 1997 and 1996, respectively:
Jan. 31 Oct. 31,
1997 1996
------ ------
Purchased parts and subassemblies $1,971 $4,040
Work-in-process 965 422
Finished goods 1,247 1,372
------ ------
$4,183 $5,834
====== ======
5
<PAGE>
Property, Plant and Equipment
-----------------------------
Depreciation and amortization are provided over the estimated useful lives of
the assets using both straight-line and accelerated methods.
Building 40 years
Production equipment 1-10 years
Office furniture 1-10 years
Net Income (Loss) Per Share
---------------------------
Net income (loss) per share is based on the weighted average number of shares
of Common Stock outstanding during each period.
2. ACQUISITIONS AND DIVESTITURES:
-----------------------------
AdMOS Technologies Inc.
-----------------------
During fiscal 1991, the Company acquired through its wholly owned subsidiary,
Silicon Logic, Inc., a 20% equity interest in a chip engineering firm (AdMOS
Technologies Inc.) in exchange for certain assets and a nominal cash payment,
the total value of which was $145,000. The acquisition of this interest had
been accounted for on the cost method. This investment was written off in
fiscal 1992 due to the continued economic difficulties experienced by AdMOS.
In fiscal 1991 and 1992, the Company loaned AdMOS a total of $470,000, which
has been partially repaid. The outstanding balance at January 31, 1997 was
$104,000. The repayment of a portion of this loan is personally guaranteed by
the President and controlling shareholders of AdMOS. Due to the economic
difficulties AdMOS is currently experiencing, the principal and interest
balances due on this note have been fully reserved.
In February 1995, the Company further loaned AdMOS $384,000 at an interest
rate of 10% per annum. Approximately $204,000 was repaid to the Company in
fiscal 1995 and fiscal 1996. In December 1996, the Company received another
$100,000 from AdMOS. The Company has fully reserved the unpaid balance of
$80,000 plus accrued interest as of January 31, 1997.
TLK, Inc.
---------
In November 1996, the Company invested $150,000 in exchange for a 20%
ownership in TLK, Inc. for the China Power Plant projects in Lin Zhang, Quin
Yuan and Henan Provinces in China. The Company expects to have a return on
investment within the next twelve months.
Russian Joint Ventures
----------------------
In fiscal 1995, 1996 and 1997, the Company acquired interests in various
joint ventures, primarily in the Commonwealth of Independent States. These
investments are accounted for on the cost method.
Three H
-------
Three H Partners (owned equally by TeleVideo and a Russian entity) was formed
in fiscal 1991 for the purpose of conducting short term commodities trading
and the initial investment was $16,000. In July 1996, the Company further
invested $60,000 in the joint venture.
6
<PAGE>
TeleVideo-RUS
-------------
In January 1996, TeleVideo set up a company called "TeleVideo-RUS" in the
Commonwealth of Independent States with an initial investment of $150,000.
The main purpose of this company is to act as a liaison between TeleVideo and
the authorities in the CIS. One of the projects that the Company is
anticipating will be the construction of truck terminals.
Risks of Operations in the Commonwealth of Independent States
-------------------------------------------------------------
There are a number of risks involved in TeleVideo's participation in foreign
joint ventures located in the Commonwealth of Independent States. These risks
include the ability to execute and enforce the agreements, the future
regulations governing the repatriation of funds, the political and economic
instability and the dependence on future events which can influence the
success or failure of the ventures and, thus, may affect the recoverability
of the amounts invested by TeleVideo. Management of the Company is aware of
the attendant risks relating to these ventures and continually monitors the
conditions in the CIS and the activities of the joint ventures. Management
further believes the investments to be secure and thus no reserves are
required as of January 31, 1997. However, there can be no assurance that
conditions in the CIS will not deteriorate and place the Company's investment
in jeopardy.
At the indicated dates the Company had the following investments in
affiliates and joint ventures: (in thousands)
Jan. 31 Oct. 31,
1997 1996
------ ------
TLK, Inc. $ 150 $ -
Three H 76 76
TeleVideo-RUS 150 150
------ ------
$ 376 $ 226
====== ======
3. LETTER OF CREDIT AGREEMENT:
--------------------------
The Company has two letter of credit agreements with the banks whereby the
banks will issue up to a total of $2.5 million of standby and sight letters
of credit. These agreements are contingent upon the Company maintaining cash
deposits at the banks as collateral in a total amount no less than the
outstanding borrowings. At January 31, 1997, the Company had letters of
credit outstanding of approximately $364,136 which were secured by cash
deposits of $2.5 million. These deposits earn interest at the rate of
approximately 5.075% per annum.
4. INCOME TAXES:
------------
The Company adopted, effective November 1, 1993, Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," issued in
February 1992. Under the liability method specified by SFAS 109, deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by
the enacted tax rates which will be in effect when these differences reverse.
Deferred tax expense is the result of changes in deferred tax assets and
liabilities. The change from the deferred method to the liability method of
accounting for income taxes had no material impact on the financial position
or results of operations of the Company for the quarter ended January 31,
1997.
As of January 31, 1997, the only tax issues pending are the Massachusetts
State Tax audit and the California Franchise Tax exposure resulting from the
previous Federal Income Tax audits. The Company believes that a resolution of
one or both of these audits could occur in fiscal 1997 and its maximum
exposure, collectively will not exceed $600,000. The Company has accrued this
full amount at January 31, 1997.
7
<PAGE>
5. LITIGATION AND OTHER:
--------------------
The Company has been named, along with dozens of other manufacturers,
designers, and distributors of computer equipments, as a defendant in several
lawsuits regarding product liability in connection with the alleged defective
design of computer terminal keyboards and the size of the computer monitor
screens. The first issue alleges that the various plaintiffs have suffered
some form of severe wrist injury from the use of said keyboards. The second
issue alleges that there was false advertising which claimed that the video
screens were 17 inches in size, when in reality they were only 15 inches. The
Company's attorneys have prepared a defense for these cases and the Company's
insurance carriers are informed of the plaintiff's claims. The Company
intends to vigorously defend against the allegations of these suits.
Management believes that the ultimate outcome of these lawsuits will not have
a material adverse effect on the Company's financial position.
6. RELATED PARTY TRANSACTIONS:
--------------------------
During 1997 and 1996 the Company has had transactions with its affiliates as
follows (in thousands):
Jan. 31, Oct. 31,
1997 1996
-------- --------
Note receivable:
AdMOS (1) $ 104 $ 104
AdMOS (1) 80 180
Interest receivable:
AdMOS (1) 67 65
AdMOS (1) 47 42
(1) Amounts are fully reserved.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net sales for the first quarter of fiscal 1997 were approximately $4.46
million, or a decrease of approximately 14.2% from the approximately $5.20
million in net sales reported in the first quarter of fiscal 1996. The decrease
in net sales was principally due to the decrease in sales of the multimedia
products from $2.48 million in the first quarter of fiscal 1996 to $2.18 million
in the first quarter of fiscal 1997, as a result of the elimination of those
unprofitable multimedia product lines. Net sales of terminal products were quite
steady which remained at the $1.7 million level.
Cost of sales decreased from approximately $4.51 million in the first
quarter of fiscal 1996 to approximately $3.86 million in the first quarter of
fiscal 1997, and deceased as a percentage of sales from approximately 86.7% to
approximately 86.4% during the same period. The percentage decrease in cost of
sales and the corresponding increase in gross margins in fiscal 1997 (an
increase from approximately 13.3% to 13.6%) were primarily the results of the
elimination of those unprofitable product lines, a strategy that the Company
expects to continue.
Sales and marketing expenses increased as a percentage of sales from
approximately 17.0% in the first quarter of fiscal 1996 to 17.3% in the first
quarter of fiscal 1997, while actual sales and marketing expenses decreased from
8
<PAGE>
$886,000 in the first quarter of fiscal 1996 to $774,000 in the first quarter of
fiscal 1997, a decrease of 12.6% from the prior year. The decrease in sales and
marketing expenses was due primarily to decreased expenditures resulting from
the decrease in employee staffing levels. The number of sales and marketing
employees decreased from 26 in the first quarter of fiscal 1996 to 22 in the
first quarter of fiscal 1997, while actual compensation expense decreased from
$497,000 in the first quarter of 1996 to $340,000 in the first quarter of fiscal
1997.
Research and development expenses decreased as a percentage of sales from
approximately 7.1% in the first quarter of fiscal 1996 to 4.2% in the first
quarter of fiscal 1997, while actual research and development expenses decreased
from $370,000 in fiscal 1996 to 186,000 in fiscal 1997 on a comparative
quarter-to-quarter basis, a decrease of 49.7% from the fiscal 1996 levels. The
decrease in actual research and development expenses in the first quarter of
fiscal 1997 compared to the same period in the prior year was primarily a result
of the decrease in employee staffing levels from 11 in the first quarter of
fiscal 1996 to 7 in the first quarter of fiscal 1997 while actual compensation
expense decreased from $252,000 in fiscal 1996 to $134,000 in fiscal 1997 on a
comparative quarter-to-quarter basis.
General and administrative expenses increased as a percentage of sales
from approximately 5.6% in the first quarter of fiscal 1996 to 6.5% in the first
quarter of fiscal 1997, while actual expenses remained at the same level of
$292,000.
The loss from operations decreased approximately 24.2%, from $854,000 in
the first quarter of fiscal 1996 to $647,000 in the first quarter of fiscal
1997. This decrease was primarily due to the decrease in actual operating
expenses from a total of $1.55 million to $1.25 million on a comparative
quarter-to-quarter basis.
Interest income earned increased from $123,000 in the first quarter of
fiscal 1996 to $155,000 in the first quarter of fiscal 1997, a 26.0% increase
from the prior year. Such increase was primarily due to the higher cash levels.
Net loss for the first quarter of fiscal 1997 was approximately $513,000,
compared with a net loss of $308,000 in the first quarter of fiscal 1996. The
loss in fiscal 1997 was a result of the various factors noted above.
As a result of the foregoing, net loss per share in the first quarter of
fiscal 1997 was $0.01, based on 45,404,745 weighted average shares outstanding,
compared to a net loss per share in the first quarter of fiscal 1996 of $0.01,
based on 45,171,403 weighted average shares outstanding.
No income tax expense or credit was provided for in the quarter ended
January 31, 1997, as the Company believes that it has adequate net operating
loss and credit carryovers to offset future federal and state corporate income
tax liabilities. No net deferred tax asset has been recognized by the Company
for any future tax benefit to be provided from the loss carryforwards since
realization of any such benefit is not assured.
Inflation had no significant impact on the Company's business or results
of operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled approximately $9.0 million at January
31, 1997, up $4.54 million (approximately 101.0%) from fiscal 1996 year-end
levels of $4.5 million. The increase in the cash and cash equivalents resulted
primarily from the repayment of its note receivable of $5.0 million from the
sale of its former headquarters while partially offset by the net cash used in
operating and investing activities of $348,000 and $150,000, respectively.
Approximately $2.5 million in certificates of deposit were pledged as
collateral for comparable amounts of stand-by and sight letters of credit under
the letter of credit agreements as of the end of the first quarter of fiscal
1997. At January 31, 1997, the Company had approximately $364,136 in outstanding
letters of credit which were secured by the pledged deposits under this
agreement.
9
<PAGE>
Net accounts receivable of $3.32 million at the end of the first quarter
of fiscal 1997 were down approximately 24.4% from the 1996 year-end level of
$4.39 million due primarily to decreased sales volume. Days sales outstanding in
accounts receivable decreased from 89 days in fiscal 1996 to 88 days in fiscal
1997.
Net inventories of approximately $4.18 million at the end of the quarter
ended January 31, 1997 were down approximately 28.3% from the 1996 year-end
level of $5.83 million.
Working capital at the end of the first quarter of fiscal 1997 was
approximately $14.70 million, down approximately 3.5% from the fiscal 1996
year-end level of approximately $15.24 million.
At the current consumption rate, the Company's cash balance of
approximately $9.0 million at January 31, 1997 (which includes $2.5 million
pledged as security for stand-by and sight letters of credit), together with
anticipated revenues from operations and other non-operating cash receipts, was
anticipated to be adequate to fund the Company's fiscal 1997 operations at
projected levels.
PART II. OTHER INFORMATION
--------------------------
ITEM 1. LEGAL PROCEEDINGS.
See Note 5 of "Notes to Condensed Consolidated Financial Statements."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit(s).
----------
Exhibit 10.7 Agreement Between TeleVideo Systems, Inc. and TLK, Inc.
Exhibit 27.0 Financial Data Schedule.
(b) Reports on Form 8-K. None.
-------------------
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10
<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.
TELEVIDEO SYSTEMS, INC.
-------------------------------
(Registrant)
Date: March 15, 1997 By: /s/ K. Philip Hwang
--------------------------------
Dr. K. Philip Hwang
Chairman of the Board and
Chief Executive Officer
/s/ David Kim
--------------------------------
David Kim
Chief Financial Officer
11
EXHIBIT 10.7
Agreement Between TeleVideo Systems, Inc. and TLK, Inc.
-------------------------------------------------------
Re: Lin Zhang, Quin Yuan & Henan Province Project
-------------------------------------------------
TeleVideo Systems, Inc. ("TeleVideo") will get:
* 20% ownership of TLK, Inc. ("TLK") in terms of common shares, on a fully
diluted basis, with the existing shareholders (Kong, Torrey, Larson and
Frogner) owning 80%. All five (5) shareholders, including TeleVideo, will
have the same kind of shares of stock and enjoy the same rights in terms of
equity distributions and all other potential benefits resulting from being a
shareholder in TLK.
* One seat on the Board of Directors of TLK.
Anti-Dilution:
* John Torrey of TLK has provided a 6 months budget consistent with a $150,000
investment from TeleVideo. In the event TLK is unable to complete the
anticipated deals within that budget, TeleVideo shall have no direct or
implied responsibility of providing additional funds. Furthermore, if such
additional funds have to be obtained from other sources with the result of
diluting the ownership of the TLK shareholders, TeleVideo shall maintain a
20% ownership in TLK.
TLK, Inc. will get:
* $150,000 in two payments: $100,000 as soon as practicable, but no later than
November 15, 1996 and the remaining $50,000 at the time a Joint Venture
Agreement re: Henan Project is signed.
Other Understandings:
* TeleVideo recognizes that TLK has prior debts that need to be paid at a time
when the company receives more than $300,000 in income. Said debts are
$30,000 to John Torrey and $86,081 to OSC, Inc. No part of these debts shall
be paid from the $150,000 provided by TeleVideo.
* TLK may have to incur some expenses associated with attorney's fees for
review of various agreements. These expenses have to be paid from the
$150,000 investment by saving in some other areas. It is the responsibility
of John Torrey, as the President of TLK, to make recommendations regarding
such tradeoffs.
* It is hereby agreed and understood that TLK shall pay the aforementioned
investors of TLK within two (2) weeks of receipt of the funds.
For TeleVideo Systems, Inc. For TLK, Inc.
/s/ K. Philip Hwang /s/ Bjorn Frogner
- -------------------------- -----------------
Dr. K. Philip Hwang Dr. Bjorn Frogner
Date: November 15, 1996
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TELEVIDEO SYSTEMS, INC. FOR THE THREE MONTHS ENDED
JANUARY 31, 1997 , AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 9,035
<SECURITIES> 0
<RECEIVABLES> 4,294
<ALLOWANCES> 971
<INVENTORY> 4,183
<CURRENT-ASSETS> 16,704
<PP&E> 6,010
<DEPRECIATION> 3,053
<TOTAL-ASSETS> 20,037
<CURRENT-LIABILITIES> 2,005
<BONDS> 0
0
0
<COMMON> 454
<OTHER-SE> 17,578
<TOTAL-LIABILITY-AND-EQUITY> 20,037
<SALES> 4,463
<TOTAL-REVENUES> 4,463
<CGS> 3,858
<TOTAL-COSTS> 5,110
<OTHER-EXPENSES> 19
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (155)
<INCOME-PRETAX> (511)
<INCOME-TAX> 2
<INCOME-CONTINUING> (513)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (513)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
