SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the Period ended December 31, 1996.
OR
[] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
Commission File Number: 0-13143
INNOVEX, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1223933
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1313 South Fifth Street, Hopkins, Minnesota 55343-9904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 938-4155
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes - X No
As of February 3, 1997, 14,362,034 shares of the registrant's common stock, $.04
par value per share, were outstanding.
Exhibit Index, page 10
PART 1: ITEM 1 FINANCIAL INFORMATION
<TABLE>
<CAPTION>
INNOVEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1996 1996
----------- -----------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,407,028 $ 5,635,534
Short-term investments 19,540,000 16,140,000
Accounts receivable, less allowance for
doubtful accounts of $342,000 and $317,000) 17,714,303 12,034,349
Inventories 6,272,178 5,570,582
Other current assets 2,540,033 2,648,112
----------- -----------
Total current assets 50,473,542 42,028,577
Property, plant and equipment, net of accumulated depreciation
of $9,573,000 and $8,743,000 13,460,795 12,731,980
Intangible assets, net of amortization of $2,468,000 and $2,317,000 2,207,328 2,308,737
Other assets 291,052 1,175,052
----------- -----------
$66,432,717 $58,244,346
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 96,000 $ 96,000
Accounts payable 5,499,055 3,581,628
Accrued compensation 1,445,027 2,158,834
Income taxes payable 2,342,745 1,809,038
Other accrued liabilities 844,939 841,150
----------- -----------
Total current liabilities 10,227,766 8,486,650
Long-term debt 1,037,861 1,063,253
Other long-term liabilities 299,252 294,327
Stockholders' equity:
Common stock, $.04 par value; 30,000,000 shares authorized,
14,311,434 and 14,221,254 shares issued and outstanding 572,457 284,425
Capital in excess of par value 9,580,603 9,418,376
Retained earnings 44,714,778 38,697,315
----------- -----------
Total stockholders' equity 54,867,838 48,400,116
----------- -----------
$66,432,717 $58,244,346
=========== ===========
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
INNOVEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended December 31,
1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 29,311,887 $ 13,111,707
Costs and expenses:
Cost of sales 17,204,240 7,595,475
Selling, general and administrative 2,403,125 1,203,795
Engineering 873,928 586,791
Net interest and other (income) expense (224,752) (204,545)
------------ ------------
Income before taxes 9,055,346 3,930,191
Provision for income taxes 2,717,000 1,179,000
------------ ------------
Net income $ 6,338,346 $ 2,751,191
============ ============
Primary and fully dilutive net income per share: $ 0.42 $ 0.19
============ ============
Common and common equivalent shares outstanding:
Primary 15,000,557 14,503,914
============ ============
Assuming full dilution 15,199,535 14,503,914
============ ============
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
INNOVEX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended December 31,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,338,346 $ 2,751,191
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,049,199 808,270
Other non-cash charges (credits) 3,777 514
Changes in operating assets and liabilities:
Accounts receivable (5,679,954) (536,917)
Inventories (701,596) (244,518)
Other current assets 108,079 (230,474)
Accounts payable 1,917,427 (14,018)
Other liabilities (705,093) (772,230)
Income taxes payable 533,707 1,023,764
----------- -----------
Net cash provided by (used in) operating activities 2,863,892 2,785,582
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,680,382) (845,410)
Proceeds from sale of investment in limited partnership 884,000 --
Proceeds from sale of assets -- 11,500
Purchase of held-to-maturity securities (7,190,000) (5,075,000)
Maturities of held-to-maturity securities 3,790,000 2,100,000
----------- -----------
Net cash provided by (used in) investing activities (4,196,382) (3,808,910)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (25,392) (26,686)
Proceeds from exercise of stock options 450,259 83,004
Dividends paid (320,883) (282,965)
----------- -----------
Net cash provided by (used in) financing activities 103,984 (226,647)
Increase (decrease) in cash and cash equivalents (1,228,506) (1,249,975)
Cash and cash equivalents at beginning of year 5,635,534 7,384,298
----------- -----------
Cash and cash equivalents at end of period $ 4,407,028 $ 6,134,323
=========== ===========
SUPPLEMENTAL DISCLOSURES:
The Company considers all highly liquid investments with a maturity date of
three months or less when purchased to be "cash equivalents."
Cash paid for interest was $20,000 and $26,000 in 1996 and 1995, respectively.
Income tax payments were $876,000 and $155,000 in 1996 and 1995, respectively.
</TABLE>
See accompanying notes.
INNOVEX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions on Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The unaudited condensed
consolidated financial statements include the accounts of Innovex, Inc. and its
subsidiaries (the "Company") after elimination of all significant intercompany
transactions and accounts. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of operating results have been made. Operating results for interim periods are
not necessarily indicative of results which may be expected for the year as a
whole. For further information, refer to the consolidated financial statements
and footnotes included in the registrant's annual report on Form 10-K for the
year ended September 30, 1996.
NOTE 2 - TWO FOR ONE STOCK SPLIT
All share and per share information for prior periods has been adjusted
to reflect a two for one stock split effective on December 23, 1996.
PART I: ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
Innovex, Inc. and its subsidiaries (the Company) operate through four
divisions, Precision Products, Litchfield Precision Components, InnoMedica and
Iconovex. Each division has its own administrative, engineering, manufacturing
and marketing organizations.
The largest division, Precision Products, develops, engineers and
manufactures specialty precision electromagnetic products for original equipment
manufacturers ("OEM's"). Lead wire assemblies for the thin film disk drive
market are the Division's primary product.
The Litchfield Precision Components Division (LPC) designs and
manufactures highly complex flexible circuitry and chemically machined
components. Approximately 40% of LPC's sales are medical product applications,
40% are computer and computer peripheral applications with the remaining 20%
primarily being communications industry or other applications.
The Company also operates two other divisions, Iconovex and InnoMedica.
These divisions currently only produce a small portion of the Company's revenue.
Iconovex is responsible for the further development and marketing of a document
handling software product which was purchased in November 1993. The purchased
software prepares indexes and abstracts of documents stored on electronic media.
The initial application derived from the purchased software, Indexicon, was
designed for use on personal computers and began shipping in fiscal 1994.
Another product, AnchorPage, was released in fiscal 1995. AnchorPage enables
Internet World Wide Web sites to provide their users access to web site
information automatically using conceptual navigational techniques. The
Division's newest product, EchoSearch, was released during the fiscal 1996
fourth quarter. EchoSearch, is a desktop based tool for browsers of the World
Wide Web which enables users to simultaneously query multiple search engines.
The search responses are indexed and abstracted to present the user a condensed
view that improves both the speed and accuracy of the search. The Division
intends to focus future attention on licensing its technology to OEM software
developers.
InnoMedica was formed late in fiscal 1993 to further develop the
Company's medical business. In line with this strategy, the Company acquired
Daig Corporation's pacemaker lead wire and adapter product line in September
1993 and Possis Medical, Inc's pacemaker lead wire product line in March 1994.
Revenue generated by this division should continue to increase throughout fiscal
1997 as its customer base expands.
RESULTS OF OPERATIONS
NET SALES
The Company's net sales from operations totaled $29,312,000 for the
quarter, up 124% from $13,112,000 reported in fiscal 1996. The increase was due
to the continued strong demand for lead wire assemblies caused by increased
demand for disk drives and the addition of sales from the May 16, 1996 LPC
acquisition. Also contributing to the sales increase was an increasing portion
of high end MR lead wire assemblies being included in the product mix, partially
as a result of the success of Innovex's new WAT technology. These MR lead wire
assemblies have a higher value added content and sell for a higher price than
the low end inductive assemblies. The lead wire assembly demand is expected to
remain strong throughout the remainder of the fiscal year with an increasing
portion of the lead wire sales being the high end MR products. The LPC
acquisition should also continue to contribute to an increase in sales for the
remainder of the fiscal year.
GROSS MARGINS
The Company's consolidated gross profit as a percent of sales for the
quarter remained relatively stable at 41% as compared to 42% reported for the
same period last year. Gross margins for the existing lead wire assembly
business should remain relatively stable for the remainder of the fiscal year
due to expected continued strong demand.
OPERATING EXPENSES
Operating expenses were 11.2% of sales for the current quarter,
improved from 13.7% in the prior year's first quarter. The decrease in operating
expenses as a percent of sales for the current year is primarily due to the
increase in sales more than offsetting the increase in total operating expenses.
Total operating expenses increased primarily due to the inclusion of operating
costs from LPC which was acquired on May 16, 1996 and the adding of
infrastructure to handle the higher level of activity. The level of operating
expenses is not expected to change significantly as a percent of sales for the
remainder of the fiscal year.
OPERATING PROFIT
Consolidated operating profit of $8,831,000 in the current quarter was
up 137% from the $3,726,000 profit for the prior year first quarter. This is
primarily the result of the increased sales volume. Operating profit for the
remainder of the fiscal year is expected to remain strong due to the continued
high demand for thin-film lead wire assemblies and the inclusion of LPC's
operating results. Revenues from the Company's Iconovex and InnoMedica Divisions
are expected to continue to increase; however, they will remain a small portion
of the Company's total sales. Although both divisions are currently generating
operating losses, InnoMedica is expected to be operating at a profitable level
by the end of the fiscal year.
NET INCOME
Consolidated net income for the fiscal 1997 first quarter was
$6,338,000 or $0.42 per share as compared to $2,751,000 or $0.19 per share for
the prior year first quarter.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments increased to $23.9 million at December
31, 1996 from $21.8 million at September 30, 1996. This increase was primarily
due to income generated from operating activities.
Accounts receivable at December 31, 1996 increased by $5,680,000 from
September 30, 1996 due to the increased level of sales at the end of the
quarter. Inventory increased by $702,000 from September 30, 1996 to support the
increased level of activity and the start up of a new sub-contractor in China.
Working capital totaled $40.2 million and $33.5 million at December 31,
1996 and September 30, 1996, respectively. The increase is primarily due to the
increase in accounts receivable.
Since September 30, 1996, the Company has invested over $1.6 million in
property, plant and equipment. These additions include equipment to expand and
further automate the lead wire assembly production process and computer
equipment and software.
Management believes that internally generated funds will provide
adequate sources of capital for supporting projected growth in fiscal 1997.
FORWARD LOOKING STATEMENTS
Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, in letters to shareholders,
elsewhere in the Company's Form 10-Q and in future filings by the Company with
the SEC, except for historical information contained herein and therein, are
"foreword looking statements" that involve risks and uncertainties, including
the timely availability and acceptance of new products, the impact of
competitive products and pricing and a general downturn in the Company's
principal market. The Company disclaims any obligation subsequently to revise
any foreword looking statements to reflect subsequent events or circumstances or
the occurrence of unanticipated events.
PART II - OTHER INFORMATION
Responses to Items 1 through 5 are omitted since these items are either
inapplicable or the response thereto would be negative.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
3a Restated Articles of Incorporation
11 Computation of Per Share Net Income
27 Financial Data Schedule
b) Reports on Form 8-K
None.
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.
INNOVEX, INC.
Registrant
Date: February 13, 1997
By \s\ Thomas W. Haley
---------------------------
Thomas W. Haley
Chief Executive Officer
By \s\ Douglas W. Keller
---------------------------
Douglas W. Keller
Vice President, Finance
INDEX TO EXHIBITS
Exhibits Page
3a Restated Articles of Incorporation 11-15
11 Computation of Per Share Net Income 16
27 Financial Data Schedule 17
EXHIBIT 3A
RESTATED ARTICLES OF INCORPORATION
OF
INNOVEX, INC.
Pursuant to the provisions of Chapter 302A of the Minnesota Statutes,
known as the Minnesota Business Corporation Act, and amendments thereto, the
following Restated Articles of Incorporation are adopted and shall supersede and
take the place of the existing Articles of Incorporation and all amendments
thereto.
ARTICLE I.
Name
The name of the corporation shall be Innovex, Inc.
ARTICLE II.
Business Purposes
The purpose for which this corporation is organized are as follows:
a. General business purposes.
b. To do everything necessary, proper, advisable or convenient
for the accomplishment of the purposes herein above set forth,
and to do all other things incidental thereto or connected
therewith, which are not forbidden by the laws under which
this corporation is organized, by other laws, or by these
Articles of Incorporation.
c. To carry out the purposes hereinabove set forth in any state,
territory, district or possession of the United States, or in
any foreign country to the extent that such purposes are
forbidden by law, to limit in any certificate for application
to do business, the purposes or purpose which the corporation
proposes to carry on therein to such as are not forbidden by
law thereof.
ARTICLE III.
Duration
The duration of the corporation shall be perpetual.
ARTICLE IV.
Registered Office
The location and post office address of the registered office of the
corporation in the State of Minnesota is 1313 5th Street S., Hopkins, Minnesota
55343.
ARTICLE V.
Powers of the Corporation
This corporation shall have all the powers granted to private
corporations organized for profit by said Minnesota Business Corporation Act,
and in furtherance and not in limitation of the powers conferred by the laws of
the State of Minnesota upon corporations organized for the foregoing purposes,
the corporation shall have the power:
a. To acquire, hold, mortgage, pledge or dispose of the shares,
bonds, securities or other evidences of indebtedness of the
United States of America, or of any domestic or foreign
corporation, and while the holder of such shares to exercise
all the privileges of ownership, including the right to vote
thereon, to the same extent as a natural person might or could
do, by the president of this corporation or by proxy appointed
to him, unless some other person, by resolution of the Board
of Directors, shall be appointed to vote such shares.
b. To purchase or otherwise acquire on such terms and in such
manner as the Bylaws of this corporation from time to time
provide, and to own all shares of the capital stock of this
corporation, and to reissue the same from time to time.
c. When and as authorized by the vote of the holders of not less
than a majority of the shares entitled to vote, at a
shareholders' meeting called for that purpose, or when
authorized upon the written consent of the holders of a
majority of such shares, to sell, lease, exchange or otherwise
dispose of all, or substantially all of its property and
assets including its goodwill, upon such terms and for such
consideration which may be money, shares, bonds, or other
instruments for the payment of money or other property as the
Board of Directors deems expedient or advisable.
d. To acquire, hold, lease, encumber, convey or otherwise dispose
of, either alone or in conjunction with others, real and
personal property within or without the state and to take real
and personal property by will or gift.
e. To acquire, hold, take over as a going concern and thereafter
to carry on, mortgage, sell or otherwise dispose of, either
alone or in conjunction with others, the rights, property,
shares, bonds, securities and other evidences of indebtedness,
including commodities and business of any person, entity,
partnership, limited partnership, association or corporation
heretofore or hereafter engaged in any business, the purpose
of which is similar to the purposes set forth in Article II of
these Articles of Incorporation.
f. To enter into any lawful arrangement for sharing profits,
union of interests, reciprocal association or cooperative
association with any corporation, association, partnership,
individual or other legal entity, for the carrying on of any
business, the purpose of which is similar to the purposes set
forth in Article II of these Articles of Incorporation or
limited partnership the purposes of which are similar to such
person.
ARTICLE VI.
Mergers and Consolidation
Any agreement for the consolidation or merger with one or more foreign
or domestic corporations may be authorized by vote of the holders of a majority
of the shares entitled to vote.
ARTICLE VII.
Capital Stock
Section 1. The aggregate number of shares which this corporation shall
have authority to issue is 30,000,000 shares, par value $0.04 each, which shall
be known as "common stock."
Section 2. Each of the common shares of this corporation now issued,
having a par value of $0.10 per share, shall be equal to and is hereby changed
into two and one-half fully paid nonassessable shares of this corporation,
having a par value of $0.04 per share, authorized to be issued under the
Articles of Incorporation, as hereby amended. Certificates for common shares
having a par value of $0.04 per share shall be issued in place and upon
surrender of certificates for shares having a par value of $0.10 per share now
issued, on the aforesaid basis; provided, however, that upon this amendment to
the Articles of Incorporation becoming effective, the holders of said shares now
issued shall thereupon cease to be holders of said shares and shall become
holders of the herein authorized common shares upon the basis hereinabove
specified, whether or not certificates representing said herein authorized
common shares are then issued and delivered.
Section 3. The powers and duties of the shareholders and the Board of
Directors with respect to the common shares shall include:
a. The holders of the common stock shall be entitled to receive,
when and as declared by the Board of Directors, out of
earnings or surplus legally available therefor, dividends,
payable either in cash, in property or in shares of the
capital stock of the corporation.
b. The common stock may be allotted as and when the Board of
Directors shall determine, and, under and pursuant to the laws
of the State of Minnesota, the Board of Directors shall have
the power to fix or alter, from time to time, in respect of
shares then unallotted, any and all of the following: The
dividend rate; the redemption price; the liquidation price;
the conversion rights and the sinking or purchase fund rights
of shares of any class, or of any series of any class, or the
number of shares constituting any series of any class. The
Board of Directors shall also have the power to fix the terms,
provisions and conditions of options to purchase or subscribe
for shares of any class or classes, including the price and
conversion basis thereof, and to authorize the issuance
thereof. The Board of Directors shall also have the power to
issue shares of stock of the corporation for cash, services,
property, securities or assets of other business enterprises,
or otherwise, as it may from time to time deem expedient.
c. No holder of stock in the corporation shall be entitled to any
cumulative voting rights.
d. No holder of stock of the corporation shall have any
preferential, preemptive or other rights of subscription to
any shares of any class of stock of the corporation allotted
or sold or to be allotted or sold now or hereafter authorized,
or to any obligations convertible into the stock of the
corporation of the class, or any right of subscription to any
part thereof.
ARTICLE VIII.
Stated Capital
The minimum amount of stated capital with which the corporation will
begin business is $1,000.00.
ARTICLE IX.
Management and Additional Powers
Section 1. The management and conduct of the business of the
corporation shall be vested in a Board of Directors, which shall consist of such
number of directors, not less than the minimum permitted by law, as shall be
fixed in the Bylaws, or in the absence of such provision in the Bylaws, as shall
be determined by the shareholders at any annual or special meeting thereof. The
term of the first Board of Directors, as hereinafter identified, shall extend
until the first shareholders' meeting subsequent to incorporation.
Section 2. Except as otherwise herein provided, the term of office of
each director of the corporation shall be for a period of one (1) year, and
until his successor is elected and qualified, unless the director is removed as
provided by law.
Section 3. At the first shareholders' meeting of the corporation
subsequent to incorporation, director or directors shall be elected to serve
until the next annual meeting of shareholders and until a successor or
successors are elected and qualified. Thereafter, all directors shall be elected
for the full term of one (1) year and until their respective successors are
elected and qualified, unless removed as provided by law. If a vacancy in the
Board of Directors occurs during the term of any director, a successor director
to serve during the unexpired portion of said term may be elected by the
remaining directors.
Section 4. The Board of Directors shall have the authority to accept or
reject subscription for capital stock made after incorporation and may grant
options to purchase or subscribe for capital stock. The Board of Directors shall
from time to time fix and determine the consideration for which the corporation
shall issue and sell its capital stock, and also the dividends to be paid by the
corporation upon the capital stock. The Board of Directors shall have authority
to fix the terms and conditions of rights to convert any securities of this
corporation into shares and to authorize the issuance of such conversion rights.
Section 5. The Board of Directors shall have the authority to issue
bonds, debentures or other securities convertible into capital stock or other
securities of any class, or bearer warrants or other evidences of optional
rights to purchase and/or subscribe to capital stock or other securities of any
class, upon such terms, in such manner, and under such conditions as may be
fixed by resolution of the Board prior to the issue thereof.
Section 6. The Board of Directors shall have the authority to make and
alter the Bylaws, subject to the power of the shareholders to change or repeal
the Bylaws.
Section 7. A quorum for any meeting of shareholders to transact
business of this corporation except as otherwise specifically provided herein or
by law shall be the presence in person or by proxy of the holders of a majority
of the shares of common stock of the corporation outstanding and of record on
the record date set for such meeting.
Section 8. No contract or other transaction between the corporation and
any person, firm, association or corporation, and no other act of this
corporation shall, in the absence of fraud, be invalidated or in any way
affected by the fact that any of the directors of the corporation are, directly
or indirectly, pecuniarily or otherwise interested in such contract, transaction
or other act or related to or interested in such person, firm, association or
corporation, as director, stockholder, officer, employee, member or otherwise.
Any director of the corporation, individually, or any firm or association of
which any director may be a member may be a party to or may be pecuniarily or
otherwise interested in any contract or transaction of the corporation, provided
that the fact that he individually or such firm or association is so interested
shall be disclosed or known to the Board of Directors or a majority of such
members thereof as shall be present at any meeting of the Board of Directors, or
of any committee of directors having the powers of the full Board, at which
action upon any such contract, transaction or other act is taken, and if such
fact shall be so disclosed or known, any director of this corporation so related
or otherwise interested may be counted in determining the presence of a quorum
at any meeting of the Board of Directors of such committee at which action upon
any such contract, transaction or act shall be taken and may vote thereat with
respect to such action with like force and effect as if he were not so related
or interested. Any director of the corporation may vote upon any contract or
other transaction between the corporation and any subsidiary or affiliated
corporation.
Section 9. Officers and directors of this corporation may hold
positions as officers and directors of any other corporations in related
businesses, and their efforts to advance such corporations will not constitute a
breach of fiduciary loyalty to this corporation in the absence of a showing of
bad faith.
ARTICLE X.
Directors
Section 1. No director of the corporation shall be personally liable to
the corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its shareholders; (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) under section 302A.559 or 80A.23 of Minnesota Statutes;
(iv) for any transaction from which the director derived any improper personal
benefit; or (v) for any act or omission occurring prior to the date when this
provision becomes effective.
Section 2. The provisions of this Article XIII shall not be deemed to
limit or preclude indemnification of a director by the corporation for any
liability of a director which has not been eliminated by the provisions of this
Article XIII.
Section 3. If Minnesota Statutes hereafter are amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the corporation shall be eliminated or limited to the
fullest extent permitted by the Minnesota Statutes, as so amended.
ARTICLE XI.
Amendment
Any provisions contained in these Articles of Incorporation may be
amended solely by the affirmative vote of the holders of a majority of the stock
entitled to vote.
EXHIBIT 11
COMPUTATION OF PER SHARE NET INCOME
For the Three Months Ended December 31,
1996 1995
---- ----
Net income for the period used in
determining net income per share $ 6,338,346 $ 2,751,191
Weighted average common and common
equivalent shares used in determining
net income per share:
Primary 15,000,557 14,503,914
Assuming full dilution 15,199,535 14,503,914
Primary and fully dilutive net income per share $0.42 $0.19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THE 10-Q FOR THE QUARTER ENDED
DECEMBER 31, 1996 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> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,407
<SECURITIES> 19,540
<RECEIVABLES> 18,056
<ALLOWANCES> 342
<INVENTORY> 6,272
<CURRENT-ASSETS> 50,474
<PP&E> 23,034
<DEPRECIATION> 9,573
<TOTAL-ASSETS> 66,433
<CURRENT-LIABILITIES> 10,228
<BONDS> 1,038
0
0
<COMMON> 572
<OTHER-SE> 54,317
<TOTAL-LIABILITY-AND-EQUITY> 66,433
<SALES> 29,312
<TOTAL-REVENUES> 29,312
<CGS> 17,204
<TOTAL-COSTS> 17,204
<OTHER-EXPENSES> 0
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<EPS-PRIMARY> .42
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</TABLE>
