<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For The Quarter Ended September 30, 1997
- --------------------------------------------------------------------------------
Commission file number 0-7024
- --------------------------------------------------------------------------------
THE FIRST YEARS INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2149581
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Kiddie Drive, Avon, Massachusetts 02322-1171
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(508) 588-1220
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 of Registrant's common stock outstanding on October 31,
1997 was 5,055,216.
<PAGE> 2
THE FIRST YEARS INC.
INDEX
PART I - FINANCIAL INFORMATION:
Condensed Consolidated Balance Sheets Page 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4 - 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 7
PART II - OTHER INFORMATION
Other information 8
SIGNATURES 8
EXHIBIT INDEX 9
<PAGE> 3
THE FIRST YEARS INC.
Condensed Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $10,569,485 $ 4,164,587
Accounts receivable, net 17,309,912 15,929,465
Inventories 19,790,100 18,588,044
Prepaid expenses and other assets 886,938 375,317
Deferred tax assets 946,400 946,400
----------- -----------
Total current assets 49,502,835 40,003,813
----------- -----------
PROPERTY, PLANT, AND EQUIPMENT:
Land 167,266 167,266
Building 4,018,915 4,016,405
Machinery and molds 7,754,546 7,329,240
Furniture and equipment 3,832,713 3,092,356
----------- -----------
Total 15,773,440 14,605,267
Less accumulated depreciation 8,577,918 7,559,543
----------- -----------
Property, plant, and equipment-net 7,195,522 7,045,724
----------- -----------
TOTAL ASSETS $56,698,357 $47,049,537
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 0 $ 100,000
Accounts payable 9,651,981 6,969,115
Accrued royalties 1,423,333 848,671
Accrued payroll expenses 1,283,271 1,087,302
Accrued selling expenses 1,684,940 1,406,009
Federal and state income taxes payable 0 0
----------- -----------
Total current liabilities 14,043,525 10,411,097
----------- -----------
DEFERRED TAX LIABILITY 772,000 772,000
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 505,522 494,898
Paid-In capital 6,294,523 5,271,875
Retained earnings 35,082,787 30,099,667
----------- -----------
Total stockholders' equity 41,882,832 35,866,440
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $56,698,357 $47,049,537
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 1
<PAGE> 4
THE FIRST YEARS INC.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $27,878,092 $23,273,193 $88,397,388 $69,631,738
COST OF PRODUCTS SOLD 16,249,011 13,629,185 52,247,703 41,588,698
----------- ----------- ----------- -----------
GROSS PROFIT 11,629,081 9,644,008 36,149,685 28,043,040
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES 8,701,661 7,306,213 26,988,068 21,154,744
----------- ----------- ----------- -----------
OPERATING INCOME 2,927,420 2,337,795 9,161,617 6,888,296
OTHER INCOME (EXPENSES):
Interest expense (542) (49,457) (26,241) (346,666)
Interest income 67,025 5,125 89,091 8,000
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 2,993,903 2,293,463 9,224,467 6,549,630
PROVISION FOR INCOME TAXES 1,190,100 917,400 3,744,600 2,619,900
----------- ----------- ----------- -----------
NET INCOME $ 1,803,803 $ 1,376,063 $ 5,479,867 $ 3,929,730
=========== =========== =========== ===========
EARNINGS PER SHARE $ 0.34 $ 0.27 $ 1.05 $ 0.81
=========== =========== =========== ===========
AVERAGE NUMBER OF SHARES
OUTSTANDING 5,257,229 5,150,751 5,203,529 4,862,132
=========== =========== =========== ===========
CASH DIVIDENDS PAID PER SHARE $ 0.00 $ 0.00 $ 0.10 $ 0.10
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 2
<PAGE> 5
THE FIRST YEARS INC.
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,479,867 $ 3,929,730
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Depreciation 1,143,226 918,186
Provision for doubtful accounts 245,359 95,595
Gain on disposal of equipment 0 22,881
Increase (decrease) arising from working
capital items:
Accounts receivable (1,625,806) (1,756,368)
Inventories (1,202,056) (1,397,316)
Prepaid expenses and other assets (511,621) 523,293
Accounts payable 2,682,866 (783,257)
Accrued royalties 574,662 260,366
Accrued payroll expenses 195,969 296,402
Accrued selling expenses 278,931 342,278
Federal and state income taxes - net 0 41,300
----------- -----------
Net cash provided by
operating activities 7,261,397 2,493,090
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant,
and equipment (1,293,024) (1,655,302)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Dividend (496,747) (453,557)
Common stock issued under stock
option plans 633,272 130,178
Tax benefit of stock option compensation 400,000 0
Net proceeds from public offering -- 5,121,750
Repayment of short term borrowings -- (4,900,000)
Repayment of industrial revenue bonds (100,000) (100,001)
----------- -----------
Net cash provided by (used for)
financing activities 436,525 (201,630)
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 6,404,898 636,158
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 4,164,587 552,568
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $10,569,485 $ 1,188,726
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for:
Interest $ 26,241 $ 346,666
=========== ===========
Income taxes $ 3,738,100 $ 2,196,300
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3
<PAGE> 6
THE FIRST YEARS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Amounts in the accompanying balance sheet as of December 31, 1996 are
condensed from the Company's audited balance sheet as of that date. All
other condensed consolidated financial statements are unaudited but, in the
opinion of the Company, contain all normal and recurring adjustments
necessary to present fairly the financial position as of September 30,
1997, and the results of operations and cash flows for the periods ended
September 30, 1997 and 1996.
2. The Company has 15,000,000 authorized shares of $.10 par value common stock
with 5,055,216 and 4,948,980 shares issued and outstanding as of September
30, 1997 and December 31, 1996, respectively.
On May 8, 1997 the Board of Directors authorized a $0.10 per share annual
cash dividend which was paid on June 2, 1997 to holders of record at the
close of business on May 21, 1997.
3. Earnings per share of common stock are computed on the basis of the average
number of shares and common share equivalents outstanding during each
quarter. Fully diluted and primary earnings per share were the same for the
nine months ended September 30, 1997 and 1996.
In February 1997 the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share" which will become effective for the Company
effective December 15, 1997. SFAS No. 128 replaces the presentation of
primary earnings per share with a basic earnings per share (which excludes
dilution) and a diluted earnings per share. Had the Company used SFAS No.
128, the Company's basic and diluted earnings per share would have been
$1.10 and $1.05, respectively for the nine months ended September 30, 1997
and $0.84 and $0.81, respectively for the nine months ended September 30,
1996.
4. The results of operations for the nine month period ended September 30,
1997 and 1996 are not necessarily indicative of the results to be expected
for the full year.
5. During 1997, the Company borrowed various amounts up to $2,500,000 under an
unsecured line of credit totaling $10,000,000 available from a bank. As of
September 30, 1997 there was no balance outstanding. During 1996, the
Company borrowed various amounts up to $9,900,000 of which $1,300,000
remained outstanding as of September 30, 1996 at a weighted average
interest rate of 7.38%. No other short-term borrowings were incurred by the
Company during the first nine months of 1997 or 1996.
Page 4
<PAGE> 7
THE FIRST YEARS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Con't)
6. In June 1997 the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" which will become effective for the
Company effective December 15, 1997. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general purpose financial
statements. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same
prominence as other financial statements. SFAS No. 130 requires that a
Company (a) classify items of other comprehensive income by their nature in
a financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of the balance sheet.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The Company has not determined the
effects, if any, that SFAS No. 130 will have on its financial statements.
In June 1997 the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" which
will become effective for the Company effective December 15, 1997. SFAS No.
131 establishes standards for the way that public companies report selected
information about operating segments in annual financial statements and
requires that those companies report selected information about segments in
interim financial reports issued to shareholders. It also establishes
standards for related disclosure about products and services, geographic
areas, and major customers. SFAS No. 131, which supersedes SFAS No. 14,
"Financial Reporting Segments of a Business Enterprise" but retains the
requirement to report information about major customers, requires that a
public company report financial and descriptive information about its
reportable operating segments. The Company has not determined the effects,
if any, that SFAS No. 131 will have on its financial statements.
Page 5
<PAGE> 8
THE FIRST YEARS INC.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Statements in this Report on Form 10-Q that are not strictly historical are
"forward-looking" statements, as defined in the Private Securities Litigation
Reform Act of 1995. The actual results may differ from those projected in the
forward-looking statements due to risks and uncertainties that exist in the
Company's operations and business environment in the development and
introduction of new products, described more fully in the Company's Annual
Report on From 10-K for the year ended December 31, 1996, and the Exhibit 99 of
this Form 10-Q for the quarter ended September 30, 1997, filed with the
Securities and Exchange Commission.
Net sales for the first nine months of 1997 were $88.4 million, an increase of
$18.8 million or 26.9%, as compared to $69.6 million for the comparable period
last year. The increase was due to new product introductions, including the
Sesame Street brand licensed from the Children's Television Workshop, and
expanded retail distribution in domestic and foreign markets.
Cost of products sold for the first nine months of 1997 was $52.2 million, an
increase of $10.6 million or 25.6%, as compared to $41.6 million for the
comparable period last year. As a percentage of sales, cost of products sold in
the first nine months of 1997 decreased to 59.1% from 59.7% in the comparable
period of 1996. The decrease was primarily due to reduced cost of products
resulting from manufacturing efficiencies and increased sales of higher margin
products.
Selling, general, and administrative expenses for the first nine months of 1997
were $27.0 million, an increase of $5.8 million or 27.6%, as compared to $21.2
million of such expenses for the first nine months of 1996. The increase
resulted primarily from costs related to increased sales volume; payroll and
payroll related costs, and integrated marketing communication program expenses.
As a percentage of net sales, selling, general, and administrative expenses for
the first nine months of 1997 and 1996 remained consistent at 30.5% and 30.4%,
respectively.
Income tax expense as a percentage of pretax income was 41% and 40% for the
first nine months of 1997 and 1996, respectively.
Net working capital increased by $5.9 million in the first nine months primarily
due to profitable operations. Accounts receivable increased by $1.4 million
primarily as a result of increased sales and inventories increased by $1.2
million to meet continued demand for the Company's products. Cash increased by
$6.4 million primarily resulting from funds generated from operations.
Page 6
<PAGE> 9
THE FIRST YEARS INC.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Con't)
The Company reviewed its needs with regard to open lines of credit during the
three months ended September 30, 1997. After this review, the Company continued
with an unsecured bank line of credit aggregating $10.0 million which is
subject to annual renewal. Amounts outstanding under the line is payable upon
demand by the bank. During the first nine months of 1997, the Company borrowed
various amounts up to $2.5 million of which no amount remained outstanding as
of September 30, 1997. During the first nine months of 1996, the Company
borrowed various amounts up to $9.9 million of which $1.3 million remained
outstanding as of September 30, 1996. The Company did not incur any other
short-term borrowings during the first nine months of 1997 and 1996.
Recent Accounting Pronouncements
In June 1997 the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" which will become effective for the Company
effective December 15, 1997. SFAS No. 130 establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general purpose financial statements. SFAS
No. 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 requires that a Company (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in-capital in the equity section of the
balance sheet. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. The Company has not determined
the effects, if any, that SFAS No. 130 will have on its financial statements.
In June 1997 the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" which will
become effective for the Company effective December 15, 1997. SFAS No. 131
establishes standards for the way that public companies report selected
information about operating segments in annual financial statements and requires
that those companies report selected information about segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosure about products and services, geographic areas, and major
customers. SFAS No. 131, which supersedes SFAS No. 14, "Financial Reporting
Segments of a Business Enterprise", but retains the requirement to report
information about major customers, requires that a public company report
financial and descriptive information about its reportable operating segments.
The Company has not determined the effects, if any, that SFAS No. 131 will have
on its financial statements.
Page 7
<PAGE> 10
THE FIRST YEARS INC.
PART II - OTHER INFORMATION
Items 1 through 5 - Not Applicable
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are filed as part of this Report:
Exhibit Description
------- -----------
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
99 Important Factors Regarding Forward-Looking Statements
(b) No reports on Form 8-K have been filed during the past quarter
covered by this report.
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.
THE FIRST YEARS INC.
--------------------
Registrant
Date 11/14/97 /s/ John R. Beals
------------------ -----------------------------
John R. Beals, Vice President
and Assistant Treasurer,
Duly Authorized Officer and
Principal Financial Officer
Page 8
<PAGE> 11
THE FIRST YEARS INC.
EXHIBIT INDEX
Exhibit Description Page
------- ----------- ----
11 Statement re Computation of
Per Share Earnings 10
27 Financial Data Schedule 11
99 Important Factors Regarding
Forward-Looking Statements 12 - 13
Page 9
<PAGE> 1
EXHIBIT 11
THE FIRST YEARS INC.
PRIMARY NET INCOME PER SHARE AND
FULLY DILUTED NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
September 30, September 30,
------------------------------- -------------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY NET INCOME PER SHARE
Net income available for common shares
and common stock equivalent shares $1,803,803 $1,376,063 $5,479,867 $3,929,730
---------- ---------- ---------- ----------
Primary net income per share $ 0.34 $ 0.27 $ 1.05 $ 0.81
---------- ---------- ---------- ----------
SHARES USED IN COMPUTATION
Weighted average common shares
outstanding 5,017,803 4,937,544 4,979,131 4,661,544
Common stock equivalents - options 239,426 213,207 224,398 200,588
---------- ---------- ---------- ----------
Total common stock and common
stock equivalent dilutive shares 5,257,229 5,150,751 5,203,529 4,862,132
========== ========== ========== ==========
FULLY DILUTED NET INCOME PER SHARE
Net income available for common shares
and common stock equivalent shares $1,803,803 $1,376,063 $5,479,867 $3,929,730
---------- ---------- ---------- ----------
Fully diluted net income per share $ 0.34 $ 0.27 $ 1.05 $ 0.81
---------- ---------- ---------- ----------
SHARES USED IN COMPUTATION
Weighted average common shares
outstanding 5,017,803 4,937,544 4,979,131 4,661,544
Common stock equivalents - options 260,877 215,264 242,584 211,518
---------- ---------- ---------- ----------
Total common stock and common
stock equivalent dilutive shares 5,278,680 5,152,808 5,221,715 4,873,062
========== ========== ========== ==========
</TABLE>
Page 10
<PAGE> 1
EXHIBIT 99.1
IMPORTANT FACTORS REGARDING
FORWARD-LOOKING STATEMENTS
The following factors, among others, could cause results to differ materially
from those contained in forward-looking statements made in this Report, or in
other SEC filings, Annual Reports to Stockholders on Form 10-K, press releases,
and oral statements, among others, made by the Company from time to time.
New Product Introductions
The growth of the Company has been, and will continue to be, dependent upon its
ability to continue to introduce new products. There can be no assurance that
the Company will continue to maintain its present rate of growth, that it will
continue to generate new product ideas, or that new products will be
successfully introduced.
Reliance on Licensed Products
A substantial factor contributing to the growth in the Company's net sales in
the past few years has been its sale of products featuring cartoon characters
licensed from other parties, including the use of Winnie the Pooh characters
licensed from The Walt Disney Company, and Sesame Street characters licensed
from The Children's Television Workshop. These license have fixed terms and
limit the type of products that may be sold under the license. There can be no
assurance that these licenses will be renewed or that, if renewed, they will
result in sales increases in future periods.
Dependence on Consumer Preferences
The continued success of the Company's business depends in part on the continued
consumer demand for its juvenile products and the Company's ability to
anticipate, gauge, and respond to changing consumer demands for juvenile
products in a timely manner. Changes in consumer demand due to
frequently-changing consumer tastes, general economic decline, or to less
favorable demographic trends related to childbirth, among other factors, could
have a material adverse effect on the Company's business. Moreover, the Company
could be materially adversely affected by conditions in the retail industry in
general, including consolidation and the resulting decline in the number of
retailers, and other cyclical economic factors.
Dependence upon Major Customers
The three largest customers of the Company, Wal*Mart, Toys "R" Us, and Target
accounted for approximately 26%, 19% and 10%, respectively, of net sales during
1996. A significant reduction of purchases by these customers could have
a material adverse effect on the Company's business.
Competition
Competition is intense in the juvenile product markets in which the Company
sells its products. The Company competes with a large number of other companies
both domestic and foreign, some of which have diversified product lines,
well-known brands and financial, distribution and marketing resources
substantially greater than those of the Company. The principal competitors for
the Company's products are Fisher Price, Playskool, EvenFlo, Playtex, Gerber,
Nuk, MAX, Gerry, Century, and Safety 1st. There can be no assurance that the
Company will be able to continue to compete effectively in the juvenile products
market.
<PAGE> 2
Reliance on Foreign Manufacturers
The Company does not own or operate its own manufacturing facilities. A number
of manufacturers located in the Far East, primarily in China, supply products
and product components to the Company. A substantial portion of all of its
products sold in 1996 were manufactured in the Far East. The Company is subject
to the usual risks of a business involving foreign suppliers, such as currency
fluctuations, government regulation of fund transfers, export and import duties,
trade limitations imposed by the United States or foreign governments, and
political and labor instability. In particular there are a number of
trade-related and other issues creating significant friction between the
governments of the United States and China, and the imposition of punitive
import duties on certain categories of Chinese products has been threatened in
the past and may be implemented in the future. Although the Company continues to
evaluate alternative sources of supply outside of China, there can be no
assurance that the Company will be able to develop alternative sources of supply
in a timely and cost-effective manner. In addition, the Company has no long-term
manufacturing agreements with its foreign suppliers and competes with other
juvenile product companies, including companies that are much larger than the
Company, for access to production facilities. Also, the Company, because of its
substantial reliance on suppliers in foreign countries, is required to order
products further in advance of customer orders than would generally be the case
if such products were produced in the United States. The risk of ordering
products in this manner is greater during the initial introduction of new
products since it is difficult to determine the demand for such products.
Cost and Availability of Certain Materials
Plastic and paperboard are significant cost components of the Company's products
and packaging. Because the primary resource used in manufacturing plastic is
petroleum, the cost and availability of plastic for use in the Company's
products varies to a great extent with the price of petroleum. The inability of
the Company's suppliers to acquire sufficient plastic or paperboard at
reasonable prices would adversely affect the Company's ability to maintain its
profit margins in the short term.
Product Liability Risks
The Company's juvenile products are used for and by small children and infants.
The Company carries product liability insurance in amounts which management
deems adequate to cover risks associated with such use; however, there can be no
assurance that existing or future insurance coverage will be sufficient to cover
all product liability risks.
Government Regulations
The Company's products are subject to the provisions of the Federal Consumer
Safety Act, the Federal Hazardous Substances Act, the Federal Flammable Fabrics
Act, and the Child Safety Protection Act (the "Acts") and the regulations
promulgated thereunder. The Acts authorize the Consumer Product Safety
Commission (the "CPSC") to protect the public from products which present a
substantial risk of injury. The CPSC can require the repurchase or recall by the
manufacturer of articles which are found to be defective and impose fines or
penalties on the manufacturer. Similar laws exist in some states and cities and
in other countries in which the Company markets its products. Any recall of its
products could have a material adverse effect on the Company, depending on the
particular product.
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 10,569,485
<SECURITIES> 0
<RECEIVABLES> 17,494,912
<ALLOWANCES> 185,000
<INVENTORY> 19,790,100
<CURRENT-ASSETS> 49,502,835
<PP&E> 15,773,440
<DEPRECIATION> 8,577,918
<TOTAL-ASSETS> 56,698,357
<CURRENT-LIABILITIES> 14,043,525
<BONDS> 0
0
0
<COMMON> 505,552
<OTHER-SE> 41,377,310
<TOTAL-LIABILITY-AND-EQUITY> 56,698,357
<SALES> 88,397,388
<TOTAL-REVENUES> 88,486,479
<CGS> 52,247,703
<TOTAL-COSTS> 79,235,771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,241
<INCOME-PRETAX> 9,224,467
<INCOME-TAX> 3,744,600
<INCOME-CONTINUING> 5,479,867
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,479,867
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
