SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1997. Commission File Number 1-9720
OR
[ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________ to __________
Commission File Number __________
PAR TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 16-1434688
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
PAR Technology Park
8383 Seneca Turnpike
New Hartford, NY 13413-4991
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (315) 738-0600
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 pre-ceding 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
October 17, 1997 - 8,848,965 shares.
<PAGE>
PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
FORM 10-Q
PART 1
FINANCIAL INFORMATION
Item Number
-----------
Item 1. Financial Statements
- Consolidated Statement of Income for
the Three and Nine Months Ended
September 30, 1997 and 1996
- Consolidated Balance Sheet at
September 30, 1997 and December 31, 1996
- Consolidated Statement of Cash Flows
for the Nine Months Ended
September 30, 1997 and 1996
- Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
Item 1.
Financial Statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
September 30, September 30,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues:
Product ........................... $ 16,993 $ 16,331 $ 32,790 $ 42,381
Service ........................... 7,105 6,171 20,280 20,874
Contract .......................... 7,435 5,436 18,203 18,564
-------- -------- -------- --------
31,533 27,938 71,273 81,819
-------- -------- -------- --------
Costs of sales:
Product ........................... 10,969 8,997 23,541 25,176
Service ........................... 5,891 5,716 17,344 18,156
Contract .......................... 7,025 5,125 17,300 17,465
-------- -------- -------- --------
23,885 19,838 58,185 60,797
-------- -------- -------- --------
Gross margin ................ 7,648 8,100 13,088 21,022
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 4,510 4,675 14,953 12,986
Research and development .......... 1,021 1,094 3,524 3,731
Non-recurring charges ............. -- -- 4,919 --
-------- -------- -------- --------
5,531 5,769 23,396 16,717
-------- -------- -------- --------
Income (loss) from operations .......... 2,117 2,331 (10,308) 4,305
Other income, net ...................... 132 415 385 650
-------- -------- -------- --------
Income (loss) before provision for
income taxes ........................ 2,249 2,746 (9,923) 4,955
Provision (benefit) for income taxes ... 818 774 (3,617) 1,542
-------- -------- -------- --------
Net income (loss) ...................... $ 1,431 $ 1,972 $ (6,306) $ 3,413
======== ======== ======== ========
Earnings (loss) per common share ....... $ .16 $ .22 $ (.69) $ .40
======== ======== ======== ========
Weighted average number of common
shares outstanding .................. 9,060 9,037 9,077 8,479
======== ======== ======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
September 30,
1997 December 31,
(Unaudited) 1996
Assets ------------ -----------
<S> <C> <C>
Current Assets:
Cash .................................. $ 4,966 $ 8,391
Accounts receivable-net ............... 33,571 42,335
Inventories ........................... 25,452 21,988
Income tax refund claims .............. 2,138 222
Deferred income taxes ................. 2,987 1,096
Other current assets .................. 1,670 1,261
-------- --------
Total current assets .............. 70,784 75,293
Property, plant and equipment - net ........ 7,142 7,243
Other assets ............................... 3,202 4,222
-------- --------
$ 81,128 $ 86,758
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable ......................... $ 195 $ 185
Accounts payable ...................... 5,086 5,127
Accrued salaries and benefits ......... 3,440 2,750
Accrued expenses ...................... 2,878 2,883
Deferred service revenue .............. 2,545 2,241
-------- --------
Total current liabilities ......... 14,144 13,186
-------- --------
Deferred income taxes ...................... 1,198 970
-------- --------
Shareholders' Equity:
Common stock, $.02 par value,
12,000,000 shares authorized;
9,451,471 and 9,416,721 shares issued
8,848,965 and 8,826,315 outstanding . 189 188
Preferred stock, $.02 par value,
250,000 shares authorized ........... -- --
Capital in excess of par value ........ 27,694 27,564
Retained earnings ..................... 41,373 47,679
Cumulative translation adjustment ..... (545) (67)
Treasury stock, at cost, 602,506 and
590,406 shares ...................... (2,925) (2,762)
-------- --------
Total shareholders' equity ........ 65,786 72,602
-------- --------
Contingent liabilities
-------- --------
$ 81,128 $ 86,758
======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ............................... $ (6,306) $ 3,413
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization .................. 1,704 1,773
Provision for obsolete inventory ............... 2,619 1,590
Translation adjustments ........................ (478) (18)
Increase (decrease) from changes in:
Accounts receivable-net ...................... 8,764 (945)
Inventories .................................. (6,083) (6,730)
Income tax refund claims ..................... (1,916) --
Other current assets ......................... (409) (636)
Other assets ................................. 1,720 (386)
Accounts payable ............................. (41) 921
Accrued salaries and benefits ................ 690 (1,017)
Accrued expenses ............................. (5) (320)
Deferred service revenue ..................... 304 70
Income taxes payable ......................... -- (401)
Deferred income taxes ........................ (1,663) 1
-------- --------
Net cash used in operating activities ....... (1,100) (2,685)
-------- --------
Cash flows from investing activities:
Purchase of investments ........................ -- (2,995)
Capital expenditures ........................... (1,197) (910)
Capitalization of software costs ............... (1,106) (893)
-------- --------
Net cash used in investing activities ....... (2,303) (4,798)
-------- --------
Cash flows from financing activities:
Net borrowings under line-of-credit agreements . 10 (121)
Proceeds from the issuance of common stock ..... -- 13,311
Proceeds from the exercise of stock options .... 131 952
Acquisition of treasury stock .................. (163) (2,037)
-------- --------
Net cash provided (used) by
financing activities ........................ (22) 12,105
-------- --------
Net increase (decrease) in cash
and cash equivalents ............................ (3,425) 4,622
Cash and cash equivalents at beginning of year .. 8,391 458
-------- --------
Cash and cash equivalents at end of period ...... $ 4,966 $ 5,080
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ....................................... $ 13 $ 43
Income taxes, net of refunds ................... (101) 1,577
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The statements for the three and nine months ended September 30, 1997 and
1996 are unaudited; in the opinion of the Company such unaudited statements
include all adjustments (which comprise only normal recurring accruals)
necessary for a fair presentation of the results for such periods. The
consolidated financial statements for the year ending December 31, 1997 are
subject to adjustment at the end of the year when they will be audited by
independent accountants. The results of operations for the three and nine
months ended September 30, 1997 are not necessarily indicative of the
results of operations to be expected for the year ending December 31, 1997.
The consolidated financial statements and notes thereto should be read in
conjunction with the financial statements and notes for the years ended in
December 31, 1997 and 1996 included in the Company's December 31, 1997
Annual Report to the Securities and Exchange Commission on Form 10-K.
Earnings per share are based on the weighted average number of shares
outstanding plus common stock equivalents under the Company's stock option
plans.
2. Inventories are used in the manufacture of Point-Of-Sale systems and other
commercial products. The components of inventory, net of related reserves,
consist of the following:
(In Thousands)
--------------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ -----------
<S> <C> <C>
Finished goods $ 6,828 $ 5,111
Work in process 3,591 3,538
Component parts 6,566 6,234
Service parts . 8,467 7,105
------- -------
$25,452 $21,988
======= =======
</TABLE>
At September 30, 1997 and December 31, 1996, the Company had recorded
reserves for obsolete inventory of $2,580,000 and $1,174,000, respectively.
3. During the second quarter of 1997, the Company recorded two non-recurring
charges. The first was $4 million ($2.6 million after tax or $.29 loss per
share) relating to Phoenix Systems and Technologies, Inc. (Phoenix). The
second charge was $900,000 ($580,000 after tax or $.06 loss per share)
relating to the Company's Corneal Topography System (CTS) business.
In June 1992, the Company was approved under the Department of Defense
Mentor-Protege Program as a mentor for a minority-owned government
contractor, Phoenix. Under this program, the Company has guaranteed a bank
loan in the amount of $900,000. Additionally, concurrent with this
approval, the Company acquired a 44% interest in Phoenix which is accounted
for under the equity method.
The Company is a subcontractor to Phoenix on certain engineering service
contracts with the United States Government. Additionally, Phoenix rented
its office space from the Company. Phoenix is also a vendor to PAR
providing manufacturing and certain contract services. At December 31,
1996, the Company had recorded a receivable from Phoenix of $1.7 million,
net of a $903,000 allowance, as a result of these activities.
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
During 1997, the Company's subcontracting activities expanded due to
increased government requirements. This coupled with Phoenix's failure to
make timely payments on amounts due resulted in the growth of this
receivable to $4.2 million at June 30, 1997. On July 29, 1997, the Company
and Phoenix reached an agreement regarding repayment of amounts owed to
PAR. Under this agreement, the Company received $720,000 in cash payments.
The agreement also provides for certain payments to be made in the second
half of 1997 and a note for $1.5 million which bears interest at 8% and is
payable at the end of three years. This amount would be subordinate to the
claims of a proposed bank lender. PAR would also be removed from the
$900,000 loan guarantee. PAR has relinquished its equity interest in
Phoenix contingent upon successful execution of a bank financing agreement.
PAR retains security interest in a portion of such stock as security for
the repayment of the subordinated debt.
The execution of this plan is primarily contingent upon Phoenix obtaining
additional bank financing. Accordingly, the Company has recorded reserves
in the second quarter of 1997 totaling $4 million. This amount includes the
remaining exposure on the receivables, ($4.2 million less $900,000
allowance and the $720,000 cash payments); the $900,000 loan guarantee and
$500,000 for additional subcontracting efforts that the Company has
performed subsequent to June 30, 1997.
During the third quarter, the Company continued to perform subcontracting
activities for Phoenix. Phoenix is making timely payments to the Company on
all current work billed to Phoenix. Phoenix's efforts to secure additional
bank financing are ongoing. The Company believes its current reserve
position continues to be adequate. For full discussion on these events and
the impact on certain announcements made by the Company, see the Company's
Current Report on Form 8-K filed on August 13, 1997.
In the second quarter of 1997, the Company also recorded a $900,000 charge
pertaining to its CTS business. The Company recently released a new CTS
product and as a result certain obsolete inventory is on hand.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1997
COMPARED WITH
QUARTER ENDED SEPTEMBER 30, 1996
Results of Operations
The Company reported revenues of $31.5 million for the quarter ended September
30, 1997 an increase of 13% from the $27.9 million for the third quarter of
1996. Net income was $1.4 million and earnings per share was $.16 for the
quarter ended September 30, 1997. This compares to net income of $2 million and
earnings per share of $.22 for the same quarter of 1996.
Product revenues increased 4% to $17 million in 1997 versus $16.3 million in
1996. This increase is the result of sales to Burger King under the Company's
contract with this customer for its new POS IV hardware system. Additionally,
international sales grew 20% in the third quarter of 1997 versus the same period
a year ago. This increase was primarily with sales to McDonald's in countries
such as Argentina, Portugal and Spain. These increases offset declines in sales
with Taco Bell and Whataburger as the Company fulfilled these customer's current
requirements in 1996. With the recent release of the Company's new software
products, product sales are expected to grow at a faster rate in the fourth
quarter of 1997.
Service revenues increased 15% to $7.1 million in the third quarter of 1997,
compared to $6.2 million for the third quarter of 1996. This increase was due to
the expansion of the Taco Bell service integration contract, certain price
adjustments in various service offerings and a 19% growth in international
service requirements.
Contract revenues were $7.4 million in 1997, an increase of 37% from $5.4
million reported in 1996. This increase was due to the Company's Airfield
Maintenance Contract at Griffiss Air Force Base.
Gross margin on product revenues was 35% in the third quarter of 1997, compared
to 45% for the third quarter of 1996. The decline in margins were due to product
mix as the Burger King sales were for POS IV hardware only. Due to the recent
release of new software products, the Company is anticipating a more favorable
product mix in the future.
Gross margin on service revenues was 17% for the three months ended September
1997 versus 7% for the same three months of 1996. This increase was the result
of higher service revenue which resulted in more favorable absorption of fixed
service costs and price adjustments in certain service offerings. Additionally,
the 1996 results include a low margin special integration project requested by a
customer and costs associated with the transition to a new third party service
provider which the Company uses in certain parts of the United States.
Gross margin on contract revenues was 6% in 1997 and 1996. The Company typically
experiences 5% to 6% margin on its contract business.
Selling, general and administrative expenses were $4.5 million in 1997, a
decrease of 4% from the $4.7 million reported in 1996. This was due to the
Company's ability to control expenses and slightly lower bad debt expense
experienced in 1997 versus 1996.
Research and development expenses were $1 million in the third quarter of 1997,
a decrease of 7% from the $1.1 million recorded in 1996. While the Company held
its research and development expenditures at a constant level in 1997 versus
1996, net research and development expenses declined due to the requirement to
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1997
COMPARED WITH
QUARTER ENDED SEPTEMBER 30, 1996
capitalize certain software development costs under the Statement of Financial
Accounting Standards No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed. The Company incurred more software costs
meeting this requirement in 1997 than in 1996. Research and development costs
attributable to government contracts are included in cost of contract revenues.
Other income was $132,000 in 1997 versus $415,000 in 1996. This decrease was due
to a decline in interest income as a result of a lower average cash balance
during 1997 when compared to 1996.
The effective tax rate for the third quarter of 1997 was 36% versus 28% a year
ago. In 1996 the Company benefited from the favorable results of a federal
income tax audit.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
COMPARED WITH
NINE MONTHS ENDED SEPTEMBER 30, 1996
The Company reported revenues of $71.3 million for the nine months ended
September 30, 1997, a decrease of 13% from the $81.8 million for the same months
of 1996. The Company reported a net loss of $6.3 million and a loss per share of
$.69 for the nine months ended September 30, 1997. This compares to net income
of $3.4 million and earnings per share of $.40 for the same period of 1996.
The results for the nine months ended September 30, 1997 include an after tax
charge of $2.6 million, or $.29 per share, relating to a receivable from and
loan guarantee for Phoenix Systems & Technologies, Inc. (Phoenix). This arises
primarily from accounts receivable due Rome Research Corporation (RRC), a wholly
owned subsidiary of PAR, from Phoenix, and a loan guarantee made by the Company,
on behalf of Phoenix, under the Department of Defense's Mentor Protege Program.
Phoenix is in arrears on significant moneys owed to RRC as a result of a
sub-contractor relationship and Phoenix has been unable to obtain new financing
sources at the present time. As a result, a reserve was taken against the
accounts receivable and also for the loan guarantee in the second quarter of
1997.
Product revenues decreased 23% to $32.8 million in 1997 versus $42.4 million in
1996. This was due to the completion of current customer requirements for Taco
Bell and Whataburger in 1996. The decrease was partially offset by sales of new
POS IV hardware to Burger King under the Company's contract with this customer.
Service revenues decreased 3% to $20.3 million for the first nine months of 1997
compared to $20.9 million for the same period of 1996. This decrease was due to
a special service integration project requested by a customer in 1996 with no
similar project in 1997. This was partially offset in 1997 by the expansion of
the Taco Bell service integration contract and certain price adjustments.
Contract revenues were $18.2 million in 1997, a decrease of 2% from $18.6
million reported in 1996. The decrease is due to the completion of certain
contracts in 1996. These declines have been virtually offset by the Company's
Airfield Maintenance Contract at Griffiss Air Force Base.
Gross margin on product revenues was 28% in 1997 compared to 41% in 1996. The
decline in margin was due to product mix as Burger King sales in 1997 included
just the Company's hardware products. In addition, the Company experienced more
favorable absorption of certain fixed manufacturing costs in 1996 due the higher
sales volume.
Gross margin on service revenues was 14% for the nine months ended September 30,
1997 versus 13% for the same nine months of 1996. This improvement was due to
certain favorable price adjustments on various service offerings in 1997 and a
low margin special integration project requested by a customer in 1996.
Gross margin on contract revenues was 5% in 1997 compared to 6% for the same
period in 1996. This decrease is attributable to contract mix. The Company
typically experiences between 5% and 6% margin on its contract business.
Selling, general and administrative expenses were $15 million in 1997 compared
to $13 million in 1996, an increase of 15%. This increase was primarily due to
greater POS sales and marketing expenses and to certain bad debt reserves
relating to the Company's government contract business.
Research and development expenses were $3.5 million in 1997, a decrease of 6%
from the $3.7 million in 1996. The decrease is primarily due to the requirement
to capitalize certain software costs as discussed above.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
COMPARED WITH
NINE MONTHS ENDED SEPTEMBER 30, 1996
Other income was $385,000 in 1997 versus $650,000 in 1996. This decrease was due
to a decline in interest income as a result of a lower average cash balance
during 1997 when compared to 1996.
Liquidity and Capital Resources
Cash flows to meet the Company's requirements for operating, investing and
financing activities for the nine months ended September 30, 1997 and 1996 are
reported in the Consolidated Statement of Cash Flows.
The Company's primary source of liquidity has been from operations. Cash used by
operating activities was $1.1 million in the first nine months of 1997, compared
to cash used of $2.7 million in 1996. During 1997, the Company experienced a net
loss of $6.3 million and an increase in its POS product and service inventory in
anticipation of future sales orders and service requirements. This was partially
offset by significant collections in 1997 of accounts receivable generated by
the sales volume in the fourth quarter of 1996.
Cash used in investing activities was $2.3 in 1997, compared to $4.8 million in
1996. In 1997, capital expenditures were primarily for upgrades to the
manufacturing facility. Capital expenditures in 1996 were for internal use
computers and other miscellaneous items. In 1996, the Company used a portion of
the proceeds received from its stock offering to purchase short-term
investments.
Cash used in financing activities was $22,000 for the first nine months of 1997
compared to cash provided of $12.1 million in 1996. In 1997, the Company
received $131,000 from the exercise of employee stock options. The Company also
purchased 12,100 shares of its stock at a cost of $163,000. In 1996, the Company
sold 975,200 shares of common stock in a secondary offering which netted
approximately $13.3 million. During 1996, the Company also received $952,000
from the exercise of employee stock options and purchased into treasury, 135,000
shares of its stock at a cost of approximately $2 million.
The Company has line-of-credit agreements with certain banks, which aggregate $
34.2 million, of which $195,000 was in use at September 30, 1997. The Company
believes that it has adequate financial resources to meet its future liquidity
and capital requirements.
Important Factors Regarding Future Results
Information provided by the Company, including information contained in this
Report, or by its spokespersons from time to time may contain forward-looking
statements. Forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that all forward-looking statements involve risks and
uncertainties, including without limitation, further delays in new product
introduction, risks in technology development and commercialization, risks in
product development and market acceptance of and demand for the Company's
products, risks of downturns in economic conditions generally, and in the quick
service sector of the restaurant market specifically, risks of intellectual
property rights associated with competition and competitive pricing pressures,
risks associated with foreign sales and high customer concentration and other
risks detailed in the Company's filings with the Securities and Exchange
Commission.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
List of Exhibits
Exhibit No. Description of Instrument
----------- -------------------------
11 Statement re computation of per-share earnings
Reports on Form 8-K
Form 8-K filed on August 13, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAR TECHNOLOGY CORPORATION
--------------------------
(Registrant)
Date: October 29, 1997
/S/RONALD J. CASCIANO
---------------------
Ronald J. Casciano
Vice President, Chief Financial Officer
and Treasurer
Exhibit Index
Exhibit
-------
11 - Statement re computation
of per-share earnings
<PAGE>
Exhibit 11
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
(In Thousands)
<TABLE>
<CAPTION>
For the three months
ended September 30,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Primary and Fully Diluted Earnings Per Share:
Weighted average shares of common stock outstanding:
Balance - beginning of period ...................... 8,849 7,780
Weighted average shares issued ..................... -- 896
Acquisition of treasury stock ...................... -- (14)
Assumed exercise of certain stock options .......... 211 375
------ ------
Weighted shares - end of period .................... 9,060 9,037
====== ======
</TABLE>
<PAGE>
Exhibit 11
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
(In Thousands)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
---------------------
1997 1996
-------- --------
<S> <C> <C>
Primary and Fully Diluted Earnings Per Share:
Weighted average shares of common stock outstanding:
Balance - beginning of period ...................... 8,826 7,682
Weighted average shares issued ..................... 26 419
Acquisition of treasury stock ...................... (8) (57)
Assumed exercise of certain stock options .......... 233 435
------ ------
Weighted shares - end of period .................... 9,077 8,479
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,966
<SECURITIES> 0
<RECEIVABLES> 33,571
<ALLOWANCES> 0
<INVENTORY> 25,452
<CURRENT-ASSETS> 70,784
<PP&E> 7,142
<DEPRECIATION> 0
<TOTAL-ASSETS> 81,128
<CURRENT-LIABILITIES> 14,144
<BONDS> 0
0
0
<COMMON> 189
<OTHER-SE> 65,597
<TOTAL-LIABILITY-AND-EQUITY> 81,128
<SALES> 32,790
<TOTAL-REVENUES> 71,273
<CGS> 23,541
<TOTAL-COSTS> 58,185
<OTHER-EXPENSES> 8,443
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,923)
<INCOME-TAX> (3,617)
<INCOME-CONTINUING> (6,306)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,306)
<EPS-PRIMARY> (.69)
<EPS-DILUTED> (.69)
</TABLE>
