<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[ x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1996
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 0-10881 NY
GRAHAM-FIELD HEALTH PRODUCTS, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2578230
- - ----------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Rabro Drive East, Hauppauge, New York 11788
- - ----------------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)
(516) 582-5900
- - -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- - -------------------------------------------------------------------------------
(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
---- ----
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by the court. Yes No
------ ------
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.025 Par Value--- 14,111,153 shares as of May 8, 1996
<PAGE>
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
I N D E X
Part I. Financial Information: Page
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
March 31, 1996 (Unaudited) and December 31, 1995
(Audited) 3
Condensed Consolidated Statements of Operations for
the three months ended March 31, 1996 and 1995
(Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 (Unaudited) 5/6
Notes to Condensed Consolidated Financial Statements 7/8/9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10/11/12
Part II. Other Information:
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ------------- -------------
(unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 364,000 $ 214,000
Accounts receivable - net 22,989,000 21,936,000
Inventories 30,835,000 29,819,000
Other current assets 2,050,000 1,789,000
Recoverable and prepaid income taxes 217,000 221,000
------------- -------------
TOTAL CURRENT ASSETS 56,455,000 53,979,000
PROPERTY, PLANT AND EQUIPMENT - net 7,835,000 8,120,000
EXCESS OF COST OVER NET ASSETS ACQUIRED - net 28,716,000 29,291,000
INVESTMENT IN LEVERAGED LEASE 486,000 487,000
OTHER ASSETS 5,683,000 4,910,000
DEFERRED TAX ASSET 2,594,000 3,012,000
------------- -------------
TOTAL ASSETS $101,769,000 $99,799,000
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Note payable to bank $ 100,000 $ 2,100,000
Current maturities of long-term debt
and Guaranteed Senior Notes 2,590,000 1,578,000
Accounts payable 10,503,000 8,750,000
Acceptances payable 8,000,000 5,000,000
Accrued expenses 2,645,000 2,788,000
------------- -------------
TOTAL CURRENT LIABILITIES 23,838,000 20,216,000
LONG-TERM DEBT 828,000 972,000
GUARANTEED SENIOR NOTES 17,000,000 19,000,000
------------- -------------
TOTAL LIABILITIES 41,666,000 40,188,000
STOCKHOLDERS' EQUITY:
Preferred Stock
Common Stock 353,000 352,000
Additional paid-in capital 66,962,000 66,887,000
(Deficit) (7,118,000) (7,628,000)
------------- -------------
Sub-Total 60,197,000 59,611,000
Notes receivable from sale of shares (94,000) -
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 60,103,000 59,611,000
------------- -------------
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $101,769,000 $99,799,000
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
Page 3
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1996 1995
----------- -----------
<S> <C> <C>
REVENUES:
Operations $26,929,000 $24,491,000
Interest and other income 419,000 8,000
----------- -----------
27,348,000 24,499,000
COST AND EXPENSES:
Cost of revenues 18,502,000 16,772,000
Selling, general and administrative 7,329,000 6,872,000
Interest expense 589,000 745,000
----------- -----------
26,420,000 24,389,000
----------- -----------
INCOME BEFORE INCOME TAXES 928,000 110,000
INCOME TAXES 418,000 44,000
----------- -----------
NET INCOME $ 510,000 $ 66,000
----------- -----------
----------- -----------
PER SHARE DATA:
NET INCOME PER SHARE $ .04 $ .01
----------- -----------
----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 14,182,000 12,950,000
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
Page 4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 510,000 $ 66,000
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 794,000 841,000
Provision for losses on accounts
receivable 132,000 73,000
Deferred income taxes 418,000 44,000
Gain on sale of product line (360,000) -
Changes in operating assets and
liabilities:
Accounts receivable (1,185,000) 320,000
Inventories, other current assets and
recoverable and prepaid income taxes (1,217,000) 3,644,000
Accounts and acceptances payable
and accrued expenses 4,383,000 (2,896,000)
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,475,000 2,092,000
----------- -----------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (97,000) (168,000)
Notes receivable from officers (94,000) -
Initial payment in connection with acquisition (500,000) -
Proceeds from sale of product line 500,000 -
Net (increase) decrease in other assets (78,000) 21,000
----------- -----------
NET CASH USED IN INVESTING
ACTIVITIES $ (269,000) $ (147,000)
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
Page 5
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS--Continued
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1996 1995
----------- -----------
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from note payable to bank $ 500,000 $ 1,000,000
Payments on note payable to bank (2,500,000) (1,673,000)
Principal payments on long term debt (1,132,000) (139,000)
Proceeds on exercise of stock options 76,000 172,000
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (3,056,000) (640,000)
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 150,000 1,305,000
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 214,000 121,000
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 364,000 $ 1,426,000
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
Page 6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
1. GENERAL
In the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position as of March
31, 1996 (unaudited), the results of operations for the three
months ended March 31, 1996 and 1995 (unaudited) and the
statements of cash flows for the three months ended March 31,
1996 and 1995 (unaudited).
Additionally, it should be noted that the accompanying
financial statements and notes thereto do not purport to be
complete disclosures in conformity with generally accepted
accounting principles. While the Company believes that the
disclosures presented are adequate to make the information
contained herein not misleading, it is suggested that these
financial statements be read in conjunction with the financial
statements and the notes included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1995.
Inventories at March 31, 1996 have been valued at average
cost based on perpetual records or the gross profit method.
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." This standard establishes the accounting for
the impairment of long-lived assets, certain identifiable
intangibles and the excess of cost over net assets acquired,
related to those assets to be held and used in operations,
whereby impairment losses are required to be recorded when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the
assets' carrying amount. SFAS No. 121 also addresses the
accounting for long-lived assets and certain identifiable
intangibles that are expected to be disposed of. The adoption of
SFAS No. 121 did not have a material effect on the results of
operations or financial condition of the Company.
In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation," which requires adoption of the
disclosure provisions no later than the fourth quarter of 1996.
The new standard defines a fair value method of accounting for
the issuance of stock options and other equity instruments.
Under the fair value method, compensation cost is measured at the
grant date based on the fair value of the award and is recognized
over the service period, which is usually the vesting period.
Pursuant to SFAS No. 123, companies are encouraged, but are not
required, to adopt the fair value method of accounting for
employee stock-based transactions. Companies are also permitted
to continue to account for such transactions under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," but would be required to disclose in a note to the
1996 financial statements proforma net income and per share
amounts as if the Company had applied the new method of
accounting. SFAS No. 123 also requires increased disclosures for
stock-based compensation arrangements. The Company has decided
not to adopt the fair value method but will provide the necessary
proforma information.
The results of operations for the three months ended March
31, 1996 and 1995 are not necessarily indicative of results for
the full year.
Page 7
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
2. NET INCOME PER SHARE
Net income per common share for 1996 and 1995 was computed
using the weighted average number of common shares and dilutive
common equivalent shares outstanding during the period.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
----------- -----------
<S> <C> <C>
Raw materials $ 2,905,000 $ 2,871,000
Work-in-process 1,678,000 1,620,000
Finished goods 26,252,000 25,328,000
----------- -----------
$30,835,000 $29,819,000
----------- -----------
----------- -----------
</TABLE>
4. INCOME TAXES
Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("Statement No. 109"). Under Statement No.
109, the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and
tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the
differences are expected to reverse. As of March 31, 1996, the
Company has recorded net deferred tax assets of $2,594,000.
These tax assets are primarily composed of net operating loss
carryforwards and investment, research and development, jobs tax
and alternative minimum tax credits. Based upon the Company's
expectation that future taxable income will be sufficient to
utilize the carryforwards prior to December 31, 2009, the Company
has not recorded a valuation allowance on these deferred tax
assets, except for an allowance of $55,000 related to tax assets
recorded for acquired carryforwards. Future taxable income is
expected to be derived from the Company's existing operations and
the taxable gain which will be realized from the sale of the
Company's Gentle Expressions-R- breast pump product line. The
amount of the deferred tax asset considered realizable could be
reduced in the near term if estimates of future taxable income
during the carryforward period are reduced.
5. OTHER MATTERS
On March 4, 1996, the Company sold its Gentle
Expressions-R- breast pump product line for $1,000,000 of
which $500,000 was paid in cash with the balance in a secured
subordinated promissory note, and recorded a gain of $360,000,
which is included in other revenue on the accompanying
condensed consolidated statements of operations.
Page 8
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--Continued
GRAHAM-FIELD HEALTH PRODUCTS, INC. AND SUBSIDIARIES
(Unaudited)
In March 1996, the Company introduced a new regional
operation under the name "GF Express" to provide "next-day" and
"same-day" service to home healthcare dealers of certain
strategic home healthcare products. In connection with the
introduction of GF Express, the Company made an initial payment
of $500,000 on March 16, 1996 to acquire certain assets at a
future date of Jeffco Express Medical Supply, Inc. ("JEM"),
including a customer list, certain contracts and other assets.
As part of the transaction, the Company entered into a Management
and Administrative Agreement pursuant to which JEM managed and
administered GF Express for a management fee. The Company
acquired the assets of JEM on May 14, 1996, and delivered a non-
negotiable promissory note in the amount of $500,000 for the
balance of the purchase price, which is payable within one year
to JEM, subject to the attainment of certain financial criteria.
6. LEGAL PROCEEDINGS
SEE PART II, ITEM 1 ON PAGE 11
Page 9
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
OPERATING REVENUES
Operating revenues for the three months ended March 31, 1996
increased approximately $2,438,000 or 10%, as compared to the
same period last year. The increase in operating revenues was
primarily attributable to the Company's expansion of its
Consolidation Advantage Program ("CAP") through its inventory
buy-back program, the introduction of a new regional operation in
the metropolitan New York area under the name "GF Express," and
the Company's revenue growth in the international market.
During the first quarter of 1996, the Company's inventory buy-
back program was introduced to provide an outlet for its
customers to eliminate their excess inventory. Under the
program, the Company purchases certain excess inventory from its
customers, who in turn place additional purchase orders with the
Company exceeding the value of the excess inventory purchased.
The Company is able to utilize its vast customer base and
distribution network to market and distribute the excess
inventory through its recently acquired division, National
Medical Excess Corp. ("NME").
In March 1996, GF Express was introduced to offer "next day" and
"same day" service to home healthcare dealers of certain
strategic home healthcare products, including Temco patient aids,
adult incontinence products, wheelchairs, and nutritional
supplements. Revenues attributable to GF Express were
approximately $733,000 for the first quarter of 1996.
The Company's revenue growth in the international market
increased by approximately 30% from $1,200,000 to $1,600,000. In
April 1996, the Company entered into an agreement with a major
Mexican distributor, which the Company believes will result in
incremental revenues in 1996 and 1997. However, no assurances
can be provided that the Company will achieve such incremental
revenues under the agreement with the Mexican distributor.
In addition, 1996 revenues include approximately $566,000
attributable to the operations of NME, which was acquired as of
July 1, 1995. The revenue increase was achieved despite the
decline in sales to Apria Healthcare Group, Inc. ("Apria") of
approximately $1,500,000 as compared to the first quarter of
1995. The Company's supply agreement with Apria expired on
December 31, 1995.
INTEREST AND OTHER INCOME
Interest and other income for the three months ended March 31,
1996 increased $411,000, as compared to the same period last
year. The increase is primarily attributable to the gain of
$360,000 recorded from the sale of the Gentle Expressions-R- breast
pump product line.
COST OF REVENUES
Cost of revenues as a percentage of operating revenues for the
three months ended March 31, 1996, remained relatively unchanged
at 69%, as compared to the same period last year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses as a percentage of
operating revenues for the three months ended March 31, 1996 was
27%, as compared to 28% in the same period last year. The
decrease is
Page 10
<PAGE>
primarily due to cost reduction programs and the
continuing efficiencies generated by the investment in new
business processing systems.
INTEREST EXPENSE
Interest expense for the three months ended March 31, 1996
decreased $156,000 or 21%, as compared to the same period last
year. The decrease is primarily due to lower interest rates and
decreased borrowings as compared to the same period last year.
NET INCOME
Income before income taxes for the three months ended March 31,
1996 was $928,000, as compared to $110,000 for the same period
last year, an increase of $818,000. The increase is primarily
due to the increase in revenues, the decrease in selling,
general and administrative expenses as a percentage of operating
revenue, the decrease in interest expense and the gain realized
from the sale of the Gentle Expressions-R- breast pump product
line.
Net income for the three months ended March 31, 1996 was
$510,000, as compared to $66,000 for the same period last year.
The Company recorded income tax expense of $418,000 during the
three month period ended March 31, 1996, as compared to $44,000
recorded during the 1995 period. As of March 31, 1996, the
Company has recorded net deferred tax assets of $2,594,000,
primarily comprised of net operating loss carryforwards and
investment, research and development, jobs tax and alternative
minimum tax credits. Based upon the Company's expectation that
future taxable income will be sufficient to utilize the
carryforwards prior to December 31, 2009, the Company has not
recorded a valuation allowance on these deferred tax assets,
except for an allowance of $55,000 related to tax assets recorded
for acquired carryforwards. Future taxable income is expected to
be derived from the Company's existing operations, and the
taxable gain to be realized on the sale of the Company's Gentle
Expressions-R- breast pump product line. The total deferred tax
asset will continue to be evaluated by management as to its
realizability on a quarterly basis. The amount of the deferred
tax asset considered realizable could be reduced in the near term
if estimates of future taxable income during the carryforward
period are reduced. Uncertainties which may impact the future
realizability but are not expected to occur, include a decline in
sales and margins resulting from a possible loss of market share
and increased competition.
The Company's business has not been materially affected by
inflation.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $32,617,000 at March 31, 1996,
as compared to $33,763,000 at December 31, 1995. The decrease in
working capital is due to the reclassification of an additional
$1,000,000 of principal related to the John Hancock Guaranteed
Senior Notes, to reflect the scheduled principal payment of
$2,000,000 due in February 1997, and the initial payment of
$500,000 in connection with an acquisition, offset by working
capital generated from the Company's operating profit of
$510,000, which included $794,000 of depreciation and
amortization expense.
Cash provided by operations for the three months ended March 31,
1996 was $3,475,000, as compared to $2,092,000 in the same period
last year. The principal reasons for the increase in cash
provided by operations were the Company's operating profit and
changes in operating assets and liabilities.
The Company anticipates that its current cash balance together
with expected cash flow from operations and the anticipated
renewal of its bank line of credit will be sufficient to meet its
working capital requirements.
Page 11
<PAGE>
FINANCING
At March 31, 1996, the Company had an unsecured line-of-credit
with a bank available for letters of credit, acceptances and
short-term borrowings. The total amount available under the
line-of-credit is $15,000,000. The line is available for the
direct borrowings in the amount of up to $5,000,000, and provides
for commercial letters of credit and bankers' acceptances.
Credit availability under this line is subject to the bank's
continuing satisfaction with current financial information.
Although the line-of-credit by its terms expires on June 30,
1996, the Company anticipates that the line-of-credit will be
renewed.
Interest on direct borrowings is payable at the bank's prime rate
plus 1%, acceptances are created for a fee of 1-1/2% above the
bank's acceptance rate, and commercial letters of credit have a
commission rate of 3/8% per drawing. At March 31, 1996, the
Company had direct borrowings of $100,000 and $8,000,000 had been
utilized under acceptances payable. Open letters of credit at
March 31, 1996 relating to vendor purchases were $ 2,336,000.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
There is no action, proceeding or investigation pending or
threatened which has or may have a material affect on the
condition (financial or otherwise), business, operations or
properties of the Company.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 10(kk). Amendment to Employment Agreement dated as of
May 3, 1996, by and between the Company and Irwin Selinger.
Page 12
<PAGE>
S I G N A T U R E S
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.
GRAHAM-FIELD HEALTH PRODUCTS, INC.
(Registrant)
Date: May 14, 1996 s/Irwin Selinger
--------------------------------------
Irwin Selinger
Chairman of the Board and
Chief Executive Officer
Date: May 14, 1996 s/Gary M. Jacobs
--------------------------------------
Gary M. Jacobs
Vice President - Finance
Chief Financial and Accounting Officer
Page 13
<PAGE>
ITEM 6. EXHIBITS AND REPORTSON FORM 8-K
EXHIBIT 10(KK)
AMENDMENT TO EMPLOYMENT AGREEMENT
DATED AS OF MAY 3, 1996
BY AND BETWEEN THE COMPANY
AND IRWIN SELINGER
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
GRAHAM-FIELD HEALTH PRODUCTS, INC.
AND
IRWIN SELINGER
AMENDMENT, dated as of May 3, 1996 (the "Amendment"),
to the Employment Agreement dated as of July 8, 1981, as amended
on June 19, 1991, by and between Graham-Field Health Products,
Inc., a Delaware corporation (the "Corporation"), and Irwin
Selinger ("Selinger").
W I T N E S S E T H:
WHEREAS, the Corporation and Selinger are parties to an
Employment Agreement dated as of July 8, 1981, as amended on June
19, 1991 (the "Employment Agreement");
WHEREAS, the Corporation and Selinger have agreed to
amend and modify certain terms and provisions of the Employment
Agreement;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, the parties hereto
hereby agree to amend and modify the Employment Agreement as
follows:
1. The term of the Employment Agreement, which is due
to expire on July 8, 1996, shall be extended for an additional
five (5) year period ending July 8, 2001 (the "New Term").
2. Effective as of January 1, 1997 (the "Effective
Date"), the Corporation shall pay Selinger an annual salary
during the 1997 calendar year (the "Base Year") of $300,000 (the
"New Base Salary"). The annual salary during each year of the
New Term following the Base Year shall be such amount as the
Corporation and Selinger shall agree upon and shall not be less
than the New Base
<PAGE>
Salary increased in each subsequent year of the
New Term by an amount which is determined by multiplying the New
Base Salary by the percentage increase, if any, of the Consumer
Price Index for all Urban Workers (New York - Northeastern New
Jersey) (1967=100), issued by the Bureau of Labor Statistics of
the United States Department of Labor (the "Index") for such
subsequent year over the Index for the Base Year. The New Base
Salary shall be payable in equal, or as nearly equal as may be
practicable, installments not less frequently than semimonthly.
The Employment Agreement, as amended, shall not be deemed
abrogated or terminated if the Corporation, in its discretion
shall determine to increase the compensation of Selinger for any
period of time, or if Selinger shall accept such increase, but
nothing shall be deemed to obligate the Corporation to make such
increase.
3. In all other respects, all of the terms and
provisions of the Employment Agreement shall remain in full force
and effect during the New Term.
-2-
<PAGE>
IN WITNESS WHEREOF, parties hereto have executed this
Amendment this 3rd day of May 1996.
GRAHAM-FIELD HEALTH
PRODUCTS, INC.
By: s/Richard S. Kolodny
----------------------------------
Richard S. Kolodny
Vice President,
General Counsel
s/Irwin Selinger
----------------------------------
Irwin Selinger
-3-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996
AS INCLUDED IN THE FORM 10Q FOR THE QUARTERLY PERIOD ENDED MARCH 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> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 364
<SECURITIES> 0
<RECEIVABLES> 22,989
<ALLOWANCES> 0
<INVENTORY> 30,835
<CURRENT-ASSETS> 56,455
<PP&E> 7,835
<DEPRECIATION> 0
<TOTAL-ASSETS> 101,769
<CURRENT-LIABILITIES> 23,838
<BONDS> 17,828
0
0
<COMMON> 353
<OTHER-SE> 59,750
<TOTAL-LIABILITY-AND-EQUITY> 101,769
<SALES> 26,929
<TOTAL-REVENUES> 27,348
<CGS> 18,502
<TOTAL-COSTS> 18,502
<OTHER-EXPENSES> 7,329
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 589
<INCOME-PRETAX> 928
<INCOME-TAX> 418
<INCOME-CONTINUING> 510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 510
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
