SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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 29, 1996
----------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-9348
------
QMS, INC.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 63-0737870
- -------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
ONE MAGNUM PASS, MOBILE, AL 36618
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(334) 633-4300
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(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 CORPORATE ISSUERS: Indicate the number of shares
outstanding of the issuer's common stock, as of the latest practicable date
10,678,115 AT MARCH 29, 1996.
- ----------------------------------
QMS, INC. AND SUBSIDIARIES
==========================
<TABLE>
INDEX
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<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NUMBER
--------------------- -----------
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(unaudited) as of March 29, 1996 and
September 29, 1995 3 - 4
Condensed Consolidated Statements of Operations
(unaudited) for the three and six months ended
March 29, 1996 and March 31, 1995 5
Condensed Consolidated Statements of Cash Flows
(unaudited) for the six months ended
March 29, 1996 and March 31, 1995 6
Notes to Condensed Consolidated Financial Statements
(unaudited) 7 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 11
PART II - OTHER INFORMATION 12
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. (a) Exhibits
(b) Reports on Form 8-K
SIGNATURES 13
</TABLE>
QMS, INC. AND SUBSIDIARIES
==========================
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
as of March 29, 1996 and September 29, 1995
<CAPTION>
(Unaudited)
March 29, September 29,
in thousands 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 1,086 $ 7,431
Trade Receivables (less allowance for doubtful
accounts of $395 at March 1996 and $546
at September 1995) 26,872 37,721
Notes Receivable 4,500 0
Inventories, Net (Note 3) 35,649 47,482
Other Current Assets 3,431 7,066
------------- -------------
Total Current Assets 71,538 99,700
PROPERTY, PLANT AND EQUIPMENT 62,123 69,205
Less Accumulated Depreciation 40,610 42,484
------------- -------------
Property, Plant and Equipment, Net 21,513 26,721
OTHER ASSETS
Note Receivable 2,500 0
Other, Net 9,698 9,117
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Total Other Assets 12,198 9,117
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TOTAL ASSETS $ 105,249 $ 135,538
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
QMS, INC. AND SUBSIDIARIES
==========================
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
as of March 29, 1996 and September 29, 1995
<CAPTION>
(Unaudited)
March 29, September 29,
in thousands 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 13,444 $ 16,586
Short-Term Bank Loans 0 7,764
Revolving Credit Loan and Short-Term Debt (Note 4) 17,495 4,990
Other 25,024 34,849
------------- -------------
Total Current Liabilities 55,963 64,189
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 656 25,630
DEFERRED INCOME TAXES 1,182 1,162
OTHER LIABILITIES 2,673 1,344
STOCKHOLDERS' EQUITY 44,775 43,213
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 105,249 $ 135,538
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
QMS, INC. AND SUBSIDIARIES
==========================
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended March 29, 1996 and March 31, 1995
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
March 29, March 31, March 29, March 31,
in thousands, except per share amounts 1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES
Printers and Supplies $ 29,211 $ 58,623 $ 58,658 $ 121,662
U.S. Service 8,192 8,028 16,090 15,510
----------- ----------- ----------- -----------
Total Net Sales 37,403 66,651 74,748 137,172
----------- ----------- ----------- -----------
COST OF GOODS SOLD
Printers and Supplies 19,981 51,321 40,273 94,618
U.S. Service 4,982 4,977 9,618 9,528
----------- ----------- ----------- -----------
Total Cost of Goods Sold 24,963 56,298 49,891 104,146
----------- ----------- ----------- -----------
GROSS PROFIT
Printers and Supplies 9,230 7,302 18,385 27,044
U.S. Service 3,210 3,051 6,472 5,982
----------- ----------- ----------- -----------
Total Gross Profit 12,440 10,353 24,857 33,026
----------- ----------- ----------- -----------
OPERATING EXPENSES
Selling, General and Administrative
Expenses 10,881 21,645 21,854 43,288
Restructuring Expense 0 2,685 0 2,685
----------- ----------- ----------- -----------
Total Operating Expenses 10,881 24,330 21,854 45,973
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 1,559 (13,977) 3,003 (12,947)
----------- ------------ ----------- ------------
OTHER INCOME (EXPENSE)
Interest Income 90 27 169 40
Interest Expense (451) (1,068) (1,024) (1,991)
Miscellaneous Income (Expense) (141) 508 (472) 486
------------ ----------- ------------ -----------
Total Other Expense (502) (533) (1,327) (1,465)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 1,057 (14,510) 1,676 (14,412)
INCOME TAX PROVISION 0 0 0 26
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 1,057 $ (14,510) $ 1,676 $ (14,438)
=========== ============ =========== ============
EARNINGS (LOSS) PER COMMON SHARE (Note 2)
Primary and Fully Diluted $ 0.10 $ (1.36) $ 0.16 $ (1.35)
SHARES USED IN PER SHARE COMPUTATION (Note 2)
Primary and Fully Diluted 10,723 10,677 10,700 10,676
</TABLE>
See Notes to Condensed Consolidated Financial Statements
QMS, INC. AND SUBSIDIARIES
==========================
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended March 29, 1996 and March 31, 1995
(Unaudited)
<CAPTION>
March 29, March 31,
in thousands 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ 1,676 $ (14,438)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by Operating Activities:
Depreciation of Property, Plant and Equipment 2,786 4,351
Amortization of Capitalized and Deferred Software 2,134 5,433
Provision for Losses on Inventory 4,242 8,545
Provision for Restructuring Expense 0 2,685
Other 60 64
Net Change in Assets and Liabilities that Provided
(Used) Cash 5,349 (1,993)
------------- --------------
Net Cash Provided by Operating Activities 16,247 4,647
Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment (808) (4,579)
Additions to Notes Receivable (7,500) 0
Additions to Capitalized and Deferred Software Costs (3,827) (4,546)
Proceeds from Divestiture of Businesses 9,800 0
Other 90 358
------------- -------------
Net Cash Used in Investing Activities (2,245) (8,767)
Cash Flows from Financing Activities:
Proceeds from Long-Term Debt and Capital Leases 12,887 5,448
Payments of Long-Term Debt and Capital Leases, including
Current Maturities (25,356) (3,246)
Payments of Notes Payable (7,764) 0
Other 158 30
------------- -------------
Net Cash Provided by (Used in) Financing Activities (20,075) 2,232
Effect of Exchange Rate Changes on Cash (272) 1,652
-------------- -------------
Net Change in Cash and Cash Equivalents (6,345) (236)
Cash and Cash Equivalents at Beginning of Period 7,431 4,956
------------- -------------
Cash and Cash Equivalents at End of Period $ 1,086 $ 4,720
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
QMS, INC. AND SUBSIDIARIES
==========================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. MANAGEMENT OPINION
In the opinion of management, the condensed consolidated financial statements
reflect all adjustments necessary to present fairly the financial position of
the Company as of March 29, 1996, the results of operations for the three and
six months ended March 29, 1996 and March 31, 1995 and changes in cash flows
for the six months ended March 29, 1996 and March 31, 1995. All adjustments
included in the condensed consolidated financial statements are of a normal
recurring nature except amounts related to the restructuring reserves (see
Note 6) and reclassification of the revolving credit loan and senior secured
notes payable from long-term to short-term debt (see Note 4). The results of
operations for the six months ended March 29, 1996 are not necessarily
indicative of the results to be expected for the fiscal year ending September
27, 1996.
2. PER COMMON SHARE COMPUTATIONS
Per share computations are based on the weighted average number of common
shares outstanding during the period and the dilutive effect of the assumed
exercise of stock options. This effect was not material for the three- and
six-month periods ending March 29, 1996 and March 31, 1995 and did not change
the amounts of the primary and fully diluted earnings (loss) per common
share.
3. INVENTORIES
Inventories at March 29, 1996 and September 29, 1995 are summarized as
follows (in thousands):
<TABLE>
<CAPTION> March 29, September 29,
1996 1995
---------------- -------------
<S> <C> <C>
Raw materials $ 10,451 $ 11,709
Work in process 1,662 3,152
Finished goods 29,649 43,453
Inventory reserve (6,113) (10,832)
-------------- ------------
TOTAL $ 35,649 $ 47,482
============= ===========
</TABLE>
4. CLASSIFICATION OF REVOLVING CREDIT LOAN AND SENIOR SECURED NOTES PAYABLE
The Company reclassified its revolving credit loan and the senior secured
notes payable from long-term to short-term debt as of December 29, 1995 only
to comply with FASB Emerging Issues Task Force Issue No. 95-22, "Balance
Sheet Classification of Borrowings Outstanding Under Revolving Credit
Arrangements That Include a Subjective Acceleration Clause and a Lock-Box
Arrangement." This pronouncement was issued in November 1995 and the
Company is currently negotiating with the lender to modify the revolving
credit agreement in such a manner as to permit classification of these loan
obligations as long-term debt. The revolving credit agreement is for a
three-year period and the Company was in full compliance with all the
covenants of this agreement as of March 29, 1996.
5. COMMITMENTS AND CONTINGENCIES
At September 29, 1995, the Company had a commitment of approximately $13.2
million under contracts to purchase print engines. As of March 29, 1996, the
Company had a commitment of approximately $9.9 million to purchase print
engines under purchase contracts.
The Company was contingently liable for approximately $1.5 million as of March
29, 1996, the result of letters of credit issued in the normal course of
business for the purchase of inventory.
6. RESTRUCTURING RESERVES
At September 29, 1995, the Company had reserves for restructuring charges and
business divestitures totaling $10.1 million. During fiscal 1996, total net
charges of $5.8 million were taken against these reserves leaving a balance
of $4.3 million at March 29, 1996.
7. RECLASSIFICATIONS
Certain reclassifications have been made to fiscal 1995 amounts to conform to
the fiscal 1996 presentation.
QMS, INC. AND SUBSIDIARIES
==========================
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net income for the second quarter of fiscal 1996 was $1.1 million on net sales
of $37.4 million and for the six months ended March 29, 1996 was $1.7 million on
net sales of $74.7 million. The 1996 results compare to a net loss of $14.5
million on net sales of $66.7 million for the second quarter of fiscal 1995 and
a net loss of $14.4 million on net sales of $137.2 million for the six months
ended March 31, 1995. Included in the results for the second quarter of fiscal
1995 were special charges of $6.8 million associated principally with inventory
revaluation and $2.7 million for restructuring charges.
<TABLE>
Table of Net Sales Comparisons for Key Channels of Distribution
-------------------------------------------------------------------------------------
<CAPTION>
Second Quarter Ended Six Months Ended
----------------------------------------- -----------------------------------------
March 29, March 31, March 29, March 31,
(000's) 1996 1995 Difference 1996 1995 Difference
------- ---- ---- ---------- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Direct $ 11,802 $ 18,617 $ (6,815) $ 24,539 $ 37,987 $ (13,448)
U.S. Service 8,192 8,028 164 16,090 15,510 580
U.S. Reseller 4,289 2,865 1,424 9,064 7,645 1,419
Europe 6,118 22,201 (16,083) 11,226 47,451 (36,225)
Japan 2,798 9,263 (6,465) 5,300 16,114 (10,814)
Canada 2,343 4,009 (1,666) 5,424 8,374 (2,950)
QMS Circuits 973 1,110 (137) 1,846 1,985 (139)
All Other 888 558 330 1,259 2,106 (847)
-------------------------------------- ---------------------------------------
Total $ 37,403 $ 66,651 $ (29,248) $ 74,748 $ 137,172 $ (62,424)
======================================= =======================================
</TABLE>
Net sales for the second quarter of fiscal 1996 declined by 43.9% from net sales
for the second quarter of fiscal 1995 and by 45.5% in the six-month comparison.
The sales by key distribution channels in the second quarter of fiscal 1996 (the
three months ended March 29, 1996) compared to the second quarter of fiscal 1995
(the three months ended March 31, 1995) and the six-month periods ending on the
same dates are shown in the table above. The principal reason for the sales
decline is the change in the methods of doing business in Europe and Japan. The
combined sales decline in these channels represents $22.5 million, or 77%, of
the total decline for the second quarter comparison, and $47 million, or 75.4%,
of the total decline for the six-month comparison. As reported in the Company's
10-Q filing for the first quarter of fiscal 1996, the Company has completed the
divestiture of its European and Japan business operations to management buy-out
groups and established exclusive master distributor agreements with the new
owners of these businesses to market QMS products in their respective geographic
territories. The Company recognizes revenue on sales of components and
controller boards to these master distributors and, additionally, commissions
are earned by the Company on sales of QMS products by these master distributors.
As a result, the amount of revenue recognized through these sales channels in
fiscal 1996 is significantly lower than that recognized in fiscal 1995.
Additionally, $3.2 million of the sales decline in the second quarter of fiscal
1996 compared to the second quarter of fiscal 1995 is due to the disposition (in
September 1995) of the color transfer consumables business. In the six-month
comparison, $7 million of the sales decline is due to the disposition of the
color transfer consumables business.
The U.S. direct channel is the Company's primary method of distribution
for the higher end of the Company's product offerings to major corporate
accounts and governmental agencies. Net sales in the direct channel for the
three- and six-month periods ending March 29, 1996 declined by 36.6% and 35.4%,
respectively, compared to the same periods in fiscal 1995. The principal
reasons for the declines are increased competition in this sales channel and the
timing of the Company's introduction of the QMS(R) 2425 Print System into this
channel which occurred at the end of the second fiscal quarter. The QMS 2425 is
a 24 page-per-minute monochrome printer featuring a 64-bit controller, up to
1200 x 1200 dpi (dots per inch) printing, an internal hard drive and RAM
capacity of up to 128 MB. In addition, a QMS CrownCopy(TM) option is available
with the QMS 2425, allowing it to serve as a copier as well as a printer. The
introduction of the QMS 2425 into the U.S. direct sales channel should allow the
Company to compete very effectively in the mid- to high-end print system market.
Overall, the Company's gross profit as a percentage of sales increased from
15.5% to 33.3% in the three-month comparison and from 24.1% to 33.3% in the six-
month comparison. The principal reason for these increases is the $6.8 million
of special charges, which are included in cost of sales in the second quarter of
fiscal 1995. Excluding the special charges, gross margins increased from 25.8%
in the second quarter of fiscal 1995 to 33.3% in the second quarter of fiscal
1996 and from 29% to 33.3% in the six-month comparison. The reasons for these
improvements are a focus on higher margin products in the sales mix, including
service and consumables, and reductions in manufacturing overhead costs that
were achieved in fiscal 1996.
The Company purchases print engine mechanisms and memory components from several
Japanese suppliers. Fluctuations in foreign currency exchange rates will affect
the prices of these products. The Company attempts to mitigate possible
negative impacts through yen-sharing arrangements with suppliers, foreign
exchange contracts and price negotiations; however, material price increases
resulting from exchange rate fluctuations could develop which would adversely
affect operating results.
Selling, general and administrative expenses declined from $21.6 million in the
second quarter of fiscal 1995 to $10.9 million in the second quarter of fiscal
1996 and from $43.3 million to $21.9 million in the six-month comparison. These
decreases of $10.7 million and $21.4 million in the three- and six-month
comparisons, respectively, are principally due to the elimination of expenses
associated with the divested business operations in Europe and Japan, which were
$6.1 million in the second quarter of fiscal 1995 and $12.7 million for the six
months ended March 31, 1995. The remainder of the decreases in selling, general
and administrative expenses from fiscal 1995 and fiscal 1996 result from cost
reductions and restructuring efforts implemented during the latter part of
fiscal 1995.
Total other expense for the second quarter of fiscal 1996 was essentially the
same as for the second quarter of fiscal 1995 and declined $0.2 million for the
comparable six-month periods. Interest expense decreased by $617,000 in the
second quarter of fiscal 1996 compared to the second quarter of fiscal 1995 and
by $967,000 in the six-month comparison which was a direct result of the
decrease in total non-trade debt from $38.4 million at September 29, 1995 to
$18.2 million at March 29, 1996.
The Company's effective tax rate was zero for the second quarter and first six
months of fiscal 1996 and for the same periods of fiscal 1995. Due to the
availability of operating loss carryforwards and income tax credits, the Company
does not anticipate providing for any income tax expense during fiscal 1996.
FINANCIAL CONDITION
- -------------------
The decrease in cash and cash equivalents from $7.4 million at September 29,
1995 to $1.1 million at March 29, 1996 results from revised cash management
processes that were implemented as part of the new credit facility with Foothill
Capital Corporation ("Foothill"). This credit facility provides for a direct
flow of the Company's cash receipts to Foothill and a simplified method of re-
borrowing funds from Foothill to meet working capital requirements.
The decreases in trade accounts receivable of $10.8 million, in inventories of
$11.8 million, in property, plant and equipment of $5.2 million, in trade
accounts payable of $3.1 million, in short-term bank loans of $7.8 million, and
in other current liabilities of $9.8 million at March 29, 1996 compared to
September 29, 1995 are principally the result of the divestitures of the
Company's European and Japanese operations.
The increases in notes receivable (current) of $4.5 million and note receivable
(non-current) of $2.5 million at March 29, 1996 compared to September 29, 1995
represent notes due from the purchasers of the Company's business operations in
Europe ($4 million) and Japan ($3 million). These notes are scheduled for
repayment over periods of one and five years, respectively, and all payments are
current as of March 29, 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the second quarter and first six months of fiscal 1996, the Company's
working capital and capital expenditure requirements came principally from
operations, the proceeds from the disposition of its business operations in
Europe and Japan, and borrowings under its new credit facility with Foothill.
The Company's net working capital as of March 29, 1996 was $15.6 million
compared to $35.5 million at September 29, 1995. This reduction is principally
due to the disposition of the European and Japanese operations, the change in
the Company's cash management processes under the Foothill credit facility and
the reclassification of the revolving credit loan and senior secured notes
payable from long-term to short-term debt, as discussed below.
At March 29, 1995, borrowings under the Foothill credit facility were $11.7
million and borrowing capacity under this three-year credit facility totaled
$15.5 million, plus the availability of a $5 million term loan. The Company was
in compliance with all of the Foothill debt covenants.
At March 29, 1996, the Company was not in compliance with certain covenants
contained in the 6.15% senior secured notes payable. Although the Company has
not received a waiver of the non-compliance, the holder of the senior secured
notes has not taken steps to accelerate repayment of this debt and, in
management's opinion, the status of this debt is unlikely to change. The
Company has adequate borrowing capacity available as a term loan under the
Foothill credit facility to repay the senior secured notes in the unlikely event
that repayment of these notes is accelerated.
In November 1995, the FASB Emerging Issues Task Force released Issue No. 95-22,
"Balance Sheet Classification of Borrowings Outstanding Under Revolving Credit
Arrangements That Include a Subjective Acceleration Clause and a Lock-Box
Arrangement" which required the Company to reclassify its revolving credit loan
and the senior secured notes payable from long-term to short-term debt. The
Company is currently negotiating with the lender to modify the revolving credit
agreement in such a manner as to permit classification of these loan obligations
as long-term debt.
Management believes that the Company's continuing working capital and capital
expenditure requirements will be met by cash flow from operations and borrowings
under the Foothill credit facility.
QMS, INC. AND SUBSIDIARIES
==========================
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
The Company is a defendant in one case in the normal course of business.
Management is of the opinion that the ultimate resolution of this case will not
materially affect the Company's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES - None.
- ------------------------------
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ----------------------------------------
(a) At March 29, 1996, the Company was not in compliance with certain covenants
contained in the 6.15% senior secured notes payable. Covenant violations
include noncompliance with minimum net income requirements and interest
coverage. Although the Company has not received a waiver of the noncompliance,
the holder of the senior secured notes has not taken steps to accelerate
repayment of this debt and, in management's opinion, the status of this debt is
unlikely to change. The Company has adequate borrowing capacity available as a
term loan under the Foothill credit facility to repay the senior secured notes
in the unlikely event that repayment of these notes is accelerated. The
Foothill credit facility is a three-year agreement and the Company was in full
compliance with all of the covenants in this agreement as of March 29, 1996.
(b) None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None.
- ------------------------------------------------------------
ITEM 5. OTHER INFORMATION - None.
- --------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits:
Exhibit
Number Description
------ -----------
27 Financial Data Schedule
(b) Reports: None.
QMS, INC. AND SUBSIDIARIES
==========================
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.
<TABLE>
<CAPTION>
<S> <C>
QMS, INC.
(Registrant)
Date: May 9, 1996 /s/ Gerald G. Roenker
------------------------------------ ------------------------------------------------------
GERALD G. ROENKER
Executive Vice President, Chief Operating
Officer and Acting Chief Financial Officer
(Mr. Roenker is the Principal Operating and
Financial Officer and has been duly authorized
to sign on behalf of the Registrant.)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000710983
<NAME> QMS, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-27-1996
<PERIOD-END> MAR-29-1996
<CASH> 1086
<SECURITIES> 0
<RECEIVABLES> 27267
<ALLOWANCES> 395
<INVENTORY> 35649
<CURRENT-ASSETS> 71538
<PP&E> 62123
<DEPRECIATION> 40610
<TOTAL-ASSETS> 105249
<CURRENT-LIABILITIES> 55963
<BONDS> 0
0
0
<COMMON> 118
<OTHER-SE> 44657
<TOTAL-LIABILITY-AND-EQUITY> 105249
<SALES> 37403
<TOTAL-REVENUES> 37403
<CGS> 24963
<TOTAL-COSTS> 24963
<OTHER-EXPENSES> 10881
<LOSS-PROVISION> 4242
<INTEREST-EXPENSE> 451
<INCOME-PRETAX> 1057
<INCOME-TAX> 0
<INCOME-CONTINUING> 1057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1057
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
