<PAGE>
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UNITED STATES
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 quarterly period ended September 30, 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 No. 0-14800
---------------
X-RITE, INCORPORATED
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-1737300
- ------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3100 44th Street, SW, Grandville, Michigan 49418
- ------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(616) 534-7663
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(Registrant's telephone number, including area code)
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 outstanding of registrant's common stock, par value
$.10 per share, at October 31, 1996 was 21,048,625 shares.
Exhibit Index on page 11.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
X-RITE, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
------------ -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,895,000 $ 332,000
Short-term investments 9,274,000 4,073,000
Accounts receivable, less allowances of
$713,000 in 1996 and $574,000 in 1995 15,676,000 13,168,000
Inventories 13,382,000 12,835,000
Deferred tax assets 746,000 792,000
Prepaid expenses and other current assets 749,000 683,000
----------- -----------
Total current assets 41,722,000 31,883,000
PROPERTY AND EQUIPMENT, at cost 27,388,000 25,107,000
Less accumulated depreciation (11,605,000) (9,825,000)
----------- -----------
15,783,000 15,282,000
OTHER ASSETS:
Costs in excess of net assets acquired 9,666,000 10,098,000
Other noncurrent assets 6,123,000 6,244,000
----------- -----------
15,789,000 16,342,000
----------- -----------
$73,294,000 $63,507,000
=========== ===========
See accompanying notes to condensed consolidated financial statements.
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X-RITE, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS--Continued
September 30, December 31,
1996 1995
------------ -----------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 1,431,000 $ 1,499,000
Accrued liabilities--
Payroll and employee benefits 1,294,000 785,000
Other accrued liabilities 913,000 1,342,000
----------- -----------
Total current liabilities 3,638,000 3,626,000
DEFERRED INCOME TAXES 644,000 611,000
SHAREHOLDERS' INVESTMENT:
Common stock 2,104,000 2,102,000
Additional paid-in capital 6,613,000 6,388,000
Retained earnings 60,363,000 50,781,000
Cumulative translation adjustment (68,000) (1,000)
----------- -----------
69,012,000 59,270,000
----------- -----------
$73,294,000 $63,507,000
=========== ===========
See accompanying notes to condensed consolidated financial statements.
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X-RITE, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Net sales $21,358,000 $18,755,000 $61,881,000 $55,607,000
Cost of sales 7,621,000 6,843,000 22,158,000 18,797,000
----------- ----------- ----------- -----------
Gross profit 13,737,000 11,912,000 39,723,000 36,810,000
Operating expenses:
Selling & marketing 3,638,000 3,730,000 10,575,000 11,674,000
Engineering, general
& administrative 2,818,000 2,784,000 8,546,000 8,188,000
Research & development 1,364,000 1,550,000 4,107,000 4,581,000
----------- ----------- ----------- -----------
7,820,000 8,064,000 23,228,000 24,443,000
----------- ----------- ----------- -----------
Operating income 5,917,000 3,848,000 16,495,000 12,367,000
Other (expense) income 118,000 (60,000) 284,000 97,000
----------- ----------- ----------- -----------
Income before
income taxes 6,035,000 3,788,000 16,779,000 12,464,000
Income taxes 2,021,000 1,257,000 5,621,000 4,077,000
----------- ----------- ----------- -----------
NET INCOME $ 4,014,000 $ 2,531,000 $11,158,000 $ 8,387,000
=========== =========== =========== ===========
Average number of common
and common equivalent
shares outstanding 21,196,000 21,186,000 21,188,000 21,173,000
========== ========== ========== ==========
Earnings per common and
common equivalent share $.19 $.12 $.53 $.40
==== ==== ==== ====
Cash dividends per share $.025 $.025 $.075 $.075
===== ===== ===== =====
See accompanying notes to condensed consolidated financial statements.
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X-RITE, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES $11,198,000 $ 8,143,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments 1,600,000 13,762,000
Proceeds from maturities of investments 567,000 -
Purchases of investments (7,379,000) -
Capital expenditures (2,443,000) (3,035,000)
Acquisition, less cash acquired - (11,490,000)
Purchases of other assets (684,000) -
Other investing activities 50,000 -
----------- -----------
Net cash and cash equivalents
used for investing activities (8,289,000) (763,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of Labsphere, Inc. long-term debt - (1,795,000)
Dividends paid (1,577,000) (1,575,000)
Issuance of common stock 227,000 214,000
----------- -----------
Net cash and cash equivalents
used for financing activities (1,350,000) (3,156,000)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 4,000 57,000
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,563,000 4,281,000
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 332,000 1,171,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 1,895,000 $ 5,452,000
=========== ===========
See accompanying notes to condensed consolidated financial statements.
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X-RITE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by X-Rite Incorporated ("X-Rite" or the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in X-Rite's 1995 annual report on Form 10-K.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the financial position of the Company as of September 30,
1996, the results of its operations for the three and nine month periods
ended September 30, 1996 and 1995, and its cash flows for the nine month
periods ended September 30, 1996 and 1995. All such adjustments are of a
normal and recurring nature.
NOTE 2--INVENTORIES
Inventories consisted of the following:
September 30, December 31,
1996 1995
------------ -----------
Raw materials $ 4,764,000 $ 4,399,000
Work in process 3,604,000 3,523,000
Finished goods 5,014,000 4,913,000
----------- -----------
$13,382,000 $12,835,000
=========== ===========
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Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition
RESULTS OF OPERATIONS
Net Sales:
Third quarter 1996 consolidated net sales were 13.9% higher than sales in
the same quarter a year ago. The year-over-year increase was due to higher
unit volume sales.
Consolidated net sales for the nine months ended September 30, 1996
increased 11.3% compared to the same period in 1995. The improvement in
sales was due to unit volume increases and the inclusion of Labsphere, Inc.
("Labsphere") sales for a full three months in the first quarter of 1996.
Labsphere was acquired by X-Rite in February of 1995 and, accordingly,
first quarter consolidated sales that year only included Labsphere's sales
subsequent to acquisition.
Cost of Sales and Gross Profit:
Gross profit as a percentage of sales was 64.3% for the third quarter of
1996, compared to 63.5% for the third quarter of 1995. Year to date, gross
profit as a percentage of sales was 64.2% in 1996 and 66.2% in 1995. The
decline in year-to-date gross profit margin was due to a change in product
sales mix.
Operating Expenses:
Third quarter and year-to-date selling and marketing expenses have declined
compared to the same periods in 1995. The decreases resulted from reducing
certain advertising and trade show expenses, and making workforce
reductions as part of an overall effort to contain operating expenses.
Engineering, general and administrative ("EG&A") expenses in the third
quarter of 1996 were approximately the same as EG&A expenses in the third
quarter of 1995. EG&A expenses year-to-date increased 4.4% compared to the
same period in the prior year. Most of the year-to-date increase was due
to EG&A expenses from the Labsphere operations being included for a full
three months in the first quarter of 1996, versus only a partial quarter's
costs in 1995. The Company has also been increasing its support of its
international subsidiary operations where management believes the greatest
long-term sales growth opportunities exist.
Research and development expenses in the third quarter and year to date
decreased slightly compared with the same periods in 1995. X-Rite is
committed to continuing its investments in strategic product development,
but is also containing costs wherever possible in order to optimize those
investments.
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Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition, continued
RESULTS OF OPERATIONS, continued
Other Income:
Other income consisted mainly of interest earnings from invested funds.
Third quarter and year-to-date interest income was higher than comparable
periods in the prior year due to increases in funds available to invest.
Net Income:
The Company recorded net income of $4,014,000 for the three months ended
September 30, 1996 compared to $2,531,000 in the same period of 1995. On a
per share basis, third quarter net income was $.19 in 1996 and $.12 in
1995. For the first nine months of 1996, net income was $11,158,000, or
$.53 per share, compared to $8,387,000, or $.40 per share in 1995. The
increase in third quarter and year-to-date earnings was due to higher sales
volume and lower operating expenses. The average number of common and
common equivalent shares outstanding was not significantly different
between the periods.
FINANCIAL CONDITION AND LIQUIDITY
Cash provided by operating activities in the first nine months of 1996
totaled $11,198,000. Working capital at September 30, 1996 was $38,084,000
compared to $28,257,000 at December 31, 1995. The increase in working
capital was due to net income earned in the period.
Capital expenditures in the first nine months of 1996 totaled $2,443,000
and consisted mainly of computers, software, machinery and equipment.
X-Rite currently anticipates capital expenditures for the remainder of 1996
will be approximately $300,000, and will consist of machinery and
equipment.
Management expects that X-Rite's current liquidity, combined with cash flow
from future operations and the Company's $20 million revolving credit
agreement, will be sufficient to finance the Company's operations, capital
expenditures and dividends for the remainder of 1996 and 1997.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on Page 11 of this Form 10-Q report.
(b) There were no reports on Form 8-K filed by the Registrant
during the three months ended September 30, 1996.
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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.
X-RITE, INCORPORATED
November 11, 1996 /s/ Ted Thompson
----------------------
Ted Thompson
Chairman and Chief
Executive Officer
November 11, 1996 /s/ Duane F. Kluting
----------------------
Duane F. Kluting
Vice President and
Chief Financial Officer
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EXHIBIT INDEX
- --------------------------------------------------------------------------
3(a) Restated Articles of Incorporation (filed as exhibit to Form
S-18 dated April 10, 1986 (Registration No. 33-3954C) and
incorporated herein by reference)
3(b) Certificate of Amendment to Restated Articles of Incorporation
adding Article IX (filed as exhibit to Form 10-Q for the quarter
ended June 30, 1987 (Commission File No. 0-14800) and
incorporated herein by reference)
3(c) Certificate of Amendment to Restated Articles of Incorporation
amending Article III (filed as exhibit to Form 10-K for the year
ended December 31, 1995 (Commission File No. 0-14800) and
incorporated herein by reference)
3(d) Bylaws, as amended through June 16, 1994 (filed as exhibit to
Form 10-K for the year ended December 31, 1994 (Commission File
No. 0-14800) and incorporated herein by reference)
3(e) First amendment to amended Bylaws amending Article IV (filed as
exhibit to Form 10-K for the year ended December 31, 1995
(Commission File No. 0-14800) and incorporated herein by
reference)
4 X-Rite, Incorporated common stock certificate specimen (filed
as exhibit to Form 10-Q for the quarter ended June 30, 1986
(Commission File No. 0-14800) and incorporated herein by
reference)
The following material contracts identified with "*" preceding the exhibit
number are agreements or compensation plans with or relating to executive
officers, directors or related parties.
*10(a) X-Rite, Incorporated Amended and Restated Outside Director Stock
Option Plan, effective as of September 17, 1996
*10(b) X-Rite, Incorporated Cash Bonus Conversion Plan (filed as
Appendix A to the definitive proxy statement dated April 8, 1996
relating to the Company's 1996 annual meeting (Commission File
No. 0-14800) and incorporated herein by reference)
*10(c) Form of Indemnity Contract entered into between the registrant
and members of the board of directors (filed as exhibit to
Form 10-Q for the quarter ended June 30, 1996 (Commission File
No. 0-14800) and incorporated herein by reference)
-11-
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<PAGE> 12
EXHIBIT INDEX
- --------------------------------------------------------------------------
*10(d) Employment Resignation and Severance Agreement entered into
between the registrant and Bruce Jorgensen (filed as exhibit to
Form 10-Q for the quarter ended March 31, 1996 (Commission File
No. 0-14800) and incorporated herein by reference)
10(e) Exchange Agreement entered into between the registrant and
Ronald L. Sisson (filed as exhibit to Form 10-K for the year
ended December 31, 1994 (Commission File No. 0-14800) and
incorporated herein by reference)
27 Financial Data Schedule
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<EX-10.a>
Exhibit 10(a)
X-RITE, INCORPORATED AMENDED AND RESTATED
OUTSIDE DIRECTOR STOCK OPTION PLAN
(EFFECTIVE AS OF SEPTEMBER 17, 1996)
ARTICLE I
GENERAL PROVISIONS
1.1 Purpose and Scope. The purpose of this Outside Director Stock
Option Plan is to make service on the Board of Directors of the Company
more attractive to present and prospective outside directors, as the
continued services of qualified outside directors are considered essential
to the Company's sustained progress.
1.2 Definitions. The following words and phrases shall have the
following meanings as used in this Plan:
(a) "Board" means the Board of Directors of the Company.
(b) "Company" means X-Rite, Incorporated and any subsidiary
corporation or other entity in which X-Rite, Incorporated holds a
proprietary interest.
(c) "Market Value" means the closing sale price reported in the
NASDAQ Stock Market or, if such value is not available, such other estimate
of fair market value as the Board shall determine.
(d) "Option Price" means the purchase price for Stock payable
upon exercise of an option granted under this Plan.
(e) "Optionee" means a person to whom an option has been granted
under this Plan.
(f) "Outside Director" means a person who is a member of the
Board of Directors of the Company, but who is not an employee of the
Company.
(g) "Plan" means this X-Rite, Incorporated Outside Director
Stock Option Plan.
(h) "Stock" means the common stock of the Company, par value
$0.10 per share.
1.3 Administration. The Plan shall be administered by the Board, and
its interpretation and construction of any provision of the Plan shall be
final and binding. Each person who is or shall have been a member of the
Board shall be defended, indemnified, and held harmless by the Company, to
the maximum extent permitted by law, from and against any cost, liability,
or expense imposed or incurred in connection with such persons taking or
failing to take any action under the Plan.
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1.4 Shares Subject to Plan. The maximum number of shares of Stock
subject to options granted under the Plan shall be 800,000 shares, subject
to adjustment as provided in Section 3.1 below. The shares of Stock may be
authorized but unissued shares or treasury shares. If any outstanding
option expires or is terminated for any reason before the end of the term
for this Plan, the shares of Stock covered by that option shall be
available for options subsequently granted under this Plan.
1.5 Eligibility; Grant of Options. Only Outside Directors shall be
eligible to receive options under this Plan. Effective as of the date of
each annual meeting of the shareholders of X-Rite, Incorporated, each
Outside Director who is newly elected or continues in office as a director
subsequent to that meeting shall be granted an option to acquire 10,000
shares. Any Outside Director who is elected as a director by the Board
shall be granted an option to acquire that number of shares that is equal
to 10,000 shares multiplied by a fraction that is equal to 365 minus the
number of days that have elapsed since the last annual meeting of
shareholders and dividing that difference by 365: the result shall be
rounded to the nearest whole share.
ARTICLE II
OPTIONS AND RIGHTS
2.1 Non-Statutory Stock Options. All options granted under the Plan
shall be non-statutory options, not entitled to special tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended.
2.2 Terms, Conditions, and Form of Options. Each option granted
under this Plan shall be evidenced by a written agreement in such form and
containing such terms as the Board shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:
(a) Transferability of Options. Options may not be sold,
pledged, assigned, or transferred in any manner otherwise than by will or
the laws of descent and distribution to the extent provided in Section
2.2(d), except that the Board may authorize the grant of options that
permit transfer to the Optionee s spouse and/or the Optionee s descendants
or to a trust created primarily for the benefit of the Optionee, the
Optionee s spouse and/or the Optionee s descendants ("Authorized
Transferee"), provided the Optionee satisfies such conditions to the
transfer as may be required by the Board. The agreement pursuant to which
a transferable option is granted shall expressly set forth the transfer
rights and limitations, prohibit payment of any consideration by the
Authorized Transferee to the original Optionee, prohibit any further
transfer of the option and provide that the Authorized Transferee shall
succeed to all rights and benefits (except any right to further transfer of
the option) and be subject to all obligations, conditions, and limitations
applicable to the original Optionee. However, such rights and benefits
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<PAGE> 15
(except any right to further transfer of the option) and obligations,
conditions, and limitations shall be determined as if the original Optionee
continued to hold the option, whereby provisions of this Plan dealing with
death of an Optionee will continue to refer to the original Optionee
regardless of whether the option has been transferred to an Authorized
Transferee. Options may be exercised during the lifetime of the original
Optionee only by the original Optionee or an Authorized Transferee. After
the Optionee s death, the Option shall be exercisable only to the extent
provided in Section 2.2(d).
(b) Period of Options. Options shall terminate upon the
expiration of ten (10) years from the date upon which such options were
granted (subject to prior termination as hereinafter provided).
(c) Exercise of Options. Options may be exercised, in full or
in part, only by giving written notice to the Company, stating the number
of shares of Stock with respect to which the option is being exercised,
accompanied by payment in full for such shares, which payment may be made,
in whole or in part, in cash, or in shares of the Stock of the Company
already owned by the Optionee, valued at Market Value as of the date of the
notice of exercise; provided, however, that (i) there shall be no such
exercise at any one time as to fewer than one hundred (100) shares, unless
fewer than one hundred (100) shares remain to be purchased under the option
being exercised; and (ii) options may not be exercised for a period of six
(6) months after the date of grant.
(d) Death of Optionee and Transfer of Options. In the event of
an Optionee s death, options may be exercised, to the same extent
exercisable by the Optionee at the date of death, at any time prior to the
earlier of the specified expiration date or the first anniversary of the
Optionee s death, by any of the following persons: (i) personal
representatives of the estate of the Optionee; (ii) any person or persons
who shall have acquired the option directly from the Optionee by bequest or
inheritance; (iii) any person designated to exercise the option by means of
a specific written designation executed by the Optionee and filed with the
Company prior to the Optionee s death; or (iv) an Authorized Transferee.
No options, unless granted pursuant to an agreement specifically permitting
transfer as described in Section 2.2(a), shall be transferable by an
Optionee otherwise than by will or by the laws of descent and distribution
of the state of the Optionee s domicile; provided, however, that an
Optionee may execute and file a notice of designation as provided for in
(iii) above.
2.3 Option Price. The Option Price for an option granted under the
Plan shall be the Market Value of the shares of Stock covered by the option
on the last business day before the day the option is granted.
2.4 Notification of Exercise. Options shall be exercised by written
notice directed to the Chief Financial Officer of the Company at the
principal executive offices of the Company. Exercise by an Optionee's heir
or personal representative shall be accompanied by evidence of his or her
authority to act, in form reasonably satisfactory to the Company.
-15-
<PAGE>
<PAGE> 16
ARTICLE III
ADDITIONAL PROVISIONS
3.1 Effect of Change in Stock Subject to the Plan. The aggregate
number of shares of Stock available for options under the Plan, the shares
subject to any outstanding option and the exercise price per share shall
all be proportionately adjusted for any increase or decrease in the number
of issued shares of Stock subsequent to the effective date of the Plan
resulting from: (a) a subdivision or consolidation of shares or any other
capital adjustment; (b) the payment of a stock dividend; or (c) other
increase or decrease in such shares effected without receipt of
consideration by the Company. If the Company shall be the surviving
corporation in any merger or consolidation, any option shall pertain,
apply, and relate to the securities to which a holder of the number of
shares of Stock subject to the option would have been entitled after the
merger or consolidation. Upon dissolution or liquidation of the Company,
or as of the effective date for a merger or consolidation in which the
Company is not the surviving corporation, all options outstanding under the
Plan shall terminate unless other provisions have been made in any
outstanding option agreement.
3.2 Compliance With Other Laws and Regulations. The Plan, the grant
and exercise of options, and the obligation of the Company to sell and
deliver shares under options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required. The Company shall not
be required to issue or deliver any certificates for shares of Stock prior
to the completion of any registration or qualification of such shares under
any federal or state law, or any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be
necessary or advisable.
3.3 Amendments. The Board may discontinue the Plan at any time, and
may amend it from time to time, but no amendment, without approval by
shareholders, may: (a) increase the total number of shares which may be
issued under the Plan or to any individual under the Plan; (b) reduce the
Option Price for shares which may be purchased pursuant to options under
the Plan; (c) extend the period during which options may be granted; or (d)
modify the eligibility requirements for participation in the Plan. Other
than as expressly permitted under the Plan, no outstanding option may be
revoked or altered in a manner unfavorable to the Optionee without the
consent of the Optionee.
3.4 No Rights as Shareholder. No Optionee shall have any rights as a
shareholder with respect to any share of Stock subject to his or her option
prior to the date of issuance of a certificate evidencing ownership of such
Stock, and no adjustment will be made for dividends or other rights for
which the record date is prior to the date of the certificate, except as
provided in Section 3.1.
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<PAGE>
<PAGE> 17
3.5 Withholding. Whenever the Company proposes or is required to
issue or transfer shares of Stock under the Plan, the Company shall have
the right to require the Optionee to remit to the Company an amount
sufficient to satisfy any federal, state, or local withholding tax
liability prior to the delivery of any certificate or certificates for such
shares.
3.6 Effective Date; Duration. The Plan shall continue in effect
until July 19, 2003. Options granted on or before the termination of the
Plan may be exercised according to the terms of the option agreements
governing those options and shall continue to be governed by and
interpreted consistent with the terms of this Plan.
CERTIFICATION
The foregoing Plan was adopted by the Company's Board of Directors on
September 17, 1996.
/s/ Duane Kluting
-------------------------------------------
Duane Kluting
Secretary
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,895,000
<SECURITIES> 9,274,000
<RECEIVABLES> 16,389,000
<ALLOWANCES> 713,000
<INVENTORY> 13,382,000
<CURRENT-ASSETS> 41,722,000
<PP&E> 27,388,000
<DEPRECIATION> 11,605,000
<TOTAL-ASSETS> 73,294,000
<CURRENT-LIABILITIES> 3,638,000
<BONDS> 0
0
0
<COMMON> 2,104,000
<OTHER-SE> 66,908,000
<TOTAL-LIABILITY-AND-EQUITY> 73,294,000
<SALES> 61,881,000
<TOTAL-REVENUES> 61,881,000
<CGS> 22,158,000
<TOTAL-COSTS> 22,158,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,779,000
<INCOME-TAX> 5,621,000
<INCOME-CONTINUING> 11,158,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,158,000
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
</TABLE>