<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 September 30, 1996
[_] 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 0-20215
MICROTOUCH SYSTEMS, INC.
(Exact name of Registrant as specified in its Charter)
Massachusetts 04-2802971
- ------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Griffin Park, Methuen, MA 01844
- ----------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number: 508-659-9000
- ------------------------------ ------------
Indicate by check mark whether the Registrant (1) has filed all reports 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 last 90 days.
Yes X No_______
------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of the latest practical date.
As of October 31, 1996 there were outstanding: 7,649,263 shares of common stock
of the Registrant.
Total number of pages: 14
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1996
and December 31, 1995 3
Consolidated Statements of Operations - Three and Nine
Months Ended September 30, 1996 and 1995 4
Consolidated Statement of Stockholders' Equity -
Nine Months Ended September 30, 1996 5
Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
Exhibit Index 13
</TABLE>
2
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN 000S EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................................................. $ 3,458 $ 5,706
Marketable securities.................................................................. 30,525 31,507
Accounts receivable, net of allowances of $3,754 at
September 30, 1996 and $2,669 at December 31, 1995................................. 15,763 12,759
Inventories............................................................................ 13,952 11,535
Deferred income taxes.................................................................. 4,945 5,311
Prepaid expenses and other current assets.............................................. 1,166 1,056
-------- --------
Total current assets............................................................... 69,809 67,874
Property and equipment, net............................................................. 6,028 5,214
Other assets............................................................................ 3,831 2,889
-------- --------
$ 79,668 $ 75,977
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................................................... $ 6,654 $ 6,026
Accrued expenses....................................................................... 8,136 6,476
-------- --------
Total current liabilities.......................................................... 14,790 12,502
Stockholders' equity
Preferred stock, $.01 par value per share-- 500,000 shares
authorized, none issued and outstanding at September 30, 1996
and December 31, 1995................................................................ --- ---
Common stock, $.01 par value per share-- authorized -
20,000,000 at September 30, 1996 and December 31, 1995;
8,220,623 issued at September 30, 1996 and December 31, 1995......................... 82 82
Additional paid-in capital............................................................. 59,200 58,984
Treasury stock at cost -- 584,382 and 508,634 shares
at September 30, 1996 and December 31, 1995.......................................... (8,642) (7,513)
Nissha litigation costs................................................................ (1,973) (1,019)
Cumulative translation adjustment...................................................... (935) (648)
Net unrealized gain on securities available for sale................................... 61 142
Retained earnings...................................................................... 17,085 13,447
-------- --------
Total stockholders' equity......................................................... 64,878 63,475
-------- --------
$ 79,668 $ 75,977
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN 000'S EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales................................. $ 24,077 $ 17,613 $ 68,023 $ 57,141
Cost of sales............................. 14,897 11,054 42,294 35,428
------ ------ ------ ------
Gross profit.............................. 9,180 6,559 25,729 21,713
Operating expenses:
Research and development................ 1,814 1,340 5,123 3,602
Sales and marketing..................... 3,225 3,107 9,984 8,357
General and administrative.............. 1,683 1,336 4,472 3,817
Amortization of intangible assets....... 117 99 340 270
Write-off of purchased technology and
related assets........................ --- --- --- 1,985
Purchased research and development and
related costs......................... --- --- --- 3,000
------ ------ ------ ------
Total operating expenses............. 6,839 5,882 19,919 21,031
------ ------ ------ ------
Operating income.......................... 2,341 677 5,810 682
Other income.............................. 294 367 1,072 1,605
------ ------ ------ ------
Income before provision for income taxes.. 2,635 1,044 6,882 2,287
Provision for income taxes................ 962 379 2,512 846
------ ------ ------ ------
Net income................................ $ 1,673 $ 665 $ 4,370 $ 1,441
====== ====== ====== ======
Earnings per share:
Primary................................ $ 0.21 $ 0.08 $ 0.54 $ 0.17
Fully diluted.......................... $ 0.21 $ 0.08 $ 0.54 $ 0.17
Weighted average common and common
equivalent shares:
Primary................................ 7,983 8,656 8,047 8,687
Fully diluted.......................... 8,066 8,656 8,109 8,686
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(AMOUNTS IN 000S EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Net Unrealized
Gain(Loss) On
Additional Nissha Cumulative Securities
Common Stock Paid-in Litigation Translation Available Retained
----------------------
Shares Amount Capital Costs Adjustment For Sale Earnings
------ ------ ------- ----- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 8,220,623 $ 82 $ 58,984 $ (1,019) $ (648) $ 142 $ 13,447
Exercise of stock options (732)
Employee stock purchase plan
Compensation expense related
to common stock options and other 27
Effect of exchange rate changes (287)
Tax benefit related to exercise
of stock options and
disqualifying dispositions 189
Unrealized loss on securities
available for sale, net of tax (81)
Nissha litigation costs (954)
Purchase of treasury stock
Net income 4,370
----------- -------- --------- ----------- --------- -------- ---------
Balance September 30, 1996 8,220,623 $ 82 $ 59,200 $ (1,973) $ (935) $ 61 $17,085
=========== ======== ========= =========== ========= ======== =========
<CAPTION>
Total
Treasury Stock Stockholders'
----------------------
Shares Amount Equity
---------- -------- ------
<S> <C> <C> <C>
Balance December 31, 1995 (508,634) $(7,513) $63,475
Exercise of stock options 71,693 1,053 321
Employee stock purchase plan 11,773 173 173
Compensation expense related
to common stock options and other 27
Effect of exchange rate changes (287)
Tax benefit related to exercise
of stock options and
disqualifying dispositions 189
Unrealized loss on securities
available for sale, net of tax (81)
Nissha litigation costs (954)
Purchase of treasury stock (159,214) (2,355) (2,355)
Net income 4,370
----------- --------- --------
Balance September 30, 1996 (584,382) $(8,642) $64,878
=========== ========= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN 000S)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,370 $ 1,441
Adjustments to reconcile net income to net cash provided
by (used in) operating activities--
Depreciation and amortization 1,305 1,225
Deferred income taxes 366 (1,920)
Compensation expense related to common stock
options and other 27 15
Write-off of purchased technology and related assets --- 1,985
Purchased research and development and related costs --- 3,000
(Increase) decrease in assets--
Accounts receivable (3,004) (3,899)
Inventories (2,417) 3,256
Prepaid expenses and other assets (1,250) (2,751)
Increase (decrease) in liabilities--
Accounts payable 605 (1,368)
Accrued expenses 1,682 458
--------- ---------
Net cash provided by operating activities 1,684 1,442
Cash flows provided by/(used in) investing activities:
Purchase of property and equipment, net (1,779) (3,083)
Sale and maturity of marketable securities 14,662 8,900
Purchase of marketable securities (13,902) (39,065)
Investments and acquisition of businesses, net of cash
acquired --- (2,486)
--------- ---------
Net cash used in investing activities (1,019) (35,734)
Cash flows provided by/(used in) financing activities:
Exercise of stock options and employee stock purchase
plan 494 338
Cost incurred related to the Nissha litigation (954) (252)
Purchase of treasury stock (2,355) ---
Tax benefit from exercise of stock options and
disqualifying dispositions 189 473
--------- ---------
Net cash provided by (used in) financing activities (2,626) 559
Effect of exchange rates on cash (287) (178)
--------- ---------
Net increase (decrease) in cash (2,248) (33,911)
Cash, beginning of period 5,706 43,613
--------- ---------
Cash, end of period $ 3,458 $ 9,702
========= =========
Supplemental disclosures of cash flow information:
Interest paid $ 78 $ 57
========= =========
Income taxes paid $ 1,314 $ 2,644
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
<PAGE>
MICROTOUCH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(1) Nature of Business
------------------
MicroTouch Systems, Inc. develops, manufactures and sells touch sensitive
input systems, including touch-sensitive screens, digitizers for pen computers,
kiosk enclosures and electronic whiteboards.
(2) Consolidated Financial Statements
---------------------------------
The accompanying consolidated financial statements include the accounts of
MicroTouch Systems, Inc. and its wholly-owned subsidiaries (together, the
"Company"). All significant intercompany accounts, transactions and profits
have been eliminated.
(3) Interim Consolidated Financial Statements
-----------------------------------------
The accompanying consolidated financial statements as of September 30, 1996
and for the three-and nine-month periods ended September 30, 1996 and 1995
include the accounts of the Company, and have not been audited by independent
public accountants; however, these statements, prepared in accordance with
generally accepted accounting principles, reflect, in the opinion of management,
all adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1996, and the results
of operations for the three-month and nine-month periods ended September 30,
1996 and 1995. The results of operations for the three-month and nine-month
periods ended September 30, 1996 are not necessarily indicative of the results
to be expected for the entire year.
These consolidated financial statements do not include all disclosures
associated with annual consolidated financial statements and, accordingly,
should be read in conjunction with the footnotes contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
(4) Earnings Per Share
------------------
Earnings per share data are computed using the weighted average number of
shares of common and dilutive common equivalent shares outstanding during the
year. Dilutive common equivalent shares consist of stock options and are
calculated using the treasury stock method.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth, for the fiscal periods indicated, the percentage
of net sales represented by certain items in MicroTouch's statements of
operations:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUE
----------------------------------------------
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- ----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 61.9 62.8 62.2 62.0
---------- ------- ---------- ----------
Gross Profit 38.1 37.2 37.8 38.0
Operating Expenses:
Research & Development 7.5 7.6 7.5 6.3
Sales & Marketing 13.4 17.6 14.7 14.6
General & Administrative 7.0 7.6 6.6 6.7
Amortization of Intangible Assets .5 .6 .5 .5
Write-off of Purchased Technology and
Related Assets -- -- -- 3.5
Purchased Research and Development
and Related Costs -- -- -- 5.2
---------- ------- ---------- ----------
Total Operating Expenses 28.4 33.4 29.3 36.8
---------- ------- ---------- ----------
Operating Income 9.7 3.8 8.5 1.2
Other Income 1.2 2.1 1.6 2.8
---------- ------- ---------- ----------
Income Before Provision for
Income Tax 10.9 5.9 10.1 4.0
Net Income 6.9 3.8 6.4 2.5
</TABLE>
NET SALES Net sales in the quarter ended September 30, 1996 increased over the
corresponding period of 1995 by $6,464,000 or 36.7%. For the nine month period
ended September 30, 1996 sales increased to $68,023,000 an increase of
$10,882,000 or 19.0% over the corresponding period of 1995. These increases in
net sales primarily reflect increased volume in domestic touchscreen and kiosk
products and higher European touchscreen sales volume for the three and nine
month periods ended September 30, 1996. Sales from international operations
were $8,210,000 and $24,080,000, respectively, for the three and nine month
periods ended September 30, 1996. Sales from international operations have
increased 38.8% and 30.1%, respectively over the comparable periods of 1995. In
the three month period ended September 30, 1996 this increase primarily reflects
the above mentioned higher touchscreen volume in Europe. For the nine month
period ended September 30, 1996 the increase also reflects higher sales volume
into the Japanese market.
GROSS PROFIT Gross profit for the three and nine month periods ended September
30, 1996 was $9,180,000 and $25,729,000, respectively, and represents increases
of 40.0% and 18.5% over the corresponding periods of 1995. As a percentage of
net sales, gross profit increased from 37.2% in the third quarter of 1995 to
38.1% in the third quarter of 1996. The increase in third quarter gross margins
as compared to 1995 primarily reflects a mix of higher margin kit revenue and
improved operating leverage in the kiosk business resulting from increased
revenue. For the nine month period ended September 30, 1996, gross profit as a
percentage of net sales decreased to 37.8% from 38.0% in the same period in
1995. This decrease resulted primarily from lower margins at the Company's
Japanese operation.
8
<PAGE>
RESEARCH AND DEVELOPMENT Research and development expenses for the quarter ended
September 30, 1996 increased over the corresponding period of 1995 by $474,000
or 35.4%. As a percentage of net sales, research and development expenses were
essentially flat, amounting to 7.6% in the third quarter of 1995 and 7.5% in the
third quarter of 1996. For the nine month period ended September 30, 1996,
research and development spending increased $1,521,000 or 42.2% over the same
period in 1995. The increase in research and development expenses resulted
primarily from development related to the Company's resistive membrane
technology and continued development in the Company's ThruGlass and TouchPen
product lines. The Company expects that research and development expenses may
increase in the future on an absolute spending basis primarily due to research
on the Company's new electronic whiteboard products.
SALES AND MARKETING Sales and marketing expenses in the quarter ended September
30, 1996 increased over the corresponding period of 1995 by $118,000 or 3.8%, to
$3,225,000. As a percentage of net sales, sales and marketing expenses decreased
from 17.6% in the third quarter of 1995 to 13.4% in the third quarter of 1996
primarily on the strength of the quarterly sales increase and tight controls
over spending. For the nine month period ended September 30, 1996, sales and
marketing expenses increased by $1,627,000 or 19.5% to $9,984,000. As a
percentage of net sales, sales and marketing expenses increased slightly from
14.6% in the first nine months of 1995 to 14.7% in the first nine months of
1996. The increase in sales and marketing expenses resulted primarily from the
sales and marketing costs associated with the launch of a new Internet Kiosk
product (Prospector)(TM) and a new electronic whiteboard product (Ibid)(TM) the
resistive membrane technology business acquired in 1995 and the expenses
resulting from the opening of two new international sales offices in France and
Germany in mid-1995.
GENERAL AND ADMINISTRATIVE General and administrative expenses for the quarter
ended September 30, 1996 increased from the corresponding period of 1995 by
$347,000 or 26.0% to $1,683,000 and included approximately $150,000 in costs
associated with the move into a new headquarters facility in the United Kingdom.
For the nine month period ended September 30, 1996, general and administrative
expenses increased over the corresponding period of 1995 by $655,000 or 17.2% to
$4,472,000. As a percentage of net sales, general and administrative expenses
decreased from 7.6% for the third quarter of 1995 to 7.0% for the third quarter
of 1996 primarily as a result of the quarterly sales increase. For the nine
months ended September 30, 1996, general and administrative expenses as a
percentage of net sales decreased to 6.6% from 6.7% for the corresponding period
of 1995.
AMORTIZATION OF INTANGIBLE ASSETS For the quarter ended September 30, 1996,
operating expenses included $117,000 of amortization relating to various
acquisitions and purchases of technologies, as compared to $99,000 for the
quarter ended September 30, 1995. For the nine month period ended September 30,
1996, amortization expense was $340,000 as compared to $270,000 for the
comparable period of 1995.
WRITE-OFF OF PURCHASED TECHNOLOGY AND RELATED ASSETS During the second quarter
of 1995, the Company, as a result of an extensive technology review and a
strategic decision to focus on product development in the resistive technology
area rather than the TouchMate technology, recorded a one-time pretax charge of
$1,985,000. This charge included the write-off of the TouchMate technology and
the write down of related inventory to net realizable value. This charge is
reflected in the results through the nine months ended September 30, 1995.
CHARGE FOR PURCHASED RESEARCH AND DEVELOPMENT AND RELATED COSTS During the
second quarter of 1995, the Company expensed $3,000,000 of costs associated with
in-process research and development projects which were part of the acquisition
of Touch Technology. This charge is reflected in the results through the nine
months ended September 30, 1995.
OPERATING INCOME Operating income in the quarter ended September 30, 1996 of
$2,341,000 represented an increase of $1,664,000 over the third quarter of 1995,
primarily reflecting operating leverage due to the 36.7% increase in net sales
over the 1995 period. For the nine month period ended September 30, 1996,
operating income of $5,810,000 reflects an increase of $5,128,000 over the
comparable period of 1995, due largely to the $4,985,000 in non-recurring
charges during the 1995 period as described above.
9
<PAGE>
OTHER INCOME Other income in the quarter ended September 30, 1996 decreased from
that of the corresponding period in 1995 by $73,000 or 19.9% to $294,000. Other
income in the third quarter of 1996 included $39,000 in foreign currency
exchange losses. Foreign currency exchange losses in the third quarter of 1995
were $111,000. Interest income, net of interest expenses, on the investment of
the Company's cash and investment portfolio for the third quarter of 1996 was
$333,000, compared to $478,000 for the third quarter of 1995, reflecting
declining short-term interest rates and a decrease in the size of the Company's
investment portfolio to support working capital requirements and to continuing
repurchases of the Company's common stock. For the nine month period ended
September 30, 1996, other income reflects a decrease from the comparable period
of 1995 by $533,000 or 33.2% to $1,072,000 due primarily to decreased interest
income as described above.
PROVISION FOR INCOME TAXES The Company's effective tax rate for both the three
and nine month periods ended September 30, 1996 was 36.5%, as compared to 36.3%
for the three month period ended September 30, 1995 and 37.0% for the nine month
period ended September 30, 1995. The effective tax rates in all periods differed
from the federal statutory rate of 34% primarily as a result of the provision
for state income taxes and the inability of the Company to record a tax benefit
from certain foreign operating loss carryforwards, partially offset by the
benefit related to the Company's foreign sales corporation and tax-exempt
interest income.
GEOGRAPHIC SEGMENTS Domestic pre-tax income for the three month period ended
September 30, 1996 increased 38.8% over the comparable period of 1995 due
primarily to sales increases, especially at the Factura Kiosks product division.
Through the nine months ended September 30, 1996, pre-tax income from domestic
operations increased 70.8% due to the non-recurring charges recorded in 1995
(discussed above) as well as the domestic sales increases. Pre-tax income from
international operations for the three and nine month periods ended September
30, 1996 increased 51.3% and 69.0%, respectively, over the comparable periods of
1995 on the strength of the previously discussed international sales increases
and the non-recurring charges recorded in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Company had net working capital of $55,019,000,
including approximately $33,983,000 in cash, cash equivalents and marketable
securities. The Company reported a net cash generated by operating activities of
$1,684,000 for the nine months ended September 30, 1996. Additionally, the
Company maintains a $3,000,000 bank line of credit. As of September 30, 1996,
the Company had no borrowings under its bank line of credit.
In September, 1995, the Board of Directors of the Company authorized a one-year
repurchase program of the Company's common stock, not to exceed $10 million.
Through September 30, 1996 the Company repurchased 672,138 shares at an
aggregate cost of $9,917,000. These shares have been and will be used for the
Company's stock option plan, employee stock purchase plan and for other
corporate purposes, including, possible acquisitions.
Pending operating needs, the Company has invested its cash in investment grade,
short-term, interest bearing securities and preferred stock. The Company
believes that these cash investments, together with anticipated cash flows from
operations pursuant to its current operating plan, will be sufficient to meet
the Company's working capital and capital expenditure requirements, at least
through 1997. While the Company regularly evaluates acquisition candidates,
conducts preliminary discussions regarding acquisitions and intends to pursue
acquisition opportunities available to it, there can be no assurance that any
such acquisition will be made.
The discussion contained in this section, as well as elsewhere in this Form 10-
Q, may contain forward-looking statements based on the current expectations of
the Company's management. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements which speak only as of the date hereof. The Company
undertakes no obligation to publicly release any revisions to these forward-
looking statements which may be necessary to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.
10
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27, Financial Data Schedule
(b) Reports on Form 8-K
None
11
<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.
MicroTouch Systems, Inc.
Dated: November 4, 1996 BY: /s/Geoffrey P. Clear
------------------------
Geoffrey P. Clear
Vice President -
Finance & Administration,
Chief Financial Officer &
Treasurer
12
<PAGE>
EXHBIT INDEX
------------
Exhibit Page
- ------- ----
27 Financial Data Schedule 14
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1996 JAN-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 3,458 0
<SECURITIES> 30,525 0
<RECEIVABLES> 19,517 0
<ALLOWANCES> 3,754 0
<INVENTORY> 13,952 0
<CURRENT-ASSETS> 69,809 0
<PP&E> 10,678 0
<DEPRECIATION> 4,650 0
<TOTAL-ASSETS> 79,668 0
<CURRENT-LIABILITIES> 14,790 0
<BONDS> 0 0
0 0
0 0
<COMMON> 82 0
<OTHER-SE> 64,796 0
<TOTAL-LIABILITY-AND-EQUITY> 79,668 0
<SALES> 24,077 68,023
<TOTAL-REVENUES> 24,077 68,023
<CGS> 14,897 42,294
<TOTAL-COSTS> 14,897 42,294
<OTHER-EXPENSES> 6,407 18,527
<LOSS-PROVISION> 92 242
<INTEREST-EXPENSE> 46 78
<INCOME-PRETAX> 2,635 6,882
<INCOME-TAX> 962 2,512
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,673 4,370
<EPS-PRIMARY> 0.21 0.54
<EPS-DILUTED> 0.21 0.54
</TABLE>
