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 28, 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: 0-15627
SEQUENT COMPUTER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-0826369
(State or other jurisdiction (I.R.S. Employer
of organization or incorporation) Identification Number)
15450 S.W. Koll Parkway
Beaverton, Oregon 97006-6063
(Address of principal executive offices, including zip code)
(503) 626-5700
(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 report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
33,963,979 common shares were issued and outstanding as of November 6, 1996.
SEQUENT COMPUTER SYSTEMS, INC.
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - September 28,
1996 and December 30, 1995 3
Consolidated Statements of Operations -
Three months and nine months ended September 28,
1996 and September 30, 1995 4
Consolidated Statements of Changes In Shareholders'
Equity - December 30, 1995 through September 28, 1996 5
Consolidated Statements of Cash Flows - Nine months
ended September 28, 1996 and September 30, 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Statement regarding computation of
earnings per share.
(b) No reports on Form 8-K were filed by the Company
during the fiscal quarter ended September 28, 1996.
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Unaudited
(in thousands, except per share amounts)
Sept. 28, 1996 Dec. 30, 1995
ASSETS
Current assets:
Cash and cash equivalents $ 22,519 $ 61,939
Restricted deposits 23,431 39,642
Receivables, net 172,565 178,322
Inventories 78,278 60,853
Prepaid royalties and other 31,985 13,464
Total current assets 328,778 354,220
Property and equipment, net 126,454 98,165
Capitalized software costs, net 55,938 45,381
Other assets, net 24,993 6,157
Total assets $ 536,163 $ 503,923
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 23,431 $ 41,146
Accounts payable and other 66,482 60,095
Accrued payroll 18,169 11,723
Unearned revenue 24,161 21,466
Income taxes payable 5,611 4,981
Current obligations under capital
leases and debt 7,807 60
Total current liabilities 145,661 139,471
Other accrued expenses 6,739 2,158
Long-term obligations under
capital leases and debt 18,799 9,106
Total liabilities 171,199 150,735
Shareholders' equity:
Common stock, $.01 par,
33,942 and 33,221 shares outstanding 339 332
Paid-in capital 309,168 302,186
Retained earnings 58,203 52,945
Foreign currency translation adjustment (2,746) (2,275)
Total shareholders' equity 364,964 353,188
Total liabilities and shareholders'
equity $ 536,163 $ 503,923
See notes to consolidated financial statements.
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
Revenue:
Product revenue $ 101,669 $ 96,970 $ 282,327 $ 283,499
Service revenue 47,116 36,245 129,790 105,022
Total revenue 148,785 133,215 412,117 388,521
Costs and expenses:
Cost of products sold 46,278 45,286 132,425 132,716
Cost of service revenue 36,375 28,364 100,876 78,469
Research and development 14,405 10,220 38,932 29,965
Selling, general and admin. 49,479 38,653 132,146 111,943
Total costs and expenses 146,537 122,523 404,37 353,093
Operating income 2,248 10,692 7,738 35,428
Interest, net 105 203 533 547
Other, net (490) (490) (1,055) (1,390)
Income before provision
for income taxes 1,863 10,405 7,216 34,585
Provision for income taxes 508 2,964 1,957 10,181
Net income $ 1,355 $ 7,441 $ 5,259 $ 24,404
Net income per share $ 0.04 $ 0.22 $ 0.16 $ 0.73
Weighted average number of
common and common equivalent
shares outstanding 33,780 34,515 33,854 33,555
See notes to consolidated financial statements.
<TABLE>
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - Unaudited
(in thousands)
<CAPTION>
Foreign
Currency
Common Stock Paid-in Retained Trans-
Shares Amount Capital Earnings lation Total
<S> <C> <C> <C> <C> <C> <C>
Balance, Dec. 30, 1995 33,221 $ 332 $ 302,186 $ 52,945 $ (2,275) $ 353,188
Common shares issued 233 3 2,468 2,471
Tax benefit of option exercises -- -- 46 -- -- 46
Net income -- -- -- 598 -- 598
Foreign currency
translation adjustment -- -- -- -- (1,194) (1,194)
Balance, March 30, 1996 33,454 $ 335 $ 304,700 $ 53,543 $ (3,469) $ 355,109
Common shares issued 164 1 526 527
Tax benefit of option
exercises -- -- 23 -- -- 23
Net income -- -- -- 3,306 -- 3,306
Foreign currency
translation adjustment -- -- -- -- (3) (3)
Balance, June 29, 1996 33,618 $ 336 $ 305,249 $ 56,849 $ (3,472) $ 358,962
Common shares issued 324 3 3,887 -- 3,890
Tax benefit of option exercises -- -- 32 -- -- 32
Net income -- -- -- 1,355 -- 1,355
Foreign currency
translation adjustment -- -- -- -- 726 726
Rounding (1) (1)
Balance, Sept. 28, 1996 33,942 $ 339 $ 309,168 $ 58,203 $ (2,746) $ 364,964
See notes to consolidated financial statements.
</TABLE>
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
(in thousands)
Nine Months Ended
Sept. 28, 1996 Sept. 30, 1995
Operating activities:
Net income $ 5,259 $ 24,404
Reconciliation of net income to net cash
provided by operating activities -
Depreciation and amortization 47,779 38,508
Changes in assets and liabilities -
Receivables, net 5,757 (23,526)
Inventories (17,425) (10,741)
Prepaid expenses (18,520) (5,784)
Accounts payable and other 2,064 15,166
Accrued payroll 6,445 (380)
Unearned revenue 2,695 6,569
Income taxes payable 630 2,442
Deferred income taxes (21) --
Other accrued expenses 8,925 (604)
Other, net -- (198)
Net cash provided by
operating activities 43,588 45,856
Investing activities:
Restricted deposits 16,211 23,964
Purchases of property and equipment, net (61,463) (31,254)
Capitalized software costs (24,787) (16,787)
Other assets, net (19,212) --
Foreign currency translation (471) 1,769
Net cash used for investing activities (89,722) (22,308)
Financing activities:
Payments on notes payable, net (17,715) (23,964)
Proceeds (payments) under capital
lease obligations, net 15,241 (652)
Long-term debt proceeds (payments), net 2,200 (56)
Stock issuance proceeds, net 6,988 17,966
Convertible debenture proceeds -- 1,000
Net cash provided (used) by financing
activities 6,714 (5,706)
Net increase (decrease) in cash and
cash equivalents (39,420) 17,842
Cash and cash equivalents at
beginning of period 61,939 46,291
Cash and cash equivalents at end of period $ 22,519 $ 64,133
See notes to consolidated financial statements.
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1996
Basis of Presentation
The accompanying consolidated financial statements are unaudited and have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and in the opinion of management include
all adjustments, consisting only of normal recurring adjustments, necessary
for a fair statement of the results for the interim periods. 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. These
consolidated financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's
annual report and Form 10-K for the fiscal year ended December 30, 1995.
The Company's fiscal year is based on a 52-53 week calendar ending the
Saturday closest to December 31. The accompanying consolidated financial
statements include the accounts of Sequent Computer Systems, Inc. and its
wholly owned subsidiaries (the Company or Sequent). All significant
intercompany accounts and transactions have been eliminated. The results for
interim periods are not necessarily indicative of the results for the entire
year.
Accounts Receivable
At September 28, 1996, accounts receivable in the accompanying consolidated
balance sheet is net of $8 million received by the Company under its two year
agreement to sell its domestic accounts receivables.
Inventories
Inventories consist of the following:
(in thousands)
Sept. 28, Dec. 30,
1996 1995
Raw Materials $ 11,970 $ 9,385
Work in Process 2,962 1,736
Finished Goods 63,346 49,732
$ 78,278 $ 60,853
Property and Equipment
Property and equipment consist of the following:
(in thousands)
Sept. 28, Dec. 30,
1996 1995
Land $ 5,037 $ 5,037
Operational Equipment 164,926 134,897
Furniture and Office Equipment 83,041 67,010
Leasehold Improvements 21,443 15,974
274,447 222,918
Less Accum. Depr. & Amort. 147,993 124,753
$ 126,454 $ 98,165
Research and Development
Amortization of capitalized software costs, generally based on a three-year
life, was $5 million and $14.6 million for the three month and nine month
periods ended September 28, 1996, respectively. Amortization for the same
periods in 1995 was $4.5 million and $12.1 million, respectively.
Notes Payable
The Company has an unsecured line of credit agreement with a group of banks
which provides short-term borrowings of up to $70 million. The line of credit
agreement extends through May 30, 1997. No borrowings were outstanding at
September 28, 1996.
The Company has a short-term borrowing agreement with a foreign bank as a hedge
to cover certain foreign currency exposures. At September 28, 1996, maximum
borrowings allowed under the agreement were approximately $55.1 million.
Borrowings under the agreement are denominated in various foreign currencies.
Proceeds from the borrowings are converted into U.S. dollars and placed in a
term deposit account with the foreign bank. Amounts outstanding were $23.4
million at September 28, 1996.
In addition to the above borrowing agreements, the Company maintains certain
other miscellaneous borrowing arrangements with a foreign bank. No such
borrowings were outstanding at September 28, 1996.
Capital Lease Obligations
In September, 1996 the Company entered into a sales-leaseback transaction with
a domestic bank under which certain operating equipment with a net book value
of $12.2 million was sold for $15.3 million and then leased back under a
capital lease. The related lease terms stipulate monthly payments ranging
from $274,000 to $341,000 over the five year lease term beginning September,
1996 at an annual interest rate of 7.4%. The resulting gain of $3.1 million
has been recorded under "Other Accrued Expenses" and is being amortized in
proportion to the related equipment depreciation over three years. The terms
of the lease include an asset buy-back provision at the end of the lease for
the then fair market value of the assets at the Company's option. Future
minimum lease payments are as follows:
1996 $ 1,094,920
1997 3,284,760
1998 3,284,760
1999 3,960,150
2000 4,095,228
2001 2,730,152
Total minimum lease payments $ 18,449,970
Less amount representing interest (3,129,099)
Present value of minimum
lease payments $ 15,320,871
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting For Income Taxes" (FAS 109). The
effective tax rate differs from the statutory tax rate principally due to tax
benefits from the Company's foreign sales corporation and tax benefits
related to the utilization of net operating loss carryforwards.
Earnings Per Share
See Exhibit 11 for the computation of average shares outstanding and earnings
per share.
Significant Customers
The Company had no single customer that represented greater than 10% of total
revenue for the quarters ending September 28, 1996 and September 30, 1995.
Geographic Segment Information
Export and foreign revenue was $78.8 million (53% of total revenue) for the
three months ended September 28, 1996 and $209.2 million (51% of total
revenue) for the first nine months of 1996. Export and foreign revenue was
$73.9 million and $210.4 million (55% and 54% of total revenue, respectively)
for the corresponding periods in 1995. The Company's United States
operations generated operating income of $8.1 million for the three months
ended September 28, 1996 and $13.9 million for the first nine months of 1996.
Foreign operations generated net operating losses of $5.9 million and $6.2
million for the three months and nine months ended September 28, 1996,
respectively. The results of comparable periods in 1995 were operating
income of $8.9 million and $32.8 million for United States operations and
$1.8 million and $2.6 million for foreign operations for the three months and
nine months ended September 30, 1995, respectively. Factors contributing to
1996 operating losses for foreign operations include the significant
investments made by the Company to expand its worldwide sales force and
service organizations, as well as slight decreases in European revenue
resulting in part from tightening in the European economy.
Forward Looking Statements
Information included in Management's Discussion and Analysis of Financial
Conditions and Results of Operations regarding product development schedules
and planned expenditure levels constitute forward-looking statements that
involve a number of risks and uncertainties. In addition, from time to time
the Company and its employees may issue other forward-looking statements. The
following factors are among the factors that could cause actual results to
differ materially from the forward-looking statements: business conditions
and growth in the electronics industry and general economies, both domestic
and international; lower than expected customer orders, delays in receipt of
orders or cancellation of orders; the Company's ability to achieve expected
results from its increased sales force; the successful development of new
technologies including NUMA-Q product technologies, the timely introduction of
new products scheduled during the year and demand for and acceptance of new
products by the Company's customers; competitive factors, including increased
competition, new product offerings by competitors and price pressures; the
availability of third party parts and supplies at reasonable prices; changes
in product mix and the mix between product and service revenue; significant
quarterly performance fluctuations due to the receipt of a significant portion
of customer orders and product shipments in the last month of each quarter;
and product shipment interruptions due to manufacturing problems.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 28, 1996
GENERAL
Total revenue was $148.8 million in the third quarter of 1996 compared to
$133.2 million in the third quarter of 1995. Total revenue was $412.1 million
in the first nine months of 1996 compared to $388.5 million in the first nine
months of 1995. Net income was $1.4 million in the third quarter of 1996
compared to $7.4 million in the third quarter of 1995. Net income was $5.3
million for the first nine months of 1996 compared to $24.4 million in the
first nine months of 1995. Factors contributing to the decrease in net income
for both periods in 1996 compared to 1995 include the continued investments
made by the Company to expand its sales channels and develop its NUMA-Q
product technology. In addition, the Company's ongoing investment in its
professional services organization contributed to the overall decline in net
income. Service revenue increased 30% and 24% in the first three months and
nine months, respectively, over the corresponding periods in 1995.
REVENUE
(dollars in millions)
Three Months Ended Nine Months Ended
Sept. 28, % Sept. 30, Sept. 28, % Sept. 30,
1996 Chg 1995 1996 Chg 1995
End-user product revenue $ 101.5 11% $ 91.1 $ 275.8 1% $ 273.1
Service and other revenue 47.1 30% 36.2 129.8 24% 105.0
Total end-user revenue 148.6 17% 127.3 405.7 7% 378.1
OEM product revenue .2 (97)% 5.9 6.5 (37)% 10.4
Total revenue $ 148.8 12% $133.2 $ 412.1 6% $ 388.5
Export and Foreign Revenue $ 78.8 7% $ 73.9 $ 209.2 (.6)% $ 210.4
Continued investment by the Company in its professional and customer service
organizations is a significant factor in the increased service revenue in 1995
and 1996. Service and other revenue increased 30% and 24% in the first three
months and nine months of 1996, respectively, over the same periods in 1995.
Factors contributing to these increases include growth in customer
installation bases and contracts, as well as a focus on selling more
solutions. Total service revenue for the Company's European operations
increased approximately 29% and 31% for the third quarter and first nine
months of 1996, respectively, over the corresponding periods of 1995. Total
service revenue increases for the Company's United States operations for the
same periods were approximately 31% and 17% for the third quarter and first
nine months of 1996, respectively.
COST OF SALES
(dollars in millions)
Three Months Ended Nine Months Ended
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
Cost of products sold $ 46.3 $ 45.3 $ 132.4 $ 132.7
As a percentage of product revenue 46% 49% 47% 47%
Cost of service revenue $ 36.4 $ 28.4 $ 100.9 $ 78.5
As a percentage of service revenue 77% 78% 78% 75%
The factors influencing gross margins in a given period include unit volumes
(which affect economies of scale), product configuration mix, changes in
component and manufacturing costs, product pricing and the mix between product
and service revenue. Consistent with its 1996 plan, the Company has continued
to invest in expanding its professional services organization which has
contributed to the increase of cost of service as a percentage of service
revenue. The Company increased its professional services headcount by
approximately 37% since the beginning of the year.
RESEARCH AND DEVELOPMENT
(dollars in millions)
Three Months Ended Nine Months Ended
Sept. 28, % Sept. 30, Sept. 28, % Sept. 30,
1996 Chg 1995 1996 Chg 1995
Research and development $ 14.4 41% $ 10.2 $ 38.9 30% $ 30.0
As a % of total revenue 10% 8% 9% 8%
Software costs capitalized $ 9.1 60% $ 5.7 $ 24.8 48% $ 16.8
The Company has continued to invest significantly in its new architecture and
software development for its next generation NUMA-Q products. Research and
development costs as a percentage of total revenue were approximately 8% for
the years 1993 through 1995, and have increased to 10% and 9% in the third
quarter and first nine months of 1996, respectively. These investments were
made consistent with management's plans to deliver NUMA-Q products into the
marketplace December, 1996.
SELLING, GENERAL AND ADMINISTRATIVE
(dollars in millions)
Three Months Ended Nine Months Ended
Sept. 28, % Sept. 30, Sept. 28, % Sept. 30
1996 Chg 1995 1996 Chg 1995
Selling, general and admin. $ 49.5 28% $ 38.7 $ 132.2 18% $ 111.9
As a % of total revenue 33% 29% 32% 29%
Consistent with its plans for 1996, the Company's selling, general and
administrative costs have continued to increase both in dollars and as a
percentage of revenue in the third quarter and first nine months of 1996 over
the corresponding periods in 1995. The Company has made substantial
investments to strengthen its worldwide sales force and to strategically
position itself for the delivery of the NUMA-Q product line in December of
this year. Since the beginning of the year, the Company has increased its
total headcount by 22%, including a 40% increase in major sales account
executives worldwide.
INTEREST AND OTHER, NET
(dollars in millions)
Three Months Ended Nine Months Ended
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
1996 1995 1996 1995
Interest, net $ 0.1 $ 0.2 $ 0.5 $ 0.5
Other, net (0.5) (0.5) (1.1) (1.4)
Provisions for income taxes .5 3.0 2.0 10.2
Interest income in the third quarter and first nine months of 1996 and 1995
was primarily generated from restricted deposits held at foreign and domestic
banks, short-term investments and cash and cash equivalents. Interest expense
for the same periods includes costs related to Convertible Debentures, foreign
currency hedging loans, interim short-term borrowing and capital lease
obligations.
Other expense consists primarily of net gains and losses on sale of assets and
discount on sale of receivables.
The provision for income taxes includes benefits related to the Company's
foreign sales corporation and the utilization of available domestic and
foreign tax attributes carried forward from prior years. The effective tax
rate for the third quarter and first nine months of 1996 was 27%, compared to
29% for the corresponding periods in 1995 and the overall annual 1995
effective tax rate of 26%.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $183.1 million at September 28, 1996 compared to $214.7
million at December 30, 1995. The Company's current ratio at September 28,
1996 and December 30, 1995 was 2.3:1 and 2.5:1, respectively.
Although net cash provided by operations for the nine months ended September
28, 1996 totaled $43.6 million, cash and cash equivalents decreased by $39.4
million. The Company continued to make significant investments in property
and equipment ($61.5 million) and capitalized software ($24.8 million),
primarily related to product and software development associated with its new
NUMA-Q product line. Other investments included approximately $26 million in
software licenses resulting from a long-term strategic partner alliance, of
which approximately $11 million is included in prepaid royalties and other
current assets. Other sources of funds included net proceeds of stock
issuances ($7 million) and capital lease transactions ($15.3 million).
The Company has a $20 million receivable sales facility with a group of banks.
At September 28, 1996 accounts receivable in the accompanying consolidated
balance sheet is net of $8 million received by the Company under this
agreement to sell its domestic accounts receivable.
The Company maintains a $70 million revolving line of credit agreement. The
line is unsecured and extends through May 30, 1997. The line contains certain
financial covenants and prohibits the Company from paying dividends without
the lenders' consent. No borrowings were outstanding under the line of credit
as of September 28, 1996.
The Company maintains a short-term borrowing agreement with a foreign bank to
cover foreign currency exposures. Maximum borrowings allowed under the
foreign bank agreement were $55.1 million, of which $23.4 million was
outstanding at September 28, 1996 (based on currency exchange rates on such
date).
In addition to the above borrowing agreements, the Company maintains
miscellaneous borrowing arrangements with a foreign bank. No such borrowings
were outstanding as of September 28, 1996.
Management expects that current funds, funds from operations, and the bank
lines of credit will provide adequate resources to meet the Company's
anticipated cash requirements during the remainder of 1996 resulting from its
operations and planned investments in its sales force and NUMA-Q product
technology.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEQUENT COMPUTER SYSTEMS, INC.
/s/ ROBERT S. GREGG
Robert S. Gregg
Sr. Vice President of Finance and
Chief Financial Officer
Date: November 12, 1996
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
11 Statement regarding computation
of earnings per share 15
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
STATEMENT SHOWING CALCULATION OF AVERAGE
COMMON SHARES OUTSTANDING AND EARNINGS
PER AVERAGE COMMON SHARE
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 28, 1996 September 28,
1996
Weighted average number
of common shares outstanding 33,727 33,512
Application of the "treasury
stock" method to the stock option
and employee stock purchase plans (A) 53 342
Weighted average of common stock
equivalent shares attributable
to convertible debentures 575 575
Total common and common
equivalent shares, assuming
full dilution 34,355 34,429
Net income $ 1,355 $ 5,259
Add:
Interest on convertible debentures,
net of applicable income taxes 121 359
Net income, assuming full dilution $ 1,476 $ 5,618
Net income per common share,
assuming full dilution (B) $ 0.04 $ 0.16
(A) Effective with the third quarter of 1996, the Company applied the
"Modified Treasury Stock" method to calculate outstanding shares for
stock options in accordance with APB 15. Application of this method
produced an anti-dilutive result and thus, no outstanding shares are
reflected for stock options for the three months ended September 28,
1996.
(B) In accordance with generally accepted accounting
principles, fully-diluted earnings per share may not
exceed primary earnings per share.
The computation of primary net income per common share is not included as the
computation can be clearly determined from the material contained in this
report.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-04-1997
<PERIOD-END> SEP-28-1996
<CASH> 45,950,000
<SECURITIES> 0
<RECEIVABLES> 175,385,000
<ALLOWANCES> 2,820,000
<INVENTORY> 78,278,000
<CURRENT-ASSETS> 328,778,000
<PP&E> 274,448,000
<DEPRECIATION> 147,994,000
<TOTAL-ASSETS> 536,163,000
<CURRENT-LIABILITIES> 145,661,000
<BONDS> 18,799,000
0
0
<COMMON> 339,000
<OTHER-SE> 364,625,000
<TOTAL-LIABILITY-AND-EQUITY> 536,163,000
<SALES> 282,327,000
<TOTAL-REVENUES> 412,117,000
<CGS> 132,425,000
<TOTAL-COSTS> 233,301,000
<OTHER-EXPENSES> 171,078,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,846,000
<INCOME-PRETAX> 0
<INCOME-TAX> 1,957,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,259,000
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
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