<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 29,1997
---------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO ________________
Commission file number 0-18863
----------------------------------------------------------
Armor Holdings, Inc.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 59-3392443
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
13386 International Parkway, Jacksonville, Florida 32218
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(904)741-5400
- --------------------------------------------------------------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's class of common
equity, as of May 12, 1997: $.01 par value Common Stock - 11,826,012
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMS (CHECK ONE): Yes No X
--- ---
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
THREE MONTH PERIODS ENDED MARCH 29, 1997 AND MARCH 31, 1996
The accompanying unaudited condensed consolidated financial statements of Armor
Holdings, Inc. (the "Company") and its wholly owned subsidiaries, NIK Public
Safety, Inc., Defense Technology Corporation of America, Armor Holdings
Limited and Armor Holdings Properties, Inc. include all adjustments
(consisting only of normal recurring accruals and the elimination of all
intercompany items and transactions) which management considers necessary for a
fair presentation of operating results as of March 29, 1997 and for the three
month periods ended March 29, 1997 and March 31, 1996.
These condensed consolidated financial statements should be read in conjunction
with the financial statements included in the Company's Annual Report on Form
10-KSB for the year ended December 28, 1996, as amended.
2
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 29,
1997
-----------
(UNAUDITED)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,146,226
Accounts receivable, net 6,209,755
Inventories 4,896,711
Prepaid expenses and other current assets 653,139
-----------
Total current assets 15,905,831
PROPERTY, PLANT AND EQUIPMENT, net 5,114,946
REORGANIZATION VALUE IN EXCESS OF AMOUNTS
ALLOCABLE TO IDENTIFIABLE ASSETS, net 3,378,340
PATENTS AND TRADEMARKS, net 4,123,119
OTHER ASSETS 337,071
-----------
TOTAL ASSETS $28,859,307
===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(CONTINUED)
<TABLE>
<CAPTION>
MARCH 29,
1997
-----------
(UNAUDITED)
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capitalized lease obligation $ 607,627
Accounts payable, accrued expenses and other current liabilities 3,024,365
-----------
Total current liabilities 3,631,992
CAPITALIZED LEASE OBLIGATION, less current portion 95,338
-----------
Total liabilities 3,727,330
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized;
0 shares issued and outstanding
Common stock, $.01 par value, 50,000,000 shares authorized;
10,591,681 issued and outstanding 105,917
Additional paid-in capital 22,810,359
Retained earnings 2,215,701
-----------
Total stockholders' equity 25,131,977
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,859,307
===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1997 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
NET SALES $ 6,422,181 $ 3,267,328
COST AND EXPENSES:
Cost of sales 3,772,743 2,110,413
Selling, general and administrative expenses 2,028,373 968,417
Interest (income) expense, net (40,111) 72,011
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES
661,176 116,487
PROVISION FOR INCOME TAXES 45,000
255,958
------------ ------------
NET INCOME $ 405,218 $ 71,487
============ ============
NET INCOME PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ 0.04 $ 0.01
============ ============
WEIGHTED AVERAGE COMMON SHARES
AND COMMON EQUIVALENT SHARES 11,522,573 7,575,936
============ ============
See notes to condensed consolidated financial statements.
5
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
</TABLE>
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 405,218 $ 71,487
Adjustments to reconcile net income to cash (used
in) provided by operating activities:
Depreciation and amortization 202,076 39,473
Deferred income taxes 32,500 45,000
(Increase) decrease in accounts receivable (457,051) 409,406
Increase in inventories (735,929) (96,630)
Increase in prepaid expenses and other assets (245,870) (168,376)
Decrease in accounts payable, accrued liabilities
and other current liabilities (739,679) (135,894)
----------- -----------
Net cash (used in) provided by operating activities (1,538,735) 164,466
INVESTING ACTIVITIES:
Capital expenditures (1,840,021) (22,696)
----------- -----------
Net cash used in investing activities (1,840,021) (22,696)
FINANCING ACTIVITIES:
Preferred stock dividends -- (22,155)
Exercise of stock options 160,186 --
Net proceeds (repayments) under line of credit 356,254 (350,938)
Net repayments of long-term debt (53,827) --
----------- -----------
Net cash provided by (used in) financing activities 462,613 (373,093)
DECREASE IN CASH AND CASH EQUIVALENTS (2,916,143) (231,323)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 7,062,369 272,972
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,146,226 $ 41,649
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 29, 1997 AND
MARCH 31, 1996 (UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of Armor
Holdings, Inc. ("AHI") and its wholly-owned subsidiaries, NIK Public Safety,
Inc. ("NIK"), Defense Technology Corporation of America ("DTC"), Armor Holdings
Limited and Armor Holdings Properties, Inc. (collectively, the "Company"). The
financial statements have been prepared in accordance with the instructions to
Form 10-QSB, and, therefore, do not include all information and footnotes
necessary for a fair presentation of financial position, results of operations,
and cash flows in conformity with generally accepted accepted principles.
However, all adjustments of a normal recurring nature which, in the opinion of
management, are necessary for a fair presentation of operating results have
been included in the statements.
The financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 28, 1996, as amended.
2. SFAS NO. 128 REQUIRED DISCLOSURE
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 128 Earnings per Share which will
require the Company to disclose Basic and Diluted earnings per share on the
face of the income statement. Basic earnings per share excludes dilution, and
is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. The
Company will adopt SFAS 128 for the fiscal year ended 1997. The effects of
adopting this statement are as follows:
March 29, 1997 March 31, 1996
----------------- -----------------
Net income $ 405,218 $ 71,487
Net income per common share and common
equivalent share - as reported $ 0.035 $ 0.01
Pro forma net income per basic share
assuming adoption of FAS 128 $ 0.038 $ 0.01
Pro forma net income per diluted share
assuming adoption of FAS 128 $ 0.035 $ 0.01
7
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 29, 1997 AND
MARCH 31, 1996 (UNAUDITED)
(CONTINUED)
3. SUBSEQUENT EVENTS
SUPERCRAFT (GARMENTS) LIMITED
On April 7, 1997, AHI through its newly formed wholly-owned subsidiary, Armor
Holdings Limited, a corporation incorporated under the laws of England and
Wales ("AHL"), acquired all of the outstanding share capital of Supercraft
(Garments) Limited ("Supercraft"), a corporation incorporated under the laws of
England, from Bodycote International PLC ("Bodycote"), a United Kingdom
corporation, the sole shareholder of Supercraft. Supercraft is a leading
European manufacturer of military apparel, high visibility garments and bullet
resistant vests which it distributes to law enforcement and military agencies
throughout Europe, the Middle East and Asia.
The purchase price of the acquisition was (pound)813,500 (or approximately
$1,326,000, using the April 7, 1997 exchange rate of (pound)1=$1.63) in cash at
closing, which is subject to adjustment in the event Supercraft's net assets,
as shown in the Completion Accounts (as defined in that certain Share
Acquisition Agreement dated April 7, 1997 between AHI, AHL and Bodycote) of
Supercraft, are less than (pound)825,000, and (pound)536,500 (or approximately
$874,500) which was placed in a segregated account pending the final
disposition of certain real property acquired by AHL from Bodycote. In
addition, certain deferred compensation in an amount not to exceed
(pound)250,000 (or approximately $407,500) will be paid if Supercraft's profit
before interest and taxes for the fiscal year ended December 31, 1997 exceeds
(pound)350,000 (or approximately $570,500). Goodwill will be amortized over 25
years. AHL funded the acquisition from working capital of AHI.
DSL GROUP LIMITED
On April 16,1997, the Company issued 1,274,217 shares of its Common Stock,
par value $.01 per share (the "Common Stock") in exchange for all of the
outstanding ordinary and deferred share capital of DSL Group Limited, a
corporation incorporated under the laws of England and Wales ("DSL"). In
addition, AHL paid the sum of (pound)4,635,000 (or approximately $7,508,700)
in cash for all of the outstanding preference share capital of DSL, including
(pound)235,000 (or approximately $308,700) in accrued dividends. This
transaction (the "DSL Transaction") was accounted for as a pooling of interests.
The value of the Common Stock issued by the Company in connection with the
DSL Transaction was (pound)6,725,656 (or approximately $10,895,500, using the
April 16, 1997 exchange rate of (pound)1=$1.62).
8
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 29, 1997 AND
MARCH 31, 1996 (UNAUDITED)
(CONTINUED)
DSL is in the business of devising and implementing solutions to complex
security problems in high risk areas. DSL's services encompass the
provision of detailed threat assessments, security planning, security
training, the provision, training and supervision of specialist manpower and
other services up to the implementation and management of fully integrated
security systems. The acquisition of DSL provides the Company with the
cornerstone of its security services business.
9
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the financial
statements and notes thereto included herein and the financial statements and
management's discussion and analysis or plan of operation included in the
Company's Annual Report on Form 10-KSB for the year ended December 28,
1996, as amended.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 29, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Sales for the three months ended March 29, 1997, were $6,422,181 representing
an increase of $3,154,853 (or 97%) compared to the same period in 1996. This
increase in sales results from $2,416,863 in sales generated from the DTC and
NIK operations in the three months ended March 29, 1997 in addition to a 17%
increase in the domestic body armor business of AHI.
The gross profit margin (sales less manufacturing costs for materials, labor
and overhead as a percent of total sales) increased to 41% for the 1997 period
from 35% in the comparable period for 1996. The increase is due primarily to
the impact of higher margin products being sold by DTC and NIK.
Selling, general and administrative expenses ("SG&A expenses") for the three
month period ended March 29, 1997 were $2,028,373 (32% of sales) compared to
$968,417 (30% of sales) during the comparable period in 1996. The increase in
the actual dollar amount of SG&A expenses between the period, amounted to
$1,059,956 and was primarily due to: approximately $382,000 of additional costs
in AHI related to commissions on increased sales and corporate overhead costs
for the development of the infrastructure of AHI as a holding company;
approximately $86,000 of amortization expenses associated with intangibles; and
additional SG&A expenses of approximately $585,000 related to the additional
revenues generated by DTC and NIK.
Interest income of $40,111 was reported for the three month period ended March
29, 1997 as compared to interest expense of $72,011 for the comparable period
in the prior year. The decrease resulted primarily from reducing the Company's
credit facility with LaSalle Business Credit, Inc. ("LaSalle") to a zero
balance and investing the proceeds from the Company's offering of its 5%
Convertible Subordinated Notes due April 30, 2001 ("the Convertible Notes") in
April 1996. The Company had approximately $357,000 of bank debt outstanding at
March 29, 1997, compared to no such debt at March 31, 1996.
10
<PAGE>
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Income before provision for income taxes for the three months ended March
29,1997 increased $544,689 or 468% to $661,176 as compared to $116,487 for the
comparable period in the prior year. This significant increase was due to the
Company's successful integration of DTC and NIK while still remaining focused
on AHI's profitability.
The provision for income taxes totaled $255,958 for the three months ended
March 29, 1997 as compared to $45,000 for the comparable period in 1996. The
provision was based on the Company's federal and state statutory rates of
approximately 39% for the quarter.
Net income for the three months ended March 29,1997 increased $333,731 or 467%
to $405,218 as compared to $71,487 for the comparable period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's backlog consists of orders received but not yet manufactured. As
of April 26, 1997, the Company had an estimated backlog of orders of
approximately $975,000.
On March 26, 1997, the Company restructured its existing credit facility with
Barnett Bank, N.A. ("Barnett Bank") which made available to the Company a
revolving line of credit of $20,000,000 for working capital purposes.
As of March 29, 1997, the Company had working capital of $12,273,839 compared
to $949,749 at March 31, 1996. The increase in working capital was due
principally to the proceeds of the Convertible Notes, which were issued in
April 1996, and converted into equity in December 1996, as well as the
continued profitability of operations.
The Company anticipates that cash flow from continuing operations will enable
the Company to meet its liquidity, working capital requirements, and capital
expenditure requirements of current operations during the next year.
11
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
On January 30, 1997, the Company and DTC (collectively, the "Plaintiffs")
commenced a proceeding in the Supreme Court of the State of New York, New York
County (the "Court"), against XM Corporation, f/k/a Defense Technology
Corporation of America, a Wyoming Corporation ("DTCoA"), Robert L. Oliver and
Sandra A. Oliver (collectively, the "Defendants"). This lawsuit relates to
that certain Asset Purchase Agreement entered into by the aforementioned
parties on August 23, 1996 (the "Asset Purchase Agreement"), pursuant to which
the Plaintiffs acquired substantially all of the assets of DTCoA in exchange
for cash, shares of Common Stock of the Company, and the assumption by the
Plaintiffs of certain specified liabilities, and that certain Authorized
Distributor Agreement dated September 30, 1996 between the Company, XM
Corporation ("XMC") and Robert L. Oliver (the "Authorized Distributor
Agreement"), pursuant to which XMC agreed to act as a non-exclusive
distributor of products manufactured by DTC in the international markets.
In their amended complaint, the Plaintiffs have alleged that the Defendants
breached the terms of the Asset Purchase Agreement by, among other things:
(i) failing to pay certain receivables payment for which was guaranteed by the
Defendants; (ii) failing to pay certain liabilities not assumed by the
Plaintiffs; (ii) failing to pay the agreed upon adjustment to the purchase
price based upon a Net Tangible Asset Value (as defined in the Asset Purchase
Agreement); (iv) continuing to represent themselves as "Defense Technology"
after the closing of the transaction and (v) engaging in business competitive
with the Plaintiffs' business. Plaintiffs also claim that the Defendants have
breached the Guaranty Agreement executed on August 23, 1996 in connection
with the Asset Purchase Agreement. The Plaintiffs have also alleged in their
complaint that the Defendants have breached the terms of the Authorized
Distributor Agreement by, among other things: (i) failing to pay certain
invoices within thirty (30) days of issuance; (ii) failing to provide adequate
service to customers; (iii) shipping goods in violation of applicable export
laws and regulations; (iv) using the "Defense Technology" name on export
licenses and otherwise falsely claiming to be the owners of DTC and (v) engaging
in business competitive with the Plaintiffs' business.
In their amended complaint, the Plaintiffs have asserted claims for, among other
things, breach of contract, declaratory judgment, conversion, breach of
fiduciary duty and a permanent injunction. The relief sought by the Plaintiffs
includes, among other things, monetary damages totaling approximately $513,680,
plus accruals thereto and interest thereon, punitive damages, and such other
damages as the court may deem just and proper. As of March 14, 1997, therefore,
the Company's total damage claims against the Defendants was in excess of
$1,500,000.
On April 3, 1997, the Defendants filed with the Court an answer and
counterclaims to the Plaintiffs' complaint.
12
<PAGE>
The Defendants have denied each of the Plaintiffs' allegations and have
asserted several affirmative defenses, including, among other things,
that: (i) the Plaintiffs have breached the Asset Purchase Agreement and the
Authorized Distributor Agreement; (ii) the Plaintiffs fraudulently entered
into the Asset Purchase Agreement; (iii) the Plaintiffs failed to comply with
the requirements of United States governmental authorities in connection with
the Defendants' export licenses; (iv) the Plaintiffs interfered with the
Defendants' contracts with its international customers.
Defendants have counterclaimed for breach of the terms of the Asset Purchase
Agreement by, among other things, alleging that Plaintiffs: (i) failing to
negotiate the net tangible assets of DTCoA in good faith; (ii) failed to
demonstrate that they placed in escrow certain stock of the Company for the
benefit of the Defendants; (iii) failed to expressly assume a contract for the
national distribution of products with Aardvark Tactical, Inc. (the "Aardvark
contract"); or (iv) fraudulently entered into the Asset Purchase Agreement
with no intent of assuming the Aardvark contract.
Defendants have also counterclaimed breach the Authorized Distributor Agreement
by, among other things, alleging the Plaintiffs: (i) failed to provide the
Defendants with necessary sales assistance; (ii) took over the distribution to
Defendants' international customers themselves; (iii) defamed the Defendants
to their international customers; and (iv) otherwise interfered with the
Defendants' contractual relations.
In their counterclaims, the Defendants have asserted claims for among other
things, breach of contract (or in the alternative, specific performance and
rescission), unjust enrichment, interference with contracts, defamation,
injurious falsehood, declaratory judgment, fraud and mistake.
This lawsuit is in the preliminary phases of litigation. The Company believes
the counterclaims asserted against it are without merit, and intend to defend
against such counterclaims.
ITEM 6. EXHIBITS & REPORTS ON FORM 8-K
a. Exhibits
The following Exhibits are hereby filed as part of this Quarterly Report
on Form 10-QSB:
EXHIBIT DESCRIPTION
2.1** Share Acquisition Agreement dated as of April 7, 1997, between Bodycote,
AHL and the Company (filed as Exhibit 2.1 to Form 8-K, Current Report of
the Company, dated April 22, 1997 and incorporated herein by reference).
2.2** Agreement for the Sale and Purchase of the Whole of the Issued Share
Capital of DSL Group Limited, dated April 16, 1997, between the Company,
AHL, NatWest Ventures Nominees Limited and Others and Martin Brayshaw
(filed as
13
<PAGE>
Exhibit 2.2 to Form 8-K, Current Report of the Company, dated April 22,
1997 and incorporated herein by reference).
10.1** Tax Deed, dated April 7, 1997, between the Company and Bodycote (filed
as Exhibit 10.1 to Form 8-K, Current Report of the Company, dated April
22, 1997 and incorporated herein by reference).
10.2** Form of Escrow Agreement, dated April 16, 1997, between the Company, the
Warrantors and Ashurst Morris Crisp (filed as Exhibit 10.2 to Form 8-K,
Current Report of the Company, dated April 22, 1997 and incorporated
herein by reference).
10.3** Form of Registration Rights Agreement, dated April 16, 1997, between the
Company and NatWest Ventures Nominees Limited and Others (filed as
Exhibit 10.3 to Form 8-K, Current Report of the Company, dated
April 22, 1997 and incorporated herein by reference).
11.1* Earnings Per Share Computations
27.1* Financial Data Schedule
* Filed herewith
** Incorporated by reference
b. The Company filed a report on Form 8-K on April 22, 1997 in connection
with the Company's acquisition of all of the outstanding share capital of
Supercraft, the Transaction DSL and the restructuring of the credit
facility with Barnett Bank.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ARMOR HOLDINGS, INC.
/s/ Jonathan M. Spiller
----------------------------------------
Jonathan M. Spiller
President and Chief Executive Officer
Dated May 13, 1997
----------------------------------
/s/ Carol T. Burke
----------------------------------------
Carol T. Burke
Vice President of Finance
Dated May 13, 1997
----------------------------------
15
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith:
EXHIBIT DESCRIPTION
- ------- -----------
11.1 Earnings Per Share Computations
27.1 Financial Data Schedule
<PAGE>
Exhibit 11.1
EARNINGS PER SHARE COMPUTATIONS
<TABLE>
<CAPTION>
THREE MONTH PERIODS ENDED
MARCH 29, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income $ 405,218 $ 71,487
----------- -----------
Shares:
Weighted average common shares outstanding 10,553,293 6,463,644
Effect of shares issuable under stock option
and stock grant plans, based on the treasury
stock method 969,280 750,101
Effect of shares issuable under conversion of
preferred stock - if converted method (for
1996 the "if converted" method is applied from
the beginning of the period to the actual
conversion date of the preferred stock of
January 19, 1996) 0 362,191
----------- -----------
Adjusted common shares and equivalents 11,522,573 7,575,936
----------- -----------
Earnings per share - primary $ 0.04 $ 0.01
----------- -----------
FULLY DILUTED EARNINGS PER SHARE:
Net income $ 405,218 $ 71,487
----------- -----------
Shares:
Weighted average common shares outstanding 10,553,293 6,463,644
Effect of shares issuable under stock option
and stock grant plans, based on the treasury
stock method 1,038,143 784,913
Effect of shares issuable under conversion of
preferred stock - if converted method (for
1996 the "if converted" method is applied from
the beginning of the period to the actual
conversion date of the preferred stock of
January 19, 1996) 0 362,191
----------- -----------
Adjusted common shares and equivalents 11,591,436 7,610,748
----------- -----------
Earnings per share - fully diluted $ 0.04 $ 0.01
----------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Exhibit 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED MARCH 29, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 4,146,226
<SECURITIES> 0
<RECEIVABLES> 6,408,305
<ALLOWANCES> 198,500
<INVENTORY> 4,896,711
<CURRENT-ASSETS> 15,905,831
<PP&E> 5,736,816
<DEPRECIATION> 621,870
<TOTAL-ASSETS> 28,859,307
<CURRENT-LIABILITIES> 3,631,992
<BONDS> 95,338
0
0
<COMMON> 105,917
<OTHER-SE> 25,026,060
<TOTAL-LIABILITY-AND-EQUITY> 28,859,307
<SALES> 6,422,181
<TOTAL-REVENUES> 6,422,181
<CGS> 3,772,743
<TOTAL-COSTS> 3,772,743
<OTHER-EXPENSES> 2,028,373
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (40,111)
<INCOME-PRETAX> 661,176
<INCOME-TAX> 255,958
<INCOME-CONTINUING> 405,218
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 405,218
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
