<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the period ended September 30, 1997
------------------------------------------------
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 0-18490
-------
K-SWISS INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-4265988
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20664 Bahama Street, Chatsworth, CA 91311
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
818-998-3388
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
-----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Shares of common stock outstanding at October 21, 1997:
Class A 3,167,186
Class B 2,485,572
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------
K-SWISS INC.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 31,969 $ 34,314
Investment securities 9,619 -
Accounts receivable, less allowance for doubtful
accounts of $815 and $630 as of September 30,
1997 and December 31, 1996, respectively 21,444 14,702
Inventories 20,548 23,789
Prepaid expenses 5,727 15,674
Deferred taxes 1,839 2,058
-------- --------
Total current assets 91,146 90,537
PROPERTY, PLANT AND EQUIPMENT, net 4,180 3,910
OTHER ASSETS
Intangible assets 4,778 5,005
Other 503 823
-------- --------
5,281 5,828
-------- --------
$100,607 $100,275
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank lines of credit $ 612 $ 1,209
Current maturities of capital lease obligations
and subordinated debentures 350 302
Trade accounts payable 3,357 3,239
Accrued liabilities 10,462 6,490
-------- --------
Total current liabilities 14,781 11,240
SUBORDINATED DEBENTURES 150 200
DEFERRED TAXES 9,706 9,266
STOCKHOLDERS' EQUITY
Preferred Stock-authorized 2,000,000 shares of
$.01 par value; none issued and outstanding - -
Common Stock:
Class A-authorized 18,000,000 shares of $.01 par
value; 4,103,386 shares issued, 3,172,186 shares
outstanding and 931,200 shares held in treasury
at September 30, 1997 and 4,087,018 shares issued,
3,585,018 shares outstanding and 502,000 shares
held in treasury at December 31, 1996 41 41
Class B-authorized 10,000,000 shares of $.01 par value;
issued and outstanding 2,485,572 shares at September 30,
1997 and 2,495,572 shares at December 31, 1996 25 25
Additional paid-in capital 25,175 25,100
Treasury Stock (11,209) (5,221)
Retained earnings 62,200 59,675
Foreign currency translation (262) (51)
-------- -------
75,970 79,569
-------- -------
$100,607 $100,275
======== ========
</TABLE>
The accompanying notes are an integral part of statements.
2
<PAGE>
K-SWISS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $92,449 $89,165 $32,835 $28,781
Cost of goods sold 57,699 59,917 19,417 19,718
------- ------- ------- -------
Gross profit 34,750 29,248 13,418 9,063
Selling, general and administrative
expenses 30,767 26,370 10,593 9,103
------- ------- ------- -------
Operating profit (loss) 3,983 2,878 2,825 (40)
Interest income, net 1,277 1,095 463 519
------- ------- ------- -------
Earnings before income taxes 5,260 3,973 3,288 479
Income tax expense 2,386 2,296 1,574 198
------- ------- ------- -------
NET EARNINGS $ 2,874 $ 1,677 $ 1,714 $ 281
======= ======= ======= =======
Earnings per share $ .48 $ .25 $ .29 $ .04
======= ======= ======= =======
Weighted average common and common
equivalent shares outstanding 5,987 6,598 5,901 6,610
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
K-SWISS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1997 1996
--------- --------
<S> <C> <C>
Net cash provided by operating activities $ 15,095 $ 7,793
Cash flows from investing activities:
Cash paid for acquisition of certain assets and rights of Robey Sportswear - (436)
Purchase of investment securities (9,619) -
Purchase of property, plant and equipment (775) (313)
Proceeds from disposal of property, plant and equipment 8 -
-------- -------
Net cash used in investing activities (10,386) (749)
Cash flows from financing activities:
Net (repayments) borrowings under the bank lines of credit and capital leases (578) 1,629
Purchase of treasury stock (5,988) (1,025)
Proceeds from stock options exercised 63 -
Income tax benefit of options exercised 12 -
Payment of dividends (349) (394)
-------- -------
Net cash (used in) provided by financing activities (6,840) 210
Effect of exchange rate changes on cash (214) 92
-------- -------
Net (decrease) increase in cash and cash equivalents (2,345) 7,346
Cash and cash equivalents at beginning of period 34,314 31,431
-------- -------
Cash and cash equivalents at end of period $ 31,969 $38,777
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
K-SWISS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the consolidated
financial position of K-Swiss Inc. (the "Company") as of September 30, 1997
and the results of its operations and its cash flows for the nine and three
months ended September 30, 1997 and 1996. The results of operations and
cash flows for the nine and three months ended September 30, 1997 are not
necessarily indicative of the results to be expected for any other interim
period or the full year. These consolidated financial statements should be
read in combination with the audited consolidated financial statements and
notes thereto for the year ended December 31, 1996.
2. The federal income tax returns of the Company for the years ended 1990,
1991 and 1992 are under examination by the Internal Revenue Service (IRS).
In December 1995, the IRS issued its report proposing additional taxes of
approximately $3,850,000 plus penalties and interest. The Company is
appealing the IRS assessment. Also, the federal income tax returns of the
Company for the years ended 1993 and 1994 are currently under examination
by the IRS which has issued Notices of Proposed Adjustment (NOPA's) for
those years. In addition, the IRS has reopened its examination of the 1991
and 1992 fiscal years. The IRS has not yet issued an examination report
covering the 1991 through 1994 fiscal years, but is expected to do so.
Based on the NOPA's for the 1993 and 1994 fiscal years, it is expected that
the IRS will issue an examination report proposing adjustments to the
Company's income of approximately $10,100,000 for fiscal years 1993 and
1994 combined. It is not clear whether the IRS intends to make any 1991 or
1992 adjustments in addition to, or in lieu of, the proposed adjustments
already made in the prior examination report. Although no assurance can be
given regarding the outcome of such examinations, the Company believes that
any taxes which might become payable as a result of the first proposed
assessments for tax years 1991 and 1992 or substantially all of the
proposed adjustments for tax years 1993 and 1994 would not result in
additional expense recognized in the financial statements other than
interest and penalties, if any, as the Company has recorded deferred income
taxes on the untaxed portion of unremitted earnings of a foreign
subsidiary. Therefore, management believes that resolution of the
aforementioned IRS examinations should not have a material adverse impact
on the Company's financial position and results of operations.
3. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS No. 128), Earnings Per
Share. SFAS No. 128 establishes standards of computing and presenting
earnings per share (EPS) and applies to entities with publicly held common
stock. SFAS No. 128 simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15 and makes them comparable to
international EPS standards. It replaces the presentation of primary EPS
with a presentation of basic EPS. It also requires dual presentation of
basic and diluted EPS on the face of the statement of earnings for all
entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation.
SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997; earlier application is not permitted. The
pro forma basic and diluted EPS calculated under SFAS No. 128 would
approximate primary earnings per share for the Company for the periods
ended September 30, 1997 and 1996.
5
<PAGE>
ITEM 2.
- ------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth, for the periods indicated, the percentage of
certain items in the consolidated statements of earnings relative to revenues.
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 62.4 67.2 59.1 68.5
Gross profit 37.6 32.8 40.9 31.5
Selling, general and administrative
expenses 33.3 29.6 32.3 31.6
Interest income, net 1.4 1.3 1.4 1.8
Earnings before income taxes 5.7 4.5 10.0 1.7
Income tax expense 2.6 2.6 4.8 0.7
Net earnings 3.1 1.9 5.2 1.0
</TABLE>
Revenues increased to $32,835,000 for the quarter ended September 30, 1997 from
$28,781,000 for the quarter ended September 30, 1996, an increase of $4,054,000
or 14.1%. Revenues increased to $92,449,000 for the nine months ended September
30, 1997 from $89,165,000 for the nine months ended September 30, 1996, an
increase of $3,284,000 or 3.7%. These increases for the quarter and nine months
were the result of higher average wholesale prices per pair, partially offset by
decreases in the volume of footwear sold. The average wholesale price per pair
increased to $24.47 and $22.44 for the quarter and nine months ended September
30, 1997 from $20.05 and $20.77 for the quarter and nine months ended September
30, 1996, increases of 22.0% and 8.0% respectively. The increases in the
average wholesale prices per pair were primarily attributable to changes in the
product and geographic mix of sales. The volume of footwear sold decreased to
1,315,000 pair and 3,926,000 pair for the quarter and nine months ended
September 30, 1997 from 1,388,000 pair and 3,996,000 pair for the quarter and
nine months ended September 30, 1996. The decrease in the volume of footwear
sold for the quarter ended September 30, 1997 was primarily due to a decrease in
the lower volume tennis/court category of shoes of 43.3% partially offset by an
increase in the higher volume Classic category of 12.9%.
Domestic revenues increased 24.2% to $27,148,000 for the quarter ended September
30, 1997 from $21,854,000 for the quarter ended September 30, 1996. Domestic
revenues increased 13.4% to $72,635,000 for the nine months ended September 30,
1997 from $64,060,000 for the nine months ended September 30, 1996.
International revenues decreased 17.9% to $5,687,000 for the quarter ended
September 30, 1997 from $6,927,000 for the quarter ended September 30, 1996.
International revenues decreased 21.1% to $19,814,000 for the nine months ended
September 30, 1997 from $25,105,000 for the nine months ended September 30,
1996. International revenues, as a percentage of total revenues, decreased to
17.3% for the quarter ended September 30, 1997 as compared with 24.1% for the
quarter ended September 30, 1996. International revenues, as a percentage of
total revenues, decreased to 21.4% for the nine months ended September 30, 1997
as compared with 28.2% for the nine months ended September 30, 1996.
Gross profit margins, as a percentage of revenues, increased to 40.9% for the
quarter ended September 30, 1997, from 31.5% for the quarter ended September 30,
1996. Gross profit margins, as a percentage of revenues, increased to 37.6%
from 32.8% for the nine months ended September 30, 1997 and 1996, respectively.
Gross profit margins increased primarily due to changes in the geographic and
product mix of sales, including a decrease in close-out sales.
6
<PAGE>
Selling, general and administrative expenses increased to $10,593,000 (32.3% of
revenues) for the quarter ended September 30, 1997, from $9,103,000 (31.6% of
revenues) for the quarter ended September 30, 1996, an increase of $1,490,000 or
16.4%. Selling, general and administrative expenses increased to $30,767,000
(33.3% of revenues) for the nine months ended September 30, 1997, from
$26,370,000 (29.6% of revenues) for the nine months ended September 30, 1996, an
increase of $4,397,000 or 16.7%. The increase in the amounts, as well as the
percentage of sales, for the quarter and nine months ended September 30, 1997
was primarily the result of an increase in direct advertisement and promotion
activities, as well as an increase in the bonus accrual due to an employee
incentive program.
Net interest income was $463,000 (1.4% of revenues) and $1,277,000 (1.4% of
revenues) for the quarter and nine months ended September 30, 1997,
respectively, compared to $519,000 (1.8% of revenues) and $1,095,000 (1.3% of
revenues) for the quarter and nine months ended September 30, 1996,
respectively, a decrease of $56,000 or 10.8% for the quarter ended September 30,
1997 and an increase of $182,000 or 16.6% for the nine months ended September
30, 1997. For the quarter ended September 30, 1997 as compared to the quarter
ended September 30, 1996, the decrease in net interest income was the result of
lower average balances partially offset by higher average interest rates on
commercial paper. For the nine months ended September 30, 1997 as compared to
the nine months ended September 30, 1996, the increase in net interest income
was the result of higher average interest rates partially offset by lower
average balances on commercial paper.
The Company's effective tax rate decreased to 45.4% of earnings before income
tax from 57.8% for the nine months ended September 30, 1997 and 1996,
respectively, due primarily to recording income taxes relating to a state income
tax audit during the nine months ended September 30, 1996.
Net earnings increased 510.0% to $1,714,000 for the quarter ended September 30,
1997 from $281,000 for the quarter ended September 30, 1996. Net earnings
increased 71.4% to $2,874,000 for the nine months ended September 30, 1997 from
$1,677,000 for the nine months ended September 30, 1996. Net earnings for the
quarter and nine months ended September 30, 1997 included net losses of the
Company's European operations of $262,000 and $1,536,000, respectively. Net
earnings for the quarter and nine months ended September 30, 1996 included net
losses of the Company's European operations of $593,000 and $1,360,000,
respectively.
At September 30, 1997 and 1996, domestic footwear futures orders with start ship
dates from October 1997 and 1996 through March 1998 and 1997 were approximately
$46,955,000 and $27,325,000, respectively. At September 30, 1997 and 1996,
international footwear futures orders with start ship dates from October 1997
and 1996 through March 1998 and 1997 were approximately $8,716,000 and
$7,819,000, respectively. "Backlog", as of any date, represents orders
scheduled to be shipped within the next six months. Backlog does not include
orders scheduled to be shipped on or prior to the date of determination of
backlog. The orders are not necessarily indicative of revenues for subsequent
periods because: (1) the mix of "futures" and "at-once" orders can vary
significantly from quarter to quarter and year to year and (2) the rate of
customer order cancellations can also vary from quarter to quarter and year to
year.
7
<PAGE>
Liquidity and Capital Resources
The Company generated cash of $15,095,000 and $7,793,000 from its operating
activities during the nine months ended September 30, 1997 and 1996,
respectively. Cash provided by operating activities for the nine months ended
September 30, 1997 as compared to the nine months ended September 30, 1996
varied primarily due to changes in accounts receivable, inventories, prepaid
expenses (principally a prepayment to secure inventory purchases) and other
assets, and accounts payable and accrued liabilities as well as an increase in
net earnings.
The Company had a net outflow of cash from its investing activities for the nine
months ended September 30, 1997 due to the purchase of investment securities and
to the purchase of property, plant and equipment. The Company had a net outflow
of cash from its investing activities for the nine months ended September 30,
1996 due primarily to the purchase of certain assets and rights of a small
apparel brand where products are primarily sold in the Netherlands. The Company
had a net outflow of cash from its financing activities for the nine months
ended September 30, 1997 primarily due to the purchase of treasury stock and
repayments under the bank lines of credit.
In November 1996, the Company extended its share repurchase program from
December 1996 to December 1997. Under this program the Company may purchase,
from time to time as market conditions warrant, up to $10,000,000 of its Class A
Common Stock on the open market. At that time, the authorization was increased
by approximately $5,200,000 from $4,800,000 (the remaining amount of the
previous $10,000,000 authorization) to $10,000,000. The Company adopted this
program because it believes repurchasing its shares can be a good use of excess
cash depending on the Company's array of alternatives. From inception under its
share repurchase program, the Company purchased an aggregate of 936,200 shares
of Class A Common Stock at an aggregate cost totaling approximately $11,294,000.
During 1997 and 1998, the Company will need an aggregate of approximately
$4,900,000 for the construction of its new headquarters facility. No other
material capital commitments exist at September 30, 1997. Depending on the
Company's future growth rate, funds may be required by operating activities.
With continued use of its revolving credit facility and internally generated
funds, the Company believes its present and currently anticipated sources of
capital are sufficient to sustain its anticipated capital needs for the
remainder of 1997.
In March 1997, the Company contracted to sell its Pacoima, California property
and opened escrow regarding such sale. The escrow was expected to close in the
second quarter of 1997 but the purchaser was unable to close escrow. A new
escrow has been entered into with a different party and such escrow is expected
to close in the fourth quarter of 1997.
The Company's working capital decreased $2,932,000 to $76,365,000 at September
30, 1997 from $79,297,000 at December 31, 1996.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings.
-----------------
None.
ITEM 2: Changes in Securities.
---------------------
None.
ITEM 3: Defaults Upon Senior Securities.
-------------------------------
None.
ITEM 4: Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None.
ITEM 5: Other Information.
-----------------
None.
ITEM 6: Exhibits
--------
(a) Exhibits
10- Third Amendment to Credit Agreement
11- Computation of Earnings Per Share
27- Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the third quarter
of 1997; however, the Company did file a Current Report on Form 8-
K on October 15, 1997 relating to the issuance by the Company of a
press release regarding the filing by the Company of a Form S-3
Registration Statement covering shares of the Company's Class A
Common Stock held by one of its principal stockholders.
9
<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.
K-Swiss Inc.
Date: October 22, 1997
By:/S/ GEORGE POWLICK
______________________________________
George Powlick,
Vice President Finance and
Chief Financial Officer
10
<PAGE>
EXHIBIT INDEX
--------------
Exhibit Page
- ------- ----
10 Third Amendment to Credit Agreement 12
11 Computation of Earnings Per Share 14
27 Financial Data Schedule
11
<PAGE>
EXHIBIT 10
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (this "Amendment") is entered into as
of July 29, 1997, between Bank of America National Trust and Savings Association
("Bank") and K-Swiss, Inc. ("Borrower"), with reference to the following:
Recitals
--------
A. Bank and Borrower are parties to that certain Credit Agreement dated as of
March 25, 1994, as modified by amendments dated as of June 29, 1995 and August
12, 1996 (as amended, the "Credit Agreement").
B. Bank and Borrower now desire to further amend the Credit Agreement on the
terms and conditions set forth below.
Agreement
---------
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this Amendment
-----------
shall have the meanings ascribed to them in the Credit Agreement.
2. Amendments. The Credit Agreement shall be amended as follows:
----------
(a) In the definition of "Availability Period" in Paragraph 1.1, the date
"July 1, 1998" is amended to read "July 1, 1999."
(b) In the definition of "Offshore Rate Interest Period" in Paragraph 1.1,
the phrase "twelve (12)" is amended to read "six (6)."
(c) Paragraph 8.6 is amended and restated in its entirety to read as
follows:
8.6 Effective Tangible Net Worth. Maintain at all times on a consolidated
----------------------------
basis effective Tangible Net Worth plus Subordinated Debt of at least Sixty
Two Million Seven Hundred Eighty Two Thousand Dollars ($62,782,000) plus the
sum of seventy-five percent (75%) of net income after income taxes (without
subtracting losses) earned in each fiscal year commencing after December 31,
1996;
(d) Except as hereby amended, all of the terms and conditions of the Credit
Agreement shall remain in full force and effect.
3. Representations and Warranties. Borrower represents and warrants to Bank
------------------------------
that: (a) no Event of Default has occurred and is continuing under the Credit
Agreement, (b) the representations and
<PAGE>
warranties in the Credit Agreement are true as of the date of this Amendment,
(c) this Amendment is within Borrower's powers, has been duly authorized, and
does not conflict with Borrower's organizational papers, and (d) this Amendment
does not conflict with any law, agreement, or obligation by which Borrower is
bound.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
BANK OF AMERICA NATIONAL TRUST K-SWISS, INC.
AND SAVINGS ASSOCIATION
By: /s/ Richard J. Pankow By: /s/ George Powlick
------------------------------- ----------------------
Richard J. Pankow George Powlick
Vice President Vice President -
Finance
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY
Earnings applicable to common stock $2,874 $1,677 $1,714 $ 281
====== ====== ====== ======
Weighted average shares:
Average shares outstanding 5,915 6,574 5,741 6,560
Net effect of warrants and dilutive
stock options based on application
of treasury stock method using
average market price 72 24 160 50
------ ------ ------ ------
Total average shares 5,987 6,598 5,901 6,610
====== ====== ====== ======
Earnings per share $ .48 $ .25 $ .29 $ .04
====== ====== ====== ======
</TABLE>
FULLY DILUTED
Fully diluted earnings per share are considered equal to primary earnings per
share due to immaterial dilution.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 31,969
<SECURITIES> 9,619
<RECEIVABLES> 22,259
<ALLOWANCES> 815
<INVENTORY> 20,548
<CURRENT-ASSETS> 91,146
<PP&E> 4,180
<DEPRECIATION> 0
<TOTAL-ASSETS> 100,607
<CURRENT-LIABILITIES> 14,781
<BONDS> 0
0
0
<COMMON> 66
<OTHER-SE> 75,904
<TOTAL-LIABILITY-AND-EQUITY> 100,607
<SALES> 92,449
<TOTAL-REVENUES> 92,449
<CGS> 57,699
<TOTAL-COSTS> 30,767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,277<F1>
<INCOME-PRETAX> 5,260
<INCOME-TAX> 2,386
<INCOME-CONTINUING> 2,874
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,874
<EPS-PRIMARY> 0.480
<EPS-DILUTED> 0.480
<FN>
<F1>INTEREST INCOME NET OF INTEREST EXPENSE
</FN>
</TABLE>
