SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1996
or
( ) Transition report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from ______________ to
_____________.
Commission file number: 0-26844
RADISYS CORPORATION
(Exact name of registrant as specified in its charter)
Oregon 93-0945232
(State or other jurisdiction (I.R.S. Employer
of organization or incorporation) Identification Number)
5445 NE Dawson Creek Drive
Hillsboro, OR 97124
(Address of principal executive offices, including zip code)
(503) 615-1100
(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
--- ---
Number of shares of common stock outstanding
as of November 8, 1996: 7,379,667
<PAGE>
RADISYS CORPORATION
PART I. FINANCIAL INFORMATION
Page No.
--------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet - September 30, 1996 and 3
December 31, 1995
Consolidated Statement of Operations - Three months ended 4
September 30, 1996 and 1995, and nine months ended
September 30, 1996 and 1995
Consolidated Statement of Changes In Shareholders' 5
Equity - December 31, 1993 through September 30, 1996
Consolidated Statement of Cash Flows - Nine months ended 6
September 30, 1996 and 1995
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
<TABLE>
<CAPTION>
RadiSys Corporation
Consolidated Balance Sheet
(in thousands, except share amounts)
ASSETS
Sept 30, December 31,
1996 1995
----------- -------------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 26,388 $ 10,236
Short term investments 0 10,922
Accounts receivable 15,044 6,869
Other receivables 4,915 139
Inventories 12,089 6,380
Other current assets 627 374
Deferred income taxes 824 297
----------- -------------
Total current assets 59,887 35,217
Equipment, net of accumulated depreciation of
$5,171 and $3,832 9,250 3,179
Other Assets 598 716
----------- -------------
$ 69,735 $ 39,112
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,368 $ 1,790
Income taxes payable 2,917 147
Accrued wages and bonuses 1,597 783
Accrued warranty costs 1,129 334
Accrued sales discounts 1,850
Other accrued liabilities 1,910 141
Current portion of note payable 600
Current portion of capital lease obligation 214 214
----------- ------------
Total current liabilities 15,585 3,409
----------- ------------
Obligations under capital lease 735 884
Note Payable 600
----------- ------------
Total long-term liabilities 1,335 884
----------- ------------
Total liabilities 16,920 4,293
----------- ------------
Commitments and contingent liabilities
Shareholders' equity
Common stock, 15,000,000 shares
authorized, 7,373,502 and 6,014,709 shares
issued and outstanding 44,400 33,627
Warrants 1,200
Cumulative translation adjustment (9) (108)
Retained earnings 7,224 1,300
----------- -------------
Total shareholders' equity 52,815 34,819
----------- -------------
$ 69,735 $ 39,112
=========== =============
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
1996 1995 1996 1995
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $ 22,459 $ 9,540 $ 53,558 $ 24,382
Cost of sales 12,006 6,271 31,372 15,807
------------ ---------- ------------ -----------
Gross Profit 10,453 3,269 22,186 8,575
Research and development 2,030 867 5,666 2,405
Selling, general and administrative 3,513 1,714 8,180 4,903
------------ ---------- ------------ -----------
Income from operations 4,910 688 8,340 1,267
Interest income, net 288 (30) 812 (2)
------------ ---------- ------------ -----------
Income before income tax provision 5,198 658 9,152 1,265
Income tax provision 1,819 197 3,228 379
------------ ---------- ------------ -----------
Net income $ 3,379 $ 461 $ 5,924 $ 886
============ ========== ============ ===========
Net income per share $ 0 $ 0 $ 1 $ 0
============ ========== ============ ===========
Weighted average number of common and
common equivalent shares outstanding 7,819 4,012 7,175 3,944
============ ========== ============ ===========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
RadiSys Corporation
Consolidated Statement of Changes in Shareholders' Equity
(in thousands, except share amounts)
(nine months ended September 30, 1996 is unaudited)
Page 1 of 2
Preferred stock
-----------------------------------------------------------
Series A Series B Series C Common stock
----------------- ------------------- ------------------- -------------------
Shares Amount Shares Amount Shares Amount Shares Amount Warrants
-------- ------- ---------- ------- ---------- ------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 355,556 1,500 1,820,988 4,917 2,159,504 2,973 1,372,752 322
Collection of note receivable
Exercise of common stock options 111,328 156
Issuance of common stock for cash 3,030 10
Repurchase of common stock (4,910) (13)
Net income for the year
-------- ------- ---------- ------- ---------- ------- ---------- ------- --------
Balances, December 31, 1994 355,556 1,500 1,820,988 4,917 2,159,504 2,973 1,482,200 475
Exercise of common stock options 58,524 106
Issuance of common stock 2,175,000 23,656
Conversion of preferred stock (355,556) (1,500) (1,820,988) (4,917) (2,159,504) (2,973) 2,298,985 9,390
Translation adjustment
Net income for the year
-------- ------- ---------- ------- ---------- ------- ---------- ------- --------
Balances, December 31, 1995 6,014,709 33,627
Exercise of common stock options 58,793 273
Translation adjustment
Stock issued for acquisition 1,300,000 10,500
Warrants issued for acquisition 1,200
Net income for the period
-------- ------- ---------- ------- ---------- ------- ---------- ------- --------
Balances, September 30, 1996 - $ - - $ - - $ - 7,373,502 $44,400 $ 1,200
======== ======= ========== ======= ========== ======= ========== ======= ========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
RadiSys Corporation
Consolidated Statement of Changes in Shareholders' Equity
(in thousands, except share amounts)
(nine months ended September 30, 1996 is unaudited)
Page 2 of 2
Cumulative Retained
Notes translation (deficit)
Receivable adjustment earnings Total
---------- ---------- -------- --------
<S> <C> <C> <C>
Balances, December 31, 1993 (5) (1,581) 8,126
Collection of note receivable 5 5
Exercise of common stock options 156
Issuance of common stock for cash 10
Repurchase of common stock (13)
Net income for the year 1,365 1,365
---------- ---------- -------- --------
Balances, December 31, 1994 (216) 9,649
Exercise of common stock options 106
Issuance of common stock 23,656
Conversion of preferred stock
Translation adjustment (108) (108)
Net income for the year 1,516 1,516
---------- ---------- -------- --------
Balances, December 31, 1995 (108) 1,300 34,819
Exercise of common stock options 273
Translation adjustment 99 99
Stock issued for acquisition 10,500
Warrants issued for acquisition 1,200
Net income for the period 5,924 5,924
---------- ---------- -------- --------
Balances, September 30, 1996 - $ (9) $ 7,224 $ 52,815
========== ========== ======== ========
</TABLE>
5A
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30, September 30,
1996 1995
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 5,924 $ 886
Adjustments to reconcile net income to net
cash provided by (used for) operating
activities:
Depreciation and amortization 1,339 728
Deferred income taxes (527) (37)
Net changes in current assets and current liabilities:
(Increase) in accounts receivable (8,175) (3,040)
Decrease in other receivables 24
(Increase) in inventories (112) (3,361)
(Increase) in other current assets (28) (41)
Increase in accounts payable 3,578 2,250
Increase (decrease) in income tax payable 2,770 (146)
Increase (decrease) in accrued wages and bonuses 814 (37)
Increase in accrued warranty costs 795 68
Increase in other accrued liabilities 3,618 127
---------- --------
Net cash provided by (used for) operating activities 10,020 (2,603)
---------- --------
Cash flows from investing activities:
Decrease in short term investments 10,922
Capital expenditures (5,132) (2,551)
Capitalized software production costs and decrease in other assets 118 (404)
---------- --------
Net cash provided by (used for) investing activities 5,908 (2,955)
---------- --------
Cash flows from financing activities:
Cash proceeds from issuance of common stock, net 274 88
Proceeds from capital lease 1,156
Payments on capital lease obligation (149)
Increase in bank line of credit 1,700
---------- --------
Net cash provided by (used for) financing activities 125 2,944
---------- --------
Effect of exchange rate changes on cash 99 (68)
---------- --------
Net increase (decrease) in cash and cash equivalents 16,152 (2,682)
Cash and cash equivalents, beginning of period 10,236 2,965
---------- --------
Cash and cash equivalents, end of period $ 26,388 $ 283
========== ========
</TABLE>
6
<PAGE>
RADISYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share amounts)
(unaudited)
1. 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 the fair statement of
results for the interim periods. Certain information and footnote
disclosure 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 on Form 10-K for the year ended December 31,
1995. The results of operations for interim periods are not
necessarily indicative of the results for the entire year.
Net income per share is based on the weighted average number of shares
of common stock and common stock equivalents (stock options and
warrants) outstanding during the periods, computed using the treasury
stock method for stock options and warrants.
2. ACCOUNTS RECEIVABLE
Trade accounts receivable are net of an allowance for doubtful
accounts of $699 and $233 at September 30, 1996 and December 31, 1995,
respectively. The Company's customers are concentrated in the
technology industry.
3. INVENTORIES
Inventories consist of the following:
Sept 30, Dec 31,
1996 1995
------------ ------------
Raw Materials $ 6,714 $ 3,835
Work in Process 2,897 270
Finished Goods 2,478 2,275
------------ ------------
$ 12,089 $ 6,380
============ ============
7
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Sept 30, Dec 31,
1996 1995
------------ ------------
Land $ 1,190 $ 33
Manufacturing Equipment 4,851 3,654
Office Equipment 7,129 3,040
Leasehold Improvements 1,251 284
------------ ------------
14,421 7,011
Less: Accum. Depr. 5,171 3,832
------------ ------------
$ 9,250 $ 3,179
============ ============
5. MULTIBUS ACQUISITION
On April 29, 1996, the Company purchased substantially all of the
assets of Intel Corporation ("Intel") that were dedicated to the
design, manufacture and sale of all standard and custom Multibus I and
Multibus II products ("Multibus") (collectively the "Acquisition"). In
addition, pursuant to the terms of the Acquisition, Intel licensed
certain Intel software to the Company. The purchase price consisted of
1,300,000 shares of the Company's common stock ("Common Stock") and
warrants to purchase an additional 300,000 shares of Common Stock
exercisable within 24 months at prices per share ranging from $13.50
to $15.00, plus an aggregate of $1.2 million in cash to be paid in
1997.
The Acquisition was accounted for using the purchase method. The
results of operations for Multibus have been included in the financial
statements since the date of acquisition. The aggregate purchase price
of $13.2 million (including direct costs of acquisition) was allocated
to purchased inventory, equipment and in-process research and
development. The non cash portions have been excluded from the
accompanying Consolidated Statement of Cash Flows.
Included within other receivables is approximately $4.1 million
related to inventory to be delivered by Intel to the Company by March
1997.
The following unaudited pro forma information represents the results
of operations of the Company as if the Acquisition had occurred as of
the beginning of the respective nine month periods, after giving
effect to assumed increases in operating, research and development,
and general and administrative costs to operate the business,
depreciation of acquired fixed assets, expensing acquired in process
research and development, and adjustments to reflect the estimated
impact on tax expense of the Acquisition. The unaudited pro forma
financial statements are not necessarily indicative of what actual
results would have been had the Multibus acquisition
8
<PAGE>
occurred at the beginning of the respective periods. The unaudited pro
forma information should be read in conjunction with the Current
Report of the Company on Form 8-K dated May 3, 1996 and the Current
Report of the Company on Form 8-K/A dated July 1, 1996.
For the nine months ended
----------------------------
Sept 30, Sept 30,
(Unaudited) 1996 1995
------------ ------------
Revenues $ 73,902 $ 86,358
------------ ------------
Net Income $ 7,594 $ 4,664
------------ ------------
Earnings per share $ 0.92 $ 0.84
------------ ------------
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Total revenue was $22.5 million for the three months ended September
30, 1996 compared to $9.5 million for the three months ended September
30, 1995, and $53.6 million for the nine months ended September 30,
1996 compared to $24.4 million for the nine months ended September 30,
1995. Net income was $3.4 million for the three months ended September
30, 1996 compared to $0.5 million for the three months ended September
30, 1995, and $5.9 million for the nine months ended September 30,
1996 compared to $0.9 million for the nine months ended September 30,
1995.
From time to time the Company may issue forward looking statements
that involve a number of risks and uncertainties. The following 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; uncertainty of market development; dependence on a
limited number of OEM customers; dependence on limited or sole source
suppliers; dependence on the relationship with Intel Corporation
("Intel"); dependence on Intel's support of the embedded computer
market; lower than expected customer orders; competitive factors,
including increased competition, new product offerings by competitors
and price pressures; the availability of parts and components at
reasonable prices; changes in product mix; dependence on proprietary
technology; technological difficulties and resource constraints
encountered in developing new products; and product shipment
interruptions due to manufacturing difficulties. The forward looking
statements contained in this document regarding industry trends,
product development and introductions, and liquidity and future
business activities should be considered in light of these factors.
On April 29, 1996, the Company purchased substantially all of the
assets of Intel Corporation ("Intel") that were dedicated to the
design, manufacture and sale of all standard and custom Multibus I and
Multibus II products ("Multibus") (collectively the "Acquisition"). In
addition, pursuant to the terms of the Acquisition, Intel licensed
certain Intel software to the Company. The Acquisition was accounted
for using the purchase method. The results of operations for Multibus
have been included in the financial statements since the date of
acquisition.
REVENUES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
(in thousands except % amounts) (in thousands except % amounts)
Sept 30, % Sept 30, Sept 30, % Sept 30,
1996 Change 1995 1996 Change 1995
------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Revenues $22,459 135 $ 9,540 $53,558 120 $24,382
</TABLE>
The increases in revenues for the three and nine months ended
September 30, 1996 compared to the three and nine months ended
September 30, 1995, respectively, resulted primarily from the
acquisition of Multibus from Intel on April 29, 1996 and from volume
increases in OEM sales. Additionally, included within revenues for the
three and nine months ended September 30, 1996 is $0.7 million and
$1.4 million of royalty payments, respectively, from Intel in
connection with
10
<PAGE>
backlog retained by Intel in connection with the Acquisition. At the
end of the third quarter RadiSys was unable to ship approximately $2
million of product due to component delays.
COST OF GOODS SOLD
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
(in thousands except % amounts) (in thousands except % amounts)
Sept 30, % Sept 30, Sept 30, % Sept 30,
1996 Change 1995 1996 Change 1995
------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Cost of Goods Sold $12,006 91 $ 6,271 $31,372 99 $15,807
As a % of total revenue 53% 66% 59% 65%
</TABLE>
As a percentage of revenues total cost of goods sold decreased for the
three and nine months ended September 30, 1996 compared to the three
and nine months ended September 30, 1995, respectively, primarily as a
result of unshipped lower margin product, component pricing decreasing
faster than price changes to the Company's customers, the mix of
products sold through distributors versus direct sales, and product
mix consisting of a larger portion of higher margin product relative
to lower margin product shipped during the second quarter of 1996.
Cost of goods sold as a percentage of revenues is expected to return
to targeted levels in future periods, which are lower than those
achieved in second and third quarters of 1996.
Additionally, included within cost of goods sold for the nine months
ended September 30, 1996 is $1.3 million of inventory valuation
adjustments recorded in the second quarter that resulted from purchase
accounting in connection with the Multibus acquisition.
RESEARCH AND DEVELOPMENT
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
(in thousands except % amounts) (in thousands except % amounts)
Sept 30, Sept 30, Sept 30, Sept 30,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Research and Development $ 2,030 $ 867 $ 5,666 $ 2,405
As a % of total revenue 9% 9% 11% 10%
</TABLE>
The dollar increases in research and development expenses were
primarily the result of increased investment in new product
development and costs of enhancements to existing products. The
Company continues to invest in new design wins for OEM customers and
the dollar increases reflect steady increases in the number of
employees working in research and development.
Additionally, included within research and development for the nine
months ended September 30, 1996 is $225,000 recorded in the second
quarter to expense in-process research and development acquired in
connection with the Multibus acquisition.
11
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
(in thousands except % amounts) (in thousands except % amounts)
Sept 30, Sept 30, Sept 30, Sept 30,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Selling, General & Admin. $ 3,513 $ 1,714 $ 8,180 $ 4,903
As a % of total revenue 16% 18% 15% 20%
</TABLE>
Selling, general and administrative expenses have increased in dollar
amount in the three and nine months ended September 30, 1996 compared
to the three and nine months ended September 30, 1995, respectively,
primarily as a result of increased personnel, facilities and travel
cost to support higher levels of sales and to support the acquired
Multibus operations. The decreases as a percentage of revenues were
primarily the result of operating efficiencies achieved by spreading
fixed costs over a larger revenue base, offset partially by increases
in costs required to expand international operations.
INTEREST INCOME, NET AND INCOME TAX PROVISION
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
(in thousands except % amounts) (in thousands except % amounts)
Sept 30, Sept 30, Sept 30, Sept 30,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest Income, net $ 288 $ (30) $ 812 $ (2)
Income Tax Provision 1,819 197 3,228 379
</TABLE>
Interest income, net includes interest income, interest expense, bank
charges and foreign currency transaction gains or losses. The
increases in interest income, net for the three and nine months ended
September 30, 1996 compared to the three and nine months ended
September 30, 1995, respectively, were primarily the result of cash
invested from the Company's initial public offering in October of
1995.
The income tax provision reflects effective income tax rates of 35
percent and 30 percent for 1996 and 1995, respectively. The increase
in the income tax provision is primarily attributable to the depletion
of tax credits in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Company had $26.4 million in cash and
short term investment grade securities, which represents the Company's
principal source of liquidity. The Company had working capital of
approximately $44.0 million. Commencing September 30, 1996, the
Company entered into a $10.0 million line of credit with a bank. The
Company has not drawn any funds under this line of credit. Net cash
provided by operating activities for the nine months ended September
30, 1996 was $10.0 million as compared with net cash used by
operations of $2.6 million for the nine months ended September 30,
1995.
12
<PAGE>
Capital expenditures were $5.1 million in the nine months ended
September 30, 1996 and $2.6 million for the nine months ended
September 30, 1995. Capital expenditures for the nine months ended
September 30, 1996 were primarily for the purchase of two parcels of
land for future expansion and construction in progress for a new
headquarters and manufacturing facility which the Company occupied
beginning in October of 1996.
On April 29, 1996, the Company purchased substantially all of the
assets of Intel Corporation that are dedicated to the design,
manufacture and sale of all standard and custom Multibus I and
Multibus II products . In addition, pursuant to the terms of the
Acquisition, Intel licensed certain Intel software to the Company. The
purchase price consisted of 1,300,000 shares of the Company's Common
Stock and warrants to purchase an additional 300,000 shares of Common
Stock exercisable within 24 months at prices per share ranging from
$13.50 to $15.00, plus an aggregate of $1.2 million in cash to be paid
in 1997. The Company will fund the acquired operations from existing
cash and cash equivalents.
The Company believes that existing cash and cash equivalents and cash
from operations will be sufficient to fund its operations for at least
the next 12 months.
13
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Revolving line of credit
27 Financial Data Schedule
14
<PAGE>
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.
RADISYS CORPORATION
BRIAN V. TURNER
-----------------------------------
Date: November 11, 1996 Brian V. Turner
Vice President of Finance and
Administration and Chief Financial
Officer
(Principal Financial Officer)
15
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
- ----------- ----------- --------
10.1 Revolving line of credit
27 Financial Data Schedule
ALTERNATIVE RATE OPTIONS
PROMISSORY NOTE
(PRIME RATE, IBOR)
$ 10,000,000.00 Date: September 12, 1996
- ------------------------------- ------------------
RADISYS CORPORATION ("Borrower")
- --------------------------------------------------------------------
UNITED STATES NATIONAL BANK OF OREGON ("Lender")
1. TYPE OF CREDIT. This note is given to evidence Borrower's obligation to
repay all sums which Lender may from time to time advance to Borrower
("Advances") under a:
[ ] single disbursement loan. Amounts loaned to Borrower hereunder will
be disbursed in a single Advance in the amount shown in Section 2.
[X] revolving line of credit. No Advances shall be made which create a
maximum amount outstanding at any one time which exceeds the maximum
amount shown in Section 2. However, Advances hereunder may be
borrowed, repaid and reborrowed, and the aggregate Advances loaned
hereunder from time to time may exceed such maximum amount.
[ ] non-revolving line of credit. Each Advance made from time to time
hereunder shall reduce the maximum amount available shown in Section
2. Advances loaned hereunder which are repaid may not be reborrowed.
2. PRINCIPAL BALANCE. The unpaid principal balance of all Advances
outstanding under this note ("Principal Balance") at one time shall not
exceed $10,000,000.00 .
3. PROMISE TO PAY. For value received Borrower promises to pay to Lender or
order at Oregon Commercial Loan Servicing , the Principal Balance of this
note, with interest thereon at the rate(s) specified in Sections 4 and 11
below.
4. INTEREST RATE. The interest rate on the Principal Balance outstanding
may vary from time to time pursuant to the provisions of this note. Subject
to the provisions of this note, Borrower shall have the option from time to
time of choosing to pay interest at the rate or rates and for the
applicable periods of time based on the rate options provided herein;
provided, however, that once Borrower notifies Lender of the rate option
chosen in accordance with the provisions of this note, such notice shall
constitute Borrower's irrevocable request for an Advance hereunder at the
rate option specified in such notice. The rate options are the Prime
Borrowing Rate and the IBOR Borrowing Rate, each as defined herein.
(a) THE PRIME BORROWING RATE.
(i) The Prime Borrowing Rate is a per annum rate equal to Lender's
prime rate plus -0- % per annum.
(ii) Whenever Borrower desires to use the Prime Borrowing Rate option,
Borrower shall give Lender notice orally or in writing in accordance with
Section 15 of this note, which notice shall specify the requested
disbursement date and principal amount of the Advance, and that Borrower
has chosen the Prime Borrowing Rate option.
(iii) Prepayments of all or any part of the Principal Balance bearing
interest at the Prime Borrowing Rate may be made at any time without
penalty. Upon prepayment of any such principal amount, Borrower also must
pay all accrued interest thereon to the date of prepayment.
(iv) Subject to Section 11 of this note, interest shall accrue on the
unpaid Principal Balance at the Prime Borrowing Rate unless and except to
the extent that the IBOR Borrowing Rate is in effect.
(b) THE IBOR BORROWING RATE.
(i) The following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday, or
other day that commercial banks in Portland, Oregon or New York City are
authorized or required by law to close. Se
"IBOR Amount" means each principal amount for which Borrower
chooses to have the IBOR Borrowing Rate apply for any specified IBOR
Interest Period.
"IBOR Interest Period" means as to any IBOR Amount, a period one,
two or three months commencing on the date the IBOR Borrowing Rate becomes
applicable thereto; provided, however, that: (A) no IBOR Interest Period
shall be selected which would extend beyond expiry ; (B) no IBOR Interest
Period shall extend beyond the date of any principal payment required under
Section 6 of this note, unless the sum of the principal amounts bearing
interest at the Prime Borrowing Rate, plus IBOR Amounts with IBOR Interest
Periods ending on or before the scheduled date of such principal payment,
plus principal amounts remaining unborrowed under a line of credit, equals
or exceeds the amount of such principal payment; (C) any IBOR Interest
Period which would otherwise expire on a day which is not a Business Day,
shall be extended to the next succeeding Business Day, unless the result of
such extension would be to extend such IBOR Interest Period into another
calendar month, in which event the IBOR Interest Period shall end on the
immediately preceding Business Day; and (D) any IBOR Interest Period that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such IBOR Interest Period) shall end on the last Business Day of a
calendar month.
(ii) The IBOR Borrowing Rate is Lender's IBOR Rate plus See
attached Exhibit "A" % per annum. Lender's IBOR Rate for any IBOR Interest
Period is the rate per annum (computed on the basis of a 360-day year and
the actual number of days elapsed) equal to the arithmetic average (rounded
upward to the nearest 1/16 of 1%) of the rates per annum determined by
Lender as of the times specified in Section 4(b)(iii) on the date two (2)
Business Days prior to the first day of such IBOR Interest Period as the
rates offered to Lender by three Eurodollar money market dealers in such
Eurodollar market as may be selected by Lender for U.S. dollar deposits to
be delivered on the first day of such IBOR Interest Period for the number
of months therein; provided, however, that Lender's IBOR Rate shall be
adjusted to take into account the maximum reserves required to be
maintained for Eurocurrency liabilities by banks during each such IBOR
Interest Period as specified in Regulation D of the Board of Governors of
the Federal Reserve System or any successor regulation.
(iii) Borrower may obtain IBOR Borrowing Rate quotes from Lender
between 8:00 a.m. and 12:00 noon (Portland, Oregon time) on any Business
Day. Any IBOR Borrowing Rate quoted (A) before 10:00 a.m. shall be based on
Lender's IBOR Rate determined as of approximately 8:00 a.m. on such day,
and Borrower may request an Advance at such rate only by giving Lender
notice in accordance with Section 4(b)(iv) before 10:00 a.m. on such day;
and (B) between 10:00 a.m. and 12:00 noon shall be based on Lender's IBOR
Rate determined as of approximately 10:00 a.m. on such day, and Borrower
may request an Advance at such rate only by giving Lender notice in
accordance with Section 4(b)(iv) not later than 12:00 noon on such day.
(iv) Whenever Borrower desires to use the IBOR Borrowing Rate option,
Borrower shall give Lender irrevocable notice (either in writing or orally
and promptly confirmed in writing) between 8:00 a.m. and 12:00 noon
(Portland, Oregon time) two (2) Business Days in advance of the desired
effective date of
<PAGE>
such rate. Any oral notice shall be given by, and any written notice or
confirmation of an oral notice shall be signed by, the person(s) authorized
in Section 15 of this note, and shall specify the requested effective date
of the rate, IBOR Interest Period and IBOR Amount, and whether Borrower is
requesting a new Advance at the IBOR Borrowing Rate under a line of credit,
conversion of any portion of the Principal Balance bearing interest at the
Prime Borrowing Rate to an IBOR Amount, or a new IBOR Interest Period for
an outstanding IBOR Amount. Notwithstanding any other term of this note,
Borrower may elect the IBOR Borrowing Rate in the minimum principal amount
of $500,00.00 and in integral multiples of $100,000.00 ; provided, however,
that no more than N/A separate IBOR Interest Periods may be in effect at
any one time.
(v) Borrower may not prepay all or any part of any IBOR Amount(s).
(vi) If at any time Lender's IBOR Rate is unascertainable or
unavailable to Lender or if IBOR Rate loans become unlawful, the option to
select the IBOR Borrowing Rate shall terminate immediately. If the IBOR
Borrowing Rate is then in effect, (A) it shall terminate automatically with
respect to all IBOR Amounts (i) on the last day of each then applicable
IBOR Interest Period, if Lender may lawfully continue to maintain such
loans, or (ii) immediately if Lender may not lawfully continue to maintain
such loans through such day, and (B) subject to Section 11, the Prime
Borrowing Rate automatically shall become effective as to such amounts upon
such termination.
(vii) If at any time after the date hereof (A) any revision in or
adoption of any applicable law, rule, or regulation or in the
interpretation or administration thereof (i) shall subject Lender or its
Eurodollar lending office to any tax, duty, or other charge, or change the
basis of taxation of payments to Lender with respect to any loans bearing
interest based on Lender's IBOR Rate, or (ii) shall impose or modify any
reserve, insurance, special deposit, or similar requirements against assets
of, deposits with or for the account of, or credit extended by Lender or
its Eurodollar lending office, or impose on Lender or its Eurodollar
lending office any other condition affecting any such loans, and (B) the
result of any of the foregoing is (i) to increase the cost to Lender or
making or maintaining any such loans or (ii) to reduce the amount of any
sum receivable under this note by Lender or its Eurodollar lending office,
Borrower shall pay Lender within 15 days after demand by Lender such
additional amount as will compensate Lender for such increased cost or
reduction. The determination hereunder by Lender of such additional amount
shall be conclusive in the absence of manifest error. If Lender demands
compensation under this Section 4(b)(vii), Borrower may upon three (3)
Business Days' notice to Lender pay the accrued interest on all IBOR
Amounts, together with any additional amounts payable under Section
4(b)(viii). Subject to Section 11, upon Borrower's paying such accrued
interest and additional costs, the Prime Borrowing Rate immediately shall
be effective with respect to the unpaid principal balance of such IBOR
Amounts.
(viii) Upon any termination of any IBOR Borrowing Rate (including but
not limited to conversion to another rate) or payment of all or any portion
of any IBOR Amount on a date other than the last day of the then applicable
IBOR Interest Period, including without limitation (A) acceleration under
Section 11 or (B) repayment in response to a notice under Section
4(b)(vii), Borrower shall pay to Lender or demand such amount as Lender
reasonably determines (determined as though 100% of the applicable IBOR
Amount had been funded in the applicable Eurodollar market) is equivalent
to all direct or indirect losses, expenses, liabilities, or reductions in
yield to Lender resulting therefrom, whether incurred in connection with
liquidation or reemployment of funds or otherwise.
(ix) If Borrower chooses the IBOR Borrowing Rate, Borrower shall pay
interest based on such rate, plus any other applicable taxes or charges
hereunder, even though Lender may have obtained the funds loaned to
Borrower from sources other than the applicable Eurodollar market. Lender's
determination of the IBOR Borrowing Rate and any such taxes or charges
shall be conclusive in the absence of manifest error.
(x) Notwithstanding any other term of this note, Borrower may not
select the IBOR Borrowing Rate if an event of default hereunder has
occurred and is continuing.
(xi) Nothing contained in this note, including without limitation the
determination of any IBOR Interest Period or Lender's quotation of any IBOR
Borrowing Rate, shall be construed to prejudice Lender's right, if any, to
decline to make any requested Advance or to require payment on demand.
5. COMPUTATION OF INTEREST. All interest under Section 4 and Section 11
will be computed at the applicable rate based on a 360-day year and applied
to the actual number of days elapsed.
6. PAYMENT SCHEDULE.
(a) PRINCIPAL. Principal shall be paid:
[X] on demand.
[ ] on demand, or if no demand, on _______________________.
[ ] on ___________________________________________________.
[ ] subject to Section 7, in installments of
[ ] ____________________ each, plus accrued interest.
[ ] ____________________ each including accrued interest.
beginning on _________________ and on the same day of each
_______________ thereafter until __________________ when the entire
Principal Balance plus Interest thereon shall be due and payable.
[ ] _________________________________
_________________________________
(b) INTEREST.
(i) Interest on all amounts bearing interest at the Prime Borrowing
Rate shall be paid:
[X] on the first day of October, 1996 and on the same day of
each month thereafter prior to maturity and at maturity.
[ ] at maturity.
[ ] at the time each principal installment is due and at maturity.
[ ] ______________________________________________
______________________________________________
______________________________________________
(ii) Interest on all IBOR Borrowing Rate Amounts shall be paid:
[X] on the last day of the applicable IBOR Interest Period,
and if such IBOR Interest Period is longer than three
months, on the last day of each three month period
occurring during such IBOR Interest Period, and at
maturity.
[ ] on the ___________ day of ______________ and on the same day
of each ___________________ thereafter prior to maturity
and at maturity.
[ ] at maturity.
[ ] at the time each principal installment is due and at maturity.
[ ] ______________________________________________
______________________________________________
<PAGE>
7. CHANGE IN PAYMENT AMOUNT. If the interest rate on this note is subject
to change in accordance with Section 4, the holder of this note may, from
time to time, in holder's sole discretion, increase or decrease the amount
of each of the installments remaining unpaid at the time of each change in
rate to an amount holder in its sole discretion deems necessary to continue
amortizing the Principal Balance at the same rate established by the
installment amounts specified in Section 6(a), whether or not a "balloon"
payment may also be due upon maturity of this note. Holder shall notify the
undersigned of each such change in writing. Whether or not the installment
amount is increased under this Section 7, Borrower understands that, as a
result of increases in the rate of interest in accordance with Section 4,
the final payment due, whether or not a "balloon" payment, shall include
the entire Principal Balance and interest thereon then outstanding, and may
be substantially more than the installment specified in Section 6.
8. ALTERNATE PAYMENT DATE. Notwithstanding any other term of this note, if
in any month there is no day on which a scheduled payment would otherwise
be due (e.g. February 31), such payment shall be paid on the last banking
day of that month.
9. PAYMENT BY AUTOMATIC CHARGE.
[ ] Please automatically deduct the amount of all principal and interest
payments from account number . If there are insufficient funds in the
account to pay the automatic deduction in full, Lender may allow the
account to become overdrawn, or Lender may reverse the automatic deduction.
Borrower will pay all the fees on the account which result from the
automatic deductions, including any overdraft/NSF charges. If for any
reason Lender does not charge the account for a payment, or if an automatic
payment is reversed, the payment is still due according to this note. If
the account is a Money Market Account, the number of withdrawals from that
account is limited as set out in the agreement. Lender may cancel the
automatic deduction at any time in its discretion.
Provided, however, if no account number is entered above, Borrower does not
want to make payments by automatic charge.
10. LENDER'S PRIME RATE. Lender's prime rate is the rate of Interest which
Lender from time to time establishes as its prime rate and is not, for
example, the lowest rate of interest which Lender collects from any
borrower or class of borrowers. When Lender's prime rate is applicable
under Section 4(a) or 11(b), the interest rate hereunder shall be adjusted
without notice effective on the day Lender's prime rate changes, but in no
event shall the rate of interest be higher than allowed by law.
11. DEFAULT.
(a) Without prejudice to any right of Lender to require payment on demand
or to decline to make any requested Advance, each of the following shall be
an event of default: (i) Borrower fails to make any payment when due. (ii)
Borrower fails to perform or comply with any term, covenant or obligation
in this note or any agreement related to this note, or in any other
agreement or loan Borrower has with Lender. (iii) Borrower defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability
to repay this note or perform Borrower's obligations under this note or any
related documents. (iv) Any representation or statement made or furnished
to Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect. (v) Borrower becomes insolvent, a receiver is appointed
for any part of Borrower's property, Borrower makes an assignment for the
benefit of creditors, or any proceeding is commenced either by Borrower or
against borrower under any bankruptcy or insolvency laws. (vi) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien
or security interest. This includes a garnishment of any of Borrower's
accounts with Lender. (vii) Any of the events described in the default
section occurs with respect to any guarantor of this note or any guaranty
of Borrower's indebtedness to Lender ceases to be, or is asserted not to
be, in full force and effect. (viii) Lender in good faith deems itself
insecure. If this note is payable on demand, the inclusion of specific
events of default shall not prejudice Lender's right to require payment on
demand or to decline to make any requested Advance.
(b) Without prejudice to any right of Lender to require payment on demand,
upon the occurrence of an event of default, Lender may declare the entire
unpaid Principal Balance on this note and all accrued unpaid interest
immediately due and payable, without notice. Upon default, including
failure to pay upon final maturity. Lender, at its option, may also, if
permitted under applicable law, increase the interest rate on this note to
a rate equal to the Prime Borrowing Rate plus 5%. The interest rate will
not exceed the maximum rate permitted by applicable law. In addition, if
any payment of principal or interest is 19 or more days past due, Borrower
will be charged a late charge of 5% of the delinquent payment.
12. EVIDENCE OF PRINCIPAL BALANCE; PAYMENT ON DEMAND. Holder's records
shall, at any time, be conclusive evidence of the unpaid Principal Balance
and interest owing on this note. Notwithstanding any other provisions of
this note, in the event holder makes Advances hereunder which result in an
unpaid Principal Balance on this note which at any time exceeds the maximum
amount specified in Section 2, Borrower agrees that all such Advances, with
interest, shall be payable on demand.
13. LINE OF CREDIT PROVISIONS. If the type of credit indicated in Section 1
is a revolving line of credit or a non-revolving line of credit, Borrower
agrees that Lender is under no obligation and has not committed to make any
Advances hereunder. Each Advance hereunder shall be made at the sole option
of Lender.
14. DEMAND NOTE. If this note is payable on demand, Borrower acknowledges
and agrees that (a) Lender is entitled to demand Borrower's immediate
payment in full of all amounts owing hereunder and (b) neither anything to
the contrary contained herein or in any other loan documents (including but
not limited to, provisions relating to defaults, rights of cure, default
rate of interest, installment payments, late charges, periodic review of
Borrower's financial condition, and covenants) nor any act of Lender
pursuant to any such provisions shall limit or impair Lender's right or
ability to require Borrower's payment in full of all amounts owing
hereunder immediately upon Lender's demand.
15. REQUESTS FOR ADVANCES.
(a) Any Advance may be made or interest rate option selected upon the
request of Borrower (if an individual), any of the undersigned (if Borrower
consists of more than one individual), any person or persons authorized in
subsection (b) of this Section 15, and any person or persons otherwise
authorized to execute and deliver promissory notes to Lender on behalf of
Borrower.
(b) Borrower hereby authorizes any one of the following individuals to
request Advances and to select interest rate options:
Glenford J. Meyers
- -----------------------------
Brian V. Turner
- -----------------------------
unless Lender is otherwise instructed in writing.
(c) All Advances made pursuant to this Section 15 shall be disbursed by
deposit directly to Borrower's account number 010-0218-205 at Main branch
of Lender, or by cashier's check issued to Borrower.
(d) Borrower agrees that Lender shall have no obligation to verify the
identity of any person making any request pursuant to Section 15, and
Borrower assumes all risks of the validity and authorization of such
requests. In consideration of Lender agreeing, at its sole discretion, to
make Advances upon such requests, Borrower promises to pay holder, in
accordance with the provisions of this note, the Principal Balance together
with interest thereon and other sums due hereunder, although any Advances
may have been requested by a person or persons not authorized to do so.
16. PERIODIC REVIEW. Lender will review Borrower's credit accommodations
periodically. At the time of the review, Borrower will furnish lender with
any additional information regarding Borrower's financial condition and
business operations that Lender requests. This information may include but
is not limited to, financial statements, tax returns, lists of assets and
liabilities, agings of receivables and payable, inventory schedules,
budgets and forecasts. If upon
<PAGE>
review, Lender, in its sole discretion, determines that there has been a
material adverse change in Borrower's financial condition, Borrower will be
in default. Upon default, Lender shall have all rights specified herein.
17. NOTICES. Any notice hereunder may be given by ordinary mail, postage
paid and addressed to Borrower at the last known address of Borrower as
shown on holder's records. If Borrower consists of more than one person,
notification of any of said persons shall be complete notification of all.
Notice may be given either before or reasonably soon after the effective
date of the change.
18. ATTORNEY FEES. Whether or not litigation or arbitration is commenced,
Borrower promises to pay all costs of collecting overdue amounts. Without
limiting the foregoing, in the event that holder consults an attorney
regarding the enforcement of any of its rights under this note or any
document securing the same, or if this note is placed in the hands of an
attorney for collection or if suit or litigation is brought to enforce this
note or any document securing the same, Borrower promises to pay all costs
thereof including such additional sums as the court or arbitrator(s) may
adjudge reasonable as attorney fees, including without limitation, costs
and attorney fees incurred in any appellate court, in any proceeding under
the bankruptcy code, or in any receivership and post-judgment attorney fees
incurred in enforcing any judgment.
19. WAIVERS; CONSENT. Each party hereto, whether maker, co-maker, guarantor
or otherwise, waives diligence, demand, presentment for payment, notice of
non-payment, protest and notice of protest and waives all defenses based on
suretyship or impairment of collateral. Without notice to Borrower and
without diminishing or affecting Lender's rights or Borrower's obligations
hereunder, Lender may deal in any manner with any person who at any time is
liable for, or provides any real or personal property collateral for, any
indebtedness of Borrower to Lender, including the indebtedness evidenced by
this note. Without limiting the foregoing, Lender may, in its sole
discretion: (a) make secured or unsecured loans to Borrower and agree to
any number of waivers, modifications, extensions and renewals of any length
of such loans, including the loan evidenced by this note; (b) impair,
release (with or without substitution of new collateral), fail to perfect a
security interest in, fail to preserve the value of, fail to dispose of in
accordance with applicable law, any collateral provided by any person; (c)
sue, fail to sue, agree not to sue, release, and settle or compromise with,
any person.
20. JOINT AND SEVERAL LIABILITY. All undertakings of the undersigned
Borrowers are joint and several and are binding upon any marital community
of which any of the undersigned are members. Holder's rights and remedies
under this note shall be cumulative.
21. ARBITRATION.
(a) Either Lender or Borrower may require that all disputes, claims,
counterclaims and defenses, including those based on or arising from any
alleged tort ("Claims") relating in any way to this note or any transaction
of which this note is a part (the "Loan"), be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and Title 9 of the U.S. Code. All Claims
will be subject to the statutes of limitation applicable if they were
litigated. This provision is void if the Loan, at the time of the proposed
submission to arbitration, is secured by real property located outside of
Oregon or Washington, or if the effect of the arbitration procedure (as
opposed to any Claims of Borrower) would be to materially impair Lender's
ability to realize on any collateral securing the Loan.
(b) If arbitration occurs and each party's Claim is less than $100,000, one
neutral arbitrator will decide all issues; if any party's Claim is $100,000
or more, three neutral arbitrators will decide all issues. All arbitrators
will be active Oregon State Bar members in good standing. All arbitration
hearings will be held in Portland, Oregon. In addition to all other powers,
the arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award may be entered in any
court with jurisdiction.
(c) If either party institutes any judicial proceeding relating to the
Loan, such action shall not be a waiver of the right to submit any Claim to
arbitration. In addition, each has the right before, during and after any
arbitration to exercise any number of the following remedies, in any order
or concurrently: (i) setoff; (ii) self-help repossession; (iii) judicial or
non-judicial foreclosure against real or personal property collateral; and
(iv) provisional remedies, including injunction, appointment of receiver,
attachment, claim and delivery and replevin.
22. GOVERNING LAW.
This note shall be governed by and construed and enforced in accordance
with the laws of the State of Oregon without regard to conflicts of law
principles; provided, however, that to the extent that Lender has greater
rights or remedies under Federal law, this provision shall not be deemed to
deprive Lender of such rights and remedies as may be available under
Federal law.
23. DISCLOSURE.
BY OREGON STATUTE (ORS 41.580), THE FOLLOWING DISCLOSURE IS REQUIRED:
- ---------------------------------------------------------------------
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDERS
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE
SIGNED BY THE LENDER TO BE ENFORCEABLE.
EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THIS DOCUMENT.
RADISYS CORPORATION
- -------------------------------------------------------
Borrower Name (Corporation, Partnership or other Entity
- -------------------------------------------------------
By Title
- --------------------------------------------------------------------------------
For valuable consideration, Lender agrees to the terms of the arbitration
provision set forth in this note.
Lender Name: UNITED STATES NATIONAL BANK OF OREGON
--------------------------------------
By:
----------------------------------
Title:
-------------------------------
Date:
-------------------------------
<PAGE>
EXHIBIT 'A'
This exhibit is attached and made a part of that certain Promissory Note
for $10,000,000.00 dated SEPTEMBER 12,1996 from RADISYS CORPORATION to
United States National Bank of Oregon.
INCENTIVE PRICING MATRIX
------------------------
Pricing to be governed by the Borrower's Debt to Worth and will be reviewed
quarterly, as expressed in the following matrix.
DEBT-TO-WORTH PRIME SPREAD IBOR SPREAD
- ------------- ------------ -----------
less than or equal to .25:1 -0- 125 basis points
less than or equal to .40:1 -0- 150 basis points
less than or equal to .65:1 -0- 175 basis points
greater than .65:1 -0- 200 basis points
RADISYS CORPORATION
- -------------------
By: ______________________________
Title: ___________________________
UNITED STATES NATIONAL BANK OF OREGON
- -------------------------------------
By: ______________________________
Title: ___________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS 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-END> SEP-30-1996
<CASH> 26,388
<SECURITIES> 0
<RECEIVABLES> 15,044
<ALLOWANCES> (699)
<INVENTORY> 12,089
<CURRENT-ASSETS> 59,887
<PP&E> 9,250
<DEPRECIATION> 5,171
<TOTAL-ASSETS> 69,735
<CURRENT-LIABILITIES> 15,585
<BONDS> 0
0
0
<COMMON> 44,400
<OTHER-SE> 8,415
<TOTAL-LIABILITY-AND-EQUITY> 69,735
<SALES> 53,558
<TOTAL-REVENUES> 53,558
<CGS> 31,372
<TOTAL-COSTS> 13,846
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 812
<INCOME-PRETAX> 9,152
<INCOME-TAX> 3,228
<INCOME-CONTINUING> 5,924
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,924
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
</TABLE>
