<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 28, 1996
---------------------------------------
Commission file number: 1-11908
--------------------------------
Department 56, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3684956
---------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Village Place, 6436 City West Parkway, Eden Prairie, MN 55344
--------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(612) 944-5600
----------------------------------------------------
(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 reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ -----
As of September 28, 1996, 21,571,187 shares of the registrant's common
stock, par value $.01 per share, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEPARTMENT 56, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS)
ASSETS
SEPTEMBER 28, DECEMBER 30,
1996 1995
------------ -------------
CURRENT ASSETS:
Cash and cash equivalents $ 3,724 $ 7,805
Accounts receivable, net 127,971 34,271
Inventories 21,733 29,059
Other current assets 7,519 6,544
----------- ------------
Total current assets 160,947 77,679
PROPERTY AND EQUIPMENT, net 12,195 12,445
GOODWILL AND TRADEMARKS, net 164,762 168,195
OTHER ASSETS 575 766
------------- -------------
$ 338,479 $ 259,085
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit $ 29,371 $ -
Current portion of long-term debt 20,000 20,000
Accounts payable 5,673 6,599
Other current liabilities 23,600 15,065
----------- -----------
Total current liabilities 78,644 41,664
DEFERRED TAXES 7,453 7,135
LONG-TERM DEBT 60,000 60,000
STOCKHOLDERS' EQUITY 192,382 150,286
---------- -----------
$ 338,479 $ 259,085
---------- ----------
---------- ----------
See notes to condensed consolidated financial statements.
<PAGE>
DEPARTMENT 56, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER QUARTER
ENDED ENDED
SEPTEMBER 28, SEPTEMBER 30,
1996 1995
---- ----
NET SALES $ 60,210 $ 77,033
COST OF SALES 25,408 33,461
--------- ----------
Gross profit 34,802 43,572
OPERATING EXPENSES:
Selling, general, and administrative 11,679 11,842
Amortization of goodwill and trademarks 1,144 1,144
Recovery of import duties (218) (2,819)
---------- ----------
Total operating expenses 12,605 10,167
---------- ----------
INCOME FROM OPERATIONS 22,197 33,405
OTHER EXPENSE (INCOME)
Interest expense 1,744 2,761
Other, net (41) (11)
---------- ----------
INCOME BEFORE INCOME TAXES 20,494 30,655
PROVISION FOR INCOME TAXES 8,198 12,415
---------- ----------
NET INCOME $ 12,296 $ 18,240
---------- -----------
---------- -----------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ 0.57 $ 0.84
---------- -----------
---------- -----------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 21,748 21,783
---------- -----------
---------- -----------
See notes to condensed consolidated financial statements.
<PAGE>
DEPARTMENT 56, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
39 WEEKS 39 WEEKS
ENDED ENDED
SEPTEMBER 28, SEPTEMBER 30,
1996 1995
---- ----
NET SALES $ 194,483 $ 204,836
COST OF SALES 81,559 89,183
---------- ----------
Gross profit 112,924 115,653
OPERATING EXPENSES:
Selling, general, and administrative 36,184 33,979
Amortization of goodwill and trademarks 3,432 3,433
Recovery of import duties (453) (2,819)
---------- -----------
Total operating expenses 39,163 34,593
---------- -----------
INCOME FROM OPERATIONS 73,761 81,060
OTHER EXPENSE (INCOME)
Interest expense 4,590 7,244
Other, net (372) (245)
---------- -----------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 69,543 74,061
PROVISION FOR INCOME TAXES 27,817 29,995
---------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 41,726 44,066
EXTRAORDINARY CHARGE DUE TO REFINANCING
OF DEBT - 1,312
---------- -----------
NET INCOME $ 41,726 $ 42,754
---------- -----------
---------- -----------
INCOME BEFORE EXTRAORDINARY ITEM
PER COMMON AND COMMON EQUIVALENT SHARE $ 1.92 $ 2.03
---------- -----------
---------- -----------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ 1.92 $ 1.97
---------- -----------
---------- -----------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 21,757 21,736
---------- -----------
---------- -----------
See notes to condensed consolidated financial statements.
<PAGE>
DEPARTMENT 56, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
39 WEEKS 39 WEEKS
ENDED ENDED
SEPTEMBER 28, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES-
Net cash used in operating activities $ (32,736) $ (47,028)
CASH FLOWS FROM INVESTING ACTIVITIES-
Purchases of property and equipment (962) (1,443)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 247 833
Net borrowings under revolving credit facility 29,370 66,500
Proceeds from issuance of term loan - 100,000
Principal payments on long-term debt - (115,500)
------------- -------------
Net cash provided by financing activities 29,617 51,833
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,081) 3,362
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,805 2,180
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,724 $ 5,542
------------- -------------
------------- -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for:
Interest $ 4,111 $ 7,086
Income taxes $ 22,740 $ 23,788
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
DEPARTMENT 56, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheet as of December 30,
1995 was derived from the audited consolidated balances as of that date. The
remaining accompanying condensed consolidated financial statements are unaudited
and, in the opinion of management, include all adjustments necessary for a fair
presentation. Such adjustments were of a normal recurring nature.
The results of operations for the quarter ended September 28, 1996 are not
necessarily indicative of the results for the full fiscal year.
It is suggested that these financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the 1995
Annual Report to Stockholders and Annual Report on Form 10-K filed by Department
56, Inc. (the "Company") with the Securities and Exchange Commission.
2. EXTRAORDINARY ITEM
In February 1995, the principal operating subsidiary of the Company, D 56,
Inc., entered into a new credit agreement providing a $100,000 term loan and a
$90,000 revolving line of credit. The Company used the proceeds of the term
loan combined with $8,000 of the revolving line of credit to refinance its long-
term debt. In connection therewith, the Company recorded an extraordinary
charge of $1,312, net of a tax benefit of $893.
3. INCOME PER SHARE
Net income and income before extraordinary item per common and common
equivalent share are based on the weighted average of common and common
equivalent shares outstanding during the period. Common equivalent shares
consist of the Company's common stock issuable upon exercise of common stock
options, determined using the treasury stock method.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 28, 1996 TO
THE QUARTER ENDED SEPTEMBER 30, 1995.
<TABLE>
<CAPTION>
Quarter Quarter
Ended Ended
September 28, 1996 September 30,1995
------------------- --------------------
(Dollars in millions)
% of % of
Dollars Net Sales Dollars Net Sales
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Net sales $60.2 100 % $77.0 100 %
Gross profit 34.8 58 43.6 57
Selling, general, and administrative expenses 11.7 19 11.8 15
Amortization of goodwill and trademarks 1.1 2 1.1 1
Recovery of import duties (.2) - (2.8) (4)
Income from operations 22.2 37 33.4 43
Interest expense 1.7 3 2.8 4
Other income, net - - - -
Income before income taxes 20.5 34 30.7 40
Provision for income taxes 8.2 14 12.4 16
Net income 12.3 20 18.2 24
</TABLE>
NET SALES. Net sales decreased $16.8 million, or 22%, from $77.0 million
in the third quarter of 1995 to $60.2 million in the third quarter of 1996
principally as a result of a decrease in volume. Sales of the Company's
Village Series products decreased $16.4 million, or 30%, while sales of General
Giftware products decreased $.4 million, or 2%, between the two periods.
Village Series and General Giftware products represented 63% and 37%,
respectively, of the Company's net sales during the third quarter.
<PAGE>
GROSS PROFIT. Gross profit decreased $8.8 million, or 20%, between the
third quarter of 1995 and the third quarter of 1996. The decrease in gross
profit was principally due to the decrease in sales volume. Gross profit as a
percentage of sales increased from 57% in the third quarter of 1995 to 58% in
the third quarter of 1996 principally due to increased manufacturing
efficiencies and lower volume discounts as a percent of sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $.2 million, or 1%, between the third quarter
of 1995 and the third quarter of 1996. Selling, general and administrative
expenses as a percent of sales increased from 15% in the third quarter of 1995
to 19% in the third quarter of 1996 principally due to increased marketing
expenses and certain other general and administrative expenses which, because of
their fixed nature, did not decrease directly with sales.
INCOME FROM OPERATIONS. Income from operations decreased $11.2 million,
or 34%, between the third quarter of 1995 and the third quarter of 1996.
Income from operations decreased from 43% to 37% of net sales due to factors
described above.
INTEREST EXPENSE. Interest expense decreased $1 million, or 37%, between
the third quarter of 1995 and the third quarter of 1996 principally due to the
payment of $33 million of debt during 1995.
PROVISION FOR INCOME TAXES. The effective tax rate was 40.5% during the
third quarter of 1995 and 40.0% during the third quarter of 1996.
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF RESULTS OF OPERATIONS FOR THE 39 WEEKS ENDED SEPTEMBER 28, 1996 TO
THE 39 WEEKS ENDED SEPTEMBER 30, 1995.
<TABLE>
<CAPTION>
39 Weeks 39 Weeks
Ended Ended
September 28, 1996 September 30,1995
------------------ ------------------
(Dollars in millions)
% of % of
Dollars Net Sales Dollars Net Sales
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Net sales $194.5 100 % $204.8 100 %
Gross profit 112.9 58 115.7 56
Selling, general, and administrative expenses 36.2 19 34.0 17
Amortization of goodwill and trademarks 3.4 2 3.4 2
Recovery of import duties (.5) - (2.8) (1)
Income from operations 73.8 38 81.1 40
Interest expense 4.6 2 7.2 4
Other income, net (0.4) - (0.2) -
Income before income taxes
and extraordinary item 69.5 36 74.1 36
Provision for income taxes 27.8 14 30.0 15
Income before extraordinary item 41.7 21 44.1 22
Extraordinary charge - - 1.3 1
Net income 41.7 21 42.8 21
</TABLE>
NET SALES. Net sales decreased $10.4 million, or 5%, from $204.8 million
in 1995 to $194.5 million in 1996 principally as a result of a decrease in
volume. Sales of the Company's Village Series products decreased $14.8 million,
or 10%, while sales of General Giftware products increased $4.5 million, or 7%,
between the two periods. Village Series and General Giftware products
represented 67% and 33%, respectively, of the Company's net sales in 1996.
<PAGE>
GROSS PROFIT. Gross profit decreased $2.7 million, or 2%, between 1995 and
1996. The decrease in gross profit was principally due to the decrease in sales
volume. Gross profit as a percentage of sales increased from 56% in 1995 to 58%
in 1996 principally due to increased manufacturing efficiencies, lower volume
discounts as a percent of sales and lower import duties from the implementation
of GATT.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $2.2 million, or 6%, between 1995 and 1996.
Selling, general and administrative expenses as a percent of sales increased
from 17% in 1995 to 19% in 1996 principally due to increased marketing expenses
and certain other general and administrative expenses which, because of their
fixed nature, did not decrease directly with sales.
INCOME FROM OPERATIONS. Income from operations decreased $7.3 million, or
9%, between 1995 and 1996. Income from operations decreased from 40% to 38% of
net sales due to the factors described above.
INTEREST EXPENSE. Interest expense decreased $2.7 million, or 37%,
between 1995 and 1996 principally due to the payment of $33 million of debt
during 1995 and a decrease in interest rates.
PROVISION FOR INCOME TAXES. The effective income tax rate was 40.5% and
40.0% during 1995 and 1996, respectively.
EXTRAORDINARY CHARGE. In February 1995, D 56, Inc. entered into a new
credit agreement providing for a $100 million term loan and a $90 million
revolving line of credit. The Company used the proceeds of the term loan
combined with $8 million of the revolving line of credit to refinance its long-
term debt. In connection therewith, the Company recorded an extraordinary
charge of $1.3 million, net of a tax benefit of $0.9 million, or $0.06 per
share.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The principal sources of the Company's liquidity are its available cash
balances, internally generated cash flow and a revolving credit agreement which
provides letters of credit, bankers' acceptances and, if required, short-term
seasonal borrowings. The Company believes that these sources of liquidity will
be more than adequate to fund operations, capital expenditures and required
principal payments on its term loan for the next 12 months.
The Company maintains a revolving credit agreement providing for borrowings
of up to $90 million (subject to certain limitations) including letters of
credit and bankers' acceptances. At September 28, 1996, the Company had $29.4
million of outstanding loans and acceptances and $1.7 million of outstanding
letters of credit under its revolving line of credit. The available revolving
line of credit commitment was $58.8 million.
Consistent with customary practice in the giftware industry, the Company
offers extended accounts receivable terms to many of its customers. This
practice has typically created significant working capital requirements in the
second and third quarters which the Company has generally financed with net cash
balances, internally generated cash flow and seasonal borrowings. The Company's
net cash balances peak in December, following the collection of accounts
receivable with extended payment terms.
Accounts receivable increased $1.2 million from $126.8 million at September
30, 1995 to $128.0 million at September 28, 1996 principally due to a higher
percentage of 1996 sales qualifying for extended terms.
FOREIGN EXCHANGE
The dollar value of the Company's assets abroad is not significant. The
Company's sales are denominated in United States dollars and, as a result, are
not subject to changes in exchange rates.
The Company imports a substantial majority of its products from
manufacturers located in the Pacific Rim, primarily Taiwan (Republic of
China), The People's Republic of China and The Philippines. The Company's
purchases from manufacturers located in The People's Republic of China and
The Philippines are denominated in United States dollars. The Company's costs
could be adversely affected if the New Taiwan Dollar (or the currencies of
other countries in which the Company conducts business) appreciates
significantly relative to the United States dollar. The Company, from time
to time, will enter into foreign exchange contracts or build currency
deposits as a partial hedge against currency fluctuations. The Company
intends to manage foreign exchange risks to the extent possible and take
appropriate action where warranted.
At September 28, 1996 the Company had $6.4 million of foreign exchange
contracts outstanding to hedge 1996 Taiwan dollar denominated inventory
purchases. These contracts mature during October and November of 1996 at a rate
of approximately 27.00 NT$/US$.
<PAGE>
EFFECT OF INFLATION
The Company continually attempts to minimize any effect of inflation on
earnings by controlling its operating costs and selling prices. During the past
few years, the rate of inflation has not had a material impact on the Company's
results of operations.
SEASONALITY AND CUSTOMER ORDERS
The Company generally records its highest level of sales during the second
and third quarters as retailers stock merchandise in anticipation of the holiday
season. The Company can also experience fluctuations in quarterly sales and
related net income compared with the prior year due to timing of receipt of
product from suppliers and subsequent shipment of product from the Company to
customers.
CUSTOMER ORDERS ENTERED (1)
(IN MILLIONS)
1st 2nd 3rd 4th
Qtr Qtr Qtr Qtr Total
---- --- --- --- -----
1994 $181 $27 $20 $9 $237
1995 210 30 27 9 276
1996 178 35 28 - -
(1) Customer orders entered are domestic orders received and approved by
the Company, subject to cancellation for various reasons, including credit
considerations, inventory shortages and customer requests.
Historically, principally due to the timing of trade shows early in the
calendar year and the limited supply of the Company's products, the Company has
received the majority of its orders in the first quarter of each year. The
Company entered 76% of its total annual customer orders during the first quarter
of both 1995 and 1994. Cancellations were approximately 7% and 5% of total
annual orders in 1995 and 1994, respectively.
The Company shipped and recorded as net sales approximately 91% and 92% of
its annual customer orders in 1995 and 1994, respectively. Orders not shipped
in a particular year, net of cancellations, returns, allowances and cash
discounts, are carried into backlog for the following year and have historically
been Easter orders. Domestic unfilled orders were $44.5 million as of September
28, 1996, as compared to $57.5 million as of September 30, 1995.
Through the third quarter of 1996, customer orders entered decreased 10% as
compared to the same period for 1995. Customer orders entered for Village
Series products and General Giftware products decreased 11% and 8%,
respectively.
<PAGE>
FORWARD-LOOKING STATEMENT CONCERNING 1996 EPS
The Company forecasts that earnings per share (EPS) for the current fiscal year
will approximate or be slightly lower than 1995 fiscal year EPS (excluding
import duty recoveries and extraordinary refinancing charges). This forecast is
a "forward-looking statement" within the meaning of The Private Securities
Litigation Reform Act of 1995, and involves risks and uncertainties. Among
others, this forecast is based on the following assumptions:
- - Order input for the 1996 fourth quarter will increase over 1995 fourth
quarter order input for each product category at the same rate by which
order input for the 1996 third quarter increased over 1995 third quarter
order input.
- - Order cancellation rates for the 1996 fourth quarter will remain stable or
improve relative to those rates for the current year through the end of
the third quarter.
- - Product received from manufacturers will be of sufficient quantity, mix
and promptness so as to satisfy new orders as well as the backlog of
orders which are to be shipped in the current year.
- - The gross margin rate will be maintained at the level of the current
year through the end of the third quarter.
- - Selling, general and administrative expenses (SG&A) for the 1996 fourth
quarter will not exceed the amount of SG&A for the 1995 fourth quarter.
- - The regulatory and trade environment will remain stable.
Actual results may vary materially from this forecast and the assumptions upon
which it is based. This forward-looking statement speaks as of the date of this
report only, and the Company undertakes no obligation to publish or update any
forward-looking statements in the future.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 11.1 Computation of net income and income before extraordinary
item per share.
(b) 27 Financial Data Schedule.
<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.
DEPARTMENT 56, INC.
Date: October 22, 1996 /s/Susan Engel
----------------
Susan Engel
President and Chief Operating Officer
Date: October 22, 1996 /s/Timothy J. Schugel
---------------------
Timothy J. Schugel
Vice President - Finance and Principal Accounting
Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT EXHIBIT PAGE
NUMBER NAME NUMBER
------ ---- ------
11.1 Computation of net income and income before
extraordinary item per share.
27 Financial Data Schedule
<PAGE>
Exhibit 11.1
DEPARTMENT 56, INC.
COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Quarter Quarter
Ended Ended
September 28, September 30,
1996 1995
---- ----
<S> <C> <C>
PRIMARY:
Net Income $12,296 $18,240
------- -------
------- -------
Weighted average number of common shares outstanding 21,564 21,541
The number of shares resulting from the assumed
exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from such exercise, using the average
market price during the period 184 242
------ -------
Weighted average number of common and
common equivalent shares 21,748 21,783
------ ------
------ ------
Net Income per Common and
Common Equivalent Share $0.57 $0.84
----- -----
----- -----
FULLY DILUTED:
Net Income $12,296 $18,240
------- -------
------- -------
Weighted average number of common shares outstanding 21,564 21,541
The number of shares resulting from the assumed
exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from such exercise, using the greater
of average market price during the period or period-
end market price 203 266
------ -------
Weighted average number of common and
common equivalent shares 21,767 21,807
------ ------
------ ------
Fully Diluted Net Income per Common and
Common Equivalent Share $0.56 $0.84
----- -----
----- -----
</TABLE>
<PAGE>
DEPARTMENT 56, INC.
COMPUTATION OF NET INCOME AND INCOME BEFORE EXTRAORDINARY ITEM PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
39 Weeks 39 Weeks
Ended Ended
September 28, September 30,
1996 1995
---- ----
<S> <C> <C>
PRIMARY:
Income Before Extraordinary Item $41,726 $44,066
------- -------
------- -------
Net Income $41,726 $42,754
------- -------
------- -------
Weighted average number of common shares outstanding 21,554 21,524
The number of shares resulting from the assumed
exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from such exercise, using the average
market price during the period 203 212
------ ------
Weighted average number of common and
common equivalent shares 21,757 21,736
------ ------
------ ------
Income Before Extraordinary Item
per Common and Common Equivalent Share $1.92 $2.03
----- ------
----- ------
Net Income per Common and
Common Equivalent Share $1.92 $1.97
----- -----
----- -----
FULLY DILUTED:
Income Before Extraordinary Item $41,726 $44,066
------- -------
------- -------
Net Income $41,726 $42,754
------- -------
------- -------
Weighted average number of common shares outstanding 21,554 21,524
The number of shares resulting from the assumed
exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from such exercise, using the greater
of average market price during the period or period-
end market price 203 260
--- ---
Weighted average number of common and
common equivalent shares 21,757 21,784
------ -------
------ -------
Fully Diluted Income Before Extraordinary Item
per Common and Common Equivalent Share $1.92 $2.02
----- -----
----- -----
Fully Diluted Net Income per Common and
Common Equivalent Share $1.92 $1.96
----- -----
----- -----
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 3,724
<SECURITIES> 0
<RECEIVABLES> 127,971
<ALLOWANCES> 0
<INVENTORY> 21,733
<CURRENT-ASSETS> 160,947
<PP&E> 12,195
<DEPRECIATION> 0
<TOTAL-ASSETS> 338,479
<CURRENT-LIABILITIES> 78,644
<BONDS> 60,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 338,479
<SALES> 194,483
<TOTAL-REVENUES> 194,483
<CGS> 81,559
<TOTAL-COSTS> 81,559
<OTHER-EXPENSES> 39,163
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,590
<INCOME-PRETAX> 69,543
<INCOME-TAX> 27,817
<INCOME-CONTINUING> 41,726
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,726
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.92
</TABLE>
