<PAGE> 1
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UNITED STATES
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 Quarterly Period Ended June 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: 0-23686
PC SERVICE SOURCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1703687
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2350 VALLEY VIEW LANE, DALLAS, TEXAS 75234
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(214) 406-8583
--------------
(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 July 31, 1996, there were 5,744,779 shares of the registrant's common
stock outstanding.
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PC SERVICE SOURCE, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements .................................... 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ........... 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ....................................... 10
Item 4. Submission of Matters to a Vote of Security Holders ..... 10
Item 6. Exhibits and Reports on Form 8-K ........................ 10
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PC SERVICE SOURCE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 4,856 $ 833
Accounts receivable, net ............................ 12,552 10,251
Inventories ......................................... 18,351 13,202
Deferred income taxes ............................... 1,235 1,322
Income taxes receivable ............................. -- 80
Other ............................................... 994 712
------- -------
Total current assets ......................... 37,988 26,400
Property and equipment, net ........................... 8,287 6,453
Other noncurrent assets ............................... 297 274
------- -------
Total Assets ........................................ $46,572 $33,127
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 7,873 $ 8,876
Accrued liabilities ................................. 2,605 1,894
Current installments of obligations
under capital leases ............................. 646 320
Income taxes payable ................................ 651 --
------- -------
Total current liabilities .................... 11,775 11,090
------- -------
Long-term debt ........................................ 2,662 10,165
Deferred income taxes ................................. 419 269
Stockholders' equity .................................. 31,716 11,603
------- -------
Total Liabilities and Stockholders' Equity .......... $46,572 $33,127
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
PC SERVICE SOURCE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues ................................ $ 26,786 $ 15,274 $ 53,067 $ 32,056
Cost of revenues ............................ 18,470 11,102 37,178 23,258
-------- -------- -------- --------
Gross margin .............................. 8,316 4,172 15,889 8,798
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative ....... 6,368 4,357 12,237 7,758
Depreciation and amortization ............. 498 440 932 733
-------- -------- -------- --------
Total operating expenses ................ 6,866 4,797 13,169 8,491
-------- -------- -------- --------
Earnings (loss) from operations ......... 1,450 (625) 2,720 307
Interest expense, net ....................... 242 75 471 82
-------- -------- -------- --------
Earnings (loss) before income taxes ..... 1,208 (700) 2,249 225
Income taxes (benefit) ...................... 449 (266) 836 95
-------- -------- -------- --------
Net earnings (loss) ......................... $ 759 $ (434) $ 1,413 $ 130
======== ======== ======== ========
Earnings (loss) per common share ............ $ .16 $ (.11) $ .30 $ .03
======== ======== ======== ========
Weighted average common shares outstanding .. 4,850 3,893 4,634 4,411
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
PC SERVICE SOURCE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings ........................................ $ 1,413 $ 130
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation and amortization ................... 932 733
Deferred income taxes ........................... 237 153
Loss incurred on terminated supply agreement .... -- 664
Other, net ...................................... (48) --
Changes in current assets and liabilities:
Accounts receivable ............................. (2,301) (3,134)
Inventories ..................................... (5,149) (3,222)
Other current assets ............................ (257) (738)
Income taxes .................................... 731 --
Payable to Intelogic Trace ...................... -- (1,200)
Accounts payable ................................ (1,003) 2,771
Accrued liabilities ............................. 711 362
-------- --------
Net cash used in operating activities ....... (4,734) (3,481)
-------- --------
Cash flows from investing activities:
Capital expenditures ................................ (809) (3,430)
-------- --------
Net cash used in investing activities ........ (809) (3,430)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock .............. 18,521 --
Proceeds from exercise of stock options ............. 155 --
Net long-term debt borrowings (repayments) .......... (8,934) 5,159
Principal payments under capital lease obligation ... (176) (101)
-------- --------
Net cash provided by financing activities .... 9,566 5,058
-------- --------
Net increase (decrease) in cash and cash equivalents .. 4,023 (1,853)
Cash and cash equivalents at beginning of period ...... 833 2,332
-------- --------
Cash and cash equivalents at end of period ............ $ 4,856 $ 479
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
PC SERVICE SOURCE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) GENERAL
These condensed interim consolidated financial statements, which include
the accounts of PC Service Source, Inc. ("PCSS") and Cyclix Engineering
Corporation ("Cyclix"), a majority-owned subsidiary of PCSS (Cyclix and
PCSS are hereinafter collectively referred to as the "Company"), should be
read in conjunction with the consolidated financial statements and the
summary of significant accounting policies and notes thereto included in
the Company's 1995 Annual Report on Form 10-K. All significant
intercompany balances and transactions have been eliminated in
consolidation. The information furnished is unaudited but reflects all
adjustments, consisting only of normal recurring accruals, which are, in
the opinion of management, necessary to present a fair statement of the
results for these interim periods. Interim results are not necessarily
indicative of results expected for the full year. Certain prior year
information has been reclassified to conform to the current year
presentation.
(2) LONG-TERM DEBT
Long-term debt (in thousands) consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Revolving bank credit facility .............. $ -- $ 8,934
Obligations under capital leases ............ 3,308 1,551
------- -------
3,308 10,485
Less current installments of obligations
under capital leases ...................... 646 320
------- -------
Total long-term debt ........................ $ 2,662 $10,165
======= =======
</TABLE>
(3) STOCKHOLDERS' EQUITY
In connection with a June 1996 offering of the Company's common stock, par
value $.01 per share (the "Common Stock"), the Company issued 1,437,500
shares of Common Stock to the public. The transaction resulted in net
proceeds to the Company and an increase in stockholders' equity of $18.5
million. Also in connection with that offering, CompuCom Systems, Inc.
exercised a warrant to purchase up to 250,000 shares of Common Stock.
Pursuant to the net exercise provision of the warrant, 209,821 shares were
issued and are outstanding. Also during the second quarter, a portion of
the warrants to acquire 100,000 shares of Common Stock that were issued to
representatives of the underwriters of the Company's 1994 initial public
offering were exercised. Pursuant to the net exercise provisions of those
warrants, 7,623 shares were issued and are outstanding and 64,809 shares of
Common Stock are available to be acquired under the terms of the warrants
as of June 30, 1996.
4
<PAGE> 7
(4) SUPPLEMENTAL CASH FLOW INFORMATION
During the first six months of 1996 and 1995, respectively, the Company
made interest payments of $458,000 and $83,000, related to borrowings under
its line of credit and its capital lease obligations, and had cash receipts
for interest income of $13,000 and $38,000. The Company had a net tax
refund of $150,000 for the six months ended June 30, 1996, compared with
tax payments of $684,000 in 1995. Also during the first six months of 1996,
the Company acquired $1.9 million of assets through non-cash capital lease
obligations.
5
<PAGE> 8
PC SERVICE SOURCE, INC. AND SUBSIDIARY
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table displays the Company's statements of operations as a
percentage of net revenues:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues ................................ 100.0% 100.0% 100.0% 100.0%
Cost of revenues ............................ 69.0 72.7 70.1 72.5
----- ----- ----- -----
Gross margin ............................ 31.0 27.3 29.9 27.5
----- ----- ----- -----
Operating expenses:
Selling, general and administrative ..... 23.7 28.5 23.0 24.2
Depreciation and amortization ........... 1.9 2.9 1.8 2.3
----- ----- ----- -----
Total operating expenses ........... 25.6 31.4 24.8 26.5
----- ----- ----- -----
Earnings (loss) from operations .... 5.4 (4.1) 5.1 1.0
Interest expense, net ....................... .9 .5 .9 .3
----- ----- ----- -----
Earnings (loss) before income taxes ......... 4.5 (4.6) 4.2 .7
Income taxes (benefit) ...................... 1.7 (1.8) 1.5 .3
----- ----- ----- -----
Net earnings (loss) ................ 2.8% (2.8)% 2.7% .4%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995
The Company recorded net earnings of $759,000, or $.16 per share, on 4,849,538
shares for the second quarter of 1996 compared with a net loss of $434,000, or
$.11 per share, on 3,893,044 shares for the same period in 1995.
Net revenues for the second quarter of 1996 of $26.8 million represent an
increase of $11.5 million, or 75%, over the second quarter of 1995. The
increased revenues occurred in all segments of the Company's business with the
largest gains coming from the general parts distribution operations which
accounted for $6.9 million of the increase, excluding parts distribution to
service provider alliances and OEM customers. The increase in general
distribution sales was mainly attributable to increased selling efforts,
including the expansion of the Company's field sales force. OEM outsourcing
revenues grew by $2.5 million in the second quarter of 1996 compared with the
same period in 1995, mainly from new outsourcing arrangements. Service provider
alliances also provided a $1.6 million increase in net revenues compared with
the same period in 1995.
Gross margin dollars improved $4.1 million for the second quarter of 1996
compared with the second quarter of 1995. The gross margin percentage for the
second quarter of 1996 increased to 31.0% compared with 27.3% for the same
period in 1995. Because the gross margin is different on each computer spare
part which the
6
<PAGE> 9
Company sells, changes in the mix of parts sold by the Company during a
particular period effect the Company's gross margin. The increase in gross
margin percentage was largely due to favorable variations in the mix of parts
sold during the period, as well as improved margins for parts sold on exchange,
improvements in pricing and purchasing, and the fact that Cyclix had slightly
higher margins than the remainder of the Company's business.
Selling, general and administrative expenses ("SG&A") increased 46% to $6.4
million for the quarter ended June 30, 1996, compared with the same period in
1995. The increase in SG&A resulted primarily from a $1.4 million increase in
compensation expenses that was driven by higher average employee levels, which
rose to 403 during the second quarter of 1996 compared with 307 for the second
quarter of 1995. Occupancy expenses also increased $216,000, as the Company
experienced higher rent associated with moving into its new corporate
headquarters in June 1995 and its new distribution facility in the first
quarter of 1996. SG&A as a percentage of net revenues declined to 23.7%
compared with 28.5% for the second quarter of 1995. The decrease in SG&A as a
percentage of net revenues resulted primarily from the expenditures made by the
Company during 1995 to accommodate the anticipated growth in revenues during
1996. In addition, the Company incurred expenses during 1995 in connection with
the termination of its outsourcing agreement with Intelogic Trace, Inc.
("Intelogic") and the bankruptcy and liquidation of Intelogic, with no related
Intelogic revenues during the second quarter of 1995.
Depreciation and amortization as a percentage of net revenues declined to 1.9%
for the second quarter of 1996 compared with 2.9% in 1995 due to the increased
revenues in 1996. The $58,000 increase in depreciation and amortization expense
in the second quarter of 1996 as compared with the same period in 1995 was due
to depreciation on capital expenditures made over the last year related to the
Company's information systems, the Company's new distribution facility, and new
corporate headquarters.
Interest expense (net) increased to $242,000 in the second quarter of 1996 from
$75,000 for the second quarter of 1995 due to higher borrowing levels against
the Company's revolving line of credit and increased capital lease obligations.
The higher borrowing levels were dictated by increases in working capital which
were required to support the increase in sales. Interest expense (net) for the
second quarter of 1996, was reduced as a result of the Company paying off the
entire outstanding indebtedness under its bank line of credit in June 1996
using a portion of the proceeds from the Company's June 1996 public offering of
Common Stock.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995.
The Company recorded net earnings of $1,413,000, or $.30 per share, on
4,633,994 shares for the six months ended June 30, 1996 compared with earnings
of $130,000, or $.03 per share, on 4,411,154 shares, for the same period in
1995.
Net revenues for the first six months of 1996 of $53.1 million represent an
increase of $21.0 million, or 66%, over the first six months of 1995. The
Company's outsourcing agreement with Intelogic contributed $3.1 million in net
revenues during the first six months of 1995 and that agreement was terminated
in April 1995 in connection with the bankruptcy and liquidation of Intelogic.
Excluding sales to Intelogic during the first six months of 1995, revenues
increased by $24.1 million, or 84%. The increased revenues occurred in all
segments of the Company's business with the largest gains coming from the
general parts distribution operations ($12.2 million) and service provider
alliance arrangements ($6.4 million, excluding sales to Intelogic in 1995). In
addition, OEM outsourcing revenues grew by $5.2 million in the first half of
1996 compared with the same period in 1995, mainly from new outsourcing
arrangements.
Gross margin dollars improved $7.1 million for the first six months of 1996
compared with the first six months of 1995. The gross margin percentage for the
first half of 1996 increased to 29.9% compared with 27.5% for
7
<PAGE> 10
the same period in 1995. Because the gross margin is different on each computer
spare part which the Company sells, changes in the mix of parts sold by the
Company during a particular period effect the Company's gross margin. The
increase in gross margin percentage was largely due to favorable variations in
the mix of parts sold, as well as improved margins for parts sold on exchange,
improvements in pricing and purchasing, and the fact that Cyclix had slightly
higher margins than the remainder of the Company's business.
SG&A increased 58% to $12.2 million for the six months ended June 30, 1996,
compared with the same period in 1995. The increase in SG&A resulted primarily
from a $3.2 million increase in compensation expenses that was driven by higher
average employee levels, which rose to 375 for the first six months of 1996
compared with 280 for the first six months of 1995. Occupancy expenses also
increased $589,000, as the Company experienced higher rent associated with
moving into its new corporate headquarters in June 1995 and its new
distribution facility in the first quarter of 1996. SG&A as a percentage of net
revenues declined to 23.0% for the first six months of 1996 from 24.2% for
1995. The decrease in SG&A as a percentage of net revenues resulted primarily
from the expenditures made by the Company during 1995 to accommodate the
anticipated growth in revenues during 1996. In addition, 1995 included expenses
incurred by the Company in connection with the termination of its outsourcing
agreement with Intelogic and the bankruptcy and liquidation of Intelogic, with
no related Intelogic revenues in the second quarter of 1995.
Depreciation and amortization decreased as a percentage of net revenues despite
a $199,000 increase in depreciation and amortization expense in the first six
months of 1996 compared with the same period in 1995. This increase was due
to depreciation on capital expenditures made over the last year related to the
Company's information systems, the Company's new distribution facility, and new
corporate headquarters.
Interest expense (net) increased $389,000 to $471,000 for the first six months
of 1996 due to higher borrowing levels against the Company's revolving line of
credit and increased capital lease obligations. The higher borrowing levels were
dictated by increases in working capital which were required to support the
increase in sales.
LIQUIDITY AND CAPITAL RESOURCES
CASH FROM OPERATIONS AND OTHER RESOURCES
The Company has historically been a net user of cash from operations, and has
financed its working capital requirements and its capital expenditures from
revolving credit, equity financing and internally generated funds.
Cash used in operating activities was $4.7 million compared with $3.5 million
for the first six months of 1995. The increase in cash used in operating
activities resulted largely from $2.1 million of additional cash being used for
working capital activities and was driven by higher inventory levels required
to support the Company's growth.
Cash outflows from investing activities decreased $2.6 million as the Company
acquired $1.9 million of assets through non-cash capital leases and,
accordingly, reduced the level of cash used for capital expenditures. Cash
flows from financing activities reflects the receipt of net proceeds of $18.5
million from the sale of 1,437,500 shares of Common Stock to the public in June
of 1996. The Company used approximately $11.4 million of the proceeds from the
stock offering to pay off the balance of the Company's outstanding indebtedness
under its bank line of credit.
The Company currently maintains a revolving bank line of credit which provides
for borrowings up to a maximum of $16 million, based on a borrowing base of
qualified inventory and eligible receivables. The line is used for working
capital purposes and matures in December 1997. At June 30, 1996, the Company
had no
8
<PAGE> 11
outstanding borrowings under the line of credit. The Company currently has
financing agreements in place that allow for the acquisition of capital assets
through leasing arrangements. At June 30, 1996, there was approximately $1.1
million available to the Company under its lease financing agreements.
The Company believes that its balances of cash and cash equivalents, its
long-term financing capability and its equipment financing agreement will be
sufficient to meet its working capital and capital expenditure requirements for
the foreseeable future.
CAPITAL EXPENDITURES
The Company made cash capital expenditures of $809,000 during the first six
months of 1996. The Company also acquired $1.9 million of capital assets
through capital lease arrangements. The $2.7 million of asset acquisitions were
largely for a new enhanced high capacity computer-telephony integration system
for handling order processing, information systems and warehouse equipment. The
Company anticipates capital expenditures for the remainder of 1996 of
approximately $2.0 million, including non-cash capital expenditures of
approximately $1.1 million for assets acquired through capital leases. These
capital expenditures will be primarily for improvements and modification to the
Company's information systems and warehouse automation equipment. The Company
believes these expenditures are required to support and manage future growth of
its business.
9
<PAGE> 12
PC SERVICE SOURCE, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In December 1994, Select All, Inc. ("Select All") filed suit against
CompuCom Systems, Inc. ("CompuCom") and the Company alleging that
Select All had an oral contract with CompuCom to purchase certain
computer parts from CompuCom. Select All alleged that its oral
contract was wrongfully interfered with by the Company. On May 10,
1996, the litigation was settled between Select All and CompuCom
without liability on the part of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 23, 1996, the Company held its annual meeting of stockholders,
at which, in addition to the election of directors nominated by the
Board of Directors, the stockholders approved an Employee Stock
Purchase Plan (the "Plan"). Information regarding the directors
nominated by the Board of Directors for election at the annual meeting
and a description of the Plan are set forth in the Company's Proxy
Statement dated April 22, 1996. With respect to the election of
directors, 3,925,886 votes were cast in favor of the directors and
5,500 votes were withheld. As for the Employee Stock Purchase Plan,
3,917,235 votes were cast in favor of the Plan and 14,151 were cast
against or abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
The following exhibits are filed as part of this report:
EXHIBIT
NO. DESCRIPTION
------- -----------
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
B. REPORTS ON FORM 8-K
On June 14, 1996, the Company filed a report on Form 8-K pursuant to
Item 5 thereof in connection with the Underwriting Agreement signed
by the Company, the Selling Stockholders listed on Exhibit 1 thereto
and the Underwriters with respect to the Company's Registration
Statement on Form S-1, SEC Registration Number 333-03977.
10
<PAGE> 13
PC SERVICE SOURCE, INC. AND SUBSIDIARY
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.
PC SERVICE SOURCE, INC.
---------------------------------------
(Registrant)
August 13, 1996 By: /s/ Bernard W. Rohde
-----------------------------------
Bernard W. Rohde, Vice President,
Finance and Chief Accounting Officer
11
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
PC SERVICE SOURCE, INC. AND SUBSIDIARY
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
Net earnings (loss) .................................... $ 759 $ (434) $ 1,413 $ 130
======= ======= ======= =======
Average common shares outstanding ...................... 4,401 3,893 4,187 3,893
Average common share equivalents resulting
from assumed conversion of options and warrants (1) .. 449 -- 447 518
------- ------- ------- -------
Average number of common shares and
common share equivalents outstanding ................. 4,850 3,893 4,634 4,411
======= ======= ======= =======
Primary earnings (loss) per common share ............... $ .16 $ (.11) $ .30 $ .03
======= ======= ======= =======
FULLY DILUTED EARNINGS PER COMMON SHARE
Average number of common shares outstanding ............ 4,401 3,893 4,187 3,893
Average common share equivalents resulting from
assumed conversion of options and warrants
assuming full dilution (1) .......................... 475 -- 539 544
------- ------- ------- -------
Average number of common shares and
common share equivalents outstanding
assuming full dilution .............................. 4,876 3,893 4,726 4,437
======= ======= ======= =======
Fully diluted earnings (loss) per common share ......... $ .16 $ (.11) $ .30 $ .03
======= ======= ======= =======
</TABLE>
(1) Common share equivalents are not included for the three months ended June
30, 1995, as exercise of options and warrants would be anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at June 30, 1996 (Unaudited) and the Consolidated
Statement of Income for the Six Months Ended June 30, 1996 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,856
<SECURITIES> 0
<RECEIVABLES> 12,896
<ALLOWANCES> (344)
<INVENTORY> 18,351
<CURRENT-ASSETS> 37,988
<PP&E> 10,969
<DEPRECIATION> (2,682)
<TOTAL-ASSETS> 46,572
<CURRENT-LIABILITIES> 11,775
<BONDS> 2,662
<COMMON> 58
0
0
<OTHER-SE> 31,658
<TOTAL-LIABILITY-AND-EQUITY> 46,572
<SALES> 51,135
<TOTAL-REVENUES> 53,067
<CGS> 35,824
<TOTAL-COSTS> 50,347
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 471
<INCOME-PRETAX> 2,249
<INCOME-TAX> 836
<INCOME-CONTINUING> 1,413
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,413
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<FN>
<F1>Provision for doubtful accounts and inventory provision included in total
costs.
</FN>
</TABLE>
