<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For the quarterly period ended Commission File
October 31, 1996 No. 0-26608
CUTTER & BUCK INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Washington 91-1474587
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2701 First Avenue, Suite 500
Seattle, WA 98121
(Address of Principal Executive Offices)
(206) 622-4191
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock of the registrant outstanding as of
December 10, 1996 was 5,122,548.
Transitional Small Business Disclosure Format (Check One)
Yes No X
----- -----
Page 1 of 13
<PAGE>
CUTTER & BUCK INC.
Quarterly Report on Form 10-QSB
For the Quarter Ended October 31, 1996
INDEX
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (unaudited):
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
CUTTER & BUCK INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
April 30, October 31,
1996 1996
------------ ------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash $ 2,010,047 $ 679,728
Due from factors 5,735,287 1,651,139
Other receivables, net of allowance for doubtful
accounts of $212,314 and $165,173 respectively 1,917,326 8,542,955
Inventories 4,693,433 7,474,835
Deferred income taxes 180,000 180,000
Prepaid expenses and other current assets 1,098,972 1,245,961
----------- -----------
Total current assets 15,635,065 19,774,618
Furniture and equipment 798,922 2,097,843
Other assets 735,931 629,545
----------- -----------
Total assets $17,169,918 $22,502,006
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,313,937 $ 3,310,370
Accrued liabilities 499,362 796,696
Income taxes payable 220,000 185,600
Loan payable to bank 114,119 2,480,072
Current portion of capital lease obligations 0 127,948
----------- -----------
Total current liabilities 3,147,418 6,900,686
Capital lease obligations 0 561,448
Shareholders' equity:
Common stock, no par value: 25,000,000 shares
authorized; 3,666,715 issued and outstanding at
April 30, 1996 and 3,668,241 at October 31, 1996 15,156,702 15,167,432
Note receivable from shareholder (44,520) (44,520)
Accumulated deficit (1,089,682) (83,040)
----------- -----------
Total shareholders' equity 14,022,500 15,039,872
----------- -----------
Total liabilities and shareholders' equity $17,169,918 $22,502,006
----------- -----------
----------- -----------
</TABLE>
See accompanying notes.
Page 3
<PAGE>
CUTTER & BUCK INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
-------------------------- -------------------------
October 31, October 31, October 31, October 31,
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $5,131,171 $12,290,179 $8,435,927 $20,289,818
Cost of sales 3,196,985 7,493,843 5,274,074 12,513,907
---------- ----------- ---------- -----------
Gross profit 1,934,186 4,796,336 3,161,853 7,775,911
Operating expenses:
Design and production 230,364 365,088 444,879 701,335
Selling and handling 980,149 2,221,617 1,648,338 3,933,537
General and administrative 486,593 912,829 897,517 1,626,150
---------- ----------- ---------- -----------
Total operating expenses 1,697,106 3,499,534 2,990,734 6,261,022
---------- ----------- ---------- -----------
Operating income 237,080 1,296,802 171,119 1,514,889
Other income (expense):
Factor commissions and
interest expense net
of interest income (28,288) (119,061) (141,168) (230,606)
License and royalty income 82,708 61,138 198,224 157,359
---------- ----------- ---------- -----------
Total other income (expense) 54,420 (57,923) 57,056 (73,247)
---------- ----------- ---------- -----------
Income before income taxes 291,500 1,238,879 228,175 1,441,642
Income taxes (50,000) (374,000) (50,000) (435,000)
---------- ----------- ---------- -----------
Net income $ 241,500 $ 864,879 $ 178,175 $ 1,006,642
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Net income per share $ 0.07 $ 0.22 $ 0.06 $ 0.26
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Shares used in computation
of net income per share 3,603,515 3,940,313 3,071,087 3,940,763
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
See accompanying notes.
Page 4
<PAGE>
CUTTER & BUCK INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
----------------------------
October 31, October 31,
1995 1996
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 178,175 $ 1,006,642
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 75,168 407,270
Changes in assets and liabilities:
Receivables, net 287,358 (2,654,310)
Inventories (849,978) (2,781,402)
Prepaid expenses and other current assets (758,471) (146,989)
Accounts payable and accrued liabilities (1,127,613) 1,293,767
Income taxes payable 0 (34,400)
----------- -----------
Net cash provided by (used for) operating activities (2,195,361) (2,909,422)
INVESTING ACTIVITIES
Purchases of furniture and equipment (391,831) (829,012)
Increase in trademarks and patents (29,940) (25,655)
----------- -----------
Net cash used in investing activities (421,771) (854,667)
FINANCING ACTIVITIES
Proceeds from loan from bank 0 2,365,953
Payments under capital lease obligations (16,115) (55,742)
Net increase (decrease) in advances from factor (2,320,891) 112,829
Issuance of preferred stock, net of offering costs 1,039,625 0
Issuance of common stock 8,468,407 10,730
----------- -----------
Net cash provided by financing activities 7,171,026 2,433,770
----------- -----------
Net increase (decrease) in cash 4,553,894 (1,330,319)
Cash, beginning of period 499,417 2,010,047
----------- -----------
Cash, end of period $ 5,053,311 $ 679,728
----------- -----------
----------- -----------
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest $ 140,554 $ 95,585
----------- -----------
----------- -----------
Cash paid during the period for income taxes $ 0 $ 275,400
----------- -----------
----------- -----------
Noncash financing and investing activities:
Equipment acquired with capital leases $ 0 $ 745,138
----------- -----------
----------- -----------
</TABLE>
See accompanying notes.
Page 5
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by
Cutter & Buck Inc. ("Company"), in accordance with generally accepted accounting
principles for interim financial statements and with the instructions to Form
10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company's
management, all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation have been included. The Company's revenues are
seasonal, and therefore the results of operations for the three months ended
October 31, 1996 may not be indicative of the results for the full fiscal year.
For further information, refer to the financial statements and footnotes thereto
for the year ended April 30, 1996, included in the Company's filing on Form
10-KSB.
2. NET INCOME PER SHARE
Net income per share has been computed by dividing net income by the
weighted average number of common shares and equivalents outstanding. Common
share equivalents included in the computation represent shares issuable upon
assumed exercise of stock options and warrants except when the effect of their
inclusion would be antidilutive.
3. DUE FROM FACTOR
Pursuant to the terms of factoring agreements, the Company assigns a
portion of its qualifying accounts receivable to factors on a preapproved,
nonrecourse basis. The amount due from factors consisted of the following:
<TABLE>
<CAPTION>
April 30, 1996 October 31, 1996
-------------- ----------------
<S> <C> <C>
Unmatured receivables:
Nonrecourse $ 5,779,659 $ 2,216,408
With recourse 55,385 53,037
Matured receivables 160,331 19,022
Advances (112,829)
Reserve for sales returns and allowances (260,088) (524,499)
-------------- --------------
$ 5,735,287 $ 1,651,139
-------------- --------------
-------------- --------------
</TABLE>
4. INCOME TAXES
The Company's deferred tax assets include the benefit to be derived from
unused net operating tax loss carryforwards of approximately $500,000 at July
31, 1996. The net operating loss carryforwards begin to expire in 2006. A
valuation allowance has been recorded for financial reporting purposes to
recognize the Company's net deferred tax assets at their estimated realizable
value.
Page 6
<PAGE>
5. LINE OF CREDIT
On July 8, 1996, the Company entered into a loan agreement with Bank of
America NW, N.A. d/b/a Seafirst Bank (Seafirst Bank) for a $7 million line of
credit, replacing the Company's previous line of credit. The line of credit
with Seafirst Bank is used for international letters of credit, bankers'
acceptances and working capital advances. Interest on borrowings is charged and
payable monthly at Seafirst Bank's prime rate. The line of credit is
collateralized by a security interest in the Company's inventory, accounts
receivable, contract rights and general intangibles. The loan agreement
contains certain restrictive covenants covering minimum working capital,
tangible net worth and accounts receivable turnover, as well as a maximum
debt-to-equity ratio. Seafirst Bank and Republic Factors Corp. have entered
into an intercreditor agreement allocating between them priority as to the
Company's assets in which both financial institutions have a security interest.
At October 31, 1996, letters of credit outstanding totaled $4,237,201 and
working capital advances totaled $2,480,072.
6. EUROPEAN OPERATIONS
The Company formed a United Kingdom subsidiary in February, 1996 for direct
marketing, sales and distribution of the Company's sportswear and outerwear in
the United Kingdom and formed a Netherlands subsidiary in May, 1996 for its
operations throughout Europe.
7. SHAREHOLDERS' EQUITY
The Company has three stock option plans that provide for the granting of
options to employees, officers and directors of the Company to purchase up to
525,313 shares of Common Stock. Options granted under the 1991 plan provide for
50% vesting on the first anniversary from the date of grant and 25% vesting on
each of the second and third anniversaries. Options granted under the 1995
employee plan generally provide for vesting over a five-year period with vesting
at 20% each year. Options granted under the 1995 director plan become
exercisable six months after the date of grant. Options under the plans expire
after 10 years and have been granted at fair market value on the date of grant.
At October 31, 1996, 419,070 options to purchase shares of common stock were
outstanding under these plans, 217,381 of which were exercisable, and 105,897
shares under these plans remained available for future grant.
8. SUBSEQUENT EVENT
On November 1, 1996 the Company sold 1,329,307 shares of its common stock
to the public at $11 per share. Pursuant to the exercise of the Underwriters'
over-allotment option, the Company sold an additional 125,000 shares of Common
stock at $11 per share on December 3,1996. Proceeds to the Company, net of
underwriting discounts and commissions and estimated offering expenses totaling
$1,400,000, amounted to $14,602,077.
Page 7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
OVERVIEW
The Company designs, sources and markets updated, traditional men's
sportswear and outerwear. It distributes its products predominantly through
golf pro shops and resorts, upscale men's specialty stores and direct sales
accounts. The Company continues to emphasize the golf distribution channel
because it believes this is an effective way to reach its target market of
affluent, sports-minded 30- to 55-year-old men and build brand identity. The
Company has found golf pro shops to be receptive to its distinctive product,
merchandising approach and sales support.
Historically, the Company has experienced its lowest level of net sales and
profitability in its first and third quarters, ending July 31 and January 31,
respectively. Correspondingly, the Company's highest level of sales and
profitability have been achieved in its second and fourth quarters, ending
October 31 and April 30, respectively. This seasonality has resulted primarily
from the timing of shipments to golf pro shops and men's specialty stores due to
seasonal fluctuations in consumer demand, the timing and amount of orders from
key customers, the timing of sales of seasonal remainder merchandise and
availability of product. This pattern of sales affects working capital
requirements and liquidity, as the Company generally must finance higher levels
of inventory during the first and third quarters, when sales are lowest.
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1996 COMPARED WITH THREE MONTHS ENDED
OCTOBER 31, 1995
NET SALES increased 139.5% in the three months ended October 31, 1996 to
$12,290,179 from $5,131,171 in the three months ended October 31, 1995. For the
second quarter of fiscal 1997 compared to the second quarter of fiscal
1996, net sales in the United States to the golf distribution channel increased
$4,224,077 to $6,646,205, the corporate channel increased $1,789,354 to
$2,429,098 and the specialty store channel increased $156,490 to $1,630,437.
Increases in these three channels accounted for approximately 86.2% of the
overall increase in net sales. In addition to these channels, for the three
months ended October 31, 1996, international distributor sales also increased
and net sales of the Company's direct distribution in the United Kingdom and
Europe totaled $495,639.
GROSS PROFIT increased 148.0% in the three months ended October 31, 1996 to
$4,796,336 from $1,934,186 in the three months ended October 31, 1995. Gross
profit as a percentage of net sales was 39.0% for the second quarter of fiscal
1997 compared to 37.7% for the second quarter of fiscal 1996. The improvement
is primarily due to lower product cost resulting from economies of scale,
product mix changes and a reduction in the net cost of embroidering golf club
and corporate logos. These improvements were partially offset by additional
costs incurred in the first quarter of fiscal 1997 to expedite delivery of
goods from Chinese manufacturers due to threatened trade sanctions.
OPERATING EXPENSES increased to $3,499,534 for the three months ended
October 31, 1996 from $1,697,106 for the three months ended October 31, 1995,
but decreased as a percentage of sales, to 28.5% in the second quarter of fiscal
1997 from 33.1% in the second quarter of fiscal 1996. The increase in
operating expenses was due primarily to increases in management, staffing and
facilities costs to support the Company's expanded operations. Selling and
handling expenses increased by $1,241,468, making up 68.9% of the overall
increase in operating expenses. The majority of the increase in selling and
handling expenses was due to increased sales commissions and staffing costs
related to a higher sales volume and a larger sales
Page 8
<PAGE>
force and to increases in advertising. The Company also has converted more
of its independent sales representatives to employees. In addition, the
Company incurred additional handling expenses associated with establishing its
own warehouse facility in Seattle and accommodating higher sales volume.
OTHER INCOME. License and royalty income earned under licensing contracts
totaled $61,138 for the three months ended October 31, 1996 and $82,708 for the
three months ended October 31, 1995. The decline in license and royalty income
is primarily due to the Company's re-purchase of its outerwear license effective
May 1, 1996 which now allows the Company to directly design and market Cutter &
Buck outerwear. Factor commissions and interest expense was $119,061 in the
quarter ended October 31, 1996 compared to $28,288 in the quarter ended October
31, 1995. Factor commission expense decreased by $15,575 due to a lower rate of
factored sales and net interest expense increased by $106,348. For the three
months ended October 31, 1996, the Company incurred net interest expense on its
bank borrowing, but for the three months ended October 31, 1995, the Company
earned net interest income on short term investments made possible by the sale
of its Common Stock in August 1995.
INCOME TAXES. The Company recorded $374,000 of income tax expense in the
three months ended October 31, 1996 and $50,000 in the three months ended
October 31, 1995. As of July 31, 1996, $500,000 in net operating loss
carryforwards were available to offset future taxable income.
As a result of the foregoing factors, the Company had NET INCOME of
$864,879 for the three months ended October 31, 1996 compared to $241,500 for
the three months ended October 31, 1995.
SIX MONTHS ENDED OCTOBER 31, 1996 COMPARED WITH SIX MONTHS ENDED OCTOBER
31, 1995
NET SALES increased 140.5% in the six months ended October 31, 1996 to
$20,289,818 from $8,435,927 in the six months ended October 31, 1995. For the
first half of fiscal 1997 compared to the first half of fiscal 1996,
net sales in the United States to the golf distribution channel increased
$6,859,796 to $10,795,278, the corporate channel increased $2,843,989 to
$3,980,595 and the specialty store channel increased $796,235 to $3,026,519.
Increases in these three channels accounted for approximately 88.6% of the
overall increase in net sales. In addition to these channels, for the six
months ended July 31, 1996, international distributor sales also increased and
net sales of the Company's direct distribution in the United Kingdom and Europe
totaled $828,362.
GROSS PROFIT increased 145.9% in the six months ended October 31, 1996 to
$7,775,911 from $3,161,853 in the six months ended October 31, 1995. Gross
profit as a percentage of net sales was 38.3% for the first half of fiscal 1997
compared to 37.5% for the first half of fiscal 1996. The improvement in gross
profit due to volume and product mix were partially offset by additional costs
incurred in the first quarter of fiscal 1997 to expedite delivery of goods
from Chinese manufacturers due to threatened trade sanctions, costs to assure
timely deliveries during the Company's transition to its new distribution
facility and start-up expenses associated with an in-house embroidery operation
and the Company's new European operations.
OPERATING EXPENSES increased to $6,261,022 for the six months ended October
31, 1996 from $2,990,734 for the six months ended October 31, 1995, but
decreased as a percentage of sales, to 30.9% in the first half of fiscal 1997
from 35.5% in the first half of fiscal 1996. The increase in operating
expenses was due primarily to increases in management, staffing and facilities
costs to support the Company's expanded operations. Selling and handling costs
increased by $2,285,199, making up 69.9% of the overall increase in operating
expenses.
Page 9
<PAGE>
The majority of the increase in selling and handling costs was due to increased
sales commissions and staffing costs related to a higher sales volume and a
larger sales force. The Company also has converted more of its independent
sales representatives to employees. In addition, the Company incurred
additional handling expenses associated with establishing its own warehouse
facility in Seattle and accommodating higher sales volume.
OTHER INCOME. License and royalty income earned under licensing contracts
totaled $157,359 for the six months ended October 31, 1996 and $198,224 for the
six months ended October 31, 1995. The decline in license and royalty income is
primarily due to the Company's re-purchase of its outerwear license effective
May 1, 1996 which now allows the Company to directly design and market Cutter &
Buck outerwear. Factor commissions and interest expense was $230,606 in the six
months ended October 31, 1996 compared to $141,168 in the six months ended
October 31, 1995. Factor commission expense increased by $16,621 due to higher
sales volume and net interest expense increased by $72,817. For the six months
ended October 31, 1996, the Company incurred net interest expense on its bank
borrowing. For the six months ended October 31, 1995, the Company had the
benefit of interest income on short term investments made possible by the sale
of its Common Stock in August 1995.
INCOME TAXES. The Company recorded $435,000 of income tax expense in the
six months ended October 31, 1996 and $50,000 in the six months ended October
31, 1995.
As a result of the foregoing factors, the Company had NET INCOME of
$1,006,642 for the six months ended October 31, 1996 compared to $178,175 for
the six months ended October 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary need for funds is to finance working capital
associated with growth in sales volume, specifically accounts receivable and
finished goods inventory which includes the Company's CLASSIC products with
multi-season appeal. Working capital for the six months ended October 31, 1996
was funded primarily by collections of accounts receivable and bank borrowing.
Net cash used for operating activities was $2,909,422 for the six months
ended October 31, 1996 compared to $2,195,361 for the six months ended October
31, 1995. For the six months ended October 31, 1996, cash was primarily used to
support an increase in inventory of $2,781,402 and a net increase in accounts
receivable of $2,654,310 that was partially funded by an increase in accounts
payable and accrued liabilities of $1,293,767. For the six months ended October
31, 1995, cash was used to support increases in inventory and prepaid expenses
as well as a net reduction in accounts payable and accrued liabilities. These
were partially offset by a net reduction of accounts receivable.
Net cash used in investing activities of $854,667 for the six months ended
October 31, 1996 was attributable primarily to investments in warehouse
equipment and leasehold improvements totaling $300,501, in-store fixtures of
$398,036 and other furniture and equipment totaling $130,475. For the six
months ended October 31, 1995, the Company purchased in-store fixtures totaling
$260,638 and other furniture and equipment totaling $131,193.
Page 10
<PAGE>
Net cash provided by financing activities for the six months ended October
31, 1996 was $2,433,770 compared to $7,171,026 during the six months ended
October 31, 1995. The six months ended October 31, 1996 included $2,365,953
generated by bank borrowing and $10,730 related to the issuance of capital stock
under the Company's employee stock purchase plan. For the six months ended
October 31, 1995, cash provided by financing activities included $1,039,625
generated by the issuance of Series B Preferred Stock and $8,468,407 generated
by the issuance of Common Stock which were used in part to eliminate advances
from the factor totaling $2,320,891.
The Company has a $7 million line of credit with Bank of America NW, N.A.
d/b/a Seafirst Bank for international letters of credit, bankers' acceptances
and working capital advances. Interest on borrowings is charged and payable
monthly at Seafirst Bank's prime rate. The line of credit is collateralized by
a security interest in the Company's inventory, accounts receivable, contract
rights and general intangibles. The loan agreement contains certain restrictive
covenants covering minimum working capital, tangible net worth and accounts
receivable turnover, as well as a maximum debt-to-equity ratio. At October 31,
1996, letters of credit outstanding totaled $4,237,201 and working capital
advances totaled $2,480,072. In November and December 1996, the Company sold
1,454,307 shares of Common Stock which generated net proceeds of approximately
$14,600,000 which will be used in part to finance working capital.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on September 19,
1996. Out of the Company's 3,668,241 shares of Common Stock entitled to vote at
the meeting, 3,224,121 were represented, either in person or by proxy.
Proposal Number 1 - Election of Directors
Nominee For Against
------- --- -------
Michael S. Brownfield 3,221,421 2,700
Frances M. Conley 3,183,757 40,364
Harvey N. Jones 3,116,560 107,561
Larry C. Mounger 3,220,821 3,300
Joey Rodolfo 3,137,021 87,100
James B. Slayden 3,221,421 2,700
Proposal Number 2 - Ratification of Appointment of Auditors
Votes
-----
For 3,113,035
Against 104,986
Abstain 6,100
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
Page 12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CUTTER & BUCK INC.
------------------------------------
(Registrant)
Dated: December 16, 1996 By /s/ Martin J. Marks
--------------------------------
Martin J. Marks
Senior Vice-President,
Chief Operating Officer,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 679,728
<SECURITIES> 0
<RECEIVABLES> 10,184,094
<ALLOWANCES> (165,173)
<INVENTORY> 7,474,835
<CURRENT-ASSETS> 19,774,618
<PP&E> 2,097,843
<DEPRECIATION> (788,492)
<TOTAL-ASSETS> 22,502,006
<CURRENT-LIABILITIES> 6,900,686
<BONDS> 0
0
0
<COMMON> 15,167,432
<OTHER-SE> (44,520)
<TOTAL-LIABILITY-AND-EQUITY> 22,502,006
<SALES> 20,289,818
<TOTAL-REVENUES> 20,289,818
<CGS> 12,513,907
<TOTAL-COSTS> 12,513,907
<OTHER-EXPENSES> 6,261,022
<LOSS-PROVISION> 51,630
<INTEREST-EXPENSE> (230,606)
<INCOME-PRETAX> 1,441,842
<INCOME-TAX> (435,000)
<INCOME-CONTINUING> 1,006,642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,006,642
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
</TABLE>
