-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OMYhGEJargjyD0GnuuclWYBjSAGspbNSeSJECjYPt/gmZVuM8l4K+bn3rFw7mn2s tDI6A9BzNNgnQwusKyORnw== 0000811716-96-000006.txt : 19961113 0000811716-96-000006.hdr.sgml : 19961113 ACCESSION NUMBER: 0000811716-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEQUENT COMPUTER SYSTEMS INC /OR/ CENTRAL INDEX KEY: 0000811716 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 930826369 STATE OF INCORPORATION: OR FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15627 FILM NUMBER: 96659662 BUSINESS ADDRESS: STREET 1: 15450 SW KOLL PKWY STREET 2: ED02-803 CITY: BEAVERTON STATE: OR ZIP: 97006-6063 BUSINESS PHONE: 5036265700 MAIL ADDRESS: STREET 1: 15450 SW KOLL PKWY STREET 2: ED02 -803 CITY: BEAVERTON STATE: OR ZIP: 97006-6063 10-Q 1 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 28, 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: 0-15627 SEQUENT COMPUTER SYSTEMS, INC. (Exact name of registrant as specified in its charter) Oregon 93-0826369 (State or other jurisdiction (I.R.S. Employer of organization or incorporation) Identification Number) 15450 S.W. Koll Parkway Beaverton, Oregon 97006-6063 (Address of principal executive offices, including zip code) (503) 626-5700 (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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 33,963,979 common shares were issued and outstanding as of November 6, 1996. SEQUENT COMPUTER SYSTEMS, INC. PART I. FINANCIAL INFORMATION Page No. Item 1. Consolidated Financial Statements Consolidated Balance Sheets - September 28, 1996 and December 30, 1995 3 Consolidated Statements of Operations - Three months and nine months ended September 28, 1996 and September 30, 1995 4 Consolidated Statements of Changes In Shareholders' Equity - December 30, 1995 through September 28, 1996 5 Consolidated Statements of Cash Flows - Nine months ended September 28, 1996 and September 30, 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 11 - Statement regarding computation of earnings per share. (b) No reports on Form 8-K were filed by the Company during the fiscal quarter ended September 28, 1996. SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - Unaudited (in thousands, except per share amounts) Sept. 28, 1996 Dec. 30, 1995 ASSETS Current assets: Cash and cash equivalents $ 22,519 $ 61,939 Restricted deposits 23,431 39,642 Receivables, net 172,565 178,322 Inventories 78,278 60,853 Prepaid royalties and other 31,985 13,464 Total current assets 328,778 354,220 Property and equipment, net 126,454 98,165 Capitalized software costs, net 55,938 45,381 Other assets, net 24,993 6,157 Total assets $ 536,163 $ 503,923 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 23,431 $ 41,146 Accounts payable and other 66,482 60,095 Accrued payroll 18,169 11,723 Unearned revenue 24,161 21,466 Income taxes payable 5,611 4,981 Current obligations under capital leases and debt 7,807 60 Total current liabilities 145,661 139,471 Other accrued expenses 6,739 2,158 Long-term obligations under capital leases and debt 18,799 9,106 Total liabilities 171,199 150,735 Shareholders' equity: Common stock, $.01 par, 33,942 and 33,221 shares outstanding 339 332 Paid-in capital 309,168 302,186 Retained earnings 58,203 52,945 Foreign currency translation adjustment (2,746) (2,275) Total shareholders' equity 364,964 353,188 Total liabilities and shareholders' equity $ 536,163 $ 503,923 See notes to consolidated financial statements. SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited (in thousands, except per share amounts) Three Months Ended Nine Months Ended Sept. 28, Sept. 30, Sept. 28, Sept. 30, 1996 1995 1996 1995 Revenue: Product revenue $ 101,669 $ 96,970 $ 282,327 $ 283,499 Service revenue 47,116 36,245 129,790 105,022 Total revenue 148,785 133,215 412,117 388,521 Costs and expenses: Cost of products sold 46,278 45,286 132,425 132,716 Cost of service revenue 36,375 28,364 100,876 78,469 Research and development 14,405 10,220 38,932 29,965 Selling, general and admin. 49,479 38,653 132,146 111,943 Total costs and expenses 146,537 122,523 404,37 353,093 Operating income 2,248 10,692 7,738 35,428 Interest, net 105 203 533 547 Other, net (490) (490) (1,055) (1,390) Income before provision for income taxes 1,863 10,405 7,216 34,585 Provision for income taxes 508 2,964 1,957 10,181 Net income $ 1,355 $ 7,441 $ 5,259 $ 24,404 Net income per share $ 0.04 $ 0.22 $ 0.16 $ 0.73 Weighted average number of common and common equivalent shares outstanding 33,780 34,515 33,854 33,555 See notes to consolidated financial statements. SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - Unaudited (in thousands)
Foreign Currency Common Stock Paid-in Retained Trans- Shares Amount Capital Earnings lation Total Balance, Dec. 30, 1995 33,221 $ 332 $ 302,186 $ 52,945 $ (2,275) $ 353,188 Common shares issued 233 3 2,468 2,471 Tax benefit of option exercises -- -- 46 -- -- 46 Net income -- -- -- 598 -- 598 Foreign currency translation adjustment -- -- -- -- (1,194) (1,194) Balance, March 30, 1996 33,454 $ 335 $ 304,700 $ 53,543 $ (3,469) $ 355,109 Common shares issued 164 1 526 527 Tax benefit of option exercises -- -- 23 -- -- 23 Net income -- -- -- 3,306 -- 3,306 Foreign currency translation adjustment -- -- -- -- (3) (3) Balance, June 29, 1996 33,618 $ 336 $ 305,249 $ 56,849 $ (3,472) $ 358,962 Common shares issued 324 3 3,887 -- 3,890 Tax benefit of option exercises -- -- 32 -- -- 32 Net income -- -- -- 1,355 -- 1,355 Foreign currency translation adjustment -- -- -- -- 726 726 Rounding (1) (1) Balance, Sept. 28, 1996 33,942 $ 339 $ 309,168 $ 58,203 $ (2,746) $ 364,964 See notes to consolidated financial statements.
SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited (in thousands) Nine Months Ended Sept. 28, 1996 Sept. 30, 1995 Operating activities: Net income $ 5,259 $ 24,404 Reconciliation of net income to net cash provided by operating activities - Depreciation and amortization 47,779 38,508 Changes in assets and liabilities - Receivables, net 5,757 (23,526) Inventories (17,425) (10,741) Prepaid expenses (18,520) (5,784) Accounts payable and other 2,064 15,166 Accrued payroll 6,445 (380) Unearned revenue 2,695 6,569 Income taxes payable 630 2,442 Deferred income taxes (21) -- Other accrued expenses 8,925 (604) Other, net -- (198) Net cash provided by operating activities 43,588 45,856 Investing activities: Restricted deposits 16,211 23,964 Purchases of property and equipment, net (61,463) (31,254) Capitalized software costs (24,787) (16,787) Other assets, net (19,212) -- Foreign currency translation (471) 1,769 Net cash used for investing activities (89,722) (22,308) Financing activities: Payments on notes payable, net (17,715) (23,964) Proceeds (payments) under capital lease obligations, net 15,241 (652) Long-term debt proceeds (payments), net 2,200 (56) Stock issuance proceeds, net 6,988 17,966 Convertible debenture proceeds -- 1,000 Net cash provided (used) by financing activities 6,714 (5,706) Net increase (decrease) in cash and cash equivalents (39,420) 17,842 Cash and cash equivalents at beginning of period 61,939 46,291 Cash and cash equivalents at end of period $ 22,519 $ 64,133 See notes to consolidated financial statements. SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 28, 1996 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 a fair statement of the results for the interim periods. Certain information and footnote disclosures 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 and Form 10-K for the fiscal year ended December 30, 1995. The Company's fiscal year is based on a 52-53 week calendar ending the Saturday closest to December 31. The accompanying consolidated financial statements include the accounts of Sequent Computer Systems, Inc. and its wholly owned subsidiaries (the Company or Sequent). All significant intercompany accounts and transactions have been eliminated. The results for interim periods are not necessarily indicative of the results for the entire year. Accounts Receivable At September 28, 1996, accounts receivable in the accompanying consolidated balance sheet is net of $8 million received by the Company under its two year agreement to sell its domestic accounts receivables. Inventories Inventories consist of the following: (in thousands) Sept. 28, Dec. 30, 1996 1995 Raw Materials $ 11,970 $ 9,385 Work in Process 2,962 1,736 Finished Goods 63,346 49,732 $ 78,278 $ 60,853 Property and Equipment Property and equipment consist of the following: (in thousands) Sept. 28, Dec. 30, 1996 1995 Land $ 5,037 $ 5,037 Operational Equipment 164,926 134,897 Furniture and Office Equipment 83,041 67,010 Leasehold Improvements 21,443 15,974 274,447 222,918 Less Accum. Depr. & Amort. 147,993 124,753 $ 126,454 $ 98,165 Research and Development Amortization of capitalized software costs, generally based on a three-year life, was $5 million and $14.6 million for the three month and nine month periods ended September 28, 1996, respectively. Amortization for the same periods in 1995 was $4.5 million and $12.1 million, respectively. Notes Payable The Company has an unsecured line of credit agreement with a group of banks which provides short-term borrowings of up to $70 million. The line of credit agreement extends through May 30, 1997. No borrowings were outstanding at September 28, 1996. The Company has a short-term borrowing agreement with a foreign bank as a hedge to cover certain foreign currency exposures. At September 28, 1996, maximum borrowings allowed under the agreement were approximately $55.1 million. Borrowings under the agreement are denominated in various foreign currencies. Proceeds from the borrowings are converted into U.S. dollars and placed in a term deposit account with the foreign bank. Amounts outstanding were $23.4 million at September 28, 1996. In addition to the above borrowing agreements, the Company maintains certain other miscellaneous borrowing arrangements with a foreign bank. No such borrowings were outstanding at September 28, 1996. Capital Lease Obligations In September, 1996 the Company entered into a sales-leaseback transaction with a domestic bank under which certain operating equipment with a net book value of $12.2 million was sold for $15.3 million and then leased back under a capital lease. The related lease terms stipulate monthly payments ranging from $274,000 to $341,000 over the five year lease term beginning September, 1996 at an annual interest rate of 7.4%. The resulting gain of $3.1 million has been recorded under "Other Accrued Expenses" and is being amortized in proportion to the related equipment depreciation over three years. The terms of the lease include an asset buy-back provision at the end of the lease for the then fair market value of the assets at the Company's option. Future minimum lease payments are as follows: 1996 $ 1,094,920 1997 3,284,760 1998 3,284,760 1999 3,960,150 2000 4,095,228 2001 2,730,152 Total minimum lease payments $ 18,449,970 Less amount representing interest (3,129,099) Present value of minimum lease payments $ 15,320,871 Income Taxes The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting For Income Taxes" (FAS 109). The effective tax rate differs from the statutory tax rate principally due to tax benefits from the Company's foreign sales corporation and tax benefits related to the utilization of net operating loss carryforwards. Earnings Per Share See Exhibit 11 for the computation of average shares outstanding and earnings per share. Significant Customers The Company had no single customer that represented greater than 10% of total revenue for the quarters ending September 28, 1996 and September 30, 1995. Geographic Segment Information Export and foreign revenue was $78.8 million (53% of total revenue) for the three months ended September 28, 1996 and $209.2 million (51% of total revenue) for the first nine months of 1996. Export and foreign revenue was $73.9 million and $210.4 million (55% and 54% of total revenue, respectively) for the corresponding periods in 1995. The Company's United States operations generated operating income of $8.1 million for the three months ended September 28, 1996 and $13.9 million for the first nine months of 1996. Foreign operations generated net operating losses of $5.9 million and $6.2 million for the three months and nine months ended September 28, 1996, respectively. The results of comparable periods in 1995 were operating income of $8.9 million and $32.8 million for United States operations and $1.8 million and $2.6 million for foreign operations for the three months and nine months ended September 30, 1995, respectively. Factors contributing to 1996 operating losses for foreign operations include the significant investments made by the Company to expand its worldwide sales force and service organizations, as well as slight decreases in European revenue resulting in part from tightening in the European economy. Forward Looking Statements Information included in Management's Discussion and Analysis of Financial Conditions and Results of Operations regarding product development schedules and planned expenditure levels constitute forward-looking statements that involve a number of risks and uncertainties. In addition, from time to time the Company and its employees may issue other forward-looking statements. The following factors 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; lower than expected customer orders, delays in receipt of orders or cancellation of orders; the Company's ability to achieve expected results from its increased sales force; the successful development of new technologies including NUMA-Q product technologies, the timely introduction of new products scheduled during the year and demand for and acceptance of new products by the Company's customers; competitive factors, including increased competition, new product offerings by competitors and price pressures; the availability of third party parts and supplies at reasonable prices; changes in product mix and the mix between product and service revenue; significant quarterly performance fluctuations due to the receipt of a significant portion of customer orders and product shipments in the last month of each quarter; and product shipment interruptions due to manufacturing problems. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 28, 1996 GENERAL Total revenue was $148.8 million in the third quarter of 1996 compared to $133.2 million in the third quarter of 1995. Total revenue was $412.1 million in the first nine months of 1996 compared to $388.5 million in the first nine months of 1995. Net income was $1.4 million in the third quarter of 1996 compared to $7.4 million in the third quarter of 1995. Net income was $5.3 million for the first nine months of 1996 compared to $24.4 million in the first nine months of 1995. Factors contributing to the decrease in net income for both periods in 1996 compared to 1995 include the continued investments made by the Company to expand its sales channels and develop its NUMA-Q product technology. In addition, the Company's ongoing investment in its professional services organization contributed to the overall decline in net income. Service revenue increased 30% and 24% in the first three months and nine months, respectively, over the corresponding periods in 1995. REVENUE (dollars in millions) Three Months Ended Nine Months Ended Sept. 28, % Sept. 30, Sept. 28, % Sept. 30, 1996 Chg 1995 1996 Chg 1995 End-user product revenue $ 101.5 11% $ 91.1 $ 275.8 1% $ 273.1 Service and other revenue 47.1 30% 36.2 129.8 24% 105.0 Total end-user revenue 148.6 17% 127.3 405.7 7% 378.1 OEM product revenue .2 (97)% 5.9 6.5 (37)% 10.4 Total revenue $ 148.8 12% $133.2 $ 412.1 6% $ 388.5 Export and Foreign Revenue $ 78.8 7% $ 73.9 $ 209.2 (.6)% $ 210.4 Continued investment by the Company in its professional and customer service organizations is a significant factor in the increased service revenue in 1995 and 1996. Service and other revenue increased 30% and 24% in the first three months and nine months of 1996, respectively, over the same periods in 1995. Factors contributing to these increases include growth in customer installation bases and contracts, as well as a focus on selling more solutions. Total service revenue for the Company's European operations increased approximately 29% and 31% for the third quarter and first nine months of 1996, respectively, over the corresponding periods of 1995. Total service revenue increases for the Company's United States operations for the same periods were approximately 31% and 17% for the third quarter and first nine months of 1996, respectively. COST OF SALES (dollars in millions) Three Months Ended Nine Months Ended Sept. 28, Sept. 30, Sept. 28, Sept. 30, 1996 1995 1996 1995 Cost of products sold $ 46.3 $ 45.3 $ 132.4 $ 132.7 As a percentage of product revenue 46% 49% 47% 47% Cost of service revenue $ 36.4 $ 28.4 $ 100.9 $ 78.5 As a percentage of service revenue 77% 78% 78% 75% The factors influencing gross margins in a given period include unit volumes (which affect economies of scale), product configuration mix, changes in component and manufacturing costs, product pricing and the mix between product and service revenue. Consistent with its 1996 plan, the Company has continued to invest in expanding its professional services organization which has contributed to the increase of cost of service as a percentage of service revenue. The Company increased its professional services headcount by approximately 37% since the beginning of the year. RESEARCH AND DEVELOPMENT (dollars in millions) Three Months Ended Nine Months Ended Sept. 28, % Sept. 30, Sept. 28, % Sept. 30, 1996 Chg 1995 1996 Chg 1995 Research and development $ 14.4 41% $ 10.2 $ 38.9 30% $ 30.0 As a % of total revenue 10% 8% 9% 8% Software costs capitalized $ 9.1 60% $ 5.7 $ 24.8 48% $ 16.8 The Company has continued to invest significantly in its new architecture and software development for its next generation NUMA-Q products. Research and development costs as a percentage of total revenue were approximately 8% for the years 1993 through 1995, and have increased to 10% and 9% in the third quarter and first nine months of 1996, respectively. These investments were made consistent with management's plans to deliver NUMA-Q products into the marketplace December, 1996. SELLING, GENERAL AND ADMINISTRATIVE (dollars in millions) Three Months Ended Nine Months Ended Sept. 28, % Sept. 30, Sept. 28, % Sept. 30 1996 Chg 1995 1996 Chg 1995 Selling, general and admin. $ 49.5 28% $ 38.7 $ 132.2 18% $ 111.9 As a % of total revenue 33% 29% 32% 29% Consistent with its plans for 1996, the Company's selling, general and administrative costs have continued to increase both in dollars and as a percentage of revenue in the third quarter and first nine months of 1996 over the corresponding periods in 1995. The Company has made substantial investments to strengthen its worldwide sales force and to strategically position itself for the delivery of the NUMA-Q product line in December of this year. Since the beginning of the year, the Company has increased its total headcount by 22%, including a 40% increase in major sales account executives worldwide. INTEREST AND OTHER, NET (dollars in millions) Three Months Ended Nine Months Ended Sept. 28, Sept. 30, Sept. 28, Sept. 30, 1996 1995 1996 1995 Interest, net $ 0.1 $ 0.2 $ 0.5 $ 0.5 Other, net (0.5) (0.5) (1.1) (1.4) Provisions for income taxes .5 3.0 2.0 10.2 Interest income in the third quarter and first nine months of 1996 and 1995 was primarily generated from restricted deposits held at foreign and domestic banks, short-term investments and cash and cash equivalents. Interest expense for the same periods includes costs related to Convertible Debentures, foreign currency hedging loans, interim short-term borrowing and capital lease obligations. Other expense consists primarily of net gains and losses on sale of assets and discount on sale of receivables. The provision for income taxes includes benefits related to the Company's foreign sales corporation and the utilization of available domestic and foreign tax attributes carried forward from prior years. The effective tax rate for the third quarter and first nine months of 1996 was 27%, compared to 29% for the corresponding periods in 1995 and the overall annual 1995 effective tax rate of 26%. LIQUIDITY AND CAPITAL RESOURCES Working capital was $183.1 million at September 28, 1996 compared to $214.7 million at December 30, 1995. The Company's current ratio at September 28, 1996 and December 30, 1995 was 2.3:1 and 2.5:1, respectively. Although net cash provided by operations for the nine months ended September 28, 1996 totaled $43.6 million, cash and cash equivalents decreased by $39.4 million. The Company continued to make significant investments in property and equipment ($61.5 million) and capitalized software ($24.8 million), primarily related to product and software development associated with its new NUMA-Q product line. Other investments included approximately $26 million in software licenses resulting from a long-term strategic partner alliance, of which approximately $11 million is included in prepaid royalties and other current assets. Other sources of funds included net proceeds of stock issuances ($7 million) and capital lease transactions ($15.3 million). The Company has a $20 million receivable sales facility with a group of banks. At September 28, 1996 accounts receivable in the accompanying consolidated balance sheet is net of $8 million received by the Company under this agreement to sell its domestic accounts receivable. The Company maintains a $70 million revolving line of credit agreement. The line is unsecured and extends through May 30, 1997. The line contains certain financial covenants and prohibits the Company from paying dividends without the lenders' consent. No borrowings were outstanding under the line of credit as of September 28, 1996. The Company maintains a short-term borrowing agreement with a foreign bank to cover foreign currency exposures. Maximum borrowings allowed under the foreign bank agreement were $55.1 million, of which $23.4 million was outstanding at September 28, 1996 (based on currency exchange rates on such date). In addition to the above borrowing agreements, the Company maintains miscellaneous borrowing arrangements with a foreign bank. No such borrowings were outstanding as of September 28, 1996. Management expects that current funds, funds from operations, and the bank lines of credit will provide adequate resources to meet the Company's anticipated cash requirements during the remainder of 1996 resulting from its operations and planned investments in its sales force and NUMA-Q product technology. 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. SEQUENT COMPUTER SYSTEMS, INC. /s/ ROBERT S. GREGG Robert S. Gregg Sr. Vice President of Finance and Chief Financial Officer Date: November 12, 1996 EXHIBIT INDEX Sequential Exhibit No. Description Page No. 11 Statement regarding computation of earnings per share 15 SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES STATEMENT SHOWING CALCULATION OF AVERAGE COMMON SHARES OUTSTANDING AND EARNINGS PER AVERAGE COMMON SHARE (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 28, 1996 September 28, 1996 Weighted average number of common shares outstanding 33,727 33,512 Application of the "treasury stock" method to the stock option and employee stock purchase plans (A) 53 342 Weighted average of common stock equivalent shares attributable to convertible debentures 575 575 Total common and common equivalent shares, assuming full dilution 34,355 34,429 Net income $ 1,355 $ 5,259 Add: Interest on convertible debentures, net of applicable income taxes 121 359 Net income, assuming full dilution $ 1,476 $ 5,618 Net income per common share, assuming full dilution (B) $ 0.04 $ 0.16 (A) Effective with the third quarter of 1996, the Company applied the "Modified Treasury Stock" method to calculate outstanding shares for stock options in accordance with APB 15. Application of this method produced an anti-dilutive result and thus, no outstanding shares are reflected for stock options for the three months ended September 28, 1996. (B) In accordance with generally accepted accounting principles, fully-diluted earnings per share may not exceed primary earnings per share. The computation of primary net income per common share is not included as the computation can be clearly determined from the material contained in this report. EX-27 2
5 9-MOS JAN-04-1997 SEP-28-1996 45,950,000 0 175,385,000 2,820,000 78,278,000 328,778,000 274,448,000 147,994,000 536,163,000 145,661,000 18,799,000 0 0 339,000 364,625,000 536,163,000 282,327,000 412,117,000 132,425,000 233,301,000 171,078,000 0 1,846,000 0 1,957,000 0 0 0 0 5,259,000 0.16 0.16
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