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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THESECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1996
/ / 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: 0-19807
SYNOPSYS, INC.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 56-1546236
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 East Middlefield Road
Mountain View, CA 94043
(Address of principal executive offices, including zip code)
Registrant's Telephone No., including area code: (415) 962-5000
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Indicate by check mark whether the registrant 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 has been subject to such filing requirements
for the past 90 days:
Yes X No
----- -----
As of April 19, 1996 there were 39,702,735 shares of the Registrant's Common
Stock outstanding.
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SYNOPSYS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
March 31, 1996 and September 30, 1995 3
Condensed Consolidated Statements of Income-
Three months and six months ended
March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows-
Six months ended March 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYNOPSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, SEPTEMBER 30,
--------- -------------
1996 1995
---- ----
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 90,910 $ 91,193
Short-term investments 134,465 118,791
--------- ---------
Cash and short-term investments 225,375 209,984
--------- ---------
Accounts receivable, net of allowances of $2,947 and $2,813 51,439 42,863
Prepaid expenses, deferred taxes and other 24,853 9,681
--------- ---------
Total current assets 301,667 262,528
--------- ---------
Property and equipment, net 40,590 28,720
Capitalized software development costs, net of accumulated
amortization of $2,274 and $1,680 1,177 1,271
Other assets 5,357 5,052
--------- ---------
Total assets $ 348,791 $ 297,571
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 54,681 $ 48,744
Current portion of long-term debt 12,561 4,061
Income taxes payable 8,010 9,908
Deferred revenue 64,813 52,556
--------- ---------
Total current liabilities 140,065 115,269
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Long-term debt 19,625 --
Stockholders' equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized;
no shares outstanding -- --
Common stock, $.01 par value; 100,000,000 shares
authorized; 39,599,532 and 38,970,504 shares
outstanding 396 390
Additional paid-in capital 133,812 124,322
Retained earnings 55,188 57,838
Cumulative translation adjustment (295) (248)
--------- ---------
Total stockholders' equity 189,101 182,302
--------- ---------
Total liabilities and stockholders' equity $ 348,791 $ 297,571
========= =========
See accompanying notes
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SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
MARCH 31, MARCH 31,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Revenue:
Product $ 56,980 $43,707 $ 110,729 $ 83,716
Service 28,020 20,293 53,271 40,184
-------- ------- --------- --------
Total revenue 85,000 64,000 164,000 123,900
-------- ------- --------- --------
Cost of revenue:
Product 3,930 5,190 7,523 8,380
Service 5,263 3,081 10,004 6,489
-------- ------- --------- --------
Total cost of revenue 9,193 8,271 17,527 14,869
-------- ------- --------- --------
Gross margin 75,807 55,729 146,473 109,031
-------- ------- --------- --------
Operating expenses:
Research and development 20,441 13,505 38,643 26,737
Sales and marketing 32,599 24,632 62,922 48,079
General and administrative 6,467 5,492 12,808 10,415
In-process research and development 39,700 -- 39,700 --
-------- ------- --------- --------
Total operating expenses 99,207 43,629 154,073 85,231
-------- ------- --------- --------
Operating income (loss) (23,400) 12,100 (7,600) 23,800
Other income, net 1,700 1,169 3,550 1,808
-------- ------- --------- --------
Income (loss) before income taxes (21,700) 13,269 (4,050) 25,608
Income tax provision (benefit) (7,400) 4,951 (1,400) 9,484
-------- ------- --------- --------
Net income (loss) $(14,300) $ 8,318 $ (2,650) $ 16,124
======== ======= ========= ========
Earnings (loss) per share $ (.36) $ .21 $ (.07) $ .41
======== ======= ========= ========
Weighted average common shares
and equivalents where dilutive 39,494 40,050 39,360 39,802
See accompanying notes
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SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS; UNAUDITED)
SIX MONTHS ENDED
----------------
MARCH 31,
---------
1996 1995
---- ----
Cash flows from operating activities:
Net income (loss) $ (2,650) $ 16,124
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 7,727 9,337
Provision for doubtful accounts and sales returns 134 716
Tax benefit associated with stock options 2,000 5,000
Deferred revenue 12,257 8,805
Deferred taxes (14,811) (926)
In-process research and development 39,700 --
Net change in assets and liabilities:
Accounts receivable (8,710) (12,348)
Prepaid expenses and other (361) (28)
Other assets (330) (1,459)
Accounts payable and accrued liabilities 6,237 4,701
Income taxes payable (1,898) 3,442
-------- --------
Net cash provided by operating activities 39,295 33,364
-------- --------
Cash flows from investing activities:
Change in short-term investments (15,674) (40,206)
Purchases of property and equipment (18,978) (9,602)
Purchase of technology (11,375) --
Capitalization of software development costs (500) (500)
-------- --------
Net cash used in
investing activities (46,527) (50,308)
-------- --------
Cash flows from financing activities:
Principal payments on debt obligation (500) --
Proceeds from sale of common stock, net 7,496 7,460
-------- --------
Net cash provided by
financing activities 6,996 7,460
-------- --------
Effect of exchange rate changes on cash (47) 485
Net decrease in cash and cash equivalents (283) (8,999)
Cash and cash equivalents, beginning of period 91,193 51,941
-------- --------
Cash and cash equivalents, end of period $ 90,910 $ 42,942
======== ========
Supplemental Disclosure:
Cash paid during the period for:
Interest $ -- $ --
======== ========
Income taxes $ 12,018 $ 238
======== ========
Non-cash transactions:
Purchase of technology $ 28,500 $ --
======== ========
See accompanying notes
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited financial information furnished herein reflects all
adjustments, consisting only of normal recurring adjustments which in
the opinion of management are necessary to fairly state the Company's
and its subsidiaries' condensed consolidated financial position, the
results of their operations, and their cash flows for the periods
presented. This report on Form 10-Q should be read in conjunction with
the Company's Financial Report included in the Annual Report to
Stockholders for the year ended September 30, 1995. For financial
reporting purposes, the Company reports on a 13-week quarter and a 52
or 53-week year. For presentation purposes, the consolidated financial
statements refer to the quarter's calendar month end. The consolidated
results of operations for the period ended March 31, 1996 are not
necessarily indicative of the results to be expected for any subsequent
quarter or for the entire fiscal year.
2. Earnings per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the
period. Dilutive common equivalent shares consist of Common Stock
issuable upon exercise of stock options and warrants using the treasury
stock method.
3. On August 14, 1995, the Company announced a two-for-one stock split of
its common stock payable in the form of a stock dividend which was
distributed on September 8, 1995, to holders of record on August 25,
1995. On March 1, 1996, the Company's Amended and Restated Certificate
of Incorporation was amended to increase the number of shares the
Company is authorized to issue from 50,000,000 to 100,000,000 shares.
Fiscal 1995 per share and authorized amounts have been restated to
reflect the stock split and amendment of the Certificate of
Incorporation.
4. On February 1, 1996, the Company and International Business Machines
Corporation ("IBM") entered into a six-year Joint Development and
License Agreement Concerning EDA Software and Related Intellectual
Property (the "Agreement"). Pursuant to the Agreement, the Company
acquired certain in-process research and development technology and a
non-exclusive license to sublicense and to use certain existing IBM
electronic design automation ("EDA") technology and the underlying
intellectual property, and licensed certain of its EDA-related
intellectual property to IBM. In addition, the Company and IBM will
jointly develop new EDA products in the areas of synthesis, test
methodology, design planning and static timing sign-off. The Company
will have sole ownership of synthesis products and the exclusive right
to market test, design planning and static timing products (subject to
certain rights of IBM upon termination of the Agreement). The agreement
calls for the Company to pay IBM $11 million in cash and issue $30
million in notes, which bear interest at 3%, and are payable to IBM
upon the earlier of achievement of scheduled milestones or at maturity
in 2006. The Company will also pay royalties on revenues from the sale
of new products developed pursuant to the Agreement. As a result of the
transaction, the Company incurred an in-process research and
development charge of $39.7 million for the quarter ending March 31,
1996.
5. On May 7, 1996, the Company and Cooper and Chyan Technology, Inc.
(CCT) announced that they have signed agreements to enter into a
strategic relationship. As part of this strategic relationship, the
Company has purchased approximately 9.9 percent of the outstanding
shares of CCT, a developer of routing technology for printed circuit
boards and integrated circuits, for $14.50 per share. In connection
with the equity investment, the Company has been granted certain
rights to maintain its percentage ownership interest in CCT. The cash
investment represents 1,046,250 shares of stock purchased from
corporate officers as well as 160,292 newly issued shares. The
strategic relationship focuses on the development of new tools and
methodologies for designing multi-million gate integrated circuits
that utilize silicon geometries of quarter-micron and below.
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SYNOPSYS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Revenue for the second quarter of fiscal 1996 increased 33% to $85.0 million
from $64.0 million in the second quarter of fiscal 1995. Revenue for the first
six months of fiscal 1996 increased 32% to $164.0 million from $123.9 million
for the comparable period in fiscal 1995. This increase in revenue was primarily
attributable to increased worldwide licensing and sales of the Company's
software and systems products. Product revenue as a percentage of total revenue
was 67% and 68% in the second quarter and first half of fiscal 1996,
respectively, compared to 68% in the second quarter and first half of fiscal
1995.
International revenue as a percentage of total revenue decreased slightly to 52%
in the second quarter of fiscal 1996 from 53% in the second quarter of fiscal
1995. International revenue as a percentage of total revenue decreased to 49%
for the first six months of fiscal 1996 from 51% for the comparable period in
fiscal 1995. This decrease was primarily due to decreased revenue in Japan,
principally attributable to a decline in the value of the yen versus the dollar,
and Europe as a percentage of total revenue in the first half of fiscal 1996.
Cost of revenue as a percentage of total revenue decreased to 11% in the second
quarter and first six months of fiscal 1996, from 13% and 12% in the second
quarter and first half of fiscal 1995, respectively. Cost of revenue includes
personnel and related costs, production costs and amortization of capitalized
software development and purchased software costs. Cost of revenue as a
percentage of total revenue decreased in the second quarter and first half of
fiscal 1996, primarily due to a decrease in amortization expense.
Research and development expenses as a percentage of total revenue increased to
24% in the second quarter of fiscal 1996 from 21% in the second quarter of
fiscal 1995, and increased in absolute dollars to $20.4 million from $13.5
million. Research and development expenses as a percentage of total revenue also
increased to 24% in the first half of fiscal 1996 from 22% in the comparable
period in fiscal 1995, and increased in absolute dollars to $38.6 million from
$26.7 million. Increased research and development expenses reflect the Company's
commitment to invest in product and development and primarily reflect personnel
increases.
Sales and marketing expenses as a percentage of total revenue decreased slightly
to 38% in the second quarter and first six months of fiscal 1996 from 38% and
39% in the second quarter and first six months of fiscal 1995, respectively. In
absolute dollars, sales and marketing expenses increased to $32.6 million in the
second quarter of fiscal 1996 from $24.6 million in the second quarter of fiscal
1995. Sales and marketing expenses increased to $62.9 million in the first half
of fiscal 1996 from $48.1 million in the first half of fiscal 1995. Total sales
and marketing expenses increased as a result of continued expansion of the
Company's worldwide sales and marketing organizations and higher commissions and
bonuses associated with increased revenue.
General and administrative expenses as a percentage of total revenue were 8% in
the second quarter and first six months of fiscal 1996, compared to 9% and 8% of
total revenue in the second quarter and first six months of fiscal 1995,
respectively. In absolute dollars, general and administrative expenses were $6.5
million in the second quarter of fiscal 1996, compared to $5.5 million in the
second quarter of fiscal 1995. For the first half of fiscal 1996, general and
administrative expenses were $12.8 million, compared to $10.4 million for the
first half of fiscal 1995. This increase in total expenses was due principally
to personnel increases and investments in management information and control
systems.
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\The Company recorded an income tax benefit of 34% of the loss before income
taxes in the second quarter of fiscal 1996, compared to an income tax provision
of 37% of income before income taxes in the second quarter of fiscal 1995. The
decrease in the Company's tax rate was primarily due to a decrease in
nondeductible expenses partially offset by the lapse of the U.S. federal
research tax credit.
A net loss of $14.3 million was recorded in the second quarter of fiscal 1996,
compared to net income of $8.3 million recorded in the second quarter of fiscal
1995. The Company incurred an in-process research and development charge of
$39.7 million in the second quarter of fiscal 1996, in connection with the
acquisition of certain IBM technology. For the first half of fiscal 1996, the
net loss was $2.7 million, compared to net income of $16.1 million in the first
half of fiscal 1995.
The Company's book-to-bill ratio for the second quarter of fiscal 1996 was
greater than one-to-one. The book-to-bill ratio measures the ratio of accepted
orders to revenue.
Liquidity and Capital Resources
For the first six months of fiscal 1996, cash and short-term investments
increased $15.4 million to $225.4 million, net of a payment to IBM of $11.0
million. The increase in cash and short-term investments is due primarily to
cash generated from operations.
The Company believes that the existing cash and short-term investments balance
of $225.4 million and the existing credit facilities will be sufficient to meet
its currently anticipated liquidity and capital expenditure requirements for at
least the next twelve months.
Factors that Could Cause Actual Results to Differ Materially from Those
Projected
When used in the following discussion, the words "projects", "expects" and
similar expressions are intended to identify forward-looking statements. Such
statements, and the Company's results, are subject to certain risks and
uncertainties, including those discussed below, that could cause actual results
to differ materially from those projected or estimated.
The Company's future success depends upon its ability to enhance current
products and to develop and introduce new products that keep pace with
technological developments and address the increasingly sophisticated needs of
its customers. Much of the Company's growth has been attributable to the
strength of its synthesis products, a market segment in which the Company is
currently the leading supplier. Opportunities for growth in market share in this
segment are limited.
The Company is seeking to develop a balanced product portfolio. Among the most
important new products offered by the Company are its Behavioral Compiler and
Cell Based Array products. These products have achieved initial market
acceptance, but the Company will only derive significant revenue from these
products if they are accepted by a broad range of customers, which cannot be
assured. The Company is developing new products in the areas of design
planning, simulation and emulation, market segments in which the Company is not
currently the market leader and faces significant entrenched competition.
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The electronic design automation (EDA) industry is highly competitive. The
Company's products compete with similar products from other vendors and compete
with other EDA products and services for a share of the EDA budgets of their
customers. The EDA industry as a whole may experience pricing and margin
pressure as a result of changes in the overall computing environment, such as
faster and multiple processing CPUs, high-speed networks, and Internet-based
software distribution. Such competition may adversely affect the Company's
operating results and financial condition.
The Company's business has benefited from the rapid worldwide growth of the
semiconductor industry. The rate of growth of the semiconductor industry has
slowed in recent quarters, and the outlook for the remainder of 1996 is
uncertain. Slower growth in the semiconductor industry could have an adverse
effect on the Company's performance.
The Company recently entered into a six-year joint development and license
agreement with International Business Machines Corporation (IBM), pursuant to
which the Company and IBM will jointly develop certain new products that the
Company believes are important to the long-term growth of its business. The
Company has not previously entered into a joint development agreement of this
scope. Joint development of products is subject to risks and uncertainties over
and above those affecting internal development, and there can be no assurance
that the Company's joint development efforts will be successful.
The Company's success is dependent on the technical and other contributions of
key individuals, and there can be no assurance that the Company can continue to
recruit and retain such key personnel.
The Company attempts to manage its business to achieve quarter-to-quarter
revenue and earnings growth. The ability to manage such growth is affected by a
number of factors, including customer product demand, the size of the Company's
backlog and decisions regarding the timing of revenue recognition. In recent
years, the Company's orders have become more seasonal, with higher volumes in
the second and fourth quarters of the Company's fiscal year, and orders have
been disproportionately weighted toward the latter part of the quarter. In
addition, the average order size has increased. For a given quarter it is
possible for the Company to maintain steady revenue and earnings growth while
experiencing a slower rate of orders growth. Ultimately, long term revenue and
earnings growth is dependent upon the successful development and sale of the
Company's products and services over a sustained period of time.
In recent years, international revenue has accounted for approximately half of
the Company's revenue. As a result, the Company's financial performance could be
negatively affected by such factors as changes in foreign currency exchange
rates and changes in regional or worldwide economic or political conditions.
The Company's operating expenses are based in part on its expectations of future
revenue, and expense levels are generally committed in advance of revenue. The
Company continues to expand and increase its operating expenses in order to
generate and support additional revenue in the future. If revenue does not
materialize as expected, the Company's results of operations are likely to be
adversely affected. Net income may be disproportionately affected by a reduction
in revenue because only a small portion of the Company's expenses varies with
its revenue.
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The Company is currently engaged in a major project to upgrade its
enterprise-wide database and information management systems, based principally
on software from SAP AG. In recent years, some software and computer systems
companies undertaking major systems transitions have experienced significant
disruption as a result of unexpected delays in the implementation of these
projects. There can be no assurance that the Company's project will be completed
within the projected time frame or within budget.
The Company's stock price, like that of other technology companies, is subject
to significant volatility. Past financial performance should not be considered a
reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods. If revenues
or earnings in any quarter fail to meet expectations of the investment
community, there could be an immediate and significant impact on the Company's
stock price. In addition, the Company's stock price may be affected by broader
market trends that may be unrelated to the Company's performance.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the recorded amounts of assets and liabilities, disclosure of those
assets and liabilities at the date of the financial statements and the recorded
amounts of expenses during the reporting period. A change in the facts and
circumstances surrounding these estimates could result in a change to the
estimates and impact future operating results.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1995 annual meeting of stockholders was held on
March 1, 1996. The following directors were elected by the
stockholders:
Harvey C. Jones, Jr.
Aart J. de Geus
Deborah A. Coleman
William W. Lattin
A. Richard Newton
Steven C. Walske
The following additional matters were submitted to the
stockholders for vote at the meeting:
1. Approval of an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the number
of shares of Common Stock that the Company is authorized to
issue from 50,000,000 to 100,000,000. Of the total shares
voting on the foregoing resolution, 33,273,223 voted in favor,
1,368,140 against and 34,538 abstained.
2. Approval of an amendment to the Company's 1992 Stock Option
Plan to increase the number of shares authorized for issuance
thereunder on the first day of fiscal years 1997, 1998, and
1999, in each case by an amount equal to 5% of the weighted
average shares and share-equivalents outstanding during the
last quarter of the preceding fiscal year. Of the total shares
voting on the foregoing resolution, 17,787,187 voted in favor,
14,830,815 against and 61,063 abstained.
3. Approval of an amendment to the Company's Employee Stock
Purchase Plan and the International Employee Stock Purchase
Plan (the "Plans") to (a) increase the number of shares of
Common Stock reserved for issuance thereunder by 750,000
shares; (b) provide for the commencement of a new 24-month
enrollment period every six months; (c) expand the types of
compensation eligible for withholding under the Plans to
include commissions, bonuses and certain other cash
compensation; (d) permit participants to adjust their
withholding rate once during an enrollment period and (e)
permit the Plans to remain in effect (subject to the
authorization of additional shares) if all available shares
have been issued. Of the total shares voting on the foregoing
resolution, 28,887,068 voted in favor, 3,750,753 against and
41,244 abstained.
4. Ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending
September 30, 1996. Of the total shares voting on the
foregoing resolution, 34,931,770 voted in favor, 22,298
against and 40,935 abstained.
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ITEM 5. OTHER INFORMATION
On May 7, 1996, the Company and Cooper and Chyan Technology, Inc. (CCT)
announced that they have signed agreements to enter into a strategic
relationship. As part of this strategic relationship, the Company has purchased
approximately 9.9 percent of the outstanding shares of CCT, a developer of
routing technology for printed circuit boards and integrated circuits, for
$14.50 per share. In connection with the equity investment, the Company has
been granted certain rights to maintain its percentage ownership interest in
CCT. The cash investment represents 1,046,250 shares of stock purchased from
corproate officers as well as 160,292 newly issued shares. The strategic
relationship focuses on the development of new tools and methodologies for
designing multi-million gate integrated circuits that utilize silicon
geometries of quarter-micron and below.
In addition, on May 7, 1996, the Company announced that its Board of Directors
authorized a stock repurchase program under which up to 2.0 million shares, or
approximately 5%, of the Company's outstanding common stock may be acquired in
the open market. Under the program, share purchases may be made in the open
market at prevailing prices over the next 24 months. The purchases will be
funded from available working capital and the repurchased shares will be used
for ongoing stock issuances such as for existing employee stock plans.
Mr. A. Brooke Seawell, the Company's Senior Vice President for Finance and
Operations, and Chief Financial Officer, will be taking a planned four month
leave of absence from the Company beginning on May 18, 1996. During his absence,
Gregory C. Walker, Vice President for Finance, will assume the duties of
Treasurer and Chief Financial Officer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits
10.28 Lease dated January 2, 1996 between the Company and
Tarigo-Paul, a California Limited Partnership.
(b.) Reports on Form 8-K
The Company filed a report on Form 8-K on February 14, 1996
related to the Joint Development and License Agreement
Concerning EDA Software and Related Intellectual Property,
executed on February 1, 1996, between the Company and
International Business Machines Corporation.
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SYNOPSYS, INC.
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.
Date: May 14, 1996 SYNOPSYS, INC.
(Registrant)
By: /s/ A. Brooke Seawell
-------------------------------
A. Brooke Seawell
Sr. Vice President, Finance and Operations
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
Exhibit 10.18 Lease dated January 2, 1996 between the Company and
Tarigo-Paul, a California Limited Partnership
Exhibit 27 Financial Data Schedule