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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 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 NO. 0-25502
INFORMATION STORAGE DEVICES, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0197173
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2045 HAMILTON AVENUE
SAN JOSE, CA 95125
(Address of principal executive offices, including zip code)
(408) 369-2400
(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 August 2, 1996, there were outstanding 9,667,450 shares of the
Registrant's Common Stock.
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INFORMATION STORAGE DEVICES, INC.
INDEX
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Condensed Balance Sheets at December 31, 1995
and June 30, 1996 .........................................1
Condensed Statements of Operations for the Three Months
and Six Months Ended June 30, 1995 and 1996................2
Condensed Statements of Cash Flows for the
Six Months Ended June 30, 1995 and 1996....................3
Notes to Condensed Financial Statements....................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............5
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders......10
Item 6. Exhibits and Reports on Form 8-K...........................12
Signatures.................................................12
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
(In thousands)
JUNE 30, DECEMBER 31,
1996 1995
---------------- ----------------
ASSETS
Current Assets:
Cash and cash equivalents $ 33,956 $ 29,202
Short-term investments 19,042 45,892
Accounts receivable, net 4,138 7,554
Inventories 14,497 9,809
Other current assets 2,919 1,841
---------------- ----------------
Total current assets 74,552 94,298
Net property and equipment 5,661 5,244
Patents and other assets, net 1,762 1,355
Long-term investments 7,639 4,533
---------------- ----------------
Total Assets $ 89,614 $ 105,430
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,571 $ 9,784
Current portion of capitalized lease obligations 1,170 1,089
Accrued liabilities 1,324 2,312
Deferred revenue 2,103 1,834
---------------- ----------------
Total current liabilities 9,168 15,019
Long-term Liabilities:
Capitalized lease obligations, net of current portion 2,361 2,630
Deferred rent 169 183
Other non-current liabilities 145 145
---------------- ----------------
Total long-term liabilities 2,675 2,958
Shareholders' Equity:
Common stock 79,306 86,256
Deferred compensation (1,058) (116)
Retained earnings (deficit) (472) 1,313
Unrealized gain on investments (5) --
---------------- ----------------
Total shareholders' equity 77,771 87,453
---------------- ----------------
Total Liabilities and Shareholders' Equity $ 89,614 $ 105,430
---------------------------------------------------------------------------- ---------------- ---- ----------------
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CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------- ------------------------------
1996 1995 1996 1995
-------------- -------------- ------------- ------------
Net revenues $ 11,183 $ 14,234 $ 23,518 $ 27,239
Cost of goods sold 7,154 8,873 16,581 17,161
-------------- -------------- ------------- ------------
Gross margin 4,029 5,361 6,937 10,078
Operating Expenses:
Research and development 1,868 1,476 5,988 2,883
Selling, general and administrative 2,419 2,239 5,029 4,007
-------------- -------------- ------------- ------------
Total operating expenses 4,287 3,715 11,017 6,890
-------------- -------------- ------------- ------------
Income (loss) from operations (258) 1,646 (4,080) 3,188
Interest and other income, net 552 390 1,334 523
-------------- -------------- ------------- ------------
Income (loss) before income taxes 294 2,036 (2,746) 3,711
Provision (benefit) for income taxes 103 712 (961) 1,298
-------------- -------------- ------------- ------------
Net income (loss) $ 191 $ 1,324 $ (1,785) $ 2,413
============== ============== ============= ============
Earnings (loss) per share $ 0.02 $ 0.15 $ (0.18) $ 0.29
============== ============== ============= ============
Shares used in computing amounts per share 9,886 8,688 9,955 8,181
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CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
SIX MONTHS ENDED JUNE 30,
----------------------------
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,785) $ 2,413
Adjustments to reconcile net income (loss) to net cash
provided by operating activities-----
Depreciation and amortization 1,198 920
Amortization of investment discount 72 --
Compensation costs related to stock and stock option grant 185 22
Provision for allowance for doubtful accounts and returns 20 180
Changes in assets and liabilities-----
Accounts receivable 3,397 (1,442)
Inventories (4,688) (1,054)
Prepaid expenses and other assets (991) (932)
Accounts payable (5,213) 765
Accrued liabilities and bonuses (989) 25
Deferred revenue 269 1,009
Deferred rent (14) 123
------------ ------------
Net cash provided by (used for) operating activities (8,539) 2,029
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,172) (246)
Change in other assets (483) (12)
Purchase of short-term investments (21,897) (20,982)
Proceeds from maturities of short-term investments 49,186 4,924
Purchase of long-term investments (3,709) (2,529)
------------ ------------
Net cash provided by (used for) investing activities 21,925 (18,845)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of issuance costs 306 23,697
Repurchase of common stock (8,382) --
Payments on capitalized lease obligations (556) (574)
------------ ------------
Net cash provided by (used for) financing activities (8,632) 23,123
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,754 6,307
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,202 7,604
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 33,956 $ 13,911
=============== ============
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NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation:
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. 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 condensed financial statements should be read in conjunction
with the financial statements and notes thereto for the year ended December 31,
1995.
The unaudited condensed financial statements included herein reflect all
adjustments (which include only normal, recurring adjustments) that are, in the
opinion of management, necessary to state fairly the results for the periods
presented. The results for such periods are not necessarily indicative of the
results to be expected for the full fiscal year.
2. Inventories:
Inventories consist of material, labor and manufacturing overhead and are stated
at the lower of cost (first-in, first-out basis) or market. The components of
inventory are as follows (in thousands):
June 30, 1996 December 31, 1995
------------- -----------------
Work-in-process.................... $ 9,247 $ 5,706
Finished goods..................... 5,250 4,103
-------- -------
$ 14,497 $ 9,809
======== =======
3. Earnings (Loss) Per Share:
Earnings (loss) per share has been computed using the weighted average number of
shares of common stock, and, when dilutive, common equivalent shares from
convertible preferred stock and common equivalent shares from stock options
outstanding (using the treasury stock method). Pursuant to the Securities and
Exchange Commissions Staff Accounting Bulletins, common and common equivalent
shares issued during the twelve-month period prior to the Company's initial
public offering in 1995 have been included in the 1995 calculation as if they
were outstanding for all periods prior to the public offering (using the
treasury stock method and the initial offering price).
4. Repurchase of Common Stock:
In January 1996, the Company's Board of Directors approved a stock repurchase
plan of up to one million shares of common stock. During the quarters ended
March 31, 1996, and June 30, 1996 the Company repurchased 835,000 and 50,000
shares respectively, on the open market at prices ranging from $8.125 to $12.000
for a total of $8.4 million.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This report includes forward looking statements that involve a number
of risks and uncertainties. The following includes a discussion of factors that,
among other factors, could cause actual results to differ materially. For
reference and discussion, see also "Other Factors That May Affect Operating
Results" on page 16 of the ISD 1995 Annual Report and the factors discussed in
ISD's Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission.
OVERVIEW
ISD designs, develops, and markets single-chip integrated circuit
products for voice recording and playback, using its proprietary ChipCorder
high-density multilevel storage technology and its mixed signal expertise. The
Company directs its marketing and product development efforts toward the
consumer, communications and industrial markets. The Company distributes its
products through a direct sales organization and a worldwide network of sales
representatives and distributors. The Company was incorporated in California in
December 1987 and introduced its first product in February 1991.
ISD subcontracts with independent foundries to fabricate the wafers for
all of its products. This approach enables the Company to concentrate its
resources on the design and test areas, where the Company believes it has the
greatest competitive advantage, and eliminates the high cost of owning and
operating a semiconductor wafer fabrication facility. The Company depends on
these foundries to allocate to the Company a portion of their foundry capacity
sufficient to meet the Company's needs, to produce products of acceptable
quality and with acceptable manufacturing yields and to deliver those products
to the Company on time.
Because of the demand for the Company's products and because of long
lead times necessary to secure additional foundry capacity, the Company is on
schedule to complete qualification of another foundry supplier by the end of
1996. Although the Company believes that current capacity is adequate to meet
the Company's current anticipated needs, there can be no assurance that the
Company will be able to qualify additional foundry capacity or otherwise obtain
needed quantities within expected time frames or at all.
Moreover, in order to reduce future manufacturing costs, the Company is
designing smaller die sizes with smaller geometry processes to increase the
number of die produced on each wafer. The Company's ability to remain
competitive depends on migrating its manufacturing to smaller geometries, in
particular certain of its products to the 0.8 micron geometry. A problem was
encountered with such a transition in the first quarter of 1996, resulting in a
write-off of in-line product and of a write-down of certain finished goods
inventory, as well as a delay in the conversion. Although management believes
the problems that delayed the 0.8 micron conversion have been identified and
solutions have been implemented, expected cost reductions from this conversion
have not yet been realized, and there can be no assurance that the Company's
foundries will achieve or maintain acceptable cost reductions, manufacturing
yields, and process control in the future or that sudden declines in yields will
not occur. Failures to improve, or fluctuations in, manufacturing yields and
process
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controls, particularly at times when the Company is experiencing severe pricing
pressures from its customers or its competitors, would have a material adverse
effect on the Company's results of
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of net revenues, each
line item in the Company's statements of operations for the periods indicated.
- -------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
- -------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
---- ---- ---- ----
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 64.0 62.3 70.5 63.0
----- ----- ----- -----
Gross margin 36.0 37.7 29.5 37.0
----- ----- ----- -----
Operating expenses:
Research and development 16.7 10.4 25.5 10.6
Sales, general and administrative 21.6 15.7 21.4 14.7
----- ----- ----- -----
Total operating expenses 38.3 26.1 46.9 25.3
----- ----- ----- -----
Income (loss) from operations (2.3) 11.6 (17.4) 11.7
----- ----- ----- -----
Other income (expense), net 4.9 2.7 5.7 1.9
----- ----- ----- -----
Income (loss) before income taxes 2.6 14.3 (11.7) 13.6
Provision (benefit) for income taxes .9 5.0 (4.1) 4.7
----- ----- ----- -----
Net income (loss) 1.7% 9.3% (7.6%) 8.9%
- -------------------------------------------------------------------------------------------------------------
NET REVENUES
During the six months ended June 30, 1996, the Company's net revenues
were principally derived from the sale of integrated circuits for voice
recording and playback. Net revenues for the second quarter of 1996 were $11.2
million or 21% lower than the $14.2 million of net revenues for the second
quarter of 1995. Revenues for the six months ended June 30, 1996 were $23.5
million. This was a 14% decrease from the revenues of $27.2 million in the first
half of 1995.
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During the second quarter, sales to the Company's top ten customers
accounted for 88% of net revenues compared to 67% in the second quarter of 1995.
During the second quarter of 1996, the top customers were Marubun (the Company's
Japanese distributor) at 30%, Motorola at 28% and Sanyo at 15% compared to
Marubun at 17%, Sanyo at 13% and Voice It at 12% for the same period of 1995.
The loss of, or significant reduction in purchases by, a current major customer
would have a material adverse effect on the Company's financial condition and
results of operations if the Company is unable to obtain the orders from new or
other customers to offset such losses or reductions.
The Company experienced a continuing softness in the consumer market
resulting in an overall decrease in net revenues for both the three and six
months ending June 30, 1996 in comparison to the same periods in the prior year.
The breakdown of net revenues by market segment for the second quarter of 1996
was 12% consumer, 81% communications, and 7% industrial. During the second
quarter of 1995, the breakdown was approximately 53% consumer, 42%
communications and 5% industrial. The Company's consumer customers in the
current quarter continued purchasing the Company's products primarily for use in
personal memo recorders, cameras, photo frames, books, educational toys and
novelties. The Company's communications customers represented products
consisting primarily of telephone answering machines, cellular phones, pagers
and personal handy phones. The company anticipates that the consumer market may
continue to be soft throughout the remained of 1996. The failure of new
applications or markets to develop or the failure of existing markets,
particularly the communications market, to continue to be receptive to the
Company's products or to offset reduced revenues from the consumer market could
have a material adverse effect on the Company's business, financial condition,
and results of operations.
International sales for the second quarter of 1996 were 72%, the same
as the second quarter of 1995. Sales to Asia were 62% in the second quarter of
1996, down from 68% in 1995, and sales to Europe were 10% in the second quarter
of 1996, up from 4% in the second quarter of 1995. Sales to Japan accounted for
45% of total sales in the second quarter of 1996, up from 31% in the previous
year. North American sales were 28% in the second quarter of 1996, down from 30%
for the same period last year. The decrease in sales to Asia in 1996 is
primarily a result of the softening in the consumer market, as mentioned above.
Due to its reliance on export sales and its dependence on foundries outside the
United States, the Company is subject to the risks of conducting business
internationally, including foreign government regulation and general
geopolitical risk such as political and economic instability, potential
hostilities, changes in diplomatic and trade relationships, and currency
fluctuation, any of which could have a material effect on the Company's
financial conditions or results of operations.
GROSS MARGIN
The Company's gross margin for the second quarter of 1996 was $4.0
million. This was a 25% decrease from the $5.4 million gross margin for the
second quarter of 1995. Gross margin as a percentage of sales for the second
quarter of 1996 decreased to 36% from 37% for the second quarter of 1995. The
reduction in gross margin is primarily the result of three factors: the value of
certain inventory items were written down for obsolescence, certain prices have
been reduced (as announced in the first quarter of 1996) however, the lower cost
expected from the conversion to the 0.8 micron line has not yet been realized,
and lower net revenues in the second quarter of 1996.
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The Company is subject to a number of factors which may have an adverse
impact on gross margin, including the availability and cost of product from the
Company's suppliers, changes in the mix of products sold, and the timing of new
product introductions and volume shipments. In addition, the markets for the
Company's products are characterized by intense price competition. To the extent
that the Company fails to facilitate its customers' opening of new markets, or
loses revenue to competition, or experiences yield or other production problems
or shortages in supply that increase its manufacturing costs, or fails to
reduce its manufacturing costs, it would have a material adverse effect on the
Company's financial condition and results of operations.
RESEARCH AND DEVELOPMENT
Research and development expenses were $1.9 million or 17% of net
revenues in the second quarter of 1996, compared to $1.5 million or 10% of net
revenues in the same period of 1995. The increase in research and development
expense was primarily due to an increase in personnel for new product
development and enhancement of existing products. In addition, the Company
increased its expenditures for materials, including wafers and masks, related to
such development activities. The Company has also made a significant investment
to continue to strengthen its technology capability by creating a technology
department and hiring related personnel. Research and development expenses are
expected to increase; however, there can be no assurance that new products will
be successfully developed or achieve market acceptance, that yield problems will
not arise in the future, or that the need to improve product yields might not
recur with existing or new products or fabrication processes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $2.4 million or 22%
of net revenues in the second quarter of 1996, compared to $2.2 million or 16%
of net revenues in the second quarter of 1995. The increase in selling expenses
for the second quarter of 1996 continues to be a result of the Company's
commitment to expanding its marketing efforts with participation in public
relations, tradeshows, advertising, web site development, as well as the
addition of more sales and marketing personnel including a Japanese Sales
Manager and a Pacific Area Sales Manager. Selling expenses are expected to
increase to the extent revenue increases as a result of additional personnel and
increased commissions. The increases in general and administrative costs come
from additional professional fees, including legal and accounting, and office
rent and insurance.
OTHER INCOME, NET
Net other income was $0.6 million for the second quarter of 1996
compared to net other income of approximately $0.4 million for the same period
of 1995. Net other income for 1996 primarily represents interest income earned
on the proceeds of the Company's initial and secondary public offerings of
common stock.
PROVISION FOR INCOME TAXES
The Company recorded an income tax provision for the second quarter of
1996, using an effective income tax rate of 35%. There is, however, a tax
benefit recorded for the six months ending June 30, 1996. The benefit, which is
at a rate of 35% of the year to date loss, is included
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in other assets in the accompanying balance sheet. The effective tax rate of 35%
for both of 1995 and 1996 represents applicable statutory rates, partially
offset by research and development tax credits and net operating loss carry
forwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a line of credit with a commercial bank under which the
Company may borrow up to $9 million, based on eligible accounts receivable and
$15 million based on eligible investments, with a term through June 30, 1997. At
June 30, 1996, the Company's borrowing base was approximately $8.7 million and
there were no borrowings outstanding under this line of credit, but it is
being used to guarantee letters of credit. The line of credit does not restrict
the Company from paying cash dividends on its capital stock but does require
that the Company maintain a ratio of total indebtedness to tangible net worth of
not more than 1 to 1 and a ratio of current assets to current liabilities of not
less than 2 to 1. The Company is currently in compliance with all financial
covenants in the line of credit agreement. As of June 30, 1996, the amount of
unrestricted equity available for distribution as a result of these covenants
was $56.2 million.
The Company's operating activities used net cash of $8.5 million in the
first six months of 1996, primarily due to an increase in inventory and a
decrease in accounts payable. The Company's repurchase of common stock,
discussed in Note 4 to Condensed Financial Statements, used $8.4 million of
cash, and the Company has announced the intent to repurchase up to 100,000
additional shares in the third quarter of 1996. Capital purchases were $1.2
million in the first six months of 1996. The Company's capital equipment needs,
including wafer sort and final test equipment, computer hardware and software
and other office related items, are currently budgeted at approximately $2.0
million through the end of 1996. The Company has agreements with two capital
equipment leasing companies providing aggregate lease lines of $2.5 million of
which $1.6 million was available on June 30, 1996.
At June 30, 1996, the Company had cash, cash equivalents and short-term
investments of $53 million, long-term investments (tax free bonds maturing in
more than one year) of $7.6 million, and working capital of $65.4 million. The
Company believes its existing cash, cash equivalents and short-term investments
and its available line of credit and current equipment lease lines, will satisfy
the Company's projected working capital and capital expenditure requirements
through at least the next twelve months.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant held its Annual Meeting of Shareholders on May
22, 1996 (the "Meeting").
(c) The following matters were voted upon at the Meeting:
1. Election of four (4) directors of the Company. The
four (4) nominees were, and the voting tabulation
with respect to each nominee was, as follows:
VOTES CAST FOR EACH DIRECTOR
Total Votes For Total Votes Withheld
Each Director From Each Director
--------------- ---------------------
Eugene J. Flath 9,236,666 71,927
David L. Angel 9,217,034 91,559
Frederick B. Bamber 9,236,666 71,927
Frederick L. Zieber 9,231,666 76,927
2. Proposal to approve an amendment for the Company's
1994 Equity Incentive Plan (the "Incentive Plan")
that increases the number of shares of the Company's
Common Stock reserved for issuance thereunder by
1,000,000 shares. The voting tabulation with respect
to this proposal was as follows:
For Against Abstain Broker Non-Votes
---------- --------- -------- ----------------
4,519,284 1,649,586 21,104 3,118,619
3. Proposal to approve amendments to each of the Incentive
Plan and the Company's 1987 Stock Option Plan (the "1987
Plan") to automatically accelerate, in the event of: (i) a
merger or acquisition in which the Company is not the
surviving entity (except for a transaction the principal
purpose of which is to change the State in which the Company
is incorporated), (ii) the sale, transfer or other disposition
of all or substantially all of the assets for the Company or
(iii) any other corporate reorganization or business
combination that is not approved by the Board and in which the
beneficial ownership of 50% or more of the Company's
outstanding voting stock is transferred, the exercisability of
all outstanding options granted under the Incentive Plan and
1987 Plan if such options are not assumed or replaced with
similar options of such successor corporation. The voting
tabulation with respect to this proposal was as follows:
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For Against Abstain Broker Non-Votes
---------- --------- -------- ----------------
8,503,719 335,147 21,450 448,227
4. Proposal to approve an amendment to the Company's 1994
Directors Stock Option Plan (the "1994 Directors Plan"): (i)
to reduce the period during which options granted pursuant to
the 1994 Directors Plan become exercisable from four (4) years
to one (1) year, other than the 1996 grant which will fully
vest on December 31, 1996, with options vesting monthly
following the date of grant; and (ii) to change the date of
grant of the automatic "succeeding" option grants to directors
from each such director's anniversary date of joining the
Board to, in 1996, March 21, 1996, the date of approval of
this amendment by the Compensation Committee of the Company's
Board of Directors, and in 1997 and in all succeeding years,
January 1 of each such year. The voting tabulation with
respect to this proposal was as follows:
For Against Abstain Broker Non-Votes
---------- --------- -------- ----------------
8,398,184 417,922 44,210 448,277
5. Proposal to select Arthur Andersen LLP as the Company's
independent auditors to perform the audit of the Company's
financial statements for the year ending December 31, 1996.
The voting tabulation with respect to this proposal was as
follows:
For Against Abstain Broker Non-Votes
---------- --------- -------- ----------------
9,242,697 60,216 5,680 0
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith.
Exhibit
Number Exhibit Title
- ------- -------------
10.01- 1987 Stock Option Plan, as amended, and related documents.
10.24- Form of Amended and Restated Employment Agreement dated May 14, 1996
between Registrant and certain of the Company Executive Officers.
11.01- Statement regarding computation of per share earnings.
27.01- Financial Data Schedule
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.
INFORMATION STORAGE DEVICES, INC.
(Registrant)
Date: August 9, 1996
----------------------------------------------------
Felix J. Rosengarten
Vice President, Finance and Administration and Chief
Financial Officer
(Principal Financial and Accounting Officer and Duly
Authorized Officer)
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