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To: Time Traveler who wrote (480)	7/4/1998 12:27:00 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 754

<<A 50% distribution is certainly a potential problem. Is there anyway we can lay this number to rest?>> Actually I disagree that it is a problem in general. If you'll remember, the last hiccup a few quarters ago was primarily blamed on OEM inventory accumulation. Splitting sales between OEM and distribution gives another dimension of diversification. Of course, if overall end market demand dives, both paths will be affected. To see what happens to a company that is overly dependent on OEMs, look at the history of the disk drive component suppliers as they go from feast to famine. As far as the percentage of distribution goes, the following come from the 1995 Annual Report - page 12 - "... Additional sales contacts are provided through eight independent distribution sales organizations with over 100 sales locations throughout North America." page 25 - "... In fiscal 1995, sales to two of the Company's domestic distributors represented 13% and 10% of net sales for the fiscal year." So we have 23% before counting domestic distributors ranked 3 through 8 and all foreign distribution. Regards, Don