UNITED STATES
                       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 June 30, 1997

                                       or

[ ]  TRANSITION  REPORTS  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________


                         Commission File Number: 0-26082


                                  VIDAMED, INC.
             (exact name of registrant as specified in its charter)



          Delaware                                         77-0314454
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


                              46107 Landing Parkway
                                Fremont, CA 94538
                    (Address of principal executive offices)

                                 (510) 492-4900
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
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. [ X ] Yes [ ] No

The number of outstanding  shares of the  registrant's  Common Stock,  $.001 par
value, was 12,586,158 as of July 25, 1997.

                                                        Page 1 of 15
                                                        Exhibit Index At Page 14

<PAGE>

<TABLE>
                                  VIDAMED, INC.

                                      INDEX

<CAPTION>
PART I: FINANCIAL INFORMATION
                                                                                        Page
<S>          <C>                                                                         <C>
Item 1.      Condensed consolidated financial statements - unaudited

             Condensed consolidated balance sheets - June 30, 1997
                  and December 31, 1996                                                   3

             Condensed consolidated statements of operations - three months
                  ended June 30, 1997 and 1996 and six months ended                       4
                  June 30, 1997 and 1996

             Condensed consolidated statements of cash flows - six months
                  ended June 30, 1997 and 1996                                            5

             Notes to condensed consolidated financial statements                         6

Item 2.      Management's discussion and analysis of financial condition
                 and results of operations                                                9


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

             Signatures                                                                  13

                                                                               Page 2 of 15
</TABLE>

<PAGE>


                          PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                  VidaMed, Inc.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

                                                           June 30, December 31,
                                                             1997        1996
                                                           --------    --------
                                                         (Unaudited)      (*)
Assets
Current Assets:
     Cash and cash equivalents                             $  6,006       3,879
     Short-term investments                                    --         1,976
     Accounts Receivable                                      3,502       2,413
     Inventory                                                1,777       1,447
     Other current assets                                     1,246         665
                                                           --------    --------
           Total current assets                              12,531      10,380

     Property and equipment, net                              2,395       2,259
     Other assets, net                                          237         208
                                                           --------    --------
           Total assets                                    $ 15,163    $ 12,847
                                                           ========    ========

Liabilities and stockholders' equity Current liabilities:
     Notes payable, current portion                        $  1,026    $  1,064
     Accounts payable                                         1,563       1,246
     Accrued professional fees                                  435         498
     Accrued clinical trial costs                               850         982
     Accrued and other liabilities                            4,187       3,114
     Current portion of obligations under capital leases        221         470
     Deferred revenue, current portion                          621         467
                                                           --------    --------
           Total current liabilities                          8,903       7,841

     Notes payable, noncurrent                                 --           480
     Other long-term liabilities                                778         825

Stockholders' equity:
     Capital stock                                           65,637      55,577
     Accumulated deficit                                    (60,155)    (51,876)
                                                           --------    --------
           Total stockholders' equity                         5,482       3,701
                                                           --------    --------
           Total liabilities and stockholders' equity      $ 15,163    $ 12,847
                                                           ========    ========

* The Balance  Sheet at  December  31,  1996 has been  derived  from the audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

                             See accompanying notes.

                                                                    Page 3 of 15

<PAGE>

<TABLE>
                                                            VidaMed, Inc.
                                           Condensed Consolidated Statements of Operations
                                               (In thousands except per share amounts)
                                                             (Unaudited)

<CAPTION>
                                                                        Three Months Ended                   Six Months Ended
                                                                              June 30,                             June 30,
                                                                     --------------------------          --------------------------
                                                                       1997             1996               1997              1996
                                                                     --------          --------          --------          --------
<S>                                                                  <C>               <C>               <C>               <C>     
Revenues:
     Product sales, net                                              $  2,103          $    496          $  5,355          $    876
     License fees and grant revenue                                        50               107               100               215
                                                                     --------          --------          --------          --------
     Net revenues                                                       2,153               603             5,455             1,091

Cost of Products Sold                                                   1,265               832             3,048             1,622
                                                                     --------          --------          --------          --------
     Gross Profit (Loss)                                                  888              (229)            2,407              (531)

Operating Expenses:
     Research and development                                           1,456             1,339             3,354             2,751
     Selling, general and administrative                                3,865             1,997             7,223             3,611
                                                                     --------          --------          --------          --------
     Total operating expenses                                           5,321             3,336            10,577             6,362

     Loss from operations                                              (4,433)           (3,565)           (8,170)           (6,893)

Other income(expense), net                                               (102)               11              (109)                8
                                                                     --------          --------          --------          --------
Net loss                                                             $ (4,535)         $ (3,554)         $ (8,279)         $ (6,885)
                                                                     ========          ========          ========          ========
Net loss per share                                                   $   (.38)         $   (.34)         $   (.72)         $   (.70)
                                                                     ========          ========          ========          ========
Shares used in computing net loss per share                            11,913            10,420            11,521             9,885
                                                                     ========          ========          ========          ========

<FN>
                                                       See accompanying notes.
</FN>

                                                                                                                        Page 4 of 15
</TABLE>

<PAGE>


                                  VidaMed, Inc.
                 Condensed Consolidated Statement of Cash Flows
                                 (In thousands)
                                   (Unaudited)


                                                              Six Months Ended
                                                                  June 30,
                                                           --------------------
                                                             1997        1996
                                                           --------    --------
Cash flows from operating activities:
     Net loss                                              $ (8,279)   $ (6,885)
     Adjustments to reconcile net loss to net cash
         used in operating activities:
           Depreciation and amortization                        670         712
           Other                                                  1          29
           Changes in assets and liabilities:
               Accounts Receivable                           (1,089)       (234)
               Inventory                                       (330)        279
               Other current assets                            (581)        126
               Other assets                                     (29)         13
               Accounts payable                                 317          97
               Accrued and other liabilities                    878         179
               Deferred revenue                                 217        (212)
                                                           --------    --------
Net cash used in operating activities                        (8,225)     (5,896)
                                                           --------    --------

Cash flows from investing activities:
     Expenditures for property and equipment                   (758)       (451)
     Purchase of short-term investments                        --        (7,846)
     Proceeds from maturities of short-term investments       1,976       8,834
                                                           --------    --------
Net cash provided by investing activities                     1,218         537
                                                           --------    --------

Cash flows from financing activities:
     Net cash proceeds from issuance of Common Stock         10,002         365
     Principal payments under capital leases                   (318)       (345)
     Principal payments of long-term debt                       (32)        (10)
     Principal payments of notes payable                       (518)     (3,162)
     Net proceeds from issuance of notes payable
         and convertible notes                                 --         9,676
                                                           --------    --------
Net cash provided by financing activities                     9,134       6,524
                                                           --------    --------
Net increase in cash and cash equivalents                     2,127       1,165
Cash and cash equivalents at the beginning
  of the period                                               3,879       5,687
                                                           --------    --------
Cash and cash equivalents at the end of the period         $  6,006    $  6,852
                                                           ========    ========

                             See accompanying notes.

                                                                    Page 5 of 15

<PAGE>


                                  VIDAMED, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1997
                                   (Unaudited)

1.       Basis of presentation

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
VidaMed, Inc. (the "Company" or "VidaMed") have been prepared in accordance with
generally accepted accounting  principles for interim financial  information and
with the  instructions  for Form 10-Q and  Article  10 of  Regulation  S-X.  The
balance sheet as of June 30, 1997 and the statements of operations for the three
and six months ended June 30, 1997 and 1996,  and the  statements  of cash flows
for the six months ended June 30, 1997 and 1996,  are  unaudited but include all
adjustments  (consisting  of normal  recurring  adjustments)  which the  Company
considers  necessary for a fair  presentation of the financial  position at such
dates and the operating  results and cash flows for those periods.  Although the
Company believes that the disclosures in these financial statements are adequate
to make the information  presented not misleading,  certain information normally
included in financial  statements and related  footnotes  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
The  accompanying  financial  statements  should be read in conjunction with the
financial  statements and notes thereto  included in the Company's annual report
on Form 10-K for the year ended  December 31, 1996 filed with the Securities and
Exchange Commission.

Results for any interim period are not necessarily indicative of results for any
other interim period or for the entire year.

2.       Net loss per share

Net loss per share is computed  using the weighted  average  number of shares of
common stock outstanding during the periods presented.  Common equivalent shares
are excluded from the computation as their effect is  antidilutive.  In February
1997,  the  Financial  Accounting  Standards  Board  issued  Statement  No. 128,
Earnings per Share,  which is required to be adopted on December  31,  1997.  At
that time,  the Company will be required to change the method  currently used to
compute  loss  per  share  and to  restate  all  prior  periods.  Under  the new
requirements for calculating  primary earnings per share or "basis" earnings per
share the  dilutive  effect of stock  options  will be  excluded.  The impact of
Statement  128 on the  calculation  of loss  per  share  is not  expected  to be
material.

3.       Inventories

Inventories  are  stated at the lower of cost  (determined  using the  first-in,
first-out method) or market value. Inventories at June 30, 1997 and December 31,
1996 consist of the following:

                                             June 30,        December 31,
                                               1997            1996
                                           ----------       ----------
        Raw materials                      $  424,000       $  600,000
        Work in process                       108,000          174,000
        Finished goods                      1,245,000          673,000
                                           ----------       ----------
                                           $1,777,000       $1,447,000
                                           ==========       ==========

                                                                    Page 6 of 15

<PAGE>

4.       Common stock

In February 1997, the Company entered into an equity financing  agreement with a
European  investment  bank under which the Company  may, at its option,  sell to
such  investment  bank up to $10.0 million of VidaMed common stock in increments
up to $2.5 million. Under this arrangement,  the common stock is priced at a 10%
discount to the current market price at the time of sale,  subject to adjustment
based on a formula  linked to the market  price of the  Company's  common  stock
during the 21 trading days following the sale. Concurrent with each common stock
issuance under this  arrangement,  the Company  issues to the investment  bank a
warrant to purchase one share of common stock for each 10 shares of common stock
purchased under the  arrangement.  The exercise price of the warrant is equal to
the adjusted  purchase price for the common stock multiplied by 1/0.9,  with the
resulting  product  multiplied  by 1.25.  Each warrant has a term of three years
from the date of issuance.

As of June 30, 1997 the Company had  completed  four  issuances  of common stock
under the arrangment,  resulting in $9.5 million in net proceeds to the Company.
The following  table  summarizes  the issuance of common stock shares under this
arrangment:

                  Sale #        Net Proceeds           Shares Issued
                  ------        ------------           -------------
                    1            $2,475,000               286,123
                    2            $2,646,000               404,040
                    3            $2,228,000               360,202
                    4            $2,121,000               415,838


The fourth sale  includes the issuance of an  additional  11,798  shares in July
1997 at the  conclusion  of the fourth  pricing  period due to adjustment of the
purchase price.

                                                                    Page 7 of 15

<PAGE>


ITEM 2.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations for the three and six months ended June 30, 1997 and 1996,  should be
read in conjunction with the  Management's  Discussion and Analysis of Financial
Condition and Results of Operations  included in the Company's  Annual Report on
Form 10-K for the year ended December 31, 1996.

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations   contains   forward-looking   statements  which  involve  risks  and
uncertainties.  The Company's actual results may differ significantly from those
anticipated by the forward-looking  statements.  Factors that might cause such a
difference  include,  but are not limited to, those  discussed  below and in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.

Overview

VidaMed has a limited  history of  operations  and has  experienced  significant
operating  losses since its  inception.  As of June 30, 1997, the Company had an
accumulated deficit of $60.2 million. The Company commenced  international sales
of its  TransUrethral  Needle  Ablation  ("TUNA") system in late 1993 and United
States sales in October 1996.  Revenues for the quarters ended June 30, 1997 and
1996 include license fees for  distribution  rights in Japan and for the quarter
ended June 30, 1996 includes a United Kingdom  government grant which ended June
30, 1996.

VidaMed anticipates that a substantial amount of its revenues from product sales
in the future will be from sales in the United States. In the United States, the
Company markets the TUNA System through a network of five VidaMed sales managers
and  approximately  35  independent  dealers and  representatives.  A network of
distributors,  supported by VidaMed staff, cover other countries in Europe, Asia
and South America.  The Company filed a premarket 510(k)  notification  with the
Food and Drug  Administration  ("FDA") for the TUNA  System in March  1996.  The
company  received FDA  clearance to market the TUNA System for the  treatment of
symptoms associated with BPH in the United States on October 8, 1996. In October
1996 the Company  applied to the  American  Medical  Association  for a CPT code
which  will  become  part of the 1998  Federal  Register.  The CPT code  enables
Medicare   reimbursement  to  occur  on  a  routine  basis  within   established
reimbursement amounts. Prior to the issuance of a CPT code there is no assurance
of  Medicare   reimbursement   of  the  TUNA   procedure  and  decisions   about
reimbursement are made on an individual basis.

The Company expects its operating  losses to continue  through at least the next
four  quarters as it continues to expend  substantial  resources in expansion of
marketing  and sales  activities  as a result of FDA  clearance of the Company's
510(k) premarket  notification  for the TUNA System,  funding clinical trials in
support of regulatory and reimbursement approvals, and research and development.
The Company's future  profitability will be dependent upon, among other factors,
market   acceptance  of  the  TUNA  System  and   availability   of  third-party
reimbursement for procedures performed with the TUNA System.

Although the Company has received FDA clearance of its 510(k)  notification  for
the TUNA System for treatment of symptoms  associated with BPH and has commenced
marketing  of the TUNA System in the United  States,  there can be no  assurance
that the TUNA System will be deemed  clinically or cost effective by many health
care providers and payors, will be deemed superior to other current and emerging
methods

                                                                    Page 8 of 15

<PAGE>

for treating BPH or will achieve  significant  market  acceptance  in the United
States market.  Furthermore,  determinations of reimbursement of the TUNA System
by private and governmental health payors are made by such payors  independently
of the FDA approval,  and, accordingly,  there can be no assurance that the TUNA
procedure will be generally  reimbursed at adequate  levels in the United States
under either private or governmental  healthcare  payment  systems.  Adequacy of
reimbursement for TUNA procedures could have an adverse effect on the ability of
the TUNA System to achieve  market  acceptance.  To date,  VidaMed has  received
reimbursement  approvals from certain  private  healthcare  payors in the United
States.  However,  due to the age of the typical BPH  patient,  the  majority of
United States healthcare expenses for treatment of BPH are paid by Medicare. The
Company  has not  received  approval  for  Medicare  reimbursment  for the  TUNA
procedure. There can be no assurance as to when or whether such approval will be
received.  Failure of the TUNA System to achieve market acceptance in the United
States would have a material adverse effect on business, financial condition and
results of operations of the Company.

The  Company  does not have a backlog of orders for its  products  in  countries
where the TUNA  System is  approved  and  anticipates  that it will  continue to
manufacture and ship orders after their receipt.  Accordingly,  the Company does
not anticipate that it will develop a significant backlog in the future.

Results of Operations

Net  revenue  for the  three  months  ended  June  30,  1997  increased  257% to
$2,153,000 from $603,000 in the three months ended June 30, 1996.  Product sales
in the second quarter of 1997 increased 324% to $2,103,000  from $496,000 in the
same period in 1996. For the first six months of 1997 net revenue increased 400%
to $5,455,000 from $1,091,000 during the same period in 1996.  Product sales for
the first six months of 1997 increased 511% to $5,355,000  from $876,000  during
the same period in 1996.  The increase in net revenues and product sales between
1997 and 1996 is the result of sales of the TUNA System in the United States.

Cost of product sales increased 52% to $1,265,000 in the three months ended June
30, 1997 from  $832,000 in the three  months  ended June 30,  1996.  For the six
months ended June 30, 1997 cost of product  sales  increased  88% to  $3,048,000
from  $1,622,000  in the same  period  in 1996.  The  increase  is due to higher
product sales in the first six months of 1997,  although the Company experienced
excess  manufacturing  overhead  in the  first  and  second  quarters  of  1996.
Increased sales in the first six months of 1997 resulted in improved  absorption
of manufacturing overhead.

Research and development expenses increased 9% to $1,456,000 in the three months
ended June 30, 1997 from $1,339,000 in the three months ended June 30, 1996. The
increase is primarily  due to  continuing  development  efforts on both the TUNA
System RF generator and VidaMed TUNA System handpiece.  For the six months ended
June 30, 1997 research and development expenses increased 22% to $3,354,000 from
$2,750,000 in the same period of 1996. The increase was primarily due to product
development  for the new TUNA  System  RF  generator  resulting  from  increased
outside services and development material which occurred in the first quarter of
1997.

Selling,  general and administrative expenses increased 94% to $3,865,000 in the
three months ended June 30, 1997 from  $1,997,000 in the three months ended June
30,  1996.  For  the six  months  ended  June  30,  1997  selling,  general  and
administrative expenses increased 100% to $7,223,000 from $3,611,000 in the same
period in 1996. The increase was primarily due to increased  sales and marketing
expense  incurred in the

                                                                    Page 9 of 15

<PAGE>

continuing  product  introduction  of the  TUNA  System  in the  United  States.
Significant  sales and  marketing  expenses  included  commissions,  advertising
expenses, trade shows and physician workshops.

Total  operating  expenses in the three months ended June 30, 1997 increased 60%
to $5,321,000  from  $3,336,000  in the three months ended June 30, 1996.  Total
operating expenses for the first six months of 1997 increased 66% to $10,577,000
from $6,362,000 in the same periods in 1996. The increase in operating  expenses
was due  primarily  to the  increase  in  selling,  general  and  administrative
expenses.

Other  expense for the three and six months ended June 30, 1997 was $102,000 and
$109,000,  respectively,  compared to other income of $11,000 and $8,000 for the
comparable  periods in 1996.  This  change is  primarily  due to lower  interest
income  attributable  to  lower  investment  balances,  offset  in part by lower
interest expense due to decreasing notes payable and capital lease balances.

The net loss  for the  three  and six  month  periods  ended  June 30,  1997 was
$4,535,000 and $8,279,000,  respectively,  compared to $3,554,000 and $6,885,000
for the comparable periods in 1996.

Liquidity and Capital Resources

At June 30,  1997 the  Company's  cash and  cash  equivalents  were  $6,006,000,
compared to  $5,855,000  at December 31,  1996.  In February  1997,  the Company
entered into an equity financing agreement with a European investment bank under
which the Company may, at its option,  sell to such  investment bank up to $10.0
million of VidaMed common stock.  As of June 30, 1997 the Company had drawn down
$9.6 million under this agreement.

In April 1995, the Company  obtained a $3,000,000  secured credit  facility.  To
date, the Company has borrowed  $3,000,000 under this facility.  Borrowings bear
interest at the prime rate plus 3% per annum plus additional  lump-sum  interest
of 15% of each  borrowing,  payable at  maturity.  Repayment is based on a three
year amortization schedule.

During the six months  ended June 30, 1997 and 1996,  VidaMed  consumed  cash in
operations of $8,225,000 and $5,896,000,  respectively. The changes in cash used
in  operations  were  attributable  to  increased  accounts  receivable  due  to
increased  product sales and sales and marketing  expenses  associated  with the
product launch of the TUNA System in the United States.

The  Company is moving to a 35,000  square foot  facility in Fremont,  CA in the
third quarter of 1997. The Company anticipates with the move to the new facility
in the next  quarter  that it will incur  approximately  $1.0 million in capital
costs.

Although VidaMed believes that its current capital  resources and cash generated
from the sale of products will be sufficient to meet the Company's operating and
capital  requirements  through the next twelve months, there can be no assurance
that the Company will not require  additional  financing within this time frame.
There can be no  assurance  that  additional  financing,  if  required,  will be
available on satisfactory terms or at all. In any event,  VidaMed anticipates in
the future that it will seek to raise  additional funds through bank facilities,
debt or equity offerings or other sources of capital. VidaMed's future liquidity
and  capital  requirements  will  depend on numerous  other  factors,  including
progress of clinical  trials,  actions  related to regulatory and  reimbursement
matters, and the extent to which the TUNA system gains market acceptance.

                                                                   Page 10 of 15

<PAGE>


                                  VIDAMED, INC.

PART II: OTHER INFORMATION

Item 1.           Legal Proceedings

                  None

Item 2.           Changes in Securities

                  See page 13.

Item 3.           Defaults upon Senior Securities

                  None

Item 4.           Submission of Matters to a Vote of Security Holders

                  See page 13.

Item 5.           Other Information

                  None

Item 6.           Exhibits and Reports on Form 8-K

                           a) Exhibits

                               (27.1)  Financial Data Schedule

                           b) Reports  on Form 8-K.  No reports on Form 8-K were
                              filed during the quarter ended June 30, 1997.

                                                                   Page 11 of 15

<PAGE>


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.


                                             VIDAMED, INC.

Date:     July 31, 997                       By:   /s/   James A. Heisch
       ---------------------                      ------------------------
                                                  James A. Heisch
                                                  President, Chief Executive
                                                  Officer

Date:     July 31, 1997                      By:    /s/   Richard D. Brounstein
       -------------------------                 ------------------------------
                                                  Richard D. Brounstein
                                                  VP Finance, Chief Financial 
                                                  Officer
                                                  (Principal Financial and 
                                                  Accounting Officer)

                                                                   Page 12 of 15

<PAGE>


PART II.          OTHER INFORMATION

Item 2.           CHANGES IN SECURITIES

During the second  quarter of 1997 the Company  issued common stock in two sales
pursuant to its equity financing  agreement with a European  investment bank. In
the first quarter of 1997, the Company issued common stock in two sales pursuant
to the same  arrangment  totaling $4.0 million with 528,547  common stock shares
being  issued.  The second sale in the first  quarter had an  adjustment  to the
amount funded of $1,173,000  that was completed in the second quarter  resulting
in 161,616 additional common stock shares being issued. The first sale of common
stock in the second quarter resulted in the issuance of 360,202 shares for $2.25
million.  The second sale of common stock in the second quarter  resulted in the
issuance of 404,040 shares for $2.1 million.  Additional  common stock of 11,798
was issued in July 1997 to conclude  the pricing  period  relating to the second
sale.

Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company  solicited  proxies for an annual meeting of  stockholders on May 7,
1997 to all of the Company's stockholders.

The election of all directors  was  conducted  and the  following  nominees were
elected:  David L. Douglass,  Stuart D. Edwards,  James A. Heisch, Wayne I. Roe,
and Michael H. Spindler. The vote with respect to each nominee was as follows:

                                             Votes                  Votes
              Name                            For                  Withheld
              ----                            ---                  --------
         David L. Douglass                  8,767,853              139,799
         Stuart D. Edwards                  8,757,070              150,582
         James A. Heisch                    8,768,053              139,599
         Wayne I. Roe                       8,768,553              139,099
         Michael H. Spindler                8,766,153              141,499

The Company's  Employee Stock Purchase Plan was amended and the number of shares
of Common Stock reserved for issuance under the plan was increased by 100,000 to
200,000  with  8,334,465  votes in  favor,  279,844  votes  against  and  55,044
abstentions.

The  Company's  Stock Plan was amended and the number of shares of Common  Stock
reserved for issuance  under the plan was increased by 366,666 to 3,100,000 with
7,927,228 votes in favor, 272,167 votes against and 51,691 abstentions.

Ernst & Young LLP was  ratified as the  independent  auditors of the Company for
the fiscal year ending December 31, 1997 with 8,842,408  votes in favor,  25,424
votes against and 39,820 abstentions.

                                                                   Page 13 of 15

<PAGE>


INDEX TO EXHIBITS



EXHIBIT
NUMBER   DESCRIPTION

  27.1  Financial Data Schedule

                                                                   Page 14 of 15