MOORPARK, Calif., Feb. 29 /PRNewswire/ -- Variflex, Inc. (Nasdaq: 
VFLX) today reported net income of $109,000, or $0.02 per share on 
net sales of $14,283,000 for the second fiscal quarter ended January 
31, 1996, down from net income of $2,167,000, or $0.36 per share on 
net sales of $26,159,000 reported in the comparable period a year 
earlier.

For the six months ended January 31, 1996, the Company reported 
net income of $1,046,000, or $0.17 per share, on net sales of 
$37,807,000, compared with net income of $4,953,000, or $0.82 per 
share, on net sales of $57,987,000 posted in the comparable period a 
year earlier.

"The retail environment late last year clearly had an impact on 
Variflex, as well as our entire industry," said Raymond H. Losi II, 
President.  He pointed out that "Weakness in the retail sector during 
the holiday season, particularly in our mass market segment, was 
primarily responsible for Variflex's soft second quarter."

Mr. Losi noted that the decrease in sales resulted from declines in 
three product categories:  in-line skates, athletic protective 
equipment and bicycle and recreational safety helmets.  These 
declines were partially offset by an increase in skateboard sales.

The Company's gross profit margin declined to 18.7 percent for the 
second quarter, from 23.3 percent a year earlier; and to 20.0 percent 
for the six months, from 24.8 percent a year earlier.  Mr. Losi 
explained that "The decline in gross profit margin is primarily due to 
two factors:  start-up costs at the Company's new Static snowboard 
plant and the higher proportion of factory overhead costs to net sales 
that resulted from our lower sales levels."

Mr. Losi said that "Notwithstanding the challenging economy, we are 
confident that fiscal 1996 will be a year of continuing profitability. 
Our new Static in-line skates were well received at the Super Show 
in Atlanta.  We are now shipping four of the six models of Static 
skates and orders are increasing.

"Earlier this year we announced our initial shipments of Static 
snowboards.  Orders for this product are increasing as well and we 
expect our state-of-the-art manufacturing facility to make a positive 
contribution to earnings beginning in the fourth fiscal quarter."

Mr. Losi also noted that the Company has seen a resurgence in 
demand for skateboards.  "The skateboard mass market has more 
than doubled in the past year.  Variflex is showing significant 
increases in skateboard sales and has the number one market share 
in the category."

Mr. Losi added that "While we continue to maintain strong orders 
from our three largest customers, our account base has broadened 
significantly over a year ago.  Moreover, we are continuing to pursue 
medium sized accounts throughout the nation, as well as new large 
national accounts."

"Overall," Mr. Losi said, "Variflex's range of products, spanning all 
levels of income and expertise, is clearly the broadest and most 
inclusive in the industry.  As a result, we believe we are in the 
strongest position to work within today's tough retail environment. 
While fiscal 1996 will be a challenge, it is a challenge Variflex will 
meet effectively."

Variflex, Inc. is a leading supplier of in-line skates, skateboards, 
skating protective equipment and bicycle and recreational safety 
helmets to the mass market.  Variflex's Static brand of high quality 
action sports products, including in-line skates, snowboards and 
skateboards are marketed to the sporting goods and specialty dealer 
market.

VARIFLEX, INC.

CONSOLIDATED STATEMENTS OF INCOME


(In thousands, except per share data)


(Unaudited)


Six months ended     Three months ended


January 31,            January 31,


1996        1995      1996         1995


Net sales               $37,807     $57,987   $14,283      $26,159


Cost of goods sold       30,235      43,591    11,614       20,072


Gross profit              7,572      14,396     2,669        6,087


Operating expenses:


Selling and marketing     3,749       4,046     1,459        1,603


General and


administrative           2,514       2,415     1,220        1,083


Total operating expenses  6,263       6,461     2,679        2,686


Income (loss) from


operations               1,309       7,935      (10)        3,401


Other income (expense):


Interest expense           (90)       (213)      (69)        (179)


Interest income and other   365         329       182          145


Total other income


(expense)                  275         116       113         (34)


Income before income


taxes                    1,584       8,051       103        3,367


(Benefit from) provision


for income taxes           538       3,098       (6)        1,200


Net income               $1,046      $4,953      $109       $2,167


Earnings per share of common stock:


Net income per share      $0.17       $0.82     $0.02        $0.36


Weighted average number of


common shares outstanding,


including common share


equivalents              6,039       6,062     6,039        6,060


VARIFLEX, INC.

CONDENSED BALANCE SHEETS


(In Thousands)


(Unaudited)


January 31,  July 31,


1996      1995


Working capital                     $29,460   $31,022


Total assets                         50,046    51,221


Total long-term debt, excluding


current maturities                      84       103


Stockholders' equity                 45,368    44,359


CO:  Variflex Inc.

ST:  California

IN:

SU:  ERN