SECURITIES AND EXCHANGE COMMISSION
Washington, DC 10549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR QUARTER ENDED DECEMBER 31, 1998.
Commission File Number 0-2958
------
TSI INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0843524
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
500 Cardigan Road, Shoreview, Minnesota 55126
- ---------------------------------------------
(Address of principal executive offices)
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 proceeding 20 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
----- -----
Indicate number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practical date.
Date: January 25, 1999 Number of Common Shares Outstanding: 11,249,647
---------------- ----------
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<PAGE>
TSI INCORPORATED
FORM 10-Q
For the Quarter Ended December 31, 1998
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Financial Condition and Results of Operations 7-11
PART II. OTHER INFORMATION 12
EXHIBIT 11 Computation of Per Share Earnings 14
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<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
1998 1997 1998 1997
- ----------------------------------------- ----------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 22,344,082 $ 19,739,440 $ 63,872,896 $ 59,715,549
Cost of products sold 9,597,981 8,365,549 28,238,999 26,068,969
- ----------------------------------------- ----------------- ---------------- ----------------- ---------------
GROSS PROFIT 12,746,101 11,373,891 35,633,897 33,646,580
Operating expenses
Research and product development 2,629,654 2,971,105 8,071,640 8,684,206
Selling 5,499,211 4,643,388 14,751,584 13,545,369
Administrative 1,858,057 1,497,507 5,119,749 4,637,485
- ----------------------------------------- ----------------- ---------------- ----------------- ---------------
9,986,922 9,112000 27,942,973 26,867,060
- ----------------------------------------- ----------------- ---------------- ----------------- ---------------
OPERATING INCOME 2,759,179 2,261,891 7,690,924 6,779,520
Other income 97,052 242,126 356,314 728,367
- ----------------------------------------- ----------------- ---------------- ----------------- ---------------
EARNINGS BEFORE INCOME TAXES 2,856,231 2,504,017 8,047,238 7,507,887
Provision for income taxes 943,000 826,000 2,656,000 2,577,000
- ----------------------------------------- ----------------- ---------------- ----------------- ---------------
NET EARNINGS $ 1,913,231 $ 1,678,017 $ 5,391,238 $ 4,930,887
================= ================ ================= ===============
BASIC EARNINGS PER COMMON SHARE $.17 $.14 $.47 $.43
- ----------------------------------------- ================= ================ ================= ===============
DILUTIVE EARNINGS PER COMMON SHARE $.17 $.14 $.47 $.41
- ----------------------------------------- ================= ================ ================= ===============
Weighted average shares outstanding 11,263,270 11,659,613 11,353,498 11,587,909
=========== =========== =========== ===========
Weighted average shares outstanding
and dilutive shares 11,424,323 11,927,208 11,523,900 11,881,767
=========== =========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31 March 31 December 31
1998 1998 1997
- ---------------------------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 10,495,427 $ 9,385,509 $ 10,071,872
Accounts receivable 14,553,553 16,508,360 12,316,089
Prepaid expenses 375,608 223,713 453,598
Inventories
Finished products 3,010,314 2,883,469 2,954,924
Work-in-process 3,121,402 2,792,730 3,571,554
Materials and supplies 10,071,915 9,840,083 9,360,250
- ---------------------------------------------------- ------------------- ------------------- -------------------
16,203,631 15,516,282 15,886,728
- ---------------------------------------------------- ------------------- ------------------- -------------------
TOTAL CURRENT ASSETS 41,628,219 41,633,864 38,728,287
INTANGIBLES AND OTHER ASSETS
Goodwill 4,491,091 3,834,903 3,799,300
Note receivable 511,780 632,540 666,387
Deferred income tax benefit 946,848 456,169 668,815
Other assets 3,108,305 2,878,348 3,131,380
- ---------------------------------------------------- ------------------- ------------------- -------------------
9,058,024 7,801,960 8,265,882
PROPERTY, PLANT AND EQUIPMENT
Land 128,503 128,503 128,503
Buildings 3,713,160 3,713,160 3,706,152
Construction in progress 193,037 51,341 84,690
Machinery and equipment 20,824,596 19,689,035 19,900,265
- ---------------------------------------------------- ------------------- ------------------- -------------------
24,859,296 23,582,039 23,819,610
Less allowance for depreciation 16,857,100 15,183,541 15,034,499
- ---------------------------------------------------- ------------------- ------------------- -------------------
8,002,196 8,398,498 8,785,111
- ---------------------------------------------------- ------------------- ------------------- -------------------
TOTAL ASSETS $ 58,688,439 $ 57,834,322 $ 55,779,280
=================== =================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 5,741,847 $ 4,924,480 $ 4,799,275
Employee compensation 3,640,894 3,918,610 3,652,035
Taxes, other than income taxes 317,370 519,285 434,934
Income taxes payable 581,966 1,028,657 831,361
- ---------------------------------------------------- ------------------- ------------------- -------------------
TOTAL CURRENT LIABILITIES 10,282,077 10,391,032 9,717,605
- ---------------------------------------------------- ------------------- ------------------- -------------------
TOTAL LIABILITIES 10,282,077 10,391,032 9,717,605
SHAREHOLDERS' EQUITY
Common shares, $.10 par value 1,123,448 1,168,138 1,168,437
Additional paid-in capital 11,327,504 11,394,909 10,805,191
Retained earnings 35,896,150 35,164,722 34,298,613
Equity adjustment from translation 59,260 (284,479) (210,566)
- ---------------------------------------------------- ------------------- ------------------- -------------------
TOTAL SHAREHOLDERS' EQUITY 48,406,362 47,443,290 46,061,675
- ---------------------------------------------------- ------------------- ------------------- -------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 58,688,439 $ 57,834,322 $ 55,779,280
=================== =================== ===================
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31 1998 1997
- --------------------------------------------------------------------- --------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 5,391,238 $ 4,930,887
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for losses on accounts receivable 48,944 33,185
Depreciation and amortization of property, plant & equipment 1,425,576 1,421,722
Amortization of goodwill 192,795 176,359
Loss (Gain) on sale of assets 76,999 (21,039)
Provision for deferred income tax (72,011) 0
Changes in operating assets and liabilities:
Accounts receivable 2,210,362 2,218,214
Prepaid expenses (123,812) (80,967)
Inventories (131,752) (1,889,404)
Other assets 278,378 (437,137)
Accounts payable and accrued expenses (319,950) (1,277,132)
Employee compensation (419,883) (317,113)
Taxes, other than income taxes (200,792) (7,313)
Income taxes payable (446,691) 584,007
Foreign currency translation (gain) loss 376,291 (284,063)
- --------------------------------------------------------------------- --------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,285,692 5,050,206
- --------------------------------------------------------------------- --------------------------------------
INVESTING ACTIVITIES
Additions to property, plant and equipment (916,688) (1,368,892)
Proceeds from disposal of property, plant and equipment 2,703 22,858
Purchase of companies, net of cash acquired (1,417,613) (1,452,208)
- --------------------------------------------------------------------- --------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,331,598) (2,798,242)
- --------------------------------------------------------------------- --------------------------------------
FINANCING ACTIVITIES
Proceeds from stock options exercised 193,363 1,112,093
Dividends paid (1,023,271) (927,252)
Purchases of common stock (3,942,000) (117,432)
- --------------------------------------------------------------------- --------------------------------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (4,771,908) 67,409
- --------------------------------------------------------------------- --------------------------------------
Effect of exchange rate changes on cash and cash equivalents (72,268) 57,501
- --------------------------------------------------------------------- --------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,109,918 2,376,874
- --------------------------------------------------------------------- --------------------------------------
Cash and cash equivalents at beginning of year 9,385,509 7,694,998
- --------------------------------------------------------------------- --------------------------------------
CASH AND CASH EQUIVALENTS AT END OF NINE MONTH PERIOD $ 10,495,427 $ 10,071,872
======================================
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(Unaudited)
Note 1. Basis of Presentation
The information included in the accompanying interim financial
statements is unaudited. In the opinion of management, all
adjustments, consisting of normal recurring accruals necessary
for a fair presentation of the results of operations,
financial position and cash flows for the interim periods
presented, have been reflected herein. The results of
operations for the interim periods are not necessarily
indicative of the results to be expected for the entire year.
Note 2. Earnings Per Share
See Exhibit 11, Computation of Per Share Earnings, on page 14
of this document.
Note 3. Comprehensive Income
Effective fiscal 1999, the Company has adopted Statement of
Financial Accounting Standards No. 130 "Reporting
Comprehensive Income". This statement requires companies to
classify items of other comprehensive income by their nature
in a financial statement and display the accumulated balance
of other comprehensive income separately from retained
earnings and additional paid-in-capital in the equity section
of the balance sheet, and is effective for the Company's
fiscal year ending March 31, 1999. The Company's only item of
other comprehensive income is foreign currency translation
adjustments. This item is separately displayed in the equity
section of the balance sheet. For the nine months ended
December 31, 1998, comprehensive net income was $230,300
higher than net income, due to the effect of foreign currency
translation adjustments, net of income taxes.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statements
From time to time, in written and oral statements, TSI Incorporated discusses
expectations regarding its future performance, including such things as sales
and expense trends, global economic issues, future order potentials and Year
2000 risks. These "forward-looking statements" are based on currently available
competitive, financial and economic data and the Company's operating plans. They
are inherently uncertain, and investors must recognize that events could turn
out to be significantly different from expectations.
Results of Operations
Quarterly sales rose $2,605,000 or 13 percent when compared to the prior year.
Following is a quarterly sales breakdown:
Third Quarter Percent
Change
1998 1997
---- ----
Safety, Comfort and Health $16,083,000 $12,946,000 24
Productivity and Quality Improvement 6,261,000 6,794,000 (8)
--------- --------- ---
$22,344,000 $19,739,000 13
=========== =========== ==
The increase in sales was due to strong demand for our safety, comfort and
health instruments, particularly the PortaCount(R) fit tester which has
benefited from recent changes in OSHA regulations. In addition, we saw strong
activity in our meteorological instrumentation. Within the productivity and
quality improvement area, the Company experienced continued weakness in sales of
research products sold into this market.
Following is a nine-month sales breakdown:
Nine Months Percent
Ended Change
December 31,
1998 1997
---- ----
Safety, Comfort and Health $45,321,000 $38,896,000 17
Productivity and Quality Improvement 18,552,000 20,819,000 (11)
---------- ---------- ----
$63,873,000 $59,716,000 7
=========== =========== ====
Increases in safety, comfort and health instruments have been substantially
offset by slower sales in productivity and quality improvement instruments. The
Company experienced slower sales of research instruments sold into this market
for the entire nine months. In response to the slow sales, the operations of
Aerometrics, a California subsidiary selling research products, were transferred
to TSI's Minnesota headquarters and consolidated with an existing research
product line selling to the same market. The $.17 per share earnings figure for
the third quarter is net of a $.03 per share charge taken to cover the costs
associated with this consolidation.
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<PAGE>
Sales to U.S. and state government agencies, including defense, shown as a
percent of total sales, were:
December 31,
1998 1997
---- ----
Quarter 20% 17%
Year-to-date 22% 22%
While the government percentage to total sales is high, the Company sells many
different products to a very diverse range of government agencies. Consequently,
government sales during the past several years have been quite stable as a
percentage of total sales. We consider the current percentages to be within the
Company's normal range.
International sales declined $208,000 or 2.9 percent for the quarter compared
with last year. The decline is attributable to slow quarterly sales of heating,
ventilating and air conditioning (HVAC) products, partially offset by stronger
demand for the Company's meteorological equipment. Year-to-date international
sales are $1,381,000 below the prior year. This was due to slow sales of both
our process controls and research instruments for productivity and quality
improvement, in addition to our HVAC products.
Order bookings were as follows:
Third Quarter Percent
Change
1998 1997
---- ----
Quarter $27,495,000 $21,492,000 28%
Year-to-date $66,766,000 $59,243,000 13%
The increase in order bookings was primarily due to strong demand for safety,
comfort and health instruments particularly the commercial PortaCount(R), and
meteorological instruments. In addition, the Company experienced an increase in
demand for its process instrumentation sold to the metals industry.
Order backlog has increased from $24.8 million last year to $25.6 million this
year. The increase is due to a $3.2 million contract option booked during the
third quarter of fiscal 1999 for the Company's Ultraviolet Aerodynamic Particle
Sizer with shipments scheduled to begin late in the fourth quarter of fiscal
1999 and continues through the second quarter of fiscal 2000. This is partially
offset by a decline in backlog for the military version of the PortaCount(R) fit
tester. As indicated in our 1998 annual report, we expect to ship $3.5 million
less of the military PortaCount(R) in Fiscal 1999 than in Fiscal 1998.
Gross profit has ranged between 55.6 and 56.0 percent over the last three fiscal
years. For the quarter it was 57.0 percent, and 55.8 percent for the
nine-months. Our gross profit percentage varies slightly depending on the
product mix. While the quarter percentage is somewhat higher than previous
years, it falls within what is considered to be a normal range for TSI's
products. We do not believe the higher gross margin percentage represents a
trend.
-8-
<PAGE>
Research and development costs were 11.8 percent of sales for the quarter,
bringing the year-to-date costs to 12.6 percent of sales. The Company continues
its commitment to growth through development of new technologies and products.
For all of fiscal 1999, research and development expenses are expected to be
similar to the year-to-date percentage.
For the last three years, selling expenses have ranged between 21.6 and 23.3
percent of sales. Selling expenses were 24.6 percent of net sales for the third
quarter compared to 23.5 percent last year. For the first nine months, selling
expenses were 23.1 percent compared to 22.7 percent for the same year-ago
period. The quarter-to-quarter percentage can vary depending on the overall
sales volume and such things as sales channels, timing of trade shows,
advertising, etc. For all of fiscal 1999, we would expect selling expenses to be
within or near the historical range.
Administrative expenses were 8.3 percent of sales for the quarter compared to
7.6 percent last year. For the first nine months of fiscal 1999, administrative
expenses were 8.0 percent compared with 7.8 percent in the first nine-months of
fiscal 1998. The Company expects administrative costs to continue within our
normal operating range between 7 and 8 percent for the rest of the year.
Other income varies depending on foreign currency fluctuations, interest rates
and invested cash balances. The first nine months of last year included
significant foreign exchange gains that did not reoccur in the first nine months
of this fiscal year.
Income taxes represent 33 percent of pre-tax income for both the quarter and
nine-month periods ended December 31, 1998. This compares to 33 percent and 34.3
percent for the same year-ago periods. We would expect the rate for the rest of
the year to be 32 to 34 percent depending on our international sales level and
the benefit the Company receives from its foreign tax credit.
Year 2000 Conversion
The Company has reviewed most of its critical information technology ("IT")
business systems and is in the testing phase. It is expected these systems will
be substantially Year 2000 compliant by May 1999. The Company is also
identifying all non-IT systems and will test them by May 1999. Management does
not believe significant changes will be required to non-IT systems to become
Year 2000 compliant. An initial list of key third party providers has been made
and discussions have been held in order to determine their state of Year 2000
readiness. Most critical vendors have indicated they will be Year 2000 compliant
at various points during calendar 1999 and we will not have a stoppage in the
flow of critical goods or services. We believe alternative suppliers can be
identified should our current suppliers fail to become Year 2000 compliant.
A committee has been formed to identify current product lines to determine if
hardware and software are Year 2000 compliant. Products fall into the following
categories:
YEAR 2000 COMPLIANT - the Company has identified several products and made them
Year 2000 compliant. We have responded to customer's request to provide these
upgrades and, in some cases, customers can download updated software from our
internet web site to make the products Year 2000 compliant.
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<PAGE>
NON-COMPLIANT INSTRUMENTS OR INSTRUMENTS NOT RELYING ON DATE INFORMATION - the
Company has identified several instruments that do not rely on any internal or
external date coding. It is anticipated no modification will be required to
these instruments. In addition, the Company has fielded several instruments in
the past using date information that the Company does not intend making Year
2000 compliant. The Company is responding to specific customer requests on these
instruments as well as providing information on our internet web site.
OTHER - there are still several products where the Year 2000 review has not been
completed. It is expected the review will be completed during the first quarter
of fiscal 2000 ending June 30, 1999. Based on the anticipated results from these
reviews, certain products will not be made Year 2000 compliant. However, we do
not feel this will be a deterrent from the customer purchasing these instruments
because it will only affect the dating information and not the performance of
the instrument. There can be no assurance regarding the customers' response to
any Year 2000 issues we have yet to identify.
Our Year 2000 compliance program is being carried out with internal staff
without significant additional outside expenditures. However, Year 2000 issues
may accelerate approximately 10 to 15 percent of our capital purchases by one to
two years. During the third quarter, the Company replaced the main IBM AS400
computer system at corporate headquarters with one meeting the requirements of
Year 2000. The Company will make similar replacements at its domestic
subsidiaries during the fourth quarter of fiscal 1999. Foreign subsidiary
systems comprise a small portion of the overall system and will be reviewed by
May 1999. Management does not believe the focus on Year 2000 compliance has
caused us to ignore other types of upgrades to any critical systems.
Failure to complete upgrades to existing systems, or third party providers being
unable to supply us with inventory, could result in the Company being unable to
ship certain products. However, management believes the remaining system changes
required can be readily implemented well before January 1, 2000 and, therefore,
will not subject the Company to significant business risks.
The Company has not yet established contingency plans, but will continue to
monitor the need for such plans.
New Euro Currency
On January 1, 1999, eleven of fifteen members of the European Union are
scheduled to establish fixed conversion rates between existing ("legacy
currencies") and one common currency - the Euro. The Euro will then trade on
currency exchanges and may be used in business transactions. Beginning in
January 2002, new Euro-denominated bills and coins will be issued, and legacy
currencies will be withdrawn from circulation.
The Company has a significant number of customers as well as operations located
in European Union countries participating in the Euro conversion and,
consequently, the Euro conversion may impact the results of our operations. The
Euro conversion may have competitive implications for the Company's pricing and
marketing strategies, which could be material in nature, however, any such
impact is not known at this time. The Company has also begun to analyze its
internal systems (such as payroll, accounting and financial reporting) to
determine modifications required to deal with the Euro conversion. The Company
does not expect the cost of making any required modifications to
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<PAGE>
have a material impact on the Company's results of operations or financial
condition. There is no assurance, however, that all problems related to the Euro
conversion will be foreseen and corrected, or that no material disruptions of
the Company's business will occur.
Liquidity and Capital Resources
TSI's cash and cash equivalents increased to $10,495,000 on December 31, 1998,
compared with $7,530,000 at September 30, 1998. The increase was attributable to
cash generated from operations partially offset by repurchase of Company common
stock, an acquisition, additions to property, plant and equipment and payment of
dividends.
The ratio of current assets to current liabilities was 4.0 as of December 31,
1998, compared to 3.7 as of March 31, 1998. Working capital increased $103,000
to $31,346,000 at the end of the third quarter of fiscal 1999, compared to
$31,243,000 at the end of fiscal 1998.
Management believes internally generated funds and short-term borrowings on
existing credit lines will provide adequate resources for supporting operations
during the remainder of fiscal 1999.
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<PAGE>
Forward-Looking Statements
The Company believes that this report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are subject
to certain risks and uncertainties.
Forward-looking statements represent the Company's expectations or beliefs
concerning future events, including the following: any statements regarding
future sales and gross profit percentages, any statements regarding the
continuation of historical trends, any statements regarding the sufficiency of
the Company's cash balances and cash generated from operating and financing
activities for the Company's future liquidity and capital resource needs, any
statements regarding the effect of regulatory changes, the success of
development and enhancement of the Company's products, the adequacy of the
Company's facilities, potential acquisitions, and any statements regarding the
future of the instrumentation industry and the various parts of the
instrumentation markets in which the Company conducts its business. The Company
cautions that any forward-looking statements made by the Company in this report
or in other announcements made by the Company are further qualified by important
factors that could cause actual results to differ materially from those in the
forward-looking statements, including, without limitations, the factors set
forth on Exhibit 99 to the Company's report on Form 10K for the fiscal year
ended March 31, 1998.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the
Registrant during the quarter for which this report
is being filed.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
thereunto duly authorized.
Registrant: TSI Incorporated
Date: February 16, 1999 By: /s/ James E. Doubles
------------------------------------
James E. Doubles
President & CEO
Date: February 16, 1999 By: /s/ Robert F. Gallagher
------------------------------------
Robert F. Gallagher
Vice President & CFO
-14-
EXHIBIT 11
TSI INCORPORATED
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended December 31 Nine Months Ended December 31
------------------------------ -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
BASIC
Weighted average common shares
outstanding 11,263,270 11,659,613 11,353,498 11,587,909
----------- ----------- ----------- -----------
Net earnings $ 1,913,231 $ 1,678,017 $ 5,391,238 $ 4,930,887
----------- ----------- ----------- -----------
Basic earnings per common share $ .17 $ .14 $ .47 $ .43
=========== =========== =========== ===========
DILUTED
Weighted average common shares
outstanding 11,263,270 11,659,613 11,353,498 11,587,909
----------- ----------- ----------- -----------
Dilutive effect of employee stock options,
and purchase awards--based on the
treasury stock method 161,053 267,595 170,402 293,858
----------- ----------- ----------- -----------
Weighted average common shares
outstanding and dilutive shares 11,424,323 11,927,208 11,523,900 11,881,767
----------- ----------- ----------- -----------
Net earnings $ 1,913,231 $ 1,678,017 $ 5,391,238 $ 4,930,887
----------- ----------- ----------- -----------
Diluted earnings per common share $ .17 $ .14 $ .47 $ .41
=========== =========== =========== ===========
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 10,495,427
<SECURITIES> 0
<RECEIVABLES> 14,553,553
<ALLOWANCES> 375,608
<INVENTORY> 16,203,631
<CURRENT-ASSETS> 41,628,219
<PP&E> 24,859,296
<DEPRECIATION> 16,857,100
<TOTAL-ASSETS> 58,688,439
<CURRENT-LIABILITIES> 10,282,077
<BONDS> 0
0
0
<COMMON> 1,123,448
<OTHER-SE> 48,406,362
<TOTAL-LIABILITY-AND-EQUITY> 58,688,439
<SALES> 22,344,082
<TOTAL-REVENUES> 22,344,082
<CGS> 9,597,981
<TOTAL-COSTS> 9,986,922
<OTHER-EXPENSES> 97,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,856,231
<INCOME-TAX> 943,000
<INCOME-CONTINUING> 1,913,231
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,913,231
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
