<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 28, 1997
------------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1984
For the transition period from to
------------------- ---------------------------
Commission file number 0-28062
-------
CERION TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 02-0485458
- ----------------------------- ---------------------------------------
(State of incorporation) (I.R.S. Employer Identification Number)
1401 Interstate Drive
Champaign, Illinois 61821-1090
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (217) 359-3700
-----------------------------
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of March 28, 1997
- ---------------------------- --------------------------------
Common Stock, par value $.01 7,018,406 shares
<PAGE> 2
PART 1 -FINANCIAL INFORMATION
---------------------
ITEM 1 -FINANCIAL STATEMENTS
--------------------
CERION TECHNOLOGIES INC.
BALANCE SHEETS
(dollars in thousands except share and per share data)
<TABLE>
<CAPTION>
March 28, December 31,
1997 1996
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,754 $ 9,300
Short-term investments 4,750 -
Accounts receivable, net 5,665 2,928
Inventories, net 748 1,046
Prepaid expenses and other assets 287 395
Deferred income taxes 273 273
------- -------
Total current assets 14,477 13,942
Property, plant and equipment, net 8,901 9,391
Other assets 97 -
------- -------
$23,475 $23,333
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 3,760 $ 3,694
------- -------
Total current liabilities 3,760 3,694
Deferred income taxes 273 273
Stockholders' equity:
Preferred Stock, par value $.01 per share, 100,000
shares authorized, none issued - -
Common Stock, par value $.01 per share, 20,000,000 70 70
shares authorized; 7,018,406 and 7,016,184 shares
issued and outstanding, respectively
Additional paid-in capital 18,649 18,639
Retained earnings 723 657
------- -------
Total stockholders' equity 19,442 19,366
------- -------
$23,475 $23,333
======= =======
</TABLE>
The notes are an integral part of the financial statements.
1
<PAGE> 3
CERION TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months Ended
------------------
(unaudited)
March 28, March 29,
1997 1996
--------- ---------
Net sales $8,266 $11,774
Cost of sales 7,262 7,098
------ -------
Gross profit 1,004 4,676
Selling, general and administrative expenses 982 1,476
------ -------
Operating income 22 3,200
Interest income (expense) 88 (120)
------ -------
Income before provision
for income taxes 110 3,080
Provision for income taxes 44 1,232
------ -------
Net income $ 66 $ 1,848
====== =======
Net income per share $ 0.01 $ 0.34
====== =======
Average common shares outstanding 7,018 5,400
The notes are an integral part of the financial statements.
2
<PAGE> 4
CERION TECHNOLOGIES INC.
STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
(unaudited)
March 28, March 29,
1997 1996
---------- ---------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income $ 66 $ 1,848
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 643 400
Changes in operating assets and liabilities:
Accounts receivable (2,737) (1,464)
Inventories 298 (361)
Prepaid expenses and other assets 108 -
Accounts payable and accrued expenses 66 1,770
------- -------
Net cash provided by (used in) operating activities (1,556) 2,193
------- -------
Cash flows used in investing activities:
Additions to property, plant and equipment (150) (1,721)
Purchase of short-term investments (4,750) -
------- -------
Cash flows used in investing activities (4,900) (1,721)
------- -------
Cash flows provided by (used in) financing activities:
Debt issuance costs (100) -
Investment by (payments to) parent company - (548)
Proceeds from shares issued 10 -
------- -------
Cash flows provided by (used in) financing activities (90) (548)
------- -------
Decrease in cash (6,546) (76)
Cash at beginning of period 9,300 173
------- -------
Cash at end of period $ 2,754 $ 97
======= =======
Supplemental disclosure of cash flow information:
Interest paid $ - $ 120
Taxes paid $ - $ -
</TABLE>
The notes are an integral part of the financial statements.
3
<PAGE> 5
CERION TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
1. Earnings Per Common and Common Share Equivalents
------------------------------------------------
Earnings per common and common share equivalents are computed based on the
weighted average number of common shares and, as applicable, the weighted
average number of common share equivalents outstanding during the periods
presented.
Three Months Ended
------------------
March 28, March 29,
1997 1996
--------- ---------
Common shares outstanding 7,018,406 5,400,000
Common share equivalents None None
The increase in the common shares outstanding primarily resulted from the
issuance by the Company of additional shares at the closing of the Company's
initial public offering on May 30, 1996.
2. Revolving Credit Facility
-------------------------
On March 7, 1997, the Company entered into a three year, $7.5 million revolving
credit facility ("facility") with The CIT Group/Business Credit, Inc. The
facility is collateralized by all the Company's assets and the Company may
borrow under the facility based upon prescribed advance rates calculated as a
percentage of the Company's accounts receivable and inventories.
The facility bears interest at the prime rate (as defined) plus 1/4 percent. The
facility's terms include a fee for the unused portion of the credit facility
equal to 3/8 percent, payable monthly. The facility contains certain covenants
that include a limitation on dividends and maintaining certain financial ratios.
No amounts were outstanding under the facility as of March 28, 1997.
In connection with obtaining the facility, the Company paid a closing fee equal
to one percent of the total facility and incurred other costs totaling
approximately $100,000. These costs will be amortized over the term of the
facility.
3. Liquidity Matters
-----------------
During the second half of 1996, and continuing since then, the market appears to
have been dominated by oversupply resulting in significant pricing pressures
and, consequently, the Company experienced sales volume reductions and net
losses for each of the last two quarters of 1996. In addition, during the same
period, some thin-film media manufacturers shifted towards vertically-integrated
production of disk substrates. No assurance can be given that further backwards
integration by thin-film media manufacturers or other industry factors will not
result in canceled orders or further sales volume reductions beyond levels
experienced in the second half of 1996. The Company does not believe current
market conditions will support price increases in the foreseeable future. Unless
the Company achieves substantial cost improvements, experiences increased demand
for its products and stabilizes pricing, the Company may incur operating losses
and negative cash flows from operating activities. Without such cost
improvements, increased demand and pricing stabilization, the Company could,
over an extended period of time, exhaust substantially all of its cash resources
and
4
<PAGE> 6
borrowing availability. In such event, the Company would be required to pursue
other alternatives to improve liquidity, including initiating plans for further
cost reductions, selling assets, deferring certain capital expenditures and
obtaining additional funding sources. No assurance can be given that the Company
will be able to successfully pursue such alternatives.
4. Other
-----
The financial statements for the three month periods ended March 28, 1997 and
March 29, 1996 are prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financials and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. These financial statements should be
read in conjunction with the financial statements and notes thereto, together
with management's discussion and analysis of financial condition and results of
operations, contained in the Company's Form 10-K dated March 24, 1997. The
results of operations for the three months ended March 28, 1997 are not
necessarily indicative of the results that may be expected for the entire fiscal
year ending December 31, 1997.
On May 30, 1996, the Company completed an initial public offering of 4,416,000
shares of its Common Stock at $13.00 per share. Of the 4,416,000 shares of
Common Stock sold, 1,615,000 shares were sold by the Company and 2,801,000 were
sold by Nashua Corporation. Nashua Corporation continues to own approximately
37% of the Company's outstanding Common Stock. The net proceeds to the Company
after the Underwriting Discount was $19,525,350.
On May 31, 1996, using proceeds from its initial public offering the Company
repaid in full the two outstanding Promissory Notes issued to Nashua Corporation
in March 1996 having a combined principal sum of $11,142,000. The prepayments
were made without penalty.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
FORWARD-LOOKING STATEMENTS -- SAFE HARBOR
- -----------------------------------------
This Report contains "forward-looking statements," including the statements
below regarding (i) trends affecting the Company's financial condition or
results of operations, including the effect of market conditions, (ii) the
Company's business strategies, including cost reduction, liquidity improvement
and targeted capital expenditures, (iii) the possible impact of cancellation of
orders by a major customer and backwards integration within the industry towards
the manufacture of aluminum disk substrates. Moreover, from time to time in both
written releases and reports and oral statements, the Company and its senior
management may express expectations regarding future performance of the Company.
The Company cautions investors not to place undue reliance on such statements.
All of these "forward-looking statements" are inherently uncertain and are not
guarantees of future performance. Investors must recognize that actual events
could cause actual results to differ materially from Senior Management's
expectations. Key risk factors that in particular, could have a material adverse
impact on current and future performance include (i) the Company's dependence on
a small number of customers, as evidenced by the cancellation of orders in July
1996 by one of the Company's two largest customers, (ii) a trend toward vertical
integration among thin-film disk manufacturers that may reduce demand for the
Company's products, as evidenced by the Company's largest customer in 1996,
(iii) dependence on the intensely competitive and cyclical hard-disk drive
industry, (iv) absence of long-term
5
<PAGE> 7
purchase commitments from the Company's customers, and (v) risk of excess
industry capacity. See "Factors that Affect Future Results" beginning at Page 13
of the Company's Form 10-K filed with the Securities and Exchange Commission on
March 31, 1997 for a more detailed discussion of factors, as updated by the
foregoing and other discussion in this Report, that could affect the Company's
performance and the value of its common stock (which section is incorporated
herein by reference). Such forward-looking statements speak only as of the date
of this report and the Company disclaims any duty to update such statements.
THREE MONTHS ENDED MARCH 28, 1997 AND MARCH 29, 1996
Net Sales. Net sales decreased $3.5 million, or 29.8%, to $8.3 million in
the three months ended March 28, 1997 from $11.8 million in the three months
ended March 29, 1996. The decrease in revenue was a result of a significant loss
of orders from a major customer, culminating in the cancellation of all its
outstanding purchase orders. This customer resumed buying substrates from Cerion
in the fourth quarter of 1996 but at reduced quantities and represented
approximately 26% of first quarter 1997 revenue as compared to 38% of first
quarter 1996 revenue. Furthermore, the Company's largest customer gradually
began decreasing orders to zero in the second half of 1996 as it expanded its
internal manufacturing capacity for aluminum disk substrates. These two
customers represented a combined 30.7% and 83.7% of the Company's revenue in the
first quarter of 1997 and 1996, respectively. Although the Company has been able
to replace the majority of the lost order volume as compared to volume in the
first quarter of 1996, it has been primarily with customers that possess
internal manufacturing capacity for aluminum disk substrates. The customers with
internal capacity are expanding that capacity with Cerion providing aluminum
disk substrates to bridge the current internal production shortfalls. Average
sales prices decreased significantly between the first quarter of 1996 and 1997
resulting in an average sales price in the first quarter of 1997 that was
approximately 25% lower than the first quarter of 1996.
Gross Profit. Gross profit decreased $3.7 million to $1.0 million in the
three months ended March 28, 1997 from $4.7 million in the three months ended
March 29, 1996. Gross profit as a percentage of net sales decreased to 12.1% in
the first quarter of 1997 as compared to 39.7% in the first quarter of 1996. The
decrease in gross profit was attributable to the underutilization of existing
capacity which had been expanded in the first half of 1996 and the spreading of
higher fixed costs, due to a larger available production capacity, over a lower
sales volume in the first quarter of 1997. Gross profit also decreased as a
result of lower average selling prices of the Company's products in the first
quarter of 1997 as compared to the first quarter of 1996.
Selling, General & Administrative Expenses. Selling, general and
administrative expenses decreased $494,000, or 33.5%, to $1.0 million in the
three months ended March 28, 1997 from $1.5 million in the three months ended
March 29, 1996. The decrease was due primarily to higher nonrecurring costs
incurred in the first quarter of 1996, including relocation costs for two
executive officers and costs associated with transitioning the Company from a
captive supplier entity within the Nashua Corporation group of affiliated
companies to a stand-alone company. Furthermore, lower spending associated with
a decrease in the workforce, including lower profit-sharing and
performance-based bonus expenses and reduced research and development spending
contributed to the reduction in costs. Selling, general and administrative
expenses as a percentage of net sales decreased to 11.9% in the first quarter of
1997 compared to 12.5% in the first quarter of 1996. The decrease in the
percentage results from a reduction in absolute spending.
Interest Income. Interest income consists of interest income from
short-term investments.
6
<PAGE> 8
Provision for Income Taxes. Provision for income taxes was $44,000 for the
three months ended March 28, 1997 as compared to $1.2 million for the three
months ended March 29, 1996. The Company's effective tax rate was 40% in the
first quarter of 1997 and 1996.
Quarterly Results. The Company's revenues and earnings may fluctuate
significantly from quarter to quarter based on a variety of factors, including
(i) the timing and size of new and recurring orders from customers, (ii) the
introduction and marketing of new products by the Company and its competitors,
(iii) changes in demand for the Company's products, and (iv) general economic
conditions within the data storage industry, (v) timing of significant orders,
changes in pricing by the Company or its competitors, (vi) order cancellations,
modifications and quantity adjustments and shipment rescheduling, (vii) changes
in product mix, (viii) manufacturing yields and the level of utilization of the
Company's production capacity. The impact of these and other factors on the
Company's expense levels are based, in part, on its expectations as to future
sales. Because the Company's sales are generally made pursuant to purchase
orders that are subject to cancellation, modification, quantity reduction or
rescheduling generally without penalty, the Company's backlog as of any
particular date may not be indicative of sales for any future period, and such
changes could cause the Company's net sales to fall below expected levels. If
sales levels are below expectations, operating results are likely to be
materially adversely affected. Furthermore, net income may be disproportionately
affected by a reduction in net sales because a proportionately smaller amount of
the Company's expenses varies with its sales. As a result, the Company's
operating results in any quarter may not be indicative of its future performance
and could have a material adverse effect on the market price for the Company's
Common Stock. In addition, the stock market recently has experienced volatility
which has affected the market price of securities of many companies and which
has sometimes been unrelated to the operating performance of such companies.
Factors such as announcements of new products, alternative memory technology or
strategic alliances by the Company or its competitors, as well as the market
condition in the information industry and the movements in the prices of stocks
in general may have a significant impact on the market price of the Company's
Common Stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements have been to fund working capital
needs, manufacturing capacity expansion and capital expenditures related to
manufacturing process automation. During the periods presented, these capital
requirements were satisfied by cash flows from operations and proceeds of the
Company's initial public offering.
Net cash provided by (used in) operating activities was $(1.6) million and $2.2
million in the three months ended March 28, 1997 and March 29, 1996,
respectively. The decrease in cash provided by operating activities from the
first three months of 1996 to the first three months of 1997 was primarily due
to the decrease in net income and the increase in accounts receivable from
December 31, 1996 to March 28, 1997 associated with growth of the Company's net
sales in the three months ended March 28, 1997.
Net cash used in investing activities was $4.9 million and $1.7 million in the
first three months of 1997 and 1996, respectively. Cash used in investing
activities in 1996 was primarily capital expenditures related to modifications
of existing equipment, purchases of new equipment and in 1997 the primarily
investing activity was the purchase of short-term investments. Newly purchased
equipment in 1996 increased both manufacturing capacities and efficiencies. The
Company's short-term investments are comprised of investment grade commercial
paper.
7
<PAGE> 9
Net cash used by financing activities was $90,000 in the first three months of
1997 primarily related to costs of obtaining the revolving credit facility. In
the first three months of 1996, net cash used by financing activities was
$548,000 related to the payment of net cash flow generated by the Company that
was directed to Nashua until May 30, 1996.
The Company's future capital requirements will be to fund working capital needs
and equipment purchases that reduce manufacturing costs through changes in its
manufacturing process. The Company has committed $1.4 million in 1997 to an
automation project that is expected to be completed by year-end. Future
additional capital expenditures will be required to increase automation within
the Company's manufacturing processes.
OUTLOOK
Cerion does not provide forecasts of potential financial performance. The
statements contained in this Outlook are based upon the intent, belief or
current expectations of the Company or its directors and officers. These
statements are forward-looking; actual results may differ materially.
Based upon anticipated cash flows from operating activities, remaining proceeds
from the initial public offering completed in 1996 and credit availability, the
Company believes that it has the liquidity and capital resources needed to meet
its financial commitments through 1997. The Company does not believe current
market conditions will support substantial price increases. Thus, any
improvement in operating performance will require cost improvements to occur.
Unless the Company achieves substantial cost improvements, increased demand and
no further price reductions beyond year-end levels, the Company may incur
operating losses and negative cash flows from operating activities. Without such
cost improvements and increased demand, at present cost levels and planned
capital expenditures of approximately $4.0 million annually, the Company over an
extended period of time will exhaust all or substantially all of its cash
resources and borrowing availability under its credit facility. In such event,
the Company would be required to pursue other alternatives to improve liquidity,
including further cost reductions, sales of assets, the deferral of certain
capital expenditures and obtaining additional sources of funds. No assurance can
be given that the company will be able to pursue such alternatives successfully.
Adverse industry conditions during the second half of 1996, and the first
quarter of 1997, in which available market supply exceeded demand is expected to
continue through the third quarter of 1997. Reduced demand combined with a
significant reduction in pricing caused the Company to incur net losses for the
last two quarters of 1996 and operate at substantially break-even for the first
quarter of 1997. These adverse industry conditions are as a result continuing
and the Company may incur operating losses and negative cash flows from
operating activities. Such net losses have, and, if they occur in the future
will impair the Company's liquidity and available sources of liquidity and will
continue to affect the Company adversely until significant product cost
improvements are achieved and combined with increased sales volumes to return
the Company to sustainable profitability.
The Company's gross margin percentage is largely a function of product mix sold
in any period. Various other factors, including unit volumes, costs and yield
issues associated with initiating production on new processes also will continue
to affect the amount of cost of sales and the variability of the gross margin
percentage in future quarters. Additionally, increased depreciation resulting
from the significant capital spending in 1996 and 1995, and planned capital
spending in 1997 will negatively impact gross margins in future periods. The
planned 1997 capital spending is focused in the area of manufacturing process
changes to reduce product cost.
8
<PAGE> 10
Reduction in demand from either a reduction in the overall industry market
demand, further backwards integration by thin film media manufacturers or a
sudden loss of one or more customers will significantly impact the Company's
operating performance. Volatility in demand for the Company's products will have
a substantial impact to the Company's operating performance because of the fixed
cost element of the Company's product manufacturing relative to total costs.
FINANCIAL ACCOUNTING STANDARDS NO. 128
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS 128 replaces
primary earnings per share ("EPS") with basic EPS, which excludes dilution, and
requires presentation of both basic and diluted EPS on the face of the income
statement. Diluted EPS is computed similarly to the current fully diluted EPS.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, and requires restatement of all prior-period EPS data
presented. The adoption of this statement is not expected to materially affect
either future or prior-period EPS.
INFLATION
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
9
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
On August 8, 1996, an individual plaintiff, Joshua Teitelbaum, initiated a
lawsuit against Cerion Technologies Inc. ("Cerion" or the "Company"), Nashua
Corporation ("Nashua"), William Blair & Co. ("Blair") and certain Cerion
directors and officers in the Circuit Court of Cook County, Illinois. On
September 4, 1996, a second individual plaintiff, Philippe Olczyk, initiated a
similar lawsuit against the Company, Nashua, Blair and certain Cerion directors
in the Circuit Court of Cook County, Illinois. Both lawsuits purport to be
brought on behalf of a class consisting of all persons (other than the
defendants) who purchased the common stock of Cerion between May 24, 1996 and
July 9, 1996.
These two cases were consolidated before the same judge. On March 24, 1997,
Teitelbaum and Olcyzk, joined by a third plaintiff, Robert K. Pickup, filed a
Consolidated Amended Class Action Complaint ("Consolidated Complaint") against
the Company, Nashua, Blair, and certain Cerion directors and officers. The
Consolidated Complaint supersedes the prior complaints and also purports to be
on behalf of a class consisting of all persons (other than the defendants) who
purchased the common stock of Cerion between May 24, 1996 and July 9, 1996. The
Consolidated Complaint alleges that, in connection with the Cerion initial
public offering, the defendants issued certain materially false and misleading
statements and omitted the disclosure of material facts regarding, in
particular, certain significant customer relationships. The Consolidated
Complaint alleges that the defendants violated sections 11, 12(a)(2), and 15 of
the 1933 Securities Act, section 13 of the Illinois Blue Sky Law, and the
Illinois Consumer Fraud and Deceptive Practices Act. The Consolidated Complaint
seeks a declaration that the case may proceed as a class action; damages;
rescission of the sale of Cerion common stock by Cerion and Nashua, to the
extent purchasers still hold Cerion shares, or rescissory damages, if they have
sold their Cerion stock; attorneys fees and costs; and other relief. The Company
believes the Consolidated Complaint to be without merit and is defending
vigorously against the consolidated case.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
A. Exhibits
11.1 Computation of Net Income per Common Share
B. Reports on Form 8-K
None.
10
<PAGE> 12
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.
CERION TECHNOLOGIES INC.
-------------------------------------------------
(Registrant)
Date: April 30, 1997 By: /s/ Richard A. Clark
----------------------------------------------
Richard A. Clark
Vice President-Finance,
Chief Financial Officer and Treasurer
(principal financial and duly authorized officer)
11
<PAGE> 1
EXHIBIT 11.1
CERION TECHNOLOGIES INC.
COMPUTATION OF NET INCOME
PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
March 28, 1997 March 29, 1996
-------------- --------------
<S> <C> <C>
Net income $ 66 $1,848
====== ======
Shares:
Weighted average common shares outstanding during the period 7,018 5,400
Common equivalent shares - -
------ ------
Average common and dilutive equivalent shares outstanding 7,018 5,400
====== ======
Net income per common share: $ 0.01 $ 0.34
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-28-1997
<EXCHANGE-RATE> 1
<CASH> 2,754
<SECURITIES> 4,750
<RECEIVABLES> 5,800
<ALLOWANCES> 135
<INVENTORY> 748
<CURRENT-ASSETS> 14,477
<PP&E> 14,074
<DEPRECIATION> 5,173
<TOTAL-ASSETS> 23,475
<CURRENT-LIABILITIES> 3,760
<BONDS> 0
0
0
<COMMON> 70
<OTHER-SE> 19,372
<TOTAL-LIABILITY-AND-EQUITY> 23,475
<SALES> 8,266
<TOTAL-REVENUES> 8,266
<CGS> 7,262
<TOTAL-COSTS> 7,262
<OTHER-EXPENSES> 982
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (88)
<INCOME-PRETAX> 110
<INCOME-TAX> 44
<INCOME-CONTINUING> 66
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
