<PAGE> 1
================================================================================
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 QUARTER ENDED MAY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22183
------------------------
MEADE INSTRUMENTS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-2988062
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6001 OAK CANYON
IRVINE, CA 92620
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(949) 451-1450
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 [ ]
Number of shares of common stock outstanding as of July 1, 1998 is
7,875,500
================================================================================
<PAGE> 2
MEADE INSTRUMENTS CORP.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I -- FINANCIAL INFORMATION
Balance Sheets (Unaudited) -- May 31, 1998 and February
28, 1998............................................... 3
Statements of Income (Unaudited) -- Three Months Ended May
31, 1998 and 1997...................................... 4
Statements of Cash Flows (Unaudited) -- Three Months Ended
May 31, 1998 and 1997.................................. 5
Notes to Financial Statements (Unaudited)................. 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 7
PART II -- OTHER INFORMATION
Other Information......................................... 10
SIGNATURES.................................................. 11
EXHIBIT INDEX............................................... 12
</TABLE>
2
<PAGE> 3
MEADE INSTRUMENTS CORP.
BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 28,
1998 1998
----------- ------------
<S> <C> <C>
Current assets:
Cash...................................................... $ 2,000 $ 1,649,000
Accounts receivable, less allowance for doubtful accounts
of $505,000 at May 31, 1998 and $485,000 at February
28, 1998............................................... 7,885,000 6,024,000
Inventories............................................... 13,941,000 11,910,000
Deferred income taxes..................................... 1,424,000 1,424,000
Prepaid expenses and other current assets................. 491,000 239,000
----------- -----------
Total current assets.............................. 23,743,000 21,246,000
Other assets................................................ 303,000 361,000
Property and equipment, net of accumulated depreciation of
$1,487,000 at May 31, 1998 and $1,316,000 at February 28,
1998...................................................... 3,644,000 2,985,000
----------- -----------
$27,690,000 $24,592,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit....................................... $ 2,508,000
Accounts payable.......................................... 2,068,000 $ 1,326,000
Accrued liabilities....................................... 3,508,000 2,897,000
Income taxes payable...................................... 93,000 1,606,000
----------- -----------
Total current liabilities......................... 8,177,000 5,829,000
----------- -----------
Long-term capital lease obligations......................... 287,000 341,000
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock; 1,000,000 shares authorized, none issued
and outstanding at May 31, 1998........................
Common stock, $0.01 par value, 20,000,000 shares
authorized; 7,875,500 shares issued and outstanding at
May 31, 1998 and February 28, 1998, respectively....... 79,000 79,000
Additional paid-in capital.................................. 21,445,000 21,445,000
Retained earnings........................................... 5,457,000 4,903,000
----------- -----------
26,981,000 26,427,000
Unearned ESOP shares........................................ (7,755,000) (8,005,000)
----------- -----------
Total stockholders' equity........................ 19,226,000 18,422,000
----------- -----------
$27,690,000 $24,592,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
MEADE INSTRUMENTS CORP.
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MAY 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net sales................................................... $14,821,000 $12,735,000
Cost of sales............................................... 8,741,000 8,526,000
----------- -----------
Gross profit.............................................. 6,080,000 4,209,000
Selling expenses............................................ 2,873,000 1,414,000
General and administrative expenses......................... 1,947,000 1,369,000
Research and development expenses........................... 245,000 194,000
----------- -----------
Operating income.......................................... 1,015,000 1,232,000
Interest expense............................................ 42,000 594,000
----------- -----------
Income before income taxes................................ 973,000 638,000
Provision for income taxes.................................. 419,000 262,000
----------- -----------
Net income.................................................. 554,000 376,000
Deduction for accretion of redeemable preferred stock....... 374,000
----------- -----------
Net income available to common stockholders................. $ 554,000 $ 2,000
=========== ===========
Net income per share available to common
stockholders -- basic and diluted......................... $ 0.08 $ 0.00
=========== ===========
Weighted average number of shares outstanding -- basic...... 6,807,000 5,424,000
=========== ===========
Weighted average number of shares outstanding -- diluted.... 6,954,000 5,424,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
MEADE INSTRUMENTS CORP.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MAY 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................. $ 554,000 $ 376,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 192,000 143,000
Debt issuance costs....................................... 400,000
ESOP contribution......................................... 300,000 250,000
Changes in assets and liabilities:
Increase in accounts receivable........................ (1,861,000) (1,415,000)
Decrease (increase) in inventories..................... (2,031,000) 547,000
Decrease (increase) in prepaid expenses and other
current assets........................................ (252,000) 61,000
Decrease in other assets............................... 37,000 57,000
(Decrease) increase in accounts payable................ 742,000 (29,000)
Increase in accrued liabilities........................ 566,000 111,000
Decrease in income taxes payable....................... (1,513,000) (296,000)
----------- -----------
Net cash provided by (used in) operating
activities..................................... (3,266,000) 205,000
----------- -----------
Cash flows from investing activities:
Capital expenditures...................................... (830,000) (137,000)
----------- -----------
Net cash used in investing activities............. (830,000) (137,000)
----------- -----------
Cash flows from financing activities:
Payments on long-term debt................................ (8,183,000)
Net borrowings (payments) under bank line of credit....... 2,508,000 (2,860,000)
Net proceeds from the issuance of common stock............ 17,913,000
Redemption of preferred stock............................. (6,864,000)
Payments under capital lease obligations.................. (59,000) (52,000)
----------- -----------
Net cash provided by (used in) financing
activities..................................... 2,449,000 (46,000)
----------- -----------
Net increase (decrease) in cash............................. (1,647,000) 22,000
Cash at beginning of period................................. 1,649,000 4,000
----------- -----------
Cash at end of period....................................... $ 2,000 $ 26,000
=========== ===========
Supplemental disclosures of cash flow information:
Non-cash financing activities:
Accretion of redeemable preferred stock..................... $ 374,000
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
MEADE INSTRUMENTS CORP.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
A. The financial statements have been prepared by the Company and are
unaudited.
In management's opinion, the information and amounts furnished in this
report reflect all adjustments (consisting of normal recurring adjustments)
considered necessary for the fair presentation of the financial position and
results of operations for the interim periods presented. These financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1998.
The Company has experienced, and expects to continue to experience,
substantial fluctuations in its sales, gross margins and profitability from
quarter to quarter. Factors that influence these fluctuations include the volume
and timing of orders received, changes in the mix of products sold, market
acceptance of the Company's products, competitive pricing pressures, the
Company's ability to meet increasing demand and delivery schedules and the
timing and extent of research and development expenses, marketing expenses and
product development expenses. In addition, a substantial portion of the
Company's net sales and operating income typically occur in the third quarter of
the Company's fiscal year primarily due to disproportionately higher customer
demand for less-expensive telescopes during the holiday season. The results of
operations for the first quarter ended May 31, 1998 and 1997, respectively, are
not necessarily indicative of the operating results for the entire fiscal year.
B. In April 1997 the Company completed an initial public offering (the
"Offering") of 3,875,500 shares of common stock (including the underwriter's
over-allotment option). The Offering included 2,875,500 newly issued shares of
common stock and 1,000,000 shares of common stock held by the Company's then
preferred stockholder. The Offering raised approximately $17.9 million (after
underwriting discounts and Offering expenses). Net proceeds from the Offering
were used to redeem approximately $6.9 million of outstanding Series A preferred
stock, including accrued dividends, and to repay approximately $11.0 million of
existing bank term and revolving debt. Prior to the closing of the Offering, the
Company merged with and into a wholly-owned Delaware subsidiary, with the
Delaware subsidiary being the surviving corporation. All of the outstanding
shares of the Series A and Series B common stock and Series A preferred stock of
the Company were exchanged on a ratio of one for one with shares of Series A and
Series B common stock and Series A preferred stock of the Delaware subsidiary as
part of the merger. All shares of Series A and Series B common stock were
converted into shares of common stock upon the completion of the Offering.
C. The write-off of approximately $400,000 of previously capitalized debt
issuance costs, related to bank term debt that was retired with the proceeds of
the Offering in April 1997, is presented as a component of interest expense for
the three months ended May 31, 1997.
D. The composition of inventories is as follows:
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 28,
1998 1998
----------- ------------
<S> <C> <C>
Raw materials..................................... $ 3,880,000 $ 2,780,000
Work-in-process................................... 1,725,000 1,819,000
Finished goods.................................... 8,336,000 7,311,000
----------- -----------
$13,941,000 $11,910,000
=========== ===========
</TABLE>
6
<PAGE> 7
MEADE INSTRUMENTS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The nature of the Company's business is seasonal. Historically, sales in
the third quarter have been higher than sales achieved in the other three fiscal
quarters of the year. Thus, expenses and, to a greater extent, operating income
vary by quarter. Caution, therefore, is advised when appraising results for a
period shorter than a full year, or when comparing any period other than to the
same period of the previous year.
FIRST QUARTER ENDED MAY 31, 1998 COMPARED TO FIRST QUARTER ENDED MAY 31,
1997
Net sales for the first quarter of fiscal 1999 were $14.8 million compared
to $12.7 million for the first quarter of fiscal 1998, an increase of 16.5%.
This increase was primarily due to a combined increase of approximately $3.7
million in net sales of LX Series telescopes and ETX telescopes, offset by a
decrease of approximately $2.0 million in net sales of less-expensive imported
telescopes. During the quarter ended May 31, 1997, sales of less-expensive
imported telescopes were especially strong due to interest in the Hale-Bopp
comet.
Gross profit increased from $4.2 million (33.1% of net sales) for the first
quarter of fiscal 1998 to $6.1 million (41.0% of net sales) for the first
quarter of fiscal 1999, an increase of 45.2%. The increase in gross profit as a
percent of net sales was principally due to the increased sales of more
profitable lines of domestically produced products.
Selling expenses increased from $1.4 million (11.0% of net sales) for the
first quarter of fiscal 1998 to $2.9 million (19.6% of net sales) for the first
quarter of fiscal 1999, an increase of 107.1%. This increase over the first
quarter of fiscal 1998 principally reflects: (i) higher advertising expenses
associated with the Company's expanding national print advertising campaign
begun during the first quarter of fiscal 1999 and (ii) higher shipping costs,
sales-related personnel expenses and other selling expenditures to support
growing sales volume for fiscal 1999.
General and administrative expenses increased from $1.4 million (11.0% of
net sales) for the first quarter of fiscal 1998 to $1.9 million (12.8% of net
sales) for the first quarter of fiscal 1999, an increase of 35.7%. This increase
over the first quarter of fiscal 1998 was generally due to increases in
personnel related costs, consulting and professional fees and increases across a
broad category of expenses to support higher sales volume during the first
quarter of fiscal 1999.
Research and development expenses increased from $194,000 (1.5% of net
sales) for the first quarter of fiscal 1998 to $245,000 (1.7% of net sales) for
the first quarter of fiscal 1999, an increase of 26.3%. This increase was due to
increased engineering personnel costs and related consulting expenses.
Interest expense decreased from $594,000 for the first quarter of fiscal
1998 to $42,000 for the comparable period of fiscal 1999, a decrease of 92.9%.
Included in interest expense for the quarter ended May 31, 1997 is approximately
$400,000 of additional interest expense recognized pursuant to the write-off of
previously capitalized debt issuance costs related to bank term debt that was
retired with the proceeds of the Offering in April 1997. Interest expense for
the first quarter of fiscal 1999 decreased 78.4% compared to the first quarter
of fiscal 1998 (before the write-off of $400,000 of debt issuance costs), due to
lower average borrowings on the Company's line of credit and the elimination of
the long-term bank debt that was retired with the proceeds of the Offering.
The provision for income taxes was $262,000 for the first quarter of fiscal
1998, or 41.1% of income before income taxes, compared to $419,000, or 43.1% of
income before income taxes for the comparable period of fiscal 1999.
7
<PAGE> 8
MEADE INSTRUMENTS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
For the first quarter of fiscal 1998, net income was adjusted by $374,000
for accretion of redeemable preferred stock to arrive at net income available to
common stockholders of $2,000. The redeemable preferred stock was redeemed in
full with the proceeds of the Offering in April 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the first quarter of fiscal 1999, the Company funded its operations
with borrowings on its bank line of credit. Internally generated cash flow from
net income was more than offset by increases in inventories and accounts
receivable as well as a decrease in income taxes payable. Net working capital
(current assets less current liabilities) totaled approximately $15.6 million at
May 31, 1998, up slightly from $15.4 million at February 28, 1998.
Working capital requirements fluctuate during the year due to the seasonal
nature of the business. These requirements are typically financed through a
combination of internally generated cash flow from operating activities and
short-term bank borrowings.
In January 1998, the Company amended its Loan and Security Agreement (the
"Loan Agreement") with Fleet Capital Corporation to provide (i) a $15.0 million
revolving line of credit and (ii) a $5.0 million term note. The Loan Agreement
is secured by the assets of the Company. The Company had outstanding borrowings
under its line of credit of approximately $2.5 million at May 31, 1998. There
were no outstanding borrowings under the term note at May 31, 1998.
Capital expenditures aggregated $830,000 and $137,000 for the quarters
ended May 31, 1998 and 1997, respectively. The Company had capital expenditure
commitments aggregating approximately $1.0 million at May 31, 1998. These
commitments relate to the purchase of manufacturing equipment and product
tooling.
The Company believes that internally generated cash flow and borrowing
ability will be sufficient to meet its operating, working capital and capital
expenditure requirements through the next twelve months. In the event the
Company's plans require more capital than is presently anticipated, the
Company's remaining cash balances may be consumed and additional sources of
liquidity, such as debt or equity financings, may be required to meet its
capital needs. There can be no assurance that additional capital beyond the
amounts the Company currently requires will be available on reasonable terms, if
at all.
FORWARD-LOOKING INFORMATION
The preceding "Management's Discussion and Analysis of Financial Conditions
and Results of Operations" section contains various "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended, which
represent the Company's reasonable judgment concerning the future and are
subject to risks and uncertainties that could cause the Company's actual
operating results and financial position to differ materially, including the
following: the Company's ability to reach new market participants as a result of
its increased advertising and marketing efforts; the Company's ability to
continue to develop and bring to market new and innovative products; the
Company's ability to retain and expand the telescope, binocular and other
optical products markets; the Company expanding its distribution network; the
Company experiencing fluctuations in its sales, gross margins and profitability
from quarter to quarter consistent with prior periods; and the Company's
expectation that it will have sufficient funds to meet any working capital
requirements during the foreseeable future with internally generated cash flow
and borrowing ability.
In addition to other information in this report, the Company cautions that
certain factors, including without limitation the following, should be
considered carefully in evaluating the Company and its business and that such
factors may cause the Company's actual operating results to differ materially
from those set forth in the forward looking statements described above or to
otherwise be adversely affected: any significant decline in general economic
conditions or uncertainties regarding future economic prospects that affect
8
<PAGE> 9
MEADE INSTRUMENTS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
consumer spending; any general decline in the size of the telescope market or
any segment of the telescope market in which the Company competes, whether from
general economic conditions, a decrease in the popularity of telescopes or
otherwise; any inability to continue to design and manufacture products that
will achieve commercial success; any product designs being rendered obsolete
within a relatively short period of time as new products are introduced into the
market; any failure of the Company to penetrate the binocular market and achieve
meaningful sales; any unexpected termination or interruption of the Company's
manufacturing arrangements with the Taiwanese Factory; greater than anticipated
competition; any loss of, or the failure to replace, any significant portion of
the sales made to any significant customer of the Company; the inherent risks
associated with international sales, including variations in local economies,
fluctuating exchange rates (including conversion to Euros) increased difficulty
of inventory management, greater difficulty in accounts receivable collections,
costs and risks associated with localizing products for foreign countries,
changes in tariffs and other trade barriers, adverse foreign tax consequences,
cultural differences affecting product demand and customer service and burdens
of complying with a variety of foreign laws; and the inherent risks associated
with products manufactured by foreign suppliers located primarily in Taiwan,
Korea, Japan and the Peoples Republic of China, including, among other things,
imposition of quotas or trade sanctions, decline in the value of the U.S. dollar
against local currencies causing an effective increase in the price of finished
products and components or the decline in value of local currencies against the
U.S. dollar resulting in competitive products being manufactured for lower costs
and thus exerting downward pricing pressures on the Company's products, shipment
delays and the political instability between China and Taiwan.
The Company is currently addressing a potential problem facing many users
of automated information systems. The widespread use of two-digit date computer
programs to perform computations and decision-making functions may cause
computer systems to malfunction in the year 2000, which could lead to business
delays and disruptions in the U.S. and internationally. The Company has made and
will continue to make modifications in its computer systems to address this
problem. The Company expects to complete these modifications prior to the end of
calendar 1999 at a cost that is not expected to be material to the operations of
the Company. However, due to the independent nature of computer systems, the
Company may be adversely impacted depending on whether or not other entities not
affiliated with the Company address this issue successfully.
9
<PAGE> 10
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Meade Instruments Corporation v. Reddwarf Starware, LLC, aka Reddwarf
Instruments, LLC ("Reddwarf"), Civil No. SACV 98-240 GLT, United States District
Court for the Central District of California. Action for declaratory relief
initiated by a complaint filed March 16, 1998, by the Company for declaratory
judgment of non-infringement of Reddwarf's U.S. Patent No. 4,764,881, for
declaratory judgment that Reddwarf's patent is invalid, void, and unenforceable,
and for an injunction and damages under Federal antitrust statutes and for an
injunction and other relief under California unfair competition statutes. A
counterclaim dated June 3, 1998 alleging infringement by the Company's LX200
series telescope system (and unspecified other products) of Reddwarf's U.S.
Patent No. 4,764,881 was also filed against the Company. The counterclaim
further alleges that the infringement is willful and seeks unspecified damages,
an injunction, and other relief against the Company. The Company contends the
counterclaim is without merit and vigorously contests its allegations. The
Company will pursue its defenses in its action for declaratory judgment of
non-infringement and invalidity. Settlement efforts to date have been
unsuccessful and no further settlement negotiations have been scheduled.
Investigations by the Company's patent counsel to date reveal facts that, in
such counsel's opinion, give the Company meritorious defenses against Reddwarf's
patent. However, due to the uncertainties of litigation, the Company is unable
to provide an evaluation of the likelihood of an unfavorable outcome in the
case, or an estimate of the amount of potential loss in the event of an
unfavorable outcome.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
6(a) Exhibits filed with this Form 10-Q
Exhibit No. 27 Financial Data Schedule for the quarter ended May 31,
1998.
6(b) Reports on Form 8-K
None.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
MEADE INSTRUMENTS CORP.
By: /s/ JOHN C. DIEBEL
------------------------------------
John C. Diebel
Chairman of the Board
and Chief Executive Officer
Dated: July 2, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN C. DIEBEL Chairman of the Board and Chief July 2, 1998
- ----------------------------------------------------- Executive Officer (Principal
John C. Diebel Executive Officer)
/s/ STEVEN G. MURDOCK Director, President, Chief July 2, 1998
- ----------------------------------------------------- Operating Officer and Secretary
Steven G. Murdock
/s/ BRENT W. CHRISTENSEN Vice President -- Finance and July 2, 1998
- ----------------------------------------------------- Chief Financial Officer (Principal
Brent W. Christensen Financial and Accounting Officer)
/s/ JOSEPH A. GORDON, JR. Director and Senior Vice President July 2, 1998
- ----------------------------------------------------- of North American Sales
Joseph A. Gordon, Jr.
Director
- -----------------------------------------------------
Timothy C. McQuay
Director
- -----------------------------------------------------
Harry L. Casari
</TABLE>
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
27 Financial Data Schedule for the quarter ended May 31, 1998.
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> FEB-28-1999 FEB-28-1998
<PERIOD-START> MAR-01-1998 MAR-01-1997
<PERIOD-END> MAY-31-1998 MAY-31-1997
<CASH> 2 1,649
<SECURITIES> 0 0
<RECEIVABLES> 8,390 6,509
<ALLOWANCES> 505 485
<INVENTORY> 13,941 11,910
<CURRENT-ASSETS> 23,743 21,246
<PP&E> 5,131 4,301
<DEPRECIATION> 1,487 1,316
<TOTAL-ASSETS> 27,690 24,592
<CURRENT-LIABILITIES> 8,177 5,829
<BONDS> 0 0
0 0
0 0
<COMMON> 79 79
<OTHER-SE> 19,147 18,343
<TOTAL-LIABILITY-AND-EQUITY> 27,690 24,592
<SALES> 14,821 12,735
<TOTAL-REVENUES> 14,821 12,735
<CGS> 8,741 8,526
<TOTAL-COSTS> 8,741 8,526
<OTHER-EXPENSES> 5,065 2,977
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 42 594
<INCOME-PRETAX> 973 638
<INCOME-TAX> 419 262
<INCOME-CONTINUING> 554 376
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 (374)
<NET-INCOME> 554 2
<EPS-PRIMARY> .08 .00
<EPS-DILUTED> .08 .00
</TABLE>
