Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 30, 1997 Commission File Number 0-5449
COMARCO, Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2088894
- ---------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
22800 Savi Ranch Parkway, Suite 214, Yorba Linda, California 92887-1299
- ------------------------------------------------------------ -----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (714) 282-3832
--------------
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 May 31, 1997.
Common Stock,
$.10 Par Value 4,762,459 Shares
-------------- ----------------
<PAGE>
Index to Form 10-Q
Page No.
--------
Part I. Financial Information
Condensed Consolidated Balance Sheets
April 30, 1997 and January 31, 1997 1
Condensed Consolidated Statements of Income
Quarters ended April 30, 1997 and April 30, 1996 2
Condensed Consolidated Statements of Cash Flows
Quarters ended April 30, 1997 and April 30, 1996 3
Notes to Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signature 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
COMARCO, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
April 30, 1997 January 31, 1997
ASSETS (Unaudited) *
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,418,000 $ 12,711,000
Short-term investments 1,528,000 1,824,000
Accounts receivable, net 13,592,000 11,526,000
Inventory 3,903,000 3,042,000
Other current assets 2,388,000 2,257,000
----------------- ----------------
Total current assets 28,829,000 31,360,000
Long-term investments 3,063,000 1,859,000
Property and equipment, net 1,789,000 1,408,000
Software development costs, net 2,611,000 2,434,000
Intangible assets, net 2,786,000 1,842,000
Other assets 482,000 307,000
----------------- ----------------
TOTAL ASSETS $ 39,560,000 $ 39,210,000
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 413,000 $ 217,000
Deferred revenue 2,724,000 2,678,000
Accrued liabilities 7,631,000 8,036,000
----------------- ----------------
Total current liabilities 10,768,000 10,931,000
Deferred income taxes 1,302,000 1,302,000
Stockholders' equity:
Common stock, $.10 par value,
33,705,000 shares authorized,
4,762,459 and 4,777,959 shares
outstanding at April 30, 1997 and
January 31, 1997, respectively 476,000 478,000
Capital contributed in excess
of par value 3,856,000 4,450,000
Retained earnings 23,158,000 22,049,000
----------------- ----------------
Total stockholders' equity 27,490,000 26,977,000
----------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,560,000 $ 39,210,000
================= ================
See accompanying notes to the condensed consolidated financial statements.
*The condensed consolidated balance sheet as of January 31, 1997 has been summarized
from the Company's audited consolidated balance sheet as of that date.
</TABLE>
COMARCO, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
Quarter Ended
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
Revenues:
Contract revenues $ 13,922,000 $ 11,952,000
Product sales 6,175,000 4,456,000
--------- ---------
20,097,000 16,408,000
---------- ----------
Direct costs:
Contract costs 9,574,000 8,385,000
Cost of product sales 2,670,000 1,550,000
--------- ---------
12,244,000 9,935,000
Indirect costs 6,200,000 4,848,000
--------- ---------
18,444,000 14,783,000
---------- ----------
Operating income 1,653,000 1,625,000
Net interest income 135,000 153,000
---------- ----------
Income before income taxes 1,788,000 1,778,000
Income taxes 679,000 676,000
---------- ----------
Net income $ 1,109,000 $ 1,102,000
================== ==================
Earnings per share
Primary $ .21 $ .21
================== ================
Fully diluted earnings per share has not been presented as the effect is
immaterial.
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
COMARCO, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Quarter Ended
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,109,000 $ 1,102,000
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 533,000 586,000
Provision for doubtful accounts receivable 10,000 9,000
Net purchases of trading securities (168,000) (555,000)
Increase in accounts receivable (2,076,000) (393,000)
Increase in inventory (300,000) (376,000)
Increase in other current assets (131,000) (181,000)
Decrease (increase) in other assets (175,000) 20,000
Increase (decrease) in accounts payable 196,000 (355,000)
Increase in deferred revenue 46,000 33,000
Decrease in other current liabilities (405,000) (443,000)
------------------ -----------------
Net cash used in operating activities (1,361,000) (553,000)
Cash flows from investing activities:
Purchases of investments (1,204,000) (1,024,000)
Sales of investments 464,000 1,509,000
Purchases of property and equipment (408,000) (201,000)
Software development costs (468,000) (401,000)
Cost of acquisition of Cubic, net of cash acquired (1,720,000) -
------------------ ---------------
Net cash used in investing activities (3,336,000) (117,000)
Cash flows from financing activities:
Proceeds from issuance of common stock 97,000 101,000
Purchase of common stock (693,000) -
------------------ ---------------
Net cash provided (used) by financing activities (596,000) 101,000
------------------ ----------------
Net decrease in cash and cash equivalents $ (5,293,000) $ (569,000)
================== ================
Supplemental disclosures of cash flow information: Cash paid during the quarter
for:
Interest $ - $ -
Income taxes 10,000 2,000
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
COMARCO, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 30, 1997 and April 30,1996
(Unaudited)
1. General
The financial statements have been prepared without audit. However, they
reflect all adjustments which in the opinion of management are necessary
to fairly state the Company's financial position at April 30, 1997 and
January 31, 1997 and the results of its operations and cash flows for the
quarters ended April 30, 1997 and April 30, 1996. The information has
been prepared in accordance with Form 10-Q instructions, but does not
necessarily include all information and footnotes required by generally
accepted accounting principles for complete financial statements. The
results of the quarter ended April 30, 1997 are not necessarily
indicative of the results to be obtained for the full fiscal year.
2. Asset Acquisitions
The Condensed Consolidated Balance Sheet includes the callbox assets of
Cubic Communications, Inc., acquired by Comarco Wireless Technologies,
Inc., a subsidiary of the Company, in February 1997, and the Condensed
Consolidated Statement of Income includes Cubic callbox operations since
February 1, 1997. The acquisition has been accounted for using the
purchase method of accounting, and accordingly, the purchase price was
allocated to the acquired share of the tangible and identifiable
intangible assets and assumed liabilities based on their respective fair
values.
3. Significant Accounting Policies - Per Share Information
The outstanding shares used for earnings per share calculations for all
years presented include the weighted average effect of common shares and
common share equivalents outstanding during the year. Common share
equivalents include dilutive stock options computed using the treasury
stock method. Consolidated net income of the Company used for earnings
per share purposes is diluted as a result of stock options issued by the
Company's subsidiaries which enable their holders to obtain the
subsidiaries' common stock. Primary earnings per share is calculated as
follows:
<TABLE>
Quarter Ended
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
Net income $ 1,109,000 $ 1,102,000
less - net income
allocated to subsidiary
dilutive stock options
outstanding (62,000) (53,000)
------------ -------------
Net income used in
calculation of primary
income per share $ 1,047,000 $ 1,049,000
============== =============
Weighted average number
of common shares used in
calculation of primary
income per share 5,093,000 5,081,000
============ =========
Primary income per
common share $ .21 $ .21
========== ==========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This quarterly report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities
Exchange Act of 1934. These are in paragraphs 12,14,15,17,19, 23,
25, and 26 of Management's Discussion and Analysis of Results of
Operations and Financial Condition. A more complete discussion of
business risks is included in the Company's Annual Report on Form
10-K for the year ended January 31, 1997.
(a) Results of Operations
During the first quarter of Fiscal Year 1998 (year ending January
31, 1998), the Company recorded total revenues of $20.1 million,
up 22.6% from the revenues of $16.4 million for the comparable
period of a year earlier. Increased year-to-year revenues are
primarily due to:
o sales of the Company's wireless communications products,
including various field measurement and revenue assurance
systems to major cellular telephone carriers;
o acquisitions as of October 1, 1996 and February 5, 1997 of
cellular callbox product lines from GTE and Cubic
Communications, respectively; and
o acquisition as of August 1, 1996 of a commercial outsourced
staffing company.
Total direct costs of $12.2 million for the first quarter of
Fiscal Year 1998 are up 2.3 million, or 23.2%, from $9.9 million
for the first quarter of Fiscal Year 1997. The increase is due to
the on-going costs contributed by the acquisitions of the
commercial outsourced staffing company and the cellular callbox
product lines, as well as costs to add additional wireless
communications products business capacity in a new, larger U.S.
facility to support future higher anticipated sales levels.
Total indirect costs of $6.2 million for the first quarter of
Fiscal Year 1998 are up $1.4 million, or 29.2%, from $4.8 million
for the first quarter of Fiscal Year 1997. The increase is also
related to the commercial outsourced staffing and callbox product
line acquisitions, as well as increased costs from expansion in
the wireless communications products business, including the
establishment of two international sales offices.
Net interest income (interest income less interest expense) for
the first quarter of Fiscal Year 1998 amounted to $135,000, as
compared to $153,000 for the comparable period of the prior fiscal
year. The decrease is principally due a reduction in cash
available to invest over the current year's first quarter, as a
result of funding the wireless communications products expansion
and the Cubic callbox product line acquisition, as well as cash
used to re-purchase Company common stock.
The Company's effective tax rate for the first quarter of Fiscal
Year 1998 is 38%, the same as the comparable period of the prior
fiscal year.
Net income of $1.1 million for the first quarter of Fiscal Year
1998 is unchanged from the comparable period of the prior year
primarily due to the additional costs incurred for the wireless
communications products expansion offsetting the increased revenue
for the period.
Wireless Communications Products
Wireless communications products revenues increased 46.3% to $6.0
million for the first quarter of Fiscal Year 1998 from $4.1
million for the comparable period of the prior fiscal year. This
increase is due to increased sales of the Company's field
measurement systems and revenue assurance systems for major
cellular telephone carriers and the acquisition of the callbox
product lines from GTE and Cubic Communications. The Company has
continued to broaden its product line with the introduction of
field measurement equipment, including products supporting the GSM
and CDMA air interfaces. Summary operating results for Comarco
Wireless Technologies, Inc., the Company's wireless communications
products subsidiary, are as follows:
<TABLE>
Quarter Ended Quarter Ended
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
Revenues $6,018,000 $4,058,000
Cost of product sales 2,594,000 1,504,000
--------- ---------
Gross income 3,424,000 2,554,000
Gross income percentage 56.9% 62.9%
Indirect costs* 2,295,000 1,452,000
--------- ---------
Operating income $1,129,000 $1,102,000
========== ==========
</TABLE>
*Indirect costs include selling, general, and administrative
expenses as well as research and development expenses.
The decreased gross income percentage is due to the increased
costs incurred to increase the capacity of the wireless
communications products business, which included additional
staffing, moving to a larger facility in California, and
associated costs to support future anticipated higher sales
levels. If the increased forecast sales levels materialize, the
Company would expect the Company's gross income percentage to move
back toward historical levels, though there can be no assurances
in that regard.
The increase in indirect costs of 58.1% for the first quarter of
Fiscal Year 1998 over the comparable period of the prior fiscal
year is a result of the increase in revenues, as well as costs
incurred to establish two international sales offices and an
increase in research and development expenses. Selling, general
and administrative expenses increased 56.4% to $1.8 million from
the first quarter of Fiscal Year 1997 to the first quarter of
Fiscal Year 1998, while research and development expenses
increased 64.4% to $485,000 from the first quarter of Fiscal Year
1997 to the first quarter of Fiscal Year 1998. As with the gross
income, if anticipated increased sales levels do occur, the
Company would expect the indirect expense factor to moderate back
toward historical levels, though there can be no assurances in
that regard.
Operating income as a percentage of revenues is 18.8% for the
first quarter of Fiscal Year 1998, compared to 27.2% for the
comparable period of the prior fiscal year. This decrease is
primarily due to the increased costs related to business
expansion, as discussed above.
As part of its product development program, the Company is
continuing its software product development program in its
wireless communications products business. In accordance with
Financial Accounting Standard No. 86, Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed, the
Company capitalized $470,000 and $400,000, respectively, during
the first quarters of Fiscal Years 1998 and 1997, respectively.
Corresponding amounts amortized were $250,000 and $325,000,
respectively. The Company's future product prospects will depend
in part on its ability to enhance the functionality of its
existing products in a timely and cost-effective manner and to
identify, develop, and achieve market acceptance of new products.
There can be no assurance that the Company will be able to respond
to technological advances, changes in customer requirements, or
changes in regulatory requirements or industry standards, and any
significant delays in development, introduction or shipment of
products, or achievement of acceptable product costs, could have a
material adverse effect on the Company's business, operating
results and financial condition.
The Company's orders for wireless communications products totalled
$6.1 million for the first quarter of Fiscal Year 1998, up from
$1.9 million from the comparable prior period. For the twelve
month periods ended April 30, 1997 and 1996, orders received were
$38.9 million and $14.9 million, respectively. Included in the
amount for the twelve months ended April 30, 1997 is $10 million
of long-term maintenance service business associated with the
purchase of the GTE callbox product line. Because of the long
sales cycle involved in selling these products and the high unit
sales price, the Company believes that orders are best analyzed by
looking at a twelve month time period, as orders can fluctuate
significantly from quarter to quarter. The value of unfilled
orders at April 30, 1997 totalled $17.8 million, of which $8.6
million relates to long-term maintenance contracts. An additional
$2.0 million of deferred revenue has been recorded for anticipated
customer warranty obligations.
The Company has experienced fluctuations in wireless
communications products activity in each of the past four years,
with greater sales in the second half of its fiscal year and
lesser amounts in the first half. This trend may or may not
continue as the Company attempts to broaden its product offerings.
The nature of the wireless communications products business is
inherently unpredictable as the Company will normally not have a
significant amount of unfilled orders at the end of a period.
Therefore, the amount of orders, sales levels, and profits are
difficult to predict and may fluctuate significantly from quarter
to quarter.
The Company faces additional risk factors in developing its
wireless communications products business, including: foreign
marketing, capital requirements, technical requirements,
employees, competition, and proprietary information. A negative
impact to any of these risk factors could have a material adverse
effect on the Company's business, operating results, and financial
condition. Foreign marketing risks include: the need for export
licenses; tariffs and other potential trade restrictions; and
changes in laws governing the imposition of duties, quotas, taxes,
or other charges relating to the import or export of its products.
Other companies having a presence or doing business overseas may
have advantages over the Company in these areas. Certain
components used by the Company in its existing products are only
available from single or a limited number of suppliers, and the
inability by any of these suppliers to fulfill Company
requirements may result in an interruption in production. Access
to technical design of air interface devices is essential for the
Company to anticipate and develop compatible wireless
communications products, therefore, the inability to obtain such
technical designs on a timely basis would have a direct impact on
product design and schedule. The Company's future success also
depends in large part on the continued service of its key
personnel, and on its ability to continue to attract and retain
qualified employees, especially highly skilled engineers, for whom
competition in the industry is intense. In addition, the ability
of the Company to compete successfully depends upon a number of
factors, including the rate at which customers accept the
Company's products in overseas markets, product quality and
performance, experienced sales and marketing personnel, rapid
development of new products and features, evolving industry
standards, and the number and nature of the Company's competitors.
There can be no assurance that the Company will be able to compete
successfully in the future. The Company relies on a combination of
trade secrets, copyrights, trademarks, and contractual rights to
protect its intellectual property. There can be no assurance that
the steps taken by the Company will be adequate to protect its
technology; in addition, the laws of certain foreign countries in
which the Company's products may be sold do not protect the
Company's intellectual property rights to the same extent as do
the laws of the United States.
Outsourced Staffing Services and Other Revenue
Revenues provided by the Company's outsourced staffing services
business area increased 14.6%, from $12.3 million in the first
quarter of Fiscal Year 1997 to $14.1 million in the first quarter
of Fiscal Year 1998. Revenues in this business area decreased from
75.0% of the Company's total revenues in the first quarter of
Fiscal Year 1997 to 70.1% of the Company's total revenues in the
first quarter of Fiscal Year 1998. The increase in
period-to-period revenue is due to the acquisition of the
commercial outsourced staffing company on August 1, 1996, which
contributed $2.6 million of revenue in the first quarter of Fiscal
Year 1998, partially offset by a decrease in other outsourced
staffing revenue at some of the Company's locations providing
services to the U.S. Government.
Sales to the U.S. Government as well as to government prime
contractors were 43% and 34% of the Company's total revenue during
the first quarters of Fiscal Years 1997 and 1998, respectively. In
the course of the Company's business, its government contracts are
periodically opened for competition, although none of the
Company's government contracts are scheduled to end in Fiscal Year
1998. The Company plans to aggressively compete for all work
opened for competition to the extent possible and selectively
pursue certain high value Government procurements. There can be no
assurance that the Company will be selected and awarded the work
associated with any of its future proposals. In addition,
government agencies may terminate their contracts in whole or in
part at their convenience. Government agencies may remove funding
previously provided or may not exercise option periods. Therefore,
there can be no assurance that the Government will fund the
portions of existing contracts that are unfunded, or that the
Governmental agencies will exercise any options.
Operating income (revenues less direct costs, indirect costs, and
depreciation and amortization) for outsourced staffing services is
virtually unchanged from $523,000 in the first quarter of Fiscal
Year 1997 to $524,000 in the first quarter of Fiscal Year 1998.
Increased operating income provided by the acquisition of the
commercial outsourced staffing company was offset by decreased
operating income from government contracts.
(b) Financial Condition
The Company signed a loan agreement with a bank effective
September 26, 1994, which was last amended effective August 30,
1996. The loan agreement consists of (1) an $8 million revolving
credit facility, which expires June 30, 1998, and (2) a $5 million
guidance line of credit, which expires June 30, 1997. The
revolving credit facility and the guidance line of credit are
unsecured provided the Company maintains certain covenants.
Currently, management anticipates that cash flow will remain at a
level which will enable the Company to avoid utilizing the credit
facility except to support letters of credit and acquisition
financing, and that the Company will be able to purchase
investments on a regular basis. The Company's cash and investment
balances averaged $14 million (includes highly liquid long-term
investments with maturities of 12 to 36 months) during the first
quarter of Fiscal Year 1998. However, maintaining such cash
balances is predicated on the Company maintaining its business
base and is subject to the cost of financing new contracts,
acquisitions, software product development costs, and the
Company's stock re-purchase program.
During the first quarter of Fiscal Year 1998, the Company's
average days' sales in accounts receivable have increased,
primarily due to increased sales of wireless communications
products, which have a longer collection cycle than the Company's
outsourced staffing revenues.
Several additional key factors indicating the Company's financial
condition include:
<TABLE>
April 30, 1997 January 31, 1997
-------------- ----------------
<S> <C> <C>
Current ratio 2.68 2.87
Working capital $ 18,061,000 $ 20,429,000
Book value per share $5.77 $5.65
</TABLE>
The decrease in the current ratio and amount of working capital
during the first quarter of Fiscal Year 1998 is due to the funding
of the wireless communications products business expansion, as
well as funds used to re-purchase Company common stock during the
first quarter of Fiscal Year 1998.
The Company has a significant commitment for capital expenditures
at April 30, 1997 for Comarco Wireless Technologies, Inc. The
Company has developed and intends to continue to develop new
product line extensions for the wireless communications industry.
This product development program is expected to be funded from the
Company's current working capital. Under the software development
portion of the Company's product development program, the Company
capitalized and amortized in accordance with Financial Accounting
Standard No. 86, Accounting for the Costs of Computer Software to
be Sold, Leased, or Otherwise Marketed, $470,000 and $250,000,
respectively, in the first quarter of Fiscal Year 1998.
The Company's Board of Directors has authorized a stock
re-purchase program of up to 1,500,000 shares. As of April 30,
1997, the Company has re-purchased and retired approximately
867,000 shares. The average price paid per share re-purchased
under the program was $5.71.
The Company is subject to legal proceedings and claims which arise
in the ordinary course of business. In the opinion of management,
the amount of ultimate liability with respect to these actions
will not materially affect the financial condition of the Company.
The Company believes that its cash flow from operations and
available bank borrowings will be sufficient to satisfy the
current and anticipated capital requirements for operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are included herewith:
ll. Schedule of Computation of Net Income Per Share
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURE
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.
COMARCO, Inc.
-------------
(Registrant)
June 13, 1997
THOMAS P. BAIRD
--------------------------------------------------
Thomas P. Baird
Chief Financial Officer
(Authorized Officer and Principal Financial Officer)
<TABLE>
Exhibit ll
SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
Quarter Ended
-----------------------------------------
April 30, 1997 April 30, 1996
<S> <C> <C>
PRIMARY
Net income $ 1,109,000 $ 1,102,000
dilutive stock options outstanding (62,000) (53,000)
------------------ -----------------
Net income used in calculation of primary
income per share $ 1,047,000 $ 1,049,000
================ ===============
Weighted average number of common shares
outstanding during the period 4,786,000 4,715,000
Add - common equivalent shares (determined using the
"treasury stock" method)
representing shares issuable upon
exercise of stock options 307,000 366,000
----------------- ----------------
Weighted average number of shares used in
calculation of primary income per share 5,093,000 5,081,000
================= ================
Primary income per common share $ .21 $ .21
================ ===============
FULLY DILUTED
Net income used in calculation of primary
income per share $ 1,049,000 $ 1,049,000
================ ===============
Weighted average number of common shares
outstanding during the period 4,786,000 4,715,000
Add - common equivalent shares (determined using the
"treasury stock" method) representing shares
issuable upon exercise of stock options 307,000 368,000
------- -------
Weighted average number of shares used in
calculation of fully diluted income per share 5,093,000 5,083,000
================ ================
Fully diluted income per common share $ .21 $ .21
================ ===============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-30-1997
<CASH> 7,418
<SECURITIES> 4,591
<RECEIVABLES> 13,592
<ALLOWANCES> 0
<INVENTORY> 3,903
<CURRENT-ASSETS> 28,829
<PP&E> 1,789
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,560
<CURRENT-LIABILITIES> 10,768
<BONDS> 0
0
0
<COMMON> 476
<OTHER-SE> 27,014
<TOTAL-LIABILITY-AND-EQUITY> 39,560
<SALES> 6,175
<TOTAL-REVENUES> 20,097
<CGS> 2,670
<TOTAL-COSTS> 18,444
<OTHER-EXPENSES> 6,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (135)
<INCOME-PRETAX> 1,788
<INCOME-TAX> 679
<INCOME-CONTINUING> 1,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,109
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<FN>
NOTE-RECEIVABLES AND PP&E VALUES REPORTED REPRESENT NET AMOUNTS
</FN>
</TABLE>
