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 quarterly period ended June 30, 1997
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number: 0-13976
AKORN, INC.
(Exact Name of Registrant as Specified in its Charter
LOUISIANA 72-0717400
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 Tri-State International, Ste. 100
Lincolnshire, Illinois 60069
(Address of Principal Executive Offices) (Zip Code)
(847) 236-3800
(Issuer's telephone number)
Indicate by check mark whether the issuer (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 ____
At August 6, 1997 there were 16,609,549 shares of common stock, no par value,
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Page
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996 2
Condensed Consolidated Statements of Income -
Three and six months ended June 30, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1997 and 1996 4
Notes to Condensed Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 13
The information contained in this filing, other than historical information,
consists of forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those described in
such statements. Such statements regarding the timing of acquiring,
developing and financing new products, of bringing them on line and of
deriving revenues and profits from them, as well as the effect of those
revenues and profits on the company's margins and financial position, is
uncertain because many of the factors affecting the timing of those items
are beyond the company's control.
<PAGE>
AKORN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DOLLARS IN THOUSANDS
(UNAUDITED)
June 30, December 31,
1997 1996*
-------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 737 $ 1,380
Short-term investments 576 576
Accounts receivable, net 5,929 4,625
Inventory 8,948 8,838
Prepaid expenses and other assets 1,704 1,502
-------- -------
TOTAL CURRENT ASSETS 17,894 16,921
PRODUCT LICENSES AND OTHER ASSETS 5,523 1,340
PROPERTY, PLANT AND EQUIPMENT, NET 12,880 12,833
------- -------
TOTAL ASSETS $36,297 $31,094
======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 382 $ 250
Current installments of long-term debt and
capital lease obligations 658 170
Trade accounts payable 3,496 1,892
Accrued compensation 752 885
Accrued expenses and other liabilities 7,643 5,520
------- -------
TOTAL CURRENT LIABILITIES 12,931 8,717
LONG-TERM DEBT AND
CAPITAL LEASE OBLIGATIONS 6,124 5,211
OTHER LONG-TERM LIABILITIES 690 792
SHAREHOLDERS' EQUITY
Common stock 14,164 14,143
Retained earnings 2,388 2,231
------- -------
TOTAL SHAREHOLDERS' EQUITY 16,552 16,374
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $36,297 $31,094
======= =======
*Condensed from audited consolidated financial statements.
See notes to condensed consolidated financial statements.
<PAGE>
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30
1997 1996 1997 1996
------------------ -----------------
Net sales $ 10,176 $ 8,159 $ 19,044 $ 16,976
Cost of goods sold 5,260 5,749 10,700 11,500
------------------ -----------------
GROSS PROFIT 4,916 2,410 8,344 5,476
Selling, general and
administrative expenses 3,246 2,367 5,804 4,273
Research and development 368 348 729 736
Acquisition and severance - 677 - 677
Relocation charges - - 1,451 -
------------------ -----------------
3,614 3,392 7,984 5,686
------------------ -----------------
OPERATING INCOME (LOSS) 1,302 (982) 360 (210)
Interest expense (138) (113) (254) (240)
Interest and other income, net 14 24 155 138
------------------ -----------------
(124) (89) (99) (102)
------------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES 1,178 (1,071) 261 (312)
Income taxes (benefit) 436 (514) 97 (305)
------------------ -----------------
NET INCOME (LOSS) $ 742 $ (557) $ 164 $ (7)
================== =================
Per Share:
NET INCOME (LOSS) $ 0.04 $ (0.03) $ 0.01 $ -
================== =================
WEIGHTED AVERAGE
SHARES OUTSTANDING 16,800 17,015 16,802 16,788
================== =================
See notes to condensed consolidated financial statements.
<PAGE>
AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)
Six months ended June 30,
1997 1996
-------------------------
OPERATING ACTIVITIES
Net income (loss) $ 164 $ (7)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 809 609
Building and equipment write down 400 -
Changes in operating assets and liabilities 1,724 (414)
-------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,097 188
INVESTING ACTIVITIES
Purchases of property, plant and equipment (981) (832)
Product license acquisitions (4,305) (90)
Net maturities of investments - 594
-------------------------
NET CASH USED IN INVESTING ACTIVITIES (5,286) (328)
FINANCING ACTIVITIES
Repayment of long-term debt (21) (276)
Issuance of long-term debt 1,500 400
Proceeds from sale of stock 13 474
Dividends paid - (583)
Pre-funded development receipts - 150
Reductions in capital lease obligations (78) (108)
Short-term borrowings, net 132 492
-------------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,546 549
-------------------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (643) 409
Cash and cash equivalents at beginning of period 1,380 482
-------------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 737 $ 891
========================
See notes to condensed consolidated financial statements.
<PAGE>
AKORN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Akorn, Inc. and its wholly owned subsidiaries (the Company).
Intercompany transactions and balances have been eliminated in consolidation.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and
accordingly do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three- and six-month periods ended June 30, 1997 are
not necessarily indicative of the results that may be expected for a full year.
For further information, refer to the consolidated financial statements and
footnotes for the transition period ended December 31, 1996, included in the
Company's Annual Report on Form 10-K.
NOTE B - INVENTORY
The components of inventory are as follows ( in thousands):
June 30, December 31,
1997 1996
-------- -----------
Finished goods $ 5,279 $ 5,181
Work in process 1,544 1,375
Raw materials and supplies 2,125 2,282
-------- ----------
$ 8,948 $ 8,838
======== ==========
Inventory at June 30, 1997 and December 31, 1996 is reported net of reserves of
$491,393 and $589,007, respectively, for slow-moving, unsaleable and obsolete
items.
NOTE C - RELOCATION EXPENSES
During the quarter ended March 31, 1997, the Company recorded $1,451,000 in
charges related to the relocation of the ophthalmic division and executive
offices from Abita Springs, Louisiana to the Chicago area. The charges
primarily relate to severance and retention bonus payments as well as a write-
down of the Abita Springs facility and equipment to net realizable value.
NOTE D - PRODUCT LICENSE ACQUISITION
Effective April 1, 1997, the Company entered into an agreement with Becton
Dickinson and Company to acquire the rights to distribute three products. Two
of the products, ICG Cardio-Green and BAL in Oil, are New Drug Application
Products with no generic competition. The third product, Indigo Carmine, is a
grandfathered product with several competitors in the marketplace. The
acquisition transfers ownership of the NDAs and regulatory files, as well as
the trade names and trademarks for the products. In exchange for the products,
the Company paid Becton Dickinson and Company $4.0 million plus the cost of
existing product inventory. Payment consisted of $2.7 million cash at closing,
a $1.5 million promissory note secured by an irrevocable letter of credit and a
final cash payment for the remaining inventory value due August 1, 1997. The
cash payment was financed with existing cash balances and a $1.5 million draw
on the Company's line of credit.
<PAGE>
NOTE E - CHANGE IN ACCOUNTING ESTIMATES
During the quarter ended June 30, 1996, the Company revised its estimate for
recording chargeback accruals. As a result, a reduction in net sales of
$250,000 was recorded. In addition, the Company increased its estimate for
unsaleable inventory by approximately $200,000, resulting in an increase in
cost of goods sold.
During the quarter ended June 30, 1996, the Company recognized estimated costs
of $677,000 related to acquisition costs and severance expenses associated with
the acquisition of Pasadena Research Laboratories, Inc. (PRL). These estimated
costs increased the reported operating loss.
During the quarter ended March 31, 1997, the Company increased its estimate for
unsaleable inventory by $84,000 and changed the timing of absorption of
manufacturing overhead expenses, resulting in a one-time charge of $213,000.
These changes in estimates are reported as an increase in cost of goods sold.
During the quarter ended March 31, 1996, the Company increased its estimate for
unsaleable inventory by approximately $300,000. This change in estimate was
reported as an increase in cost of goods sold. During the same quarter, an
evaluation by the Company resulted in a change in the estimated liability
related to aged customer credits, resulting in a reduction of selling, general
and administrative expenses of $85,000. A decision to no longer pursue
Abbreviated New Drug Applications (ANDAs) for several products which had been
produced in previously-owned facilities, and for which estimated costs of
transferring such ANDAs had been accrued, resulted in a $316,000 reduction of
selling, general and administrative expenses.
NOTE F - RECENT ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number 128 "Earnings per Share" ("SFAS 128")
which changes the method of calculating earnings per share (EPS). SFAS 128
requires the presentation of "basic" EPS and "diluted" EPS on the face of the
statement of operations. Basic EPS is computed by dividing the net income
available to common shareholders by the weighted average shares of outstanding
common stock. The calculation of diluted EPS is similar to basic EPS except
that the denominator includes dilutive common stock equivalents such as stock
options and warrants. The statement is effective for financial statements for
periods ending after December 15, 1997. The Company will adopt SFAS 128 in the
fourth quarter of 1997. The Company's current EPS calculation significantly
conforms to basic EPS. Diluted EPS is not expected to be materially different
from basic EPS since potential common shares in the form of common stock
options and warrants are not estimated to be materially dilutive.
<PAGE>
AKORN, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 Compared to 1996
The following table sets forth, for the periods indicated, net sales by
segment, excluding intersegment sales:
Three Months Ended
June 30,
1997 1996
------------------
(in thousands)
Ophthalmic distribution $ 5,949 $ 4,553
Contract manufacturing 1,307 2,312
Injectable distribution 2,920 1,294
------- -------
Total net sales $10,176 $ 8,159
======= =======
Consolidated net sales increased 25% in the quarter ended June 30, 1997 compared
to the same period in 1996. Ophthalmic distribution sales increased 31%,
primarily due to strong performance in the diagnostic and therapeutic product
lines as well as surgical products and surgical instruments. The acquisition of
ICG from Becton Dickinson in April and the introduction of the Company's generic
version of Timolol Maleate also contributed to the sales increase.
Injectable distribution sales increased 126% compared to the same period in
1996, primarily due to penetration into the hospital market and strong
performance in rheumatology and antidote products, including Bal in Oil,
acquired from Becton Dickinson in April. The increase also reflects sales of
the injectable product line acquired from Janssen Pharmaceutica, Inc. in July
1996. Sales of the Janssen products during the quarter were $734,000. Prior to
the acquisition, sales of this product line were reported as contract
manufacturing sales. For the quarter ended June 30, 1997, contract
manufacturing sales declined 43% over the comparable period in 1996. This
decline reflects the transfer of the Janssen product line to the injectable
distribution segment as well as less emphasis on low-margin basic contract
sales. Simultaneously, intercompany contract manufacturing sales, which are
eliminated in consolidation, increased from $743,000 to $958,000 for the
quarters ended June 30, 1996 and 1997, respectively. The Company has shifted
its marketing efforts in the area of contract manufacturing, focusing on
Taylor's ability to provide a full range of services including product
development, regulatory and sterile manufacturing.
Consolidated gross profit increased 104% during the quarter ended June 30, 1997
compared to the same period in 1996, with gross margins increasing from 30% to
48%. Margins for the ophthalmic segment increased from 30% to 46% during the
comparable periods, primarily due to product acquisitions and a shift in sales
mix to higher-margin products. Margins on the Company's generic version of
Timolol Maleate have declined at a faster than anticipated rate, due to the
large number of competitors offering the product. During the quarter ended
June 30, 1996, ophthalmic sales were reduced $250,000 by a chargeback
adjustment while cost of sales was increased by a $200,000 inventory adjustment.
Excluding these adjustments, margins for the ophthalmic segment increased from
38% to 46%. Margins for the injectable segment (including both injectable
distribution and contract manufacturing) increased from 29% to 52%, primarily
due to product acquisitions and increased sales in injectable distribution as
well as re-engineering of production processes to reduce costs of manufacturing.
Selling, general and administrative (SG&A) expenses increased 37% during the
quarter ended June 30, 1997 as compared to the same period in 1996. This
increase is primarily due to increased marketing and promotional activities in
both segments, as well as a $250,000 provision for employee bonuses included in
<PAGE>
1997. The percentage of SG&A expenses to sales increased from 29% to 32%,
reflecting the increased marketing and promotional activities noted above
as well as the bonus accrual.
Research and development (R&D) expense increased 6% in the quarter ended June
30, 1997, to $368,000 from $348,000 for the same period in 1996. Management
expects R&D expenses in 1997 to increase over prior year levels.
During the quarter ended June 30, 1996, the Company recognized estimated costs
of $677,000 related to acquisition costs and severance expenses associated with
the acquisition of Pasadena Research Laboratories, Inc. (PRL). These estimated
costs increased the reported operating loss.
Net interest and other expense of $124,000 was higher than the prior-year
quarter's $89,000, primarily due to increased interest expense on higher
average outstanding debt balances.
The Company's effective tax rate for the quarter ended June 30, 1997 was 37%
compared to 48% (benefit) for the prior-year period. The effective rate for 1996
varies from the statutory rates primarily due to the inclusion of net income for
PRL prior to the acquisition date as a result of the pooling of interests. PRL
was a Subchapter S corporation and therefore not subject to corporate income
taxes. The Company reported net income of $742,000 or $0.04 per share for the
three months ended June 30, 1997. The net loss for the comparable prior-year
period was $557,000 or $0.03 per share.
Six Months Ended June 30, 1997 Compared to 1996
The following table sets forth, for the periods indicated, net sales by segment,
excluding intersegment sales:
Six Months Ended
June 30,
1997 1996
----------------
(in thousands)
Ophthalmic distribution $11,625 $ 9,714
Contract manufacturing 2,931 4,776
Injectable distribution 4,488 2,486
----------------
Total net sales $19,044 $16,976
================
Consolidated net sales increased 12% in the six months ended June 30, 1997
compared to the same period in 1996. Ophthalmic distribution sales increased
20%, primarily due to strong performance in the diagnostic and therapeutic
product lines as well as surgical products and surgical instruments. The
acquisition of ICG from Becton Dickinson in April and the introduction of the
Company's generic version of Timolol Maleate also contributed to the sales
increase.
Injectable distribution sales increased 81% compared to the same period in 1996,
primarily due to penetration into the hospital market and strong performance in
rheumatology and antidote products, including Bal in Oil, acquired from Becton
Dickinson in April. The increase also reflects sales of the injectable product
line acquired from Janssen Pharmaceutica, Inc. in July 1996. Sales of the
Janssen products during the six month period were $1,156,000. Prior to the
acquisition, sales of this product line were reported as contract manufacturing
sales. For the six months ended June 30, 1997, contract manufacturing sales
declined 39% over the comparable period in 1996. This decline reflects the
transfer of the Janssen product line to the injectable distribution segment as
well as less emphasis on low-margin basic contract sales. Simultaneously,
intercompany contract manufacturing sales, which are eliminated in
consolidation, increased from $1,191,000 to $2,118,000 for the six months
ended June 30, 1996 and 1997, respectively. The Company has shifted its
marketing efforts in the area of contract manufacturing, focusing on Taylor's
ability to provide a full range of services including product development,
regulatory and sterile manufacturing.
Consolidated gross profit increased 52% during the six months ended June 30,
1997 compared to the same period in 1996, with gross margins increasing from 32%
to 44%. Margins for the ophthalmic segment increased from 31% to 45% during the
<PAGE>
comparable periods, primarily due to product acquisitions and a shift in
sales mix to higher-margin products. Margins on the Company's generic version
of Timolol Maleate have declined at a faster than anticipated rate, due
to the large number of competitors offering the product. During the six months
ended June 30, 1996, ophthalmic sales were reduced $250,000 by a chargeback
adjustment while cost of sales was increased by a $500,000 inventory adjustment.
Excluding these adjustments, gross margins for the ophthalmic segment increased
from 38% to 45%. Margins for the injectable segment (including both injectable
distribution and contract manufacturing) increased from 33% to 42%, primarily
due to product acquisitions and increased sales in injectable distribution as
well as re-engineering of production processes to reduce costs of
manufacturing. During the six months ended June 30, 1997, injectable cost of
sales was increased by an $84,000 inventory adjustment and a $213,000 charge for
a change in the timing of overhead absorption. Excluding these charges, margins
for the injectable segment increased from 33% to 46%.
Selling, general and administrative (SG&A) expenses increased 36% during the six
months ended June 30, 1997 as compared to the same period in 1996. This
increase is partially due to a $400,000 reduction in estimated accrued expenses
reversed in 1996. Excluding these reversals, SG&A expenses increased 24% during
the six month period, reflecting increased marketing and promotional activities
in both segments, as well as a $250,000 provision for employee bonuses included
in 1997. The percentage of SG&A expenses to sales, after exclusion of the 1996
expense reversals, increased from 28% to 30%, reflecting the increased marketing
and promotional activities noted above.
Research and development (R&D) expense declined 1% in the six months ended June
30, 1997, to $729,000 from $736,000 for the same period in 1996. The decrease
reflects timing of research activities rather than a change in the Company's
strategy. Management expects R&D expenses in 1997 to increase over prior year
levels.
During the six months ended June 30, 1996, the Company recognized estimated
costs of $677,000 related to acquisition costs and severance expenses associated
with the acquisition of Pasadena Research Laboratories, Inc. (PRL). These
estimated costs increased the reported operating loss.
During the six months ended June 30, 1997, the Company recorded $1,451,000 in
charges related to the relocation of the ophthalmic division and executive
offices from Abita Springs, Louisiana to the Chicago area. The charges
primarily relate to severance and retention bonus payments as well as a write-
down of the Abita Springs facility and equipment to net realizable value.
Net interest and other expense of $99,000 was lower than the prior-year period's
$102,000, primarily due to increased licensing fees offsetting a slight increase
in interest expense on higher average outstanding debt balances.
The Company's effective tax rate for the six months ended June 30, 1997 was 37%
compared to 98% (benefit) for the prior-year period. The lower effective rate
in 1996 reflects the fact that PRL was a subchapter S corporation and not
subject to corporate income taxes. The Company reported net income of $164,000
or $0.01 per share for the six months ended June 30, 1997 The net loss for the
comparable prior-year period was $7,000.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Number 128 "Earnings per Share" ("SFAS 128")
which changes the method of calculating earnings per share (EPS). SFAS 128
requires the presentation of "basic" EPS and "diluted" EPS on the face of the
statement of operations. Basic EPS is computed by dividing the net income
available to common shareholders by the weighted average shares of outstanding
common stock. The calculation of diluted EPS is similar to basic EPS except
that the denominator includes dilutive common stock equivalents such as stock
options and warrants. The statement is effective for financial statements for
periods ending after December 15, 1997. The Company will adopt SFAS 128 in the
fourth quarter of 1997. The Company's current EPS calculation significantly
conforms to basic EPS. Diluted EPS is not expected to be materially different
from basic EPS since potential common shares in the form of common stock options
and warrants are not estimated to be materially dilutive.
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
Working capital at June 30, 1997 was $5.0 million compared to $8.2 million at
December 31, 1996. The Company restructured its bank credit facilities in
February 1997 to lower its short-term debt service requirements and to allow for
additional financing. At June 30, 1997 the Company had $2.6 million of working
capital financing available under its line of credit in addition to $2.0 million
of construction and equipment financing. The Company borrowed $1.5 million
under its line of credit on April 1, 1997 to finance a product license purchase
from Becton Dickinson and Company, and subsequently paid down the line with cash
generated from operations. See Note D of Notes to Condensed Consolidated
Financial Statements. Management believes that existing cash, cash flows from
operations and available bank credit are sufficient to handle the Company's
requirements for the foreseeable future.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Certain legal proceedings in which the registrant, Akorn, Inc. (the "Company"),
is involved are described in Item 3 to the Company's Form 10-K for the
transition period ended December 31, 1996 and in Note W to the consolidated
financial statements included in that report.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11.1) Computation of Earnings (Loss) per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
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.
AKORN, INC.
/s/ Rita J. McConville
----------------------
Rita J. McConville
Vice President, Chief Financial Officer and Secretary
(Duly Authorized and Principal Financial Officer)
Date: August 8, 1997
<PAGE>
Akorn, Inc.
Exhibit 11.1
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1997 1996 1997 1996
------------------ ----------------
Earnings (Loss):
Income (loss) applicable to
common stock $ 742 $ (557) $ 164 $ (7)
================= ================
Shares:
Weighted average number of
shares outstanding 16,598 16,493 16,596 16,383
Additional shares assuming
conversion of options and
warrants 202 522 206 405
---------------- ----------------
Pro forma shares 16,800 17,015 16,802 16,788
================ ================
Net income (loss) per share $ 0.04 $ (0.03) $ 0.01 $ -
================ ================
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> QTR-2 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 737,498 737,498
<SECURITIES> 576,000 576,000
<RECEIVABLES> 5,929,499 5,929,499
<ALLOWANCES> 0 0
<INVENTORY> 8,948,334 8,948,334
<CURRENT-ASSETS> 17,894,117 17,894,117
<PP&E> 21,953,923 21,953,923
<DEPRECIATION> (9,074,092) (9,074,092)
<TOTAL-ASSETS> 36,296,968 32,296,968
<CURRENT-LIABILITIES> 12,931,042 12,931,042
<BONDS> 0 0
<COMMON> 14,163,458 14,163,458
0 0
0 0
<OTHER-SE> 2,388,140 2,388,140
<TOTAL-LIABILITY-AND-EQUITY> 36,296,968 36,296,968
<SALES> 10,175,543 19,044,323
<TOTAL-REVENUES> 10,175,543 19,044,323
<CGS> 5,259,237 10,700,132
<TOTAL-COSTS> 5,259,237 10,700,132
<OTHER-EXPENSES> 3,614,324 7,984,261
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 137,581 253,210
<INCOME-PRETAX> 1,177,942 260,665
<INCOME-TAX> 435,839 96,446
<INCOME-CONTINUING> 742,103 164,219
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 742,103 164,219
<EPS-PRIMARY> .04 .01
<EPS-DILUTED> .04 .01
</TABLE>
