<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 Commission File Number 1-6787
HEALTH-CHEM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2682801
(State of Incorporation) (I.R.S. Employer Identification No)
1212 Avenue of the Americas, 24th Floor, New York, NY 10036
(Address of principal executive offices)
Registrant's Telephone Number: 212-398-0700
The registrant 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,
and has been subject to such filing requirements for the past 90 days.
As of April 30, 1997, 7,982,424 shares of Common Stock, $.01 Par Value, were
outstanding.
Page 1<PAGE>
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<TABLE>
HEALTH-CHEM CORPORATION Part I
CONSOLIDATED BALANCE SHEETS (Unaudited) Item 1
(In thousands) Page 2
March 31, December 31,
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 277 $ 134
Accounts receivable, net 5,399 5,337
Inventories (Note 3) 7,169 7,343
Deferred taxes-current 588 554
Other current assets 1,410 1,285
Total Current Assets 14,843 14,653
PROPERTY, PLANT & EQUIPMENT
Land and buildings 5,713 5,713
Other Property, Plant & Equipment 23,978 23,788
Total Property, Plant & Equipment 29,691 29,501
Less accumulated depreciation & amortization 16,338 15,934
Net Property, Plant & Equipment 13,353 13,567
NON-CURRENT ASSETS
Notes receivable 1,125 1,200
Cash surrender value of life insurance policies 1,402 1,402
Excess of cost over fair value of assets acquired 700 706
Deferred taxes-non-current 1,170 675
Other non-current assets 301 210
Total Non-Current Assets 4,698 4,193
TOTAL ASSETS $32,894 $32,413
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,712 $ 5,026
Accrued expenses and other current liabilities 2,473 2,132
Income taxes payable 568 568
Total Current Liabilities 7,753 7,726
LONG-TERM LIABILITIES
10.375% Convertible Subordinated Debentures 9,500 9,500
Long-term debt 7,417 6,082
Other long-term liabilities 2,116 1,949
Minority Interest 11 12
STOCKHOLDERS' EQUITY
Convertible special stock 7 7
Common stock 145 145
Additional paid in capital 18,286 18,286
Less stockholder notes receivable <148> <148>
Accumulated deficit <4,510> <3,463>
Subtotal 13,780 14,827
Less treasury stock <7,683> <7,683>
Total Stockholders' Equity 6,097 7,144
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $32,894 $32,413
<FN>
See Notes to Consolidated Financial Statements.<PAGE>
<PAGE>
</TABLE>
<TABLE>
HEALTH-CHEM CORPORATION Part I
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Item 1
(In thousands, except per share amounts) Page 3
For The Three Months
Ended March 31,
<S> 1997 1996
REVENUE: <C> <C>
Net sales $ 8,743 $13,149
Cost of goods sold 6,871 9,233
Gross profit 1,872 3,916
OPERATING EXPENSES:
Selling, general and administrative expense 2,317 2,373
Legal expense 107 305
Research and development expense 744 691
Net interest expense 384 398
Total operating expenses 3,552 3,767
<LOSS> INCOME FROM OPERATIONS <1,680> 149
Other income - net 101 83
<LOSS> INCOME FROM OPERATIONS BEFORE TAXES AND
MINORITY INTEREST <1,579> 232
Income tax <benefit> provision <530> 12
<LOSS> INCOME BEFORE MINORITY INTEREST <1,049> 220
Minority Interest in earnings of subsidiary 1 0
<LOSS> INCOME BEFORE EXTRAORDINARY GAIN <1,048> 220
Extraordinary gain from repurchase of debentures 1 4
NET <LOSS> INCOME $<1,047> $ 224
Earnings per common share (primary & fully diluted)
(Note 4):
<Loss> income before extraordinary gain $ <.13> $ .03
Extraordinary gain from repurchase of debentures .00 .00
NET <LOSS> INCOME PER SHARE $ <.13> $ .03
Average number of common and common equivalent
shares outstanding (primary & fully diluted)
(Note 4): 7,982 7,982
<FN>
See Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
</TABLE>
<TABLE>
HEALTH-CHEM CORPORATION Part I
CONSOLIDATED CASH FLOW STATEMENTS Item 1
(Unaudited) Page 4
(In thousands)
For The Three Months
Ended March 31,
<S> 1997 1996
Cash was <Used for> Provided by: <C> <C>
OPERATIONS:
<Loss> income before extraordinary gain $<1,049> $ 220
Adjustments to reconcile to net cash <used for>
provided by operations:
Depreciation and amortization 364 494
Gain on disposal of property, plant & equipment <14> 0
Provision for doubtful accounts receivable 12 24
Deferred income taxes <529> 8
Minority interest <1> 0
Changes in:
Accounts receivable <74> <2,315>
Inventories 174 416
Other current assets <50> <65>
Other noncurrent assets 0 12
Accounts payable <314> 1,888
Accrued expenses and other current liabilities 152 792
Interest and income taxes payable 272 <402>
Long-term liabilities 136 168
Other, net <3> <5>
Net cash <used for> provided by operations <924> 1,235
INVESTING:
Additions to property, plant and equipment <189> <990>
Proceeds on disposals of property, plant and equipment 17 21
Investment in life insurance policies - net 0 <41>
Net cash used for investing <172> <1,010>
FINANCING:
Long-term debt proceeds 6,887 3,938
Long-term debt payments <5,553> <4,047>
Repurchase of convertible subordinated debentures <95> <106>
Net cash provided by <used for> financing 1,239 <215>
Net Increase in Cash and Cash Equivalents 143 10
Cash and cash equivalents at beginning of period 134 259
Cash and cash equivalents at end of period $ 277 $ 269
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 129 $ 157
Income taxes 4 101
Supplemental Disclosures of Noncash Investing
and Financing:
Acquisition of fixed assets through capital
lease obligations 47 0
<FN>
See Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION Part I
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Item 1
(Unaudited) Page 5
1. Principles of consolidation
The consolidated financial statements include the accounts of Health-
Chem Corporation ("Health-Chem") and all of its subsidiaries
(collectively the "Company").
The Consolidated Balance Sheet as of March 31, 1997, the Consolidated
Statements of Operations and the Consolidated Cash Flow Statements for
the interim periods ended March 31, 1997 and 1996 have been prepared
by the Company, without audit. In the opinion of the Company, all
necessary adjustments, consisting of normal recurring items, have been
made to present fairly the financial position, results of operations
and cash flows at March 31, 1997 and for all periods presented.
Certain amounts included in the consolidated financial statements
relating to prior periods have been reclassified to conform to the
current presentation.
Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included
in the Company's December 31, 1996 Annual Report on Form 10-K. The
results of operations for the periods ended March 31, 1997 and 1996
are not necessarily indicative of the operating results for the full
years.
2. Taxes on Income (In thousands) For the Three Months
Ended March 31,
1997 1996
The income tax <benefit> provision includes:
State and local income taxes $ <36> $ <71>
Federal income taxes <493> 85
Total $<529> $ 14
Taxes on income are comprised of:
Currently payable $ 0 $ 6
Deferred payable <529> 8
Total $<529> $ 14
Taxes are charged to:
Operations $<530> $ 12
Extraordinary gain on repurchase of debentures 1 2
Total $<529> $ 14
A reconciliation of taxes on income to the federal statutory rate is as
follows:
For the Three Months
Ended March 31,
1997 1996
Tax <benefit> provision at statutory rate $<536> $ 81
Increase <decrease> resulting from:
Intangibles and officers life insurance premiums 36 14
State and local taxes, net of federal tax benefit <36> 6
Settlement of state tax assessments 0 <69>
Reversal of valuation allowance 0 <25>
Other 7 7
Tax <benefit> provision $<529> $ 14
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION Part I
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Item 1
(Unaudited) Page 6
3. Inventories (In thousands)
March 31, 1997 December 31, 1996
Raw materials $3,641 $3,979
Finished goods and work-in-process 3,528 3,364
Total Inventories $7,169 $7,343
4. Earnings Per Share
Primary and fully diluted earnings per share are computed based upon
the weighted average number of common and common equivalent shares
outstanding. Shares issuable upon exercise of dilutive stock options
are included in the number of common and common equivalent shares
outstanding for 1996 and 1995. Subordinated debentures are anti-
dilutive for all periods presented.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" (SFAS 128). SFAS 128 establishes standards for computing and
presenting earnings per share and applies to entities with publicly-
held common stock or potential common stock. SFAS 128 simplifies the
standards for computing earnings per share previously found in APB
Opinion No. 15, "Earnings Per Share," by replacing the presentation of
primary earnings per share with a presentation of basic earnings per
share. It also requires dual presentation of basic and diluted
earnings per share on the face of the income statement for all
entities with complex capital structures.
SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. Earlier
application is not permitted; however, restatement of all prior-period
earnings per share data is required upon adoption. The impact of
adopting SFAS 128 on the Company's earnings per share data is not
expected to be significant.
5. Litigation
In August 1995, Key Pharmaceuticals, Inc., a subsidiary of Schering-
Plough Corporation ("Key"), commenced an action against Hercon
Laboratories in the United States District Court for the District of
Delaware alleging that Hercon Laboratories; submission to the United
States Food and Drug Administration ("FDA") of three Abbreviated New
Drug Applications ("ANDAs") relating to some of Hercon Laboratories'
transdermal nitroglycerin products, for which Hercon Laboratories is
awaiting FDA approval, constitutes infringement of Key's patent for
its Nitro-Dur(R) products. Key seeks certain injunctive relief,
monetary damages if commercial manufacture, use or sale occurs, and a
judgment that the effective date for FDA approval of the above-
referenced ANDAs be not earlier than February 16, 2010, the expiration
date of Key's patent. In its answer, Hercon Laboratories denied the
material allegations of the complaint, asserting, among other things,
that the Key patent is invalid and unenforceable and that Hercon
Laboratories has not infringed and does not infringe any claim of the
patent. Hercon Laboratories has counterclaimed against Key for
declaratory judgment of patent noninfringement, invalidity and
unenforceability. Following extensive discovery, a non-jury trial was
completed on October 10, 1996. All post-trial briefs were filed in
December 1996 and the Company is awaiting decision by the Court.
Costs of this litigation have adversely affected profitability in
1996. Management continues to believe that Key's claims are without
merit.
<PAGE>
<PAGE> HEALTH-CHEM CORPORATION Part I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF Item 2
FINANCIAL CONDITION & RESULTS OF OPERATIONS Page 7
Results of Operations
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company provides the following cautionary
remarks regarding important factors which, among others, could cause future
remarks to differ materially from the forward-looking statements, expectations
and assumptions expressed or implied herein. The following discussion
includes certain forward-looking statements. Such forward-looking statements
are subject to a number of factors, including material risks and
uncertainties, including those referred to herein and in the Company's Reports
on Form 10-K and Form 10-Q, which could cause actual results to differ
materially from the forward-looking statements.
Net sales decreased $4.4 million, or 34% for the three months ended March 31,
1997 as compared to the same period for 1996. The decrease is due primarily
to decreases in sales of transdermal nitroglycerin patches and synthetic
fabrics of $2.7 million and $1.8 million, respectively, partially offset by a
$.1 million increase in sales of environmental products. Sales of transdermal
nitroglycerin patches manufactured and marketed by the Company's Hercon
Laboratories subsidiary ("Hercon Laboratories") decreased due primarily to
lower sales to a former domestic distributor who accounted for approximately
13% of the Company's sales for the three months ended March 31, 1996. The
most recent sales to this distributor were during the fourth quarter of 1996.
In August 1996, this former distributor obtained approval from the United
States Food and Drug Administration for the manufacture and sale of its own
nitroglycerin patches and now competes with the Company's nitroglycerin
patches. Sales to the Company's current domestic distributors of
nitroglycerin patches also decreased during the three months ended March 31,
1997 due to both of these distributors' adjusting inventory levels. The
synthetic fabrics sales decrease is due primarily to lower industrial fabrics
sales which were partially increased in 1996 by a $1.0 million special order
for the Company's Pacific Combining subsidiary ("Pacific") which is expected
to occur later this year. The environmental product sales increase is due
primarily to sales of a new insect lure product.
Gross profit decreased $2.0 million, or 52%, for the three months ended March
31, 1997 as compared to the same period in 1996. Gross profit as a percent of
sales for the three month period ended March 31, 1997 and 1996 was 21% and
30%, respectively. Gross profit for transdermal nitroglycerin patches
decreased $1.9 million due primarily to decreased domestic sales volumes.
Gross profit for transdermal nitroglycerin patches as a percentage of net
sales decreased from 61% for 1996 to 35% for 1997. Lower transdermal
nitroglycerin patch margins reflect the allocation of fixed costs over
decreased revenue. Gross profit for synthetic fabrics decreased $.2 million
reflecting a $.4 million decrease for Pacific offset by a $.2 million increase
for the Company's Herculite Products subsidiary ("Herculite"). In 1996, the
Company focused its cost reduction measures primarily on Herculite yielding an
improved and more cost efficient manufacturing system. In 1997, the Company
is applying these cost reduction measures to Pacific. Gross profit increased
$.1 million for environmental products due primarily to increased sales of
higher margin products.
Selling, general and administrative expenses decreased $.1 million for the
three months ended March 31, 1997 as compared to the corresponding period in
1996. The decrease is due primarily to lower payroll-related expenses
partially offset by increased sales commission expense.
Legal expenses decreased $.2 million for the three months ended March 31, 1997
as compared to the same period in 1996. In August 1995, Key Pharmaceuticals,
Inc. ("Key") commenced an action against Hercon Laboratories relating to some
of Hercon Laboratories' improved transdermal nitroglycerin products. The
decreased legal expenses are due primarily to reduced activity associated with
the defense of this action, with respect to which a two-week trial was
completed in October 1996. All post-trial briefs were filed in early December
1996 and the Company is awaiting a decision by the Court.
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION Part I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF Item 2
FINANCIAL CONDITION & RESULTS OF OPERATIONS Page 8
Research and development expense increased $.1 million for the three months
ended March 31, 1997. The increase is due primarily to higher clinical
materials and outside testing expenses. The Company expects total research
and development expenses related to pharmaceutical products in 1997 to be
lower than 1996 levels.
Net interest expense was approximately the same for the three months ended
March 31, 1997 as compared to the same period in 1996.
Other income - net was approximately the same for the three months ended March
31, 1997 as compared to the same period in 1996.
Income from operations before taxes and minority interest decreased $1.8
million for the three months ended March 31, 1997 as compared to the same
period in 1996 due primarily to the decrease in sales and gross profits of
transdermal nitroglycerin patches. Income tax provision or benefit varies
with the amount and nature of the components of income or loss from operations
before income taxes. Note 2 to the accompanying consolidated financial
statements presents a reconciliation of taxes on income for 1997 and 1996.
Minority interest represents a 1.5% interest of a former Hercon Laboratories
president in the equity of Hercon Environmental.
The results of operations for the periods ended March 31, 1997 and 1996 are
not necessarily indicative of the operating results for the full years.
Liquidity and Capital Resources
The following measures of liquidity are drawn from the Company's Consolidated
Financial Statements:
March 31, December 31,
1997 1996
Working Capital (current assets less current
liabilities, in thousands) $ 7,090 $ 6,927
Current Ratio (current assets/current
liabilities) 1.9 1.9
Quick Ratio (cash & receivables/current
liabilities) .7 .7
Working capital increased $163,000 from December 31, 1996 to March 31, 1997
due to an increase of $190,000 in current assets, partially offset by an
increase of $27,000 in current liabilities. Cash, accounts receivable,
deferred taxes - current and other current assets increased $143,000, $62,000,
$34,000 and $125,000 respectively, while inventory decreased $174,000. The
decrease in inventory primarily reflect reduced sales levels of transdermal
nitroglycerin patches. Accrued expenses and other current liabilities
increased $341,000 while accounts payable decreased $314,000. The accrued
expenses and other current liabilities increase primarily reflect a routine
increase in accrued interest related to the Company's convertible subordinated
debentures. The accounts payable decrease reflects a decrease in legal fees
related to the defense of Hercon Laboratories in its litigation with Key and
a decrease in raw material purchases related to lower sales levels of
transdermal nitroglycerin patches.
<PAGE>
HEALTH-CHEM CORPORATION Part I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF Item 2
FINANCIAL CONDITION & RESULTS OF OPERATIONS Page 9
Cash used for operations for the three months ended March 31, 1997 was $.9
million as compared to cash provided by operations of $1.2 million for the
same period in 1996. This decrease is due primarily to lower sales volumes,
decreased gross profits and decreases in accounts payable and deferred income
taxes for 1997 as compared to 1996. Investing activities for the three months
ended March 31, 1997 and 1996 used cash of $.2 million and $1.0 million,
respectively, primarily to fund the Company's purchase of property, plant and
equipment. Financing activities for the three months ended March 31, 1997
provided $1.2 million of cash required to fund operations, thus increasing
long term debt as compared to the same period in 1996 which used $.2 million
of cash generated by operations to reduce long term debt.
The Company expects to meet $.5 million of debenture interest payments on its
convertible subordinated debentures each April and October and other periodic
interest payments out of working capital. The required $1.5 million sinking
fund payment on the Company's subordinated debentures due on April 15, 1997
was satisfied by application of $.5 million debentures previously repurchased
and by the Company's redemption of an additional $1.0 million of debentures.
In market transactions throughout the three months of 1997, the Company
purchased $97,000 principal amount of its subordinated debentures for $94,947.
Any debentures acquired in excess of the $1.5 million April 15, 1997 sinking
fund requirements may be used to meet the 1998 sinking fund requirements.
Subsequent to the end of the quarter, through April 30, 1997, the Company
purchased in market transactions, $48,000 principal amount of its debentures
for $46,784. Additional debentures may be repurchased and retired or if
debentures are not available for purchase, the Company has an option to call
for redemption the amount required to meet sinking fund requirements.
The Company has not paid cash dividends and does not anticipate paying such
dividends on its common stock in the foreseeable future.
On January 9, 1997, the Company replaced a $6,000,000 line of credit and a
$1,750,000 term loan from The First National Bank of Maryland ("First
National") with an aggregate of up to $15,000,000 in senior secured financing
from IBJ Schroder Bank & Trust Company ("IBJS"). Pursuant to a Revolving
Credit Term Loan and Security Agreement ("Loan Agreement") dated as of January
9, 1997, the Company will be provided with up to $7,000,000 in term loans and
up to $8,000,000 in revolving credit. Proceeds from borrowings under the Loan
Agreement have been used by the Company to repay outstanding indebtedness
under the aggregate $7,750,000 facility with First National and are also used
to repurchase, repay and/or redeem up to $7,000,000 of the Company's 10 3/8%
Convertible Subordinated Debentures due April 15, 1999, as market conditions
warrant, and for general working capital purposes. Advances on the term loan
are limited to $4,000,000 until such time as the litigation between Hercon
Laboratories and Key is resolved in such a way as to be immaterial on the
future operations of the Company.
At March 31, 1997 the Company had borrowed $5.8 million on its revolving line
of credit from IBJS and $1.5 million on the term loan. Subsequent to March
31, 1997, through April 30, 1997, the Company paid $.1 million on the
revolving line of credit and borrowed $1.1 million on the term loan. The $1.1
million was primarily used to purchase the Company's convertible subordinated
debentures to meet the April 1997 sinking fund requirements. The revolving
credit line bears interest at the Bank's prime rate and the term loan bears
interest at the Bank's prime rate plus .375%. Borrowings under the new
facility are collateralized by a pledge of substantially all of the assets of
the Company. The Company will pay a facility fee of 3/8 of 1% on the amount
of the unused available financing facility. The borrowing agreement, which
expires on January 9, 2002, contains various covenants which, among other
things, require the Company to maintain specified ratios of debt to tangible
net worth and fixed charge coverage, and minimum levels of tangible net worth
and limits capital additions.
<PAGE>
HEALTH-CHEM CORPORATION Part I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF Item 2
FINANCIAL CONDITION & RESULTS OF OPERATIONS Page 10
The $8,000,000 revolving credit line borrowing base is limited to the sum of
85% of eligible accounts receivable and 50% of eligible inventory. The
eligible amount is evaluated monthly. For the three months ended March 31,
1997, the maximum eligible amount has ranged from $6,460,000 to $6,860,000, or
from 81% to 86%.
The Company's debt to equity ratio was 4:1 at both March 31, 1997 and at
December 31, 1996.
Management believes anticipated expenditures in 1997 such as capital
expenditures, research and development costs and other operating expenses will
be funded with cash generated from operations, supplemented by the utilization
of the Company's new credit facility from IBJS. The term loan portion of up
to $7,000,000 of the overall $15,000,000 credit facility from IBJS will be
used for the repurchasing of debentures. The Company anticipates capital
expenditures for property, plant and equipment in 1997 to decrease from the
$2.2 million expended in 1996 to approximately $1.0 million. These capital
expenditures will primarily consist of manufacturing equipment. At March 31,
1997 the Company had expended $236,000 for capital expenditures for property,
plant and equipment in 1997.
<PAGE>
<PAGE>
Part II
Item 1
Page 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There were no material developments in any pending legal proceedings in the
quarter ended March 31, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) On January 22, 1997, the Company filed a report on Form 8-K with respect
to the Company's obtaining up to $15 million in senior secured financing
from IBJ Schroder Bank & Trust Company.
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.
HEALTH-CHEM CORPORATION
May 14, 1997 /s/ Marvin M. Speiser
By: Marvin M. Speiser
Chairman of the Board and
President
(Principal Executive Officer)
/s/ Paul R. Moeller
By: Paul R. Moeller
Vice President - Finance
(Principal Financial Officer)
(Principal Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 277
<SECURITIES> 0
<RECEIVABLES> 5709
<ALLOWANCES> 310
<INVENTORY> 7169
<CURRENT-ASSETS> 1998
<PP&E> 29691
<DEPRECIATION> 16338
<TOTAL-ASSETS> 32894
<CURRENT-LIABILITIES> 7753
<BONDS> 9500
<COMMON> 145
0
0
<OTHER-SE> 6097
<TOTAL-LIABILITY-AND-EQUITY> 32894
<SALES> 8743
<TOTAL-REVENUES> 8743
<CGS> 6871
<TOTAL-COSTS> 6871
<OTHER-EXPENSES> 3168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 384
<INCOME-PRETAX> (1579)
<INCOME-TAX> (530)
<INCOME-CONTINUING> (1048)
<DISCONTINUED> 0
<EXTRAORDINARY> 1
<CHANGES> 0
<NET-INCOME> (1047)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
