===============================================================================
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 March 27, 1998
/ / Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the period from to
---------- ----------
-----------------------------
Commission File Number 0-6890
-----------------------------
MECHANICAL TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
New York 14-1462255
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
968 Albany-Shaker Rd., Latham, New York 12110
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(518) 785-2211
--------------
Registrant's telephone number, including area code
Not Applicable
--------------
(Former name,former address and former fiscal year,if changed since last report)
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
--- ---
Class Outstanding at March 27, 1998
- ----------------------------- -----------------------------
Common Stock, $1.00 Par Value 5,905,661 Shares
================================================================================
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
INDEX
Page No.
----------
Part I Financial Information
- ----------------------------
Consolidated Balance Sheets - March 27, 1998
and September 30, 1997 (Restated) 3 - 4
Consolidated Statements of Income -
Three months and six months ended
March 27, 1998 and March 28, 1997 (Restated) 5
Consolidated Statements of Cash Flows -
Six months ended March 27, 1998
and March 28, 1997 (Restated) 6 - 7
Notes to Consolidated Financial Statements 8 - 11
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 14
Part II Other Information
- -------------------------
Item 6 15
Signature 16
<PAGE>
PART I FINANCIAL INFORMATION
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 27, 1998 (Unaudited) and September 30, 1997
(Derived from audited financial statements, as restated)
(Dollars in thousands)
Restated
March 27, Sept 30,
1998 1997
--------- ---------
Assets
Current Assets:
Cash and cash equivalents $ - $ 1,421
Trade accounts 6,388 4,576
Allowance for doubtful accounts (106) (94)
------- -------
Net receivables 6,282 4,482
Inventories:
Raw materials and components 2,472 2,214
Work in process 466 967
Finished goods 233 205
------- -------
Total inventories 3,171 3,386
Note receivable - current 324 315
Prepaid expenses and other current assets 109 102
Taxes receivable 180 -
Net assets of a discontinued operation 596 3,186
------- -------
Total Current Assets 10,662 12,892
Property, Plant and Equipment, net 1,632 749
Note receivable - noncurrent 300 335
Other assets - 27
------- -------
Total Assets $ 12,594 $ 14,003
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 27, 1998 (Unaudited) and September 30, 1997
(Derived from audited financial statements, as restated)
(Dollars in thousands)
Restated
March 27, Sept 30,
1998 1997
--------- ---------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 1,689 $ 1,389
Accrued liabilities 3,279 3,276
Income taxes payable - 73
Line of credit 100 -
Payroll liabilities 144 458
------- -------
Total Current Liabilities 5,212 5,196
Deferred income taxes and other credits 583 594
------- -------
Total Liabilities 5,795 5,790
Shareholders' Equity:
Common stock 5,910 5,909
Paid-in-capital 13,925 13,923
Deficit (12,989) (11,569)
Foreign currency translation adjustment (16) (19)
Treasury stock (29) (29)
Restricted stock grants (2) (2)
------- -------
Total Shareholders' Equity 6,799 8,213
------- -------
Total Liabilities and Shareholders' Equity $ 12,594 $ 14,003
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share)
Three months ended Six months ended
Restated Restated
March 27, March 28, March 27, March 28,
1998 1997 1998 1997
-------- -------- -------- --------
Revenue $ 6,999 $ 6,328 $ 10,249 $ 12,594
Cost of sales 3,979 3,842 6,000 7,746
Selling, general and administrative
expenses 1,585 1,625 2,908 3,031
Product development and
research costs 197 329 345 498
------- ------- ------- -------
Operating income 1,238 532 996 1,319
Interest expense (5) (64) (10) (225)
Other (expense) income, net (182) - (121) 35
------- ------- ------- -------
Income from continuing operations
before extraordinary item and
income taxes 1,051 468 865 1,129
Income tax expense - (90) - (135)
------- ------- ------- -------
Income from continuing operations
before extraordinary item 1,051 378 865 994
Gain on extinguishment of debt, net
of taxes ($106) - - - 2,507
------- ------- ------- -------
Net income from continuing
operations 1,051 378 865 3,501
------- ------- ------- -------
Discontinued Operations (Note 4)
Loss from operations of
discontinued Technology Division,
net of tax benefit - (276) (516) (469)
Loss on disposal of Technology
Division, net of tax benefit (792) - (1,769) -
------- ------- ------- -------
Loss from discontinued operations (792) (276) (2,285) (469)
------- ------- ------- -------
Net income (loss) $ 259 $ 102 $ (1,420) $ 3,032
======= ======= ======= =======
Earnings per Share:
Income before extraordinary item $ .18 $ .07 $ .15 $ .18
Gain on extinguishment of debt - - - .46
Loss on discontinued operations (.14) (.05) (.39) (.08)
------- ------- ------- -------
Net income (loss) $ .04 $ .02 $ (.24) $ .56
======= ======= ======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Earnings per Share-assuming dilution:
Income before extraordinary item $ .17 $ .07 $ .14 $ .18
Gain on extinguishment of debt - - - .46
Loss on discontinued operations (.13) (.05) (.37) (.08)
------- ------- ------- -------
Net income (loss) $ .04 $ .02 $ (.23) $ .56
======= ======= ======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six months ended
Restated
March 27, March 28,
1998 1997
Operating Activities --------- ---------
Net income from continuing operations $ 865 $ 3,501
Adjustments to reconcile net income to net
cash provided (used) by continuing operations:
Gain on extinguishment of debt - (2,507)
Depreciation and amortization 143 122
Loss in joint venture 27 -
Reserve for bad debts 12 (11)
Foreign currency translation 3 3
Deferred taxes and other credits (11) (5)
Changes in operating assets and liabilities:
Accounts receivable (1,812) 155
Inventories 215 98
Prepaid expenses and other current assets (11) (44)
Accounts payable 300 (499)
Income taxes (253) 1
Payroll liabilities (314) -
Accrued liabilities 3 (1,268)
------- -------
Net cash used by continuing operations (833) (454)
------- -------
Discontinued operations:
Net loss from discontinued operations (2,285) (469)
Change in net assets/liabilities of
discontinued operations 2,590 9
Net assets transferred from discontinued
operations (907) -
------- -------
Net cash used by discontinued operations (602) (460)
------- -------
Net cash used by operating activities (1,435) (914)
------- -------
Investing Activities
Purchases of property, plant & equipment (115) (244)
Principal payments from note receivable 26 -
------- -------
Net cash used by investing activities (89) (244)
------- -------
Financing Activities
Net borrowings under line-of-credit 100 1,500
Principal payments of long-term debt - (303)
Proceeds from options exercised 3 -
------- -------
Net cash provided by financing activities 103 1,197
------- -------
(Decrease) increase in cash and cash equivalents (1,421) 39
Cash and cash equivalents - beginning of period 1,421 62
------- -------
Cash and cash equivalents - end of period $ 0 $ 101
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six months ended
Restated
March 27, March 28,
Supplemental Disclosure 1998 1997
- ----------------------- --------- ---------
NonCash Financing Activities
Conversion of Note Payable to common stock
Note payable extinguishment $ - $ (3,000)
Common stock issued - 1,500
Accrued interest- Note Payable - (1,213)
------- -------
Net noncash used in financing activities $ - $ (2,713)
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of only normal,
recurring adjustments, necessary for a fair presentation of results for such
periods. The results for any interim period are not necessarily indicative of
results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. These consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto for the fiscal year ended September 30, 1997.
2. Income Taxes
The Company's effective tax rate for the six months ended March 27, 1998 and
March 28, 1997 was 0% and 6.6%, respectively. The March 27, 1998 rate reflects
the use of net operating losses and a full valuation allowance against the
deferred tax assets generated by the losses on discontinued operations.
3. Earnings per Share
The reconciliation of the numerators and denominators of Earnings per Share and
Earnings per Share-assuming dilution are as follows:
<TABLE>
For the three month period For the three month period
ended March 27, 1998 ended March 28, 1997
------------------------------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Income before
extraordinary item $ 1,051,000 $ 378,000
Earnings per Share:
- ------------------
Income available to
common stockholders $ 1,051,000 5,906,277 $ .18 $ 378,000 5,899,201 $ .07
====== ======
Effect of Dilutive
Securities Stock
Options - 166,949 - -
---------- ---------- ---------- ----------
Earnings per Share-
assuming dilution:
- -------------------
Income available to
common stockholders
plus assumed
conversion $ 1,051,000 6,073,226 $ .17 $ 378,000 6,899,201 $ .07
========== ========== ====== ========== ========== ======
</TABLE>
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
For the six month period For the six month period
ended March 27, 1998 ended March 28, 1997
------------------------------------- -------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Income before
extraordinary item $ 865,000 $ 994,000
Earnings per Share:
- ------------------
Income available to
common stockholders $ 865,000 5,905,987 $ .15 $ 994,000 5,413,167 $ .18
====== ======
Effect of Dilutive
Securities Stock Options - 177,086 - -
--------- ---------- --------- ----------
Earnings per Share-
assuming dilution:
- ------------------
Income available to
common stockholders
plus assumed conversion $ 865,000 6,083,073 $ .14 $ 994,000 5,413,167 $ .18
========= ========== ====== ========= ========== ======
</TABLE>
During the first half of fiscal 1998, options to purchase 15,000 shares of
common stock at $5.70 per share were outstanding but were not included in the
computation of Earnings per Share-assuming dilution because the options'
exercise price was greater than the average market price of the common shares.
The options, which expire on October 20, 2007, were still outstanding at March
27, 1998.
During the first half of fiscal 1997, options to purchase 188,100 shares of
common stock at a price of $2.44 per share were outstanding but were not
included in the computation of Earnings per Share-assuming dilution because the
exercise price was greater than the average market price of the common shares.
Therefore, no potential common shares are included in the computation. The
options, which expire between December 20, 2006 and March 14, 2007, were still
outstanding at March 28, 1997.
4. Discontinued Operations
All remaining assets of the Company's Technology Division, the sole component of
the Technology segment, were sold to NYFM, Incorporated (a wholly owned
subsidiary of Foster Miller, Incorporated, a Waltham Massachusetts based
Technology Company) on March 31, 1998. In exchange for the Technology Division's
assets,NYFM,Incorporated a)agreed to pay the Company a percentage of gross sales
in excess of $2.5 million for a period of five years; b) assumed approximately
$40,000 of liabilities; and c) established a credit for warranty work of
approximately $35,000. Accordingly, the Company no longer includes Technology
among its reportable business segments and now operates in only one segment,Test
& Measurement. The Technology Division is reported as a discontinued operation
as of December 26, 1997, and the consolidated financial statements have been
reclassified to report separately the net assets and operating results of the
business. The Company's prior year financial statements have been restated to
conform to this treatment.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Discontinued operations consist of the following:
Three months ended Six months ended
------------------ ------------------
Mar 27, Mar 28, Mar 27, Mar 28,
(Dollars in thousands) 1998 1997 1998 1997
-------- -------- -------- --------
Sales $ - $ 2,186 $ 532 $ 4,042
======= ======= ======= =======
Loss from operations before
income tax $ - $ (291) $ (516) $ (494)
Income tax (benefit) - (15) - (25)
------- ------- ------- -------
Net loss from discontinued
operations $ - $ (276) $ (516) $ (469)
======= ======= ======= =======
Loss on disposal of Division $ (792) $ (1,769)
Income tax (benefit) - -
------- -------
Loss on disposal of Division $ (792) $ (1,769)
======= =======
The assets and liabilities of the Company's discontinued operations are as
follows:
March 27, Sept 30,
1998 1997
Assets: --------- ---------
Assets held for sale $ 2,477 $ 3,968
------- -------
Total Assets $ 2,477 $ 3,968
Liabilities:
Liabilities $ 1,881 $ 782
------- -------
Total Liabilities $ 1,881 $ 782
------- -------
Net Assets $ 596 $ 3,186
======= =======
Assets with a net book value of $907,000 consisting primarily of land,
building and management information systems were transferred to continuing
operations on October 1, 1997.
5. Reclassification
Certain fiscal 1997 amounts have been reclassified to conform with the fiscal
1998 presentation.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Comprehensive Income
Total comprehensive income for the three and six months ended March 27, 1998 and
March 28, 1997 consists of:
Three months ended Six months ended
Restated Restated
March 27, March 28, March 27, March 28,
(Dollars in thousands) 1998 1997 1998 1997
- ---------------------- -------- -------- -------- --------
Net income(loss) $ 259 $ 102 $ (1,420) $ 3,032
Other comprehensive income(loss),
before tax:
Foreign currency translation
adjustments 1 (2) 3 3
Income tax related to items of other
comprehensive income(loss) - - - -
-------- -------- -------- --------
Total comprehensive income(loss) $ 260 $ 100 $ (1,417) $ 3,035
======== ======== ======== ========
7. Investment in Plug Power, L.L.C.
On or about April 21, 1998, the Company was notified that Edison Development
Corporation ("EDC") had made an additional capital contribution of $2,250,000 to
Plug Power, L.L.C. The Company is currently negotiating to determine how it
will match EDC's contribution. Pursuant to the terms of the Limited Liability
Agreement of Plug Power, L.L.C., the Company may purchase an option to match
EDC's contribution at any time during the next twelve months. The cost of such
an option would be $192,000.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's earnings during the periods included
in the accompanying consolidated statements of income.
The Company's Technology Division, the sole component of the Technology
segment, was sold to Foster-Miller Inc., a Waltham Massachusetts based
Technology Company, on March 31, 1998. Accordingly, the Company no longer
includes Technology among its reportable business segments and now operates in
only one segment, Test & Measurement. The Technology Division is reported as a
discontinued operation as of December 26, 1997, and the consolidated financial
statements have been reclassified to report separately the net assets and
operating results of the business. Net assets of the discontinued operation were
$596 thousand and $3,186 thousand at March 27, 1998 and September 30, 1997,
respectively and the loss on discontinued operations included a loss from
operations of $516 thousand and a loss on disposal of $1,769 thousand as of the
six month period ended March 27, 1998. The loss on disposal includes a provision
for estimated operating results prior to disposal. The Company's prior year
financial statements have been restated to conform to this treatment.
Continuing Operations
- ---------------------
Sales increased $671 thousand to $7.0 million for the three months ended
March 27, 1998 as compared to $6.33 million for the three months ended March 28,
1997, a 10.6% increase. This increase is the result of the timing of shipments
to customers shifting from the first to the second quarter of fiscal 1998.
Additionally, on September 30, 1997, the Company sold its L.A.B. Division, which
reported sales of $862 thousand and operating income of $120 thousand in the
second quarter of fiscal 1997. Operating income increased $706 thousand to
$1,238 thousand for the three months ended March 27, 1998 as compared to $532
thousand for the three months ended March 28, 1997, a 132.7% increase. The
increase is the result of increased sales levels, improved margins and reduced
selling, general and administrative costs resulting from cost control measures.
Sales for the first half of fiscal year 1998 versus the same period in
fiscal year 1997 have decreased $2.4 million to $10.2 million in 1998 from $12.6
million in 1997, a 19% decrease. This decrease is partially the result of lower
levels of shipments in the first quarter of 1998 compared to 1997 due, in part,
to the timing of several large orders. Also, on September 30, 1997, the Company
sold its L.A.B. Division, which reported sales of $1,728 thousand and operating
income of $210 thousand in the first half of fiscal 1997. The first half of
fiscal 1998 operating income of $996 thousand represented a $323 thousand
decrease or a 24.5% decrease from the $1,319 thousand operating income recorded
during the same period last year.
Other
- -----
In addition to the matters noted above, during the first half of fiscal
1997, the Company recorded a $2.5 million extraordinary gain, net of taxes, on
the extinguishment of debt.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results during the first half of fiscal 1998 and fiscal 1997 were enhanced
by lower interest expense, principally resulting from reduced indebtedness.
Moreover, the Company benefited from reduced income tax expense due to the use
of net operating loss carryforwards. However, as a result of ownership changes,
the availability of further net operating loss carryforwards to offset future
taxable income will be significantly limited pursuant to the Internal Revenue
Code. The tax rate for the six months ended March 27, 1998 and March 28, 1997
was 0% and 6.6%, respectively. The March 27, 1998 rate reflects the use of net
operating losses and a full valuation allowance against the deferred tax assets
generated by the losses on discontinued operations.
Financial Condition
- -------------------
Working capital of $5.45 million at March 27, 1998 reflects a $2.25 million
decline from September 30, 1997.
At March 27, 1998 cash and cash equivalents were $0 versus $1.42 million at
September 30, 1997. Net cash used by operating activities for the first six
months of fiscal 1998 amounted to $1.44 million, as compared to cash used of
$914 thousand in the prior year.
The capital used during the first half of fiscal 1998 was applied
principally to fund short term operating cash flow requirements and pay tax
estimates. Additionally, accounts receivable increased to $6.3 million or 40%
as of March 27, 1998 as compared to $4.5 million as of September 30, 1997. Line
of credit borrowings at March 27, 1998 were $100 thousand, as compared to $0 at
September 30, 1997.
Capital spending during the first six months of fiscal 1998 was $115
thousand, a decrease from the comparable period in 1997 where capital spending
totaled $244 thousand.
The reduction in net assets of discontinued operations of $2,590 thousand
includes the transfer of $907 thousand of assets to continuing operations
(principally land, building and management information systems) as well as the
accrual for the loss on disposal of the Division which includes a provision for
estimated operating results prior to disposal and an estimate of the loss on
disposal which totaled $1,769 thousand for the six months ended March 27, 1998.
The sale of the Technology Division was completed as of March 31, 1998.
During fiscal 1996, First Albany Companies, Inc. ("FAC") purchased 909,091
shares of the Company's common stock from the New York State Superintendent of
Insurance as the court-ordered liquidator of United Community Insurance Company
("UCIC"). In connection with this purchase, FAC had also acquired certain rights
to an obligation ("Term Loan") due from the same finance company ("FCCC") to
whom the Company was obligated under the Note Payable. FCCC was in default of
its Term Loan to UCIC. FAC, as the owner of the rights to the Term Loan, filed
suit-seeking payment and obtained a summary judgment. Collateral for the FCCC
Term Loan included the Company's Note Payable to FCCC. FAC exercised its rights
to the collateral securing the Term Loan, including the right to obtain payment
on the Note Payable directly from the Company.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On December 27, 1996, the Company and FAC entered into an agreement under
which the Company issued to FAC 1.0 million shares of common stock in full
satisfaction of the Note Payable of $3.0 million and accrued interest of $1.2
million. Accordingly, the Company realized a gain on the extinguishment of debt
totaling $2.5 million, net of approximately $100 thousand of transaction related
expenses and net of taxes of $106 thousand.
The Company anticipates that it will be able to meet the liquidity needs of
its continuing operations during fiscal year 1998 from cash flow generated by
those operations and borrowing under its existing line of credit.
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
Exhibit No. Description
----------- -----------------------
27 Financial Data Schedule
(b) One report on Form 8-K was filed during the quarter ended March 27, 1998 and
one was filed subsequent to the quarter.
The Company filed a Form 8-K Report, dated February 27, 1998, reporting
under Item 5 thereof the Company's execution of a Letter of Intent with Foster-
Miller, Inc. and NYFM, Inc. to transfer certain assets and certain employees of
the Technology Division to NYFM.
The Company filed a Form 8-K Report, dated April 8, 1998, reporting under
Item 5 thereof the resignation of Martin J. Mastroianni as an officer and
director of the Company, Ling Electronics, Inc. and Plug Power, L.L.C. and
subsidiaries thereof.
<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.
Mechanical Technology Incorporated
05-08-98 /s/ G.C. McNamee
- ---------- ---------------------------------------
(Date) George C. McNamee
Chairman of the Board/Chief Executive
Officer
05-08-98 /s/ C.A. Scheuer
- ---------- ---------------------------------------
(Date) Cynthia A. Scheuer
Vice President/Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-27-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 6,388
<ALLOWANCES> 106
<INVENTORY> 3,171
<CURRENT-ASSETS> 10,662
<PP&E> 9,124
<DEPRECIATION> 7,492
<TOTAL-ASSETS> 12,594
<CURRENT-LIABILITIES> 5,212
<BONDS> 0
0
0
<COMMON> 5,910
<OTHER-SE> 889
<TOTAL-LIABILITY-AND-EQUITY> 12,594
<SALES> 10,249
<TOTAL-REVENUES> 10,249
<CGS> 6,000
<TOTAL-COSTS> 9,253
<OTHER-EXPENSES> 121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 865
<INCOME-TAX> 0
<INCOME-CONTINUING> 865
<DISCONTINUED> (2,285)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,420)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.23)
</TABLE>
