UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
(Mark One)
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the Quarter Ended September 30, 1997
or
- --- 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 0-11370
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CERPROBE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0312814
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1150 North Fiesta Boulevard, Gilbert, Arizona 85233
---------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(602) 333-1500
----------------------------------------------------
(Registrant's telephone number, including area code)
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 and 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
------- -------
As of October 31, 1997, there were 8,070,313 shares of the Registrant's common
stock outstanding.
<PAGE>
CERPROBE CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996..............................3
Condensed Consolidated Statements of Operations -
Three and Nine Months Ended September 30, 1997 and 1996...............4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996.........................6
Notes to Condensed Consolidated Financial Statements..................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.....................................19
Signatures ............................................................21
2
<PAGE>
CERPROBE CORPORATION
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 24,443,687 $ 5,564,557
Accounts receivable, net of allowance of $312,278
in 1997 and $223,000 in 1996 11,452,878 5,564,203
Inventories, net 6,990,722 3,862,753
Note receivable -- 250,000
Prepaid expenses 391,602 377,003
Income taxes receivable -- 214,097
Deferred tax asset 506,129 202,476
------------ ------------
Total current assets 43,785,018 16,035,089
Property, plant and equipment, net 14,588,884 11,446,291
Intangibles, net 2,491,340 2,602,812
Other assets 1,491,382 1,326,592
------------ ------------
Total assets $ 62,356,624 $ 31,410,784
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,335,407 $ 2,739,064
Accrued expenses 4,317,611 1,600,120
Demand note payable 988,911 1,030,000
Current portion of notes payable 132,786 128,180
Current portion of capital leases 581,608 634,755
------------ ------------
Total current liabilities 10,356,323 6,132,119
Notes payable, less current portion 185,031 278,645
Capital leases, less current portion 1,010,346 1,462,799
Other liabilities 490,992 394,011
------------ ------------
Total liabilities 12,042,692 8,267,574
------------ ------------
Minority interest -- 12,851
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.05 par value; authorized
10,000,000 shares; issued and outstanding 330
shares of Series A Convertible Preferred Stock,
liquidation preference of $10,164 per share at
December 31,1996 -- 16
Common stock, $.05 par value; authorized, 10,000,000
shares; issued and outstanding 7,765,113 shares at
September 30, 1997 and 6,027,714 at December 31, 1996 388,255 301,386
Additional paid-in capital 48,231,185 20,652,290
Retained earnings 1,762,462 2,105,674
Foreign currency translation adjustment (67,970) 70,993
------------ ------------
Total stockholders' equity 50,313,932 23,130,359
------------ ------------
Total liabilities and stockholders' equity $ 62,356,624 $ 31,410,784
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CERPROBE CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 19,886,447 $ 8,799,247 $ 54,469,368 $ 28,159,069
Costs of goods sold 11,698,566 4,937,571 32,101,895 15,285,366
------------ ------------ ------------ ------------
Gross profit 8,187,881 3,861,676 22,367,473 12,873,703
------------ ------------ ------------ ------------
Expenses:
Selling, general and administrative 4,746,863 2,595,559 13,874,174 7,870,390
Engineering and product development 412,905 345,963 1,030,679 724,230
Acquisition related costs (recovery) (1,167,689) -- 4,996,467 --
------------ ------------ ------------ ------------
Total expenses 3,992,079 2,941,522 19,901,320 8,594,620
------------ ------------ ------------ ------------
Operating income 4,195,802 920,154 2,466,153 4,279,083
------------ ------------ ------------ ------------
Other income (expense):
Interest income 10,609 177,113 78,274 345,356
Interest expense (170,050) (50,737) (466,905) (167,194)
Other income, net 107,153 64,348 221,999 151,830
------------ ------------ ------------ ------------
Total other income (expense) (52,288) 190,724 (166,632) 329,992
------------ ------------ ------------ ------------
Income before income taxes and
minority interest 4,143,514 1,110,878 2,299,521 4,609,075
Minority interest share of loss 67,394 21,521 96,379 83,809
------------ ------------ ------------ ------------
Income before income taxes 4,210,908 1,132,399 2,395,900 4,692,884
Provision for income taxes (1,248,812) (469,000) (2,739,112) (2,162,000)
------------ ------------ ------------ ------------
Net income (loss) $ 2,962,096 $ 663,399 $ (343,212) $ 2,530,884
============ ============ ============ ============
Net income (loss) per common and common equivalent share:
Primary $ 0.44 $ 0.13 $ (0.05) $ 0.49
============ ============ ============ ============
Weighted average number of common
and common equivalent shares
outstanding 6,706,347 5,297,528 6,318,243 5,125,943
============ ============ ============ ============
Fully diluted $ 0.44 $ 0.11 $ (0.05) $ 0.45
============ ============ ============ ============
Weighted average number of common
and common equivalent shares
outstanding 6,786,973 5,782,576 6,318,243 5,647,789
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CERPROBE CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1997 1996
--------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (343,211) $ 2,530,884
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 2,627,529 1,339,227
Purchased research and development 4,496,467 --
Loss on sale of fixed assets 508 --
Tax benefit from stock options excercised 28,000 407,000
Deferred income taxes (303,553) (65,999)
Provision for losses on accounts receivable, net 79,395 5,000
Provision for obsolete inventory, net 624,132 46,000
Compensation expense 888 49,383
Income (loss) applicable to minority interest in consolidated subsidiaries 96,379 (83,809)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable (5,143,871) (797,178)
Inventories (393,353) (1,055,273)
Prepaid expenses and other assets (204,855) (461,780)
Income taxes receivable 214,097 (200,652)
Accounts payable and accrued expenses 2,310,621 869,365
Other liabilities 20,140 292,358
------------ ------------
Net cash provided by operating activities 4,109,313 2,874,526
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (5,011,726) (2,896,861)
Purchase of marketable securities -- (2,260,063)
Investment in CRPB Investors, L.L.C (607) (600,000)
Investment in Upsys-Cerprobe, L.L.C 19,333 --
Supplemental acquisition costs for CompuRoute (80,102) --
Purchase of SVTR, net of cash acquired (2,590,697) --
Proceeds from sale of equipment 71,183 --
Payment of notes receivable 250,000 --
------------ ------------
Net cash used in investing activities (7,342,616) (5,756,924)
------------ ------------
Cash flows from financing activities:
Principal payments on notes payable and capital leases (3,715,538) (261,000)
Net proceeds from issuance of convertible preferred stock -- 9,400,000
Redemption of convertible preferred stock (5,250,000) --
Net proceeds from issuance of common stock 30,710,000 564,980
Net proceeds from stock options exercised 506,936 --
Capital contribution by minority interest partner -- 113,020
------------ ------------
Net cash provided by financing activities 22,251,398 9,817,000
------------ ------------
Effect of exchange rates on cash and cash equivalents (138,965) 34,712
------------ ------------
Net increase in cash and cash equivalents 18,879,130 6,969,314
Cash and cash equivalents, beginning of period 5,564,557 263,681
------------ ------------
Cash and cash equivalents, end of period $ 24,443,687 $ 7,232,995
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CERPROBE CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1997 1996
--------------------------------
<S> <C> <C>
Supplemental schedule of noncash investing and financing activities:
Conversion of subordinated debentures to common stock $ -- $ 110,000
------------ --------------
Equipment acquired under capital leases and issuances of notes payable $ 4,144 $ 253,378
------------ --------------
Supplemental disclosures of cash flow information:
Interest paid $ 466,903 $ 118,685
------------ --------------
Income taxes paid $ 1,917,596 $ 1,812,000
------------ --------------
Supplemental disclosures of noncash investing activities:
The Company made an acquisition for $4.5 million.
The purchase price was allocated to the assets acquired and liabilities assumed
based on their fair values as indicated in Note 4 to the condensed consolidated
financial statements. A summary of the acquisition after adjustment is as follows:
Purchase price $ 4,546,825
Less cash acquired (285,316)
Common stock issued (1,670,812)
-----------
Cash invested $ 2,590,697
===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
CERPROBE CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Preparation
The accompanying condensed consolidated financial statements as of
September 30, 1997 and for the three months and nine months ended
September 30, 1997 and September 30, 1996 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of
financial position and operating results for the interim periods. The
condensed consolidated balance sheet as of December 31, 1996 was
derived from the audited consolidated financial statements at such
date.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the
accompanying condensed consolidated financial statements and notes do
not include all disclosures required by generally accepted accounting
principles for complete financial statements. Accordingly, these
statements should be read in conjunction with Cerprobe Corporation's
(the "Company") annual financial statements and notes thereto included
in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
Results of operations for interim periods are not necessarily
indicative of those to be achieved for full fiscal years.
Principles of Consolidation
The consolidated financial statements include the accounts of Cerprobe
and its wholly-owned subsidiaries: Cerprobe Europe Limited, Cerprobe
Asia Holdings PTE LTD, CompuRoute, Inc., Silicon Valley Test & Repair,
Inc. and Cobra Venture Management, Inc.
Cerprobe Asia Holdings PTE LTD, together with Asian investors, formed
Cerprobe Asia PTE LTD in 1995. Cerprobe Asia Holdings PTE LTD is a 70%
owner of Cerpobe Asia PTE LTD. Cerprobe Asia PTE LTD created wholly
owned subsidiaries, Cerprobe Singapore PTE LTD ("Cerprobe Singapore")
and Cerprobe Taiwan Co. LTD ("Cerprobe Taiwan"), to operate full
service sales and manufacturing plants. Cerprobe-Singapore became
operational in April 1996 and Cerprobe-Taiwan in January 1997. All
significant intercompany transactions have been eliminated in
consolidation.
The consolidated balance sheet at December 31, 1996 also includes the
assets and liabilities of CompuRoute, Inc. ("CompuRoute"), a
wholly-owned subsidiary, acquired on December 27, 1996. As a result of
the date of acquisition, the condensed consolidated financial
statements do not include the 1996 operations of CompuRoute.
On January 15, 1997, the Company acquired all of the outstanding stock
of Silicon Valley Test & Repair, Inc. ("SVTR"), a company that
refurbishes, reconfigures, and services wafer probing equipment.
Accordingly, the condensed consolidated financial statements
7
<PAGE>
as of September 30, 1997 and for the three months and nine months ended
September 30, 1997 include SVTR's activities since the date of
acquisition.
On May 30, 1997, the Company entered into a joint venture with Upsys
Reseau Eurisys ("Upsys"), a French company owned by IBM and GAME, a
French test and engineering company. The joint venture, called
Upsys-Cerprobe, L.L.C., assembles and repairs the Cobra Probe in
Arizona for distribution by Cerprobe throughout the United States and
Asia. Cerprobe owns 55% of the joint venture and Upsys owns 45%.
The Company manages the joint venture and established a wholly owned
subsidiary called Cobra Venture Management, Inc. to function as manager
of Upsys-Cerprobe, L.L.C. Accordingly, the condensed consolidated
financial statements as of September 30, 1997 and for the three months
and nine months ended September 30, 1997 include the activities of both
organizations since the formation of the venture.
On August 18, 1997, Cerprobe Asia Holdings PTE LTD sold 10% of its
ownership in Cerprobe Asia PTE LTD to a Taiwanese Investor.
Accordingly, the condensed consolidated financial statements as of
September 30, 1997 and for the three months and nine months ended
September 30, 1997 show a 60% ownership in Cerprobe Asia PTE LTD since
the transaction date.
(2) Commitments and Contingencies
Lease Line of Credit
In February 1997, the Company entered into a $10,000,000 unsecured
revolving line of credit, which matures August 15, 1998, with its
primary lender, Wells Fargo Bank. Advances under the revolving line may
be made as prime rate advances, which accrue interest payable monthly,
at the Bank's prime lending rate, or as LIBOR rate advances, which bear
interest at 175 basis points in excess of the LIBOR base rate. As of
September 30, 1997, no amounts were outstanding under the line.
In May 1997, the Company entered into a $3,000,000 lease line of
credit, which matures February 28, 1998, with Banc One Leasing
Corporation. The maximum term for each lease schedule will not exceed
60 months. Pricing will be indexed to like term treasuries plus 170
basis points. The advances will be collateralized by the underlying
leased manufacturing equipment, furniture, fixtures, software, and/or
hardware. As of September 30, 1997, no advances had been made under the
agreement.
Convertible Preferred Stock
On August 25, 1997, the Company reached an agreement, which included
mutual releases, with the holders of the remaining 330 shares of
convertible preferred stock to redeem their shares for $5,250,000 in
cash. The redemption was funded through an advance on the Company's
line of credit which was paid off in September 1997, with the proceeds
from the Secondary Offering. See Note 3.
8
<PAGE>
(3) Common Stock
In September 1997, the Company completed a Secondary Public Offering
(the "Secondary Offering") of 2,000,000 shares of the Company's Common
Stock at a price of $22 per share. Of the shares, 1,500,000 were sold
by the Company and the remaining 500,000 shares were sold by selling
stockholders. The Company did not receive proceeds from shares sold by
selling stockholders. The Company received approximately $30,710,000 in
net proceeds from the offering.
In addition, on October 6, 1997 the managing underwriters of the
offering, Adams, Harkness & Hill, Inc. and Dain Bosworth Incorporated
exercised their over-allotment options to purchase an additional
300,000 shares of the Company's Common Stock at a price of $22 per
share. The Company received $6,222,000 in net proceeds from the
exercise of the over-allotment.
(4) Acquisitions
SVTR, Inc.
On January 15, 1997, the Company acquired all of the outstanding stock
of SVTR. The purchase price paid by the Company consisted of $2,753,217
in cash and 300,000 shares of common stock.
The acquisition has been accounted for using the purchase method of
accounting. Accordingly, the purchase price has been allocated to
assets acquired and liabilities assumed based upon their estimated fair
values at the date of acquisition.
The purchase price of $5,617,467 plus acquisition costs of $97,796 was
allocated as follows.
Purchase price:
Cash $ 2,753,217
Common stock 2,864,250
Costs of acquisition 97,796
------------
$ 5,715,263
============
Assets acquired and liabilities assumed:
Current assets $ 4,979,145
Property, plant, and equipment 651,781
Other assets 185,007
Purchased research and development 5,664,156
Current liabilities (4,795,473)
Noncurrent liabilities (969,353)
------------
$ 5,715,263
============
9
<PAGE>
At acquisition, the state of the research and development products was
not yet at a technologically or commercially viable stage. The Company
does not believe that the research and development products have any
future alternative use because if these products are not finished and
brought to ultimate product completion, they have no other value.
Therefore, consistent with generally accepted accounting principles,
the Company recorded a one-time charge of $5,664,156 on January 15,
1997 for the full value of the purchased research and development. In
addition, at the date of acquisition the Company recorded a $500,000
accrual for the estimated costs to move SVTR's manufacturing operations
from California to Arizona during 1997.
Under the original terms of the acquisition, the Company agreed to pay
up to an additional $500,000 in cash and up to 50,000 additional shares
of common stock if certain sales and operating profit targets for
calendar year 1997 were achieved by SVTR.
On August 18, 1997, a letter of understanding detailing the settlement
of certain open terms related to the purchase of SVTR by the Company on
January 15, 1997 was signed by the former owners of SVTR. In general,
the letter of understanding required the former owners to return
125,000 shares of the Company's common stock then held in escrow to the
Company. In addition, the former owners were required to release any
claims or interests they may have to receive any payments or shares of
common stock of the Company with respect to an earnout provision
detailed in the January 15, 1997 agreement of merger between the two
entities. On September 26, 1997, a formal agreement was signed
consummating the details in the letter of understanding. As a result,
the Company has recorded a $1,167,689 reduction in previously recorded
acquisition related expenses.
The re-negotiated purchase price of $4,546,825 plus acquisition costs
of $122,795 was allocated as follows.
Purchase price:
Cash $ 2,753,217
Common stock 1,670,813
Costs of acquisition 122,795
-----------
$ 4,546,825
===========
Assets acquired and liabilities assumed:
Current assets $ 4,918,904
Property, plant and equipment 517,413
Other assets 146,867
Purchased research and development 4,496,467
Current liabilities (4,795,473)
Noncurrent liabilities (737,353)
-----------
$ 4,546,825
===========
10
<PAGE>
Pro forma Results
The following summary, prepared on a pro forma basis, excluding the
charges for purchased research and development, presents the results of
operations as if the acquisitions of CompuRoute and SVTR had occurred
January 1, 1996:
Nine Months Ended
September 30,
------------------------------
1997 1996
------------------------------
(unaudited)
Net sales $ 54,522,748 $ 48,041,518
Net income $ 4,325,282 $ 2,778,633
Primary net income per share $ .65 $ .48
Fully diluted net income per share $ .64 $ .44
The pro forma results are not necessarily indicative of what the actual
consolidated results of operations might have been if the acquisitions
had been effective at the beginning of 1996 and are not a projection of
future results.
(5) Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (Statement 128). This Statement establishes standards for
computing and presenting earnings per share ("EPS"), and supersedes APB
Opinion No. 15. The Statement replaces primary EPS with basic EPS and
requires dual presentation of basic and diluted EPS. The Statement is
effective for both interim and annual periods ending after December 15,
1997. Earlier application is not permitted. After adoption, all
prior-period EPS data shall be restated to conform to Statement 128.
Basic and diluted EPS, as calculated under Statement No. 128 would have
been $.47 and $.44 for the fiscal three months ended September 30, 1997
and $(.05) and $(.05) for the nine months ended September 30, 1997.
11
<PAGE>
CERPROBE CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Introduction and General Development of Business
Cerprobe offers comprehensive solutions for semiconductor test integration and
is a leading manufacturer of probe cards, ATE interface assemblies, and ATE test
boards. The Company's products and services enable semiconductor manufacturers
to test integrated circuits ("ICs") in wafer form and as packaged ICs.
The Company has grown substantially over the last five years as the Company has
increased its market share and has benefited from the substantial growth in the
worldwide demand for ICs. Net sales have increased from $8.1 million for 1992 to
$37.3 million for 1996, representing an average annualized growth rate of 46.5%.
Similarly, the Company's net income has increased from $.8 million for 1992 to
$3.2 million for 1996 (before a one-time charge for purchased research and
development of $4.6 million, resulting in a net loss of $1.4 million). Until
1995, substantially all of the Company's growth was from the existing probe card
product line.
Beginning with the April 1995 acquisition of Fresh Test Technology Corporation
("Fresh Test"), acquisitions have contributed to the Company's growth. Fresh
Test, which expanded the Company's product line to include ATE interface
assemblies, contributed approximately $4 million to 1995 net sales and
approximately $7 million to 1996 net sales. The Company acquired CompuRoute in
December 1996, which enabled the Company to offer ATE test boards. CompuRoute's
net sales and net income for its fiscal year ended December 31, 1996 were $10.4
million and $.5 million, respectively. The Company acquired SVTR in January
1997, which added wafer prober refurbishing and upgrading services. SVTR's net
sales and net loss for its fiscal year ended December 31, 1996 were $14.6
million and $.4 million, respectively. Together, these acquisitions contributed
approximately $19.5 million to net sales for the first nine months of 1997. In
May 1997, the Company entered into a joint venture with Upsys Reseau Eurisys
("Upsys"), a French company owned by IBM and GAME, a French test and engineering
company. The joint venture, called Upsys-Cerprobe, L.L.C., will assemble and
repair the Cobra probe card for distribution by the Company in the United States
and Asia. The Company believes the Cobra probe is well-suited for multiple-IC
and memory IC testing.
The Company believes that it is positioned to continue its growth as a result of
its strength in designing, producing, and delivering, on a timely and
cost-efficient basis, a broad range of custom or customized, high quality test
products and services for semiconductor manufacturers in the United States,
Europe, and Asia. There can be no assurance that the Company can continue its
growth. The Company maintains regional full service facilities in Arizona,
California, and Texas as well as sales offices in Colorado, Florida,
Massachusetts, and Oregon to service the U.S. market for its products and
services. The Company continues to expand into international markets, including
Europe and Asia. The Company maintains a full service facility in Scotland to
serve the European market and full service facilities in Singapore and Taiwan to
serve the Southeast Asia market. Each of the Company's facilities is located in
proximity to semiconductor manufacturing centers.
12
<PAGE>
Results of Operations
Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996.
Net Sales. Net sales for the three months ended September 30, 1997 were
$19,886,447, an increase of 126.0% over net sales of $8,799,247 for the three
months ended September 30, 1996. This increase in net sales is a result of
Cerprobe's two recent acquisitions, higher order rates for Cerprobe's probe card
and interface products and increased sales from Cerprobe's international
operations.
Gross Profit. Gross profit for the three months ended September 30, 1997, was
$8,187,881, an increase of 112.0% over the gross profit of $3,861,676 for the
same period in 1996. Gross profit as a percentage of sales decreased from 43.9%
for the three months ended September 30, 1996 to 41.2% for the same period in
1997. The decrease in gross profit was primarily a result of a change in product
mix due to the recent acquisitions. Approximately 27.8% of net sales within the
period were attributed to ATE test boards from the Company's CompuRoute
subsidiary and wafer prober products and services from the Company's SVTR
subsidiary. Both product lines currently have lower gross profit than the
Company's core products of probe cards and ATE interfaces.
Selling, General and Administrative. Selling, general and administrative
expenses were $4,746,863, or 23.9% of net sales, for the three months ended
September 30, 1997 as compared to $2,595,559, or 29.5% of net sales, for the
same period in 1996, an increase of 82.9%. The increase in selling, general and
administrative expenses resulted primarily from the two recent acquisitions, the
start up of the joint venture with Upsys, and the continued domestic and
international expansion. Of the increase, $1,428,743, or 66%, was attributable
to Cerprobe's two recent acquisitions and the joint venture with Upsys.
Engineering and Product Development. Engineering and product development
expenses were $412,905 for the three months ended September 30, 1997, an
increase of 19.3% over $345,963 for the same period in 1996. This increase
resulted from Cerprobe's recent acquisitions and Cerprobe's continued emphasis
on engineering and product development in an effort to anticipate and address
technological advances in semiconductor testing.
Acquisition Related Recovery. Acquisition related recovery was $1,167,689 of the
original $5,664,156 purchased research and development expenses associated with
the acquisition of SVTR on January 15, 1997. The recovery is a result of a
formal agreement signed September 26, 1997 by the former owners of SVTR which
settled certain open terms relating to Cerprobe's purchase of SVTR. The
agreement required the former owners to return to the Company 125,000 shares of
the Company's common stock currently held in escrow. In addition, the former
owners were required to release any claim or interest they may have to receive
any payments or shares of common stock of the company with respect to an earnout
provision detailed in the January 15, 1997 agreement of merger between the two
entities.
Interest Income. Interest income was $10,609 for the three months ended
September 30, 1997 as compared to $177,113 for the same period in 1996. The
decrease was a result of utilizing the net
13
<PAGE>
proceeds of the Series A Convertible Preferred Stock offering for the CompuRoute
and SVTR acquisitions in the fourth quarter of 1996 and in the first quarter of
1997, respectively. Interest income is expected to increase significantly in the
quarter ending December 31,1997 due to the investment of the net proceeds of the
Company's recent Secondary Offering.
Interest Expense. Interest expense was $170,050 for the three months ended
September 30, 1997 as compared to $50,737 for the same period in 1996, an
increase of 235.2%. The majority of the 1997 increase in interest expense was
due to the debt acquired in the acquisition of CompuRoute and SVTR. This debt
was liquidated at September 30, 1997, with a portion of the net proceeds from
the Company's recent Secondary Offering. Accordingly, interest expense is
expected to be substantially lower in the quarter ending December 31, 1997.
Minority Interest Share of loss. The minority interest share of loss from
operations of $67,394 for the three months ended September 30, 1997 represents
the Company's joint venture partners' share (40.0%, prior to August 18, 1997,
30.0% thereafter) of the income from Cerprobe Asia PTE LTD of $47,704 and the
Company's joint venture partner's share (45.0%) of the loss from Upsys-Cerprobe,
L.L.C. of $115,098.
Provision for Income Taxes. The provision for income taxes was $1,248,812 which
represents an effective tax rate of 41.0%, excluding the recovery of acquisition
costs of $1,167,689 for the three months ended September 30, 1997 versus the
provision for income taxes for the three months ended September 30, 1996 of
$469,000 which represents an effective tax rate of 41.4%.
Net Income. Net income for the three months ended September 30, 1997 was
$2,962,096, an increase of $2,298,697, or 346.5%, from the net income of
$663,399 for the same period in 1996. Excluding the $1,167,689 recovery of
purchased research and development expenses, net income would have been
$1,794,407 or 9.0% of sales compared to 7.5% of sales for the same period in
1996.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996.
Net Sales. Net sales for the nine months ended September 30, 1997 were
$54,469,368, an increase of 93.4% over net sales of $28,159,069 for the nine
months ended September 30, 1996. This increase in net sales is a result of
Cerprobe's two recent acquisitions, higher order rates for Cerprobe's probe card
and interface products and increased sales from Cerprobe's international
operations.
Gross Profit. Gross profit for the nine months ended September 30, 1997, was
$22,367,473, an increase of 73.7% over the gross profit of $12,873,703 for the
same period in 1996. Gross profit as a percentage of sales decreased from 45.7%
for the nine months ended September 30, 1996 to 41.1% for the same period in
1997. The decrease in gross profit, as a percentage of sales, is primarily a
result of a change in product mix due to the recent acquisitions. Approximately
25.9% of net sales within the period were attributed to ATE test boards from the
Company's CompuRoute subsidiary and wafer prober products and services from the
Company's SVTR subsidiary. Both product lines currently have lower gross profit
than the Company's core products of probe cards and ATE interfaces.
14
<PAGE>
Selling, General and Administrative. Selling, general and administrative
expenses were $13,874,174, or 25.5% of net sales, for the nine months ended
September 30, 1997 as compared to $7,870,390, or 27.9% of net sales, for the
same period in 1996. The increase of $6,003,784, or 76.3%, resulted primarily
from the two recent acquisitions, the start up of the joint venture with Upsys,
and the continued domestic and international facilities expansion. Of the
increase, $3,745,466, or 62.4%, was attributable to CompuRoute, SVTR, and the
joint venture with Upsys.
Engineering and Product Development. Engineering and product development
expenses were $1,030,679 for the nine months ended September 30, 1997, an
increase of 42.3% over $724,230 for the same period in 1996. This increase
resulted from Cerprobe's recent acquisitions and from Cerprobe's continued
emphasis on engineering and product development in an effort to anticipate and
address technological advances in semiconductor testing.
Acquisition Related Expenses. Acquisition related costs totaled $4,996,467,
including a recovery of $1,167,689, and are related to the acquisition of SVTR
on January 15, 1997. The acquisition was accounted for using the purchase method
of accounting. Accordingly, the purchase price was allocated to the assets
acquired and the liabilities assumed based upon their estimated fair values. The
value of the purchased research and development in connection with the
acquisition was $4,496,467. The current state of the research and development
products/processes was not yet at a technologically feasible or commercially
viable stage. Cerprobe does not believe that the research and development
products/processes have any future alternative use because if they are not
finished and brought to ultimate product or process completion they have no
value. Therefore, consistent with generally accepted accounting principles,
Cerprobe took a one-time charge for the full value of the purchased research and
development. The remaining $500,000 of acquisition related costs represent the
estimated cost to move SVTR's manufacturing operations to Arizona during 1997.
Interest Income. Interest income was $78,274 for the nine months ended September
30, 1997 as compared to $345,356 for the same period on 1996. The decrease was a
result of utilizing the net proceeds of the Series A Convertible Preferred Stock
offering in the CompuRoute and SVTR acquisitions in the fourth quarter of 1996
and in the first quarter of 1997, respectively.
Interest Expense. Interest expense was $466,905 for the nine months ended
September 30, 1997 as compared to $167,194 for the same period in 1996, an
increase of 179.3%. The majority of the 1997 increase in interest expense was
due to the debt acquired in the acquisition of CompuRoute and SVTR.
Minority Interest Share of Income. The minority interest share of loss from
operations of $96,379 for the nine months ended September 30, 1997, represents
the Company's joint venture partners' share (40.0%, prior to August 18, 1997,
30.0% thereafter) of the income from Cerprobe Asia PTE LTD of $68,447 and the
Company's joint venture partner's share (45.0%) of the loss from Upsys-Cerprobe,
L.L.C. of $164,826.
Provision for Income Taxes. The provision for income taxes was $2,739,112, which
represents an effective tax rate of 39.8%, excluding the acquisition costs of
$4,996,467, for the nine months ended September 30, 1997, versus $2,162,000,
which represents an effective rate of 46.0%, for 1996. The decreased effective
tax rate, as adjusted for the nine months ended September 30,
15
<PAGE>
1997, is due to the utilization of CompuRoute's net operating loss carryforward
of $140,000 and partial use of previous nondeductible losses from foreign
subsidiaries.
Net Loss. Net loss for the nine months ended September 30, 1997 was $(343,212),
a decrease of $2,874,096, or 113.6%, from the net income of $2,530,884 for the
same period in 1996. This decrease is primarily due to the recording of
approximately $500,000 of costs associated with the relocation of SVTR's
manufacturing operations and the write-off of the purchased research and
development of $4,496,467 from the SVTR acquisition. Excluding the acquisition
related expenses, net income for the nine months ended September 30, 1997 would
have been $4,453,255, or 8.1% of net sales, as compared to 9.0% of net sales for
the nine months ended September 30, 1996.
Liquidity and Capital Resources
Cerprobe has financed its operations and capital requirements primarily through
cash flow from operations, equipment lease financing arrangements and sales of
equity securities. In January 1996, Cerprobe completed a private placement of
Series A Convertible Preferred Stock, which raised net proceeds of $9,400,000.
The net proceeds have been used in domestic and international expansion and
acquisition of companies and/or technologies. In September 1997, the Company
completed the Secondary Offering which raised net proceeds of approximately
$30,710,000. The proceeds have been used to redeem the remaining outstanding
shares of Series A Convertible Preferred Stock and repay existing Company debt.
The remainder will be used for general corporate purposes, including working
capital and for possible future acquisitions. In addition, on October 6, 1997,
the managing underwriters of the offering, Adams, Harkness & Hill, Inc. and Dain
Bosworth Incorporated exercised their over-allotment option to purchase an
additional 300,000 shares of the Company's Common Stock at a purchase price of
$22 per share. Approximately $6,222,000 in net proceeds was received by the
Company from the exercise of the over-allotment. At September 30, 1997, cash and
cash equivalents were $24,443,687, compared to $5,564,557 at December 31, 1996.
Cerprobe generated $4,109,313 in cash flow from operating activities for the
nine months ended September 30, 1997. Accounts receivable increased by
$5,888,675, or 105.8%, to $11,452,878 at September 30, 1997. Of this increase,
$884,440 resulted from the acquisition of SVTR with the balance a result of
increased sales. Inventories increased $3,127,969, or 81.0%, over December 31,
1996 to $6,990,722 at September 30, 1997. The increase resulted primarily from
the acquisition of SVTR.
Accounts payable and accrued expenses increased $4,313,834, or 99.4%, to
$8,653,018 at June 30, 1997. The increase resulted from the acquisition of SVTR
and Cerprobe's continued expansion activities.
The current portions of notes payable and capital leases increased to $1,703,305
at September 30, 1997 from $762,935 at December 31, 1996, primarily as a result
of Cerprobe's recent acquisition of SVTR. Cerprobe borrowed approximately
$2,000,000 from its revolving line of credit during the second quarter to payoff
notes payable and capital lease obligations of CompuRoute and SVTR whose
obligation interest rates were higher than Cerprobe's borrowing rate. The
16
<PAGE>
$2,000,000 borrowed from the revolving line has been paid off with proceeds from
the Secondary Offering.
Working capital increased $23,525,725, or 237.6%, to $33,428,695 at September
30, 1997 from December 31, 1996, primarily as a result of the Secondary Offering
which netted proceeds of approximately $30,710,000. The current ratio increased
from 2.6 at December 31, 1996 to 4.2 at September 30, 1997. This increase was
due to the net proceeds from the Secondary Offering.
Cerprobe increased its investment in property, plant, and equipment during the
nine months ended September 30, 1997 by $3,142,593, or 27.5%, to $14,588,884.
This increase was attributable to the acquisition of SVTR and the Company's
efforts to expand capacity to meet customer demand for its products. These
capital expenditures were funded from cash flow from operations, and proceeds
from the private placement of the Series A Convertible Preferred Stock.
In February 1997, Cerprobe entered into a $10,000,000 unsecured revolving line
of credit, which matures August 15, 1998, with its primary lender, Wells Fargo
Bank. Advances under the revolving line may be made as prime rate advances,
which accrue interest payable monthly, at the Bank's prime lending rate, or as
LIBOR rate advances, which bear interest at 175 basis points in excess of the
LIBOR base rate. At September 30, 1997, there were no amounts outstanding under
the unsecured revolving line of credit.
In May 1997, Cerprobe entered into a $3,000,000 lease line of credit, which
matures February 28, 1998, with Banc One Leasing Corporation. The maximum term
for each lease schedule will not exceed 60 months. Pricing will be indexed to
like term treasuries plus 170 basis points. The advances will be collateralized
by the underlying leased manufacturing equipment, furniture, fixtures, software
and/or hardware. At September 30, 1997, no advances had been made under the
agreement.
In September 1997, the Company completed a Secondary Offering of 2,000,000
shares of the Company's common stock at a price of $22.00 per share. Of the
shares, 1,500,000 were sold by the Company and the remaining 500,000 shares were
sold by selling stockholders. The Company did not receive proceeds from shares
sold by selling stockholders. Accordingly, $30,710,000 was received in net
proceeds from the transaction.
In addition, on October 6, 1997, the managing underwriters of the offering,
Adams, Harkness & Hill, Inc. and Dain Bosworth Incorporated exercised their
over-allotment option to purchase an additional 300,000 shares of the Company's
Common Stock at a price of $22.00 per share. Approximately $6,222,000 was
received by the Company from the exercise of the over-allotment.
The Company used a portion of the proceeds from the Secondary Offering to redeem
the remaining shares of Series A Convertible Preferred Stock for $5,250,000 and
to repay certain existing Company debt of approximately $3,000,000. The
remainder will be used for general corporate purposes, including working capital
and possible future acquisitions.
Cerprobe believes that its working capital, together with the loan commitments
described above and anticipated cash flow from operations, will provide adequate
sources to fund operations for at least the next 12 months. Cerprobe anticipates
that any additional cash requirements for operations or capital expenditures
will be financed through cash flow from operations, by
17
<PAGE>
borrowing from Cerprobe's primary lender, by lease financing arrangements, or by
sales of equity securities. There can be no assurance that any such financing
will be available on acceptable terms and that any additional equity financing,
of available, would not result in additional dilution to existing investors.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
Statements in this section regarding the Company's prospects for continued
growth and the adequacy of sources of capital are forward-looking statements.
Words such as "intends," "adequate," "believes," and "anticipates," also
identify forward-looking statements. Actual results, however, could differ
materially from those anticipated for a number of reasons, including product
demand and development, technological advancements, impact of competitive
products and pricing, growth in targeted markets, and other factors identified
under "Special Considerations" of the Company's 1996 Form 10-KSB and under "Risk
Factors" of the Company's Secondary Offering prospectus dated September 24,
1997, both of which have been filed with the Securities and Exchange Commission.
Additional risk factors are identified from time to time in the Company's 1997
press releases.
18
<PAGE>
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits
10(fff) Agreement dated September 26, 1997, by and
among the Company, EMI Acquisition, Inc.,
Silicon Valley Test & Repair, Inc. and
William and Carol Mayer.
(11) Statement regarding computation of net
earnings (loss) per share.
(27) Financial Data Schedule.
b. No reports on Form 8-K were filed by the Company during
the quarter ended September 30, 1997
19
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigning
thereunto duly authorized.
CERPROBE CORPORATION
/s/Randal L. Buness
---------------------------------------
Randal L. Buness
Vice President - Chief Financial Officer
November 11, 1997
20
AGREEMENT
THIS AGREEMENT is made and entered into as of September 26,
1997, by and among SVTR, INC., a Delaware corporation, formerly known as Silicon
Valley Test & Repair, Inc. and formerly known as EMI Acquisition, Inc. ("SVTR"),
CERPROBE CORPORATION, a Delaware corporation ("Cerprobe"), and WILLIAM E. MAYER
and CAROL MAYER (individually and together, "Mayer").
RECITALS
A. On January 15, 1997, EMI Acquisition, Inc., a Delaware
corporation ("Acquisition") and a wholly-owned subsidiary of Cerprobe, and
Cerprobe entered into an Agreement of Merger and Plan of Reorganization
("Agreement of Merger") with Silicon Valley Test & Repair, Inc., a California
corporation ("SVTR California") and Mayer, pursuant to which SVTR California
merged into Acquisition and Acquisition changed its name to Silicon Valley Test
& Repair, Inc. (the "Merger"). Later, Silicon Valley Test & Repair, Inc. changed
its name again to SVTR, Inc.
B. Certain matters of dispute have arisen regarding: (a) the
financial condition of SVTR California prior to the Merger; (b) the accuracy of
certain forecasts, representations and other statements by Mayer, whether or not
contained in the Agreement of Merger; (c) the ability of SVTR California and
later of SVTR to make certain products and meet specifications; and (d) the
relationship of SVTR California and SVTR with customers, vendors and employees.
C. Mayer seeks to assure his future by having Cerprobe and
SVTR release Mayer of any liability to Cerprobe and SVTR arising out of: (a) any
of the items in Recital B above; (b) the Merger; or (c) actions or statements by
Mayer before or after the Merger relating to SVTR California.
D. SVTR, Cerprobe and Mayer have agreed to resolve all
disputes between them as hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants set forth in this Agreement, the parties hereto agree as
follows:
1. Mayer Payment. Upon the execution of this Agreement, Mayer
shall pay to Cerprobe the sum of $230,000 representing repayment of a portion of
the cash payment paid to Mayer pursuant to Section 3.2(c) of the Agreement of
Merger.
2. Escrow Stock. The 125,000 shares of common stock of
Cerprobe issued to Mayer in connection with the Merger currently held in escrow
pursuant to that certain Escrow and Security Agreement, by and among Cerprobe,
Mayer and Arizona Escrow & Financial Corporation, dated January 28, 1997, shall,
effective August 18, 1997, be redelivered to Cerprobe and Mayer does hereby
forever release and relinquish any and all claims or interest with respect
thereto.
<PAGE>
Contemporaneously with the execution and delivery of this Agreement, Cerprobe
and Mayer shall execute and deliver a letter to Arizona Escrow & Financial
Corporation in form and content as set forth in Exhibit A attached hereto.
3. Earn Out. Effective August 18, 1997, Mayer hereby releases
any and all rights, claims or interests that either of them may have to receive
any payment or shares of the common stock of Cerprobe with respect to the
earn-out provisions set forth in Article IV of the Agreement of Merger.
4. Resignation. By executing the form of resignation attached
hereto as Exhibit B, Mayer hereby resigns as an officer and employee of SVTR
(formerly Acquisition) effective on October 31, 1997. The Employment Agreement,
by and between Acquisition and William E. Mayer, dated as of January 15, 1997,
is terminated effective October 31, 1997.
5. Promissory Note. Upon the execution of this Agreement, SVTR
shall pay to Mayer the sum of $242,000 representing the pre-payment of the
entire principal owing on the indebtedness owing to Mayer under that certain
Note Payment Agreement, by and between SVTR California and Mayer, dated as of
January 15, 1997 (the "Note Payment Agreement"), and that certain Promissory
Note executed by SVTR California, dated July 31, 1994, in the original principal
amount of $407,949.55, payable to William E. Mayer (the "SVTR Note"). Upon
receipt of the $242,000, Mayer shall deliver to SVTR the original SVTR Note
marked "paid in full." Mayer hereby releases and forever discharges SVTR of all
indebtedness owed under the Note Payment Agreement and SVTR Note.
6. COBRA. Upon the execution of this Agreement, Mayer shall
pay to SVTR the amount of $10,000 which amount shall be utilized for the
insurance premiums for COBRA coverage (both medical and dental) for a period of
18 months beginning November 1, 1997. SVTR hereby agrees to pay, for a period of
18 months beginning November 1, 1997, unless sooner terminated by Mayer, the
insurance premium payments for COBRA coverage for William E. Mayer, Carol Mayer
and any minor children residing with them. At the end of the 18 month COBRA
period, or earlier termination by William E. Mayer, if any amount of the $10,000
is remaining, that remaining amount shall belong to SVTR. If the premiums for
COBRA coverage exceed $10,000, Mayer shall pay any excess.
7. Net Effect. The net financial effect of the payments
provided for in Sections 1, 5 and 6 hereof is that Cerprobe and SVTR shall pay
$2,000 to Mayer. Payment shall be made within 10 days of the execution of this
Agreement. Nothing herein or in any other Release or Agreement shall be deemed
to waive, release or discharge this net payment.
8. Release. SVTR and Cerprobe shall deliver to Mayer a Release
in form and content as set forth in Exhibit C attached hereto, and Mayer shall
deliver to SVTR and Cerprobe a Release in form and content as set forth in
Exhibit D attached hereto.
9. Labor Code. Nothing in this Agreement nor in any
contemporaneous agreement among the parties hereto shall waive, release or
diminish the rights of Mayer or SVTR pursuant to California Labor Code section
2802, as applicable, which provides:
2
<PAGE>
"An employer shall indemnify his employee for all
that the employee necessarily expends or loses in
direct consequence of the discharge of his duties as
such, or of his obedience to the directions of the
employer, even though unlawful, unless the employee,
at the time of obeying such directions, believed them
to be unlawful."
10. Miscellaneous.
(a) Effective Date of Transactions. The parties agree
that, unless otherwise provided in this Agreement, the transactions referenced
herein shall be effective as of September 26, 1997.
(b) Entire Agreement. This Agreement and the
agreements referred to herein constitutes the entire agreement among the parties
and shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and permitted assigns.
Except as set forth herein, the provisions of this Agreement supersede any and
all other agreements or understandings, whether oral or written, among the
parties hereto with respect to their dispute. Any amendments, or alternative or
supplementary provisions to this Agreement must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
(c) Construction. Any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this Agreement or any amendments thereto.
(d) Governing Law. This Agreement shall be governed
by the laws of the State of California.
(e) Further Assurances. Each party hereto agrees to
do all acts and things and to make, execute, and deliver such written
instruments and documents as shall from time to time be reasonably required to
carry out the terms and provisions of this Agreement.
(f) Attorneys' Fees. In the event of any claim,
controversy or dispute arising out of or relating to this Agreement, or the
breach thereof, each party shall pay his, her or its own attorneys' fees.
(g) Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original, and all
such counterparts shall constitute but one instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement,
or caused this Agreement to be executed, as of the date first written above.
SVTR, INC.
By:
-------------------------------------
Randal L. Buness, Chief Financial
Officer
CERPROBE CORPORATION
By:
-------------------------------------
Randal L. Buness, Vice President
----------------------------------------
William E. Mayer
----------------------------------------
Carol Mayer
4
Cerprobe Corporation
Computation of Net earnings (Loss) Per Share
Exhibit 11
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months ended
September 30, 1997 September 30, 1997
------------------------------------ ------------------------------------
1997 1996 1997 1996
---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net income (loss) $ 2,962,096 $ 663,399 $ (343,212) $ 2,530,884
================ ================= ================= =================
Weighted average common shares outstanding 6,315,506 4,529,389 6,318,243 4,304,633
Common equivalent shares:
Shares issuable upon exercise
of stock options (1) 390,841 249,009 - 199,331
Convertible preferred stock - 519,130 - 621,979
---------------- ----------------- ----------------- -----------------
Total weighted average shares-primary 6,706,347 5,297,528 6,318,243 5,125,943
---------------- ----------------- ----------------- -----------------
Fully diluted incremental shares:
Stock options (calculated using the higher
of end of period or average market value) 80,626 48 - 4,846
Convertible subordinated debentures - 485,000 - 517,000
---------------- ----------------- ----------------- -----------------
Total weighted average shares-fully diluted 6,786,973 5,782,576 6,318,243 5,647,789
---------------- ----------------- ----------------- -----------------
Primary net income per common and
common equivalent share $ 0.44 $ 0.13 $ (0.05) $ 0.49
---------------- ----------------- ----------------- -----------------
Fully diluted net income per common and
common equivalent share $ 0.44 $ 0.11 $ (0.05) $ 0.45
---------------- ----------------- ----------------- -----------------
(1) Amount calculated under the treasury stock method and fair market values for stock
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 24,443,687
<SECURITIES> 0
<RECEIVABLES> 11,765,156
<ALLOWANCES> 312,278
<INVENTORY> 6,990,722
<CURRENT-ASSETS> 43,785,018
<PP&E> 20,906,624
<DEPRECIATION> 6,317,740
<TOTAL-ASSETS> 62,356,624
<CURRENT-LIABILITIES> 10,356,323
<BONDS> 1,195,377
0
0
<COMMON> 388,255
<OTHER-SE> 49,925,677
<TOTAL-LIABILITY-AND-EQUITY> 62,356,624
<SALES> 54,469,368
<TOTAL-REVENUES> 54,469,368
<CGS> 32,101,895
<TOTAL-COSTS> 52,003,215
<OTHER-EXPENSES> 466,905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 466,905
<INCOME-PRETAX> 2,299,521
<INCOME-TAX> 2,739,112
<INCOME-CONTINUING> (343,212)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343,212)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
