<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NUMBER 2
(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, 1998
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
CERPROBE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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)
</TABLE>
(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 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 February 26, 1999, there were 7,657,726 shares of the registrant's
Common Stock outstanding.
<PAGE> 2
CERPROBE CORPORATION
QUARTERLY REPORT ON FORM 10-Q/A
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RESTATEMENT EXPLANATION....................................................................................... 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AS RESTATED
Condensed Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997..................................................... 4
Condensed Consolidated Statements of Operations -
Three and Nine months Ended September 30, 1998 and 1997...................................... 5
Condensed Consolidated Statements of Cash Flows -
Nine months Ended September 30, 1998 and 1997................................................ 6
Notes to Condensed Consolidated Financial Statements......................................... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS AS RESTATED.............................................. 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS............................................................................ 20
ITEM 2. CHANGES IN SECURITIES........................................................................ 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................................. 20
SIGNATURE ............................................................................................. 22
</TABLE>
2
<PAGE> 3
CERPROBE CORPORATION AND SUBSIDIARIES
RESTATEMENT EXPLANATION
The accompanying condensed consolidated financial statements as of September 30,
1998 and for the three and nine months ended September 30, 1998 have been
restated to reflect a change in the amount of in-process research and
development charge ("IPR&D") related to the September 30, 1998 acquisition of
France-based SemiConducteur Services S.A. ("SCS").
The IPR&D adjustment was made in response to the recent initiative of the
Securities and Exchange Commission regarding IPR&D charges. The Company
recalculated the IPR&D charge attributable to the $3,250,000 acquisition of SCS
which occurred in the third quarter of 1998. The previously reported $1,948,000
IPR&D charge has been reduced by $380,000 to a revised amount of $1,568,000
based on this recalculation. The adjustment, net of tax, has increased net
income from continuing operations by $228,000, or $0.03 per diluted common share
outstanding for the three and nine months ended September 30, 1998.
A summary of the financial statement impact of this restatement, by line item,
is included in Note 7. Also, all other footnotes have been revised to reflect
the effect of this restatement, as applicable.
3
<PAGE> 4
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
Assets 1998 1997
------------ ------------
(unaudited
and restated)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 21,449,467 $ 29,716,188
Accounts receivable, net of allowance of $234,559
in 1998 and $215,179 in 1997 11,013,101 8,230,178
Inventories, net 5,516,599 4,969,804
Accrued interest receivable 120,457 202,939
Prepaid expenses 919,753 377,799
Income taxes receivable 313,091 471,046
Deferred tax asset 1,226,879 411,177
Net assets of discontinued operations 1,809,012 5,220,343
------------ ------------
Total current assets 42,368,359 49,599,474
Property, plant and equipment, net 19,038,019 14,439,254
Intangibles, net 3,189,766 2,279,347
Other assets 853,625 957,175
Net assets of discontinued operations -- 832,653
------------ ------------
Total assets $ 65,449,769 $ 68,107,903
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,447,596 $ 3,502,561
Accrued expenses 4,205,446 2,831,759
Current portion of notes payable 401,541 139,661
Current portion of capital leases 630,560 620,570
------------ ------------
Total current liabilities 7,685,143 7,094,551
Notes payable, less current portion 736,196 138,985
Capital leases, less current portion 2,301,861 1,136,032
Deferred tax liability 574,001 377,701
Other liabilities 9,600 16,700
------------ ------------
Total liabilities 11,306,801 8,763,969
------------ ------------
Minority interest 191,227 132,437
Commitments and contingencies -- --
Stockholders' equity:
Common stock, $.05 par value; authorized 25,000,000 shares;
issued 8,127,728 shares at September 30, 1998 and
8,097,979 shares at December 31, 1997 406,464 404,899
Additional paid-in capital 55,213,526 55,136,307
Retained earnings 3,256,648 4,001,642
Foreign currency translation adjustment (348,840) (331,351)
------------ ------------
58,527,798 59,211,497
Treasury stock, at cost, 412,992 shares
at September 30, 1998 (4,576,057) --
------------ ------------
Total stockholders' equity 53,951,741 59,211,497
------------ ------------
Total liabilities and stockholders' equity $ 65,449,769 $ 68,107,903
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and restated)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 20,107,096 $ 17,562,150 $ 61,199,104 $ 49,134,074
Costs of goods sold 11,513,959 9,989,751 35,473,693 27,494,242
------------ ------------ ------------ ------------
Gross profit 8,593,137 7,572,399 25,725,411 21,639,832
------------ ------------ ------------ ------------
Expenses:
Selling, general and administrative 4,714,758 3,968,620 14,370,299 11,787,189
Engineering and product development 955,978 250,803 2,301,671 545,121
Acquisition related expenses 1,568,000 -- 1,568,000 --
------------ ------------ ------------ ------------
Total expenses 7,238,736 4,219,423 18,239,970 12,332,310
------------ ------------ ------------ ------------
Operating income 1,354,401 3,352,976 7,485,441 9,307,522
------------ ------------ ------------ ------------
Other income (expense):
Interest income 328,161 9,697 1,063,877 75,125
Interest expense (59,546) (164,913) (182,133) (344,110)
Other income 219,379 109,190 258,195 224,878
------------ ------------ ------------ ------------
Total other income (expense) 487,994 (46,026) 1,139,939 (44,107)
------------ ------------ ------------ ------------
Income before income taxes and
minority interest 1,842,395 3,306,950 8,625,380 9,263,415
Minority interest share of (income) loss (86,147) 67,394 (111,540) 96,379
------------ ------------ ------------ ------------
Income before income taxes 1,756,248 3,374,344 8,513,840 9,359,794
Provision for income taxes (720,613) (1,442,284) (3,528,637) (3,816,184)
------------ ------------ ------------ ------------
Income from continuing operations 1,035,635 1,932,060 4,985,203 5,543,610
Discontinued operations:
Income (loss) from operations of
SVTR, Inc., net of taxes (785,097) 1,030,036 (1,922,457) (5,886,822)
Loss on disposal of SVTR, Inc., net of taxes (3,807,740) -- (3,807,740) --
------------ ------------ ------------ ------------
Income (loss) from discontinued operations (4,592,837) 1,030,036 (5,730,197) (5,886,822)
------------ ------------ ------------ ------------
Net income (loss) $ (3,557,202) $ 2,962,096 $ (744,994) $ (343,212)
============ ============ ============ ============
Net income (loss) per common share:
Basic:
From continuing operations before
acquisition related expenses $ 0.25 $ 0.31 $ 0.74 $ 0.89
Acquisition related expenses (0.12) -- (0.12) --
------------ ------------ ------------ ------------
From continuing operations 0.13 0.31 0.62 0.89
From discontinued operations (0.59) 0.16 (0.71) (0.95)
------------ ------------ ------------ ------------
Net income (loss) per common share $ (0.46) $ 0.47 $ (0.09) $ (0.06)
============ ============ ============ ============
Weighted average number of common
shares outstanding 7,768,874 6,246,825 8,058,011 6,219,800
============ ============ ============ ============
Diluted:
From continuing operations before
acquisition related expenses $ 0.25 $ 0.29 $ 0.74 $ 0.89
Acquisition related expenses (0.12) -- (0.12) --
------------ ------------ ------------ ------------
From continuing operations 0.13 0.29 0.62 0.89
From discontinued operations (0.59) 0.16 (0.71) (0.95)
------------ ------------ ------------ ------------
Net income (loss) per common share $ (0.46) $ 0.45 $ (0.09) $ (0.06)
============ ============ ============ ============
Weighted average number of common and
common equivalent shares outstanding 7,768,874 6,637,665 8,058,011 6,219,800
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and restated)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $ 4,985,203 $ 5,543,611
Adjustments to reconcile net income from continuing operations
to net cash provided by continuing operations:
Depreciation and amortization 3,378,441 2,621,681
Acquisition related expenses 1,568,000 --
Loss on sale of equipment 435,996 1,396
Loss on disposal of discontinued operations, net of taxes 3,807,740 --
Tax benefit from exercise of nonqualified stock options 106,000 28,000
Deferred income taxes (619,402) (303,553)
Provision for losses on accounts receivable 19,920 18,000
Provision for obsolete inventory 315,000 204,997
Income applicable to minority interest in consolidated subsidiaries 111,540 96,379
Changes in working capital of continuing operations, net of
acquisitions:
Accounts receivable (1,323,031) (2,738,299)
Inventories (730,671) 2,640,183
Prepaid expenses and other assets (175,710) 228,378
Income taxes receivable 157,955 214,097
Accounts payable and accrued expenses (317,706) (300,740)
Accrued income taxes (108,648) 2,118,521
Other liabilities (7,100) 20,140
------------ ------------
Net cash provided by continuing operations 11,603,527 10,392,791
------------ ------------
Net cash used in discontinued operations (5,293,953) (6,989,699)
------------ ------------
Net cash provided by operating activities 6,309,574 3,403,092
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (7,128,764) (4,273,852)
Investment in CRPB Investors, L.L.C 47,656 (607)
Investment in Upsys-Cerprobe, L.L.C -- 19,333
Purchase of Upsys-Cerprobe, L.L.C (376,366) --
Purchase of Semiconducteur Services S.A., net of cash acquired (3,230,230) --
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 (10,687,704) (6,604,742)
------------ ------------
Cash flows from financing activities:
Issuance of (payments on) notes payable and capital leases 960,063 (3,765,841)
Net proceeds (expenses) from issuance of common stock (245,093) 30,710,000
Redemption of convertible preferred stock -- (5,250,000)
Purchase of treasury stock (4,781,107) --
Net proceeds from employee stock purchase plan 238,164 --
Net proceeds from exercise of stock options 184,763 506,936
------------ ------------
Net cash provided by (used in) financing activities (3,643,210) 22,201,095
------------ ------------
Effect of exchange rates on cash and short-term investments (245,381) (138,965)
------------ ------------
Net increase (decrease) in cash and short-term investments (8,266,721) 18,860,480
Cash and short-term investments, beginning of period 29,716,188 5,564,557
------------ ------------
Cash and short-term investments, end of period $ 21,449,467 $ 24,425,037
============ ============
</TABLE>
6
<PAGE> 7
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and restated)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Supplemental schedule of non-cash financing activities from continuing
operations:
Equipment acquired under capital leases $ 620,509 $ 4,144
----------- -----------
Cash-less exercise of warrants $ 33,114 $ --
----------- -----------
Supplemental disclosures of cash flow information from continuing operations:
Interest paid $ 182,133 $ 344,110
----------- -----------
Income taxes paid $ 2,049,282 $ 1,917,596
----------- -----------
Supplemental disclosures of non-cash investing activities:
The Company acquired SVTR, Inc. for $4.5 million in
the nine months ended September 30, 1997. The purchase price was
allocated to the assets acquired and the liabilities assumed based on
their fair values.
The Company acquired Upsys-Cerprobe. L.L.C for $376,366 in the nine
months ended September 30, 1998.
The Company acquired Semiconducteur Services S.A. for approximately $3.3
million in the nine months ended September 30, 1998. The purchase price
was allocated to the assets acquired and the liabilities assumed based
on their fair values.
A summary of the acquisitions is as follows:
Purchase price $ 3,626,366 $ 4,546,825
Less cash acquired (19,770) (285,316)
Common stock issued -- (1,670,812)
----------- -----------
Cash invested $ 3,606,596 $ 2,590,697
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
CERPROBE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND RESTATED)
(1) BASIS OF PREPARATION AND RESTATEMENT
The accompanying condensed consolidated financial statements as of
September 30, 1998, and for the three and nine months ended September 30,
1998 have been restated to reflect a change in the amount of in-process
research and development charge ("IPR&D") related to the September 30
1998 acquisition of France-based SemiConducteur Services S.A. ("SCS").
The IPR&D adjustment was made in response to a recent initiative of the
Securities and Exchange Commission regarding IPR&D charge attributable to
the $3,250,000 acquisition of SCS in the third quarter of 1998. The
previously reported $1,948,000 IPR&D charge has been reduced by $380,000
to a revised amount of $1,568,000. The adjustment, net of tax, has
increased net income from continuing operations by $228,000, or $0.03 per
diluted common share outstanding for the three and nine months ended
September 30, 1998.
The effect of this restatement on previously reported condensed
consolidated financial statements as of and for the three and nine months
ended September 30, 1998 is detailed in Note 7.
The accompanying condensed consolidated financial statements as of
September 30, 1998, and for the three and nine months ended September 30,
1998, and 1997, 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, 1997, 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-K for the year ended December 31, 1997.
Results of operations for interim periods are not necessarily indicative
of those to be achieved for full fiscal years.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
Cerprobe Corporation and its subsidiaries: Cerprobe Europe Limited,
Cerprobe Asia Holdings PTE LTD, CompuRoute, Inc.("CompuRoute"), SVTR,
Inc. ("SVTR"), Upsys-Cerprobe, L.L.C., and Cobra Venture Management, Inc.
Cerprobe Asia Holdings PTE LTD is a 60% (70% prior to August 18, 1997)
owner of Cerprobe Asia PTE LTD; the balance is owned by Asian investors.
Cerprobe Asia PTE LTD's wholly owned subsidiaries, Cerprobe Singapore PTE
LTD and Cerprobe Taiwan Co. LTD, operate full service sales and
manufacturing plants. All significant intercompany transactions have been
eliminated in consolidation.
8
<PAGE> 9
On May 30, 1997, the Company entered into a joint venture with Upsys
Reseau Eurisys ("Upsys"), a French company owned by IBM and GAME COGEMA
Group, a French testing and engineering company. The joint venture,
called Upsys-Cerprobe, L.L.C., assembled and repaired Upsys's vertical
probe card that had been distributed by Cerprobe throughout the United
States and Asia. Cerprobe owned 55% of the joint venture and Upsys owned
45%. Accordingly, the condensed consolidated financial statements include
the activities of Upsys-Cerprobe, L.L.C. since the date of inception of
the joint venture. On June 25, 1998, the Company terminated its
distribution agreement with Upsys, and in connection therewith, Upsys's
45% interest in Upsys-Cerprobe, L.L.C. was purchased. (See Note 5)
On September 30, 1998, the Company acquired France-based SemiConducteur
Services S.A. or ("SCS") for $3.0 million in cash plus $250,000 in
acquisition related expenses. SCS designs and manufactures probe cards at
its manufacturing plant near Marseilles. Accordingly, the condensed
consolidated balance sheet at September 30, 1998 includes the assets
purchased and the liabilities assumed of SCS.
In the third quarter of 1998, the Company discontinued operations of
SVTR, a wafer prober refurbishing and upgrading subsidiary. As a result,
the Company plans to dispose of SVTR's assets by the end of 1998. SVTR
has been accounted for as a discontinued operation and, accordingly, its
results of operations and financial position are segregated for all
periods presented in the accompanying financial statements.
(2) COMMITMENTS AND CONTINGENCIES
LEGAL CLAIM
On October 20, 1998, the Company filed an action against the former
President, Director and shareholders of Silicon Valley Test & Repair,
Inc., which was acquired by the Company by way of a merger into its
wholly-owned subsidiary, SVTR, Inc. in January, 1997. The suit seeks
rescission of the merger transaction and/or money damages arising from
failure of the defendants to disclose material facts regarding the
origins of certain software necessary for SVTR, Inc.'s business. While
the Company intends to vigorously prosecute this action, it is impossible
to predict the outcome of this or any litigation. Regardless of the
outcome, it is not anticipated that this suit will have a material
adverse impact on the Company's financial condition or results of
operations.
The Company is involved in other legal actions arising in the ordinary
course of business. In the opinion of management, the disposition of
these actions would not have a material adverse effect on the Company.
(3) COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130), effective January 1, 1998.
SFAS 130 establishes standards for the reporting and presentation of
comprehensive income and its components in financial statements.
Comprehensive income encompasses net income and "other comprehensive
income," which includes all other non-owner transactions and events which
change stockholders' equity.
The Company recognized a comprehensive loss of $734,501 and $426,590 for
the nine months ended September 30, 1998 and 1997 as follows:
9
<PAGE> 10
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net loss $(744,994) $(343,212)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 17,489 (138,963)
Tax (expense) benefit from foreign currency
Translation (6,996) 55,585
--------- ---------
Net other comprehensive income (loss) 10,493 (83,378)
--------- ---------
Comprehensive loss $(734,501) $(426,590)
========= =========
</TABLE>
(4) TREASURY STOCK
In the third quarter of 1998, the Company purchased on the open market
407,900 shares of its Common Stock at an average purchase price of $11.02
per share. The Company currently holds 412,992 shares in treasury.
(5) UPSYS-CERPROBE L.L.C.
On June 25, 1998, the Company purchased Upsys's 45% interest in
Upsys-Cerprobe L.L.C. The acquisition resulted in $376,366 of Goodwill,
which will be amortized on a straight-line basis over eight years.
(6) DISCONTINUED OPERATIONS
In the third quarter of 1998, the Company discontinued operations of
SVTR, a wafer prober refurbishing and upgrading subsidiary. The
discontinuance resulted from questions regarding the origins of certain
software necessary for SVTR's business. As a result, the Company plans
disposition of the operations by sale or closure by the end of 1998.
SVTR has been accounted for as a discontinued operation and accordingly,
its results of operation and financial position are segregated for all
periods presented in the accompanying consolidated financial statements.
Net sales, related losses and income taxes associated with the
discontinued operations are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ------------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 740,682 $2,324,297 $ 3,070,479 $ 5,335,294
Discontinued
operations:
Income (loss) from
operations $(1,308,495) $ 836,564 $(3,204,095) $(6,963,894)
Income tax benefit 523,398 193,472 1,281,638 1,077,072
----------- ---------- ----------- -----------
Income (loss) from
Operations, net $ (785,097) $1,030,036 $(1,922,457) $(5,886,822)
=========== ========== =========== ===========
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C>
Loss on disposal $(6,346,233) -- $(6,346,233) --
Income tax benefit 2,538,493 -- 2,538,493 --
----------- -------- ----------- --------
Loss on disposal,
Net $(3,807,740) $ -- $(3,807,740) $ --
=========== ======== =========== ========
</TABLE>
The effective income tax benefit (expense) from discontinued operations
is approximately the same as the Company's effective tax rate.
The Company recorded a pretax charge of $4,597,034 to write down
inventory, equipment, and intangibles to estimated net realizable value
and to record additional liabilities in the shut down period. A charge of
$1,749,199 was also recorded to reflect the estimated phase out costs and
losses from operations associated with SVTR. The tax benefit associated
with these charges was $2,538,493.
The net assets of the discontinued operations have been reclassified in
the accompanying consolidated balance sheet as follows:
<TABLE>
<CAPTION>
September 30,
------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Current assets $ 4,693,906 $ 6,527,594
Property, plant and equipment, net 64,160 702,648
Intangibles, net -- 116,954
Other assets 47,315 52,741
Current liabilities (2,971,721) (1,307,251)
Long term debt (24,648) (39,690)
----------- -----------
$ 1,809,012 $ 6,052,996
=========== ===========
</TABLE>
(7) ACQUISITION
On September 30, 1998, the Company acquired France-based SemiConducteur
Services S.A. for $3.0 million in cash and approximately $250,000 in
acquisition related expenses. At that time the Company included a
one-time charge in its third quarter results of $1,948,000 for in-process
research and development.
Subsequent to the issuance of the Company's September 30, 1998 condensed
consolidated financial statements, the Company's management revised its
original estimate of in-process research and development in response to a
recent initiative of the Securities and Exchange Commission. As a result,
the Company's financial statements for the three and nine months ended
September 30, 1998 have been restated to reflect this change. This
resulted in a reduction in the amount of in-process research and
development of $380,000, to bring the year-to-date charge to $1,568,000.
The intangible assets, goodwill and workforce, were increased by $282,000
and $98,000, respectively and will be amortized over 10 and 4 years,
respectively. The tax impact of the transaction was $152,000 and the
provision for taxes and deferred tax liability have been adjusted
accordingly. The change had no impact on net cash flows provided by
operations. The effect of the restatement on the accompanying financial
statements is as follows.
11
<PAGE> 12
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1998 September 30, 1998
As Reported Restated As Reported Restated
----------- ------------------- ----------- ------------------
<S> <C> <C> <C> <C>
Statement of Operations:
Acquisition related
expenses $ 1,948,000 $ 1,568,000 $ 1,948,000 $ 1,568,000
Operating income 974,401 1,354,401 7,105,441 7,485,441
Provision for income
taxes (568,613) (720,613) (3,376,637) (3,528,637)
Income from continuing
operations 807,635 1,035,635 4,757,203 4,985,203
Net income (loss) (3,785,202) (3,557,202) (972,994) (744,994)
Net income (loss) per
common share:
Basic and diluted
Acquisition related
expenses $ (0.15) $ (0.12) $ (0.15) $ (0.12)
From continuing
operations $ 0.10 $ 0.13 $ 0.59 $ 0.62
Net income (loss) per
common share $ (0.49) $ (0.46) $ (0.12) $ (0.09)
</TABLE>
<TABLE>
<CAPTION>
September 30, 1998
As Reported Restated
----------- ------------------
<S> <C> <C>
Balance Sheet:
Intangibles, net $ 2,809,766 $ 3,189,766
Total assets 65,069,769 65,449,769
Deferred tax liability 422,001 574,001
Total liabilities 11,154,801 11,306,801
Retained earnings 3,028,648 3,256,648
Total stockholders' equity
53,723,741 53,951,741
Total liabilities and
stockholders' equity 65,069,769 65,449,769
</TABLE>
(8) SUBSEQUENT EVENTS
CAPITAL LEASES
In October 1998, the Company financed an additional $505,575 of
manufacturing equipment with BancOne Leasing Corporation. The lease
accrues interest at 6.33% annually with monthly payments for 60 months of
principal and interest of $9,853.
SHAREHOLDER RIGHTS PLAN
On October 8, 1998, each shareholder of record received one Preferred
Share Purchase Right on each outstanding share of Common Stock owned.
Each right entitled shareholders to buy one one-thousandth of a share of
newly created Series A Junior Participating Preferred Stock of the
Company at an exercise price of $110. The Rights will be exercisable if a
person or group hereafter acquires 15% or more of the Common Stock of the
Company or announces a tender
12
<PAGE> 13
offer for 15% or more of the Common Stock. Should this occur, the Right
will entitle its holder to purchase, at the Right's exercise price, a
number of shares of Common Stock having a market value at the time of
twice the Right's exercise price. Rights held by the 15% holder will
become void and will not be exercisable to purchase shares at the bargain
purchase price. If the Company is acquired in a merger or other business
combination transaction after a person acquires 15% or more of the
Company's Common Stock, each Right will entitle its holder to purchase,
at the Right's then current exercise price, a number of the acquiring
company's common shares having a market value at that time of twice the
Right's exercise price.
LICENSE AGREEMENT
In November 1998 the Company signed a 10-year agreement with Feinmetall
GmbH, a German contact technology company. The agreement gives Cerprobe
exclusive license to manufacture, distribute, and repair vertical
integrated probe (ViProbe(R)) products worldwide, except Europe.
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (RESTATED)
The following discussion and analysis should be read in conjunction with the
Selected Consolidated Financial Data and the Consolidated Financial Statements
and related Notes thereto of the Company appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
RESTATEMENT
Subsequent to the issuance of the Company's September 30, 1998 condensed
consolidated financial statements, the Company's management revised its original
estimate of in-process research and development in response to a recent
initiative of the Securities and Exchange Commission.
As discussed in the notes to the financial statements, the Company restated its
September 30, 1998 financial statements to reduce the amount of in-process
research and development charge by $380,000 resulting from the acquisition of
SemiConducteur Services S.A. on September 30, 1998. The adjustment, net of tax,
has increased net income from continuing operations by $228,000, or $0.03 per
diluted common share outstanding for the three and nine months ended September
30, 1998. Therefore, the financial information contained herein has been
restated to incorporate all relevant information.
OVERVIEW
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 from continuing operations have
increased from $11.2 million for 1993 to $69.0 million for 1997. Similarly, the
Company's income from continuing operations has increased from $1.5 million for
1993 to $7.7 million for 1997 (before a one-time acquisition related expenses
charge). 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 expanded the Company's product line to include ATE interface
assemblies. The Company acquired CompuRoute in December 1996, which enabled the
Company to offer ATE test boards. The Company acquired SVTR in January 1997,
which added wafer prober remanufacturing and upgrading services. Net sales from
these acquired products and services together approximated $28 million, $7
million, and $4 million in 1997, 1996, and 1995, respectively.
In the third quarter of 1998, the Company discontinued operations of SVTR.
As a result, the Company plans disposition of the operation by sale or closure
by the end of 1998. SVTR has been accounted for as a discontinued operation and,
accordingly, its results of operation and financial position are segregated for
all periods presented.
In September 1998, the Company acquired France-based SemiConducteur
Services S.A. for $3.0 million in cash plus $250,000 in acquisition related
expenses. SCS Europe designs and manufactures
14
<PAGE> 15
probe cards at its manufacturing plant near Marsielle. Accordingly, the
condensed consolidated balance sheet at September 30, 1998 includes the assets
purchased and the liabilities assumed of SCS.
The Company believes that it is positioned to continue its long term 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. Beginning in the second quarter of 1998, however, the
worldwide demand for ICs fell dramatically due to excess inventory of older IC
designs, and slower transition to new IC designs resulting generally from
softening worldwide demand for end user products, especially personal computers.
Current Asian economic instability exacerbated the semiconductor industry
downturn. The Company's financial performance was negatively impacted by these
industry conditions. Net sales fell from $23.0 million, restated for
discontinued operation of SVTR, Inc, for the first quarter of 1998 to $20.1
million for the third quarter of 1998, or a decline of 12.6%. For the same
periods, net income from continuing operations was $2.7 million compared to $2.0
million, prior to acquisition related expenses. The Company is cautious about
sales and net income for the balance of 1998 due to the continued uncertainty in
the industry.
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, and
maintains full service facilities in Scotland and France 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.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1998 Compared to Three Months Ended September
30, 1997.
Net Sales. Net sales for the three months ended September 30, 1998 were
$20.1 million, an increase of 14.2% over net sales of $17.6 million for the
three months ended September 30, 1997.
Gross Profit. Gross profit for the three months ended September 30, 1998
was $8.6 million, an increase of 13.2% from the gross profit of $7.6 million for
the same period in 1997. Gross margin decreased to 42.8% for the three months
ended September 30, 1998, from 43.2% for the same period of 1997. The decrease
in gross margin was primarily a result of the Company's production
infrastructure capable of higher production run rates, resulting in over
capacity and under-absorption of overhead.
Selling, General and Administrative. Selling, general and administrative
expenses were $4.7 million, or 23.4% of net sales, for the three months ended
September 30, 1998 as compared to $4.0 million, or 22.7% of net sales, for the
same period of 1997, an increase of $0.7 million.
Engineering and Product Development. Engineering and product development
expenses were $955,978 for the three months ended September 30, 1998, an
increase of 281.2% over $250,803 for the same period of 1997. The Company has
added substantial resources to its product development team to address emerging
and next generation probing requirements for gird array, multi-chip testing,
very high frequency ICs, and those that have pad pitch architectures of less
than 60 mirons.
Interest Income. Interest income was $328,161 for the three months ended
September 30, 1998 as compared to $9,697 for the same period in 1997. The
increase was due to the investment of the net proceeds of the Company's 1997
Common Stock offering.
15
<PAGE> 16
Interest Expense. Interest expense was $59,546 for the three months ended
September 30, 1998 as compared to $164,913 for the same period in 1997, a
decrease of $105,367. A portion of the net proceeds from the Company's 1997
Common Stock offering was used to repay the Company's short-term debt.
Minority Interest Share of (Income) Loss. The minority interest share of
income from operations of $86,147 for the three months ended September 30, 1998
represents the Company's joint venture partners' share (40.0%) of the income
from Cerprobe Asia PTE LTD. For the three months ended September 30, 1997, the
minority interest share of loss from operations of $67,394 represents the
Company's joint venture partner's share (40.0%, 30.0% prior to August 18, 1997)
of income from Cerprobe Asia PTE LTD and the Company's joint venture partner's
share (45.0%) of the loss from Upsys-Cerprobe, L.L.C.
Provision for Income Taxes. The provision for income taxes was $720,613,
which represents an effective tax rate of 41.0% for the three months ended
September 30, 1998, compared to the provision for income taxes for the three
months ended September 30, 1997 of $1.4 million, which represented an effective
tax rate of 41.2%.
Discontinued operations. For the three months ended September 30, 1998, the
Company has recorded approximately $4.6 million in loss from operations and loss
from disposal of its wafer prober refurbishing and upgrading subsidiary, SVTR,
Inc. The Company plans disposition of the operations by sale or closure by the
end of 1998.
Net Income. Net loss for the three months ended September 30, 1998 was $3.6
million, an increased loss of $6.6 million, or 220%, from net income of $3.0
million for the same period of 1997. Prior to acquisition costs and discontinued
operations, net income for the three months ended September 30, 1998 was $2.0
million as compared to $1.9 million for the same period of 1997.
Nine months Ended September 30, 1998 Compared to Nine months Ended September 30,
1997.
Net Sales. Net sales for the nine months ended September 30, 1998 were
$61.2 million, an increase of 24.6% over net sales of $49.1 million for the nine
months ended September 30, 1997. The majority of this increase occurred in the
first quarter of 1998 as a result of higher order rates for Cerprobe's probe
card and interface products. However, in the second and third quarters of 1998,
slower sales have resulted from the softness in the worldwide demand for
semiconductors.
Gross Profit. Gross profit for the nine months ended September 30, 1998 was
$25.7 million, an increase of 19.0% from the gross profit of $21.6 million for
the same period in 1997. Gross margin decreased to 42.0% for the nine months
ended September 30, 1998, from 44.0% for the same period of 1997. The decrease
in gross margin primarily resulted from second and third quarter lower sales due
to the softness in the worldwide demand for semiconductors. The Company's
production infrastructure was capable of higher production run rates thereby
resulting in over capacity.
Selling, General and Administrative. Selling, general and administrative
expenses were $14.4 million, or 23.5% of net sales, for the nine months ended
September 30, 1998 as compared to $11.8 million, or 24.0% of net sales, for the
same period of 1997, an increase of $2.6 million. The increase in selling,
general and administrative expenses resulted primarily from domestic expansion
occurring in the later part of 1997 and first quarter of 1998.
Engineering and Product Development. Engineering and product development
expenses were $2.3 million for the nine months ended September 30, 1998, an
increase of 360.0% over $545,000 for the
16
<PAGE> 17
same period of 1997. The Company has added substantial resources to its product
development team to address emerging and next generation probing requirements
for gird array, multi-chip testing, very high frequency ICs, and those that have
pad pitch architectures of less than 60 mirons. Additionally, during the nine
months ended September 30, 1997, expenses were offset by increased project
funding receipts from collaborations on engineering and product development with
certain customers.
Interest Income. Interest income was $1.1 million for the nine months ended
September 30, 1998 as compared to $75,125 for the same period in 1997. The
increase was due to the investment of the net proceeds of the Company's 1997
secondary offering.
Interest Expense. Interest expense was $182,133 for the nine months ended
September 30, 1998 as compared to $344,110 for the same period in 1997, a
decrease of 47.1%. A portion of the net proceeds from the Company's 1997
secondary offering was used to repay the Company's short-term debt.
Minority Interest Share of (Income) Loss. The minority interest share of
income from operations of $111,540 for the nine months ended September 30, 1998
represents the Company's joint venture partners' share (40.0%) of the income
from Cerprobe Asia PTE LTD and the Company's joint venture partner's share
(45.0%) of the loss from Upsys-Cerprobe, L.L.C. For the nine months ended
September 30, 1997, the minority interest share of loss from operations of
$96,379 represents the Company's joint venture partner's share (40.0%, 30.0%
prior to August 18, 1997) of income from Cerprobe Asia PTE LTD and the Company's
joint venture partner's share (45.0%) of the loss from Upsys-Cerprobe, L.L.C.
Provision for Income Taxes. The provision for income taxes was $3.5
million, which represents an effective tax rate of 41.4% for the nine months
ended September 30, 1998, compared to the provision for income taxes for the
nine months ended September 30, 1997 of $3.8 million, which represented an
effective tax rate of 40.4%.
Discontinued operations. For the nine months ended September 30, 1998, the
Company has recorded approximately $4.6 million in loss from operations and loss
from disposal of its wafer prober refurbishing and upgrading subsidiary, SVTR,
Inc. The Company plans disposition of the operations by sale or closure by the
end of 1998.
Net Income. Net loss for the nine months ended September 30, 1998 was
$744,994, an increased loss of $401,782, or 117%, from net loss of $343,212 for
the same period of 1997. Prior to acquisition costs and discontinued operations,
net income for the nine months ended September 30, 1998 was $5.9 million as
compared to $5.5 million for the same period of 1997.
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. At September 30, 1998, cash and short-term
investments were $21.4 million compared to $29.7 million at December 31, 1997.
Cerprobe generated approximately $6.3 million in cash flow from operating
activities for the nine months ended September 30, 1998. Net accounts receivable
increased by $2.8 million, or 34.1%, to $11.0 million at September 30, 1998.
Approximately $1.5 million was due to the acquisition of SCS. Net inventories
increased $546,795, or 11.0%, over December 31, 1997 to $5.5 million at
September 30, 1998. Approximately $131,000 was due to the acquisition of SCS.
17
<PAGE> 18
Accounts payable and accrued expenses increased $383,722, or 6.1%, to $6.7
million at September 30, 1998. The increase resulted from the acquisition of
SCS.
The current portions of notes payable and capital leases increased to $1.0
million at September 30, 1998, from $760,231 at December 31, 1997, primarily as
a result of financing capital equipment purchases.
Working capital decreased $7.8 million, or 18.4%, to $34.7 million at
September 30, 1998 from December 31, 1997. The current ratio decreased from 7.0
at December 31, 1997 to 5.5 at September 30, 1998. This decrease was due to the
reduction of cash from the acquisition of SCS and the stock repurchase program.
Cerprobe increased its net investment in property, plant, and equipment
during the nine months ended September 30, 1998 by $4.6 million, or 31.9%, to
$19.0 million. This increase was attributable to the Company's first quarter
efforts to expand capacity to meet customer demand for its products and the
acquisition of SCS. These capital expenditures were funded from cash flow from
operations and capital leases.
On August 5, 1998, the Company announced a stock repurchase program whereby
up to 500,000 shares, or approximately 6%, of the Company's Common Stock may be
purchased from time to time in the open market. The Company intends to utilize a
portion of the reacquired shares for reissuance in connection with its Employee
Stock Purchase Plan as well as to reduce dilution from the Company's existing
stock option plans. As of September 30, 1998 the Company had purchased 412,992
shares at an approximate cost of $4.6 million.
On September 30, 1998, the Company acquired France-based SemiConducteur
Services S.A. for $3.0 million in cash and approximately $250,000 in acquisition
related expenses. SCS designs and manufactures probe cards at its manufacturing
plant near Marseilles.
On October 22, 1998, the Company financed an additional $505,575 of
manufacturing equipment with BancOne Leasing Corporation. The lease accrues
interest at 6.33% annually with monthly payments for 60 months of principal and
interest of $9,853.10.
Cerprobe believes that its working capital, together with its credit
facilities, 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 by 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, if available, would not result in additional dilution to
existing investors.
YEAR 2000 ISSUE
The Company is in the process of performing a comprehensive review of its
Year 2000 issues and has completed its review of internal systems (information
technology ("IT") and non-IT). The majority of the Company's application
software programs are currently being replaced with Oracle applications which
are Year 2000 compliant. The Oracle project budget, including software,
hardware, and implementation is expected to be approximately $3.0 million. The
Company estimates the status of progress on these internal systems as of
September 30, 1998 was as follows:
18
<PAGE> 19
<TABLE>
<S> <C>
IT Systems 50%
Non-IT Systems 50%
</TABLE>
The Company presently believes that with modifications and updates to
existing software and the implementation of the Oracle applications, the Year
2000 problem will not pose significant operational problems for the Company's
internal systems. The Company also believes that remediation costs to become
Year 2000 compliant, excluding the costs associated with the replacement Oracle
applications, are not material.
The Company is also continuing to verify the Year 2000 readiness of third
parties (vendors and customers) with whom the Company has material
relationships. The Company is not able to determine the effect on the Company's
results of operations, liquidity, and financial condition in the event the
Company's material vendors and customers are not Year 2000 compliant. The
Company will continue to monitor the progress of its material vendors and
customers and formulate a contingency plan at that point in time when the
Company believes a material vendor or customer will not be compliant.
BUSINESS OUTLOOK
The Company's business depends substantially on both the volume of IC
production by semiconductor manufacturers as well as new IC designs, which in
turn depend on the demand of ICs and products utilizing ICs. The semiconductor
industry is highly cyclical and historically has experienced periods of
oversupply, resulting in reduced demand for IC testing products, including the
products manufactured by the Company. Based on lower production rates among many
of the Company's customers, the Company is very cautious about net sales for the
remainder of 1998. In response to those lower sales, the Company analyzed its
current cost structure and in early July undertook a restructuring to bring its
production and overhead costs in line with the anticipated industry demand for
its products in the second half of this year.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this section regarding the Company's prospects for growth and
adequacy of sources of capital are forward-looking statements. Words such as
"believes," "expects," "anticipates," "intends," "may," "estimates," "should,"
"will likely," and similar expressions are intended to identify such
forward-looking statements. Actual results, however, could differ materially
from those anticipated for a number of reasons, including product demand and
development, technological advances, impact of competitive products and pricing,
growth in targeted markets and other factors identified under "Special
Considerations" of the Company's 1997 Form 10-K which has been filed with the
Securities and Exchange Commission. Additional risk factors are identified from
time to time in the Company's 1998 financial press releases. The cautionary
statements made in this Report should be read as being applicable to all related
forward-looking statements wherever they appear in this Report.
19
<PAGE> 20
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
On October 20, 1998, the Company filed an action entitled
Cerprobe Corporation and SVTR, Inc. v. William E. Mayer, et al
(No. C 98-4034), in the U.S. District court for the Northern
District of California, against the former President, Director
and shareholders of Silicon Valley Test & Repair, Inc., which
was acquired by the Company by way of a merger into its
wholly-owned subsidiary, SVTR, Inc. in January, 1997. The suit
seeks rescission of the merger transaction and/or money
damages arising from failure of the defendants to disclose
material facts regarding the origins of certain software
necessary for SVTR, Inc.'s business.
Item 2 Changes in Securities
On October 8, 1998, each shareholder of record will receive
one Preferred Share Purchase Right on each outstanding share
of Common Stock owned. Each Right will entitle shareholders to
buy one one-thousandth of a share of newly created Series A
Junior Participating Preferred Stock of the Company at an
exercise price of $110. The Rights will be exercisable if a
person or group hereafter acquires 15% or more of the Common
Stock of the Company or announces a tender offer for 15% or
more of the Common Stock. Should this occur, the Right will
entitle its holder to purchase, at the Right's then current
exercise price, a number of the acquiring company's common
shares having a market value at that time of twice the Right's
exercise price. Rights held by the 15% holder will become void
and will not be exercisable to purchase shares at the bargain
purchase price. If the Company is acquired in a merger or
other business combination transaction after a person acquired
15% or more of the Company's Common Stock, each Right will
entitle its holder to purchase, at the Right's then current
exercise price, a number of the acquiring company's Common
Shares having a market value at that time of twice the Right's
exercise price.
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits
10(iii) Lease agreement between Cerprobe Corporation
and BancOne Leasing Corporation dated
October 22, 1998.
(11) Computation of Net Income (Loss) Per Share.
(27.1) Financial Data Schedule - September 30, 1998
(27.2) Financial Data Schedule - September 30, 1997
20
<PAGE> 21
b. Reports on Form 8-K
Form 8-K, filed on October 2, 1998, to report the approval
of the declaration of a dividend distribution of one
Preferred Share Purchase Right on each outstanding share
of Cerprobe's Common Stock.
21
<PAGE> 22
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
Senior Vice President - Chief Financial Officer
March 1, 1999
22
<PAGE> 23
Exhibits Exhibit Index
10(iii) Lease agreement between Cerprobe Corporation
and BancOne Leasing Corporation dated
October 22, 1998.
(11) Computation of Net Income (Loss) Per Share.
(27.1) Financial Data Schedule - September 30, 1998
(27.2) Financial Data Schedule - September 30, 1997
<PAGE> 1
CERPROBE CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
EXHIBIT 11
(UNAUDITED AND REVISED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ------------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net income (loss) $(3,557,202) $2,962,096 $ (744,994) $ (343,212)
=========== ========== =========== ===========
Weighted average number of
common shares outstanding 7,768,874 6,246,825 8,058,011 6,219,800
Common equivalent shares representing shares
issuable upon exercise of stock options 157,694 390,840 286,833 390,840
Subtraction of common equivalent shares due to
antidilutive nature (157,694) -- (286,833) (390,840)
----------- ---------- ----------- -----------
Dilutive adjusted weighted average shares
and assumed conversions 7,768,874 6,637,665 8,058,011 6,219,800
=========== ========== =========== ===========
Basic net income (loss) per share $ (0.46) $ 0.47 $ (0.09) $ (0.06)
=========== ========== =========== ===========
Diluted net income (loss) per share $ (0.46) $ 0.45 $ (0.09) $ (0.06)
=========== ========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1998 AND THE CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 21,449,467
<SECURITIES> 0
<RECEIVABLES> 11,247,660
<ALLOWANCES> 234,559
<INVENTORY> 5,516,599
<CURRENT-ASSETS> 42,368,359
<PP&E> 28,694,352
<DEPRECIATION> 9,656,333
<TOTAL-ASSETS> 65,449,769
<CURRENT-LIABILITIES> 7,685,143
<BONDS> 3,038,057
0
0
<COMMON> 406,464
<OTHER-SE> 53,545,277
<TOTAL-LIABILITY-AND-EQUITY> 65,449,769
<SALES> 61,199,104
<TOTAL-REVENUES> 61,199,104
<CGS> 35,473,693
<TOTAL-COSTS> 18,239,970
<OTHER-EXPENSES> 182,133
<LOSS-PROVISION> 19,920
<INTEREST-EXPENSE> 182,133
<INCOME-PRETAX> 8,625,380
<INCOME-TAX> (3,528,637)
<INCOME-CONTINUING> 4,985,203
<DISCONTINUED> (5,730,197)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (744,994)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</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 FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 24,425,037
<SECURITIES> 0
<RECEIVABLES> 9,343,980
<ALLOWANCES> 235,278
<INVENTORY> 4,376,321
<CURRENT-ASSETS> 43,283,128
<PP&E> 20,150,500
<DEPRECIATION> 6,182,536
<TOTAL-ASSETS> 61,813,482
<CURRENT-LIABILITIES> 9,854,433
<BONDS> 1,154,125
0
0
<COMMON> 388,255
<OTHER-SE> 49,925,677
<TOTAL-LIABILITY-AND-EQUITY> 61,813,482
<SALES> 49,134,074
<TOTAL-REVENUES> 49,134,074
<CGS> 27,494,242
<TOTAL-COSTS> 12,332,310
<OTHER-EXPENSES> 344,110
<LOSS-PROVISION> 18,000
<INTEREST-EXPENSE> 344,110
<INCOME-PRETAX> 9,263,415
<INCOME-TAX> 3,816,184
<INCOME-CONTINUING> 5,543,610
<DISCONTINUED> 5,886,822
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343,212)
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
