<PAGE>
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 Period Ended June 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
Commission File No. 0-19923
STM WIRELESS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-3758983
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
One Mauchly
Irvine, California 92718
(Address of principal executive offices) (Zip code)
(714) 753-7864
(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 and (2) has been subject to such filing
requirements for the last 90 days.
Yes No
X
- --- ---
As of August 1, 1996, there were 5,848,342 shares of Common Stock, no par value,
outstanding.
Page 1 of 14
Exhibit index appears on Page 14
<PAGE>
STM WIRELESS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995 3
Consolidated Statements of Operations for the three and six
month periods ended June 30, 1996 and June 30, 1995 4
Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1996 and June 30, 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
STM WIRELESS, INC
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,429 $ 4,145
Short-term investments 4,550 4,950
Accounts receivable, net 18,926 11,612
Inventories, net 7,245 6,255
Current portion of long-term receivables 880 544
Deferred income taxes 1,576 1,576
Net assets of discontinued operations - 3,761
---------- ----------
Total current assets 37,606 32,843
Property & equipment, net 8,430 8,598
Long-term receivables 3,961 3,515
Other assets 1,436 1,256
---------- ----------
$ 51,433 $ 46,212
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 5,100 $ 1,600
Current portion of long-term debt 159 216
Accounts payable 5,265 3,923
Accrued liabilities 1,033 1,901
Customer deposits 106 -
Income taxes payable 1,484 1,102
---------- ----------
Total current liabilities 13,147 8,742
Long-term debt 4,436 4,488
Minority Interest 372 452
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares
authorized, none issued or outstanding - -
Common stock, no par value; 20,000,000 shares authorized;
issued and outstanding 5,843,207 shares at June 30,
1996 and 5,816,219 shares at December 31, 1995 32,143 32,068
Retained earnings 1,335 462
---------- ----------
Total shareholders' equity 33,478 32,530
---------- ----------
$ 51,433 $ 46,212
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
STM WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Products $ 9,079 $ 9,001 $ 15,617 $ 13,684
Services 757 991 1,686 2,232
--------- --------- --------- ---------
Total revenues 9,836 9,992 17,303 15,916
Cost of revenues
Products 5,928 6,654 9,886 9,613
Services 388 339 652 854
--------- --------- --------- ---------
Total cost of revenues 6,316 6,993 10,538 10,467
Gross profit 3,520 2,999 6,765 5,449
Operating costs
Selling, general & administrative expenses 1,402 1,386 2,873 2,685
Research & development 1,377 828 2,966 1,486
--------- --------- --------- ---------
Total operating costs 2,779 2,214 5,839 4,171
Operating income 741 785 926 1,278
Other income (72) 10 (72) 21
Interest income 177 214 558 465
Interest expense (188) (114) (332) (245)
--------- --------- --------- ---------
Income from continuing operations, before
minority interest and income taxes 658 895 1,080 1,519
Income tax expense (221) (155) (372) (311)
--------- --------- --------- ---------
Income from continuing operations
before minority interest 437 740 708 1,208
Minority interest in net loss of consolidated
subsidiary 32 - 81 -
--------- --------- --------- ---------
Income from continuing operations 469 740 789 1,208
Income from and gain on sale
of discontinued operations - 97 84 151
--------- --------- --------- ---------
Net income $ 469 $ 837 $ 873 $ 1,359
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per share:
Continuing operations $ 0.08 $ 0.12 $ 0.13 $ 0.20
Discontinued operations - 0.02 $0.02 0.03
--------- --------- --------- ---------
Total net income per share: $ 0.08 $ 0.14 $ 0.15 $ 0.23
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average shares outstanding 5,998 6,012 5,998 6,014
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
STM WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
---- ----
<S> <C> <C>
Net cash used in operating activities $ (2,407) $ 766
---------- ----------
Cash flows provided by (used in) investing activities:
Net decrease in short-term investments 400 915
Acquisition of property, plant and equipment (393) (1,007)
- -
---------- ----------
Net cash provided by (used by) investing activities 7 (92)
---------- ----------
Cash flows from financing activities:
Net increase in long-term receivables (782) (2,533)
Proceeds from issuance of common stock 75 137
Borrowings from banks 3,500 1,100
Repayments of long-term debt (52) (49)
---------- ----------
Net cash provided by financing activities 2,684 (1,345)
---------- ----------
Net increase (decrease) in cash and cash equivalents 284 (671)
Cash and cash equivalents at beginning of period 4,145 5,026
---------- ----------
Cash and cash equivalents at end of period $4,429 $4,355
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
STM WIRELESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
1. BASIS OF PRESENTATION
These financial statements are unaudited; however, the
information contained herein for STM Wireless, Inc. (the "Company", or
"STM") gives effect to all adjustments (which are normal recurring
accruals) necessary, in the opinion of Company management, to present
fairly the financial statements for the interim periods presented.
The results of operations for the current interim period are not
necessarily indicative of the results to be expected for the current
year.
Although the Company believes that the disclosures in these
financial statements are adequate to make the information presented
not misleading, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission
(the "SEC"), and these financial statements should be read in
conjunction with the financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, which
is on file with the SEC.
2. DISCONTINUED OPERATIONS
Effective March 31, 1996 the Company sold its RF Microsystems
subsidiary to Remec, Inc. for cash in the amount of $2,926,000. The
gain on the sale has been accounted for as discontinued operations and
prior period financial statements have been restated to reflect
discontinuance of this segment of the business. A summary of
operating results for discontinued operations is shown below:
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, June 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues $ - $1,312,000 $1,216,000 $2,540,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income from and gain
on sale of discontinued
operations, net of income taxes $ - $97,000 $84,000 $151,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
6
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3. INVENTORIES
Inventories are summarized as follows:
June 30, December 31,
1996 1995
----------- ------------
Raw materials $ 4,078,000 $ 1,797,000
Work in process 1,371,000 866,000
Finished goods 1,796,000 3,592,000
----------- ------------
$ 7,245,000 $ 6,255,000
----------- ------------
----------- ------------
At December 31, 1995, inventories included $2,881,000 related to
discontinued operations which are classified separately in the
consolidated balance sheet as part of "Net assets of discontinued
operations".
4. INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Income per share of common stock is computed using the weighted
average number of common and common equivalent shares of stock
outstanding during the period. Common stock equivalents consist of
dilutive outstanding stock options and warrants and are calculated
using the treasury stock method. Primary income per share
approximates fully diluted earnings per share for all periods
presented.
1. RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 consolidated
financial statements to conform to the 1996 presentation.
7
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
The Company develops, manufactures and markets satellite and wireless
communication products including VSATs (very small aperture terminals),
transceivers, modems, and other networking equipment. The Company's proprietary
hardware and software are designed to support data, fax, voice, and video
networks requiring cost effective connections between geographically dispersed
locations. The majority of the Company's revenue is generated in the
international market through foreign distributors and sales representatives.
The Company's customers include government agencies, telephone companies,
multi-location corporations and others.
Effective March 31, 1996 , the Company sold all the outstanding common
stock of RF Microsystems, Inc., its wholly owned subsidiary, for $2,926,000
cash to Remec, Inc.. The Company also entered into a Technology Purchase
Agreement on March 31, 1996, whereby the Company sold certain of its
technologies, which were not part of the RF Microsystems segment, to Remec, Inc.
for $1,000,000 cash. In addition, the Company entered into Development,
Manufacturing and Product Supply Agreements which establish Remec, Inc. as the
sole provider of certain components that are incorporated into the Company's
products utilizing the aforementioned technologies for a term of at least two
years. The agreement also provides for joint development of other products by
the Company and Remec, Inc. which will require purchase of such products by the
Company from Remec, Inc. at specified market prices.
RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS
Combined product and service revenues were $9,836,000 and $17,303,000,
respectively, for the three and six-month periods ended June 30, 1996, compared
to $9,992,000 and $15,916,000, respectively, for the corresponding periods of
1995, representing a 2% decrease and a 9% increase, respectively, over the prior
year periods. Product revenues were $9,079,000 and $15,617,000, respectively,
for the three and six-month periods ended June 30, 1996, compared to $9,001,000
and $13,684,000, respectively, for the corresponding periods in 1995,
representing increases of 1% and 14%, respectively, over the prior year periods.
The product revenue increases were due to the sale of technology to the
purchaser of the Company's RF Microsystems subsidiary in the first quarter, and
to shipments related to the Company's major contracts throughout the three and
six-month periods. Service revenues were $757,000 and $1,686,000,
respectively, for the three and six-month periods ended June 30, 1996, compared
to $991,000 and $2,232,000, respectively, for the corresponding periods in 1995,
representing a decrease of 24% from both prior year periods. Program management
services for both of the comparable periods in 1995 were bolstered by a
relatively large
8
<PAGE>
contract, not representing core business, to provide services to a Malaysian
customer in connection with the design, procurement, and supervision of a
personal communications service (PCS) network. The contract was completed in
1995.
Combined product and service gross profit margins in the three and
six-month periods ended June 30, 1996, were 36% and 39%, respectively, compared
to 30% and 34%, respectively, for the comparable periods in 1995. Product gross
profit margins in the three and six-month periods ended June 30, 1996, were 35%
and 37%, respectively, compared to 26% and 30%, respectively, for the comparable
periods in 1995. Profit margins in the comparable periods in 1995 suffered
primarily due to the Company acting as an integrator in providing Standard A
Earth Stations to a customer in Malaysia. Product integration generally yields
a lower gross profit margin than product manufacturing. Service gross profit
margins in the three and six-month periods ended June 30, 1996, were 49% and
61%, respectively, compared to 66% and 62%, respectively, for the comparable
periods in 1995. During the comparable periods in 1995, the Company was
providing services to a customer in Malaysia in connection with a PCS network,
which provided higher gross profit margins than the Company's historical
services.
Selling, general, and administrative expenses for the three-month period
ended June 30, 1996, increased to $1,402,000 from $1,386,000, but remained
constant as a percentage of revenue at 14%. For the six months ended June 30,
1996, such expenses increased to $2,873,000 from $2,685,000, but remained
constant as a percentage of revenue at 17%. The dollar increases in expenditures
in both periods in 1996 were the result of increases in expenses to support the
Company's growth in core product revenues.
Research and development expenses for the three-month period ended June 30,
1996, increased to $1,377,000, or 14% of revenues, from $828,000, or 8% of
revenues, in the corresponding period of 1995. For the six-month period ended
June 30, 1996, such expenses increased to $2,966,000, or 17% of revenues, from
$1,486,000, or 9% of revenues, in the corresponding period in 1995. The planned
increases in expenditures for both periods were for additional personnel and
outside services, both in STM and the Company's TMSI subsidiary, for strategic
new product development which should lead to penetration of new markets for the
Company .
Interest income decreased by $37,000 to $177,000 for the three-month period
ended June 30, 1996. Interest income increased by $93,000 to $558,000 for the
six-month period ended June 30, 1996, over the six-month period ended June 30,
1995. The decrease in the three-month period was due to a lower level of
short-term investment income. The increase in the six-month period was due to
the recognition of interest income related to a long-term lease receivable in
Brazil.
Interest expense increased by $74,000 to $188,000 for the three-month
period ended June 30, 1996, over the three-month period ended June 30, 1995.
Interest expense increased by $87,000 to $332,000 for the six-month period ended
June 30, 1996, over the
9
<PAGE>
six-month period ended June 30, 1995. The increases were primarily due to
interest expense incurred as a result of the Company's utilization of its
secured and unsecured lines of credit.
DISCONTINUED OPERATIONS
Effective March 31, 1996 , the Company sold all the outstanding common
stock of RF Microsystems, Inc., its wholly owned subsidiary, for $2,926,000
cash to Remec, Inc.. A summary of operating results for discontinued operations
is shown below:
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, June 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues $ - $1,312,000 $1,216,000 $2,540,000
---------- ---------- ---------- ----------
Net income from and gain
on sale of discontinued
operations, net of income taxes $ - $97,000 $84,000 $151,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
For the first six months of 1996, the Company had negative cash flows from
operations of $2,407,000, compared to positive cash flows of $766,000 in the
same period of 1995. The decrease in cash flows was primarily due to increased
investments in receivables and inventories, partially offset by increased
accounts payable, the sale of net assets of discontinued operations, and net
income. A major factor in the increase of receivables was the granting of
extended credit terms related to the Company's introduction of its DAMA 10000
product in the South American telephony market.
Cash provided by investing activities in the first six months of 1996
totaled $7,000. Sales and maturities of short-term investments exceeded
purchases of such investments by $400,000. The acquisition of fixed assets used
$393,000.
Cash flows from financing activities during the first six months totaled
$2,684,000 and included net bank borrowings of $3,500,000. The Company paid down
and terminated its $3,000,000 unsecured line of credit with Wells Fargo Bank and
entered into an agreement with Wells Fargo HSBC Trade Bank N.A. for a secured
$5,000,000 line of credit, of which $3,500,000 had been utilized at June 30,
1996. In addition, the Company borrowed $500,000, secured by the Company's
certificates of deposit, from another bank. Proceeds from issuance of common
stock related to the exercise of stock options totaled $75,000. Repayment of
long-term debt used $52,000, and funding the increase in long-term receivables
used $782,000.
Overall, the Company's cash, cash equivalents, and short-term investments
totaled $8,979,000 at June 30, 1996, as compared to $9,095,000 at December 31,
1995. The Company believes it has adequate capital resources to meet its current
working capital requirements and capital expenditure commitments for at least
the next 12 months,
10
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including the expansion of its international marketing and sales efforts, and
the purchase of additional capital equipment for manufacturing and research and
development.
POSSIBLE VOLATILITY OF STOCK PRICES
The market prices for securities of technology companies, including the
Company, have been volatile. Quarter to quarter variations in operating
results, changes in earnings estimates by analysts, announcements of
technological innovations or new products by the Company or its competitors,
announcements of major contract awards and other events or factors may have
significant impact on the market price of the Company's common stock. In
addition, the securities of many technology companies have experienced extreme
price and volume fluctuations, which have often been unrelated to the company's
operating performance. These conditions may adversely affect the market price
of the Company's stock.
FORWARD LOOKING STATEMENTS
This report contains certain forward looking statements that involve risks
and uncertainties. Certain risks and uncertainties which may impact the
accuracy of forward looking statements with respect to revenues, expenses and
operating results may include, without limitation, long-term cycle involved in
completing major contracts, particularly in foreign markets, increasing
competitive pressures, general economic conditions, technological advances, the
timing of new product introductions, political and economic risks involved in
foreign markets and foreign currencies and the timing of operating and other
expenditures.
Because of time and other factors affecting the Company's operating
results, past historical performance should not be used as an indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
11
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
10.23. Credit Agreement entered into as of the 31st day of
May, 1996, by and between STM WIRELESS, INC., a Delaware
corporation ("Borrower") and WELLS FARGO HSBC TRADE BANK N.A.
("Bank")
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Satellite Technology Management, Inc.
Date: August 9, 1996 By: PRESTON ROMM
Preston Romm
Vice President, Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer and
Duly Authorized Officer)
13
<PAGE>
EXHIBIT INDEX
The following exhibits are attached hereto and incorporated herein by reference:
Sequentially
Numbered
Exhibit Number Description Page
- -------------- ----------- ----
Ex. 10.23 Credit Agreement entered into as of the 15
31st day of May, 1996, by and between
STM WIRELESS, INC. a Delaware corporation
("Borrower"), and WELLS FARGO HSBC TRADE
BANK N.A. ("Bank")
14
<PAGE>
1 EXHIBIT 10.23
CREDIT AGREEMENT
STM WIRELESS, INC., ("Borrower"), a corporation organized under the laws of
the State of Delaware and WELLS FARGO HSBC TRADE BANK, N.A. ("Trade Bank"), have
entered into this CREDIT AGREEMENT as of May 31, 1996 ("Effective Date").
I. CREDIT FACILITY
1.1 THE FACILITY. Subject to the terms and conditions of this Agreement,
Trade Bank agrees to make advances ("Advances") to Borrower from and after the
Effective Date up to and until May 31 , 1997 ("Termination Date") in an
aggregate principal amount not to exceed Five Million Dollars ($5,000,000);
provided, however, that the aggregate principal amount of all outstanding
Advances may at no time exceed the Borrowing Base as then in effect. Definitions
for those terms not otherwise defined are contained in Section 8 below.
1.2 REPAYMENT; INTEREST AND FEES. Each Advance shall be repaid by
Borrower, and shall bear interest from the date of disbursement at those per
annum rates and such interest shall be paid, at the times specified in the note
(" Note") substantially in the form of Exhibit A hereto. On the Closing Date
Borrower will pay Trade Bank a facility fee in the amount of $50,000. Interest
and fees will be calculated on the basis of a 360 day year, actual days elapsed.
Any overdue payments of principal (and interest to the extent permitted by law)
shall bear interest at a per annum floating rate equal to the Prime Rate plus
2.0%.
1.3 PREPAYMENTS. At the time of any prepayment (including, but not
limited to, any prepayment which is a result of the occurrence of an Event of
Default and an acceleration of the Advances) Borrower will pay to Trade Bank all
interest accrued on the amount so prepaid to the date of such prepayment. Any
Advance repaid or prepaid may be reborrowed.
II. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Trade Bank that the following
representations and warranties are true and correct:
2.1 LEGAL STATUS. Borrower is duly organized and existing and in good
standing under the laws of the state in which it is incorporated, and is
qualified or licensed to do business in all jurisdictions in which such
qualification or licensing is required and in which the failure to so qualify or
to be so licensed could have a material adverse affect on Borrower.
2.2 AUTHORIZATION AND VALIDITY. The execution, delivery and performance
of this Agreement, and all other Loan Documents to which Borrower is a party,
have been duly and validly authorized, executed and delivered by Borrower and
constitute legal, valid and binding agreements of Borrower, enforceable against
Borrower in accordance with their respective terms.
2.3 FINANCIAL CONDITION AND STATEMENTS. All financial statements of
Borrower and prepared by Borrower and audited on an annual basis by independent
auditors delivered to Trade Bank have been prepared in conformity with GAAP, and
completely and accurately reflect the financial condition of Borrower (and any
consolidated Subsidiaries) at the times and for the periods stated in such
financial statements. All financial statements prepared by Borrower and
delivered to Trade Bank have been prepared in conformity with GAAP. Neither
Borrower nor any Subsidiary has any material contingent liability not reflected
in the aforesaid financial statement. Since the date of the financial
statements delivered to Trade Bank for the last fiscal period of Borrower to end
before the Effective Date, there has been no material adverse change in the
financial condition, business or prospects of Borrower. Borrower is solvent.
2.4 LITIGATION. Except as disclosed in writing to Trade Bank prior to the
Effective Date, there is no action, claim, suit, litigation, proceeding or
investigation pending or (to best of Borrower's knowledge) threatened by or
against or affecting Borrower or any Subsidiary in any court or before any
governmental authority, administrator or agency which may result in (a) any
material adverse change in the financial condition or business of Borrower, or
(b) any material impairment of the ability of Borrower to carry on its business
in substantially the same manner as it is now being conducted.
2.5 NO DEFAULTS. No Event of Default, and event which with the giving of
notice or the passage of time or both would constitute an Event of Default, has
occurred and is continuing.
<PAGE>
2
III. CONDITIONS TO EXTENDING FACILITY
3.1 CONDITIONS TO INITIAL ADVANCE. The obligation of Trade Bank to make
the first Advance is subject to having received, in form and substance
satisfactory to Trade Bank, the following documents duly executed, dated the
Closing Date and in full force and effect:
(a) a corporate borrowing resolution and incumbency certificate;
(b) the Note;
(c) each Collateral Document;
(d) the "Borrower Agreement" required by Ex-Im Bank together with the U.S.
Small Business Administration/Export-Import Bank of the United States
"Joint Application For Working Capital Guarantee" and the latest
"Country Limitation Schedule of Ex-Im Bank"; and
(e) executed copies of financing statements (UCC-1) for filing in
California and all other jurisdictions in which the Trade Bank
believes desirable to perfect its security interest in the Collateral;
3.2 CONDITIONS TO MAKING EACH CREDIT EXTENSION. The obligation of Trade
Bank to make each Advance is subject to the fulfillment to Trade Bank's
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in this Agreement and the Collateral Documents will be true
and correct on and as of the date of the Advance with the same effect
as though such representations and warranties had been made on and as
of such date; and
(b) DOCUMENTATION. Trade Bank must have received, in form and substance
satisfactory to Trade Bank:
(1) a Borrowing Base Certificate dated within five calendar days of
the date of the Advance, demonstrating compliance with the
requirements for such Advance.
(2) a summary of outstanding purchase orders/contracts being financed
under the credit facility
IV. AFFIRMATIVE COVENANTS
Borrower covenants that so long as Trade Bank remains committed to make
Advances to Borrower, and until payment of all Obligations, Borrower will comply
with each of the following covenants:
5.1 PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees
and other Obligations due under this Agreement or under any other Loan Document
at the time and place and in the manner specified herein or therein.
5.2 NOTIFICATION TO TRADE BANK. Promptly, but in no event more than 5
calendar days after the occurrence of each such event, provide written
notice in reasonable detail of each of the following:
(a) OCCURRENCE OF A DEFAULT. The occurrence of any Event of Default or
any event which with the giving of notice or the passage of time or
both would constitute an Event of Default;
(b) BORROWER'S TRADE NAMES; PLACE OF BUSINESS. Any change of Borrower's
(or any Subsidiary's) name, trade name or place of business, or chief
executive officer;
(c) LITIGATION. Any action, claim, proceeding, litigation or
investigation threatened or instituted by or against or affecting
Borrower (or any Subsidiary) in any court or before any government
authority, administrator or agency which may materially and adversely
affect Borrower's (or any Subsidiary's) financial condition or
business or Borrower's ability to carry on its business in
substantially the same manner as it is now being conducted;
<PAGE>
3
(d) UNINSURED OR PARTIALLY UNINSURED LOSS. Any uninsured or partially
uninsured loss through liability or property damage or through fire,
theft or any other cause affecting Borrower's (or any Subsidiary's)
property in excess of the aggregate amount required hereunder;
5.3 BOOKS AND RECORDS. Maintain at Borrower's address books and records
in accordance with GAAP, and permit any representative of Trade Bank, at any
time during customary business hours with reasonable notice, to inspect, audit
and examine such books and records, to make copies of them, and to inspect the
properties of Borrower.
5.4 TAX RETURNS AND PAYMENTS. Timely file all tax returns and reports
required by foreign, federal, state and local law, and timely pay all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower. Borrower may, however, defer payment of any contested taxes, provided
that Borrower (i) in good faith contests Borrower's obligation to pay the taxes
by appropriate proceedings promptly instituted and diligently conducted, (ii)
notifies Trade Bank in writing of the commencement of, and any material
development in, the proceedings, (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral, and (iv) makes provision, to Trade Bank's satisfaction, for eventual
payment of such taxes in the event Borrower is obligated to make such payment.
5.5 COMPLIANCE WITH LAWS. Comply in all material respects with the
provisions of all foreign, federal, state and local laws and regulations
relating to Borrower, including, but not limited to, those relating to
Borrower's ownership of real or personal property, the conduct and licensing of
Borrower's business, and health and environmental matters.
5.6 INSURANCE. Maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business similar to that of Borrower,
including, but not limited to, fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance to be in
amounts satisfactory to Trade Bank and to be carried with companies approved by
Trade Bank before such companies are retained, and deliver to Trade Bank from
time to time at Trade Bank's request schedules setting forth all insurance then
in effect. All insurance policies shall name Trade Bank as an additional loss
payee, and shall contain a lenders loss payee endorsement in form reasonably
acceptable to Trade Bank. If Borrower fails to provide or pay for any
insurance, Trade Bank may, but is not obligated to, obtain the insurance at
Borrower's expense.
5.7 FURTHER ASSURANCES. At Trade Bank's request and in form and substance
satisfactory to Trade Bank, execute all documents and take all such actions at
Borrower's expense as Trade Bank may deem reasonably necessary or useful to
perfect and maintain Trade Bank's perfected security interest in the Collateral
and in order to fully consummate all of the transactions contemplated by the
Loan Documents.
5.8 REPORTS. Furnish the following information or deliver the following
reports to Trade Bank at the times indicated below:
(a) ANNUAL FINANCIAL STATEMENTS. Not later than 120 calendar days after
and as of the end of each of Borrower's fiscal years, an annual
audited financial statement of Borrower prepared by a certified public
accountant acceptable to Trade Bank to include balance sheet, income
statement and cash flow statement.
(b) QUARTERLY FINANCIAL STATEMENTS. Not later than 45 calendar days after
and as of Borrower's quarter end, a financial statement of Borrower
prepared by Borrower, to include balance sheet, income statement and
cash flow statement.
(c) CERTIFICATE OF ACCURACY AND NO EVENT OF DEFAULT. At the time each
financial statement of Borrower required above is delivered to Trade
Bank, a certificate of the president or chief financial officer of
Borrower that said financial statements are accurate and that there
exists no Event of Default under this Agreement nor any condition, act
or event which with the giving of notice or the passage of time or
both would constitute an Event of Default.
(d) QUARTERLY STATUS REPORT. Not later than 30 days after and as of
quarter end, submission of actual purchase orders/contracts equivalent
to at least 25% of total export orders.
(e) ANNUAL AUDIT REPORT. An audit report from Wells Fargo or another
auditor acceptable to Trade Bank reflecting values and property
conditions satisfactory to Trade Bank as at June 30 of each fiscal
year. Cost to Borrower for each audit report will not exceed $2,000.
<PAGE>
4
(f) INSURANCE. Borrower will maintain in full force and effect insurance
coverage on all Borrower's property, including, but not limited to,
the following types of insurance coverage:
(i) policies of fire insurance
(ii) extended coverage insurance with replacement cost
endorsements; and
(iii) marine cargo insurance
All the insurance referred to in the preceding sentence must be in
form, substance and amounts, and issued by companies, satisfactory to
Trade Bank, and cover risks required by Trade Bank and contain loss
payable endorsements in favor of Trade Bank.
(g) BORROWING BASE CERTIFICATE. Not later than 30 calendar days
after and as of the end of each MONTH.
(i) a Borrowing Base Certificate
(ii) an inventory report showing the types, locations and dollar
values of all the inventory collateral
(iii) an aged listing of accounts receivable.
5.9 FINANCIAL COVENANTS. Maintain the following (if Borrower has any
Subsidiaries which must be consolidated under GAAP, the following applies to
Borrower and the consolidated Subsidiaries):
(a) CURRENT RATIO. Not at any time less than 3.0 TO 1.0. ("CURRENT
RATIO" means total current assets divided by total current
liabilities, and "CURRENT ASSETS" and "CURRENT LIABILITIES" have the
meanings given to them in accordance with GAAP.)
(b) TANGIBLE NET WORTH. Not less than $29,225,000 at any time.
("TANGIBLE NET WORTH" means the excess of total assets over total
liabilities determined in accordance with GAAP.
(c) PRE-TAX PROFIT. Not less than one dollar ($1.00) determined on
(i) a rolling two-quarter basis as of each fiscal quarter end
(ii) an annual basis as of each fiscal year end
5.10 JUDGMENTS AND LIENS. Satisfy all material judgments and liens.
V. NEGATIVE COVENANTS
Borrower covenants that so long as Trade Bank remains committed to make
any Advances hereunder and until all Obligations have been paid in full,
Borrower will not:
5.1 MERGER OR CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business..
5.2 LIENS. Except for Permitted Liens, mortgage, pledge, grant or permit
to exist a security interest in, or lien upon, all or any portion of Borrower's
assets now owned or hereafter acquired.
5.3 USE OF PROCEEDS. Borrower will not use the proceeds of any Advance
except for the acquisition of inventory for, and costs related to, the delivery
of communications networks.
5.4 DIVIDENDS, DISTRIBUTIONS OF CAPITAL AND STOCK REDEMPTIONS. Borrower
will not pay or declare any dividends or make any distribution of capital on
Borrower's stock (except for dividends payable solely in stock of Borrower).
5.5 LOANS TO STOCKHOLDERS. Borrower shall not make any loans to any
stockholder or any affiliate of Borrower over $50,000. As used in this Section
5.5, "affiliate" means any person which directly or indirectly controls, is
controlled by, or is under common control with Borrower.
<PAGE>
5
VI. EVENTS OF DEFAULT AND REMEDIES
6.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default":
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. Borrower's failure to pay
principal, interest, fees or other amounts when due under any Loan
Document.
(b) FAILURE TO PERFORM OBLIGATIONS. Any failure by Borrower to comply
with any covenant or obligation in any Loan Document (other than those
referred to in subsection (a) above), and such default shall continue
for a period of twenty calendar days from the earlier of (i)
Borrower's failure to notify Trade Bank of such Event of Default
pursuant to Section 4.2(a) above, or (ii) Trade Bank's notice to
Borrower of such Event of Default.
(c) UNTRUE OR MISLEADING WARRANTY. Any warranty, representation,
financial statement, report or certificate made or delivered by
Borrower under any Loan Document is materially untrue or misleading in
any material respect when made or delivered.
(d) DEFAULTS UNDER OTHER LOAN DOCUMENTS. Any "Event of Default" occurs
under any other Loan Document; the Guarantee is no longer in full
force and effect (or any claim thereof made by Guarantor) or any
failure of Guarantor to comply with the provisions thereof; or any
breach of the provisions of the Subordination Agreement or
Intercreditor Agreement by any party other than the Trade Bank.
(e) DEFAULTS UNDER OTHER AGREEMENTS OR INSTRUMENTS. Any material default
in the payment or performance of any obligation, or the occurrence of
any event of default, under the terms of any other agreement or
instrument pursuant to which Borrower, any Subsidiary or Guarantor has
incurred any debt or other material liability to any person or entity.
(f) JUDGMENTS AND LEVIES AGAINST BORROWER. The filing of a notice of
judgment lien against Borrower or the recording of any abstract of
judgment against Borrower, in any county in which Borrower has an
interest in real property, or the service of a notice of levy and/or
of a writ of attachment or execution, or other like process, against
the assets of Borrower, or the entry of a judgment against Borrower.
(g) EVENT OR CONDITION IMPAIRING PAYMENT OR PERFORMANCE. Any event occurs
or condition arises which Trade Bank in good faith believes materially
impairs or is substantially likely to materially impair the prospect
of payment or performance by Borrower of the Obligations, or any
material adverse change in Borrower's financial condition, business or
prospects.
(h) VOLUNTARY INSOLVENCY. Borrower, any Subsidiary or Guarantor (i)
becomes insolvent, (ii) suffers or consents to or applies for the
appointment of a receiver, trustee, custodian or liquidator of itself
or any of its property, (iii) generally fails to pay its debts as they
become due, (iv) makes a general assignment for the benefit of
creditors, or (v) files a voluntary petition in bankruptcy, or seeks
reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title
11 of the United States Code, as amended or recodified from time to
time ("Bankruptcy Code"), or under any state or Federal law granting
relief to debtors, whether now or hereafter in effect.
(i) INVOLUNTARY INSOLVENCY. Any involuntary petition or proceeding
pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower, any Subsidiary or
Guarantor, or (b) have an order for relief entered against it by any
court of competent jurisdiction under the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization
or other relief for debtors.
(j) CHANGE IN OWNERSHIP. Any change in the ownership of Borrower, which
the Trade Bank determines, in its sole discretion, may adversely
affect the creditworthiness of Borrower or credit support for the
Obligations.
<PAGE>
6
6.1 REMEDIES. Upon the occurrence of any Event of Default, or at any time
thereafter, Trade Bank, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower), may do any one or more
of the following: (a) terminate Trade Bank's obligation to make Advances or to
make available to Borrower the Facilities or other financial accommodations; (b)
accelerate and declare all or any part of the Obligations to be immediately due,
payable, and performable, notwithstanding any deferred or installment payments
allowed by any instrument evidencing or relating to any Advance; and/or (c)
exercise all its rights, powers and remedies available under the Loan Documents,
or accorded by law, including, but not limited to, the right to resort to any or
all Collateral or other security for any of the Obligations and to exercise any
or all of the rights of a beneficiary or secured party pursuant to applicable
law. All rights, powers and remedies of Trade Bank may be exercised at any time
by Trade Bank and from time to time after the occurrence of an Event of Default,
are cumulative and not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity.
VII. GENERAL PROVISIONS
7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given personally or by regular first-class mail, by
certified mail return receipt requested, or by facsimile transmission addressed
to Trade Bank or Borrower at the address indicated after their signature to this
Agreement. All notices shall be deemed to have been given upon delivery, in the
case of notices personally delivered, upon the expiration of 3 calendar days
following the deposit of the notices in the United States mail, in the case of
notices deposited in the United States mail, or upon receipt, in the case of
notices sent by facsimile transmission.
7.2 WAIVERS. No delay or failure of Trade Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, consent or approval by Trade Bank under any of the Loan Documents
must be in writing and shall be effective only to the extent set out in such
writing.
7.3 BENEFIT OF AGREEMENT. The provisions of the Loan Documents shall be
binding upon and inure to the benefit of the respective successors and assigns
of Borrower and Trade Bank; provided, however, that Borrower may not assign or
transfer any of its rights under any Loan Document without the prior written
consent of Trade Bank, and any prohibited assignment shall be void. Trade Bank
reserves the right to sell, assign, transfer, negotiate or grant participations
in all or any part of, or any interest in, Trade Bank's rights and benefits
under each of the Loan Documents. In connection therewith, Trade Bank may
disclose any information relating to the Facility, Borrower or Guarantor.
7.4 NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into
for the sole protection and benefit of Borrower and Trade Bank and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, any of the Loan Documents to which it is not a
party.
7.5 GOVERNING LAW AND JURISDICTION. This Agreement shall, be governed by,
and be construed in accordance with, the internal laws of the State of
California, except to the extent Trade Bank has greater rights or remedies under
federal law as a national bank. Borrower and Trade Bank (a) agree that all
actions and proceedings relating directly or indirectly to this Agreement shall
be litigated in courts located within California; (b) consent to the
jurisdiction of any such court and consent to service of process in any such
action or proceeding by any method permitted by law; and (c) waive any and all
rights Borrower may have to object to the jurisdiction of any such court or to
transfer or change the venue of any such action or proceeding.
7.6 MUTUAL WAIVER OF JURY TRIAL. Borrower and Trade Bank each hereby
waive the right to trial by jury in any action or proceeding based upon, arising
out of, or in any way relating to, (a) any Loan Document, or (b) any conduct,
act or omission of Trade Bank or Borrower or any of their directors, officers,
employees or agents, whether the claim is based on contract or tort.
7.7 SEVERABILITY. Should any provision of any Loan Document be prohibited
by, or invalid under applicable law, or held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect, the
validity of the other provisions of the Loan Documents.
<PAGE>
7
7.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other Loan
Documents are the final, entire and complete agreement between Borrower and
Trade Bank concerning the Facility. There are no oral understandings,
representations or agreements between the parties concerning the Facility which
are not set forth in the Loan Documents. The Loan Documents may not be waived,
amended or superseded except in a writing executed by Borrower and Trade Bank.
<PAGE>
8
VIII. DEFINITIONS
8.1 "AGREEMENT" means this Agreement, as amended or modified from time to
time in writing by Trade Bank and Borrower.
8.2 "BORROWING BASE" means an amount equal to 70% of export inventory
related to purchase orders/contracts approved by Trade Bank and 90% of export
accounts receivable related to purchase orders/contracts approved by Trade Bank.
Without limiting the fact that the determination of which accounts are
eligible for borrowing is a matter in Trade Bank's discretion, the following
will not be deemed eligible for borrowing:
(a) accounts with terms in excess of net 180 days,
(b accounts, uninsured, outstanding for more than 60 days from the due
date,
(c) accounts, insured through Eximbank export credit insurance for
comprehensive commercial and political risk, or through Eximbank
approved private insurers for comparable coverage, outstanding for
more than 90 days from the due date,
(d) accounts subject to any contingencies (including, without limitation,
guaranteed sales, and consignments),
(e) accounts deemed uncollectible by Trade Bank
(f) accounts payable in a currency other than US Dollars, unless
preapproved in writing by Trade Bank
(g) accounts from a military buyer not approved by Trade Bank
(h) accounts owing from any officer, director, employee, affiliated
company or other affiliate of Borrower, from a person or entity with
a controlling interest in the Borrower or from an entity which shares
common controlling ownership with the Borrower;
(i) receivables from foreign buyers in countries where Eximbank is legally
prohibited from doing business as set forth in the current Country
Limitation Schedule (Exhibit "C" attached hereto);
(j) receivables from foreign Buyers in countries where Eximbank coverage
is not available for economic reasons, as designated in the Country
Limitation Schedule in effect at the time of the related export sale,
unless the export sale is supported by an irrevocable letter of
credit, confirmed by a bank acceptable to Trade Bank
Without limiting the fact that the determination of which inventory is
eligible for borrowing is a matter of Trade Bank's discretion, the following
will not be deemed eligible for borrowing:
a) inventory not located in the United States,
b) demonstration or consignment inventory,
c) inventory consisting of proprietary software, (i.e. software not
intended for resale)
d) inventory damaged, obsolete, returned, defective, recalled or unfit
for further processing,
e) inventory previously exported from the United States, unless such
inventory returned had no value added to it outside the United States
f) inventory which constitutes defense articles or defense services or
accounts receivable generated by sales of such inventory,
g) inventory to be incorporated into items destined for shipment to, and
any account receivable in the name of a buyer located in , a country
in which Eximbank is legally prohibited from doing business as
designated in the Country Limitation Schedule (Exhibit "C" attached
hereto);
h) inventory which is to be incorporated into items destined for shipment
to, and any account receivable in the name of a buyer located in, a
country which Eximbank coverage is not available for commercial
reasons as designated in the Country Limitation Schedule, unless and
only to the extent that such items are to be sold to such country
terms of a Letter of Credit confirmed by a bank acceptable to Trade
Bank,
i) inventory which has previously been exported from the U.S.
j) inventory to be incorporated into items whose sale would result in an
ineligible account receivable, and inventory not located at location
of security agreement
8.1 "BORROWING BASE CERTIFICATE" means a certificate, in the form of
Exhibit B hereto, showing collateral values satisfactory to Trade Bank.
<PAGE>
9
8.2 "CLOSING DATE" means the date on which the first Advance is made.
8.3 "COLLATERAL" means all export related inventory and accounts
receivable and other property securing the Obligations.
8.4 "COLLATERAL DOCUMENTS" means the Security Agreement, the Guarantee,
the Subordination Agreement, the Intercreditor Agreement, and other credit
support documents required by the Trade Bank to provide collateral and credit
support for the Advances.
8.5 "DOLLARS" and "$" means United States dollars.
8.6 "EX-IM BANK" means The Export-Import Bank of the United States.
8.7 "GAAP" means generally accepted accounting principles, which are
applicable to the circumstances, as of the date of determination, set out in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession.
8.8 "LETTER OF CREDIT" means a commercial letter of credit in form and
substance satisfactory to Trade Bank, issued by a bank acceptable to Trade Bank.
8.9 "LOAN DOCUMENTS" means this Agreement, the Borrower Agreement as
defined in Section 3.1(e), the Note and the Collateral Documents.
8.10 "OBLIGATIONS" means all obligations of Borrower to Trade Bank under
this Agreement or any other Loan Document.
8.11 "PERMITTED LIENS" means:
(a) purchase money security interests in specific items of Borrower's
equipment;
(b) leases of specific items of Borrower's equipment;
(c) liens for Borrower's taxes not yet payable;
(d) additional security interests and liens consented to in writing by
Trade Bank in its sole discretion; and
(e) security interests being terminated concurrently with the
effectiveness of the Agreement.
8.12 "PRIME RATE" means the rate most recently announced by Wells Fargo at
its principal office in San Francisco, California as its "Prime Rate", with the
understanding that the Prime Rate is one of Wells Fargo's base rates and serves
as the basis upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording thereof after
its announcement in such internal publication or publications as Wells Fargo may
designate. Any change in an interest rate resulting from a change in the Prime
Rate shall become effective as of 12:01 a.m. of the Banking Day on which each
change in the Prime Rate is announced by Wells Fargo.
8.13 "SUBSIDIARY" means (i) any corporation at least the majority of whose
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of
acontingency) are at the time owned by Borrower and/or one or more Subsidiaries,
and (ii) any joint venture or partnership in which Borrower and/or one or more
Subsidiaries has a majority interest.
8.14 "WELLS FARGO" means Wells Fargo Bank, N.A.
<PAGE>
10
Borrower and Trade Bank have caused this Agreement to be executed by
their duly authorized officers or representatives on the date specified below.
STM WIRELESS, INC.
By: EMIL YOUSSEFZADEH
Title: President & CEO
----------------------------
By: PRESTON ROMM
-------------------------------
Title: Vice President Finance & CFO
---------------
Address:
One Mauchly
Irvine, CA. 92618-2305
WELLS FARGO HSBC TRADE BANK, N.A.
By:
-------------------------------
JAN MACY-BUESCHER
Vice President
Address:
333 S. Grand Ave., 3rd Floor
Los Angeles, CA. 90071
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE PERIOD ENDED 6-30-96 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,429
<SECURITIES> 4,550
<RECEIVABLES> 19,001
<ALLOWANCES> 75
<INVENTORY> 7,245
<CURRENT-ASSETS> 37,606
<PP&E> 11,727
<DEPRECIATION> 3,297
<TOTAL-ASSETS> 51,433
<CURRENT-LIABILITIES> 13,147
<BONDS> 4,436
0
0
<COMMON> 32,143
<OTHER-SE> 1,335
<TOTAL-LIABILITY-AND-EQUITY> 51,433
<SALES> 9,079
<TOTAL-REVENUES> 9,836
<CGS> 5,928
<TOTAL-COSTS> 6,316
<OTHER-EXPENSES> 2,779
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 188
<INCOME-PRETAX> 658
<INCOME-TAX> 221
<INCOME-CONTINUING> 469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 469
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
