<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Period ended September 30, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-13981
ELECTRONIC TELE-COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1357760
(State of incorporation) (IRS Employer Identification No.)
1915 MacArthur Road Waukesha, Wisconsin 53188
(Address of principal executive offices) (Zip Code)
(414) 542-5600
(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 October 31, 1999, there were outstanding 2,008,949 shares of Class A
common stock and 499,998 shares of Class B common stock. The Class B common
stock, 87.9% of which is owned by affiliates, is the only voting stock. The
Class B common stock is not traded on an exchange.
<PAGE> 2
ELECTRONIC TELE-COMMUNICATIONS, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
-1-
<PAGE> 3
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
(UNAUDITED) (Note 1)
SEPTEMBER 30 December 31
1999 1998
-------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 306,433 $ 848,087
Trade accounts receivable, net 1,355,407 2,600,229
Inventories (Note 2) 1,545,657 1,384,265
Net investment in installment sales contracts 261,883 157,579
Prepaid expenses and other current assets 114,600 166,051
-------------------------------------
Total current assets 3,583,980 5,156,211
PROPERTY, PLANT AND EQUIPMENT, NET 1,516,970 1,628,448
NET INVESTMENT IN INSTALLMENT SALES CONTRACTS 1,130,663 772,685
EXCESS COST OVER NET ASSETS ACQUIRED 825,814 881,422
-------------------------------------
Total Assets $ 7,057,427 $ 8,438,766
=====================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility $ - $ 1,300,000
Accounts payable 102,992 173,958
Accrued expenses 700,605 704,105
Income taxes payable 5,449 50,750
Deferred revenue 117,869 168,068
-------------------------------------
Total current liabilities 926,915 2,396,881
LONG-TERM LIABILITIES 3,783 52,393
-------------------------------------
Total liabilities 930,698 2,449,274
STOCKHOLDERS' EQUITY:
Preferred stock, authorized 5,000,000 shares, none issued - -
Class A common stock, authorized 10,000,000 shares,
par value $.01, issued and outstanding 2,008,949 shares 20,089 20,089
Class B common stock, authorized 10,000,000 shares,
par value $.01, issued and outstanding 499,998 shares 5,000 5,000
Additional paid-in capital 3,335,349 3,335,349
Retained earnings 2,766,291 2,629,054
-------------------------------------
Total stockholders' equity 6,126,729 5,989,492
-------------------------------------
Total Liabilities and Stockholders' Equity $ 7,057,427 $ 8,438,766
=====================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-2-
<PAGE> 4
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 -
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------------------------- ------------------------------------------
1999 1998 1999 1998
---------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 2,888,497 $ 3,025,266 $ 9,032,850 $ 8,881,448
COST OF PRODUCTS SOLD 1,447,817 1,548,653 4,482,615 4,692,247
---------------------------------------- ------------------------------------------
GROSS PROFIT 1,440,680 1,476,613 4,550,235 4,189,201
OPERATING EXPENSES:
General and administrative 323,130 385,509 975,683 1,147,187
Marketing and selling 567,807 584,219 1,884,922 1,824,943
Research and development 404,252 422,171 1,262,204 1,316,927
---------------------------------------- ------------------------------------------
1,295,189 1,391,899 4,122,809 4,289,057
---------------------------------------- ------------------------------------------
EARNINGS (LOSS) FROM OPERATIONS 145,491 84,714 427,426 (99,856)
OTHER INCOME (EXPENSE):
Interest expense - (24,783) (1,283) (49,679)
Interest and dividend income 39 51 3,210 168
---------------------------------------- ------------------------------------------
39 (24,732) 1,927 (49,511)
---------------------------------------- ------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES 145,530 59,982 429,353 (149,367)
Income taxes 49,400 39,300 131,400 22,000
---------------------------------------- ------------------------------------------
NET EARNINGS (LOSS) $ 96,130 $ 20,682 $ 297,953 $ (171,367)
======================================== ==========================================
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE:
Class A common $ 0.05 $ 0.01 $ $ 0.13 $ $ (0.06)
Class B common $ 0.01 $ 0.01 $ $ 0.05 $ $ (0.10)
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
<PAGE> 5
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998 -
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------------------
1999 1998
------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 297,953 $ (171,367)
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 293,336 278,979
Deferred income taxes 32,894 58,500
Loss from sale of equipment 455 -
Changes in operating assets and liabilities:
Accounts receivable 1,244,822 (391,355)
Inventories (161,392) (184,855)
Net investment in installment sales contracts (462,282) (364,154)
Prepaid expenses and other assets 51,451 19,001
Accounts payable and accrued expenses (123,076) (4,927)
Income taxes (45,301) 219,346
Deferred revenue (50,199) 49,932
------------------------------------------
Total adjustments 780,708 (319,533)
------------------------------------------
Net cash provided by (used in) operating activities 1,078,661 (490,900)
------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (159,599) (186,987)
------------------------------------------
Net cash provided by (used in) investing activities (159,599) (186,987)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on revolving credit facility, net (1,300,000) 775,000
Dividends paid (160,716) (80,358)
Purchase and retirement of common stock - (4)
------------------------------------------
Net cash provided by (used in) financing activities (1,460,716) 694,638
------------------------------------------
Net increase (decrease) in cash and cash equivalents (541,654) 16,751
Cash and cash equivalents at beginning of year 848,087 489,573
==========================================
Cash and cash equivalents at end of period $ 306,433 $ 506,324
==========================================
Supplemental disclosures of cash flow information:
Cash received from income tax refunds $ - $ 260,453
Cash paid for income taxes 146,595 5,027
Cash paid for interest expense 8,027 45,689
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-4-
<PAGE> 6
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 - (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments, which consist only of normal recurring accruals, considered
necessary for a fair presentation have been included. Operating results for the
three-month and nine-month periods ended September 30, 1999, are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999.
The balance sheet at December 31, 1998, has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's 1998 Annual Report to Shareholders.
2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31
1999 1998
------------ -----------
<S> <C> <C>
Raw materials and supplies $ 525,866 $ 437,349
Work-in-process and finished goods 745,450 559,674
Maintenance and demo parts 496,314 532,502
Reserve for obsolescence (221,973) (145,260)
------------ ------------
Total inventories $ 1,545,657 $ 1,384,265
============ ============
</TABLE>
3. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 2000. Because the
Company has not used derivatives in the past and does not expect to do so in the
future, the Company does not anticipate that adoption of SFAS No. 133 will have
an effect on its results of operations or financial position.
In March 1998, the AICPA issued SOP 98-1, "Accounting For the Costs of Computer
Software Developed For or Obtained For Internal Use." The SOP, which has been
adopted prospectively as of January 1, 1999, requires the capitalization of
certain costs incurred in connection with developing or obtaining internal use
software. The Company does not develop its own software for internal use. The
Company capitalizes the cost of software it obtains for internal use, and
amortizes it using the straight-line method over the useful life of the
software. Adoption of SOP 98-1 does not have an impact on the financial
statements of the Company.
-5-
<PAGE> 7
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $2,888,497 and $3,025,266 for the three-month periods ended
September 30, 1999 and 1998, respectively. Net sales for the nine-month period
ended September 30, 1999, were $9,032,850, compared to $8,881,448 for the
corresponding period of 1998. The decrease in net sales for the three-month
period ended September 30, 1999, was due to weaker than expected sales of the
Company's interactive voice information systems to operating telephone
companies, original equipment manufacturers, and competitive local exchange
carriers (CLEC's). However, for the nine-month period ended September 30, 1999,
sales of the Company's interactive voice information systems were higher than
the prior year comparable period due to a strong 1999 first quarter. Revenues
from sales of the Company's interactive voice information systems were
$5,357,181 or 59% of net sales, and $4,969,536 or 56% of net sales, for the
nine-month periods ended September 30, 1999 and 1998, respectively. Revenues
from operating leases, installment sales contracts, and services were $2,726,255
or 30% of net sales for the 1999 nine-month period, which is consistent with
$2,664,741 or 30% of net sales for the corresponding 1998 period. The dollar
increase between years was primarily due to increased revenues from new
installment sales contracts, and increased revenue from installation of the
Company's interactive voice information systems. Product pricing for the
Company's equipment remained relatively constant between periods, and inflation
did not have a material impact on revenues.
For the three-month periods ended September 30, 1999 and 1998, the gross profit
percentage was 50% and 49%, respectively. Gross profit as a percentage of net
sales for the nine-month periods ended September 30, 1999 and 1998, was 50% and
47%, respectively. The increase in gross profit percentage in the 1999
three-month period was due to higher sales of various Y2K upgrades which have a
higher profit margin than the Company's normal product mix, partially offset by
spreading fixed manufacturing costs over lower sales volume. The increase in the
1999 nine-month period was due to spreading fixed manufacturing costs over
higher sales volume, and sales of various Y2K upgrades which have a higher
profit margin than the Company's normal product mix.
For the three-month periods ended September 30, 1999 and 1998, total operating
expenses were $1,286,620 or 45% of net sales, and $1,380,515 or 46% of net
sales, respectively. Total operating expenses were $4,099,097 or 45% of net
sales for the nine-month period ended September 30, 1999, compared to $4,258,464
or 48% for the corresponding period of 1998. General and administrative expenses
were lower for the 1999 periods as a result of lower staffing. Marketing and
selling expenses increased in the 1999 nine-month period over 1998 due primarily
to salary and benefit expenses related to previously open sales and marketing
positions that were more fully staffed during the 1999 period. Research and
development expenses were slightly lower in the 1999 periods due to open
engineering positions.
Net other expenses were $21,785 for the nine-month period ended September 30,
1999, compared to $80,104 for the corresponding period of 1998. The decrease
between periods was primarily due to less interest expense incurred for bank
borrowings during the 1999 period and higher interest income earned from
investing Company funds.
For the three-month periods ended September 30, 1999 and 1998, net earnings were
$96,130 and $20,682, respectively. Higher net earnings for the 1999 quarter were
due to higher gross margins, lower operating expenses, and lower interest
expense, partially offset by lower sales. Net earnings for the nine-month period
ended September 30, 1999, were $297,953 compared to a net loss of $171,367 for
the corresponding 1998 period. Higher earnings in the 1999 period were
attributable to higher sales, higher gross profit margin on products sold, lower
operating expenses, and lower interest expense.
-6-
<PAGE> 8
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
LIQUIDITY AND SOURCES OF CAPITAL
Working capital was $2,657,065 as of September 30, 1999, compared to $2,759,330
at December 31, 1998. The slight decrease in working capital was due primarily
to payment of dividends and expenditures made for capital equipment, partially
offset by net earnings. Cash provided by operating activities was $1,078,661 for
the nine-month period ended September 30, 1999, compared to cash used of
$490,900 for the corresponding 1998 period. The cash provided by operating
activities in the 1999 period was due primarily to net earnings and a decrease
in accounts receivable, partially offset by an increase in inventories and
investment in installment sales contracts. The substantial decrease in accounts
receivable since December 31, 1998, was due to a large sale to a major customer
in December 1998 that was paid for in January 1999. Cash used in operating
activities in the 1998 period was due primarily to the net loss, increases in
accounts receivable and inventories, and investment in installment sales
contracts, partially offset by refunds of income taxes.
For the nine-month period ended September 30, 1999, cash provided by net
earnings and reduction of accounts receivable was used for repayment of bank
borrowings, payment of dividends, purchases of capital equipment, investment in
installment sales contracts, and increases in inventories. For the 1998
nine-month period, cash provided by bank borrowings was used for payment of
dividends, purchases of capital equipment, investment in installment sales
contracts, and to fund increased accounts receivable and the net loss.
As of September 30, 1999, the Company had no borrowings on its available
$3,500,000 revolving credit facility. The revolving credit facility expires on
June 30, 2000.
At current operating levels, management believes that cash generated from
operations, together with the available revolving credit facility, will provide
adequate funds to meet the Company's operating needs for the foreseeable future.
YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Some of ETC's internal
operating computer programs had time-sensitive software that recognized a date
using "00" as the year 1900 rather than the year 2000. This could have caused
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities. In addition, ETC's
products contain computer programs that may be impacted by the Year 2000 Issue.
The Company also deals with third parties that may be affected by the Year 2000
Issue and may subsequently affect ETC.
ETC has completed its assessment of the Year 2000 Issue in regard to its
internal computer systems and has modified and replaced minor portions of its
software so that its computer systems will function properly with respect to
dates in the year 2000 and thereafter. The project has been completed, and the
Company believes that with these modifications to existing software and
conversions to new software, the Year 2000 Issue will not pose significant
operational problems for its computer systems.
The Company has completed evaluation of its products and has determined that all
of its current systems are Year 2000 compliant. For any customers that possess
ETC equipment that is currently not Year 2000 compliant, the Company has offered
upgrades or migration paths to new equipment to address the Year 2000 needs of
its customers.
-7-
<PAGE> 9
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
ETC is continuing to evaluate the Year 2000 readiness of its critical third
party suppliers. If it is determined that any suppliers are not Year 2000 ready,
ETC will continue to monitor the situation and take appropriate action. Based on
current progress, ETC does not anticipate any adverse consequences due to
supplier Year 2000 readiness.
The total year 2000 project cost is expected to be minimal and all costs will be
expensed as incurred and are included within the Company's normal operating
budget. Computer system software upgrades are included under normal maintenance
contracts.
ETC believes, based on an overall analysis of the Year 2000 Issue, that it will
be able to manage its total Year 2000 transition without any adverse effect on
its business operations, products or financial prospects. However, the actual
results could differ and if such modifications and conversions are not made or
are not completed timely, the Year 2000 Issue could have a material impact on
the operations of the Company.
FORWARD LOOKING INFORMATION
From time to time, information provided by the Company, statements made by its
employees, and information included in its filings with the Securities and
Exchange Commission which are not historical facts are forward-looking in nature
and relate to trends and events that may affect the Company's future financial
position and operating results. Such forward-looking information is provided
pursuant to the Safe Harbor provision of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties including, but not
limited to, technology changes, backlog, acquisitions, status of the economy,
governmental regulations, sources of supply, expense structure, product mix,
major customers, competition, litigation, and other risk factors detailed in the
Company's filings of Form 10-K with the Securities and Exchange Commission.
Investors are encouraged to consider the risks and uncertainties included in
those filings.
-8-
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not use derivative financial instruments for speculative or
trading purposes. The Company is exposed to market risk related to changes in
short-term interest rates as a result of borrowings under its revolving credit
facility. However, due to the short-term nature and low amount of borrowings,
any impact on the Company's earnings due to changes in interest rates would be
insignificant.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule
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.
ELECTRONIC TELE-COMMUNICATIONS, INC.
/s/ Dean W. Danner
--------------------------------------
Dean W. Danner
President and
Chief Executive Officer
/s/ Jeffrey M. Nigl
--------------------------------------
Jeffrey M. Nigl
Vice President, Chief Financial
Officer, Treasurer and Principal
Accounting Officer
Date: November 10, 1999
-9-
<PAGE> 1
Exhibit 11
ELECTRONIC TELE-COMMUNICATIONS, INC. AND SUBSIDIARY
COMPUTATION OF EARNINGS PER SHARE
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
Earnings (loss) net of dividends paid (undistributed earnings) are allocated
equally per share to weighted average Class A shares, as adjusted for the
dilutive effect of stock options using the treasury stock method, and weighted
average Class B shares outstanding during the year. Earnings (loss) per Class A
and Class B common share were computed, as shown in the table below, by adding
dividends paid per Class A and Class B common share (distributed earnings) to
undistributed earnings.
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1999 1998 1999 1998
----------------------------------- -----------------------------------
Numerator for basic and diluted earnings per share:
<S> <C> <C> <C> <C>
Net earnings (loss) $ 95,770 $ 20,682 $ 297,953 $ (171,367)
Less dividends paid:
Class A common 80,358 0 160,716 80,358
Class B common - - - -
----------------------------------- -----------------------------------
Undistributed earnings (loss) $ 15,412 $ 20,682 $ 137,237 $ (251,725)
Denominator for basic and diluted earnings per share:
Weighted average shares:
Class A common 2,008,949 2,008,949 2,008,949 2,008,949
Class B common 499,998 499,998 499,998 499,998
----------------------------------- -----------------------------------
Total 2,508,947 2,508,947 2,508,947 2,508,947
Calculation of basic and diluted earnings (loss) per share:
Class A common:
Distributed earnings $ 0.04 $ - $ 0.08 $ 0.04
Undistributed earnings (loss) 0.01 0.01 0.05 (0.10)
----------------------------------- -----------------------------------
Basic and diluted earnings (loss) per share $ 0.05 $ 0.01 $ 0.13 $ (0.06)
=================================== ===================================
Class B common:
Distributed earnings $ - $ - $ - $ -
Undistributed earnings (loss) 0.01 0.01 0.05 (0.10)
----------------------------------- -----------------------------------
Basic and diluted earnings (loss) per share $ 0.01 $ 0.01 $ 0.05 $ (0.10)
=================================== ===================================
</TABLE>
Options to purchase shares of Class A common stock under the Company's
Nonqualified Stock Option Plan were outstanding during the three-month and
nine-month periods ended September 30, 1999 and 1998. However, these shares were
not included in the computation of diluted earnings per share because the
options' exercise price was greater than the average market price of the common
shares and, therefore, the effect would be antidilutive. The number of shares
excluded from the computation were 72,160 for the 1999 periods and 95,220 for
the 1998 periods.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1999 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 306,433
<SECURITIES> 0
<RECEIVABLES> 1,452,129
<ALLOWANCES> 96,722
<INVENTORY> 1,545,657
<CURRENT-ASSETS> 3,583,980
<PP&E> 5,814,970
<DEPRECIATION> 4,298,000
<TOTAL-ASSETS> 7,057,427
<CURRENT-LIABILITIES> 926,915
<BONDS> 0
0
0
<COMMON> 25,089
<OTHER-SE> 6,101,640
<TOTAL-LIABILITY-AND-EQUITY> 7,057,427
<SALES> 9,032,850
<TOTAL-REVENUES> 9,032,850
<CGS> 4,482,615
<TOTAL-COSTS> 4,482,615
<OTHER-EXPENSES> 3,955,599
<LOSS-PROVISION> 164,000
<INTEREST-EXPENSE> 1,283
<INCOME-PRETAX> 429,353
<INCOME-TAX> 131,400
<INCOME-CONTINUING> 297,953
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297,953
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.13
</TABLE>
