<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 QUARTERLY PERIOD ENDED DECEMBER 31, 1996
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: 0-15383
CEM CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1019741
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
3100 Smith Farm Road, Matthews, NC 28105
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Post Office Box 200, Matthews, North Carolina 28106
- --------------------------------------------------------------------------------
(Mailing address of principal executive offices)
(704) 821-7015
- --------------------------------------------------------------------------------
(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
----- -----
3,534,235 shares of the issuer's $.05 par value common stock, its only class of
common stock, were outstanding as of January 31, 1997.
<PAGE> 2
PART I. FINANCIAL INFORMATION
QUARTERLY REPORT ON FORM 10-Q
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended December 31, 1996
CEM Corporation
Matthews, North Carolina
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. 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 such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1996.
<PAGE> 3
CEM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31 AND JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
December 31 June 30
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 3,181,000 $ 1,832,000
Short-term investments.................................. 3,600,000 4,100,000
Trade receivables....................................... 6,558,000 7,061,000
Inventories............................................. 6,016,000 5,639,000
Deferred taxes and other................................ 502,000 679,000
------------- --------------
Total current assets................................. 19,857,000 19,311,000
LONG-TERM INVESTMENTS...................................... 2,271,000 2,024,000
PROPERTY, PLANT AND EQUIPMENT, NET......................... 5,474,000 5,569,000
OTHER ASSETS............................................... 823,000 680,000
------------- --------------
$ 28,425,000 $ 27,584,000
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses................... $ 2,236,000 $ 2,254,000
Deferred income......................................... 1,088,000 1,098,000
Income taxes payable.................................... 649,000 410,000
------------- --------------
Total current liabilities............................ 3,973,000 3,762,000
LONG-TERM DEBT, NET OF CURRENT MATURITIES 1,392,000 1,417,000
DEFERRED TAXES............................................. 54,000 54,000
SHAREHOLDERS' EQUITY....................................... 23,006,000 22,351,000
------------- --------------
$ 28,425,000 $ 27,584,000
============= ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
CEM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Net sales............................................ $8,172,000 $8,731,000
Cost of goods sold................................... 3,699,000 3,490,000
---------- ----------
Gross profit....................................... 4,473,000 5,241,000
Selling, general and administrative expenses......... 2,947,000 3,085,000
Research and development expenses.................... 694,000 687,000
---------- ----------
Income from operations............................. 832,000 1,469,000
Investment income.................................... 106,000 111,000
Other expenses, net 14,000 39,000
---------- ----------
Income before income taxes......................... 924,000 1,541,000
Provision for income taxes........................... 319,000 540,000
---------- ----------
Net income......................................... $ 605,000 $1,001,000
========== ==========
Net income per common and
common equivalent share............................ $ .17 $ .27
========== ==========
Weighted average common and
common equivalent shares outstanding............... 3,545,000 3,741,000
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
CEM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Net sales............................................ $14,782,000 $16,192,000
Cost of goods sold................................... 6,757,000 6,684,000
----------- -----------
Gross profit....................................... 8,025,000 9,508,000
Selling, general and administrative expenses......... 5,719,000 5,743,000
Research and development expenses.................... 1,352,000 1,387,000
----------- -----------
Income from operations............................. 954,000 2,378,000
Investment income.................................... 200,000 213,000
Other expenses , net................................. 66,000 8,000
----------- -----------
Income before income taxes......................... 1,088,000 2,583,000
Provision for income taxes........................... 377,000 905,000
----------- -----------
Net income......................................... $ 711,000 $ 1,678,000
=========== ===========
Net income per common and
common equivalent share............................ $ .20 $ .45
Weighted average common and =========== ===========
common equivalent shares outstanding............... 3,564,000 3,753,000
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 6
CEM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES................ $ 1,808,000 $ 636,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of available-for-sale investments................. 1,000,000 503,000
Sale of held-to-maturity investments................... - 1,000,000
Purchase of available-for-sale investments (500,000) (1,000,000)
Purchase of long-term investment....................... (250,000) -
Acquisition of intangibles............................. (215,000) (49,000)
Capital expenditures, net.............................. (313,000) (289,000)
------------ ------------
Net cash (used in) provided by
investing activities .............................. (278,000) 165,000
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock................. 142,000 418,000
Repurchase of common stock............................. (348,000) (397,000)
------------ ------------
Net cash (used in) provided by
financing activities............................... (206,000) 21,000
------------ ------------
EFFECTS OF EXCHANGE RATES ON CASH........................ 25,000 (1,000)
------------ ------------
Net increase in cash and cash equivalents................ 1,349,000 821,000
Cash and cash equivalents at
beginning of period.................................... 1,832,000 2,078,000
------------ ------------
Cash and cash equivalents at end of period .............. $ 3,181,000 $ 2,899,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 7
CEM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods.
2. INVENTORIES
The components of inventories at current cost at December 31 and June 30, 1996
are as follows:
<TABLE>
<CAPTION>
December 31 June 30
----------- ----------
<S> <C> <C>
Parts and raw materials.......................... $ 3,321,000 $2,974,000
Work-in-process and finished goods............... 2,695,000 2,665,000
----------- ----------
$ 6,016,000 $5,639,000
=========== ==========
</TABLE>
3. NET INCOME PER SHARE
The computation of net income per common share is based on the weighted average
number of common shares outstanding for each period after adding dilutive
common stock equivalents. Common stock equivalents consist of dilutive stock
options using the treasury stock method. Fully diluted net income per share is
not presented because it approximates net income per common share.
4. NEW PRONOUNCEMENT
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" (SFAS
No. 123), which is effective for years beginning after December 15, 1995. SFAS
No. 123 encourages, but does not require, companies to recognize compensation
expense for grants of common stock, stock options, and other equity instruments
to employees based upon the fair value of the instruments when issued.
Companies electing not to recognize compensation expense are required to
disclose what net income and earnings per share would have been if the expense
were recognized. The Company has elected the disclosure option of SFAS No. 123
rather than recognition of compensation expense.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table sets forth, for the three-month periods indicated, the
percentages which certain components of the condensed consolidated statements
of income bear to net sales and the percentage of change of such components
from the same period of the prior year.
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
12/31/96 12/31/95 % Change
----------- ----------- ------------
<S> <C> <C> <C>
Net sales............................................... 100.0 % 100.0 % (6.4)
Cost of goods sold...................................... 45.3 40.0 6.0
----------- -----------
GROSS PROFIT....................................... 54.7 60.0 (14.7)
Selling, general and administrative expenses............ 36.0 35.3 (4.5)
Research and development expenses....................... 8.5 7.9 1.0
----------- -----------
INCOME FROM OPERATIONS............................. 10.2 16.8 (43.4)
Investment income....................................... 1.3 1.3 (4.5)
Other expenses, net..................................... 0.2 0.5 (64.1)
----------- -----------
INCOME BEFORE INCOME TAXES......................... 11.3 17.6 (40.0)
Provision for income taxes.............................. 3.9 6.2 (40.9)
----------- -----------
NET INCOME......................................... 7.4 % 11.4 % (39.6)
=========== ===========
</TABLE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1996
The decline in sales resulted from continued weakness in the German and
Japanese economies, technologies competing with the Company's fat analysis
system in the U.S. process control market and continued softness in the U.S.
environmental and governmental markets which significantly impacts digestion
system sales. As expected, sales improved from the first quarter of the fiscal
year due to seasonal factors; however, management anticipates continued
softness in U.S. governmental and environmental markets in the near term.
Lower sales in the aforementioned areas were partially offset by increased
sales of the STAR system which is gaining market acceptance. Foreign sales
decreased as a percent of total sales from 49% to 46% due primarily to
international economic weaknesses; additionally, the prior year second quarter
in Germany was unusually strong. Management continues to expect fiscal 1997
sales will be lower than prior year.
Profit margins declined from 60.0% to 54.7% negatively impacting gross profit
by $433,000. This decline primarily resulted from the decline in sales from
our German subsidiary which carries higher margins than U.S. sales; incremental
costs associated with new product introductions; write-down of used equipment;
increased service travel costs; product mix and stable fixed costs in relation
to declining sales. In the prior year, gross margin was substantially higher
than normal levels and was the highest in the history of the Company.
Management expects fiscal 1997 gross profit margins to be lower than the prior
year.
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
Selling, general and administrative expenses decreased primarily due to cost
containment initiatives. Research and development remained relatively
consistent with the prior year and reflects the Company's continued commitment
to new product development and enhancements. The Company expects these
expenses to remain between 8% and 10% of net sales for the foreseeable future.
The Company's effective tax rate did not change significantly and approximated
the federal statutory rate. With the extension of the Research and
Experimentation tax credit, management does not expect the rate to change
significantly in fiscal 1997.
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
The following table sets forth, for the six-month periods indicated, the
percentages which certain components of the condensed consolidated statements
of income bear to net sales and the percentage of change of such components
from the same period of the prior year.
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------------
12/31/96 12/31/95 % Change
----------- ----------- ------------
<S> <C> <C> <C>
Net sales............................................... 100.0 % 100.0 % (8.7)
Cost of goods sold...................................... 45.7 41.3 1.1
----------- -----------
GROSS PROFIT....................................... 54.3 58.7 (15.6)
Selling, general and administrative expenses............ 38.7 35.4 (0.4)
Research and development expenses....................... 9.1 8.6 (2.5)
----------- -----------
INCOME FROM OPERATIONS............................. 6.5 14.7 (59.9)
Investment income....................................... 1.4 1.3 (6.1)
Other expenses, net..................................... 0.5 0.0 725.0
----------- -----------
INCOME BEFORE INCOME TAXES......................... 7.4 16.0 (57.9)
Provision for income taxes.............................. 2.6 5.6 (58.3)
----------- -----------
NET INCOME......................................... 4.8 % 10.4 % (57.6)
=========== ===========
</TABLE>
RESULTS OF OPERATIONS - SIX MONTHS ENDED DECEMBER 31, 1996
The decline in total sales and the decline in foreign sales as a percent of
total sales from 48% to 47% resulted primarily from the same factors described
for the quarter ended December 31, 1996.
Gross profit declined primarily due to the factors described for the quarter
ended December 31, 1996. In addition, the Company experienced an increase in
sales to foreign distributors as a percent of total sales which generally have
lower margins than U.S. sales.
Operating expenses have remained relatively consistent with prior year as a
result of cost containment initiatives.
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL CONDITION
In the six months ended December 31, 1996, the Company generated income from
operations of approximately $954,000. The Company's cash and short-term
investments increased to $6.8 million from $5.9 million at June 30, 1996, due
primarily to cash provided by operating activities. The decrease in accounts
receivable is primarily due to timing of sales activity. The increase in
inventory is primarily attributable to the Company's new product, the STAR(TM)
system.
During the six months ended December 31, 1996, the Company used approximately
$350,000 to acquire 32,200 shares of the Company's common stock under the stock
repurchase program. As of December 31, 1996, approximately $2.5 million remains
authorized for the repurchase of the Company's common stock.
Management believes that working capital, planned capital expenditures, debt
servicing and stock repurchases can be funded currently with cash on hand and
cash generated from operations. The Company has never paid, and does not
anticipate paying, cash dividends in the foreseeable future.
As expected, the Company experienced business improvement from the first
quarter during the quarter ended December 31, 1996 due primarily to seasonal
factors. The Company's immediate challenge is to sustain this improvement
throughout the remainder of fiscal 1997, however earnings for fiscal 1997 as a
whole are expected to be substantially lower than a year ago. The preceding
forward looking statement is subject to the following cautionary statement.
CAUTIONARY STATEMENT
The following cautionary statement identifies important factors that could
cause the Company's actual results to differ materially from those projected in
forward-looking statements made by or on behalf of the Company. Except for the
historical information contained herein, the matters discussed in Management's
Discussion and Analysis of Results of Operations and Financial Condition are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These cautionary statements are made pursuant
to Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both enacted pursuant to the Private Securities
Litigation Reform Act of 1995.
The industry in which the Company competes, as well as the markets that it
serves, are characterized by cyclical market patterns as a consequence of,
among other things, business cycles, foreign exchange fluctuations, regulatory
changes, government spending levels and general economic conditions. These
factors affect the timing of orders from the Company's customers and cause
substantial variations in sales and profitability from quarter to quarter.
Likewise, supplier-related delays and the timing of the release of Company's
customer orders may affect quarter-to-quarter sales and profitability. The
Company's sales may also be adversely affected by direct and indirect
competition from third parties including, but not limited to, legal challenges
to existing patents or pending patent applications.
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CAUTIONARY STATEMENT (CONTINUED)
Demand for the Company's instrumentation is substantially affected by the
enactment, timing, extent and severity of state, federal and foreign laws
governing environmental testing standards as well as product labeling
requirements including foods and pharmaceuticals. The Company has and may
experience fluctuations in sales of such products as well as in demand for
particular product enhancements as a result of actual or perceived changes in
regulatory requirements. Legislation or regulations resulting in the
development or expansion of acceptance standards for specific testing methods
has and may result in periodic delays in sales, especially in the United
States. Conversely, increases in international sales have resulted, and may
result in the future, from less stringent or nonexistent acceptance standards
in a given country.
Moreover, the Company's success is dependent on its ability to continue to
develop and engineer high-quality, high-performance products that are
commercially acceptable. Risks associated with new product development include
market acceptance, competition from other products and the Company's ability to
manufacture and market products on an efficient and timely basis at a
reasonable cost and in sufficient volume.
<PAGE> 13
PART II. OTHER INFORMATION
ITEMS 1, 2, 3, and 5 are not applicable and are omitted.
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Registrant's Annual Meeting of Shareholders held on November
7, 1996, the following matters were submitted to a vote of the
shareholders of the Registrant:
1. Election of four nominees to the Board of Directors
of the Registrant for terms ending at the Annual Meeting of
Shareholders in 1996:
<TABLE>
<CAPTION>
Nominee Shares Voted in Favor Shares Withheld Shares Not Voted
----------------------------------- --------------------- --------------- ----------------
<S> <C> <C> <C>
Michael J. Collins 3,150,975 14,446 362,939
Ronald A. Norelli 3,151,967 13,454 362,939
John L. Chanon 3,151,375 14,046 362,939
John D. Correnti 3,152,467 12,954 362,939
</TABLE>
2. Ratification of the selection of Coopers & Lybrand, L.L.P. as
independent public accountants to audit the Corporation's
financial statements for the fiscal year ending June 30, 1997,
which was approved by a vote of 3,162,428 shares in favor and
1,250 shares against, with 1,743 shares abstaining.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(11) Statement of Computation of Earnings per Share
(27) Financial Data Schedule (filed in electronic format only).
This schedule shall not be deemed filed for purposes of
Section 11 of the Securities Act of 1933 or Section 18 of
the Securities Exchange Act of 1934 or otherwise be subject
to the liabilities of such sections, nor shall it be
deemed a part of any registration statement to which it
relates.
(b) Reports on Form 8-K:
No Reports on Form 8-K were filed during the quarter ended
December 31, 1996.
<PAGE> 14
CEM CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934 , the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: January 31, 1997 CEM CORPORATION
BY: /s/ Richard N. Decker
-----------------------------
Richard N. Decker
Vice President - Finance and
Chief Financial Officer
<PAGE> 15
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
ITEM 6(a)
Quarterly Report on Form 10-Q
For the quarter ended December 31, 1996 Commission File Number: 0-15383
CEM CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number: Exhibit Description
- --------------- ---------------------------------------------------------
<S> <C>
11 Computation of Earnings per Share
27 Financial Data Schedule (filed in electronic format only)
</TABLE>
<PAGE> 1
EXHIBIT 11
CEM CORPORATION
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
NET INCOME................................................. $ 605,000 $ 1,001,000
========== ===========
Weighted average number of shares outstanding.............. 3,534,000 3,609,000
Number of shares purchasable upon exercise of
options, reduced by the number of shares
which could have been purchased with
proceeds from exercise of such options at
average market price..................................... 11,000 132,000
---------- -----------
Weighted average number of shares outstanding,
as adjusted.............................................. 3,545,000 3,741,000
========== ===========
PRIMARY EARNINGS PER SHARE................................. $ .17 $ .27
========== ===========
NET INCOME................................................. $ 605,000 $ 1,001,000
========== ===========
Weighted average number of shares outstanding.............. 3,534,000 3,609,000
Number of shares purchasable upon exercise of
options, reduced by the number of shares
which could have been purchased with
proceeds from exercise of such options at
the greater of period-end market price or
average market price..................................... 11,000 132,000
---------- -----------
Weighted average number of shares outstanding,
as adjusted.............................................. 3,545,000 3,741,000
========== ===========
EARNINGS PER COMMON SHARE,
ASSUMING FULL DILUTION................................... $ .17 $ .27
========== ===========
</TABLE>
<PAGE> 2
EXHIBIT 11
CEM CORPORATION
COMPUTATION OF EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
NET INCOME................................................. $ 711,000 $ 1,678,000
========== ===========
Weighted average number of shares outstanding.............. 3,537,000 3,625,000
Number of shares purchasable upon exercise of
options, reduced by the number of shares
which could have been purchased with
proceeds from exercise of such options at
average market price..................................... 27,000 128,000
---------- -----------
Weighted average number of shares outstanding,
as adjusted.............................................. 3,564,000 3,753,000
========== ===========
PRIMARY EARNINGS PER SHARE................................. $ .20 $ .45
========== ===========
NET INCOME................................................. $ 711,000 $ 1,678,000
========== ===========
Weighted average number of shares outstanding.............. 3,537,000 3,625,000
Number of shares purchasable upon exercise of
options, reduced by the number of shares
which could have been purchased with
proceeds from exercise of such options at
the greater of period-end market price or
average market price..................................... 27,000 128,000
---------- -----------
Weighted average number of shares outstanding,
as adjusted.............................................. 3,564,000 3,753,000
========== ===========
EARNINGS PER COMMON SHARE,
ASSUMING FULL DILUTION................................... $ .20 $ .45
========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CEM CORPORATION FOR THE SIX MONTHS ENDED DECEMBER 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.<F1>
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,181,000
<SECURITIES> 3,600,000
<RECEIVABLES> 6,558,000
<ALLOWANCES> 0
<INVENTORY> 6,016,000
<CURRENT-ASSETS> 19,857,000
<PP&E> 5,474,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,425,000
<CURRENT-LIABILITIES> 3,973,000
<BONDS> 1,392,000
0
0
<COMMON> 177,000
<OTHER-SE> 22,829,000
<TOTAL-LIABILITY-AND-EQUITY> 28,425,000
<SALES> 14,782,000
<TOTAL-REVENUES> 14,782,000
<CGS> 6,757,000
<TOTAL-COSTS> 6,757,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,088,00
<INCOME-TAX> 377,000
<INCOME-CONTINUING> 711,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 711,000
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<FN>
<F1> CERTAIN INFORMATION IN THE FINANCIAL DATA SCHEDULE ABOVE HAS BEEN
CONDENSED FOR INTERIM FINANCIAL REPORTING PURSUANT TO THE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION.
</FN>
</TABLE>
