FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: June 30,
1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the Transition Period
from
to
Commission file number: 0-15159
RENTRAK CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-0780536
State or other jurisdiction of (IRS Employer
incorporation or organization) Identification no.)
7700 NE Ambassador Place, Portland, Oregon 97220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:503)284-7581
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 July 31, 1998, the Registrant had 11,007,002 shares of
Common Stock outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income for the three
month periods ended June 30, 1998 and June 30,
1997
Consolidated Balance Sheets as of June 30, 1998
and March 31, 1998
Consolidated Statements of Cash Flows for the
three month periods ended June 30, 1998 and June
30, 1997
Notes to Consolidated Financial Statements
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(UNAUDITED)
Three Months Ended June 30,
1998 1997
<S> <C> <C>
REVENUES:
PPT $ 30,441,358 $ 28,771,168
Other 3,018,084 1,843,383
33,459,442 30,614,551
OPERATING COSTS AND EXPENSES:
Cost of sales 27,547,868 25,038,640
Selling, general, and administrative 3,761,942 3,419,737
31,309,810 28,458,377
INCOME FROM OPERATIONS 2,149,632 2,156,174
OTHER INCOME (EXPENSE):
Interest income 121,862 122,851
Interest expense (18,225) (5,000)
Other (117,768) -
(14,131) 117,851
INCOME BEFORE INCOME TAX PROVISION 2,135,501 2,274,025
INCOME TAX PROVISION 845,657 962,891
NET INCOME $ 1,289,844 $ 1,311,134
EARNINGS PER SHARE:
Basic $ 0.12 $ 0.11
Diluted $ 0.11 $ 0.11
The accompanying notes are an integral
part of these consolidated statements.
</TABLE>
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
UNAUDITED
June 30 March 31,
1998 1998
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,180,636 $ 6,361,680
Accounts receivable, net of allowance for doubtful
accounts of $394,470 and $586,641 21,338,028 24,395,143
Advances to program suppliers 4,927,361 431,975
Inventory 2,739,199 2,427,176
Deferred tax asset 1,217,950 1,217,950
Other current assets 5,219,204 4,582,337
Total current assets 40,622,378 39,416,261
PROPERTY AND EQUIPMENT, net 1,809,861 1,910,317
OTHER INVESTMENTS, net 654,002 887,884
DEFERRED TAX ASSET 4,155,243 4,087,292
OTHER ASSETS 5,220,241 5,306,943
TOTAL ASSETS $ 52,461,725 $ 51,608,697
The accompanying notes are an integral
part of these consolidated balance sheets.
</TABLE>
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
UNAUDITED
June 30, March 31,
1998 1998
<S> <C> <C>
CURRENT LIABILITIES:
Line of credit $ - $ 6,000,000
Accounts payable 29,520,499 23,333,656
Accrued liabilities 3,014,025 2,532,832
Accrued compensation 611,155 1,072,848
Deferred revenue 53,939 829,863
Net current liabilities of discontinued operations 4,585,373 4,585,373
Total current liabilities 37,784,991 38,354,572
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock $.001 par value;
Authorized: 10,000,000 shares - -
Common stock, $.001 par value;
Authorized: 30,000,000 shares
Issued and outstanding: 11,006,983 shares
at June 30, 1998 and 10,986,455 at
March 31, 1998 11,007 10,987
Capital in excess of par value 45,451,048 45,365,298
Net unrealized gain (loss) on investment securities (56,224) 54,645
Accumulated deficit (29,504,419) (30,794,263)
Less - Deferred charge - warrants (1,224,678) (1,382,542)
14,676,734 13,254,125
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 52,461,725 $ 51,608,697
The accompanying notes are an integral
part of these consolidated balance sheets.
</TABLE>
<TABLE>
RENTRAK CORPORATION
STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited)
Three Months Ended June 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,289,844 $ 1,311,134
Adjustments to reconcile income to
net cash provided (used) in operations
Loss on investment / asset sales 117,768 -
Depreciation and Amortization 196,494 210,495
Amortization of warrants 157,864 151,698
Provision for doubtful accounts (131,653) (5,246)
Studio advance reserves - (12,126)
Deferred income taxes - 426,471
Change in specific accounts:
Accounts receivable 3,231,437 (600,031)
Advances to program suppliers (4,495,386) (138,148)
Inventory (312,023) (39,650)
Other current assets (636,867) 113,416
Accounts payable 6,186,843 3,276,350
Accrued liabilities & compensation 19,500 (285,992)
Deferred revenue (775,924) (109,677)
Net current liabilities of discontinued operations - (43,198)
Net cash provided (used) by operations 4,847,897 4,255,496
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (72,087 (143,651)
Investments in retailer financing program (545,108)
Proceeds from sale of investments 65,121 -
(Purchase) reduction of other assets & intangibles (107,745) (677,211)
Net cash provided (used) by investing activities (114,711) (1,365,970)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (Payments) under line of credit, net (6,000,000) (5,000,000)
Repurchase of common stock - (732,366)
Issuance of common stock 85,770 24,482
Net cash provided (used) by financing activities (5,914,230) (5,707,884)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (1,181,044) (2,818,358)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THIS PERIOD 6,361,680 10,167,169
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,180,636 $ 7,348,811
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for -
Interest $ 18,225 $ 5,000
Income taxes, net of refunds 107,857 142,093
NON-CASH TRANSACTIONS
Increase (decrease) in net unrealized gain on
investment securities (110,869) 21,091
Retailer Loan Program Investment through
conversion of accounts receivable 1,031,626
The accompanying notes are an integral
part of these consolidated statements.
</TABLE>
RENTRAK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements
of RENTRAK CORPORATION (the "Company"), have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission
(SEC). 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. The results of operations for the three month
period ended June 30, 1998 are not necessarily indicative of the
results to be expected for the entire fiscal year ending March 31,
1999. The Condensed Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and
footnotes thereto included in the Company's 1998 Annual Report to
Shareholders.
The Condensed Consolidated Financial Statements reflect, in the
opinion of management, all material adjustments (which include only
normal and recurring adjustments) necessary to present fairly the
Company's financial position and results of operations.
The Condensed Consolidated Financial Statements include the accounts
of the Company, its majority owned subsidiaries, and those
subsidiaries in which the Company has a controlling interest after
elimination of all inter-company accounts and transactions.
Investments in affiliated companies owned 20 to 50 percent are
accounted for by the equity method. Certain amounts in the prior
period's Condensed Consolidated Financial Statements have been
reclassified to conform to the current period's presentation.
NOTE B: Net Income Per Share
3-Months Ended 3-Months Ended
June 30, 1998 June 30, 1997
Basic Diluted Basic Diluted
Weighted average
number of shares
of common stock
outstanding 11,004,333 11,004,333 11,697,712 11,697,712
Dilutive effect
of exercise of
stock options - 931,306 - 70,352
Weighted average
number of shares
of common stock
and common stock
equivalents 11,004,333 11,935,639 11,697,712 11,768,064
Net Income $ 1,289,844 $ 1,289,844 $ 1,311,134 $1,311,134
Net Income per
Share $ 0.12 $ 0.11 $ 0.11 $ 0.11
Basic earnings per common share is computed by dividing net income by
the weighted average number of shares of common stock outstanding
during the periods. Diluted earnings per common share is computed on
the basis of the weighted average shares of common stock outstanding
plus common equivalent shares arising from dilutive stock options. In
the quarter ended December 31, 1997, the Company adopted SFAS No. 128,
"Earnings per Share," effective December 15, 1997. As a result, the
Company's reported earnings per share for the three month period ended
June 30, 1997 was restated.
Three Months
Per Share Amounts Ended
June 30,1997
Primary EPS as reported $.10
Effect of SFAS No. 128 .01
Basic EPS as Restated $.11
Fully Diluted EPS as reported $.10
Effect of SFAS No. 128 .01
Diluted EPS as restated $.11
NOTE C: Major Suppliers
For the quarter ended June 30, 1998, the Company had one program
supplier whose product generated 32 percent, a second that generated
31 percent, and a third that generated an additional 17 percent of
Rentrak revenues. No other program supplier provided product which
generated more than 10 percent of revenue for the three month period
ended June 30, 1998.
For the quarter ended June 30, 1997, the Company had one program
supplier whose product generated 55 percent, a second that generated
18 percent, and a third that generated an additional 15 percent of
Rentrak revenues. No other program supplier provided product which
generated more than 10 percent of revenue for the three month period
ended June 30, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
Information included in Management's Discussion and Analysis of
Financial Conditions and Results of Operations regarding liquidity and
capital resources constitute forward-looking statements that involve a
number of risks and uncertainties. Forward looking statements can be
identified by the uses of forward-looking words such as "may", "will",
"expects", "intends", "anticipates", "estimates", or "continues" or
the negative thereof or variations thereon or comparable terminology.
The following factors are among the factors that could cause actual
results to differ materially from the forward-looking statements: the
Company's ability to continue to market the Pay Per Transaction
("PPT") System successfully, the financial stability of participating
retailers and their performance of their obligations under the PPT
System, non-renewal of line of credit, business conditions and growth
in the video industry and general economics, both domestic and
international; competitive factors, including increased competition,
expansion of revenue sharing programs other than the PPT System by
Program Suppliers, new technology, the ability of the Company and its
suppliers and customers to address potential Year 2000 problems, and
the continued availability of prerecorded videocassettes ("Cassettes")
from Program Suppliers. Such factors are discussed in more detail in
the Company's 1998 Annual Report to Shareholders.
Results of Operations
For the quarter ended June 30, 1998, total revenue increased $2.9
million, or 9.5 percent, rising to $33.5 million from $30.6 million in
the quarter ended June 30, 1997. Total revenue includes the following
fees: application fees generated when retailers are approved for
participation in the PPT System; order processing fees generated when
Cassettes are ordered by and distributed to retailers; transaction
fees generated when retailers rent Cassettes to consumers; sell-
through fees generated when retailers sell Cassettes to consumers; buy
out fees when retailers purchase Cassettes at the end of the lease
term; royalty payments from Rentrak Japan; and sale of Cassettes.
The increase in total revenue and the increases described in the
following paragraph were primarily due to the growth in (i) the total
number of Cassettes leased under the PPT System.
(ii) the number of retailers approved to lease Cassettes under the
PPT System from the Company (the "Participating Retailers"); and (iii)
the number of titles released to the PPT System.
Cost of sales for the quarter ended June 30, 1998 rose to $27.5
million from $25.0 million in the quarter ended June 30, 1997, an
increase of $2.5 million, or 10 percent. The increase is due to the
increase in revenue noted above.
Selling, general and administrative expenses were $3.8 million for the
quarter ended June 30, 1998 compared to $3.4 million in the quarter
ended June 30, 1997, an increase of $0.4 million, or 11.8 percent.
The increase in selling, general and administrative expenses is
primarily due to increased legal fees related primarily to executing
marketing agreements with traditional distributors and other
contracts. Even with these legal costs, selling, general and
administrative expenses as a percentage of revenue remained unchanged
at 11% compared to the same quarter of the prior year.
For the quarter ended June 30, 1998, the Company recorded a net income
of $1.3 million, or 3.9 percent of total revenue, compared to a net
income of $1.3 million, or 4.3 percent of total revenue in the quarter
ended June 30, 1997. This decrease in pre-tax profit as a percentage
of revenue is primarily due to the increase in selling, general and
administrative expenses as noted above.
Consolidated Balance Sheet
At June 30, 1998, total assets were $52.5 million, an increase of $.9
million from the $51.6 million at March 31, 1998. As of June 30,
1998, cash decreased $1.2 million to $5.2 million from $6.4 million at
March 31, 1998. Accounts receivable decreased $3.1 million from $24.4
million at March 31, 1998 to $21.3 million at June 30, 1998. The
line of credit of $6.0 million which was outstanding at March 31,
1998, was repaid during the quarter with cash on hand and collections
of outstanding accounts receivable.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had cash and other liquid investments of
$5.2 million, compared to $6.4 million at March 31, 1998. At June 30,
1998, the Company's current ratio (current assets/current liabilities)
increased to 1.08 from 1.03 at March 31, 1998.
The Company has an agreement for a line of credit with a
financial institution in an amount not to exceed the lesser of
$12.5 million or the sum of (a) 80 percent of the net amount of
eligible accounts receivable as defined in the agreement. The
line of credit expires on December 18, 1999. Interest is payable
monthly at the bank's prime rate (8.5 percent at June 30, 1998).
The lender has an option to purchase 10,000 unregistered shares
of common stock of the Company at $7 per share, which exceeded
market value at the date of grant. The line is secured by
substantially all of the Company's assets. The terms of the
agreement require, among other things, a minimum amount of
tangible net worth, minimum current ratio and minimum total
liabilities to tangible net worth. The agreement also restricts
the amount of net losses, loans and indebtedness and limits the
payment of dividends on the Company's stock. As of June 30,
1998, the Company is in compliance with these covenants. The
Company had no borrowings under this line at June 30, 1998.
The Company has established a retailer financing program whereby the
Company will provide, on a selective basis, financing to video
retailers which the Company believes have the potential for
substantial growth in the industry. In connection with these
financings, the Company typically makes a loan to and/or an equity
investment in the retailer. In some cases, a warrant to purchase
stock may be obtained. As part of such financing, the retailer
typically agrees to cause all of its current and future retail
locations to participate in the PPT System for a designated period of
time. Under these agreements, retailers are typically required to
obtain some or all of their requirements of Cassettes offered under
the PPT System or obtain a minimum amount of Cassettes based on a
percentage of the retailer's revenues. Notwithstanding the long term
nature of such agreements, both the Company and the retailer may, in
some cases, retain the right to terminate such agreement upon 30-90
days prior written notice. These financings are highly speculative in
nature and involve a high degree of risk, and no assurance of a
satisfactory return on investment can be given. The amounts the
Company could ultimately receive could differ materially in the near
term from the amounts assumed in establishing reserves.
The Board of Directors has authorized up to $18 million to be used in
connection with the Company's retailer financing program. As of June
30, 1998, the Company had invested or loaned approximately $14.3
million in various retailers. The investments individually range from
$0.2 million to $5.3 million. Interest rates per annum on the various
loans range from nine percent to the prime rate plus 2 percent. As
each financing is made, and periodically throughout the term of the
agreement, the Company assesses the likelihood of recoverability of
the amount invested or loaned based on the financial position of each
retailer. This assessment includes reviewing available financial
statements and cash flow projections of the retailer and discussions
with retailers' management. As of June 30, 1998, the Company reserved
approximately $9.3 million.
As noted in the Company's 1998 Annual Report to Shareholders, the
Company distributed to its Shareholders shares of common stock of
BlowOut Entertainment, Inc. (BlowOut). The operations of BlowOut were
reflected as discontinued operations in the March 31, 1996
consolidated financial statements. Net current liabilities of
discontinued operations include management's best estimates of the
anticipated losses from discontinued operations through the final
resolution of all contingencies related to the disposition of BlowOut.
The estimates are based on an analysis of the costs which may be
incurred to dispose of the entity. The amounts the Company will
ultimately incur could differ materially in the near term from the
amounts assumed in arriving at the loss on disposal of the
discontinued operations.
BlowOut is an early stage company requiring additional financing if it
is to continue its expansion and support its operations. The Company
is the principal creditor to BlowOut. Pursuant to a Financing
Agreement, the Company agreed to provide guarantees for up to $7
million of indebtedness of BlowOut (the "Guarantee").
The obligations under the Guarantee are comprised of the
following:
(a) BlowOut has a credit facility (the Credit Facility)
in an aggregate principal amount of $2 million for a five-year
term. Amounts outstanding under the Credit Facility bear
interest at a fixed rate per annum equal to 14.525 percent.
Pursuant to the terms of the Guarantee, the Company agreed to
guarantee any amounts outstanding under the Credit Facility
until the lender is satisfied, in its sole discretion, that
BlowOut's financial condition is sufficient to justify the
release of the Company's guarantee. As of June 30, 1998,
BlowOut had borrowed approximately $1.5 million under the
Credit Facility.
(b) BlowOut also has a revolving line of credit (Line of
Credit) in a maximum principal amount at one time outstanding
of $5 million. Under the Line of Credit, BlowOut may only
draw up to 80 percent of the Orderly Liquidation Value (as
defined in the Line of Credit) of eligible new and used
Cassette inventory. Advances under the Line of Credit bear
interest at a floating rate per annum equal to the Bank of
America Reference Rate plus 2.75 percent (11.25 percent as of
June 30, 1998). The term of the Line of Credit is three
years. The Company has agreed, pursuant to an Unconditional
Repurchase Agreement, to purchase under certain circumstances
in the event of default under the Line of Credit, BlowOut's
Cassette inventory at specified amounts up to a principal
amount of $5 million. In February 1998, the Company entered
into an agreement with BlowOut and CCC (the "Tri-Party
Agreement") under which BlowOut has agreed not to draw down in
excess of $4.0 million under the Line of Credit. As of June
30, 1998, BlowOut had borrowed approximately $2.7 million
under the Line of Credit.
There can be no assurance that the Company will not have to pay
out under these guarantees or provide other accommodations.
During the term of the Guarantee, BlowOut has agreed to pay the
Company a weekly fee at a rate equal to .02 percent per week of
then-currently outstanding indebtedness subject to the
Guarantee.
In fiscal year 1997, BlowOut executed a $3.0 million note in
favor of the Company which accrues interest at 9 percent per
annum. As part of the Tri-Party Agreement, the Company agreed
to defer principal and interest payments on this note by BlowOut
until December 31, 2004 during which deferment period no
interest accrues. The Company also agreed to the forgiveness of
all or a portion of the $3.0 million note as BlowOut is able to
lower the Company's contingent obligations under its guarantees.
At June 30, 1998, the total outstanding balance of the debt
under such note, including accrued interest, was $2.8 million.
The Company's exposure related to adverse financial and
operational developments at BlowOut is limited to its
receivables from BlowOut and the obligations under the
Guarantee.
The Company's sources of liquidity include its cash balance,
cash generated from operations and its available credit
facility. These sources are expected to be sufficient to fund
the Company's operations for the year ending March 31, 1999.
PART II
Item 1. Legal Proceedings.
On November 21, 1997, Merle Harmon, individually and as assignee
for Merle Harmon Enterprises and Fan Fair Corporation, sued the
Company and two of its officers in relation to the Company's
attempt to negotiate the purchase of Merle Harmon Enterprises
and Fan Fair Corporation. The case is pending in the U.S.
District Court for the Eastern District of Wisconsin. Plaintiff
alleges breach of contract, fraud, misrepresentation, and
violations of RICO (the Racketeer Influenced and Corrupt
Organizations Act of 1970), and also asserts claims based on a
promissory estoppel theory. The Company believes that all of
the Plaintiff's claims are without merit and has recently filed
a motion to dismiss all claims. The Company intends to continue
to vigorously defend itself and its officers against the suit.
In April 1998, the Company filed a complaint (the "Hollywood
Complaint") against Hollywood Entertainment, Inc. ("Hollywood"),
entitled Rentrak Corporation v. Hollywood Entertainment et al.,
case no. 98-04-02811, in the Circuit Court of the State of
Oregon for the County of Multnomah, Portland, Oregon. In the
Hollywood Complaint, the Company alleges that Hollywood breached
and is continuing to breach its contractual obligation to
acquire all of its leased videocassettes exclusively from the
Company. The Company also alleges that Hollywood committed
certain audit violations including breaching its contractual
obligation to fully and accurately report all sales of the
Company's videocassettes and to pay the appropriate fees to the
Company in connection with such sales. The Company is seeking
monetary damages in the amount of $180,264,576 and injunctive
relief for Hollywood's alleged violations of the exclusivity
obligation. On June 16, 1998, Hollywood responded to the
Hollywood Complaint denying Rentrak's allegations and asserting
a claim for attorney's fees. The Company has suspended the
ordering privileges of Hollywood on account of its breach of the
PPT Agreement and Hollywood has served Rentrak notice attempting
to terminate its PPT Agreement with Rentrak.
In June 1998, Video Update, Inc. ("Video Update") filed a
complaint (the "Video Update Complaint") against the Company
entitled Video Update, Inc. v. Rentrak Corp., Civil Action No.
98-286, in the United States District Court for the District of
Delaware. The Video Update Complaint alleges various violations
of the antitrust laws, including that the Company has attempted
to monopolize the market for videocassettes leased to retail
video stores in violation of Section 2 of the Sherman Act.
Video Update further alleges that the Company's negotiation and
execution of an exclusive, long-term revenue sharing agreement
with Video Update violates Section 1 of the Sherman Act and
Section 3 of the Clayton Act. Video Update is seeking
unspecified monetary relief, including treble damages and
attorneys' fees, and equitable relief, including an injunction
prohibiting the Company from enforcing its agreement with Video
Update or any exclusivity provision against videocassette
suppliers and video retailers. The Company believes the
Complaint filed by Video Update lacks merit and intends to
vigorously defend against the allegations in the Complaint. The
Company has filed a motion to dismiss or transfer pursuant to
the Federal Rule of Civil Procedure 12(b)(3) or alternatively to
transfer pursuant to 28 U.S.C. Section 14.04.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
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.
Dated this 10th day of August, 1998
RENTRAK CORPORATION:
/s/ Carolyn A. Pihl
Carolyn A. Pihl
Chief Accounting Officer
Signing on behalf of the registrant
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 5,180,636
<SECURITIES> 0
<RECEIVABLES> 21,732,498
<ALLOWANCES> 394,470
<INVENTORY> 2,739,199
<CURRENT-ASSETS> 40,622,378
<PP&E> 7,312,231
<DEPRECIATION> 5,502,370
<TOTAL-ASSETS> 52,461,725
<CURRENT-LIABILITIES> 37,784,991
<BONDS> 0
0
0
<COMMON> 11,007
<OTHER-SE> 14,665,727
<TOTAL-LIABILITY-AND-EQUITY> 52,461,725
<SALES> 33,459,442
<TOTAL-REVENUES> 33,459,442
<CGS> 27,547,868
<TOTAL-COSTS> 31,309,810
<OTHER-EXPENSES> 14,131
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,225
<INCOME-PRETAX> 2,135,501
<INCOME-TAX> 845,657
<INCOME-CONTINUING> 1,289,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,289,844
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.11
</TABLE>
