UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
Commission File No. 0-15205
-------
ELCOTEL, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2518405
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6428 Parkland Drive, Sarasota, Florida 34243
----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(941) 758-0389
--------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
----- -----
The number of shares of the issuer's Common Stock outstanding as of
August 12, 1998 was 13,463,390.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
-------------------------------
Item 1. Financial Statements
--------------------
ELCOTEL, INC. AND SUBSIDIARIES
------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Dollars in thousands, except per share data)
<CAPTION>
June 30, March 31,
1998 1998
------------ ------------
(Unaudited)
ASSETS
- -------
CURRENT ASSETS
- --------------
<S> <C> <C>
Cash and temporary investments $21 $1,655
Accounts and notes receivable,
less allowance for doubtful
accounts of $2,257 and $1,923 12,582 11,407
Inventories 13,110 9,088
Refundable income taxes 743 809
Deferred tax asset 3,943 4,141
Prepaid exp. and other current assets 956 1,024
-------- --------
TOTAL CURRENT ASSETS 31,355 28,124
Property, plant and equipment, net
of accumulated depreciation 4,908 4,779
Notes receivable, less allowance for
doubtful accounts of $487 174 346
Goodwill, net of accumulated
amortization of $355 and $190 23,741 23,906
Identified intangible assets, net of
accumulated amortization of $793
and $498 9,867 10,203
Other assets 127 80
-------- --------
$70,172 $67,438
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
- -------------------
Accounts payable and accrued expenses $8,670 $7,819
Current portion of long-term debt 70 68
-------- --------
TOTAL CURRENT LIABILITIES 8,740 7,887
DEFERRED TAX LIABILITY 190 415
BORROWINGS UNDER REVOLVING CREIT LINE 9,385 7,645
LONG TERM DEBT, less current portion 1,805 1,831
-------- --------
TOTAL LIABILITIES 20,120 17,778
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value:
30,000,000 shares authorized
13,475,390 and 13,416,850
shares issued 135 134
Additional paid-in capital 46,538 46,384
Retained earnings 3,556 3,319
Less treasury stock (177) (177)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 50,052 49,660
-------- --------
$70,172 $67,438
======== ========
1
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ELCOTEL, INC. AND SUBSIDIARIES
------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
-------------------
1998 1997
------- -------
<S> <C> <C>
NET SALES $15,636 $6,753
------- -------
COSTS AND EXPENSES:
Cost of goods sold 10,309 3,838
Research and development expenses 1,494 708
Selling, general and
administrative expenses 2,851 1,688
Amortization expense 507 7
Interest (income) expense net 80 (63)
------- -------
TOTAL COSTS AND EXPENSES 15,241 6,178
------- -------
INCOME BEFORE INCOME TAXES 395 575
INCOME TAX EXPENSE 158 200
------- -------
NET INCOME $237 $375
======= =======
BASIC EARNINGS PER SHARE
- ------------------------
NET INCOME PER COMMON SHARE $0.02 $0.05
======= =======
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 13,404 8,182
======= =======
DILUTED EARNINGS PER SHARE
- --------------------------------
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $0.02 $0.05
======= =======
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 13,763 8,301
======= =======
2
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ELCOTEL, INC. AND SUBSIDIARIES
------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(in thousands)
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $237 $375
Adjustments to reconcile net income
to net cash used for operating activities:
Depreciation and amortization 753 105
Provision for doubtful accounts 45 (15)
Deferred tax benefit (27) -
Change in operating assets and liabilities
Accounts and notes receivable (1,048) (1,267)
Inventories (4,022) (828)
Refundable income taxes 66 -
Prepaid expenses and other
current assets 68 (42)
Accounts payable and accrued expense 851 409
Other, net (37) (13)
--------- ---------
Net cash flow used for operating activities: (3,114) (1,276)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (391) (208)
--------- ---------
Net cash flow used for investing activities (391) (208)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds under revolving credit line 1,740 525
Payments on long-term debt (24) (49)
Issuance of common stock 155 -
--------- ---------
Net cash flow provided by
financing activities 1,871 476
--------- ---------
Net decrease in cash and
temporary investments (1,634) (1,008)
Cash and temporary investments at
beginning of period 1,655 1,009
--------- ---------
Cash and temporary investments at
end of period $21 $1
========= =========
ADDITIONAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $157 $11
Income taxes 85 -
3
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
ELCOTEL, INC. AND SUBSIDIARIES
-------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
NOTE A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet as of June 30, 1998 and the
consolidated statements of operations for the three month periods ended
June 30, 1998 and 1997, and the consolidated statements of cash flows for
the three month periods ended June 30, 1998 and 1997 have been prepared
by Elcotel, Inc. (the "Company"), without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results
of operations and cash flows of the Company at June 30, 1998, and for all
periods presented, have been made.
The condensed consolidated balance sheet at March 31, 1998 has been
derived from the Company's audited consolidated financial statements as
of and for the year ended March 31, 1998.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998. The results of operations for the three month
period ended June 30, 1998 are not necessarily indicative of the results
for the full fiscal year.
NOTE B. ACQUISITIONS:
On December 18, 1997, the Company acquired Technology Service Group, Inc.
("TSG"), a Delaware corporation, via a merger for a total purchase price
of $35,605. On September 30, 1997, the Company acquired from Lucent
Technologies Inc. ("Lucent") certain assets related to Lucent's payphone
manufacturing and component parts business for a total purchase price of
$5,821. The accompanying consolidated statement of operations for the
three months ended June 30, 1998 reflect the effects of the TSG merger
and the Lucent acquisition.
4
<PAGE>
Assuming these transactions had occurred on April 1, 1997, the Company's
pro forma results of operations for the quarter ended June 30, 1997 would
have been as follows:
June 30,
1997
----
(Unaudited)
Net Sales $12,970
========
Net Loss ($ 158)
========
Basic earnings per share ($0.01)
========
Diluted earnings per share ($0.01)
========
The pro forma results of operations for the quarter ended June 30, 1997,
set forth above, reflect pro forma adjustments that are directly
attributable to the transactions and the use of the purchase method of
accounting, include the operating results of TSG from March 29, 1997 to
June 27, 1997, but do not reflect the impact of cost reductions or
revenues, gross profit and operating expenses from the Lucent assets.
The pro forma adjustments related to the TSG merger consist of an
increase in amortization of goodwill and other intangible assets of $350
due to the increase in the basis of intangible assets and their estimated
useful lives, a decrease in depreciation of $100 due to an increase in
the basis of property and equipment and their estimated useful lives, an
increase in deferred tax expense of $121 resulting from the allocation to
deferred tax assets and liabilities and a decrease in income tax expense
of $77 to reflect the pro forma effect on income tax expense resulting
from the acquisition. The pro forma adjustments related to the
acquisition of Lucent's assets from the quarter ended June 30, 1997
include an increase in amortization of intangible assets of $65, an
increase in depreciation of $25, an increase in interest expense of $122
and a decrease in income tax expense of $74.
NOTE C. INVENTORIES:
Inventories at June 30, 1998 and March 31, 1998 are summarized as
follows:
June 30, March 31,
1998 1998
--------- ---------
Finished products $ 1,215 $1,383
Work-in-process 2,540 1,545
Purchased components 9,355 6,160
------- -------
$13,110 $9,088
======= =======
5
<PAGE>
NOTE D. STOCKHOLDERS' EQUITY:
Changes in stockholders' equity during the quarter ended June 30, 1998
are summarized as follows:
Additional
Common Paid-In Retained Treasury
Stock Capital Earnings Stock Total
----- ------- -------- -------- -------
Balance at March 31, 1998 $134 $46,384 $3,319 ($177) $49,660
Issuance of 58,541 shares upon
exercise of common stock
options at prices between
$.9524 and $5.25 per share 1 154 155
Net income for the period 237 237
---- ------- ------ ----- -------
Balance at June 30, 1998 $135 $46,538 $3,556 ($177) $50,052
==== ======= ====== ===== =======
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income
("SFAS 130"). SFAS 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined as the
change in equity of a business during a period from transactions and
events and circumstances from non-owner sources, and includes all changes
in equity during a period except those resulting from investments by
owners and distributions to owners. SFAS 130 is effective for fiscal
years beginning after December 15, 1997. The Company has no items of
comprehensive income for the periods ended June 30, 1998 and June 30,
1997; therefore, statements of comprehensive income for such periods are
not presented in the accompanying condensed consolidated financial
statements.
NOTE E. EARNINGS PER SHARE:
Earnings per common share is computed in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"),
which the Company adopted during the third quarter of fiscal 1998. SFAS
128 requires disclosure of basic earnings per share and diluted earnings
per share. Basic earnings per share is computed by dividing net income
by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share is computed by dividing
net income by the weighted average number of shares of common stock
outstanding and potential dilutive common shares outstanding during the
period. Earnings per share for the quarter ended June 30, 1997 has been
restated to conform with SFAS 128. The adoption of SFAS 128 did not have
a significant effect on the Company's financial statements.
6
<PAGE>
The following table represents the computation of basic and diluted
earnings per common share as required by SFAS 128.
Three months ended June 30,
1998 1997
---- ----
Basic earnings per share computation:
Net income applicable to common
shares $237 $375
------ ------
Weighted average common shares
outstanding (in thousands) 13,404 8,182
------ ------
Basic income per common share $0.02 $0.05
====== ======
Three months ended June 30,
1998 1997
---- ----
Diluted earnings per share computation:
Net income applicable to common
shares $237 $375
------ ------
Weighted average common shares
outstanding (in thousands) 13,404 8,182
Common stock equivalents (in thousands) 359 119
------ ------
Total weighted average shares (in thousands) 13,763 8,301
------ ------
Diluted income per common share $0.02 $0.05
====== ======
7
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
-----------------------------------------------
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFEHARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
- ------------------------------------------------------------------------
This report contains certain forward looking information with respect to
plans, projections or future performance of the Company, the occurrence
of which involve certain risks and uncertainties that could cause the
Company's actual results to differ materially from those expected by the
Company, including the risk of adverse regulatory action affecting the
Company's business or the business of the Company's customers, the
integration of operations acquired in fiscal 1998, competition, the risk
of obsolescence of its products, changes in the international business
climate, general economic conditions, seasonality, changes in industry
practices, the outcome of litigation, and uncertainties detailed in the
Company's filings with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
- ---------------------
(Dollars in thousands)
On December 18, 1997, the Company acquired Technology Service Group, Inc.
("TSG"), a Delaware corporation, via a merger for a total purchase price
of $35,605. On September 30, 1997, the Company acquired from Lucent
Technologies Inc. ("Lucent") certain assets related to Lucent's payphone
manufacturing and component parts business for a total purchase price of
$5,821. The accompanying consolidated statement of operations for the
three months ended June 30, 1998 reflect the effects of the TSG merger and
the Lucent acquisition ("fiscal 1998 acquisitions").
Quarter ended June 30, 1998, compared to the quarter ended June 30, 1997:
- -------------------------------------------------------------------------
Net sales for the quarter ended June 30, 1998 ("first quarter 1999"),
increased from $6,753 for the quarter ended June 30, 1997 ("first quarter
1998") to $15,636, an increase of $8,883, or approximately 132%,
principally as a result of an increase in sales of products to customers
in the Independent Private Payphone ("IPP") market of $558, or
approximately 11%, from $5,234 for the first quarter 1998 to $5,792 for
the first quarter 1999, an increase in sales of products to customers in
the Regulated Telephone ("Telco") market of $7,550 from $755 for the first
quarter 1998 to $8,305 for the first quarter 1999 due to the fiscal 1998
acquisitions, an increase in sales of products to customers in the
International market of $867, or approximately 204%, from $426 for the
first quarter 1998 to $1,293 for the first quarter 1999 due to the
Company's performance in the Canadian and Latin American markets, and a
decrease in miscellaneous other sources of revenue of $92, or
approximately 27%, from $339 for the first quarter 1998 to $247 for the
first quarter 1999. Sales to international customers accounted for
approximately 8% of net sales for the first quarter 1999 as compared to
approximately 6% for the first quarter 1998.
8
<PAGE>
Cost of sales as a percentage of net sales increased to 66% for the first
quarter 1999 from 57% for the first quarter 1998 principally as a result
of the increase in sales of lower margin products to the Telco market. As
a result of the fiscal 1998 acquisitions, the Company believes that its
sales to the Telco markets will increase compared to historical sales to
such markets prior to such acquisitions. Because sales of products to the
domestic Telco market have lower margins than many of the other markets in
which the Company competes, the Company also believes its cost of sales as
a percentage of net sales will be higher compared to that percentage for
the Company on a historical basis prior to such acquisitions.
Notwithstanding, the Company expects to improve its margins throughout
fiscal 1999 as a result of cost reduction initiatives and release of lower
cost products.
Research and development costs increased by $786, or approximately 111%,
from $708 in the first quarter 1998 to $1,494 in the first quarter 1999
due to the expansion of resources to support development and engineering
activities related to technology and products acquired in connection with
the fiscal 1998 acquisitions. Selling, general and administrative
expenses increased by $1,163, or approximately 69%, from $1,688 in the
first quarter 1998 to $2,851 in the first quarter 1999 principally as a
result of an expansion of marketing resources to support domestic and
international initiatives, an increase in the Company's allowance for
doubtful accounts, and an increase in expenses resulting from the
acquisition of TSG. Amortization expense increased by $500 from $7 for
the first quarter 1998 to $507 for the first quarter 1999 due to
amortization of goodwill and identifiable intangible assets recorded in
connection with the fiscal 1998 acquisitions. Net interest expense
increased by $143, to $80 of net interest expense for the first quarter
1999, due to an increase in outstanding debt related to the fiscal 1998
acquisitions, as compared with net interest income of $63 for the first
quarter 1998.
The effective tax rate increased from 35% for the first quarter 1998 to
40% for the first quarter 1999 due primarily to non deductible
amortization of goodwill in connection with the TSG acquisition. The
income tax expense for the first quarter 1999 is comprised of $185 of
current tax expense and a deferred tax benefit of $27, as compared to a
current tax expense of $200 for the first quarter 1998.
Liquidity and Capital Resources
- -------------------------------
(Dollars in thousands)
The Company's current assets increased by $3,231, or approximately 11%,
from $28,124 at March 31, 1998 to $31,355 at June 30, 1998, predominantly
from an increase in accounts and notes receivable of $1,175 (related to a
reduction in sales prepaid by customers), an increase of $4,022 in
inventory (related to purchase of inventory to resolve supply shortages
experienced in the fourth quarter of fiscal 1998 and to support the
expected demand in the second quarter of fiscal 1999), and a decrease in
cash of $1,634 used to lower revolving credit indebtedness. Current
liabilities increased by $853, or approximately 11%, from $7,887 at March
31, 1998 to $8,740 at June 30, 1998 predominantly from an increase in
accounts payable and accrued expenses relating to the increase in
inventory levels.
9
<PAGE>
On November 25, 1997, the Company entered into a restated loan agreement
(the "Loan Agreement") with its bank. Under the terms of the Loan
Agreement, the Company is able to borrow a maximum of $15,000 based on the
value of eligible collateral under a revolving line of credit that matures
on November 25, 2002. Indebtedness outstanding under the Loan Agreement
is collateralized by substantially all the assets of the Company.
Interest on amounts borrowed under the line of credit is payable monthly
at the bank's floating 30 day Libor rate plus 1.5% (7.16% at June 30,
1998). Financing available under the Loan Agreement was used to refinance
and retire the Company's then outstanding debt under a $2,000 working
capital line of credit, a $3,050 installment note due on October 2, 2004
and term notes of $3,800 that were due on March 31, 1998. In addition, on
December 18, 1997, the Company retired TSG's outstanding bank indebtedness
of $3,970 from proceeds drawn under the Loan Agreement. Indebtedness
outstanding under the Loan Agreement approximated $9,385 and $7,645,
respectively, at June 30, 1998 and March 31, 1998. At June 30, 1998, the
Company is able to borrow up to $12,886 based on the value of eligible
collateral.
The Company believes that its anticipated cash flow from operations and
borrowings against its bank line of credit will be sufficient to fund its
working capital needs, its capital expenditures and its short and long
term note obligations through June 30, 1999.
Year 2000 Discussion
- --------------------
The Company has completed a preliminary review of Year 2000 issues related
to the Company's internal systems and its products. The Company believes
that its internal systems are Year 2000 compliant since it has recently
installed a new accounting system which integrates its accounting, billing
and manufacturing operations. The Company has evaluated the products that
it continues to support and has identified those products whose software
will have to be modified in order to become Year 2000 compliant. The
Company's plan is to address the modifications required for the software
in those products during fiscal 1999. The Company does not believe that
the cost of such modifications will be material to its business,
operations or financial condition. During fiscal 1999, the Company
intends to contact those suppliers who provide critical products and
services to the Company to determine that the suppliers' operations and
the products and services they provide are Year 2000 compliant or to
monitor their progress toward Year 2000 compliance.
10
<PAGE>
New Accounting Pronouncements
- -----------------------------
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS 131"). SFAS 131 requires public
entities to report certain information about operating segments, their
products and services, the geographic areas in which they operate, and
their major customers, in complete financial statements and in condensed
interim financial statements issued to stockholders. SFAS 131 is
effective for fiscal years beginning after December 15, 1997. The
adoption of SFAS 131 is not expected to have a material effect on the
Company's results of operations or financial position.
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, Employers'
Disclosures about Pensions and Other Post-retirement Benefits ("SFAS
132"). SFAS 132 revises employers' disclosures about pension and other
post-retirement benefit plans. SFAS 132 is effective for fiscal years
beginning after December 15, 1997. The standard addresses disclosure
issues and, therefore, will not affect the Company's financial position or
results of operations.
Also, in June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 133
requires that gains or losses be recognized in earnings for a fair value
hedge in the period of change together with the offsetting loss or gain on
the hedged item attributable to the risk being hedged. Management does
not believe that the adoption of SFAS 133 will have a significant impact
on the Company's consolidated financial statements. This statement is
effective for all fiscal quarters of all fiscal years beginning after June
15, 1999. In accordance with SFAS 133, the Company will begin
implementing the requirements under SFAS 133 beginning in fiscal year 2000.
11
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
Nogah Bethlahmy, et al. plaintiffs v. Randy S. Kuhlmann, et al .defendants.
- ---------------------------------------------------------------------------
San Diego Superior Court Case No. 691635.
As previously reported, this putative class action was filed in the
Superior Court of the State of California for the County of San Diego
alleging that Amtel Communications, Inc. ("Amtel"), a former customer of
the Company that filed for bankruptcy, conspired with its own officers and
professionals, and with various telephone suppliers (including the
Company) to defraud investors in Amtel by operating a Ponzi scheme. See
Item 3, Legal Proceedings of Part I of the Company's Form 10-KSB for the
fiscal year ended March 31, 1996 and Item I, Legal Proceedings of Part II
of the Company's Form 10-Q for the quarter ended September 30, 1996.
On July 17, 1998, the Company filed a Motion for Summary Judgment. The
Company disputes liability and intends to defend this matter vigorously,
although the Company cannot predict the ultimate outcome of this
litigation.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
The following exhibits are filed herewith as a part of this Report
Exhibit
No. Description of Exhibit
------- ----------------------
27 Financial Data Schedule (Edgar Filing only)
(b) Reports on Form 8-K
None
13
<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.
Elcotel, Inc.
----------------
(Registrant)
Date: August 14, 1998 By: /s/ Ronald M. Tobin
-------------------------
Ronald M. Tobin
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Method of
Number Description Filing
- ------- ----------- ----------------
27 Financial Data Schedule (Edgar Filing only) Included in this
report.
E-1
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATMENTS AS OF JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 21
<SECURITIES> 0
<RECEIVABLES> 12,582
<ALLOWANCES> (2,257)
<INVENTORY> 13,110
<CURRENT-ASSETS> 31,355
<PP&E> 4,908
<DEPRECIATION> 0
<TOTAL-ASSETS> 70,172
<CURRENT-LIABILITIES> 8,840
<BONDS> 0
0
0
<COMMON> 135
<OTHER-SE> 49,917
<TOTAL-LIABILITY-AND-EQUITY> 70,172
<SALES> 15,636
<TOTAL-REVENUES> 15,636
<CGS> 10,309
<TOTAL-COSTS> 10,309
<OTHER-EXPENSES> 4,852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> 395
<INCOME-TAX> 158
<INCOME-CONTINUING> 237
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 237
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
