<PAGE> 1
U.S. 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, 1997
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 0-15963
INVIVO CORPORATION
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 77-0115161
---------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
4900 HOPYARD RD. SUITE 210, PLEASANTON, CALIFORNIA 94588
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
TELEPHONE: (510) 468-7600
-------------------------------
(Registrant's telephone number)
Indicate by check whether the registrant (1) 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 outstanding of the issuer's Common Stock, par value $.0008
per share, at December 31, 1997 was 3,268,668 shares.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1997
DECEMBER 31, (DERIVED FROM
1997 AUDITED CONSOLIDATED
(UNAUDITED) FINANCIAL STATEMENTS
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 158,900 171,100
Trade receivables, net 9,810,400 7,898,800
Inventories 6,832,900 7,100,900
Deferred income taxes 802,300 802,300
Prepaid expenses and other current assets 394,500 516,200
----------- -----------
Total current assets 17,999,000 16,489,300
Property and equipment, net 4,368,900 4,460,100
Intangible assets 5,364,500 5,442,400
Other assets 327,700 219,700
----------- -----------
$28,060,100 26,611,500
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,847,000 2,871,000
Accrued expenses 2,062,200 2,153,200
Current portion of long-term debt and
bank borrowings 3,437,100 3,487,900
Income taxes payable 1,077,000 481,200
Other 18,800 21,900
----------- -----------
Total current liabilities 9,442,100 9,015,200
Long-term debt, excluding current portion 1,532,000 1,584,400
Deferred income taxes 145,400 145,400
Other liabilities 52,000 52,000
----------- -----------
Total liabilities 11,171,500 10,797,000
----------- -----------
Stockholders' equity:
Common stock 2,600 2,600
Additional paid-in capital 12,888,400 12,817,400
Retained earnings 3,997,600 2,994,500
----------- -----------
Total stockholders' equity 16,888,600 15,814,500
----------- -----------
Commitments and contingencies
$28,060,100 26,611,500
=========== ===========
</TABLE>
See accompanying note to consolidated financial statements.
2
<PAGE> 3
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------ ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 9,723,600 9,500,800 19,107,300 17,393,200
Cost of goods sold 4,983,800 4,988,600 9,948,000 8,919,100
----------- ----------- ----------- -----------
Gross profit 4,739,800 4,512,200 9,159,300 8,474,100
Operating expenses:
Selling, general
and administrative 3,170,200 3,386,600 6,256,000 6,719,900
Research and experimental 639,900 607,900 1,250,200 1,201,700
----------- ----------- ----------- -----------
Total operating expenses 3,810,100 3,994,500 7,506,200 7,921,600
----------- ----------- ----------- -----------
Income from operations 929,700 517,700 1,653,100 552,500
Other income (expense):
Interest expense (99,500) (67,800) (195,200) (121,000)
Other, net (7,200) 1,700 24,100 24,800
----------- ----------- ----------- -----------
Income before income taxes 823,000 451,600 1,482,000 456,300
Income tax expense 279,800 153,600 478,900 155,100
----------- ----------- ----------- -----------
Net income $ 543,200 298,000 1,003,100 301,200
=========== =========== =========== ===========
Basic net income per common share $ .17 .09 .31 .09
=========== =========== =========== ===========
Weighted average common
shares outstanding (basic) 3,265,233 3,235,516 3,260,646 3,232,719
=========== =========== =========== ===========
Diluted net income per common share $ .16 .09 .30 .09
=========== =========== =========== ===========
Weighted average common
shares outstanding (diluted) 3,416,028 3,460,955 3,393,748 3,439,163
=========== =========== =========== ===========
</TABLE>
See accompanying note to consolidated financial statements.
3
<PAGE> 4
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,003,100 301,200
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization 386,500 338,200
Change in operating assets and liabilities:
Trade receivables (1,911,600) (1,082,300)
Inventories 268,000 (691,700)
Prepaid expenses and other current assets 121,700 54,900
Accrued expenses (91,000) (18,400)
Accounts payable (24,000) 971,900
Income taxes payable 595,800 72,300
Other current liabilities (3,100) (13,300)
----------- -----------
Net cash provided by (used in) operating activities 345,400 (67,200)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (217,400) (1,325,200)
Other (108,000) 18,600
----------- -----------
Net cash used in investing activities (325,400) (1,306,600)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 71,000 62,600
Bank borrowings (repayments), net (62,400) 1,176,500
Principal payments under acquisition notes
payable and long term debt (40,800) --
----------- -----------
Net cash (used in) provided by financing activities (32,200) 1,239,100
----------- -----------
Net decrease in cash and cash equivalents (12,200) (134,700)
Cash and cash equivalents at beginning of period 171,100 436,200
----------- -----------
Cash and cash equivalents at end of period $ 158,900 301,500
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period
for:
Income taxes $ 211,000 92,800
=========== ===========
Interest $ 195,200 121,000
=========== ===========
</TABLE>
See accompanying note to consolidated financial statements.
4
<PAGE> 5
INVIVO CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The consolidated balance sheet as of December 31 1997 and the related
consolidated statements of income for the three and six month periods ended
December 31, 1997 and 1996; and the consolidated statements of cash flows for
the six month periods ended December 31, 1997 and 1996 are unaudited. The
consolidated financial statements reflect, in the opinion of management, all
adjustments necessary to present fairly the financial position and results of
operations as of the end of and for the periods indicated. Interim results are
not necessarily indicative of results for a full year.
For the quarter ended December 31, 1997, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share". This standard
requires reporting of both "basic" and "diluted" earnings per share. Prior year
results have been restated to conform with the new standard.
The financial statements and note are presented as permitted by Form
10-Q, and do not contain certain information included in the Company's annual
consolidated financial statements and notes.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 1997 AND 1996
Sales
Sales for the second quarter ended December 31, 1997 were $9,723,600, an
increase of 2.3% over sales of $9,500,800 for the same period of fiscal 1997.
Sales for the six month period increased 9.9% to $19,107,300 compared with
$17,393,200 in the same period last year. The sales increase for the three and
six month periods was primarily due to sales growth at the Company's patient
safety monitoring business as sales of the "Millennia" portable vital signs
monitor continued to increase along with increased sales in the second quarter
of the Company's MRI vital signs monitoring system. This sales increase at the
patient safety monitoring business offset a sales decline at the oxygen
monitoring business in the second quarter. Sales for the three and six month
periods ended December 31, 1997 were also positively affected by increased sales
at the Company's industrial process control businesses.
Gross Profit
The gross profit margin increased for the three month period ended
December 31, 1997 to 48.7% from 47.5% in the prior fiscal period. The increase
was largely attributable to the sales increase of the MRI vital signs monitor
which has higher margins than the Company's other monitoring products. The gross
profit margin for the six month period ended December 31, 1997 declined to 47.9%
from 48.7% in the prior fiscal period as higher material costs resulted in lower
gross margins at the Company's oxygen monitoring business.
Operating Expenses
Selling, general and administrative expenses for the three and six month
periods ended December 31, 1997 decreased 6.4% or $216,400 and 6.9% or $463,900
respectively, over the previous fiscal periods. Selling, general and
administrative expenses were 32.6% and 32.7% of sales for the three and six
month periods ended December 31, 1997 compared with 35.7% and 38.6%,
respectively, for the same periods in fiscal 1997. The decrease in these
expenditures in aggregate and as a percentage of sales was largely due to a
reduction in selling, general and administrative expenses at the Company's
patient safety monitoring business as many of the non-recurring expenses
associated with the significant expansion in the Company's direct sales force in
fiscal 1997 have decreased.
Research and experimental expenses remained stable at 6.6% and 6.5% of
sales for the three and six month periods ended December 31, 1997 compared to
6.4% and 6.9% for the same periods in fiscal 1997. A substantial amount of the
aggregate research and experimental expenses are on behalf of the patient safety
monitoring business as the Company continues its efforts in developing and
enhancing its "Millennia" vital signs monitor and other vital signs monitoring
products.
Other Income and Expense
Interest expense increased to $99,500 and $195,200 for the three and six
months ended December 31, 1997 compared with $67,800 and $121,000 for the same
periods in fiscal 1997. This increase was the result of increased outstandings
on
6
<PAGE> 7
the Company's revolving bank line of credit along with the increased mortgage on
the Company's recently expanded patient safety monitoring facility.
Provision for Income Taxes
The effective tax rate for the first six months of fiscal 1998 was 32.3%
compared with 34.0% for the same period in fiscal 1997. This reduction in the
effective tax rate was principally due to an adjustment of prior year's taxes.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1997 increased to $8,556,900 compared
with $7,474,100 at June 30, 1997. Cash and cash equivalents at December 31, 1997
were $158,900 compared with $171,100 at June 30, 1997. Net cash provided by
operating activities was $345,400 for the six months ended December 31, 1997
compared with $67,200 used in operations for the six months ended December 31,
1996. This increase was primarily the result of the increase in net income for
the six months ended December 31, 1997 as compared to the same period in the
prior year. Capital expenditures were $217,400 for the six months ended December
31, 1997 compared to $1,325,200 for the first six months of fiscal 1997. The
fiscal 1997 capital expenditure figure included approximately $600,000 of
construction in progress for the expansion of the patient safety monitoring
facility which was completed in February 1997. The remaining difference in
capital spending is largely due to less demonstration equipment requirements for
the direct sales force at the Company's patient safety monitoring business in
fiscal 1998.
In fiscal 1993, the Company purchased 80% of the outstanding common
stock of Invivo Research, Inc. The agreement provided for a contingent payment
resulting in an initial payment of $1,000,000 made on July 15, 1994 and a final
payment of $2,000,000 paid on July 15, 1995. In fiscal 1994, the Company entered
into an agreement to acquire the remaining 20% of the Invivo Research, Inc.
shares. The contingent purchase price for such shares is to be paid in one or
more installments. One-fifth of the price vested on January 1, 1996, 1997 and
1998 and two-fifths vest on January 1, 1999. The former Invivo Research
shareholders can make an election each year beginning in 1996 to be paid any
vested payment. The amount of any payment is based on the after tax profits of
Invivo Research for the calendar year preceding the year that the payment is
made, regardless of when the payment vested, subject to a minimum share price if
certain milestones are achieved. The former Invivo Research shareholders must,
generally, elect to receive a payment in any calendar year by giving notice to
the Company by March of that year and the payment so elected is to be made on
June 1 of that year. The payments are to be made in cash, but if the
shareholders require that more than one-fifth of the payments be made in any
year, the Company can elect to make the excess amount of the payment in the form
of its shares. The Company was informed in March of 1996 that the former Invivo
Research shareholders would elect to be paid on their first installment. Based
on the 1995 calendar year results for Invivo Research, payment was made on June
1, 1996, for $987,900. The former Invivo Research shareholders did not elect to
be paid on their vested second installment in June of 1997.
Bank borrowings decreased $62,400 in the first six months of fiscal
1998. The Company's revolving bank line of credit is collateralized by the
Company's accounts receivable, inventory, and equipment. The Company renewed the
$5,000,000 line of credit on December 1, 1997 to December 1, 1998. At December
31, 1997, $3,332,600 was outstanding on the line of credit.
The Company believes that its cash flow from operations and amounts
available from the bank line of credit will be adequate to meet its anticipated
cash needs for working capital and capital expenditures throughout fiscal 1998.
The Company will continue to explore opportunities for the possible acquisitions
of technologies or businesses, which may require the Company to seek additional
financing.
7
<PAGE> 8
OUTLOOK. The statements contained in this Outlook are based on current
expectations. These statements are forward looking, and actual results may
differ materially. These forward looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
In early fiscal 1997, the Company introduced its new "Millennia" portable
multi-parameter vital signs monitor and substantially increased selling, general
and administrative expenses in connection with this product coming on line. The
Company believes this product positions it to expand from its MRI monitoring
market niche into the much larger mainstream patient monitoring market. The
Company expects this product to continue to have a substantial impact on future
revenue growth and that its future financial results will to a large extent
depend on the success of this product.
The success of the "Millennia" will be dependent on a variety of factors, some
of which may be beyond the control of the Company. Among the factors that could
cause actual results to differ from those anticipated by the Company are:
customer acceptance of new product; effectiveness of sales and marketing
efforts; customer buying patterns; changes in healthcare delivery and
reimbursement; availability of components; impact of the Asian economic
environment; execution of new product manufacturing ramp and competitive
factors, such as competitor's new products and pricing pressures. The statements
contained in this Outlook are based on current expectations. These statements
are forward looking, and actual results may differ materially.
YEAR 2000 ISSUE. Many existing computer systems and related software
applications use only two digits to identify a year in the date field, without
considering the impact of the upcoming change in the century. Such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000. The Company relies on such
computer systems and applications in operating and monitoring all major aspects
of its business. The Company is currently in the process of evaluating the
potential impact of the year 2000 issue on its business and the related expenses
that would be incurred in attempting to remedy such impact. Management's current
estimate is that the costs associated with the year 2000 issue should not have a
material adverse effect on the results of operations or financial position of
the Company in any given year. However, despite the Company's efforts to address
the year 2000 impact on its internal systems, the Company is not sure that it
has fully identified such impact or that it can resolve it without disruption of
its business and without incurring significant expense.
8
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS:
None.
ITEM 2: CHANGES IN SECURITIES:
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES:
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS:
At the Annual Meeting of Stockholders of the Company held on
December 10, 1997 the Stockholders:
1. Elected all of the nominees for Director for the ensuing year
as follows:
<TABLE>
<CAPTION>
Name For Against Abstain
---- --- ------- -------
<S> <C> <C> <C>
Ernest Goggio 2,818,597 0 23,780
James Hawkins 2,815,004 0 27,373
George Sarlo 2,816,004 0 26,373
</TABLE>
2. Amended the Company's 1994 Stock Option Plan to increase by
200,000 the number of shares covered by the Plan with the number
of shares voting in favor of the amendment being 1,150,417; the
number of shares voted against being 204,215; and the number of
abstentions being 16,615.
3. Ratified the selection of KPMG Peat Marwick LLP as
independent public auditors for the Company, with the number of
shares voted in favor of the ratification being 2,833,147; the
number of shares voted against being 3,830; and the number of
abstentions being 5,400.
ITEM 5: OTHER INFORMATION:
None.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) See Exhibit Index included
herein on page 10.
(b) Reports on Form 8-K:
None.
9
<PAGE> 10
INVIVO CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
10.14 Second Amendment to Credit Agreement between Invivo Corp. and
Wells Fargo Bank dated November 19,1997
11.1 Statement of computation of net income per share
27.0 Financial Data Schedule
</TABLE>
10
<PAGE> 11
SIGNATURES
In accordance with requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
INVIVO CORPORATION
Date: February 13, 1998 By:/S/ JOHN F. GLENN
-----------------
Vice President-Finance
and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
11
<PAGE> 1
EXHIBIT 10.14
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of November 19, 1997, by and between Invivo Corporation, a Delaware
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank').
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain Credit Agreement between Borrower and Bank dated
as of December 1, 1996, as amended from time to tome ("Credit Agreement").
WHEREAS, Bank and borrower have agreed to certain changes in the terms
and conditions set forth in the Credit Agreement and have agreed to amend the
Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:
1. Section 1.1(a) is hereby amended by deleting "December 1, 1997" as
the last day on which Bank will make advances under the Line of Credit, and by
substitution for said date "December 1, 1998," with such change to be effective
upon the execution and delivery to Bank of a promissory note substantially in
the form of Exhibit A attached hereto (which promissory note shall replace and
be deemed the Line of Credit Note defined in and made pursuant to the Credit
Agreement) and all other contracts, instruments and documents required by Bank
to evidence such change.
2. Sections 1.3, 1.4, 1.5 and 1.6 are hereby renumbered as Sections 1.4,
1.5, 1.6 and 1.7 The following is hereby added to the Agreement as new Section
1.3:
"SECTION 1.3 FOREIGN EXCHANGE FACILITY.
(a) Foreign Exchange Facility. Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make available to Borrower a facility (the
"Foreign exchange Facility") under which from time to time up to and including
December 1, 1998, will enter into foreign exchange contracts for the account of
Borrower for the purchase and/or sale by Borrower in United States dollars of
medical devices in Europe and Asia; provided however, that the maximum amount of
all outstanding foreign exchange contracts shall not at any time exceed an
aggregate of Three Million Five Hundred Thousand United States Dollars (US
$3,500,000.00). No foreign exchange contract shall be executed for a term in
excess of twelve (12 months or for a term which extends beyond December 1, 1998.
Borrower shall have a "Delivery Limit" under the Foreign Exchange Facility not
to exceed at any time the aggregate principal amount of Seven Hundred fifty
Thousand United States Dollars (US $750,000.00), which Delivery Limit reflects
the maximum principal amount of Borrower's foreign exchange contracts which may
mature during any one (1) day period. All foreign exchange transactions shall be
subject to the additional terms of a Foreign Exchange Agreement, substantially
in the form of Exhibit C attached hereto ("Foreign Exchange Agreement"), all
terms of which are incorporated herein by this reference.
<PAGE> 2
(b) Settlement. Each foreign exchange contract under the Foreign
exchange Facility shall be settled on its maturity date by Bank's debit to any
demand deposit account maintained by Borrower with Bank."
3. Sections 4.8(a) and 4.8(b) are hereby deleted in their entirety, and
the following substituted therefore:
"(a) Working Capital not at any time less than $6,000,000.00, with
"Working Capital" defined as total current assets minus total current
liabilities.
(b) Tangible Net Worth not at any time less than $9,000,000.00, with
"Tangible Net worth" defined as the aggregate of total stockholders equity plus
subordinated debt less any intangible assets."
4. Except as specifically provided herein, all terms and conditions of
the Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This amendment and the Credit Agreement
shall be read together, as one document.
5. Borrower hereby remakes all representations and warranties contained
in the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any conditions, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed as of the day and year first written above.
INVIVO CORPORATION WELLS FARGO BANK,
NATIONAL ASSOCIATION
Bu: __________________________ By:____________________________
JAMES B. HAWKINS RICK FREEMAN
PRESIDENT VICE PRESIDENT
By: __________________________
JOHN GLENN
VICE PRESIDENT, FINANCE
<PAGE> 1
EXHIBIT 11.1
INVIVO CORPORATION AND SUBSIDIARIES STATEMENT OF COMPUTATION OF NET INCOME PER
SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------------- ---------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BASIC:
Weighted average common
shares outstanding 3,265,233 3,235,516 3,260,646 3,232,719
========== ========== ========== ==========
Net Income $ 543,200 298,000 1,003,100 301,200
========== ========== ========== ==========
Basic net income per common share $ 0.17 0.09 0.31 0.09
---------- ---------- ---------- ----------
DILUTED:
Weighted average common
shares outstanding (basic) 3,265,233 3,235,516 3,260,646 3,232,719
---------- ---------- ---------- ----------
Dilutive stock options 150,795 225,439 133,102 206,444
---------- ---------- ---------- ----------
Weighted average common
shares outstanding (diluted) 3,416,028 3,460,955 3,393,748 3,439,163
========== ========== ========== ==========
Net Income $ 543,200 298,000 1,003,100 301,200
========== ========== ========== ==========
Diluted net income per common share $ 0.16 0.09 0.30 0.09
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 159
<SECURITIES> 0
<RECEIVABLES> 10,188
<ALLOWANCES> 378
<INVENTORY> 9,810
<CURRENT-ASSETS> 17,999
<PP&E> 8,205
<DEPRECIATION> 3,836
<TOTAL-ASSETS> 28,060
<CURRENT-LIABILITIES> 9,442
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 16,886
<TOTAL-LIABILITY-AND-EQUITY> 28,060
<SALES> 9,724
<TOTAL-REVENUES> 9,724
<CGS> 4,984
<TOTAL-COSTS> 4,984
<OTHER-EXPENSES> 3,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100
<INCOME-PRETAX> 823
<INCOME-TAX> 280
<INCOME-CONTINUING> 543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 543
<EPS-PRIMARY> .17
<EPS-DILUTED> .16
</TABLE>
