<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, 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 0-15963
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 $.01
per share, at December 31, 1998 was 3,286,768 shares.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INVIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1998 JUNE 30,
(UNAUDITED) 1998
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 606,500 554,100
Trade receivables, net 10,583,800 10,277,000
Inventories 7,495,300 7,282,400
Deferred income taxes 1,138,000 1,138,000
Prepaid expenses and other current assets 470,400 451,400
----------- -----------
Total current assets 20,294,000 19,702,900
Property and equipment, net 4,856,500 4,441,100
Intangible assets 5,664,300 5,748,700
Other assets 286,200 302,600
----------- -----------
$31,101,000 30,195,300
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,353,900 3,139,100
Accrued expenses 2,920,600 2,679,700
Current portion of long-term debt and
bank borrowings 2,424,800 3,087,200
Income taxes payable 1,146,500 1,433,200
----------- -----------
Total current liabilities 8,845,800 10,339,200
Long-term debt, excluding current portion 2,066,600 1,479,800
Deferred income taxes 156,000 156,000
Other liabilities 52,000 52,000
----------- -----------
Total liabilities 11,120,400 12,027,000
----------- -----------
Stockholders' equity:
Common stock 32,868 32,694
Additional paid-in capital 13,038,232 12,878,606
Retained earnings 6,909,500 5,257,000
----------- -----------
Total stockholders' equity 19,980,600 18,168,300
----------- -----------
Commitments and contingencies
$31,101,000 30,195,300
=========== ===========
</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,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $11,910,300 9,723,600 23,410,800 19,107,300
Cost of goods sold 5,929,400 4,983,800 11,665,300 9,948,000
---------- --------- ---------- ----------
Gross profit 5,980,900 4,739,800 11,745,500 9,159,300
Operating expenses:
Selling, general
and administrative 3,862,000 3,170,200 7,707,200 6,256,000
Research and experimental 722,200 639,900 1,413,100 1,250,200
--------- --------- --------- ---------
Total operating expenses 4,584,200 3,810,100 9,120,300 7,506,200
--------- --------- --------- ---------
Income from operations 1,396,700 929,700 2,625,200 1,653,100
Other income (expense):
Interest expense (77,300) (99,500) (159,900) (195,200)
Other, net (5,900) (7,200) (1,300) 24,100
---------- ---------- ---------- ---------
Income before income taxes 1,313,500 823,000 2,464,000 1,482,000
Income tax expense 420,300 279,800 811,500 478,900
--------- --------- --------- ---------
Net income $ 893,200 543,200 1,652,500 1,003,100
========= ========= ========= =========
Basic net income per common share $ .27 .17 .50 .31
=== === === ===
Weighted average common
shares outstanding (basic) 3,277,386 3,265,233 3,273,667 3,260,646
========= ========= ========= =========
Diluted net income per common share $ .25 .16 .47 .30
=== === === ===
Weighted average common
shares outstanding (diluted) 3,586,518 3,416,028 3,551,454 3,393,748
========= ========= ========= =========
</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, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,652,500 1,003,100
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Depreciation and amortization 437,000 386,500
Loss on sale of property and equipment 9,200 -
Change in operating assets and liabilities:
Trade receivables (306,800) (1,911,600)
--------- ----------
Inventories (212,900) 268,000
Prepaid expenses and other current assets (19,000) 121,700
Accrued expenses 240,900 (91,000)
Accounts payable (785,200) (24,000)
Income taxes payable (235,000) 595,800
Other current liabilities - (3,100)
--------- ----------
Net cash provided by operating activities 780,700 345,400
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (777,300) (217,400)
Other assets 16,400 (108,000)
Intangible assets (232,600) -
--------- ----------
Net cash used in investing activities (993,500) (325,400)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 108,200 71,000
Bank borrowings (repayments), net 209,000 (62,400)
Principal payments under acquisition notes
payable and long term debt (52,000) (40,800)
--------- ----------
Net cash (used in) provided by financing activities 265,200 (32,200)
--------- ----------
Net decrease in cash and cash equivalents 52,400 (12,200)
Cash and cash equivalents at beginning of period 554,100 171,100
--------- ----------
Cash and cash equivalents at end of period $ 606,500 158,900
========= ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $1,033,300 211,000
========= ==========
Interest $ 157,000 195,200
========= ==========
</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, 1998 and the related
consolidated statements of income for the three and six month periods ended
December 31, 1998 and 1997; and the consolidated statements of cash flows for
the six month periods ended December 31, 1998 and 1997 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.
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, 1998 AND 1997
Sales
Sales for the second quarter ended December 31, 1998 were $11,910,300,
an increase of 22.5% over sales of $9,723,600 for the same period of fiscal
1998. Sales for the six months ended December 31, 1998 increased 22.5% to
$23,410,800 compared with $19,107,300 for 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. Continued strong demand for
the Company's next generation MRI vital signs monitor was largely responsible
for the sales increase. Sales of the "Millennia" portable vital signs monitor
and "Centurion" central station monitor also contributed to the sales increase.
Sales for the three and six month periods ended December 31, 1998 were also
positively affected by increased sales at the Company's gas detection and oxygen
monitoring businesses.
Gross Profit
The gross profit margin increased for the three and six month periods
ended December 31, 1998 to 50.2% from 48.8% and 47.9%, respectively, in the
three and six month fiscal periods. The increase was largely attributable to the
sales growth of the MRI vital signs monitoring product line which has higher
margins than the "Millennia" vital signs monitor and other monitoring products.
Operating Expenses
Selling, general and administrative expenses for the three and six
month periods ended December 31, 1998 increased 21.8% or $691,800 and 23.2% or
$1,451,200 respectively, over the previous fiscal periods. Selling, general and
administrative expenses were 32.4% and 32.9% of sales for the three and six
month periods ended December 31, 1998 compared with 32.6% and 32.7%,
respectively, for the same periods in fiscal 1998. The increase in these
expenditures in aggregate was largely due to higher sales commission expenses on
the higher sales volume at the Company's patient safety monitoring and gas
detection businesses. Increased administrative expenses in support of the higher
sales volume at the patient safety monitoring business also contributed to the
increase.
Research and experimental expenses were 6.1% and 6.0% of sales for the
three and six month periods ended December 31, 1998 compared to 6.6% and 6.5%
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 to develop additions to its
"Millennia" line designed for specialized market areas and to enhance existing
models.
Other Income and Expense
Interest expense decreased to $77,300 and $159,900 for the three and
six months ended December 31, 1998 compared with $99,500 and $195,200 for the
same periods in fiscal 1998. This decrease was primarily the result of lower
average balances on the Company's revolving bank line of credit for the first
six months of fiscal 1999.
6
<PAGE> 7
Provision for Income Taxes
The effective tax rate for the quarter ended December 31, 1998 was
32.0% compared with 34.0% for the prior year period. This reduction in the
effective tax rate was principally due to an adjustment of prior year's taxes.
The effective tax rate for the first six months of fiscal 1999 was 32.9%
compared with 32.3% for the same period in fiscal 1998. The effective rate
differs from the statutory rate due principally to the benefit of a foreign
sales corporation and utilization of research, experimental, and other credits.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1998 increased to $11,396,500 compared
with $9,363,700 at June 30, 1998. Cash and cash equivalents at December 31, 1998
were $606,500 compared with $554,100 at June 30, 1998. Net cash provided by
operating activities was $780,700 for the six months ended December 31, 1998
compared with $345,400 provided by operations for the six months ended December
31, 1997. This increase was largely the result of the increase in net income
offset by changes in operating assets and liabilities, particularly inventories,
accounts receivable, accounts payable and income taxes payable.
Capital expenditures were $777,300 for the first six months of fiscal
1999 compared to $217,400 for the prior year period. The increase was primarily
the result of costs associated with the Company's new information systems and
sales demonstration equipment at the Company's patient safety monitoring
business.
In fiscal 1993, the Company purchased 80% of the outstanding common
stock of Invivo Research, Inc. 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 vested 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. In March of 1998, the former Invivo Research shareholders
elected to be paid on the second vested installment which amounted to $465,342.
The former Invivo Research shareholders may elect to receive any of the three
remaining vested payments on June 1, 1999, by giving notice to the Company by
March 15, 1999, or may choose to defer any vested payments to future years. If
the former shareholders elect to receive a vested payment, the Company must make
the payment on June 1, 1999. The payments are to be made in cash. However, if
the shareholders require that the payment vested in 1998 and one or more of the
payments which vested in 1999 all be made in any one year, the Company can elect
to make the payment that vested in 1998 in the form of its shares. Beginning
March 31, 1999, the Company has the right to elect to pay any or all of the
remaining three payments. If the Company exercises its rights, it must make the
payment in cash. As of February 1999, the total remaining purchase price is
estimated to be approximately $2,900,000.
In October 1998, the Company increased its bank line of credit to
$7,500,000 from $5,000,000 and added a $1,000,000 three-year term loan. The
Company also renewed the line of credit from December 1, 1998 to December 1,
1999. The Company's revolving bank line of credit and term loan are
collateralized by the Company's accounts receivable, inventory, and equipment.
At December 31, 1998, $1,987,100 was outstanding on the line of credit and
$972,200 was outstanding on the term loan.
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 1999.
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
NEWLY ADOPTED ACCOUNTING PRONOUNCEMENTS
REPORTING COMPREHENSIVE INCOME. In 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards(SFAS)
No.130, Reporting Comprehensive Income, which establishes standards for
reporting and displaying comprehensive income and its components. The statement
is effective for fiscal years beginning after December 15, 1997 and has been
adopted by Invivo Corporation in fiscal year 1999. The Company does not
currently have any of the reconciling components defined; therefore, net income
equals comprehensive income.
RECENT ACCOUNTING PRONOUNCEMENTS
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. In
1997, the FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, which establishes standards for the way the public
business enterprises are to report selected information about operating segments
in interim financial reports issued to stockholders. The statement is effective
for years beginning after December 15, 1997, and will be adopted by Invivo
Corporation in its annual reporting for fiscal year 1999.
EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT
BENEFITS. In February 1998, the FASB issued SFAS No. 132, Employers' Disclosures
about Pensions and Other Postretirement Benefits. SFAS No. 132 revises SFAS 87
Employers' Accounting For Pensions. SFAS No. 132 is effective for fiscal years
beginning after December 15, 1997 and requires restatement of disclosures for
earlier periods provided for comparative purposes, if available. Because the
Company does not have any of these type of plans, it believes that SFAS No. 132
will have no impact on the consolidated financial statements.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. In June
1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, which establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. The statement is effective for
fiscal quarters of fiscal years beginning after June 15, 1999. As the Company
does not currently have any derivative instruments for hedging activities
engaged, the Company believes that SFAS No. 133 will have no impact on its
consolidated financial statements.
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 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. In
late fiscal 1998, the Company introduced its next generation MRI monitor. The
Company expects both of these products 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 these products.
The success of the "Millennia" and the MRI monitor will be dependent on a
variety of factors, some of which may be beyond the control of the Company.
8
<PAGE> 9
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 international economic environment; execution of new product manufacturing
ramp and competitive factors, such as competitor's new products and pricing
pressures.
The Company's statements in this Form 10-Q for the period ended December 31,
1998 regarding the year 2000 issue also constitute forward looking statements of
anticipated costs, timing of hardware and software installation and year 2000
compliance of suppliers and customers. Actual results could differ due to
unanticipated difficulties in completing year 2000 compliance efforts or
additional year 2000 issues that have not been identified by the Company.
YEAR 2000
READINESS FOR YEAR 2000
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 incorrect or unintended results unless corrected so that they can process
data related to the year 2000 and thereafter. We rely on such computer systems
and applications in operating and monitoring most major aspects of our business.
We have evaluated the impact of the year 2000 issue on our business and the
related expenses incurred in attempting to remedy such impact. The year 2000
issue could affect us in at least three different ways:
o The software or the chips embedded within computers and other
systems we use in our offices and manufacturing facilities could be
affected.
o The software or the chips used in the products we sell could be
affected.
o Third parties who do business with us may not be prepared for the
year 2000.
We have determined that regardless of the year 2000 issue, replacement of
existing office and other systems would provide more efficient operations and
added functionality. We have contracted with outside information consulting
companies both to install new hardware and to replace our current
mission-critical software systems with off-the-shelf year 2000 compliant
software. We expect all information system upgrades and conversions to be
completed and fully operational by April 1, 1999. We are currently assessing our
electronic office and manufacturing equipment to determine if such equipment is
dated-sensitive and will require upgrades. If after this assessment we determine
that some of our equipment needs to be upgraded or replaced, we plan to finish
the required work by September 1999.
We believe that our currently marketed products are, or will be by July 1, 1999,
year 2000 compliant. Some of our products are not affected because they do not
contain a date field in the software. On some previously marketed products which
are not year 2000 compliant, we will make an upgrade available to our customers
to ensure year 2000 compliance.
We cannot predict the effect of year 2000 problems on our vendors, customers and
other entities with which we transact business, or with whose products our
products interact. We have undertaken a survey of the year 2000 readiness of
these third parties and plan to complete this assessment by mid-calendar 1999.
COSTS
Through December 31, 1998, we incurred approximately $275,000 of costs
associated with our new information systems, all of which has been capitalized.
Of this, approximately $200,000 has been spent on replacing old hardware, and
approximately $75,000 has been spent on replacing old software. We currently
estimate that the costs associated with the new systems will ultimately total
approximately $350,000 and should not have a material adverse effect on our
result of operations or financial position in fiscal 1999. We expect that most
of the remaining $75,000 will be spent on replacing existing hardware. Because
we would have replaced these systems even without the year 2000 problem, our
year 2000 expenditures have not deferred other projects that we otherwise would
have undertaken.
RISKS
We expect to make the changes required to address the year 2000 problems for the
software and embedded chips in our offices and manufacturing facilities and in
the products we make. We presently believe that with the new software and
hardware we are currently purchasing and with any required modifications to our
office and other systems which our assessment shows to be needed, the year 2000
issues is not reasonably likely to pose significant problems with respect to our
operations or products. However, if unforeseen difficulties arise, such
modifications, conversions and replacements are not completed on time, or if or
customers' or suppliers' systems are not modified to become year 2000 compliant,
the year 2000 issue may have a material adverse effect on our business,
financial condition and results of operations.
We cannot presently assess the likelihood that we will experience significant
problems due to the unresolved year 2000 problems of third parties with which we
do business. Although we have not been put on notice that any known third party
problem will not be timely resolved, we have limited information and no
assurance can be made concerning the year 2000 readiness of third parties. If
third parties fail to achieve year 2000 compliance, the year 2000 issue may have
a material adverse effect on our business, financial condition and results of
operations. Similarly, there can be no assurance that we can timely mitigate our
risks related to a third party's failure to resolve its year 2000 issues. If we
fail to timely mitigate such risks, that failure may have a material adverse
effect on our business and results of operations.
CONTINGENCY PLANS
We have not attempted to quantify our most likely year 2000 worst-case scenario
nor have we considered any contingency plans in case the installations by our
outside information consulting companies are not satisfactory for year 2000
compliance, as we believe that the installations will sufficiently address the
year 2000 issue. However, if the installations completed by April 1, 1999 are
not satisfactory for year 2000 compliance, we will then formulate the necessary
contingency plans.
9
<PAGE> 10
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, 1998 the Stockholders:
1. Elected all of the nominees for Director for the ensuing year as
follows:
Name For Against Abstain
---- --- ------- -------
Ernest Goggio 2,808,492 0 8,380
James Hawkins 2,831,178 0 8,380
George Sarlo 2,831,178 0 8,180
Laureen Debuono 2,835,978 0 3,380
Roger Susi 2,836,178 0 3,180
2. 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.
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 8, 1999 By: /s/ JOHN F. GLENN
-------------------------
Vice President-Finance
and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
11
<PAGE> 12
INVIVO CORPORATION
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
11.1 Statement of computation of net income per share
27.0 Financial Data Schedule
12
<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,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BASIC:
Weighted average common
shares outstanding 3,277,386 3,265,233 3,273,667 3,260,646
========== ========== ========== ==========
Net Income $ 893,200 543,200 1,652,500 1,003,100
========== ========== ========== ==========
Basic net income per common share $ 0.27 0.17 0.50 0.31
========== ========== ========== ==========
DILUTED:
Weighted average common
shares outstanding (basic) 3,277,386 3,265,233 3,273,667 3,260,646
Dilutive stock options 309,132 150,795 133,102 206,444
---------- ---------- ---------- ----------
Weighted average common
shares outstanding (diluted) 3,586,518 3,416,028 3,551,454 3,393,748
========== ========== ========== ==========
Net Income $ 893,200 543,200 1,652,500 1,003,100
========== ========== ========== ==========
Diluted net income per common share $ 0.25 0.16 0.47 0.30
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 607
<SECURITIES> 0
<RECEIVABLES> 10,584
<ALLOWANCES> 456
<INVENTORY> 7,495
<CURRENT-ASSETS> 20,294
<PP&E> 9,338
<DEPRECIATION> 4,481
<TOTAL-ASSETS> 31,101
<CURRENT-LIABILITIES> 8,846
<BONDS> 0
0
0
<COMMON> 33
<OTHER-SE> 19,948
<TOTAL-LIABILITY-AND-EQUITY> 31,101
<SALES> 11,910
<TOTAL-REVENUES> 11,910
<CGS> 5,929
<TOTAL-COSTS> 5,929
<OTHER-EXPENSES> 4,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 1,314
<INCOME-TAX> 420
<INCOME-CONTINUING> 893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 893
<EPS-PRIMARY> .27
<EPS-DILUTED> .25
</TABLE>
