SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the quarterly period ended April 4, 1999
/_/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ________
Commission File Number: 0-15930
SOUTHWALL TECHNOLOGIES INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-2551470
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1029 Corporation Way, Palo Alto, California 94303
------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 962-9111
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 May 12, 1999 there were 7,388,065 shares of the Registrant's Common Stock
outstanding.
1
<PAGE>
SOUTHWALL TECHNOLOGIES INC.
INDEX
Page
Number
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Consolidated Balance Sheets - April 4, 1999
and December 31, 1998.......................................3
Consolidated Statements of Operations -
three months ended April 4, 1999
and March 29, 1998 .........................................4
Consolidated Statements of Cash Flows -
three months ended April 4, 1999
and March 29, 1998 .........................................5
Notes to Consolidated Financial Statements..................6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of Operations............7
Item 3 Quantitative and Qualitative Disclosures about Market Risk.12
PART II OTHER INFORMATION
Item 1 Legal Proceedings..........................................13
Item 2 Changes in Securities......................................13
Item 3 Defaults Upon Senior Securities............................13
Item 4 Submission of Matters to a Vote of Stockholders............13
Item 5 Other Information..........................................13
Item 6 Exhibits and Reports on Form 8-K...........................13
Signatures.................................................14
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements:
SOUTHWALL TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
ASSETS April 4, December 31,
1999 1998
-------- --------
Current assets:
Cash and cash equivalents $ 230 $ 4,136
Short-term investments -- 7
Accounts receivable, net of allowance
for doubtful accounts of $893 and $845 9,860 12,355
Inventories 6,521 6,057
Other current assets 1,099 813
-------- --------
Total current assets 17,710 23,368
Property and equipment, net 30,431 29,068
Other assets 1,598 1,583
-------- --------
Total assets $ 49,739 $ 54,019
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank credit line $ 500 $ --
Accounts payable 5,582 6,307
Accrued compensation 1,806 2,265
Other accrued liabilities 1,927 3,655
Current portion of long-term debt 15,085 15,397
-------- --------
Total current liabilities 24,900 27,624
Long-term debt 104 141
Deferred income taxes 437 437
-------- --------
Total liabilities 25,441 28,202
-------- --------
Commitments
Stockholders' equity:
Common stock, $.001 par value,
20,000 shares authorized:
Issued and outstanding: 7,889 and 7,889 8 8
Capital in excess of par value 52,181 52,181
Notes Receivable (1,020) (1,020)
Accumulated deficit (24,019) (22,500)
Less cost of treasury stock, 565
and 565 shares (2,852) (2,852)
-------- --------
Total stockholders' equity 24,298 25,817
-------- --------
Total liabilities and
stockholders' equity $ 49,739 $ 54,019
======== ========
See accompanying notes to consolidated financial statements.
3
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SOUTHWALL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended
---------------------------------
April 4, 1999 March 29, 1998
------------- --------------
Net revenues $ 10,858 $ 10,416
-------- --------
Costs and expenses:
Cost of sales 8,911 10,215
Research and development 1,233 1,060
Selling, general and
administrative 1,966 2,408
-------- --------
Total costs and expenses 12,110 13,683
-------- --------
Loss from operations (1,252) (3,267)
Interest income/(expense), net (255) (108)
-------- --------
Loss before income taxes (1,507) (3,375)
Provision for income taxes 12 --
-------- --------
Net loss $ (1,519) $ (3,375)
======== ========
Net loss per share - Basic $ (.21) $ (.45)
======== ========
- Diluted $ (.21) $ (.45)
======== ========
Weighted average shares of
common stock and common
stock equivalents
- Basic 7,324 7,561
- Diluted 7,324 7,561
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
SOUTHWALL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<CAPTION>
Three Months Ended
-----------------------------------
April 4, 1999 March 29, 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,519) $ (3,375)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,152 940
Decrease (increase) in accounts receivable 2,495 2,712
Decrease (increase) in inventories (464) (335)
Decrease (increase) in other current assets (286) (2)
(Decrease) increase in accounts payable
and accrued liabilities (2,912) 945
-------- --------
Cash provided by (used in) operating activities (1,534) 885
-------- --------
Cash flows from investing activities:
Decrease (increase) in short-term investments 7 (1,510)
Expenditures for property and equipment
and other assets (2,530) (1,044)
-------- --------
Net cash used in investing activities (2,523) (2,554)
-------- --------
Cash flows from financing activities:
Payments on long-term debt (349) (118)
Bank line of credit borrowings 500 --
Issuance of treasury stock, net -- 74
Repayment of stock option loans -- 50
-------- --------
Net cash provided by financing activities 151 6
-------- --------
Net decrease in cash and cash
equivalents (3,906) (1,663)
Cash and cash equivalents, beginning of year 4,136 10,524
-------- --------
Cash and cash equivalents, end of period $ 230 $ 8,861
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
SOUTHWALL TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(Unaudited)
Note 1 - Interim Period Reporting:
While the information presented in the accompanying consolidated
financial statements is unaudited, it includes all adjustments
(consisting only of normal recurring adjustments) which, in the opinion
of management, are necessary to present fairly the Company's financial
position and results of operations, and changes in financial position
as of the dates and for the periods indicated.
Certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the financial statements contained in the Company's Form 10-K for
the year ended December 31, 1998. The results of operations for the
interim periods presented are not necessarily indicative of the
operating results of the full year.
Note 2 - Inventories:
Inventories are stated at the lower of cost (determined by the
first-in, first-out method) or market. Inventories consisted of the
following:
April 4, 1999 December 31, 1998
------------- -----------------
Raw materials $3,829 $2,314
Work-in-process 1,056 2,155
Finished goods 1,636 1,588
------ ------
Total $6,521 $6,057
====== ======
Note 3 - Commitments:
During 1996, the Company entered into an addendum to a previous
supply agreement with a major customer for the sale of the Company's
anti-reflective film. Beginning July 1, 1997, the Company is committed
to supply and the customer is committed to purchase fixed volumes
thereafter until December 31, 2000. Should either the Company fail to
supply or the customer fail to purchase the specified quantities, a
penalty, based on the sales price to the customer from the prior
period, must be paid to the other. Currently, the Company and its
customer are in the process of negotiating modifications to certain
terms and conditions of this supply agreement.
Note 4 - Line of Credit Agreement:
The Company has secured a $4 million revolving line of credit with
a bank which expires in June 2000. This line of credit may be extended
further for additional one-year terms with the bank's approval. The
amount of borrowings is based upon a percentage of accounts receivable,
which at April 4, 1999, did not limit available borrowing under the
line. The line is secured by certain assets of the Company and bears
interest at an annual rate of prime plus
6
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1.25%. Under the terms of the agreement, the Company is required to
maintain certain financial covenants. As of April 4,1999, $0.5 million
was borrowed under this line of credit.
Note 5 - Net income (loss) per share:
Basic net income (loss) per share is computed by dividing income
available to common shareholders (numerator) by the weighted average
number of common shares outstanding (denominator) for the period.
Diluted net income (loss) per share gives effect to all dilutive
potential common shares outstanding during the period. The computation
of diluted earnings per share uses the average market prices during the
period. During each of the periods presented there were no differences
between the numerators used for calculation of basic and diluted net
income (loss) per share. The total amount of the difference in the
basic and diluted weighted average shares of common stock and common
stock equivalents in the periods where there is net income is
attributable to the effect of dilutive stock options. In net loss
periods, the basic and diluted weighted average shares of common stock
and common stock equivalents are the same because inclusion of stock
options would be antidilutive.
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations:
Except for the historical information contained herein, the
matters discussed in this Form 10-Q Report are forward-looking
statements that involve risks and uncertainties, including those
discussed below and in the Company's Annual Report on Form 10-K. Actual
results may differ materially from those projected. These
forward-looking statements represent the Company's judgment as of the
date of the filing of this Form 10-Q Report. The Company disclaims,
however, any intent or obligation to update these forward-looking
statements.
General
The Company has experienced significant fluctuations in quarterly
results of operations. Revenues have varied from quarter to quarter due
to the seasonal buying patterns for the Company's Heat Mirror(TM)
products, which typically have been strongest in the second and third
quarters, and the timing of short-term sales contracts. Additionally,
sales of the Company's energy conservation products are significantly
influenced by the residential and commercial construction industries,
and reduction in construction has generally resulted in a reduction in
the sales of the Company's Heat Mirror(TM) products. Historically,
operating results have varied from quarter to quarter as a function of
the utilization of the Company's production machines. In 1998, and in
the first quarter of 1999, operating results were affected by process
and machine problems resulting in quality issues associated with the
anti-reflective film product manufactured in Tempe, Arizona. The
development and introduction of new products and the changing mix of
products manufactured have added to the production problems and
inefficiencies experienced by the Company. Primarily as a result of
these factors, and in view of the Company's strategy of developing
additional applications for its thin-film technology, and its ongoing
practice of upgrading its manufacturing processes, the Company may
continue to experience quarterly fluctuations in its results of
operations.
7
<PAGE>
Although the Company has not experienced a significant amount of
inventory obsolescence and believes that its inventory is recoverable,
obsolescence of the Company's products could be affected by
technological change, competition, loss of customers and reduction in
demand, among other factors.
The Company believes that it must continue to increase revenues
and improve manufacturing processes and yields to achieve sustained
profitability. Although the Company expanded its capacity by opening a
new manufacturing facility in 1997 in Tempe, Arizona and entered into a
purchase agreement in 1998 for a new production machine to be completed
and installed in Tempe by the fourth quarter of 1999, and is
continuously seeking to expand existing applications, to develop new
applications and to expand international marketing and sales efforts,
there can be no assurance that the Company will be successful in these
efforts and continue to increase revenues.
Year 2000 readiness
The Company believes the Year 2000 issue represents a material
risk to the Company. The Year 2000 issue involves the potential
inability of information or other data dependent systems to properly
distinguish year references at the turn of the century and certain
other dates.
The Company itself is heavily dependent upon the proper
functioning of its own computer systems, including (1) computers and
related software for its financial and manufacturing information
systems, (2) computers, programmable logic controllers and other data
dependent equipment in its manufacturing processes, and (3) computers,
scientific equipment and related software for its engineering, research
and development activities. Any failure or malfunctioning on the part
of these or other systems could cause disruptions of operations,
including a temporary inability to process financial transactions,
manufacture products or engage in ordinary business activities in ways
that are not currently known, discernible, quantifiable or otherwise
anticipated by the Company.
In October 1996 the Company began reviewing Year 2000 issues and
prepared a plan ("The Plan") to address those issues. The Plan consists
of several phases. The first is the inventory and prioritization of
potential Year 2000 items, and the assessment of Year 2000 compliance.
The second phase is the remediation of any noted problems. The third
phase is the testing of material items and the fourth phase is the
preparation of contingency plans. All phases of The Plan are expected
to be handled with existing staff and the Company believes the cost to
address Year 2000 issues will not be material.
The Company is currently involved in the testing of material items
and expects this phase to be completed by June 30, 1999. The Company
anticipates that it will complete the contingency planning phase by
June 30, 1999 although the Company currently has no contingency plans
to deal with the most likely worst case scenarios.
8
<PAGE>
For the Company's most significant IT and non-IT systems (defined
below), the first and second phases have been completed. The Company
has completed major upgrades and modifications, which have made
essentially all mainframe accounting and inventory control software
Year 2000 compliant. The scope of the Year 2000 compliance effort
includes (1) information technology ("IT") such as software and
hardware; (2) non-IT systems or embedded technology such as
micro-controllers contained in various manufacturing and laboratory
equipment; environmental and safety systems, facilities and utilities,
and (3) the readiness of key third parties, including suppliers and
customers, and the electronic data interchange (EDI) with those key
third parties.
The Company's suppliers (particularly sole-source and long lead
time suppliers) and key customers may be adversely affected by their
respective failures to address the Year 2000 issue. If the Company's
suppliers are unable to provide goods or services, the Company's
operations could be materially adversely affected. Key customers that
encounter Year 2000 difficulties could fail to order or take delivery
of the Company's products, or could fail to make or delay payments to
the Company. Such failure or delay could have a material adverse effect
on the Company's business and results of operations. While some of
these risks are outside the control of the Company, the Company's Plan
includes communications with suppliers and customers to ascertain the
state of their Year 2000 compliance program. The questionnaire phase of
this activity was completed as of March 31, 1999. Remediation
activities and preparation of contingency plans related to suppliers
and customers is scheduled for completion by June 30, 1999.
The Company's products are not affected by calendar dating.
Therefore, there is no known or anticipated Year 2000 impact on its
product offerings.
The Company believes its Year 2000 Plan will significantly reduce
the probability of significant interruptions of normal operations
resulting from Year 2000 issues. However, the Company may not properly
identify and assess all Year 2000 issues, or it may not remediate and
test all its IT and non-IT systems in a timely or adequate manner. In
addition, its key suppliers or customers could experience Year 2000
problems. If any of these potential situations occur, the Company's
contingency plans may not be adequate to protect the Company from the
adverse effects of such problems. The worst case scenario resulting
from Year 2000 issues would be a material adverse impact on the
Company's results of operations, an interruption in normal business
operations, or an adverse impact on the Company's relationships with
customers, suppliers or others.
Three Months Ended April 4, 1999 and March 29, 1998
Net revenues increased to $10.9 million for the first three months
of 1999, compared to $10.4 million for the similar period of 1998. The
increase was primarily attributable to increased sales of $3.3 million
for automotive film offset by decreased sales of $2.1 million for
anti-reflective film and $0.7 million of various other products. The
decrease in anti-reflective film sales was primarily due to minimal
production in the Tempe plant during January and February 1999 as a
result of the re-certification of production processes for product
provided to a single customer. In March the Tempe plant was
re-certified and commenced production.
9
<PAGE>
Cost of sales for the first quarter of 1999 was 82% of net
revenue, compared to 98% for the similar period of 1998. The
improvement in cost of sales was due to an increase in sales of
automotive film which contributes higher gross margins. Also, the loss
of production capacity and product yields in Tempe in the first three
months of 1999 had less impact on cost of sales than the process and
product yield problems experienced at the Tempe facility in the first
three months of 1998.
Research and development expenses, as a percent of net sales,
were 11% of net revenues for the first three months of 1999, compared
to 10% for the similar period in 1998. The absolute dollars increased
to $1.2 million in the first quarter of 1999 from $1.1 million in the
comparable period of 1998. The increase in 1999 is attributable to
additional personnel required to support the development of new
products, primarily the development of products for the anti-reflective
film market, and the development of new deposition technologies
resulting in faster coating processes.
Selling, general and administrative expense, as a percent of net
sales, was 18% of net revenues in the first three months of 1999,
compared to 23% for the similar period in 1998. The absolute dollars
decreased to $2.0 million in 1999 from $2.4 million in 1998. The
decrease in absolute dollars was primarily due to a decrease in
personnel in 1999 and reorganization severance payments in 1998 which
was the result of combining the Company's two divisions into one in
1998.
Net interest expense increased to $0.3 million for the first three
months of 1999 compared to $0.1 million for the similar period of 1998
due to a decrease in interest income. The average cash balances
invested during the first three months of 1999 was significantly less
than the average balances invested for the comparable period of 1998.
As a result of the factors discussed above, the Company reported a
pre-tax loss of $1.5 million for the first three months of 1999,
compared to a pre-tax loss of $3.4 million for the similar period in
1998.
Liquidity and Capital Resources
On December 16, 1996, the Company borrowed $5 million from an
institutional lender for partial financing of the new manufacturing
facility in Tempe, Arizona. On April 9, 1997, the Company signed an
agreement with Teijin Limited of Japan (Teijin), a major raw material
supplier of the Company, which included arrangements for additional
financing for the new manufacturing facility and for related potential
working capital growth. Teijin purchased 667,000 shares of the
Company's common stock at a price of $7.50 per share, and guaranteed a
loan through Sanwa Bank for an additional $10 million. Teijin also
received warrants to purchase 158,000 shares of common stock at a price
of $9.00 per share at any time within three years of the date of the
agreement. The stock purchase transaction of approximately $5 million
was completed on April 28, 1997. In addition, a loan agreement with
Sanwa Bank was signed on May 2, 1997, and the Company received the
first $5 million of funding on May 6, 1997, and the remaining $5
million was received on November 6, 1997. The manufacturing facility in
Tempe, Arizona began operations during the fourth quarter 1997, and is
currently dedicated to the production of anti-reflective film products.
10
<PAGE>
From December 31, 1998 to April 4, 1999, cash and short-term
investments decreased by $3.9 million, primarily due to expenditures
for property and equipment, payments on debt and cash used in operating
activities. Of the capital expenditures during the first three months
of 1999, approximately $1.2 million was for the conversion of an older,
large-scale production machine located in Palo Alto, California to
produce advanced anti-reflective film products and approximately $0.9
million for the new manufacturing machine, PM#6, to be located in
Tempe, Arizona. The cash used in operating activities resulted
primarily from a decrease of $2.9 million in accounts payable and
accrued liabilities and the net loss of $1.5 million for the first
three months of 1999 offset by a decrease in accounts receivable of
$2.5 million and depreciation and amortization of $1.2 million.
At April 4, 1999, the Company had $0.2 million of cash and
short-term investments. The Company also has a bank line of credit for
$4 million under which the Company has $0.5 million in borrowings at
April 4, 1999 and term loans of $10 million and $5 million, which are
subject to certain financial covenants. The Company was not in
compliance with some of the financial covenants pertaining to the term
loans at April 4, 1999. The Company is in continuing default of these
covenants and has therefore classified the term loans as current
liabilities until such time when the Company is in full compliance. The
Company has maintained favorable relations with all of its financing
institutions and is working closely with its lenders to reset the
covenants based on the Company's current 1999 projections. While there
can be no assurance that the Company will be successful in these
efforts the Company anticipates a favorable resetting of such covenants
and the ability to pay these loans in accordance with their original
terms.
The Company anticipates that it will acquire approximately $14
million to $17 million of new capital equipment in 1999 which includes
the purchase of two new production machines for its film products and a
planned expansion in the European automotive film market. The Company
is currently seeking approximately $10 million of additional equipment
financing from one of its current lenders and expects this financing to
be in place early in the second quarter of 1999, although there can be
no assurance that the Company will be successful in obtaining this
financing. Additionally, the Company's Convertible Subordinated Note
for $2.65 million is due and payable on May 31, 1999.
While there can be no assurance that the Company will be
successful in its efforts to renegotiate its financial covenants with
its lenders or obtain the additional financing that will be necessary
for its 1999 operating cash requirements, the Company believes that
existing cash, cash anticipated to be generated from operations, the
bank line of credit and the additional term loan borrowing, as
discussed above, will be sufficient to meet the Company's operating
cash requirements through fiscal 1999.
If the Company is not successful in obtaining the financing
described above, it may also need to raise additional funds through
public or private equity or debt financing from other sources. The sale
of additional equity or convertible debt may result in additional
dilution to the Company's stockholders and such securities may have
rights, preferences or privileges
11
<PAGE>
senior to those of the Common Stock. There can be no assurance that
additional equity or debt financing will be available or that if
available it can be obtained on terms favorable to the Company or its
stockholders.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk:
The Company is exposed to the impact of interest rate changes,
foreign currency fluctuations, and changes in the market values of its
investments.
FINANCING RISK. The Company's exposure to market rate risk for
changes in interest rates relates primarily to the Company's term loans
which are tied to the London Interbank Offered Rate ("LIBOR") and the
Company's Convertible Subordinated Note and bank line of credit which
are tied to the prime rate. Fluctuations in interest rates may
adversely impact the interest expense expected for the Company. The
effect of interest rate fluctuations on the Company in the first three
months of 1999 was not material.
INVESTMENT RISK. The Company invests its excess cash in
certificates of deposit and money market accounts and, by policy,
limits the amount of exposure to any one institution. Investments in
both fixed rate and floating rate interest earning instruments carries
a degree of interest rate risk. Fixed rate securities may have their
fair market value adversely impacted due to a rise in interest rates,
while floating rate securities may produce less income than expected if
interest rates fall.
FOREIGN CURRENCY RISK. International revenues amounted to 71% of
the Company's total sales in the first three months of 1999 and, by
policy, the Company limits foreign currency risk by requiring all sales
to be denominated in U.S. dollars. The Company's international business
is subject to risks typical of an international business, including,
but not limited to differing economic conditions, changes in political
climate, differing tax structures, other regulations and restrictions,
and foreign exchange rate volatility. Accordingly, the Company's future
results could be materially adversely impacted by changes in these or
other factors. The effect of foreign exchange rate fluctuations on the
Company in the first three months of 1999 was not material.
12
<PAGE>
PART II OTHER INFORMATION
Item 1 Legal Proceedings and Other Matters
Certain litigation filed against the Company by one of its
customers was described in the Company's Form 10-K filed on March 31,
1999. Subsequent to such filing, no material developments have occurred
with respect to this litigation.
In addition, the Company is involved in certain other legal
actions arising in the ordinary course of business. The Company
believes, however, that none of these actions, either individually or
in the aggregate, will have a material adverse effect on the Company's
business or its consolidated financial position or results of
operations.
Item 2 Changes in Securities
Not applicable
Item 3 Defaults upon Senior Securities
Not applicable
Item 4 Submission of Matters to a Vote of Stockholders
No matters were submitted to a vote of security
holders during the quarter ended April 4, 1999.
Item 5 Other Information
Not applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits - None
(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.
Dated: May 12, 1999
Southwall Technologies Inc.
By:/s/Thomas G. Hood
-----------------------------
Thomas G. Hood
President and
Chief Executive Officer
By:/s/Bill R. Finley
-----------------------------
Bill R. Finley
Vice President and
Chief Financial Officer
14
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> APR-04-1999
<CASH> 230
<SECURITIES> 0
<RECEIVABLES> 10,753
<ALLOWANCES> (893)
<INVENTORY> 6,521
<CURRENT-ASSETS> 17,710
<PP&E> 58,141
<DEPRECIATION> (27,710)
<TOTAL-ASSETS> 49,739
<CURRENT-LIABILITIES> 24,900
<BONDS> 0
0
8
<COMMON> 0
<OTHER-SE> 24,298
<TOTAL-LIABILITY-AND-EQUITY> 49,739
<SALES> 10,725
<TOTAL-REVENUES> 10,858
<CGS> 8,911
<TOTAL-COSTS> 12,110
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (255)
<INCOME-PRETAX> (1,507)
<INCOME-TAX> 12
<INCOME-CONTINUING> (1,519)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,519)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
