FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from .................to.................
Commission file number 33-19583
ZEVEX INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
DELAWARE 87-0462807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4314 ZEVEX Park Lane, Salt Lake City, Utah
84123 (Address of principal executive offices and zip code)
(801) 264-1001
(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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ] Not Applicable [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of November 12, 1998, the
Company had outstanding 3,301,226 shares of common stock, par value $0.001 per
share.
<PAGE>
PART I
FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q
- -------------------------------------------------------------------------------
ZEVEX International, Inc. (the "Company"), files herewith balance sheets of the
Company as of September 30, 1998, and December 31, 1997, and the related
statements of operations and cash flows for the respective three month and nine
month periods ended September 30, 1998, and 1997. In the opinion of the
Company's management, the financial statements reflect all adjustments, all of
which are normal recurring adjustments, necessary to fairly present the
financial condition of the Company for the interim periods presented. The
financial statements included in this report on Form 10-Q should be read in
conjunction with the audited financial statements of the Company and the notes
thereto included in the annual report of the Company on Form 10-K for the year
ended December 31, 1997.
<PAGE>
ZEVEX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
Sept 30 Dec. 31
1998 1997
----- ----
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,686 $ 2,260,426
Restricted cash for sinking
fund payment on industrial
development bond 55,059 76,164
Accounts receivable 2,173,010 2,095,455
Inventories 4,333,895 3,540,591
Marketable securities 11,133,568 10,403,109
Deferred income taxes 114,933 82,930
Prepaid expenses and taxes 231,013
67,307
--------------- ---------------
Total current assets 18,044,164 18,525,982
Property and equipment, net 4,652,599 3,933,804
Patents and trademarks 135,350 122,002
Deferred acquisition costs 28,894 --
Other assets
755 755
--- ---
$ 22,861,762 $ 22,582,543
============== ==============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,243,831 $ 640,579
Other accrued expenses 261,732 264,484
Income taxes payable -- 285,403
Current portion of industrial development bond 100,000
100,000
---------------
Total current liabilities 1,605,563 1,290,466
Deferred income taxes 123,984 126,380
Industrial development bond 1,800,000 1,900,000
Stockholders' equity:
Common stock, $.001 par value: authorized 10,000,000
shares, issued 3,300,776 and 3,264,326
shares, respectively 3,301 3,265
Additional paid in capital 16,825,827 16,697,203
Less: Treasury stock (50,790) --
Unrealized (gain)/loss on SAS (53,797) --
Retained earnings
2,607,674 2,565,229
--------- ---------
Total stockholders' equity
19,332,215 19,265,697
---------- ----------
$ 22,861,762 $ 22,582,543
============== ==============
</TABLE>
See accompanying notes.
<PAGE>
ZEVEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Nine months ended
Sept 30, Sept 30,
1998 1997 1998 1997
------------------- ---------------- ------------------- --------------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenue:
Product sales $ 2,301,498 $ 2,437,734 $ 7,205,922 $ 5,534,205
Engineering services 44,645 59,391 427,285 777,285
------------------ ------------------ ------------------ --------------------
Total revenue 2,346,143 2,497,125 7,633,207 6,311,490
Cost of sales 2,038,200 1,534,365 4,898,227 3,475,154
------------------ ------------------ ------------------ --------------------
Gross profit 307,943 962,760 2,734,980 2,836,336
Operating expenses:
General and administrative 648,974 473,105 1,931,996 1,198,499
Selling and marketing 351,508 194,960 944,197 528,417
Research and development 53,328 63,749 209,302 521,870
----------------- ------------------ ------------------- --------------------
Total operating expenses 1,053,810 731,814 3,085,495 2,248,786
Operating income (loss) (745,867) 230,946 (350,515) 587,550
Other income (expense):
Interest income 158,188 4,532 427,252 66,367
Interest expense (28,517) (18,918) (72,930) (56,381)
Unrealized gain (loss) on
marketable securities (42,963) 7,812 31,251 7,812
Income (loss) before provision ------------------ ------------------ ------------------ --------------------
for income taxes (659,159) 224,372 35,058 605,348
Provision for taxes 239,315 (96,134) 7,387 (194,585)
------------------ ------------------ ------------------ --------------------
Net income (loss) $ (419,844) $ 128,238 $ 42,445 $ 410,763
================== ================== ================== ====================
Basic net income (loss) per share $ (.13) $ .06 $ .01 $ .18
================== ================== ================== ====================
Weighted average shares
Outstanding 3,297,688 2,063,826 3,289,312 2,315,802
================== ================== ================== ====================
Diluted net income (loss) per
share (.13) .05 .01 .17
================== ================== ================== ====================
Diluted weighted average shares
Outstanding 3,654,132 2,525,364 3,652,666 2,455,930
================== ================== ================== ====================
</TABLE>
See accompanying notes.
<PAGE>
ZEVEX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
Sept 30,
1998 1997
--------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 42,445 $ 410,763
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Depreciation and amortization 343,519 177,021
Benefit for deferred income taxes (34,399) (152,006)
Unrealized (gain)/loss on marketable securities 74,169 (7,812)
Changes in operating assets and liabilities:
Decrease (increase) in restricted cash for sinking
fund payment on industrial development bond 21,105 (50,306)
(Increase) decrease in accounts receivable (77,555) (405,490)
Increase in inventories (793,304) (1,996,798)
Increase in deferred offering costs -- (154,694)
Increase in marketable securities (858,425) --
(Increase) decrease in prepaid expenses (163,706) 37,744
(Increase) decrease in other assets (28,894) 2,734
Increase in accounts payable 603,252 516,124
(Increase) decrease in accrued liabilities (2,752) 150,706
(Decrease) increase in income taxes payable (285,403) 267,379
--------------- ---------------
Net cash (used in) provided by operating activities (1,159,948) (1,204,635)
Cash flows from investing activities
Purchase of property and equipment (1,055,200) (2,854,004)
Additions to patents and trademarks (20,462) (29,584)
--------------- ---------------
Net cash used in investing activities (1,075,662) (2,883,588)
Cash flows from financing activities
Proceeds from issuance of common stock -- 1,498,975
Proceeds from exercise of stock options 23,660 --
Proceeds from exercise of warrants 105,000 --
Purchase of treasury stock (50,790) --
Proceeds from bank line of credit -- 700,000
Repayment of bank line of credit -- (60,108)
Repayment of industrial development bond (100,000) --
--------------- ---------------
Net cash (used in) provided by financing activities (22,130) 2,138,867
--------------- ---------------
Net decrease in cash and cash equivalents (2,257,740) (1,949,356)
Cash and cash equivalents at beginning of period 2,260,426 2,085,055
--------------- ---------------
Cash and cash equivalents at end of period $ 2,686 $ 135,699
=============== ===============
</TABLE>
See accompanying notes.
<PAGE>
ZEVEX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
1. Summary of Significant Accounting Policies
ZEVEX (a Delaware corporation) designs and manufactures advanced medical
devices, including surgical systems, device components, and sensors for medical
technology companies. The Company also designs, manufactures, and markets its
own medical devices using its proprietary technologies. The Company's design and
manufacturing service customers are medical technology companies, who sell the
Company's systems and devices under private labels or incorporate the Company's
devices into their products.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q of Regulation S-X. Accordingly, certain
information and footnote disclosures normally included in complete financial
statements have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and footnotes thereto included
in the Company's 1997 Annual Report and Form 10-K.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary for a fair presentation have been
included. The results of operations for interim periods are not indicative of
the results of operations to be expected for a full year.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------------------ -----------------
<S> <C> <C>
Materials $ 2,226,626 $ 2,306,8181
Work in progress 1,833,504 1,044,331
Finished Goods,
Including completed
Subassemblies 273,765 189,442
------------------- -----------------
$ 4,333,895 $ 3,540,591
=================== =================
</TABLE>
3. Bank Line of Credit
On December 31, 1997, the Company renewed its line of credit arrangement with a
financial institution for $5 million. The line matures on May 30, 1999. The line
of credit is collateralized by accounts receivable and inventory and bears
interest at the prime rate (8.5% at September 30, 1998, and at December 31,
1997). The Company's balance on its line of credit was zero at September 30,
1998 and December 31, 1997. Under the line of credit agreement, the Company is
restricted from declaring cash dividends. The renewal of the Company's line of
credit resulted in the addition of certain financial covenants. As of September
30, 1998, the Company was in compliance with these financial covenants.
4. Stockholders' Equity
Repurchase of Common Stock
On February 4, 1998, the Company repurchased 6,700 shares of outstanding Common
Stock for $50,790. The Company anticipates that all the shares repurchased will
be contributed to the Employees' Stock Ownership Plan.
5. Related Party Transactions
On April 15, 1997, the Company entered into a consulting agreement with another
company owned by certain stockholders to provide services related to strategic
planning, public relations, financing and potential acquisition of new products
or companies. Under the consulting agreement, the Company paid an initial fee of
$50,000, and must pay $10,000 per month for two years.
In connection with the secondary public offering completed in November 1997,
certain stockholders waived their registration rights on 350,000 warrants. In
exchange, the Company and the stockholders executed a registration rights
agreement, entitling the stockholders to certain demand registration rights for
a period of two years from February 1, 1998.
6. Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No. 130
requires that all items recognized under accounting standards as components of
comprehensive income be reported in an annual financial statement that is
displayed with the same prominence as other annual financial statements. This
statement also requires that an entity classify items of other comprehensive
income by their nature in an annual financial statement. Other comprehensive
income may include foreign currency translation adjustments, and unrealized
gains and losses on marketable securities classified as available-for-sale. For
the first nine months ending September 30, 1998, SFAS No. 130 would have
required the Company to show comprehensive income of $53,797 lower than net
income reported on the Company's financial statements.
<PAGE>
- -------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
Results of Operations
The Company's revenues for the third quarter of 1998 decreased to $2,301,498,
from $2,437,734 for the third quarter of 1997, a decrease of approximately 6%.
For the first nine months of 1998, revenues increased 21% to $7,633,207 from
$6,311,490 for the nine months ended 1997. Although revenues for the nine month
period increased due to overall increases in revenues of contract manufacturing
and proprietary products, three months revenues are below the prior years
revenue numbers due to customer delaying orders into the fourth quarter and into
1999. During the first nine months of 1998, 51% of total revenues, compared to
67% of total revenues for the first nine months of 1997, resulted from sales to
three customers, all of whom were major customers in 1997. Sales of the
Company's Proprietary Product, the EnteraLite(R) Ambulatory Enteral Feeding Pump
and the enteral feeding product line, accounted for approximately 39% of the
total revenues for the third quarter of 1998, compared to 12% for the third
quarter of 1997.
The majority of the Company's products are manufactured for and sold to contract
manufacturing customers, who market the final product. The Company's
manufacturing revenue growth depends upon growth in demand for systems, devices
and instruments manufactured by ZEVEX, and ZEVEX's ability to acquire additional
manufacturing service contracts for these products from medical technology
companies. ZEVEX's contract manufacturing customers have complete control over
the marketing and sales of products that ZEVEX manufactures for them. ZEVEX has
no ability to increase demand for instruments that it manufactures for its
contract manufacturing customers. No assurances can be given that orders from
any customer will increase or remain at current levels or that they will not
decline.
The Company's gross profit as a percentage of revenues was approximately 14% for
the three months ended September 30, 1998, as compared to 39% for 1997. Gross
profits for nine months ended September 30, 1998, were 36% for 1998 and 45% for
1997. Management attributes the decrease in gross profit percentage to a number
of matters, including (1) a shift in the revenue mix of its products to lower
margin items that were sold during the quarter, (2) delays experienced in the
delivery schedules dictated by three of the Company's major customers, where the
Company normally experiences a higher gross margin, (3) increased costs of
engineering staff to execute new engineering and production jobs obtained by the
Company during the second and third quarters, (4) the Company also recorded
revenues related the Nutrition Medical acquisition as well as non-recurring
engineering (NRE) tooling costs on which the Company did not realize any gross
profit and (5) the Company recognized costs associated with a reengineering
project to enhance the marketability of a product on a cost-sharing basis with a
major customer.
Selling, general and administrative expenses for the three months ended
September 30, 1998, increased $332,417, from $668,065 in 1997 to $1,000,482 in
1998. For nine months ended September 30, 1998, selling, general and
administrative increased $1,149,277 from $1,726,916 in 1997 to $2,876,193 in
1998. Increased expenses resulted from the Company's continuing growth as it
establishes marketing channels for proprietary products. The Company had a
one-time expense related to its application and listing on the NASDAQ National
Market, also increased legal, accounting, general consulting and public and
investor relations increased general expenses. Expanded sales and marketing
efforts increased staffing, travel, advertising and administrative expenses
related to the Company's proprietary clinical nutrition delivery product line.
The Company also had an increase in expenses related to employees, such as
insurance, taxes, and pension benefits. The Company believes that general and
administrative expenses in 1998 as related to sales will continue at
approximately the same percentage as in the previous two years.
Research and development expenses vary from quarter to quarter depending on the
number and nature of pending research and development projects and their various
stages of completion. For the three months ended September 30, 1998, research
and development expenses were $53,328 in 1998, compared to $63,749 in 1997. For
nine months ended September 30, 1998, research and development expenses were
$209,302 for 1998 and $521,870 for 1997. Significant fluctuations experienced in
research and development are due to the timing of the Company's research
projects. Expenses incurred during the third quarter were for the continued
development of new applications of the Company's ultrasound technology and
proprietary products. Management believes investing in research and development
will serve the Company's future well, and intends to continue this investment
for the foreseeable future. Research and development expenses will continue at
approximately the same percentage as in the previous two years.
For the three months ended September 30, 1998 the Company had a net loss of
$419,844, 18% of revenues compared to $128,238 net income, for the three months
ended September 30, 1997, or approximately 5.1% of revenues. Net income for the
nine months ended September 30, 1998, decreased to $42,445, 0.5% of revenues,
from $410,763, 6.5% of 1997 revenues. The decrease in net income during the
third quarter of 1998, as compared to the third quarter of 1997, is principally
due to the lower margin product sold, increased engineering staff and related
expenses as discussed above.
As of September 30, 1998, the Company's backlog of customer orders was
$6,327,000, as compared to $7,726,000 on September 30, 1997. Management
estimates that approximately 60% of the backlog will be shipped before December
31, 1998. The Company's backlog is for contract manufacturing only and can be
drastically affected by the timing of annual or semi-annual purchase orders
placed by its customers.
Liquidity and Capital Resources
During the three months and nine months ended September 30, 1998, the Company
produced a net loss of $419,844 and net income of $42,445, respectively,
compared to net incomes of $56,987 and $282,525, respectively, for the three
months and nine months ended September 30, 1997. Cash decreased by $2,257,740
for the nine months ending September 30, 1998, as the Company continued to fund
an increase in accounts receivable and inventories, as well as purchases of
property, plant and equipment.
The Company's investment in property, patents from new research, production,
test equipment and tooling was $1,075,662 for the nine months ended September
30, 1998, compared to $2,883,588 in 1997. The Company paid $580,000 to purchase
a parcel of land, approximately 3.47 acres, to the north of its facility. Total
expenditures for equipment of $476,214 were primarily due to upgrading the
Company's research, design and engineering capabilities. The Company expects to
spend approximately $100,000 for the remainder of 1998 for additional
manufacturing equipment, as well as for normal replacement of old equipment. The
Company also anticipates approximately $250,000 of additional research and
development expenses during 1998.
The Company's working capital at September 30, 1998 was $16,438,601, compared to
$3,587,841 at September 30, 1997. The increase in working capital is primarily
due to the secondary offering that was completed in November 1997, as described
in the Stockholders' Equity section of the Notes to Consolidated Financial
Statements in the Company's 1997 Annual Report. The portion of working capital
represented by cash at such dates was $2,686 and $135,699 respectively. The
Company has $10,496,008 in short term, investment grade, interest bearing
investments at September 30, 1998. The Company uses substantial portions of its
cash from time to time to fund its operations, including increases in
inventories, accounts receivable and work in process in connection with various
customer orders.
<PAGE>
Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private
Securities Litigation Reform Act of 1995
When used in this report, the words "estimate," "believe," "project" and similar
expressions, together with other discussion of future trends or results, are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Such statements are subject to certain risks and uncertainties, including those
discussed below, that could cause actual results to differ materially from those
projected. These forward-looking statements speak only as of the date hereof.
All of these forward-looking statements are based on estimates and assumptions
made by management of the Company, which although believed to be reasonable, are
inherently uncertain and difficult to predict. Therefore, undue reliance should
not be placed upon such estimates. There can be no assurance that the benefits
anticipated in these forward-looking statements will be achieved. The following
important factors, among others, could cause the Company not to achieve the
benefits contemplated herein, or otherwise cause the Company's results of
operations to be adversely affected in future periods: (i) continued or
increased competitive pressures from existing competitors and new entrants; (ii)
unanticipated costs related to the Company's growth and operating strategies;
(iii) loss or retirement of key members of management; (iv) increase in interest
rates of the Company's cost of borrowing, or a default under any material debt
agreement; (vi) prolonged labor disruption; (viii) deterioration in general of
regional economic conditions; (ix) adverse state or federal legislation or
regulation that increases the cost of compliance, or adverse findings by a
regulator with respect to existing operations; (x) loss of customers;(xi)
adverse determinations in connection with pending or future litigation or other
material claims and judgments against the Company; (xii) inability to achieve
future sales; and (xiii) the unavailability of funds for capital expenditures.
Many of such factors are beyond the control of the Company. Please refer to the
Company's SEC Form 10-K for its fiscal year ended December 31, 1997, for
additional cautionary statements.
<PAGE>
PART II
Item 1. Legal Proceedings - None.
Item 2. Changes in Securities and Use of Proceeds - None.
Item 3. Defaults upon Senior Securities - None.
Item 4. Submission of Matters to a Vote of Security Holders - None.
Item 5. Other Information
On July 28, 1998, ZEVEX International, Inc.'s wholly-owned subsidiary, ZEVEX,
Inc. signed an agreement to acquire the product rights to the enteral feeding
pumps, delivery sets and feeding tubes of Minneapolis, Minnesota-based Nutrition
Medical Inc. Enteral pumps deliver nutrition to patients requiring feeding
through the intestines or stomach. Total sales of these products for the past 12
months ending June 30, 1998 were approximately $2 million. Consideration for the
transaction will be approximately $1.22 million, comprised of $500,000 in cash
and 115,000 shares of ZEVEX International common stock, currently valued at
$704,375. The acquisition is subject to approval by Nutrition Medical Inc.
shareholders, which is expected in the fourth quarter 1998. Effective
immediately, ZEVEX has entered into an exclusive marketing agreement for these
product lines. The marketing agreement will be in effect until the completion of
the acquisition.
On November 6, 1998, ZEVEX International, Inc.'s wholly-owned subsidiary, ZEVEX,
Inc. executed letters of intent to acquire two companies, Aborn Electronics,
Inc. and J-Tech Medical Industries, Inc. Aborn is a manufacturer and developer
of optic sensors and custom computer chips used in both medical and industrial
devices. J-Tech Medical Industries manufactures and markets computerized
musculoskeletal evaluation products, which measure isolated muscle strength,
joint ranges of motion and sensation during physical therapy. Consideration for
the transactions will be approximately $12.35 million, comprised of cash,
convertible debentures and earn-outs. These two acquisitions are subject to the
execution of definitive agreements and further due diligence, and are expected
to close in the fourth quarter 1998
Item 6. Exhibits and Reports on Form 8-K - None.
- -------------------------------------------------------------------------------
SIGNATURES
- -------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZEVEX INTERNATIONAL, INC.
Dated: November 13, 1998
By /s/ Dean G. Constantine
Dean G. Constantine, President
By /s/ Phillip L. McStotts
Phillip L. McStotts, Secretary
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000827056
<NAME> ZEVEX International, Inc.
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,686
<SECURITIES> 11,133,568
<RECEIVABLES> 2,173,010
<ALLOWANCES> 0
<INVENTORY> 4,333,895
<CURRENT-ASSETS> 18,044,164
<PP&E> 6,019,261
<DEPRECIATION> 1,231,314
<TOTAL-ASSETS> 22,861,762
<CURRENT-LIABILITIES> 1,605,563
<BONDS> 1,800,000
0
0
<COMMON> 3,301
<OTHER-SE> 19,328,914
<TOTAL-LIABILITY-AND-EQUITY> 22,861,762
<SALES> 7,633,207
<TOTAL-REVENUES> 7,633,207
<CGS> 4,898,227
<TOTAL-COSTS> 4,898,227
<OTHER-EXPENSES> 3,085,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,930
<INCOME-PRETAX> 35,058
<INCOME-TAX> 7,387
<INCOME-CONTINUING> 42,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,445
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
