<PAGE> 1
UNITED STATES
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
For the quarterly period ended July 31, 1996
-------------
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: 0-19487
---------------
NSA INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Tennessee 62-1387102
- --------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
4260 East Raines Road, Memphis, Tennessee 38118
- -------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(901) 541-1223
--------------------------------------------------------
(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.
[X] Yes [ ] No
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.
4,858,156 shares of $.05 par value common stock were outstanding at
July 31, 1996.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NSA International, Inc. and Subsidiaries:
Consolidated Balance Sheets as of July 31, 1996 (unaudited) and April
30, 1996
Consolidated Statements of Operations for the Three Month Periods
Ended July 31, 1996 and 1995 (unaudited)
Consolidated Statements of Shareholders' Equity for the Three Month
Periods Ended July 31, 1996 and 1995 (unaudited)
Consolidated Statements of Cash Flows for the Three Month Periods
Ended July 31, 1996 and 1995 (unaudited)
Notes to Consolidated Financial Statements
-1-
<PAGE> 3
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
ASSETS 1996 1996
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,860,723 $ 8,754,770
Short-term investments 13,196 13,047
Receivables, net 3,246,685 1,839,493
Refundable income taxes 742,083 729,545
Inventories 11,336,560 10,233,158
Deferred income taxes 322,000 322,000
Notes receivable - short-term 125,000 125,000
Other current assets 1,111,275 1,093,442
------------ ------------
Total current assets 23,757,522 23,110,455
PROPERTY AND EQUIPMENT, At cost:
Leasehold improvements 579,618 579,618
Manufacturing equipment 678,800 678,800
Office furniture and equipment 2,696,603 2,693,847
Transportation equipment 124,765 124,765
Data processing equipment 2,148,027 2,148,027
------------ ------------
Total 6,227,813 6,225,057
Less accumulated depreciation and amortization (3,553,356) (3,347,843)
------------ ------------
Property and equipment, net 2,674,457 2,877,214
NOTES RECEIVABLE - LONG-TERM 4,458,409 4,615,495
OTHER ASSETS 629,885 670,827
------------ ------------
TOTAL ASSETS $ 31,520,273 $ 31,273,991
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Amounts due to NSA, Inc. $ 3,806,654 $ 923,150
Accounts payable, trade 1,731,525 2,556,531
Accrued sales commissions and allowances 888,889 771,868
Accrued compensation and expenses 7,546,171 4,724,392
Accrued sales returns 1,255,556 1,196,142
Advance payments by dealers/distributors 43,854 105,079
Income taxes payable 1,090,122 1,068,596
Other current liabilities 167,050 441,300
------------ ------------
Total current liabilities 16,529,821 11,787,058
AMOUNTS DUE TO NSA, INC. 7,900,000
DEFERRED INCOME TAXES 322,000 322,000
OTHER LIABILITIES 1,058,662 1,058,662
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.05 par value, 100,000,000 shares authorized,
4,858,156 shares issued and outstanding at July 31 and April 30, 1996 242,908 242,908
Additional paid-in capital 29,106,950 21,196,430
Retained earnings (15,740,068) (11,233,067)
------------ ------------
Total shareholders' equity 13,609,790 10,206,271
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 31,520,273 $ 31,273,991
============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
NET REVENUES:
Net sales $ 13,335,120 $ 20,758,117
Dealer fee income 267,837 855,373
Revolving credit fee income 6,769 18,538
------------ ------------
Total 13,609,726 21,632,028
COSTS AND EXPENSES:
Dealer/distributor commissions and allowances (4,549,701) (8,260,567)
Cost of products sold (5,964,228) (8,013,615)
Operating expenses (4,562,919) (7,167,759)
Management fees to NSA, Inc. (246,449) (396,926)
Interest income 122,886 216,955
Interest expense (5,379)
Other income (expense), net 93,152 (313,943)
Restructuring charge (3,000,000)
------------ ------------
Total (18,107,259) (23,941,234)
------------ ------------
LOSS BEFORE INCOME TAXES (4,497,533) (2,309,206)
INCOME TAX PROVISION (9,468) (119,027)
------------ ------------
NET LOSS $ (4,507,001) $ (2,428,233)
============ ============
LOSS PER COMMON SHARE $ (0.93) $ (0.50)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,858,156 4,858,156
============ ============
TRANSACTIONS WITH NSA, INC. INCLUDED IN THE ABOVE
Net sales to NSA, Inc. $ 2,521,000 $ 3,100,000
Cost of products sold (purchased from NSA, Inc.) 293,823 371,695
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE MONTH PERIODS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------- ADDITIONAL
NUMBER PAID IN RETAINED
OF SHARES AMOUNT CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C>
1995
BALANCES AT APRIL 30, 1995 4,858,156 $ 242,908 $ 21,197,616 $ (523,582) $ 20,916,942
Net loss (2,428,233) (2,428,233)
--------- --------- ------------ ----------- ------------
BALANCES AT JULY 31, 1995 4,858,156 $ 242,908 $ 21,197,616 $ (2,951,815) $ 18,488,709
--------- --------- ------------ ----------- ------------
1996
BALANCES AT APRIL 30, 1996 4,858,156 $ 242,908 $ 21,196,430 $(11,233,067) $ 10,206,271
Net loss (4,507,001) (4,507,001)
Forgiveness of debt by NSA, Inc. 7,910,520 7,910,520
--------- --------- ------------ ----------- ------------
BALANCES AT JULY 31, 1996 4,858,156 $ 242,908 $ 29,106,950 $(15,740,068) $ 13,609,790
--------- --------- ------------ ----------- ------------
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,507,001) $(2,428,233)
Adjustments to reconcile net loss to net cash provided by (used in) operations:
Loss on sales of property and equipment (18,663)
Depreciation and amortization 205,510 208,143
Restructuring charge 3,000,000
Changes in assets and liabilities:
Receivables, net (1,407,192) 221,363
Inventories (1,103,402) 717,893
Other current assets 22,962 (23,168)
Accounts payable (825,006) (533,725)
Liability for sales returns 59,414 (198,997)
Advance payments by dealers/distributors (61,225) (72,794)
Accrued expenses (61,200) (2,813,582)
Income taxes payable and refundable 8,988 135,616
Other current liabilities (274,250) (73,714)
------------- -----------
Net cash used in operating activities (435,401) (4,879,861)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (1,904)
Purchase of property and equipment (2,755) (205,894)
Proceeds from sales of property and equipment 12,732
Principal payments on notes receivable 157,086
------------- -----------
Net cash provided by (used in) investing activities 154,331 (195,066)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (repayments to) National Safety Associates, Inc. for equipment
purchases and working capital 2,894,024 (1,460,870)
------------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,894,047) (6,535,797)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,754,770 15,603,316
------------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,860,723 $ 9,067,519
------------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ Nil $ 5,379
Income taxes Nil 67,029
</TABLE>
See Note 4 for discussion of noncash investing and financing activity.
See notes to consolidated financial statements.
5
<PAGE> 7
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED JULY 31, 1996 AND 1995 (UNAUDITED)
1. FINANCIAL STATEMENT PRESENTATION
The consolidated balance sheet as of July 31, 1996 and the
consolidated statements of operations, shareholders' equity, and cash
flows for the three month periods ended July 31, 1996 and 1995 have
been prepared by the Company, without audit. It is management's
opinion that these statements include all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the
financial position, results of operations, and cash flows as of July
31, 1996 and for all periods presented. The results for the periods
presented are not necessarily indicative of the results that may be
expected for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included
in the Company's Annual Report on Form 10-K, previously filed with the
Securities and Exchange Commission.
2. LOSS PER SHARE
Loss per share have been computed by dividing net loss applicable to
common shareholders by the weighted average number of common shares
outstanding.
3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JULY 31, 1996 APRIL 30, 1996
<S> <C> <C>
Raw materials $ 4,994,275 $ 5,850,158
Finished goods 8,877,594 6,733,874
Accessories 1,899,211 1,933,995
--------------- ----------------
Total at cost 15,771,080 14,518,027
Reserve for excess and obsolete inventories (4,434,520) (4,284,869)
--------------- ----------------
Inventories, net $ 11,336,560 $ 10,233,158
=============== ================
</TABLE>
4. RESTRUCTURING CHARGE
In June 1996, the Company obtained letters of intent to sell certain
inventories, fixed assets, and prepaid expenses of operations in
Germany, Switzerland, Belgium, Holland, and the United Kingdom. These
expected dispositions will obligate the buyers to assume
responsibilities for future multi-level direct selling operations in
these countries. Also, during the first quarter of 1997, the Company
announced its decision to close its European headquarters.
Accordingly, a restructuring charge totalling $3,000,000 was reflected
during the first quarter of fiscal 1997. The charge includes
estimates of $975,000 to writedown fixed assets to net realizable
value, $500,000 to recognize termination costs of certain employees,
6
<PAGE> 8
$200,000 to accrue costs related to early termination of leases, and
$1,325,000 to writedown certain inventories which will be obsolete as
a result of the restructuring. Additional employee termination costs
of $500,000 to $1,000,000 are expected during the implementation of
the restructuring plan, which is expected to be completed by the end
of fiscal 1997.
5. SUBSEQUENT EVENT
In September 1996, the Company completed negotiations for the sale of
certain of the assets of two of its operating subsidiaries in Germany
and Switzerland as well as the ownership of its Austrian subsidiary to
Holzmann Holding AG, a Swiss corporation. The agreed-upon aggregate
purchase price for this scheduled transaction is approximately $1.5
million, payable by delivery of a promissory note. Management does
not anticipate any significant gain or loss on the transaction.
Holzmann Holding will also enter into a distribution contract which
provides that Holzmann Holding will continue to purchase products from
NSA International for resale in Austria, Germany, and Switzerland.
The transfer of the operations began on September 2, 1996.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's discussion should be read in conjunction with the
Consolidated Financial Statements and the discussion of NSA International,
Inc.'s (the "Company") business and other detailed information appearing
elsewhere herein. All information is based on the Company's first quarter
ended July 31.
RESULTS OF OPERATIONS
Net Revenues
<TABLE>
<CAPTION>
First Quarter
---------------------------------
1997 Change 1996
---- ------ ----
(Dollars In Thousands)
<S> <C> <C> <C>
Net Revenues $13,610 (37.08%) $21,632
Cost and Expenses $18,107 (24.37%) 23,941
Percentage of net revenues 133.04% 110.67%
Net loss $ 4,507 2,428
Earnings (loss) per share $(.93) $(.50)
</TABLE>
The 1997 first quarter decrease in net revenues primarily reflects
decreased sales by the Company's European direct selling subsidiaries and the
results of the sale of the Company's direct selling operation in Canada during
the 1996 fourth quarter. The decreased sales in its European markets is
attributed in part to the Company's focus on restructuring its existing direct
selling operations in Europe rather than increased sales.
The Company has reached a definitive agreement for the sale of its
German and Swiss direct selling operations as well as the rights to Austria.
The transfer of operations began on September 2 and is expected to be completed
within 30 days. Management anticipates that the sale of the Company's direct
selling operations in the United Kingdom, Ireland, Holland, and Belgium will
also occur in the second quarter of 1997.
The Company will continue to sell products to those third party
licensees, receive royalties and reimbursement for certain administrative
services. The Company anticipates that its remaining direct selling operations
in Italy and France will be replaced with this type of distribution arrangement
during fiscal 1997.
COST AND EXPENSES
<TABLE>
<CAPTION>
First Quarter
-----------------------------------
1997 Change 1996
---- ------ ----
(Dollars In Thousands)
<S> <C> <C> <C>
Dealer/Distributor commissions $4,550 (44.92%) $ 8,260
and allowances
Percentage of net revenues 33.43% 38.18%
Cost of products sold $5,964 (25.58%) 8,014
Percentage of net revenues 43.82% 37.05%
</TABLE>
The decrease in dealer/distributor commissions and allowances, as a
percentage of net revenues, reflects a change of the sales mix and the revenue
decline of the Company's direct selling subsidiaries, which pay
dealer/distributor commissions on most of their sales.
The increase in the cost of products sold, as a percentage of net
revenues, resulted from the continued concentration of the Company's sales mix
toward lower margin items.
-8-
<PAGE> 10
<TABLE>
<CAPTION>
First Quarter
-----------------------------------
1997 Change 1996
---- ------ ----
(Dollars In Thousands)
<S> <C> <C> <C>
Operating Expenses $4.563 (37.17%) $7,168
Percentage of net revenues 33.53% 33.14%
</TABLE>
The Company's decline in operating expenses reflect certain cost and
expense controls implemented in fiscal 1996, expense reductions resulting from
the sale of the Canadian direct selling operations and the pending sales of
several of the European direct selling operations previously discussed.
<TABLE>
<CAPTION>
First Quarter
----------------------------------
1997 Change 1996
---- ------ ----
(Dollars In Thousands)
<S> <C> <C>
Interest Income $123 $217
Interest Expense $ 0 $ 5
</TABLE>
The decrease in interest income reflects lower average balances of
cash and cash equivalents.
<TABLE>
<CAPTION>
First Quarter
---------------------------------
1997 Change 1996
---- ------ ----
(Dollars In Thousands)
<S> <C> <C> <C>
Management fees $246 (38.04%) $397
to NSA, Inc.
Percentage of net revenues 1.81% 1.84%
</TABLE>
The Management fees decrease is due to the decline of the Company's
revenue, primarily resulting from decreased sales by the Company's European
direct selling subsidiaries, combined with the sale of the Canadian operations.
<TABLE>
<CAPTION>
First Quarter
---------------------------------
1997 Change 1996
---- ------ ----
(Dollars In Thousands)
<S> <C> <C>
Other income (expense) $93 $(314)
Percentage of net revenues .68% 1.45%
</TABLE>
The increase in other income resulted from foreign currency
transaction gains, net of a small foreign currency hedging loss. The 1996
first quarter loss was primarily due to foreign currency transaction losses.
<TABLE>
<CAPTION>
First Quarter
----------------------------------
1997 1996
---- ----
(Dollars In Thousands)
<S> <C> <C>
Restructuring Costs $3,000 $0
Percentage of net revenues 22.04%
</TABLE>
-9-
<PAGE> 11
During the 1997 first quarter, the Company charged $3,000,000 for
expenses to be incurred with the closing of the Company's European Central
Office and other changes as a result of the decision to sell the European
direct selling operations.
<TABLE>
<CAPTION>
First Quarter
----------------------------------
1997 1996
---- ----
(Dollars In Thousands)
<S> <C> <C>
Provision for income taxes $9 $119
Effective tax rate N/A N/A
</TABLE>
The tax provision for the first quarter of 1996 reflects losses
incurred by the European direct selling subsidiaries for which the Company was
not able to recognize a tax benefit.
NET LOSS
<TABLE>
<CAPTION>
First Quarter
---------------------------------
1997 1996
---- ----
(Dollars In Thousands)
<S> <C> <C>
Net Loss $4,507 $2,428
Earnings per share $ (.93) $ (.50)
</TABLE>
FUTURE OUTLOOK
As the Company continues to change its operational philosophy from its
current sales and distribution method to third party licenses, management
anticipates that the Company will experience additional adverse short-term
operating results.
On April 30, 1996, the Company sold its Canadian direct selling
operations. The Company has entered into a definitive agreement for the sale
of the direct selling operations in Germany and Switzerland as well as the
rights to Austria and has completed negotiations for the sale of the direct
selling operations in the United Kingdom, Ireland, Belgium and Holland. The
transfer of these European operations is expected to be consummated during the
second quarter of 1997.
In addition to the operational changes, the Company is currently test
marketing a natural dietary food supplement and a diet program in the United
States through its affiliate NSA, Inc. If the test is successful, this product
will begin to be marketed as an addition to its Juice Plus product line in
November 1996.
The Company's focus toward third party licensees is expected to allow
the Company to expand into new markets more quickly and efficiently. This
approach is also intended to transfer from the Company to the distributors the
costs associated with building and operating the corporate infrastructure
required to open and support these markets. Management anticipates that its
operational changes and new product introduction will provide the Company with
long-term favorable operating results, although the ultimate effect of those
changes cannot be determined.
-10-
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
First Quarter
----------------------------
1997 1996
---- ----
(Dollars in thousands)
<S> <C> <C>
Cash and cash equivalents $6,861 $9,068
Short-term investments 13 523
Working capital 7,227 10,809
Cash provided (used) by operating activities (435) (4,880)
Cash provided (used) by investing activities 154 (195)
Cash (used) by financing activities (2,894) (1,461)
</TABLE>
On July 9, 1996, the Company's affiliate, NSA, Inc. forgave
approximately $7.9 million of debt which was due from the Company's direct
selling subsidiaries. The amount of this debt forgiveness has increased the
Company's Shareholders' Equity, Additional Paid-in Capital, by $1.63 per share
of common stock.
The Company has sufficient cash on-hand to finance current operations,
and does not anticipate requiring additional funding in excess of the current
cash balances and cash flow generated from operations. If required, management
believes additional funding will be available from financial institutions or
NSA at satisfactory terms.
-11-
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is party to various claims and matters of litigation that
arise in the normal course of its business. Management of the Company believes
the resolution of these matters will not have a material adverse effect on the
results of operations or the financial condition of the Company.
On February 12, 1993, a complaint for injunctive relief and damages
was filed against the Company's affiliate, NSA, and Messrs. A. Jay Martin, L.F.
Swords and George R. Poteet, individually, in the United States District Court
for the Northern District of California. The named plaintiffs are seeking
relief on behalf of themselves and for an alleged class of persons who
participated or attempted to participate in NSA's multi-level marketing plan
from February 13, 1989 to the present. The complaint alleges that the NSA
multi-level marketing plan constitutes an unlawful pyramid scheme and the sale
of unregistered securities made through the use of allegedly untrue, inaccurate
and misleading statements of material facts. It further alleges that the NSA
marketing plan was promoted utilizing fraudulent activities, unfair business
practices and false advertising. NSA and the individual defendants answered
denying the allegations. During a hearing on October 1, 1993, motions
regarding the certification of the alleged class were argued before the court.
On April 5, 1994, the case was moved to the Federal District Court for the
Western District of Tennessee. The magistrate judge assigned to the case
recommended certification of the class and NSA filed exceptions to the report.
On August 20, 1996, the Court rendered an Order Granting Plaintiff's Motion for
Class Certification as Modified. On September 6, 1996 the Defendants filed
their Motion for Reconsideration, for Clarification of Class Certification,
Stay or Alternatively for Interlocutory Appeal and a supporting Memorandum with
the Court.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (Section 249.308 OF THIS CHAPTER).
(a) Exhibits.
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K.
None.
-12-
<PAGE> 14
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.
NSA INTERNATIONAL, INC.
Date: September 13, 1996 By: /s/ Stan C. Turk
--------------------------------------
Stan C. Turk, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000850036
<NAME> NSA INTERNATIONAL, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<EXCHANGE-RATE> 1
<CASH> 6,861
<SECURITIES> 13
<RECEIVABLES> 3,424
<ALLOWANCES> (177)
<INVENTORY> 11,337
<CURRENT-ASSETS> 2,300
<PP&E> 6,228
<DEPRECIATION> (3,553)
<TOTAL-ASSETS> 31,520
<CURRENT-LIABILITIES> 16,530
<BONDS> 0
0
0
<COMMON> 243
<OTHER-SE> 13,367
<TOTAL-LIABILITY-AND-EQUITY> 31,520
<SALES> 13,335
<TOTAL-REVENUES> 13,610
<CGS> 5,964
<TOTAL-COSTS> 10,514
<OTHER-EXPENSES> 7,593
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,498)
<INCOME-TAX> 9
<INCOME-CONTINUING> (4,507)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,507)
<EPS-PRIMARY> (.93)
<EPS-DILUTED> (.93)
</TABLE>
