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 March 31, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to ______________
Commission file number 0-18090
CAERE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2250509
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Cooper Court, Los Gatos, California, 95030
(Address of principal executive offices)
(408) 395-7000
(Registrant's telephone number, including area code)
----------------------------------------------------------------------
(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 CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock.
Outstanding
Class March 31, 1997
Common Stock
$.001 par value 13,246,757
This is page 1 of 14 pages
<PAGE>
CAERE CORPORATION
INDEX
PART I. Financial Information
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM 1. Financial Statements
Page
Condensed Consolidated Balance Sheets - March 31, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Earnings -- Three Months
Ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6-7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
Exhibit 11 Statement Regarding Computation of Net Earnings (Loss)
Per Share 13
PART II. Other Information
ITEM 2. Changes in Securities 14
ITEM 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CAERE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
<S> <C> <C> <C> <C>
March 31, December 31,
1997 1996
ASSETS
Cash and cash equivalents $ 3,146 $ 11,663
Short-term investments 40,858 32,627
Receivables 7,644 6,888
Inventories (Note B) 2,436 2,779
Deferred income taxes 2,474 2,474
Other current assets 1,301 768
----------- ---------
Total current assets 57,859 57,199
Property and equipment, net 4,814 4,742
Other assets 1,370 1,213
----------- -----------
Total assets $ 64,043 $ 63,154
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other payables $ 6,627 $ 7,406
Preferred stock, $.001 par value: authorized 2,000,000
shares; none issued or outstanding - -
Common stock, $.001 par value: authorized 30,000,000
shares; issued and outstanding 13,246,757 and 12,630,584
shares 13 13
Additional paid-in capital 59,008 55,399
Retained earnings (deficit) (1,605) 336
------------ -----------
Total stockholders' equity 57,416 55,748
----------- -----------
Total liabilities and stockholders' equity $ 64,043 $ 63,154
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAERE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended
March 31,
1997 1996
Net revenues $ 12,572 $ 13,556
Cost of revenues 3,716 4,315
----- -----
8,856 9,241
----- -----
Operating expenses:
Research and development 2,002 1,762
Selling, general and administrative 6,312 6,518
In-process research and development 2,935 -
----- --
11,249 8,280
------ -----
Operating earnings (loss) (2,393) 961
Interest income, net 562 648
---- ----
Earnings (loss) before income taxes (1,831) 1,609
Income tax expense 110 309
---- ----
Net earnings (loss) $ (1,941) $ 1,300
======= ======
Net earnings (loss) per common and
common equivalent share $ (.15) $ .10
====== ======
Shares used in per share calculation 12,682 13,459
====== ======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAERE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net earnings (loss) $ (1,941) $ 1,300
Adjustments to reconcile net earnings to net cash provided
by (used for) operating activities:
Depreciation and amortization 787 636
In-process research and development 2,935 -
Merger related costs - (507)
Amortization of capitalized software development costs 117 162
Changes in operating assets and liabilities:
Receivables, net (756) (198)
Income tax receivable -- 1,109
Inventories 343 126
Other current assets (533) (56)
Accrued expenses and other payables (779) (760)
----------- -----------
Net cash provided by operating activities 173 1,812
---------- ----------
Cash flows from investing activities:
Short-term investments, net (8,231) (8,509)
Capital expenditures (738) (325)
Capitalized software development costs (408) (165)
Other assets 183 37
---------- ----------
Net cash used for investing activities (9,194) (8,962)
----------- -----------
Cash flows from financing activities:
Proceeds from issuances of common stock 504 214
---------- ----------
Net change in cash and cash equivalents (8,517) (6,936)
Cash and cash equivalents at beginning of period 11,663 10,664
---------- ----------
Cash and cash equivalents at end of period $ 3,146 $ 3,728
========== ==========
Supplemental disclosures:
Cash paid for income taxes $ 709 $ 29
========== ==========
Common stock issued for business acquisition $ 3,105 $ -
========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
CAERE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A) Basis of Presentation
The accompanying unaudited condensed consolidated balance sheets,
statements of earnings, and statements of cash flows reflect all adjustments
(consisting of only normal recurring adjustments) which are, in the opinion of
management, necessary to present the financial position of the Company as of
March 31, 1997, and its results of operations and cash flows for the periods
indicated.
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions for Form 10-Q, and, therefore,
certain information and footnote disclosures normally contained in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The Company filed audited financial statements
with the Securities and Exchange Commission which included all information and
footnotes necessary for a complete presentation of the Company's financial
position, results of operations and cash flows for the years ended December 31,
1996, 1995 and 1994, in its report on Form 10-K for the year ended December 31,
1996 (the "Form 10-K"). These condensed financial statements should be read in
conjunction with the financial statements contained in the Company's Form 10-K.
The results of operations for the interim period ended March 31, 1997, are not
necessarily indicative of the results to be expected for the full year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
B) Inventories March 31, 1997 December 31, 1996
----------- -------------- -----------------
(In thousands)
A summary of inventories follows:
Raw materials $ 1,266 $ 1,540
Work in process 429 348
Finished goods 741 891
---------- - --------
$ 2,436 $ 2,779
========== ========
</TABLE>
C) Net Earnings (Loss) Per Share
Net earnings per common and common equivalent share are computed using
the weighted average number of common and dilutive common equivalent shares
outstanding during the period. Common equivalent shares consist of options to
purchase common stock calculated using the treasury stock method. Fully diluted
earnings per share for all periods presented were not materially different from
primary earnings per share.
<PAGE>
D) Business Acquisition
On March 31, 1997, the Company acquired Formonix, Inc. ("Formonix"), a
software developer located in Colorado. The total value of the acquisition was
approximately $3,188,000. The Company issued 550,000 shares of common stock in
exchange for all of the capital stock of Formonix. Using the closing price of
the Company's stock on the closing date of the acquisition, the valuation of the
shares issued was approximately $3,105,000. Acquisition costs associated with
the transaction totaled approximately $83,000 and consisted mainly of
professional fees. The business combination was accounted for under the purchase
method of accounting. Accordingly, the consolidated financial statements of the
Company will not include Formonix until after the date of acquisition.
Acquired technology was valued using a risk-adjusted cash flow model,
under which future expected cash flows were discounted taking into account risks
related to existing markets, the technology's life expectancy, future target
markets and potential changes thereto, and the competitive outlook for the
technology. The analysis resulted in an allocation of approximately $253,000 to
capitalized software development costs and the balance of approximately
$2,935,000 to in-process technology which had not yet reached technological
feasibility and had no alternative future use, and accordingly, was charged to
expense.
The following summarized, pro forma results of operations assume the
acquisition took place at the beginning of the respective periods and excludes
the $2,935,000 charge for acquired in-process technology.
<TABLE>
<CAPTION>
<S> <C> <C>
Quarter ended March 31, In thousands, except per share amounts 1997 1996
- - -------------------------------------------------------------- ---- ----
Net revenues $12,572 $13,556
Net earnings (loss) $(2,084) $ 1,361
Earnings (loss) per share $ (.16) $ .10
</TABLE>
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company notes that, except for the historical information contained
herein, the matters discussed below contain forward-looking statements subject
to risks and uncertainties that may cause the Company's actual results to differ
materially. Such risks and uncertainties include, but are not limited to,
various important competitive and technological factors such as pricing
pressures; success of the "bundle and upgrade" business model, including the
maintenance of the Company's relationships with scanner manufacturers, as well
as customers opting to upgrade to newer or more fully featured products; changes
in customer order patterns, the maintenance of relationships with retail
distributors and dealers; manufacturing considerations, including the
maintenance of margins in a declining-price environment as well as risk of
inventory obsolescence due to shifts in market demand and new product
introductions; and other risk factors listed from time to time in the Company's
reports filed with the Securities and Exchange Commission, including, but not
limited to, the report on Form 10-K for the year ended December 31, 1996
(Business, Certain Trends, and Risk Factors sections).
Results of Operations
The following chart summarizes net revenues, cost of revenues, and
gross margins for the Company's products categorized between hardware and
software. Software products consist of the OmniPage, WordScan, OmniForm,
PageKeeper, and Recognita lines of products. Hardware products consist of
transaction processing optical character recognition ("OCR") and bar code
products, and the M/Series line of production OCR products.
<TABLE>
<CAPTION>
Business Line Analysis
Three Months Ending: March 31, 1997 March 31, 1996
<S> <C> <C> <C> <C> <C> <C>
Software Hardware Software Hardware
Products Products Combined Products Products Combined
Net revenues $10,865 $1,707 $12,572 $11,415 $2,141 $13,556
Cost of revenues 2,777 939 3,716 3,422 893 4,315
----- --- ----- ----- --- -----
$8,088 $768 $8,856 $7,993 $1,248 $9,241
Gross margin % 74.4% 45.0% 70.4% 70.0% 58.3% 68.2%
</TABLE>
Net revenues for software products decreased 5% during the first
quarter of 1997 to $10,865,000 from $11,415,000 in 1996, due primarily to
decreased bundled revenues from the Company's scanner manufacturer partners.
Beginning in the fourth quarter of 1996, the Company began to change the
bundling arrangement with certain of its partners. Prior to the fourth quarter
of 1996, the Company sold such bundled product to partners at prices
approximating cost. Since the fourth quarter of 1996, certain partners have
agreed to manufacture their product requirements on a much reduced royalty
basis. The effect of this change to the Company was to reduce net revenues
associated with such bundled product along with reducing the cost of revenue by
a similar amount, creating a favorable impact on overall gross margins. On a
year-to-year basis, net revenues from such bundling arrangements were down
approximately $600,000 in the first quarter of 1997, compared with the same
period of 1996. The objective of the Company's "bundle and upgrade" strategy is
to increase unit sales of bundled product, which, in turn, is expected to
stimulate unit sales of upgrade products. As more customers acquire bundled
products with their scanners and qualify to purchase fully featured OCR products
at upgrade prices, unit shipments of fully priced, non-upgrade products are
expected to decline.
Net revenues for hardware products decreased 20% to $1,707,000 in the
first quarter of 1997, compared to $2,141,000 during the same period in 1996.
Approximately one-half of this decrease was attributable to lower unit sales of
transaction processing OCR and bar code products. This fluctuation in revenues
is typical of quarterly shipment patterns in this line of the Company's
business. The balance of the decrease in hardware revenues is associated with a
transition of the M/Series line of production-level OCR products to
"software-only" solutions as the computing power available on today's personal
computers continues to increase.
International sales increased 16% to $4,939,000, or 39% of net
revenues, during the first quarter of 1997, compared to $4,260,000, or 31% of
net revenues, in the same period of 1996. The primary reason for this increase
was the operation of the Company's Hungarian subsidiary, Recognita Rt.
("Recognita"), acquired in December 1996. Also, to a lesser extent, the
availability of new foreign versions of certain software products contributed to
the increase in international sales as the "bundle and upgrade" strategy
continued to develop overseas.
<PAGE>
Gross Margins
Gross margins for software products improved from 70.0% in the first
quarter of 1996 to 74.4% in the first quarter of 1996, primarily due to the
shift of the manufacturing of the bundled product to our scanner manufacturer
partners as described above.
Gross margins for hardware products decreased to 45.0% in the first
quarter of 1997 from 58.3% in the same period of 1996, due primarily to lower
unit sales and revenues of both transaction processing OCR and bar code
products, as well as M/Series products, which typically carry higher gross
margins than other hardware products. Also contributing to the reduced margin on
hardware products was the fixed nature of a majority of the Company's hardware
manufacturing overhead. As hardware product revenues decline, the level of
manufacturing overhead does not necessarily decline in the same proportion.
The primary factor affecting gross margins in the future is likely to
be shifts in product mix between fully priced retail software, bundled software,
and upgrade products, as well as overall shifts in product mix between software
and hardware products. The microcomputer software market has been subject to
rapid changes, including significant price competition, which can be expected to
continue. Future technology or market changes may cause certain products to
become obsolete rapidly, necessitating increased inventory write-offs or
reserves and a corresponding decrease in gross margins.
Operating Expenses
Research and development (R&D) expenses increased 14% to $2,002,000 in
the first quarter of 1997 from $1,762,000 during the same period of 1996. The
increase in spending from 1996 to 1997 was primarily the result of development
expenses of the Company's Hungarian subsidiary, Recognita, which was acquired in
the fourth quarter of 1996. To a lesser extent, the increase in R&D expenses was
also attributable to increased staffing associated with the Company's ongoing
software development projects. As a percentage of revenue, R&D expense increased
to 16% of revenue in the first quarter of 1997 from 13% during the same period
in 1996. This increase is attributable to higher R&D expense and lower net
revenues between the comparable periods.
The Company is committed to providing continuing enhancements to
current products as well as developing new technologies for the future. This
commitment will result in the Company's continuing to invest heavily in R&D
during 1997. In accordance with Statement of Financial Accounting Standards No.
86, the Company capitalized $155,000 of software development costs during the
first quarter of 1997, compared to $165,000 in the same period of 1996. In
addition to this capitalization of internal R&D expenses, in connection with the
Company's acquisition of Formonix, Inc. ("Formonix") in March 1997, the Company
capitalized approximately $253,000 of the acquisition cost during the first
quarter of 1997. The costs capitalized related to the portion of the Formonix
acquisition valuation which was allocated to existing products acquired.
Amortization of capitalized software development costs was $117,000 in the first
quarter of 1997, versus $162,000 for the comparable period in 1996.
Selling, general and administrative (S,G&A) expenses decreased 3% in
the first quarter of 1997 to $6,312,000 from $6,518,000 during the same period
of 1996. The decrease in S,G&A spending was primarily a result of the
streamlining of management and promotional costs between the OmniPage and
OmniForm product line marketing areas. As a percentage of revenue, S,G&A expense
increased to 50% of revenue in the first quarter of 1997, from 48% during the
same period in 1996. This increase is primarily attributable to lower net
revenues between the comparable periods. The Company expects that S,G&A expense
may increase in dollar terms in 1997 as efforts to expand sales and marketing
activities continue in the OCR, forms, and desktop document management areas.
During the first quarter of 1997, a $2,935,000 one-time charge for
in-process research and development was taken related to the Company's
acquisition of Formonix in March 1997. This charge related to the portion of the
Formonix acquisition valuation represented by the present value of the estimated
cash flow expected to be generated by Formonix-related technology, which, at the
acquisition date, had not yet reached the point of technological feasibility and
did not have an alternative future use.
Interest Income
Interest income decreased 13% in the first quarter of 1997 to $562,000
from $648,000 during the same period of 1996. The decrease in interest income is
attributable to a reduction in total cash and short-term investment balances
between the comparable periods. The Company's one million share repurchase
during the third quarter of 1996 and its acquisition of Recognita in December
1996 were the primary reasons for the decline in total cash and short-term
investment balances since the first quarter of 1996.
<PAGE>
Income Taxes
The Company's effective income tax rate in 1997 is expected to be
10-20%, which is less than statutory rates, primarily due to the use of the
Company's foreign sales corporation and increased utilization of net operating
loss carryforwards acquired in its 1994 acquisition of Calera Recognition
Systems, Inc. ("Calera"). In the first quarter of 1996, the effective income tax
rate was 20%, due primarily to the use of the Company's foreign sales
corporation and to the expected utilization of the Calera net operating loss
carryforwards in the 1996 fiscal year.
Net Earnings and Earnings Per Share
Net loss for the first quarter of 1997 was $1,941,000, compared to net
earnings of $1,300,000 during the same period in 1996. Net loss per share was
$.15 in the first quarter of 1997, versus earnings per share of $.10 in the
comparable period of 1996. The reason for the loss in the first quarter of 1997
was the $2,935,000 one-time in-process research and development charge related
to the Formonix acquisition recorded during the quarter. Excluding this one-time
charge, net earnings for the first quarter of 1997 would have been $994,000, or
$.08 per share, using primary dilutive shares outstanding of 12,931,000 under
the treasury stock method.
Certain Trends
The Company's future operating results may be affected by various
uncertain trends and factors which are beyond the Company's control. These
include but are not limited to adverse changes in general economic conditions,
rising costs, or the occasional unavailability of needed components. The
industry is characterized by rapid changes in the technologies affecting optical
character recognition, forms technology, and document management technology. The
industry has also become increasingly competitive, and, accordingly, the
Company's results may also be adversely affected by the actions of existing or
future competitors, including the development of new technologies, the
introduction of new products, and the reduction of prices by such competitors to
gain or retain market share.
Bundled products incorporating OmniPage and WordScan began shipping in
significant quantities in the fourth quarter of 1994. Because of the lower
per-unit revenue to the Company that results from the combined sale of a bundled
product plus an upgrade, compared to the retail sale of a fully featured version
of the software, the success of the "bundle and upgrade" program relies on
increasing unit sales of upgrades for its success. There can be no assurance
that Caere's transition to the "bundle and upgrade" business model will be
successful and provide sufficient increase in unit volume in the future to
offset reduced per-unit revenue. In addition, customers using the bundled
product may defer or forego purchase of the Company's more fully featured
versions of OmniPage and WordScan products if they find that the bundled
products satisfy their recognition needs.
A significant portion of the Company's net revenues is attributable to
sales through the distribution channel. The Company's future operating results
are dependent to a certain extent on its ability to maintain its existing
relationships with such distributors.
The Company's future earnings and stock price could be subject to
significant volatility, particularly on a quarterly basis. The Company's
revenues and earnings are unpredictable until the end of each quarter due to the
Company's shipment patterns. As is common in the software industry, the
Company's experience has been that a disproportionately large percentage of
shipments has occurred in the third month of each fiscal quarter, and shipments
tend to be concentrated in the latter half of that month. Because the Company's
backlog early in a quarter is not generally large enough to assure that it will
meet its revenue targets for any particular quarter, quarterly results are
difficult to predict until the end of the quarter. A shortfall in shipments at
the end of any particular quarter may cause the results for that quarter to fall
significantly short of anticipated levels. Due to analysts' expectations of
continued growth, any such shortfall in earnings could have a very significant
adverse effect on the trading price of the Company's common stock in any given
period.
As a result of the foregoing factors and other factors which may arise
in the future, the market price of the Company's common stock may be subject to
significant fluctuations over a short period of time. These fluctuations may be
due to factors specific to the Company, to changes in analysts' earnings
estimates, or to factors affecting the computer industry or the securities
markets in general.
<PAGE>
Liquidity and Capital Resources
Caere's financial position remains strong at March 31, 1997. Working
capital increased 3% to $51,232,000 from $49,793,000 at December 31, 1996. The
Company has no long-term debt. The Company's cash and short-term investments
totaled $44,004,000 at March 31, 1997. The Company believes that current cash
balances and internally generated funds will be sufficient to meet its cash
requirements through 1997.
Caere generated cash from operating activities of $173,000 during the
three months ended March 31, 1997. Uses of cash included $8,231,000 to purchase
additional short-term investments, in addition to $738,000 for
modest investments in capital equipment. During the first quarter of 1996, the
Company generated cash from operating activities of $1,812,000. Uses of cash
during that period included $8,509,000 to purchase short-term investments and
$325,000 of expenditures for capital equipment.
The Company offers credit terms to qualifying customers and also sells
on a prepaid, credit card and cash-on-delivery basis. With respect to credit
sales, the Company attempts to control its bad debt exposure through monitoring
of customers' creditworthiness and, where practicable, through participation in
credit associations that provide credit rating information about its customers.
The Company has also purchased credit insurance for certain key accounts to
reduce the potential for catastrophic losses.
<PAGE>
EXHIBIT 11
CAERE CORPORATION
STATEMENT REGARDING COMPUTATION
OF NET EARNINGS (LOSS) PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended
March 31,
1997 1996
Net earnings (loss) $ (1,941,000) $ 1,300,000
============= =============
Weighted average shares outstanding during the period 12,681,795 13,349,703
Common equivalent shares using the treasury
stock method -- 109,373
-------------- -----------
Common and common equivalent shares outstanding
for purposes of calculating net earnings per share 12,681,795 13,459,076
=============== ===============
Net earnings (loss) per common and common
equivalent share $ (.15) $ .10
============== ==============
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 2
Changes in Securities
On March 31, 1997, the Company issued 550,000 shares of its Common
Stock in connection with the acquisition of Formonix, Inc., a privately held
Colorado corporation, in exchange for all of the outstanding shares of Common
Stock of Formonix, Inc. The 550,000 shares of the Company's Common Stock were
issued to the two shareholders of Formonix, Inc. without registration under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
Section 4(2) under the Securities Act.
Item 6
Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Statement Regarding Computation of Net Earnings
(Loss) Per Share - page 13.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
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.
CAERE CORPORATION
Date: May 12, 1997
/S/ Blanche M. Sutter
Blanche M. Sutter, Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,146
<SECURITIES> 40,858
<RECEIVABLES> 7,644
<ALLOWANCES> 1,315
<INVENTORY> 2,436
<CURRENT-ASSETS> 57,859
<PP&E> 14,503
<DEPRECIATION> 9,689
<TOTAL-ASSETS> 64,043
<CURRENT-LIABILITIES> 6,627
<BONDS> 0
0
0
<COMMON> 59,021
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 64,043
<SALES> 12,572
<TOTAL-REVENUES> 12,572
<CGS> 3,716
<TOTAL-COSTS> 11,249
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 562
<INCOME-PRETAX> 1,831
<INCOME-TAX> 110
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,941
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
