<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 1997.
Commission file number: 0-20206
PERCEPTRON, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2381442
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47827 Halyard Drive, Plymouth, Michigan 48170-2461
(Address of principal executive offices)
(313) 414-6100
(Registrants telephone number, including area code)
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 proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock as of May 12, 1997 was:
Common Stock, $0.01 par value 8,016,874
- ----------------------------- ----------------
Class Number of shares
1
<PAGE> 2
PERCEPTRON, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page
----
ITEM I Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1997 3
and December 31, 1996
Condensed Consolidated Statements of Income - 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 6-8
ITEM 2 Management's Discussion and Analysis of Financial Condition 8-10
and Results of Operations
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 10
PART II. OTHER INFORMATION
ITEM 1 Legal Proceedings 11
ITEM 2 Changes in Securities 11
ITEM 6 Exhibits and Reports on Form 8-K 12
2
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PERCEPTRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $16,785,000 $14,677,000
Accounts receivable and other receivables,
net of reserves of $175,000 and $60,000 17,033,000 22,477,000
Inventory, net of reserves of $895,000 and $860,000 7,004,000 6,574,000
Income tax receivables 850,000 2,103,000
Prepaid expenses and deferred tax asset 1,765,000 2,001,000
----------- ------------
Total current assets 43,437,000 47,832,000
----------- ------------
Property and equipment:
Construction in progress 0 6,202,000
Machinery and equipment 4,752,000 4,544,000
Furniture and fixtures 1,131,000 252,000
Building and land 5,983,000 0
----------- ------------
11,866,000 10,998,000
Less: Accumulated depreciation and amortization (1,918,000) (1,654,000)
----------- ------------
Net property and equipment 9,948,000 9,344,000
Intangible assets, net 2,069,000 2,352,000
----------- ------------
Total assets $55,454,000 $59,528,000
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to bank $0 $830,000
Accounts payable 1,663,000 4,534,000
Accrued payables 4,487,000 4,435,000
Accrued compensation and stock option expense 900,000 1,930,000
----------- ------------
Total current liabilities 7,050,000 11,729,000
----------- ------------
Shareholders' equity:
Preferred Stock, no par value, 1,000,000 shares
authorized, none issued 0 0
Common stock, $.01 par value; 19,000,000 shares
authorized, 7,696,000 and 7,640,000 issued and
outstanding at March 31, 1997 and December 31, 1996,
respectively 77,000 77,000
Cumulative translation adjustments (1,647,000) (929,000)
Additional paid-in capital 39,998,000 39,468,000
Retained earnings 9,976,000 9,183,000
----------- -----------
Total shareholders' equity 48,404,000 47,799,000
----------- -----------
Total liabilities and shareholders' equity $55,454,000 $59,528,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE> 4
PERCEPTRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
----------------------------
1997 1996
------------- ----------
Net sales $10,330,000 $9,510,000
Cost of sales 4,270,000 3,921,000
------------- ----------
Gross profit 6,060,000 5,589,000
Selling, general and administrative expense 3,198,000 2,801,000
Engineering, research and development expense 1,911,000 1,295,000
Non-cash stock compensation expense 0 421,000
------------- ----------
Income from operations 951,000 1,072,000
Interest income, net 182,000 161,000
------------- ----------
Income before provision for income taxes 1,133,000 1,233,000
------------- ----------
Provision for income taxes 340,000 374,000
------------- ----------
Net income $793,000 $859,000
============= ==========
Net income per weighted average share $.10 $.11
============= ==========
Weighted average common and common
equivalent shares 8,227,543 7,854,650
============= ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 5
PERCEPTRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $793,000 $859,000
----------- -----------
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 547,000 152,000
Non-cash stock compensation expense --- 421,000
Changes in operating assets and liabilities:
Accounts receivable 6,244,000 3,464,000
Inventory (430,000) (1,214,000)
Prepaid expenses and other current assets 236,000 497,000
Accounts payable (603,000) (429,000)
Accrued expenses (978,000) (1,605,000)
----------- -----------
Total adjustments 5,016,000 1,286,000
----------- -----------
Net cash provided by operating activities 5,809,000 2,145,000
----------- -----------
Cash flows (used in) investing activities:
Capital expenditures (3,136,000) (470,000)
----------- -----------
Cash flows from financing activities:
Principal payments under capital lease obligations 0 (14,000)
Proceeds from issuance of short-term debt 0 240,000
Proceeds from exercise of options and other 530,000 261,000
Repayment of short-term debt (830,000) 0
----------- -----------
Net cash provided (used in) by financing activities (300,000) 487,000
----------- -----------
Effect of exchange rates on cash and cash equivalents (265,000) (52,000)
----------- -----------
Net increase in cash and cash equivalents 2,108,000 2,110,000
Cash and cash equivalents, beginning of year 14,677,000 15,185,000
----------- -----------
Cash and cash equivalents, end of period $16,785,000 $17,295,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE> 6
PERCEPTRON, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTES 1. FINANCIAL STATEMENT PRESENTATION
Information for the three months ended March 31, 1997 and 1996 is
unaudited, but includes all adjustments, consisting of normal recurring
adjustments, which the management of Perceptron, Inc. ("Perceptron" or the
"Company") consider necessary for fair presentation of financial position,
results of operations and cash flows. In accordance with the instructions for
the completion of the Quarterly Report on Form 10Q, certain information and
footnote disclosures necessary to comply with generally accepted accounting
principles have been condensed or omitted. Certain 1996 amounts have been
reclassified to conform to the 1997 presentation.
These financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K and Current Report on Form 8-K for the
year ended December 31, 1996, which contain summaries of Perceptron's
accounting principles and other footnote information. The results of
operations for any interim period are not necessarily indicative of the results
of operations for a full year.
The condensed consolidated financial statements of the Company have been
prepared to give retroactive affect to the acquisition by the Company of
Autospect, Inc. ("Autospect"), which acquisition was consummated on February 3,
1997. The acquisition is accounted for as a pooling of interests.
NOTE 2. INVENTORY
Inventory is stated at the lower of cost or market. The cost of inventory
is determined by the first in, first out (FIFO) method. Inventory, net of
reserves, is comprised of the following:
March 31, December 31,
1997 1996
---------- ------------
Component parts $4,458,000 $4,498,000
Work in process 1,570,000 1,396,000
Finished goods 976,000 680,000
---------- ------------
Total $7,004,000 $6,574,000
========== ============
NOTE 3. NET INCOME PER SHARE
Net income per common and common equivalent share is calculated based upon
the weighted average number of shares of Common Stock outstanding, adjusted for
the dilutive effect of stock options and warrants, using the treasury stock
method.
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings per Share", was issued in February 1997. Adoption of SFAS 128,
effective for periods ending after December 31, 1997, is not expected to have a
significant effect on reported earnings.
6
<PAGE> 7
NOTE 4. COMMITMENTS AND CONTINGENCIES
The Company may, from time to time, be subject to legal proceedings and
claims. Litigation involves many uncertainties. Management is currently
unaware of any significant pending litigation affecting the Company, other than
the indemnification matter and the complaint discussed in the following
paragraphs.
The Company has been informed that certain of its customers have received
allegations of possible patent infringement involving processes and methods
used in the Company's products. One such customer is currently engaged in
litigation relating to such matter. This customer has notified various
companies from which it has purchased such equipment, including the Company,
that it expects the suppliers of such equipment to indemnify such customer, on
a pro-rata basis, for expenses and damages, if any, incurred in this matter.
Management believes, however, that the processes used in the Company's products
were independently developed without utilizing any previously patented process
or technology. Because of the uncertainty surrounding the nature of any
possible infringement and the validity of any such claim or any possible
customer claim for indemnity, it is not possible to estimate the ultimate
effect, if any, of this matter on the company's financial position.
On March 13, 1996, a complaint was filed naming the Company as a
defendant, along with two other co-defendants, in an action alleging that the
Company's TriCam sensor violates a patent held by the plaintiff and seeking
preliminary and permanent injunctions and damages. In May 1997, this matter
was settled with AST acknowledging that there was no infringement of the AST
patents covered by the suit by the Company, Trident or Nanoose and agreeing to
dismiss, with prejudice, all claims against the Company, Trident and Nanoose.
NOTE 5. CREDIT FACILITIES
The Company has unsecured bank credit facilities of $5.2 million US and
1.0 DM, which may be used to finance working capital needs and equipment
purchases or capital leases. Any borrowings for working capital needs will
bear interest at the bank's prime rate (8.5% as of April 15, 1997) any
borrowings to finance equipment purchases will bear interest at the bank's
prime rate plus 1/2%. These credit facilities expire on May 31, 1997 unless
canceled earlier by the Company or the bank. A portion of the credit
facilities are subject to a borrowing formula based on eligible accounts
receivables. The Company expects to renew these credit facilities. At March
31, 1997, the Company had no outstanding liabilities under these facilities,
and at December 31, 1996, Autospect had borrowings of $830,000 under these
facilities.
NOTE 6. FOREIGN EXCHANGE CONTRACTS
The Company uses, from time to time, a limited hedging program to minimize
the impact of foreign currency fluctuations. As the Company exports products,
it generally enters into limited hedging transactions relating to the accounts
receivable arising as a result of such shipment. These transactions involve
the use of forward contracts. At March 31, 1997, the Company had no forward
contracts outstanding.
7
<PAGE> 8
NOTE 7. SUBSEQUENT EVENTS
On April 30, 1997, the Company consummated its acquisition of Trident
Systems Inc. ("Trident") and Nanoose Systems Corporation ("Nanoose") for
aggregate consideration consisting of 219,962 and 89,820 shares of Common Stock
of the Company, respectively. The transactions will be accounted for as
poolings of interests. As of and for the year ended December 31, 1996,
Trident's revenues, net income (loss), and stockholders deficit were
approximately $6.7 million, ($0.8) million and $1.1 million, respectively.
Nanoose's revenue, net income and net assets were not material.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Net Sales. The Company's net sales increased by 9.0% from $9.5 million in
the first quarter of 1996 to $10.3 million in the first quarter of 1997. The
increase of $0.8 million in net sales is attributable to increased sales to
international automotive customers, up by $1.1 million from the same quarter
last year. Domestic automotive sales for the first quarter of 1997 and 1996
were flat at $7.1 million and $0.4 million for Perceptron and Autospect,
respectively. Non-automotive sales were down by $0.3 million for 1997 versus
1996.
New order bookings during the first quarter of 1997 totaled $17.7 million
compared to $8.7 million in the first quarter of 1996. The increase of $9.0
million is attributable to the timing of orders from Perceptron, Inc. domestic
automotive customers, up by $8.0 million on a comparative basis, plus an
increase of $1.3 million on a comparative basis from European and Asian
customers. Non-automotive bookings were up by $0.4 million for the first
quarter 1997 versus 1996, and Autospect bookings were down by $0.7 million in
1997 versus the 1996 period.
The fluctuations in automotive sales and bookings by geographic segments
is primarily due to the timing of customer delivery requirements.
New order bookings are dependent on the timing of customer re-tooling
programs, and accordingly may vary significantly from month to month. The
amount of new order bookings during any particular period is not necessarily
indicative of the future operating performance of the Company.
Backlog at March 31, 1997 totaled $28.3 million, compared to $21.0 million
at December 31, 1996. The level of order backlog at any particular time is not
necessarily indicative of the future operating performance of the Company. The
Company expects to be able to fill substantially all of the orders in backlog
by December 31, 1997.
Gross profit. Gross profit increased from $5.6 million in the first
quarter of 1996 to $6.1 million in the first quarter of 1997. Gross profit as
a percentage of net sales decreased from 58.8% in the first quarter of 1996 to
58.7% in the first quarter of 1997. The decrease is due primarily to increased
manufacturing expenses in anticipation of higher volumes for 1997.
8
<PAGE> 9
Gross profit as a percentage of net sales in the first quarter 1996 had been
adversely affected by the lesser gross profit percentage associated with one
specific sale by the Company of a new product which was integrated into
equipment acquired from an original equipment manufacturer and sold as a
complete system.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased from $2.8 million in the first quarter of
1996 to $3.2 million in the first quarter of 1997. This change is principally
due to increased personnel and related expenses to support the planned 1997
operating activity and, to a lesser extent, costs associated with the recent
acquisitions. As a percentage of sales, selling, general and administrative
expenses increased from 29.5% in the first quarter of 1996, to 31.0% in the
first quarter of 1997.
Engineering, research and development expense. Engineering, research and
development expenses increased from $1.3 million in the first quarter of 1996,
to $1.9 million in the first quarter of 1997, due primarily to increased
personnel. The Company's new engineering personnel are principally involved in
new product development efforts and were hired in anticipation of higher sales
volumes in 1997. As a percentage of net sales, research and development
expense increased from 13.6% in the first quarter of 1996 to 18.5% in the first
quarter of 1997.
Non-cash stock compensation expense. During the first quarter of 1996,
the Company recorded non-cash compensation expense reflecting the use by
some participants in the Company's stock option plan of Perceptron stock
options to pay the exercise price of stock options issued under the plan.
Action is being taken to eliminate the provision in the Company's stock option
agreement permitting the exercise of stock options in a manner which results in
such non-cash compensation expense.
Interest income, net. Interest income increased from $161,000 in the
first quarter of 1996, to $182,000 in the first quarter of 1997, due to higher
cash balances and related investments.
Income before provision for income taxes. During the first quarter of
1996, Perceptron had income before provision for income taxes of $1.2 million,
representing 13.0% of net sales, as compared to income before provision for
income taxes of $1.1 million, representing 11.0% of net sales, in the first
quarter of 1997.
Provision for income taxes. For the three months ended March 31, 1997,
the Company recorded a $340,000 provision for income taxes, representing an
estimated effective tax rate of 30%. This was consistent with the 1996
effective tax rate of 30%.
Net income. During the first quarter of 1996, Perceptron had net income
of $859,000 representing 9.0% of net sales, as compared to net income of
$793,000 million representing 7.7% of net sales in the first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents as of March 31, 1997 totaled $16.8
million, as compared with $14.7 million as of December 31, 1996. This increase
was due primarily to net income recorded in the quarter and the collection of
accounts receivable, partially offset by increased capital expenditures and
payments of accounts payable and accrued compensation expense.
9
<PAGE> 10
The Company has unsecured credit facilities totaling $5.2 million U.S. and
1.0 million DM. These facilities may be used to finance working capital needs
and equipment purchases or capital leases. Any borrowings for working capital
needs will bear interest at the bank's prime rate (8. 5% as of April 15, 1997);
any borrowings to finance equipment purchases will bear interest at the bank's
prime rate plus 1/2%. The credit facilities expire on May 31, 1997 unless
canceled earlier by the Company or the bank. As of March 31, 1997, Perceptron
had no short-term or long-term debt. The Company expects to renew these credit
facilities.
The Company's working capital increased to $36.4 million at March 31,
1997, from $36.1 million at December 31, 1996. Accounts receivable decreased
from $22.5 million as of December 31, 1996 to $17.0 million as of March 31,
1997 primarily as a result of collections. The increase of approximately $0.4
million in inventory is due primarily to an increase in component parts
inventory in preparation for the planned 1997 operating activity. The decrease
of $4.7 million in current liabilities is due primarily to the payments of 1996
performance bonuses and payments on the new facility.
During the first quarter of 1997, construction of the Company's new
headquarters facility in Plymouth, Michigan was completed and the sale of the
facility to the Company was consummated. This is reflected in the Property and
Equipment portion of the Perceptron, Inc. and Subsidiary's Balance Sheet for
the period ended March 31, 1997.
The Company does not believe that inflation has had any significant impact
on historical operations, and does not expect any significant near-term
inflationary impact.
The Company believes that available cash on hand and existing credit
facilities will be sufficient to fund its currently anticipated 1997 cash flow
requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, on March 13, 1996, a complaint was filed by Applied Scanning
Technology, Inc. ("AST") naming the Company, Trident Systems, Inc. ("Trident")
and Nanoose Systems Corporation ("Nanoose") as co-defendants in an action
alleging patent infringement by the Company, Trident and Nanoose. In May 1997,
this matter was settled with AST acknowledging that there was no infringement
of the AST patents covered by the suit by the Company, Trident or Nanoose and
agreeing to dismiss, with prejudice, all claims against the Company, Trident
and Nanoose.
ITEM 2. CHANGES IN SECURITIES
On February 3, 1997, the Company consummated the acquisition of Autospect,
Inc. ("Autospect") through the merger of a wholly-owned subsidiary of the
Company with and into Autospect for aggregate consideration consisting of
387,093 shares of Common Stock of the Company (the "Merger"). Autospect, based
in Ann Arbor, Michigan, designs, develops and manufactures information-based
coatings inspection and defect detection systems primarily for use in the
automotive industry. Common Stock of the Company was issued in the Merger
pursuant to Rule 504 of Regulation D promulgated under the Securities Act of
1933, as amended, to the seven shareholders of Autospect, five of whom were
accredited investors and the remainder of whom, based on information provided
by them to the Company, were believed by the Company to have such knowledge and
experience in financial and business matters to be capable of evaluating the
merits and risks of the acquisition of the Common Stock of the Company. In
connection with the Merger, the shareholders of Autospect received disclosure
regarding the Company in accordance with Subsection (b) of Rule 502 of
Regulation D ("Rule 502"). No form of general solicitation or advertising was
used in connection with the issuance of the Common Stock of the Company to the
shareholders of Autospect. The shares of Common stock of the Company received
by the shareholders of Autospect in the Merger are subject to limitations on
resale as required by Rule 502(d). The Company registered with the Securities
and Exchange Commission for resale one-half of the shares of Common stock
issued in the Merger and has agreed to also register one-half of the remainder
of such shares on each of the first and second anniversaries of the closing of
the Merger.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
10.39 First Amendment to Amended and
Restated 1992 Stock Option Plan
11. Statement re: computation of
earnings per share.
27. Financial Data Schedule
(K) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated January
11, 1997 which disclosed information under Item 5 and
contained condensed financial information.
12
<PAGE> 13
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.
PERCEPTRON, INC.
(Registrant)
Date: May 13, 1997 By: /S/ Alfred A. Pease
------------------------------
Alfred A. Pease, President
and Chief Executive Officer
Date: May 13, 1997 By: /S/ John G. Zimmerman
------------------------------
John G. Zimmerman
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 13, 1997 By: /S/ Paul J. Tripodi
------------------------------
Paul J. Tripodi, Controller
(Principal Accounting Officer)
13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.39 First Amendment to Amended and
Restated 1992 Stock Option Plan
11 Statement Re: Computation of
earnings per share.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.39
FIRST AMENDMENT TO THE
PERCEPTRON, INC. 1992 STOCK OPTION PLAN
(AMENDED AND RESTATED OCTOBER 31, 1996)
Pursuant to the Amendment provisions in Section 9.2 of the Perceptron,
Inc. 1992 Stock Option Plan ("Plan") and the approval of the Board of Directors
of Perceptron, Inc. ("Company"), the Plan is hereby amended as set forth below.
1. Subject to shareholder approval, Section 4.1 of the Plan (Shares
Available for Options) shall be amended and restated in its entirety to read as
follows:
4.1 SHARES AVAILABLE FOR OPTIONS. The Board of Directors
shall reserve for purposes of this Plan, out of the authorized but
unissued Stock or out of shares of Stock held in the Company's
Treasury, or partly out of each, a total of 2,114,286 shares of
Stock, after taking into account the Company's reverse stock split
effected on May 5, 1992 and stock split effected November 30,
1995, (or the number and kind of shares of Stock or other
securities which, in accordance with Section 8 of this Plan, shall
be substituted for such shares or to which such shares shall be
adjusted).
THIS FIRST AMENDMENT is hereby adopted as of May 13, 1997.
PERCEPTRON, INC.
By: /s/ ALFRED A. PEASE
---------------------------------------
Alfred A. Pease, Chairman, President
and Chief Executive Officer
<PAGE> 1
PERCEPTRON, INC. AND SUBSIDIARIES
EXHIBIT 11, STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Earnings Per Share
Three Months Ended March 31,
------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
A. Net income $793,000 $859,000
-------------- --------------
Weighted average number of common shares outstanding 7,664,769 7,142,983
Effect of the issuance of stock options and assumed
exercise of stock options at prices which are lower
than the average market price of the common shares
during the period, using the treasury stock method 562,774 711,667
-------------- --------------
B. Weighted average number of common shares and common
equivalent shares for primary earnings per share 8,227,543 7,854,650
-------------- --------------
Weighted average number of common shares outstanding 7,664,769 7,142,983
Effect of the issuance of stock options and assumed
exercise of stock options at prices which are lower
than the market price of the common shares at the
end of the period, using the treasury stock method 562,774 782,395
C. Weighted average number of common shares and common
equivalent shares for fully diluted earnings per -------------- --------------
share 8,227,543 7,925,378
-------------- --------------
Primary earnings per share (A/B) $0.10 $0.11
============== ==============
Fully diluted earnings per share (A/C) $0.10 $0.11
============== ==============
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 16,785,000
<SECURITIES> 0
<RECEIVABLES> 17,208,000
<ALLOWANCES> (175,000)
<INVENTORY> 7,004,000
<CURRENT-ASSETS> 43,437,000
<PP&E> 11,866,000
<DEPRECIATION> (1,918,000)
<TOTAL-ASSETS> 55,454,000
<CURRENT-LIABILITIES> 7,050,000
<BONDS> 0
0
0
<COMMON> 77,000
<OTHER-SE> 48,327,000
<TOTAL-LIABILITY-AND-EQUITY> 55,454,000
<SALES> 10,330,000
<TOTAL-REVENUES> 10,330,000
<CGS> 4,270,000
<TOTAL-COSTS> 5,109,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (182,000)
<INCOME-PRETAX> 1,133,000
<INCOME-TAX> 340,000
<INCOME-CONTINUING> 793,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 793,000
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
