CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 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: 0-20728
RIMAGE CORPORATION
(Exact name of Registrant as specified in its charter)
Minnesota 41-1577970
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7725 Washington Avenue South, Edina, MN 55439
(Address of principal executive offices)
612-944-8144
( Registrant's telephone number, including area code)
NA
(Former name, former address, and former fiscal year, if changed since last
report.)
Common Stock outstanding at May 8, 1998 -- 3,143,471
shares of $.01 par value Common Stock.
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___
<PAGE>
RIMAGE CORPORATION
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED MARCH 31, 1998
Description Page
----------- ----
PART I FINANCIAL INFORMATION
Item 1.Financial Statements
Consolidated Balance Sheets as of
March 31, 1998 (unaudited) and
December 31, 1997 . . . . . . . . . . . . . . . . 3-4
Consolidated Statements of Operations
(unaudited) for the Three Months
Ended March 31, 1998 and 1997 . . . . . . . . . . 5
Consolidated Statements of Cash Flows
(unaudited) for the Three Months
Ended March 31, 1998 and 1997 . . . . . . . . . . 6-7
Condensed Notes to Consolidated
Financial Statements (unaudited) . . . . . . . . . . 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
PART II OTHER INFORMATION . . . . . . . . . . . . . . . . . 14
- -------
Item 1-5. None
Item 6. Exhibits
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . .16
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
(unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,427,551 656,127
Trade accounts receivable, net of allowance for doubtful
accounts and sales returns of $356,528 and $505,458,
respectively 5,482,881 4,778,055
Inventories (note 2) 2,134,123 2,265,867
Income tax receivable 134,200 23,350
Prepaid expenses and other current assets 297,011 378,306
Current installments of investment in sales-type leases 70,621 94,422
- -----------------------------------------------------------------------------------------------------------------------
Total current assets 9,546,387 8,196,127
- -----------------------------------------------------------------------------------------------------------------------
Property and equipment, net 5,602,175 5,846,953
Investment in sales-type leases, net of current
installments 4,110 12,013
Goodwill 828,513 848,692
Other noncurrent assets 199,650 259,727
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 16,180,835 15,163,512
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
Liabilities and Stockholders' Equity 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Current liabilities:
Current portion of notes payable $ 900,000 900,000
Current installments of capital lease obligations 371,892 356,053
Trade accounts payable 2,561,205 2,789,973
Accrued expenses (Note 4) 1,367,453 1,069,315
Income taxes payable 155,000 -
Deferred income and customer deposits 697,138 640,725
- ---------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 6,052,688 5,756,066
Notes payable, less current portion 525,000 750,000
Capital lease obligations, less current installments 2,562,511 2,661,334
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 9,140,199 9,167,400
- ---------------------------------------------------------------------------------------------------------------------------------
Minority interest in inactive subsidiary 57,907 57,907
Stockholders' equity:
Common stock, $.01 par value, authorized 10,000,000 shares,
issued and outstanding 3,104,471 and 3,084,500, respectively 31,045 30,845
Additional paid-in capital 10,507,511 10,468,136
Accumulated deficit (3,401,743) (4,405,218)
Foreign currency translation adjustment (154,084) (155,626)
- ---------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 6,982,729 5,938,205
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 16,180,835 15,163,512
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three months ended March 31, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 9,648,600 10,826,773
Cost of revenues 5,831,732 8,262,083
- -------------------------------------------------------------------------------------------------
Gross profit 3,816,868 2,564,690
- -------------------------------------------------------------------------------------------------
Operating expenses:
Engineering and development 509,411 556,693
Selling, general, and administrative 2,042,250 1,735,918
- -------------------------------------------------------------------------------------------------
Total operating expenses 2,551,661 2,292,611
- -------------------------------------------------------------------------------------------------
Operating earnings 1,265,207 272,079
- -------------------------------------------------------------------------------------------------
Other (expense) income:
Interest expense (91,639) (267,138)
Loss on currency exchange (5,683) (2,419)
Other, net 8,790 12,508
- -------------------------------------------------------------------------------------------------
Total other expense, net (88,532) (257,049)
- -------------------------------------------------------------------------------------------------
Earnings before income taxes 1,176,675 15,030
Income taxes 173,200 -
- -------------------------------------------------------------------------------------------------
Net earnings $ 1,003,475 15,030
- -------------------------------------------------------------------------------------------------
Basic net earnings per common share $ 0.32 0.01
- -------------------------------------------------------------------------------------------------
Diluted net earnings per common share
and common share equivalents $ 0.29 0.01
- -------------------------------------------------------------------------------------------------
Basic weighted average shares 3,093,369 3,084,500
- -------------------------------------------------------------------------------------------------
Diluted weighted average shares and common
share equivalents outstanding 3,447,220 3,087,891
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended March 31, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings 1,003,475 15,030
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 528,240 715,720
Change in reserve for excess and obsolete inventories 10,819 (31,141)
Change in reserve for doubtful accounts (148,930) (10,077)
Loss on sale of property and equipment 1,997 -
Changes in operating assets and liabilities:
Trade accounts receivable (555,896) (2,097,280)
Inventories 120,925 461,160
Income tax receivable (110,850) 192,790
Prepaid expenses and other current assets 81,295 (154,405)
Trade accounts payable (228,768) 552,628
Accrued expenses 298,138 (373,523)
Income taxes payable 155,000 -
Deferred income and customer deposits 56,413 153,861
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 1,211,858 (575,237)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (223,203) (97,204)
Other noncurrent assets 29,546 (19,775)
Receipts from sales-type leases 31,704 59,396
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing
activities (161,953) (57,583)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from stock option exercise 39,507 -
Principal payments on capital lease obligations (82,984) (75,389)
Proceeds from other notes payable - 8,361,233
Repayment of other notes payable (225,000) (7,732,476)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (268,477) 553,368
- -------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (10,004) (18,224)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 771,424 (97,676)
Cash and cash equivalents, beginning of period 656,127 117,322
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,427,551 19,646
- -------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of net cash paid during the period for:
Interest $ 100,356 190,748
Income taxes $ 110,850 (147,924)
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION AND NATURE OF BUSINESS
The consolidated financial statements include the accounts of Rimage
Corporation, Rimage Europe GmbH, A/G Systems Inc., d/b/a Duplication
Technology Inc. (Rimage Boulder), Knowledge Access International
(Knowledge Access) and Rimage Services, collectively hereinafter
referred to as Rimage or the Company. All material intercompany
accounts and transactions have been eliminated upon consolidation.
The Company operates in two divisions, Rimage Systems Division and
Rimage Services Division. The Rimage Systems Division consists of
substantially all of the former Rimage Companies. The Rimage Services
Division consists of Rimage Services in addition to the existing
service business at Rimage Boulder.
The Systems Division develops, manufactures and distributes high
performance CD-Recordable (CD-R) publishing and duplication systems,
and continues to support its long term involvement in diskette
duplication and publishing equipment. The Services Division provides
computer media duplication and production services to software
developers and manufacturers and information publishers.
The Company extends unsecured credit to its customers as well as credit
to a limited number of authorized distributor wholesalers, who in turn
provide warehousing, distribution, and credit to a network of
authorized value added resellers. These distributors and value added
resellers sell and service a variety of hardware and software products.
Certain prior year amounts have been reclassified to conform with the
current quarter presentation.
(2) INVENTORIES
Inventories consist of the following as of:
March 31, December 31,
1998 1997
(unaudited)
- -------------------------------------------------------------------------------
Finished goods
and demonstration equipment $ 587,302 $ 578,689
Work-in-process 297,506 234,177
Purchased parts and subassemblies 1,708,134 1,901,001
-------------------------------------------------------------------
2,592,942 2,713,867
Less reserve for excess inventories 458,819 448,000
-------------------------------------------------------------------
$2,134,123 $2,265,867
-------------------------------------------------------------------
(Continued)
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(3) SEGMENT REPORTING
The following table summarizes certain financial information for the
Systems and Service segment:
Three Months Ended March 31,
(unaudited)
(in thousands) 1998 1997
- ---------------------------------------------------------------------
Revenues from unaffiliated customers:
Systems $ 6,132 $ 4,731
Service 3,517 6,096
-------- --------
9,649 10,827
Operating earnings (loss):
Systems 1,148 425
Service 117 (153)
-------- --------
1,265 272
March 31, December 31,
1998 1997
-------- --------
(unaudited)
Net identifiable assets:
Systems $ 8,276 7,031
Service 7,076 7,283
-------- --------
15,352 14,314
As of and for the quarter ended March 31, 1998, foreign revenues from
unaffiliated customers, operating earnings, and net identifiable assets
were $1,761,000, $240,000 and $1,908,000, respectively. As of and for
the quarter ended March 31, 1997, foreign revenues from unaffiliated
customers, operating loss, and net identifiable assets were $895,000,
$(5,000), and $1,978,000, respectively.
(4) ACCRUED EXPENSES
During March 1998, the Company formulated a plan to dramatically reduce
its diskette production at one of its facilities during the second
quarter of 1998. Also during March 1998, the Company reserved for the
write off of approximately $169,000 of net book value associated with
leasehold improvements made to the facility. No reserve has been
recorded for the remaining net book value of approximately $67,000 as
the Company believes future sublease rental income will negate this
expense as well as future rental payments under the third party
operating lease.
(Continued)
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(5) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 130, REPORTING COMPREHENSIVE INCOME. This statement requires
companies to classify items of other comprehensive income by their
nature in a financial statement and display the accumulated balance of
other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet,
and is effective for the Company's year ending December 31, 1998. The
Company's only item of other comprehensive income relates to foreign
currency translation adjustments, and is presented separately on the
balance sheet as required. If presented on the statement of operations
for the three months ended March 31, 1998, comprehensive income would
be $1,542 more than reported net income, due to foreign currency
translation adjustments.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
items from the Company's consolidated statements of operations, shown
in thousands.
Three months ended
March 31,
--------------------
%
1998 1997 Change
-------- --------
Revenues from unaffiliated customers:
Systems ......................... $ 6,132 $ 4,731 29.6%
Services ........................ 3,517 6,096 (42.3)
-------- --------
Total revenues .............. 9,649 10,827 (10.9)
Cost of revenues:
Systems ......................... 2,928 2,794 4.8
Service ......................... 2,904 5,468 (46.9)
-------- --------
Total cost of revenues ...... 5,832 8,262 (29.4)
Gross profit:
Systems ......................... 3,204 1,937 65.4
Services ........................ 613 628 2.4
-------- --------
Total gross profit .......... 3,817 2,565 48.8
Operating expenses:
Systems ........................ 2,056 1,512 36.0
Service ........................ 496 781 (36.5)
-------- --------
Total operating expenses ... 2,552 2,293 11.3
Operating earnings (loss):
Systems ........................ 1,148 425 170.1
Service ........................ 117 (153) 176.5
-------- --------
Total operating earnings ............ $ 1,265 $ 272 365.1
======== ========
<PAGE>
RESULTS OF OPERATIONS
Rimage operates through two primary divisions: (1) the systems
division designs, manufactures and sells high performance, on-demand publishing
and duplication equipment for CD-R's, diskettes and tapes, and (2) the services
division provides media duplication and fulfillment services for most computer
media types, including CD-ROM, diskette, tape and other media such as ZIP and
Jazz disks. Results of operations during the three months ended March 31, 1998
reflected the continued trend of substantial growth and profitability in the
systems division and lower contribution from the services division.
REVENUE. Revenue decreased 10.9% from $10.8 million during the first
quarter of 1997 to $9.6 million during the first quarter of 1998. All of the
decrease, however, occurred in the services division, which recorded a 42.3%
decline in revenue from $6.1 million in the first quarter of 1997 to $3.5
million in the first quarter of 1998. Fueled by increasing sales of its CD-R
products, revenue in the systems division increased 29.6% to $6.1 million in the
first quarter of 1998 from $4.7 in the first quarter of 1997. Revenue in the
services division was affected by the loss of a customer that provided 21.5% of
services sales during the first quarter of 1997 and by decreasing demand for
diskette duplication services.
GROSS PROFIT. Gross profit increased 48.8% from $2.6 million in the
first quarter of 1997 to $3.8 million in the first quarter of 1998. The increase
was due to the greater proportion of high margin systems sales in the 1998
quarter, and particularly sales of CD-R equipment. Gross profit from the
services division remained relatively constant from the 1997 quarter to the 1998
quarter while gross profit in the systems division increased by 65.4%. As a
percentage of revenue, gross profit increased from 23.7% during the first
quarter of 1997 to 39.6% during the first quarter of 1998. Margins in the
systems division increased to 52.3% in the first quarter of 1998 from 40.9% in
the first quarter of 1997 as CD-R products contributed a greater percentage of
sales and due to manufacturing efficiencies instituted in 1997. Margins also
improved in the services division from 10% in the first quarter of 1997 to 17.4%
in the first quarter of 1998, primarily as a result of cost savings measures
applied to the services organization in 1997.
OPERATING EXPENSE. Operating expense increased 11.3% from $2,293,000
in the first quarter of 1997 to 2,552,000 in the first quarter of 1998 and
increased as a percentage of revenue from 21.2% in the first quarter of 1997 to
26.4% in the first quarter of 1998. All of the increase in operating expense
related to increased sales and marketing expense and to the reserve for the
write off of certain leasehold improvements associated with plans to remove
operations from the services facility in Plover, WI. The Company significantly
expanded its distribution network, both domestically and internationally, for
its systems products in the second half of the 1997 fiscal year and has
commenced joint marketing campaigns with distributors and value added resellers.
These steps, combined with the increasing percentage of overall sales from the
systems division (where products are sold through distribution) as opposed to
services (where services are generated primarily through contacts and
advertisement) were primary causes of sales and marketing expense to increase
from 9.0% of revenue in the first quarter of 1997 to 12.8% of revenue in the
first quarter of 1998. Partially offsetting the increased sales and marketing
expense was a decrease in general and administrative expense both in terms of
dollars (from $953,000 in the first quarter of 1997 to $806,000 in the first
quarter of 1998) and as a percentage of revenue (from 8.8% in the first quarter
of 1997 to 8.4% in the first quarter of 1998). Research and development expense
remained relatively constant between the periods. One of the Company's principal
objectives is to continue to reduce expenditures in administration as a
percentage of revenue and direct more resources to revenue producing activities
through selling and marketing expense. Accordingly, the Company intends to
continue spending in sales and marketing.
<PAGE>
INTEREST EXPENSE. The Company repaid all outstanding borrowings
under its line of credit during the fourth quarter of 1997, substantially
reducing net interest expense from $267,000 in the first quarter of 1997 to
$92,000 in the first quarter of 1998. With a substantial cash balance at March
31, the Company anticipates that net interest expense will remain lower for the
balance of the year.
INCOME TAXES. Income tax expense for the first quarter of 1998
amounted to $173,000 as compared to $0 for the first quarter of 1997. The
Company is using an effective rate of 15% to record income taxes during 1998.
NET EARNINGS. The significant change in mix of revenue to higher
margin product sales in the system division, combined with only marginal
increases in operating expense to support those sales, caused net earnings to
increase dramatically to over $1 million in the first quarter of 1998. The
Company expects to continue to emphasize and devote much of its resources to its
systems business in coming quarters.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities generated $1.2 million of cash during the three
months ended March 31, 1998. The $1.6 million of cash generated from net
earnings, after adjustment for non-cash items (primarily depreciation and
amortization) was offset by increased receivables resulting from increased
revenue netted with a reduction in inventories and increased accrued expenses.
The Company invested approximately $223,000 in additional equipment
primarily for manufacturing purposes. Financing activities consumed $268,000 of
cash primarily as a result of monthly payments under a term note agreement with
its bank.
The Company also maintains a revolving credit agreement with the
same bank that provides for borrowings of up to $5,000,000 based on qualifying
balances of varying assets. The Company estimates that it had available
borrowing authority of approximately $3,342,000 under such line at March 31,
1998, but had no outstanding advances under the line at that date.
The Company believes that the $1.4 million cash balance at March 31,
1998 and available borrowings under its credit line will be more than adequate
to finance operations through the remainder of the calendar year.
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. 11.1 Calculation of Earnings Per Share.
Exhibit No. 27.1 Financial Data Schedule
Exhibit No. 27.2 Financial Data Schedule - Restated
(b) Reports on Form 8-K:
Not Applicable.
<PAGE>
SIGNATURES
In accordance with the Exchange Act, this report has been signed below by
following persons on behalf of the registrant and on the dates indicated.
RIMAGE CORPORATION
Registrant
Date: May 14, 1998 By : /s/ Bernard P. Aldrich
-------------------- ----------------------
Bernard P. Aldrich
Director, Chief Executive Officer,
and President
(Principal Executive Officer)
(Principal Financial Officer)
Date: May 14, 1998 By: /s/ Robert M. Wolf
-------------------- -------------------
Robert M. Wolf
Controller
(Principal Accounting Officer)
EXHIBIT 11.1
RIMAGE CORPORATION
COMPUTATION OF NET EARNINGS PER SHARE OF COMMON STOCK
Basic net earnings per common share is determined by dividing net earnings by
the weighted average number of shares of common stock outstanding, unless the
result is anti-dilutive. Diluted net earnings per common share is determined by
dividing the net earnings by the weighted average number of shares of common
stock and common share equivalents outstanding, unless the result is
anti-dilutive. The following is a summary of the weighted average common shares
outstanding and common share equivalents:
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
Shares outstanding at beginning of period 3,091,302 3,084,500
---------- ----------
Common stock issued in stock option exercise 13,169 0
Shares outstanding at end of period 3,104,471 3,084,500
========== ==========
Weighted average shares of common stock outstanding 3,093,369 3,084,500
========== ==========
Common stock equivalents 709,797 388,853
Weighted average shares of common stock equivalents 353,851 3,391
========== ==========
Weighted average shares of common stock and stock equivalents 3,447,220 3,087,891
========== ==========
Net earnings $1,003,475 $ 15,030
========== ==========
Basic net earnings per share $ 0.32 $ 0.01
========== ==========
Diluted net earnings per share $ 0.29 $ 0.01
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,428
<SECURITIES> 0
<RECEIVABLES> 5,839
<ALLOWANCES> 357
<INVENTORY> 2,134
<CURRENT-ASSETS> 9,546
<PP&E> 13,364
<DEPRECIATION> 7,762
<TOTAL-ASSETS> 16,181
<CURRENT-LIABILITIES> 6,053
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 6,952
<TOTAL-LIABILITY-AND-EQUITY> 16,181
<SALES> 9,649
<TOTAL-REVENUES> 9,649
<CGS> 5,832
<TOTAL-COSTS> 5,832
<OTHER-EXPENSES> 2,552
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 92
<INCOME-PRETAX> 1,177
<INCOME-TAX> 173
<INCOME-CONTINUING> 1,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,004
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 20 117
<SECURITIES> 0 0
<RECEIVABLES> 8,253 6,156
<ALLOWANCES> 1,075 1,085
<INVENTORY> 3,598 4,028
<CURRENT-ASSETS> 12,071 10,545
<PP&E> 13,893 13,796
<DEPRECIATION> 6,615 5,981
<TOTAL-ASSETS> 20,522 20,010
<CURRENT-LIABILITIES> 13,455 12,836
<BONDS> 0 0
0 0
0 0
<COMMON> 31 31
<OTHER-SE> 4,030 4,053
<TOTAL-LIABILITY-AND-EQUITY> 20,522 20,010
<SALES> 10,827 11,051
<TOTAL-REVENUES> 10,827 11,051
<CGS> 8,262 7,882
<TOTAL-COSTS> 8,262 7,882
<OTHER-EXPENSES> 2,293 2,988
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 267 139
<INCOME-PRETAX> 15 71
<INCOME-TAX> 0 24
<INCOME-CONTINUING> 15 47
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 15 47
<EPS-PRIMARY> 0.01 0.02
<EPS-DILUTED> 0.01 0.02
</TABLE>
