UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
---------------------------------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 30, 1998
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
------ -------
Commission File No. 0-21820
--------------------------------------------
KEY TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
Oregon 93-0822509
(State of Incorporation) (I.R.S. Employer Identification No.)
150 Avery Street, Walla Walla, Washington 99362
(Address of principal executive offices) (Zip Code)
(509) 529-2161
(Registrant's telephone number, including area code)
---------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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
--- ---
The number of shares outstanding of the Registrant's common stock, no
par value, on July 31, 1998 was 4,697,912 shares.
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 1998
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Condensed consolidated balance sheets, June 30, 1998
(unaudited) and September 30, 1997................................3
Condensed unaudited consolidated statements of operations for the
three months ended June 30, 1998 and 1997 .......................4
Condensed unaudited consolidated statements of operations for the
nine months ended June 30, 1998 and 1997 ........................5
Condensed unaudited consolidated statements of cash flows for
the nine months ended June 30, 1998 and 1997.....................6
Notes to condensed unaudited consolidated financial statements.......7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................................14
SIGNATURES...................................................................15
EXHIBIT INDEX................................................................16
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 (UNAUDITED) AND SEPTEMBER 30, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, September 30,
1998 1997
---------------------- ----------------------
(in thousands)
Assets
- ---------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 5,268 $ 2,896
Trade accounts receivable, net 8,952 8,716
Inventories:
Raw materials 5,239 5,393
Work-in-process and sub-assemblies 5,307 5,357
Finished goods 2,586 3,096
------- -------
Total inventories 13,132 13,846
Other current assets 1,914 1,851
------- -------
Total current assets 29,266 27,309
Property, plant and equipment, net 9,153 9,380
Other assets 2,548 2,752
------- -------
Total $40,967 $39,441
======= =======
Liabilities and Shareholders' Equity
- ---------------------------------------------------------------
Current liabilities:
Accounts payable $ 2,653 $ 2,496
Accrued payroll liabilities and commissions 2,618 2,332
Income tax payable 447 738
Other accrued liabilities 2,483 2,239
Customers' deposits 1,400 1,344
Short-term borrowings and debt 553 852
------- -------
Total current liabilities 10,154 10,001
Long-term debt 1,302 1,293
Deferred income taxes 178 116
Total shareholders' equity 29,333 28,031
------- -------
Total $40,967 $39,441
======= =======
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
----------------- ----------------
(in thousands, except per share data)
Net sales $14,431 $13,951
Cost of sales 8,934 9,607
------- -------
Gross profit 5,497 4,344
Operating expenses:
Selling 1,937 1,866
Research and development 1,232 1,215
General and administrative 1,440 1,198
------- -------
Total operating expenses 4,609 4,279
------- -------
Income from operations 888 65
Other income 69 87
------- -------
Earnings before income taxes 957 152
Income tax expense (336) (58)
------- -------
Net earnings $ 621 $ 94
------- -------
Net earnings per common share - basic $ .13 $ .02
======= =======
Net earnings per common share - diluted $ .13 $ .02
======= =======
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
----------------- ----------------
(in thousands, except per share data)
Net sales $40,377 $42,654
Cost of sales 25,284 29,660
------- -------
Gross profit 15,093 12,994
Operating expenses:
Selling 5,879 5,966
Research and development 3,735 3,386
General and administrative 3,854 3,852
------- -------
Total operating expenses 13,468 13,204
------- -------
Income (loss) from operations 1,625 (210)
Other income 133 223
------- -------
Earnings before income taxes 1,758 13
Income tax expense (616) (11)
------- -------
Net earnings $ 1,142 $ 2
======= =======
Net earnings per common share - basic $ .24 $ .00
======= =======
Net earnings per common share - diluted $ .24 $ .00
======= =======
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
--------------- --------------
(in thousands)
Net cash provided by (used in) operating activities $3,770 ($4,102)
Cash flows from investing activities:
Proceeds from short-term investments - 6,070
Additions to property, plant and equipment, net (1,289) (2,360)
------ -------
Net cash provided by (used in) investing activities (1,289) 3,710
------ -------
Cash flows from financing activities:
Proceeds from (repayment of) short-term borrowings - (114)
Proceeds from issuance of long-term debt 408 1,500
Repayments of long-term debt (631) (1,146)
Proceeds from issuance of common stock 114 216
------ -------
Net cash provided by (used in) financing activities (109) 456
------ -------
Net increase in cash and cash equivalents 2,372 64
Cash and cash equivalents, beginning of the year 2,896 3,458
------ -------
Cash and cash equivalents, end of period $5,268 $3,522
====== =======
Supplemental information:
Cash paid during the period for interest $ 253 $ 169
Cash paid during the period for income taxes $ 710 $1,318
</TABLE>
See notes to condensed unaudited consolidated financial statements
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. Condensed unaudited consolidated financial statements
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted from these condensed unaudited consolidated
financial statements. These condensed unaudited consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K for the fiscal year ended
September 30, 1997. The results of operations for the three- and nine-month
periods ended June 30, 1998 are not necessarily indicative of the operating
results for the full year.
In the opinion of management, all adjustments, consisting only of normal
recurring accruals, have been made to present fairly the Company's
financial position at June 30, 1998 and the results of its operations for
the three- and nine-month periods ended June 30, 1998 and 1997 and its cash
flows for the nine-month periods ended June 30, 1998 and 1997.
The balance sheet at September 30, 1997 has been condensed from the audited
balance sheet as of that date.
2. Income taxes
The provision for income taxes is based on the estimated effective income
tax rate for the year.
3. Earnings per share
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings per
Share, requires all companies whose capital structures include stock
options, warrants or convertible securities to make a dual presentation of
basic and diluted earnings per share ("EPS"). This accounting standard
became effective for the Company's fiscal quarter ended December 31, 1997.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during the period. Diluted earnings per
share are calculated after adjusting the weighted average number of common
shares outstanding for any dilutive effect of outstanding stock options
using the treasury stock method. During periods of net loss, the effect of
outstanding stock options is anti-dilutive and excluded from the
calculation of loss per share.
Tables reconciling basic earnings per share and diluted earnings per share
follow:
<PAGE>
<TABLE>
<CAPTION>
Reconciliation of Basic EPS to Diluted EPS (in thousands, except per share data):
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
For the Three Months Ended June 30,
-------------------------------------------------------------------------------
1998 1997
-------------------------------------- -------------------------------------
Per-Share Per-Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic EPS:
Income available to common
shareholders $ 621 4,694 $ .13 $ 94 4,679 $ .02
===== =====
Effect of Dilutive Securities:
Stock Options - 30 - 77
---------- ---------- ---------- ----------
Diluted EPS:
Income available to common
shareholders plus assumed stock
options $ 621 4,724 $ .13 $ 94 4,756 $ .02
====== ===== ===== ===== ===== =====
For the Nine Months Ended June 30,
-------------------------------------------------------------------------------
1998 1997
-------------------------------------- -------------------------------------
Per-Share Per-Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
Basic EPS:
Income available to common
shareholders $ 1,142 4,690 $ .24 $ 2 4,671 $ .00
===== =====
Effect of Dilutive Securities:
Stock Options - 38 - 90
---------- ---------- ---------- ----------
Diluted EPS:
Income available to common
shareholders plus assumed stock
options $ 1,142 4,728 $ .24 $ 2 4,761 $ .00
======= ===== ===== ====== ===== =====
</TABLE>
Options to purchase 467,650 shares at prices ranging from $11.50 to $23.25
per share were outstanding as of June 30, 1998, but were not included in
the computation of diluted EPS for the three-month period ended June 30,
1998 because the options' exercise prices were greater than the average
market price of the common stock. For the nine month period ended June 30,
1998, options for 331,050 shares of common stock at prices ranging from
$12.00 to $23.25 per share were not included in the computation of diluted
EPS because the options' exercise prices were greater than the average
market price of the common stock. These options expire on dates beginning
February 6, 2006 through February 4, 2008.
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Comments included in this document may include "forward-looking statements"
within the meaning of the federal securities laws, including statements as to
anticipated future results that are based on current expectations and subject to
a number of risks and uncertainties. The following factors, among others, could
cause actual results or outcomes to differ materially from current expectations:
the ability of the Tegra product line to rebound and sustain an improved level
of customer acceptance; the impact of beginning backlog levels and
order-to-shipment lead time intervals in certain product lines on quarterly
revenues; achievement of product performance specifications and related product
upgrade or warranty expenses; the ability of new products to compete
successfully in either existing or new markets; product development activities;
future costs of materials and other operating expenses; competitive factors; the
risks involved in expanding international operations and sales; the costs
associated with providing remediation activities and contingency plans for
potential Year 2000 issues; the performance and needs of industries served by
the Company and the financial capacity of customers in these industries to
purchase capital equipment.
Results of Operations
- ---------------------
For the three-month period ended June 30, 1998, net earnings were $621,000 or
$.13 per share on net sales of $14.4 million compared to net earnings of $94,000
or $.02 per share on net sales of $14.0 million for the comparable period in
fiscal 1997. Net earnings were 4.3% and 0.7% of net sales in the two periods,
respectively. For the nine months ended June 30, 1998, the Company's operating
activities resulted in net income of $1.1 million or $.24 per share on net sales
of $40.4 million compared to net income of $2,000 or $.00 per share on net sales
of $42.7 million for the corresponding period in fiscal 1997. Net income was
2.8% and 0.0% of net sales in the two nine-month periods, respectively.
THREE MONTHS. Net sales increased $480,000 to $14.4 million in the three-month
period ended June 30, 1998 compared to the corresponding period in fiscal 1997.
The increase in net sales between the two periods resulted principally from
increased sales in the automated inspection systems and processing equipment
product groups, partially offset by decreased sales of specialized conveying
systems. Sales of automated inspection systems resulted principally from
shipments of the Company's Tegra (TM) sorting systems. Within the specialized
conveying systems product group, decreased sales to domestic customers were
partially offset by increased sales to European and other international
customers. Sales to European customers increased by 19% in the third quarter of
fiscal 1998 over the same period last year. Sales of specialized conveying
systems to European customers by the Company's Dutch subsidiary, KEY/Superior
B.V., was a significant factor contributing to this increase.
Backlog at the end of the most recent quarter was approximately $8.1 million
compared to the backlog of $9.0 million at June 30, 1997. Backlog at the
beginning of the quarter compared to backlog at the close of the quarter
decreased by $2.1 million compared to a decrease of $5.5 million in the
corresponding period in fiscal 1997, principally as a result of customer
requirements for delivery in each respective period.
<PAGE>
Backlog does not include orders received and shipped within the same quarter.
The total value of orders received in the third quarter of fiscal 1998 increased
by 45% over the value of orders recorded in the corresponding period in fiscal
1997. The increase in orders in the third quarter of the current fiscal year
compared to the same period last year was principally due to increased orders
for Tegra automated inspection systems followed by increased orders for
specialized conveying systems.
Gross profit increased to $5.5 million or 38% of sales for the three months
ended June 30, 1998 compared to $4.3 million or 31% of sales in the
corresponding period last year. The improved margin resulted principally from
decreased warranty and installation expenses related to the Tegra product line
and decreased manufacturing labor, overhead and other cost variances as
percentages of sales due to cost reduction programs and improved manufacturing
efficiencies.
Operating expenses were $4.6 million in the three-month period ended June 30,
1998 compared to $4.3 million for the three-month period ended June 30, 1997.
General and administrative expenses increased by 20% to $1.4 million in the more
recent quarter principally as a result of expenses related to consulting and
training services to improve the Company's processes and product reliability.
Management expects the general and administrative expenses to decrease modestly
over the next several quarterly periods. Selling expenses increased slightly to
just over $1.9 million in the more recent period due principally to increased
advertising and product promotion expenses. Research and development expenses
were essentially unchanged between the comparable quarterly periods. For the
fiscal quarter ended June 30, 1998, other income was $69,000 compared to $87,000
for the corresponding period in fiscal 1997.
During the three-month period ended March 31, 1998, the Company began the merger
and consolidation of its two European subsidiaries, Key Technology B.V. and
Superior B.V into an entity named KEY/Superior B.V. The consolidation will also
include the physical relocation of the combined operations into a new, leased
facility adjacent to the current Superior B.V. location. The physical relocation
began in the third quarter and is expected to be completed in the fourth quarter
of fiscal 1998.
NINE MONTHS. Net sales for the nine-month period ended June 30, 1998 decreased
5% to $40.4 million from $42.7 million in the comparable period last year. The
decrease in net sales resulted from decreased sales of products principally in
the processing equipment product group followed by decreases in sales of
specialized conveying systems. The decreased sales in these product groups were
generally spread across the various geographic markets to which the Company
sells, except for Europe and, to a lesser extent, Latin America, both of which
experienced increased sales. In the more recent nine-month period, decreased
sales to customers in international geographic markets other than Europe and
Latin America resulted principally from decreased sales of automated inspection
systems and specialized conveying systems. Historically, the Company's typical
terms of sale for such systems sold to international customers have been
denominated in U.S. dollars. The Company believes the relative strengthening of
<PAGE>
the dollar against other foreign currencies since the comparable period a
year ago has placed the Company's automated inspection systems at a competitive
pricing disadvantage. Net sales for the nine-month period ended June 30, 1998 in
the domestic and international markets served by the Company have also been
unfavorably affected by decreased capital spending by customers. The Company,
however, has recently been consulted on and is expecting to participate in
providing equipment and systems for a number of processing line refurbishment
and capacity expansion projects beginning in the fourth quarter of fiscal 1998
and continuing into the upcoming year.
For the nine months ended June 30, 1998, gross profit increased by $2.1 million
or 16% to $15.1 million, or 37% of sales, compared to $13.0 million, or 30% of
sales, in the nine months ended June 30, 1997. Gross profit contribution during
the nine-month period ended June 30, 1998 increased over the corresponding
period in 1997 due principally to a slight shift in product mix to higher
margined systems and improved margins on these systems, decreased warranty and
installation expenses and decreased manufacturing overhead and labor as
percentages of sales. Total operating expenses increased by $264,000 to $13.5
million in the nine-month period ended June 30, 1998 from $13.2 million in the
comparable period in the previous fiscal year principally as a result of
increased research and development expenditures, offset slightly by decreased
selling expenses. For the nine-month period ended June 30, 1998, other income
was $133,000 compared to other income of $223,000 for the corresponding period
in fiscal 1997. In the corresponding period in fiscal 1997, other income had
benefited from moderately higher royalty, scrap and interest income compared to
the more recent period
Liquidity and Capital Resources
- -------------------------------
For the nine-month period ended June 30, 1998, net cash provided by operating
activities totaled $3.8 million compared to net cash used in operating
activities totaling $4.1 million in the corresponding period in fiscal 1997. A
principal source of cash during the nine months ended June 30, 1998 was provided
by a decrease in inventories of $714,000. In the corresponding period last year,
the Company used $3.7 million in cash to decrease trade accounts payable
balances and pay accrued income taxes and certain accrued payroll liabilities,
including profit sharing and incentive compensation expenses, which had been
accrued in the previous fiscal year. Additionally, operating activities during
the fiscal 1997 period had resulted in the use of $1.8 million to fund an
increase in inventories.
Cash flows from investing activities for the nine-month period ended June 30,
1998 included the use of net cash resources totaling $1.3 million to fund the
acquisition of capital equipment compared to $2.4 million in the corresponding
period last year. In the first three quarters of fiscal 1997, proceeds from
short-term investments, upon their maturity, in a net amount of $6.1 million
were utilized to partially fund operating activities and $2.4 million in
purchases of capital equipment. No such proceeds from short-term investments
have been utilized in the nine-month period ended June 30, 1998. At June 30,
1998, the Company had outstanding commitments for capital expenditures totaling
<PAGE>
approximately $650,000 for equipment and leasehold improvements related to the
completion of the expansion of its operations in Beusichem, The Netherlands.
The Company's cash flows from financing activities for the nine months ended
June 30, 1998 were principally affected by repayments of $631,000 in long-term
debt. These repayments, offset by the receipt during the first quarter of fiscal
1998 of $408,000 from a third-party leasing company, the result of an assignment
of the future proceeds of a customer's operating lease of the Company's
products, resulted in a net decrease of $223,000 in total consolidated long-term
debt for the nine months ended June 30, 1998. Proceeds from the issuance of
common stock during the period under the Company's employee stock option and
stock purchase plans totaled $114,000.
During the nine-month period ended June 30, 1998, working capital increased by
$1.8 million to $19.1 million. Cash and cash equivalents increased by $2.4
million as a result of operating activities. Trade accounts receivable increased
by the net amount of $236,000 and inventories decreased by $714,000 principally
as a result of a high level of shipments at the end of the period. Trade
accounts payable increased by $157,000, principally as the result of the
expenditures for equipment and leasehold improvements in Europe. Income taxes
payable, payroll and other accrued liabilities also increased by the net amount
of $239,000, including the payment of $710,000 for income taxes.
The Company's facility with a domestic commercial bank provides for an operating
line of credit up to $4.0 million. At June 30, 1998, the Company had no
borrowings under this credit facility.
The Company also maintains a credit facility with a Dutch bank which
provides for operating lines of credit totaling 1.5 million guilders, or
approximately $750,000, to the Company's subsidiary in the Netherlands. At June
30, 1998, the Company had no borrowings under this credit facility.
The Company's operating, investing and financing activities resulted in a $2.4
million increase in cash and cash equivalents. At the end of the period, the
balance of cash and cash equivalents totaled $5.3 million. The Company believes
that its cash and cash equivalents, cash generated from operations and available
borrowings under its operating lines of credit will be sufficient to provide for
its working capital needs and to fund future growth.
Year 2000 Conversion
- --------------------
The Company has initiated an enterprise-wide program to prepare its computer
systems, applications and products for the year 2000 date conversion. The
Company expects to incur internal staff costs as well as consulting expenses,
investments in capital equipment and other remediation expenditures related to
enhancements necessary to achieve a year 2000 date conversion with no effect on
customers or disruption to business operations. The total cost of compliance and
its effect on the Company's future results of operations is still being
determined as a part of the detailed and on-going compliance-planning program.
<PAGE>
However, management currently believes that total expenditures for the Company's
year 2000 compliance program will be approximately $350,000, including both
capital equipment and operating expense. Expenditures through June 30, 1998
total approximately $30,000.
The Company expects that the portion of its year 2000 compliance program that
addresses internal issues should be substantially completed by January 1, 1999
and contains only a moderate to low level of risk. The Company also expects to
continue its assessment of external issues related to suppliers, customers,
utilities and other factors which are outside of its immediate control. These
activities are expected to continue throughout 1999 and beyond, as applicable.
Since the external issues are outside of its immediate control, the Company
assigns a higher level of risk to such issues. The Company expects to implement
contingency plans as the requirements for such plans are identified. The costs,
if any, for such contingency plans are expected to be incremental to the
Company's year 2000 compliance program expenditures indicated above.
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
- -------------------------------------------------------------------------------
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the three
months ended June 30, 1998.
1. Registrant's Form 8-K dated May 13, 1998 and filed with the
Securities and Exchange Commission on June 24, 1998
disclosing the Company's adoption of a shareholder rights
plan.
<PAGE>
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.
KEY TECHNOLOGY, INC.
(Registrant)
Date: August 12, 1998 By /s/ Thomas C. Madsen
-------------------------------------
Thomas C. Madsen,
President and Chief Executive Officer
Date: August 12, 1998 By /s/ Steven D. Evans
-------------------------------------
Steven D. Evans,
Vice President of Finance and Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 1998
- -------------------------------------------------------------------------------
EXHIBIT INDEX
Exhibit Page
- ------- ----
27.1 Financial Data Schedule for the nine-month period
ended June 30, 1998................................................17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM KEY
TECHNOLOGY, INC.'S CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY
REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 5,268
<SECURITIES> 0
<RECEIVABLES> 9,483
<ALLOWANCES> (531)
<INVENTORY> 13,132
<CURRENT-ASSETS> 29,266
<PP&E> 18,906
<DEPRECIATION> (9,753)
<TOTAL-ASSETS> 40,967
<CURRENT-LIABILITIES> 10,154
<BONDS> 1,302
0
0
<COMMON> 9,083
<OTHER-SE> 20,250
<TOTAL-LIABILITY-AND-EQUITY> 40,967
<SALES> 40,377
<TOTAL-REVENUES> 40,677
<CGS> 25,284
<TOTAL-COSTS> 25,284
<OTHER-EXPENSES> 13,376
<LOSS-PROVISION> 92
<INTEREST-EXPENSE> 167
<INCOME-PRETAX> 1,758
<INCOME-TAX> 616
<INCOME-CONTINUING> 1,142
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,142
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
