UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File No. 000-22166
AETRIUM INCORPORATED
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1439182
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2350 HELEN STREET, NO. ST. PAUL, MINNESOTA 55109
(Address of principal executive offices) (Zip Code)
(651) 704-1800
(Registrant's 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 Exchange Act during the past 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
--------- ---------
Number of shares of Common Stock, $.001 par value,
outstanding as of August 6, 1998 9,703,308
---------
<PAGE>
AETRIUM INCORPORATED
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements as Restated:
Consolidated Balance Sheets as of June 30, 1998 (unaudited) and
December 31, 1997 3-4
Consolidated Statements of Operations (unaudited) for the three
months and six months ended June 30, 1998 5
and 1997
Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 30, 1998 and 1997 6
Notes to unaudited consolidated financial statements 7-9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations As Restated 10-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 13
Item 2. Changes in Securities and Use of Proceeds. 13
Item 3. Defaults Upon Senior Securities. 13
Item 4. Submission of Matters to a Vote of Security Holders. 13
Item 5. Other Information. 14
Item 6. Exhibits and Reports on Form 8-K. 14
SIGNATURES 15
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS AS RESTATED
AETRIUM INCORPORATED
CONSOLIDATED BALANCE SHEETS AS RESTATED
ASSETS
June 30, December 31,
1998 1997
--------------------------------
(Unaudited) (Audited)
(in thousands, except share data)
Current Assets:
Cash and cash equivalents $ 19,258 $ 27,584
Accounts receivable, net 14,131 12,709
Inventories 15,554 16,785
Deferred taxes 2,417 784
Other current assets 417 615
--------------------------------
Total current assets 51,777 58,477
--------------------------------
Property and equipment:
Furniture and fixtures 1,537 1,351
Equipment 6,080 5,282
--------------------------------
7,617 6,633
Less accumulated depreciation and
amortization (3,502) (2,990)
--------------------------------
Property and equipment, net 4,115 3,643
--------------------------------
Noncurrent deferred taxes 6,473 4,951
Intangible and other assets, net 18,430 3,823
--------------------------------
Total assets $ 80,795 $ 70,894
================================
See accompanying notes to the consolidated financial statements.
3
<PAGE>
AETRIUM INCORPORATED
CONSOLIDATED BALANCE SHEETS AS RESTATED
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------------------------
(Unaudited) (Audited)
(in thousands, except share data)
<S> <C> <C>
Current liabilities:
Trade accounts payable $ 2,148 $ 2,611
Accrued compensation and commissions 2,745 2,250
Other accrued expenses 3,369 2,807
Income taxes payable 0 734
------------------------------
Total current liabilities 8,262 8,402
------------------------------
Shareholders' equity:
Common stock, $.001 par value; 30,000,000
shares authorized; 9,703,308 and 8,786,740
shares issued and outstanding, respectively 10 9
Additional paid-in capital 61,989 46,562
Retained earnings 10,534 15,921
------------------------------
Total shareholders' equity 72,533 62,492
------------------------------
Total liabilities and shareholders' equity $ 80,795 $ 70,894
==============================
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
AETRIUM INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and restated)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
----------------------------- ----------------------------
1998 1997 1998 1997
---------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $ 16,108 $ 14,921 $ 36,589 $ 26,857
Cost of goods sold 12,152 7,295 22,350 13,113
---------------------------------------------------------------
Gross profit 3,956 7,626 14,239 13,744
---------------------------------------------------------------
Operating expenses:
Selling, general, and administrative 5,491 3,224 9,821 6,090
Research and development 3,528 2,474 6,477 4,452
Non-recurring charges 6,527 7,191 6,527 7,191
---------------------------------------------------------------
Total operating expenses 15,546 12,889 22,825 17,733
---------------------------------------------------------------
Loss from operations (11,590) (5,263) (8,586) (3,989)
Other income, net 214 303 519 615
---------------------------------------------------------------
Loss before income taxes (11,376) (4,960) (8,067) (3,374)
Provision for income taxes 3,606 1,520 2,680 1,044
---------------------------------------------------------------
Net loss $ (7,770) $ (3,440) $ (5,387) $ (2,330)
===============================================================
Net loss per common share:
Basic $ (.80) $ (.40) $ (.58) $ (.27)
Diluted $ (.80) $ (.40) $ (.58) $ (.27)
Weighted average common shares outstanding:
Basic 9,704 8,683 9,250 8,572
Diluted 9,704 8,683 9,250 8,572
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
AETRIUM INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and restated)
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
-------------------------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (5,387) $ (2,330)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,289 504
Acquisition-related charges 3,900 7,191
Write-off of intangibles 2,080 0
Deferred taxes (3,155) (2,265)
Changes in assets and liabilities, net of
effects of acquired businesses:
Accounts receivable, net 815 (3,454)
Inventories 3,163 (2,656)
Other current assets 198 111
Trade accounts payable (1,118) 2,863
Accrued compensation and commissions 5 (169)
Other accrued expenses 450 (122)
Income taxes payable (579) 903
-------------------------------
Net cash provided by operating activities 1,661 576
-------------------------------
Cash flows from investing activities:
Purchases of businesses and technology, net of cash acquired (8,835) (4,997)
Sale of short term investments 0 1,000
Purchase of property and equipment (1,011) (329)
-------------------------------
Net cash used in investing activities (9,846) (4,326)
-------------------------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 73 439
Repurchase of common stock, primarily related to exercise of
stock options (214) (439)
Principal payments on debt 0 (1,293)
-------------------------------
Net cash used in financing activities (141) (1,293)
-------------------------------
Net decrease in cash and cash equivalents (8,326) (5,043)
Cash and cash equivalents at beginning of period 27,584 34,756
-------------------------------
Cash and cash equivalents at end of period $ 19,258 $ 29,713
===============================
</TABLE>
See accompanying notes to the consolidated financial statements.
6
<PAGE>
AETRIUM INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND RESTATEMENT
In the opinion of management, the accompanying unaudited restated
consolidated financial statements include all adjustments necessary to
present fairly the financial position, results of operations, and changes
in cash flows for the interim periods presented.
Certain footnote information has been condensed or omitted from these
financial statements. Therefore, these financial statements should be read
in conjunction with the consolidated financial statements and accompanying
footnotes included in Form 10-K for the year ended December 31, 1997.
On April 1, 1998, the company acquired substantially all of the assets and
assumed certain liabilities of the Equipment Division ("Equipment
Division") of WEB Technology, Inc. (see Note 4). The acquisition was
recorded using the purchase method and, as required, the purchase price
was allocated to the assets acquired and liabilities assumed. In
connection therewith, the company hired an independent third party
appraisal firm to value the intangible assets acquired, including
in-process research and development ("IPR&D"). The estimated fair values
of the intangible assets were determined using appraisal and valuation
methods commonly used and considered appropriate at the time. Recently the
Securities and Exchange Commission ("SEC") has published its views
regarding methods used to value intangible assets, including specific
guidelines it feels should be used in determining the value of IPR&D.
Recently, the company re-engaged the appraisal firm to review the
valuation of the WEB intangible assets in light of the new SEC guidance.
The revaluation of the WEB intangible assets resulted in a reduction of
the value of IPR&D and a corresponding net increase in capitalized
goodwill and other intangibles such as developed technology, core
technology, customer lists, and assembled workforce.
The impact of the revaluation on the company's financial statements was to
reduce the amount of IPR&D expense (included in "Non-recurring Charges")
for the quarter and to increase "Selling, General, and Administrative"
expenses for the additional amortization expense related to the
capitalized intangible assets as follows (thousands, except per share
amounts):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Statement of Operations Three months ended June 30, 1998 Six months ended June 30, 1998
- ----------------------------------------------------------------------------------------------
As reported Restated As reported Restated
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selling, general &
administrative expenses $ 5,255 $ 5,491 $ 9,585 $ 9,821
- ----------------------------------------------------------------------------------------------
Non-recurring charges 14,656 6,527 14,656 6,527
- ----------------------------------------------------------------------------------------------
Total operating expenses 23,439 15,546 30,718 22,825
- ----------------------------------------------------------------------------------------------
Loss from operations (19,483) (11,590) (16,479) (8,586)
- ----------------------------------------------------------------------------------------------
Loss before income taxes (19,269) (11,376) (15,960) (8,067)
- ----------------------------------------------------------------------------------------------
Income tax benefit 6,117 3,606 5,191 2,680
- ----------------------------------------------------------------------------------------------
Net Loss (13,152) (7,770) (10,769) (5,387)
- ----------------------------------------------------------------------------------------------
Net loss per diluted share $ (1.36) $ (.80) $ (1.16) $ (.58)
- ----------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
1. BASIS OF PRESENTATION AND RESTATEMENT (CONTINUED)
- -----------------------------------------------------------------------
Balance Sheet at
June 30, 1998 As reported Restated
- -----------------------------------------------------------------------
Intangible and other
assets, net $10,537 $18,430
- -----------------------------------------------------------------------
Deferred taxes 11,401 8,890
- -----------------------------------------------------------------------
Total assets 75,413 80,795
- -----------------------------------------------------------------------
Retained earnings 5,152 10,534
- -----------------------------------------------------------------------
Shareholders' equity 67,151 72,533
- -----------------------------------------------------------------------
Total liabilities and
Shareholders' equity $75,413 $80,795
- -----------------------------------------------------------------------
2. INVENTORIES
Inventories consist of the following:
June 30, December 31,
1998 1997
---- ----
(in thousands)
Purchased parts and completed subassemblies $7,807 $ 9,307
Work in process 5,556 5,488
Finished goods, primarily demonstration equipment 2,191 1,990
------- -------
Total $15,554 $16,785
======= =======
3. NET INCOME (LOSS) PER COMMON SHARE
Basic net income per share is computed by dividing net income by the
weighted-average number of common shares outstanding during the period.
Diluted net income per share is computed by dividing net income by the
weighted-average number of common shares and common stock equivalent shares
outstanding during the period. Common stock equivalents include stock
options using the treasury stock method. Since the company reported net
losses for the interim periods presented herein, common stock equivalents
have been excluded from the computations because they are antidilutive.
4. ACQUISITIONS
On April 1, 1998, the company acquired substantially all of the assets and
assumed certain liabilities of the Equipment Division ("Equipment
Division") of WEB Technology, Inc., a privately-held company that consisted
of several business units in addition to the Equipment Division. The
Equipment Division specializes in the design, development, manufacturing
and marketing of a variety of electromechanical equipment used by the
semiconductor industry to handle and test integrated circuits. The purchase
price totaled $23,567,500 consisting of $7,835,000 in cash, 900,000 shares
of Aetrium common stock valued at $15,412,500 and $320,000 of
acquisition-related costs. The acquisition was accounted for as a purchase.
The company's consolidated financial statements include the results of the
Equipment Division's operations since April 1, 1998.
8
<PAGE>
4. ACQUISITIONS (CONTINUED)
On April 1, 1997, the company acquired substantially all of the assets and
assumed certain liabilities of Forward Systems Automation, Inc. ("FSA"), a
privately held manufacturer of equipment for the semiconductor and
electronic component industries. The purchase price totaled $9,132,869
consisting of $4,000,000 of cash, 186,000 shares of Aetrium common stock
valued at $2,499,840, $250,000 of acquisition-related costs and $2,383,029
of assumed liabilities. The acquisition was accounted for as a purchase.
The company's consolidated financial statements include the results of
FSA's operations since April 1, 1997.
For each acquisition, a portion of the purchase price, as determined by
third party appraisal, was allocated to intangible assets, including
in-process research and development that had not reached technological
feasibility and did not have alternative future uses. As required by
generally accepted accounting principles, the values of the in-process
research and development ($3,900,000 for the Equipment Division and
$7,190,809 for FSA) were charged to operations in the second quarter of
1998 and 1997, respectively. These amounts are included in the caption
"Non-recurring charges" in the accompanying Statements of Operations.
The following table presents the consolidated results of operations of the
company on an unaudited pro forma basis as if the acquisitions of the
Equipment Division and FSA had taken place at the beginning of each period
(in thousands, except per share data):
<TABLE>
<CAPTION>
Six months ended
----------------
Unaudited pro forma June 30, 1998 June 30, 1997
- ------------------- ------------- -------------
<S> <C> <C>
Net sales $39,583 $30,416
Net income (loss) (2,819) 1,906
Net income (loss) per diluted share $ (.29) $ .19
- -----------------------------------------------------------------------------------------
Reported net income (loss) per diluted share before
acquisition-related charges $ (.32) $ .32
- -----------------------------------------------------------------------------------------
</TABLE>
The acquisition-related charges of $3,900,000 in 1998 and $7,190,809 in
1997 are not reflected in the pro forma results above. The unaudited pro
forma results of operations are for comparative purposes only and do not
necessarily reflect the results that would have occurred had the
acquisitions occurred at the beginning of the periods presented or the
results which may occur in the future.
9
<PAGE>
AETRIUM INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET SALES. Net sales for the six months ended June 30, 1998, were
$36.6 million, an increase of 36 percent from the same period of
1997. The 1998 results include the net sales of FSA (acquired in
April 1997), the Advantek Handler Division (acquired in October
1997), and the equipment business of WEB Technology (acquired in
April 1998). Net sales were $16.1 million for the quarter ended June
30, 1998, compared with $14.9 million for the comparable 1997
quarter, an 8% increase. The increase is primarily attributable to
the inclusion of the net sales of the acquired operations.
GROSS PROFIT. Gross profit was 38.9 % of net sales for the six
months ended June 30, 1998, including an inventory charge of $3.7
million related primarily to the suspension of marketing efforts on
certain older, less profitable products. Excluding the one-time
charge, gross profit was 49 % of net sales, compared with 51.2 % for
the same period of 1997. Gross profit was 24.6 % of net sales for
the quarter ended June 30, 1998, including the unusual $3.7 million
charge, and 47.5 % excluding the unusual charge. This compares with
51.1 % for the quarter ended June 30, 1997. Excluding the one-time
charge of $3.7 million, the decrease in the gross margin in 1998 is
primarily attributable to the inclusion of sales of the product line
acquired from Advantek; the significant increase in the sales mix to
more pick-and-place test handlers which tend to have lower margins
than gravity-feed test handlers; and the costs associated with the
production ramp of new products. These factors are partially offset
by improving gross margins on environmental test products and the
inclusion of relatively high-margin sales of the product line
recently acquired from WEB Technology.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses for the six months ended June 30, 1998 were
$9.8 million compared with $6.1 million for the comparable period in
1997, a 61% increase. Selling, general and administrative expenses
for the quarter ended June 30, 1998 were $5.5 million compared with
$3.2 million for the comparable period in 1997, a 70% increase. The
increase in 1998 is attributable to higher commissions expense on
increased net sales, higher amortization expense related to acquired
intangibles and the inclusion of expenses to support recently
acquired businesses.
RESEARCH AND DEVELOPMENT. Research and development expenses were
$6.5 million for the six months ended June 30, 1998 compared with
$4.5 million for the comparable period in 1997, a 44% increase.
Research and development expenses were $3.5 million for the quarter
ended June 30, 1998 compared with $2.5 million for the comparable
period in 1997, a 40% increase. The increase in 1998 is attributable
to the inclusion of expenses for continued development of the
product lines acquired in 1997 and 1998, including expenditures
required to complete the research and development projects that were
in process at the time of each acquisition. Research and development
expenses represented 21.9% of net sales for the quarter ended June
30, 1998.
10
<PAGE>
NON-RECURRING CHARGES. The company incurred non-recurring charges of
$6.5 million in the quarter ended June 30, 1998. Of this amount,
$3.9 million was related to the acquisition of the Equipment
Division of WEB Technology, for that portion of the purchase price
allocated to research and development projects that were in process
at the time of acquisition but had not yet reached technological
feasibility. The balance of the non-recurring charges during the
quarter were for severance costs resulting from a reduction in work
force and the write-off of certain capitalized technology. In
connection with the FSA acquisition, $7.2 million related to
in-process research and development was charged against income in
the second quarter ended June 30, 1997 as the underlying research
and development projects had not yet reached technological
feasibility. See Note 4 to the unaudited consolidated financial
statements.
OTHER INCOME, NET. Other income, net, which consists primarily of
interest income from the investment of excess funds, amounted to
$519,000 for the six months ended June 30, 1998 which was a decline
from the $615,000 for the same period in 1997 due to lower average
levels of invested funds. Other income, net, amounted to $214,000
for the quarter ended June 30, 1998, compared to $303,000 for the
same period of 1997. The decline reflects the decrease in invested
funds due to the cash outlay of $7.8 million for the acquisition of
the equipment business of WEB Technology.
INCOME TAX EXPENSE (BENEFIT). Income tax expense (benefit) was
provided for at an effective rate of 28.0% for the quarter and six
months ended June 30, 1998 which was comparable to the rate used for
fiscal year 1997 excluding the impact of non-recurring
acquisition-related charges. The effective tax rate compares
favorably with the Federal and state statutory rates primarily due
to benefits associated with the company's Foreign Sales Corporation
and research tax credits as well as the implementation of various
tax planning strategies, including the investment of excess funds in
tax exempt instruments.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The company has a $5.0 million line of credit agreement with Harris
Trust and Savings Bank in Chicago, Illinois. Borrowings under this
agreement are secured by receivables, inventories and general
intangibles. Borrowing is limited to a percentage of eligible
receivables and inventories. There were no line of credit advances
outstanding as of June 30, 1998 or December 31, 1997.
In the quarter ended June 30, 1998, the company disbursed
approximately $7.8 million in connection with the acquisition of the
equipment business of WEB Technology, Inc. The company believes its
remaining cash balances of approximately $19.3 million as of June
30, 1998, funds generated from operations, and borrowings available
under its credit facility will be sufficient to meet capital
expenditure and working capital needs for at least 24 months. The
company may acquire other companies, product lines or technologies
that are complementary to the company's business, and the company's
working capital needs may change as a result of such acquisitions.
11
<PAGE>
BUSINESS RISKS AND UNCERTAINTIES
A number of risks and uncertainties exist which could impact the
company's future operating results. These uncertainties include, but
are not limited to, general economic conditions, competition,
changes in rates of capital spending by semiconductor manufacturers,
the company's success in developing new products and technologies,
market acceptance of new products, risks and unanticipated costs
associated with integrating acquired businesses, and other factors,
including those set forth in the company's SEC filings, including
its current report on Form 10-K for the year ended December 31,
1997.
YEAR 2000 ISSUES
Many existing computer programs use only two digits to identify a
year in the date field, with the result that data referring to the
year 2000 and subsequent years may be misinterpreted by these
programs. If present in the computer applications of the company or
its suppliers and not corrected, this problem may cause computer
applications to fail or to create erroneous results and could cause
a disruption in operations and have an adverse effect on the
company's business and results of operations. The company has
evaluated its principal computer systems and has determined that
they are substantially Year 2000 compliant. The company has
completed a series of tests of the electronics systems of its
products, including those product lines no longer being manufactured
but remaining in use at customer sites, and has determined that they
should continue to operate according to specification after January
1, 2000. The company has initiated discussions with its key
suppliers to determine whether they have any Year 2000 issues. The
company has not incurred any material expenses to date in connection
with this evaluation, and does not anticipate material expenses in
the future, depending upon the status of its suppliers with respect
to this issue.
12
<PAGE>
AETRIUM INCORPORATED
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None which the company believes will have a material adverse
impact on its financial condition or results of operations.
Item 2. Changes in Securities
None.
Item 3. Defaults on Senior Securities
None.
Item 4. Submissions of Matters to a Vote of Security Holders
On May 19, 1998 the company held its Annual Shareholder Meeting
at which the following matters were voted upon.
1. The share holders elected the following individuals to serve
as members of the Board of Directors:
Votes for Votes Withheld
--------- --------------
Joseph C. Levesque 7,946,788 20,444
Darnell L. Boehm 7,946,038 21,194
Terrence W. Glarner 7,946,153 21,079
Andrew J. Greenshields 7,946,528 20,704
Douglas L. Hemer 7,945,838 21,394
Terrance J. Nagel 7,946,253 20,979
2. The shareholders also approved an amendment to the company's
Restated Articles of Incorporation to increase the number of the
company's authorized shares of common stock, $.001 par value,
from 16,000,000 to 30,000,000 shares.
Votes Votes
Votes for Against Withheld
--------- ------- --------
Amendment to Restated
Articles of Incorporation 7,800,627 145,442 21,163
13
<PAGE>
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exh 27 - Financial Data Schedule.
(b) Reports on Form 8-K
On April 15, 1998, the company filed a Form 8-K relating
to the purchase of substantially all of the assets of
the Equipment Division ( "Equipment Division") of WEB
Technology, Inc. on April 1, 1998 pursuant to an Asset
Purchase Agreement which was executed on March 20, 1998.
On June 15, 1998, the company filed an amendment to the
Form 8-K on Form 8-K/A that contained (i) audited
historical financial statements of the Equipment
Division for the year ended December 31, 1997, (ii)
unaudited historical financial statements of the
Equipment Division for the three months ended March 31,
1998, and (iii) pro forma consolidated financial
statements as of March 31, 1998, for the year ended
December 31, 1997, and for the three months ended March
31, 1998.
14
<PAGE>
AETRIUM INCORPORATED
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.
AETRIUM INCORPORATED
--------------------
(Registrant)
Date: March 24, 1999 By: /s/ Joseph C. Levesque
----------------------------------------
Joseph C. Levesque
Chairman of the Board, President, and
Chief Executive Officer
Date: March 24, 1999 By: /s/ Darnell L. Boehm
----------------------------------------
Darnell L. Boehm
Chief Financial Officer, Secretary, and
Director
15
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 19,258
<SECURITIES> 0
<RECEIVABLES> 14,131
<ALLOWANCES> 0
<INVENTORY> 15,554
<CURRENT-ASSETS> 51,777
<PP&E> 7,617
<DEPRECIATION> 3,502
<TOTAL-ASSETS> 80,795
<CURRENT-LIABILITIES> 8,262
<BONDS> 0
10
0
<COMMON> 0
<OTHER-SE> 72,523
<TOTAL-LIABILITY-AND-EQUITY> 80,795
<SALES> 36,589
<TOTAL-REVENUES> 36,589
<CGS> 22,350
<TOTAL-COSTS> 22,350
<OTHER-EXPENSES> 13,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,067)
<INCOME-TAX> (2,680)
<INCOME-CONTINUING> (5,387)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,387)
<EPS-PRIMARY> (.58)
<EPS-DILUTED> (.58)
</TABLE>
