UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission File No. 000-22166
AETRIUM INCORPORATED
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1439182
(State or other jurisdiction ( I.R.S. Employer Identification No.)
of 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 9,436,035
of November 5, 1999 ---------
<PAGE>
AETRIUM INCORPORATED
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1999 (unaudited)
and December 31, 1998 3-4
Consolidated Statements of Operations (unaudited) for the three
months and nine months ended September 30, 1999 and 1998 5
Consolidated Statements of Cash Flows (unaudited) for the nine
months ended September 30, 1999 and 1998 6
Notes to unaudited consolidated financial statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AETRIUM INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1999 1998
-------------------- --------------------
(Unaudited) (Audited)
(in thousands, except share data)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $15,083 $18,133
Accounts receivable, net 7,794 7,191
Refundable income taxes 0 3,182
Inventories 10,557 14,335
Deferred taxes 1,946 1,946
Other current assets 283 360
-------------------- --------------------
Total current assets 35,663 45,147
-------------------- --------------------
Property and equipment:
Furniture and fixtures 1,966 1,949
Equipment 5,989 5,718
-------------------- --------------------
7,955 7,667
Less accumulated depreciation and
amortization (5,171) (3,903)
-------------------- --------------------
Property and equipment, net 2,784 3,764
-------------------- --------------------
Noncurrent deferred taxes 11,730 6,038
Intangible and other assets, net 16,091 17,495
-------------------- --------------------
Total assets $66,268 $72,444
==================== ====================
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
AETRIUM INCORPORATED
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
-------------------- --------------------
(Unaudited) (Audited)
(in thousands, except share data)
<S> <C> <C>
Current liabilities:
Trade accounts payable $ 2,612 $ 721
Accrued compensation and commissions 1,724 1,933
Other accrued expenses 2,808 3,005
-------------------- --------------------
Total current liabilities 7,144 5,659
-------------------- --------------------
Shareholders' equity:
Common stock, $.001 par value; 30,000,000
shares authorized; 9,436,035 and 9,471,642
shares issued and outstanding, respectively 10 10
Additional paid-in capital 59,962 60,304
Retained earnings (accumulated deficit) (848) 6,471
-------------------- --------------------
Total shareholders' equity 59,124 66,785
-------------------- --------------------
Total liabilities and shareholders' equity $66,268 $72,444
==================== ====================
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
AETRIUM INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1999 1998 1999 1998
---------------------- ------------------ ------------------ -------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales $10,106 $12,009 $26,176 $48,598
Cost of goods sold 5,753 7,044 17,743 29,394
---------------------- ------------------ ------------------ ------------------
Gross profit 4,353 4,965 8,433 19,204
---------------------- ------------------ ------------------ ------------------
Operating expenses:
Selling, general, and administrative 4,768 5,123 13,347 14,944
Research and development 2,265 3,214 7,347 9,691
Unusual charges 0 0 352 6,527
---------------------- ------------------ ------------------ ------------------
Total operating expenses 7,033 8,337 21,046 31,162
---------------------- ------------------ ------------------ ------------------
Loss from operations (2,680) (3,372) (12,613) (11,958)
Other income, net 143 206 419 725
---------------------- ------------------ ------------------ ------------------
Loss before income taxes (2,537) (3,166) (12,194) (11,233)
Provision for income taxes 1,015 950 4,875 3,630
---------------------- ------------------ ------------------ ------------------
Net loss $(1,522) $(2,216) $(7,319) $(7,603)
====================== ================== ================== ==================
Net loss per common share:
Basic $(.16) $(.23) $(.77) $(.81)
Diluted $(.16) $(.23) $(.77) $(.81)
Weighted average common shares outstanding :
Basic 9,475 9,640 9,481 9,382
Diluted 9,475 9,640 9,481 9,382
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
AETRIUM INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
1999 1998
------------------- ---------------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(7,319) $(7,603)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,684 2,195
Acquisition-related charge 0 3,900
Write-off of intangibles 0 2,080
Deferred taxes (5,692) (3,221)
Changes in assets and liabilities, net of effects of acquired business:
Accounts receivable, net (603) 3,111
Refundable income taxes 3,182 0
Inventories 3,778 4,160
Other current assets 77 (908)
Intangible and other assets 47 0
Trade accounts payable 1,891 (1,391)
Accrued compensation and commissions (209) (115)
Other accrued expenses (197) 294
Income taxes payable 0 (551)
------------------- ---------------------
Net cash provided by (used in) operating activities (2,361) 1,951
------------------- ---------------------
Cash flows from investing activities:
Purchase of property and equipment (290) (1,274)
Purchases of a business and technology, net of cash acquired 0 (8,835)
------------------- ---------------------
Net cash used in investing activities (290) (10,109)
------------------- ---------------------
Cash flows from financing activities:
Net proceeds from issuances of common stock 101 73
Repurchases of common stock (500) (1,083)
------------------- ---------------------
Net cash used in financing activities (399) (1,010)
------------------- ---------------------
Net decrease in cash and cash equivalents (3,050) (9,168)
Cash and cash equivalents at beginning of period 18,133 27,584
------------------- ---------------------
Cash and cash equivalents at end of period $15,083 $18,416
=================== =====================
</TABLE>
See accompanying notes to the consolidated financial statements.
6
<PAGE>
AETRIUM INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL REPORTING
In the opinion of management, the accompanying unaudited 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, 1998 as well as management's discussion and analysis of
financial condition and results of operations presented herein.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(in thousands)
<S> <C> <C>
Purchased parts and completed subassemblies $6,329 $ 7,292
Work-in-process 2,826 4,221
Finished goods, including demonstration equipment 1,402 2,822
------- -------
Total $10,557 $14,335
======= =======
</TABLE>
3. NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per share is computed by dividing net income (loss)
by the weighted-average number of common shares outstanding during the
period. Diluted net income (loss) per share is computed by dividing net
income (loss) 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. For
periods in which the company reports a net loss, common stock equivalents
are excluded from the computations because they are antidilutive.
4. ACQUISITION
On April 1, 1998, the company acquired substantially all of the assets and
assumed certain liabilities of the Equipment Division of WEB Technology,
Inc., a privately held company. The Equipment Division specializes in the
design, development, manufacturing and marketing of automatic burn-in board
loaders/unloaders and a variety of other electromechanical equipment used
by the semiconductor industry to handle and test integrated circuits. The
purchase price totaled $23,567,500 including $7,835,000 of cash, 900,000
shares of the company's common stock valued at $15,412,500 and $320,000 of
acquisition-related costs. The company's consolidated financial statements
include the results of the Equipment Division's operations since April 1,
1998.
7
<PAGE>
4. ACQUISITION (CONTINUED)
The acquisition was accounted for as a purchase and, accordingly, the net
assets acquired were recorded at their estimated fair values at the date of
the acquisition. The estimated fair value of acquired intangibles amounted
to $20,698,423. Of this amount, $3,900,000 or 17% of the total purchase
cost, was allocated to in-process research and development, which amount
was expensed in the second quarter of 1998 as the underlying research and
development projects had not yet reached technological feasibility and did
not have alternative future uses. This amount is included in the caption
"unusual charges" in the accompanying Statement of Operations.
The following table presents the consolidated results of operations of the
company for the nine months ended September 30, 1998 on an unaudited pro
forma basis as if the acquisition of the Equipment Division had taken place
on January 1, 1998 (in thousands, except per share data):
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Unaudited Pro Forma September 30, 1998
------------------- ------------------
<S> <C>
Net sales $51,592
Net loss (5,035)
Net loss per basic and diluted share $ (.52)
----------------------------------------------------- --------------------------
Reported net loss per basic and diluted share
before acquisition-related charge $ (.56)
----------------------------------------------------- --------------------------
</TABLE>
The acquisition-related charge of $3,900,000 is 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 acquisition occurred at the beginning of the
period presented or the results which may occur in the future.
5. REPURCHASES OF COMMON STOCK
In connection with the acquisition of the Equipment Division of WEB
Technology, Inc. on April 1, 1998, the company entered into Right of First
Refusal Agreements with certain shareholders of WEB Technology, Inc. In
1998, the Board of Directors authorized the company to repurchase up to
300,000 shares of common stock pursuant to such agreements. As of September
30, 1999, the company had repurchased the total authorized quantity of
300,000 shares for approximately $2.2 million, including 56,150 shares for
$430,000 and 139,000 shares for $901,000 during the nine-month periods
ended September 30, 1999 and 1998, respectively. In addition, the company
repurchased 104,850 shares for $870,000 during the quarter ended December
31, 1998.
The company accounts for repurchased shares as retirements. The par value
of repurchased shares is charged to the common stock account and the excess
of the purchase cost over par value is charged to additional paid-in
capital.
8
<PAGE>
AETRIUM INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET SALES. Net sales were $10.1 million for the quarter ended
September 30, 1999 compared with $12.0 million for the
comparable quarter in 1998, a 16% decrease. Net sales for the
nine months ended September 30, 1999, were $26.2 million, a
decrease of 46 percent from the same period of 1998. Sales of
test handlers increased slightly in the third quarter of 1999
compared with the same period in 1998, but were offset by lower
equipment sales of other product lines. For the nine-month
period ended September 30, 1999, equipment sales in all product
areas remained below 1998 levels as a result of the severe
semiconductor equipment industry downturn that began in 1998
and continued into 1999. The decrease also reflects a decision
on the part of one of the company's significant test handler
customers to significantly reduce its capital spending in 1999.
GROSS PROFIT. Gross profit was 43.1% of net sales for the
quarter ended September 30, 1999 compared with 41.3% for the
comparable period in 1998. The gross profit margin improvement
resulted from cost reductions implemented during the past year
and a slightly more favorable revenue mix. Gross profit was
32.2 % of net sales for the nine months ended September 30,
1999 and 39.5% for the same period in 1998, including unusual
charges of $2.5 million and $3.7 million in 1999 and 1998,
respectively. The $2.5 million charge in 1999 includes
inventory write-downs resulting primarily from one of the
company's largest customers significantly reducing its 1999
capital spending as well as obsolescence associated with
upcoming transitions to new products. The $3.7 million charge
in 1998 included inventory write-downs related to management
decisions to discontinue certain products, delayed and reduced
expansion plans on the part of two large customers, and to
significantly reduced revenue levels resulting from the
semiconductor industry downturn in 1998. Excluding the unusual
charges, gross profit was 41.8% of net sales for the nine
months ended September 30, 1999 compared with 47.1% for the
same period in 1998. The decrease in 1999 resulted primarily
from under-absorbed manufacturing overhead due to the
significantly lower sales volume.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses for the quarter ended September 30,
1999 were $4.8 million, compared with $5.1 million for the
comparable period in 1998, a 6% decrease. Commissions expense
was higher in 1999 due to mix despite lower sales, but was
offset by reduced wages expense resulting from workforce
reductions in the first and second quarters of 1999. Selling,
general and administrative expenses for the nine months ended
September 30, 1999 were $13.3 million compared with $14.9
million for the comparable period in 1998, a decrease of 11%.
The decrease in 1999 resulted from cost containment efforts
including workforce reductions and lower commissions on
significantly reduced revenue levels. These expense reductions
were offset somewhat in 1999 by the inclusion of a full nine
months of operations of the Equipment Division of WEB
Technology, Inc. which was acquired on April 1, 1998.
Amortization expense associated with acquisition-related
intangible assets currently amounts to approximately $.5
million per quarter and totaled $1.4 million for the nine
months ended September 30, 1999 compared with $ 1.1 million for
the same period in 1998.
9
<PAGE>
RESEARCH AND DEVELOPMENT. Research and development expenses
were $2.3 million for the quarter ended September 30, 1999 and
represented 31 % of net sales. This compares with $3.2 million
for the comparable period in 1998, reflecting a 28% decrease.
Research and development expenses were $7.3 million for the
nine months ended September 30, 1999 compared with $9.7 million
for the comparable period in 1998, a 25% decrease. The
decreases in 1999 resulted from cost containment efforts
implemented during the past year, including a reduction in
research and development personnel. These expense reductions
were offset somewhat in 1999 by the inclusion of a full nine
months of operations of the Equipment Division of WEB
Technology, Inc.
UNUSUAL CHARGES. As a result of weak business conditions, the
company has continued to reduce costs. The company completed
workforce reductions resulting in severance and related costs
of $352,000 for the nine months ended September 30, 1999. These
reductions included the terminations of 48 employees resulting
in estimated annual cost savings of approximately $1.8 million.
The company also recorded unusual operating expense charges of
$6.5 million in the nine months ended September 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 (See Note 4 to the unaudited
consolidated financial statements). The balance of unusual
charges recorded in the second quarter of 1998 were for
severance costs resulting from a reduction in work force and
the write-off of certain capitalized technology. The work force
reductions included the terminations of 50 employees resulting
in estimated annual savings of approximately $2.3 million.
OTHER INCOME, NET. Other income, net, which consists primarily
of interest income from the investment of excess funds,
amounted to $143,000 for the quarter ended September 30, 1999,
compared to $206,000 for the same period of 1998. Other income,
net, amounted to $419,000 for the nine months ended September
30, 1999 compared with $725,000 for the same period in 1998.
Interest income was lower in 1999 primarily due to a decrease
in the average level of invested funds, which were lower
primarily due to the cash outlays of $7.8 million for the
acquisition of the Equipment Division of WEB Technology in
April 1998, approximately $2.3 million used to repurchase
company shares at various times since April 1998, and cash used
to fund recent operating losses.
INCOME TAX EXPENSE (BENEFIT). The company recorded an income
tax benefit of approximately $4.9 million for the nine months
ended September 30, 1999 compared with an income tax benefit of
approximately $3.6 for the comparable period in 1998. The
income tax benefit in 1999 results from the operating loss
incurred for the period and generally represents refundable
income taxes that can be recovered through net operating loss
carrybacks to prior years and net operating loss carryforwards
which can be used to reduce taxable income in future years.
At September 30, 1999, the company has recorded net deferred
tax assets of $13.7 million. Based on its assessment of
prospective future taxable income and tax planning strategies
available to the company, management has determined that it is
more likely than not that it will realize its deferred tax
assets in future periods and that a valuation allowance is
therefore not required at this time. However, the company may
determine that it is necessary to provide a valuation allowance
for this asset in the future if it does not generate sufficient
taxable income as anticipated.
10
<PAGE>
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 September 30, 1999 or
December 31, 1998.
The company believes its current cash balances 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.
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,
1998.
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 third parties (such as customers, financial
institutions, and 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 adopted a formal plan to evaluate its state of
readiness for the Year 2000 and to address any deficiencies.
The plan encompasses 1) information technology (IT) systems 2)
non-IT systems 3) company products and 4) systems of third
parties, including key suppliers.
INFORMATION TECHNOLOGY: The company's principal computer
systems that it uses for financial accounting, manufacturing,
inventory control, purchasing, sales administration,
engineering, and other business functions have been determined
to be substantially Year 2000 compliant. The company intends to
monitor such principal computer systems throughout the balance
of 1999 for any Year 2000 issues.
NON-IT SYSTEMS: The company has completed an evaluation of its
telephone, manufacturing equipment, facility heating and
cooling, and other non-IT systems for Year 2000 readiness.
These systems have been determined to be substantially Year
2000 compliant.
COMPANY PRODUCTS: The company has completed a series of tests,
utilizing industry standards, of the electronics systems of its
products, including certain product lines no longer being
manufactured but remaining in use at customer sites. Certain
products that are no longer being manufactured required a minor
software adjustment to address Year
11
<PAGE>
2000 issues. A software upgrade was developed at a cost of
approximately $4,000 and has been supplied to affected
customers.
THIRD PARTIES: The company distributed a survey to its key
vendors and suppliers to assess their plans for bringing any
non-compliant systems into Year 2000 compliance. This study
focused particularly on suppliers of materials and services who
are either the sole source or one of a limited number of
potential suppliers. More than 250 suppliers were surveyed in
connection with this study, which was completed in October
1999. This study indicated that the company's key vendors and
suppliers do not anticipate significant Year 2000 issues. The
company's key distributors have represented that they are Year
2000 compliant.
Substantially all of the effort to evaluate the company's Year
2000 readiness has been made using internal personnel, and
therefore incremental expenses have been less than $50,000,
excluding the time of the company's personnel. Any employee
costs associated with the company 2000's readiness program have
been expensed as incurred. The company has achieved substantial
compliance on Year 2000 issues on its principal computer
systems in the course of normally planned hardware and software
upgrades, and thus has not incurred any significant expense to
date specifically to address Year 2000 issues. The company has
not incurred any material expenses in connection with its
evaluation of non-IT systems, and does not expect material
expenses in the future. The company has not incurred material
expenses to date in connection with the evaluation of its
products and the status of its vendors and suppliers with
respect to Year 2000 issues, and does not anticipate material
expenses in the future.
The only formal contingency plan adopted by the company
concerns certain purchased parts and materials for its products
that, should there be an interruption of deliveries from
vendors, could cause a disruption of the company's product
build schedules. As a result, the materials planning group of
the company continues to monitor its supplier base and qualify
additional sources of supply for purchased parts and materials
that are either critical or available from a limited number of
suppliers. The company will consider implementing or adopting
additional contingency plans as it continues to monitor its
Year 2000 readiness, and as new information becomes available.
The company believes that the most reasonably likely worst case
Year 2000 scenario would result from a disruption of prompt
deliveries of purchased materials and subassemblies used to
manufacture the company's products. This concern is being
addressed by the materials contingency plan mentioned above.
The company will determine the need for such additional plans
as part of its ongoing assessment of vendors and suppliers,
products, and internal systems.
Due to the complexity and pervasiveness of the Year 2000 issue,
and in particular the uncertainty regarding the Year 2000
compliance programs of the company's suppliers and other third
parties, no assurances can be given that there will not be
material adverse effects on the business or its results from
operations.
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
None.
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
None.
13
<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: November 5, 1999 By: /s/ Joseph C. Levesque
-----------------------
Joseph C. Levesque
Chairman of the Board, President, and
Chief Executive Officer
Date: November 5, 1999 By: /s/ Darnell L. Boehm
---------------
Darnell L. Boehm
Chief Financial Officer, Secretary, and
Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 15,083
<SECURITIES> 0
<RECEIVABLES> 7,794
<ALLOWANCES> 0
<INVENTORY> 10,557
<CURRENT-ASSETS> 35,663
<PP&E> 7,955
<DEPRECIATION> 5,171
<TOTAL-ASSETS> 66,268
<CURRENT-LIABILITIES> 7,144
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 59,114
<TOTAL-LIABILITY-AND-EQUITY> 66,268
<SALES> 26,176
<TOTAL-REVENUES> 26,176
<CGS> 17,743
<TOTAL-COSTS> 8,433
<OTHER-EXPENSES> 7,347
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,194)
<INCOME-TAX> (4,875)
<INCOME-CONTINUING> (7,319)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,319)
<EPS-BASIC> (.77)
<EPS-DILUTED> (.77)
</TABLE>
