UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 March 31, 1999
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 0-23454
Total Containment, Inc.
(Exact name of registrant as specified in its
charter)
Pennsylvania 23-2394872
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
422 Business Center, A130 North Dr., Oaks, PA 19456
(Address of principal executive offices) (Zip Code)
(610) 666-7777
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:
4,672,600 shares of Common Stock, par value $0.01 per share were
outstanding at April 30, 1999.
PAGE 1
<PAGE>
Total Containment, Inc.
Index
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet -
December 31, 1998 and March 31, 1999 3
Condensed Consolidated Statement of Operations
- Three months ended March 31, 1998 and 1999 4
Condensed Consolidated Statement of Cash Flows -
Three months ended March 31, 1998 and 1999 5
Notes to Condensed Consolidated Financial
Statements - March 31, 1998 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9
Part II. Other Information
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
PAGE 2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
(Unaudited)
(In thousands)
ASSETS
<S>
<C> <C>
Current Assets:
Cash and cash equivalents
$132 $20
Accounts receivable, net
13,329 9,907
Inventories - Note 2
7,623 8,930
Deferred income taxes
2,851 2,547
Other assets
767 769
Total current assets
24,702 22,173
Molds and tooling, net
438 412
Property and equipment, net
4,386 4,604
Patents and patent rights, net
310 295
Goodwill, net
5,792 5,699
Deferred income taxes
1,527 2,489
Total Assets
$37,155 $35,672
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of credit borrowings
$ 3,388 $ 6,045
Current portion of long-term debt
668 590
Accounts payable, trade and accrued expenses
6,412 4,662
Other payable
4,020 4,020
Warranty reserve
5,452 4,121
Total current liabilities
19,940 19,438
Long-term debt
1,727 1,660
Warranty reserve
667 719
Total liabilities
22,334 21,817
Shareholders' Equity:
Preferred stock - $10,000 stated value;
authorized 400 shares issued and
outstanding
4,000 4,000
Common stock - $0.01 par value;
authorized 20,000,000 shares;
4,652,600 and 4,672,600 shares issued and
outstanding
47 47
Capital in excess of par value
13,756 13,808
Retained earnings
(2,816) (3,857)
Equity adjustment from foreign
currency translation
(166) (143)
Total shareholders' equity
14,821 13,855
Total Liabilities & Shareholders' Equity
$37,155 $35,672
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 3
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months
ended
March 31,
1998 1999
(In thousands, except per
share data)
<S> <C> <C>
Net sales $10,221 $7,770
Cost of sales (excluding warranty
provision) 6,041 5,929
4,180 1,841
Warranty Provision 302 228
Gross Profit 3,878 1,613
Selling, general and administrative 2,856 2,973
Amortization of patents, licenses
and goodwill 119 61
Income (loss) from operations 903
(1,421)
Interest expense 149 131
Income (loss) before income taxes 754
(1,552)
Income tax expense (benefit) 277
(587)
Net income (loss) 477
(965)
Preferred stock dividends 14 76
Net income (loss) applicable to common
shareholders $ 463
$(1,041)
Net income (loss) per common share $0.10
($0.22)
Weighted average shares and share
used in computation of net income (loss)
per share 4,642 4,657
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 4
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three
months ended
March 31,
1998
1999
(In
thousands)
<S> <C>
<C>
Cash flows from operating activities:
Net income (loss) $ 477
$ (965)
Adjustment to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 473
395
Change in operating assets and liabilities (3,089)
(289)
Change in warranty accrual (785)
(1,279)
Net cash used for operating activities ($2,924)
($2,138)
Cash flows from investing activities:
Purchase of property and equipment (325)
(538)
Net cash used for investing activities (325)
(538)
Cash flows from financing activities:
Proceeds from the sale of preferred stock 4,000
0
Proceeds from the sale of common stock 0
52
Net borrowings (repayments) on long-term debt (202)
(145)
Net borrowings (repayments) under line of credit (705)
2,657
Net cash provided by financing activities 3,093
2,564
Net decrease in cash ($156)
($112)
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
Note 1 - Basis of Presentation
The unaudited Condensed Consolidated Financial Statements
of
Total Containment, Inc. and its wholly-owned subsidiaries (the
"Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included.
The results of operations of the Company for the three months
ended March 31, 1999 are not necessarily indicative of the
results that may be expected for any other interim period or for
a full year. For further information, refer to the Consolidated
Financial Statements and notes thereto included in the Registrant
Company's Annual Report and Form 10-K for the year ended
December 31, 1998.
Use of Estimates. The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates. Significant estimates made by management that
are reasonably subject to change include the warranty reserve
allowance for doubtful accounts and deferred tax assets.
New Accounting Pronouncements. On January 1, 1998, the
Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income. SFAS No. 130
establishes standards to provide prominent disclosure of
comprehensive income items. Comprehensive income is the change
in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner
sources. Prior period presentations have been restated to
conform to the provisions of SFAS No. 130. The adoption of SFAS
130 had no impact on the Company's financial position or results
of operations. The Company's total comprehensive income (loss)
for the quarters ended March 31, 1998 and 1999 was $477,000 and
$(965,000) respectively.
The AICPA's Accounting Standards Executive Committee has
issued SOP 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. The SOP segments an
internal use software project into stages and the accounting is
based on the stage in which a cost is incurred. SOP 98-1 is
<PAGE 6> effective for fiscal years beginning after December 15,
1998 for costs incurred in those fiscal years for all projects,
including projects in progress when the SOP is adopted. The
adoption of SOP 98-1 is not expected to have a material impact on
the Company's financial position or results of operations.
Note 2 - Inventories
The components of inventory consist of the following:
Dec. 31, March 31,
1998 1999
(In
thousands)
Raw Materials $ 785 $ 798
Finished Goods 6,838 8,132
$7,623 $8,930
Note 3 - Line of Credit
In April 1998, the Company increased its overall working
capital line of credit with its bank to $10.0 million . This
facility provides for financing of working capital needs and
equipment purchases and is secured by the Company's receivables,
inventory and other assets. As of June 30, 1998, the Company met
certain financial covenants contained in the line of credit
agreement and therefore received a reduction in the interest rate
effective September 1, 1998, down to the prime rate.
In January 1999, the Company negotiated a change in the
interest rate charged on the line of credit from the national
commercial rate to a LIBOR based rate. The Company is currently
charged LIBOR plus 250 basis points (currently 7.44% at
February 19, 1999). The rate will be further reduced to LIBOR
plus 225 basis points as of June 30, 1999 if certain financial
covenants are met.
Note 4 - Sale of Preferred Stock
On March 17, 1998, the Company's principal shareholder
purchased from the Company 400 shares of authorized perpetual
Class A Floating Rate Preferred Stock of the Company at $10,000
cash per share (the "Preferred Stock"), or $4 million in the
aggregate. The perpetual Preferred Stock is entitled to receive,
as and if declared by the Company's Board, dividends at a
floating rate equal to the rate payable by the Company on its
line of credit with its commercial bank. Dividends are paid
quarterly in arrears, and if not declared or paid would cumulate
at the line of credit rate, plus 50 basis points. The preferred
stock: (i) does not possess voting rights, (ii) is not
convertible into common stock, and (iii) is not redeemable at the
option of the holder. The Preferred Stock is redeemable at the
option of the Company, but only (i) if and to the extent the
<PAGE 7> Company's net tangible assets at the end of any fiscal
quarter and after such dividend exceeds $4.5 million , or (ii) if
at least a majority of the independent and disinterested members
of the audit committee of the Company's Board of Directors
approve such redemption. The preceding provision relating to
redemption constitutes a covenant between the Company, the
Company's principal shareholder and its remaining shareholders
and may not be changed without the approval of at least a
majority of the independent and disinterested members of the
audit committee of the Company's Board of Directors.
Note 5 - Warranty Reserves
The Company's Tank Jacket product line carries a warranty
of
one year for workmanship and materials. The Enviroflex product
line carries a ten-year warranty for workmanship and materials.
The Tank Jacket product line also carries a thirty year warranty
for corrosion from certain specified materials. The Company's
warranties are limited to replacement of defective material; they
do not cover by their terms costs associated with leaks or
spillage of tank or pipe contents. Management has accrued a
reserve for anticipated warranty and other products liability
claims and associated legal fees based upon its industry
knowledge and actual claims experience.
As a result of a review of piping problems initiated in
1996, the Company, during the third quarter of 1997, increased
its warranty reserve by approximately $18.6 million primarily to
cover the Company's estimate of the cost, anticipated to be
incurred over a two to three year period, of inspecting and
replacing pipe that had deteriorating cover material on the
retractable inner pipe portion of the Company's double-wall
underground fuel dispensing and containment systems installed
between 1990 and 1994 at approximately 3,000 remaining sites.
The deterioration results from a microbiological fungus, which,
under certain conditions, affects the outer layers of the
system's primary (inner) retractable pipe. The Company has
instituted litigation against the supplier of the pipe to recover
the cost the Company has sustained and will sustain to replace
such pipe, as well as other damages.
As a result of a review performed during the third quarter
of 1998 of the progress made regarding this replacement pipe
program, as well as the costs now expected to be incurred to
complete this process, the Company recorded, during the third
quarter of 1998, a reduction of the warranty reserve of
approximately $3.3 million. The Company has been able to
significantly reduce the cost of performing the pipe replacement
program by managing more efficiently the use of outside
contractors as well as controlling the costs incurred by the
Company's service crews.
PAGE 8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is a Pennsylvania corporation organized in
1986.
The Company is a leading manufacturer and distributor of
underground systems and products for the conveyance and
containment of petroleum and alcohol based motor vehicle fuels
from underground storage tanks to aboveground fuel dispensers.
The principal end users of the Company's products are service
stations, convenience stores and other retail sellers of
gasoline, gasohol and other motor vehicle fuels, government
bodies, utilities and other fleet vehicle operators.
In addition to historical information, this Form 10-Q
contains forward-looking information. The forward-looking
information contained herein is subject to certain risk and
uncertainties that could cause actual results to differ
materially from those projected. For example, risk and
uncertainties can arise with changes in: general economic
conditions, including their impact on capital expenditures;
business conditions in the manufacturing and distribution
industry; the regulatory environment; rapidly changing technology
and industry standards; competitive factors, including increased
competition with both national and international companies, new
services and products offered by competitors; and price
pressures. Readers are cautioned not to place undue reliance on
the forward-looking information included within, which reflects
management's analysis only as of the date hereof. The Company
undertakes no obligation to publicly revise or update this
forward-looking information to reflect events or circumstances
that arise after the date hereof. Readers should carefully
review the risk factors described in other documents the Company
files from time to time with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS - First Quarter of 1999 compared to First
Quarter of 1998
Net Sales
The Company's net sales for the quarter ended March 31,
1999, were $7.8 million compared to $10.2 million for the
corresponding quarter in 1998, a decrease of 23.5%. The decrease
was attributable to a decrease of revenues from our field
operations at our American Containment, Inc. subsidiary, as well
as a decrease of product sales, primarily attributable to a
general slowdown in new construction and renovation of petroleum
service stations despite the large number of service stations
still not in compliance with the federally mandated regulations.
The recently announced merger plans of several large oil
companies resulted in decreased revenues from these customers and
has created short-term uncertainty regarding their capital
expenditure plans. <PAGE 9>
Gross Profit (Loss)
The primary component of the Company's cost of sales is the
product manufacturing costs incurred by the Company as well as
costs paid to various third party manufacturers. Other
components are the variable and fixed costs of operating the
Company's manufacturing and warehousing operations, depreciation
of molds, tools and equipment, and warranty expense. The
Company's gross profit after the warranty provision for the
quarter ended March 31, 1999, was $1.6 million compared to
$3.9 million for the corresponding quarter in 1998. The decrease
resulted primarily from a decrease in product sales volume as
well as a decrease in the field operation sales volume.
Comparing margins before the effect of the warranty
provision, the Company experienced a decrease in gross profit
primarily from the decreased sales.
The Company's gross profit percentage after the effect of
the warranty provision decreased to 21.6% for the quarter ended
March 31, 1999 compared to a gross profit of 37.9% for the
corresponding quarter in 1998. The decrease in the gross profit
margin is due to unabsorbed manufacturing costs attributable to
lower than expected manufacturing activity, increased scrap
levels due to production problems experienced by our standard
pipe vendor and higher freight costs.
Operating Expense
Selling, general and administrative expenses consist
primarily of salaries and related benefits, payroll taxes,
commissions, royalties, legal expenses and other general,
administrative and overhead costs. Selling, general and
administrative expenses for the quarter ended March 31, 1998 were
$3.0 million compared to $2.9 million for the corresponding
quarter in 1998. The increase for the quarter resulted mainly
from an increase in training costs related to the implementation
of our new information system at our field service operations.
Amortization of Intangibles
Amortization of intangibles consists of the amortization of
goodwill over a period of 40 years and the amortization of
various patents that are amortized on a straight-line basis over
the estimated lives of the patents (which range from 13 to 17
years) at the acquisition date or subsequent issuance date. The
decrease in amortization expense to $61,000 for the quarter ended
March 31, 1999 from $119,000 in 1998 is due to the write off of a
patent license in the third quarter of 1998.
<PAGE 10>
Interest Expense
Interest expense for the quarter ended March 31, 1999 was
$131,000 compared to $149,000 for the corresponding quarter in
1998. Interest expense is incurred on term loans that were used
for purchasing equipment and under the Company's working capital
line of credit. The decrease is due to a lower rate charged on
the Company's line of credit during the 1999 period as compared
to the 1998 period.
Income Taxes
Income tax benefit for the quarter ended March 31, 1999 was
$587,000 compared to an income tax expense of $277,000 for the
corresponding quarter in 1998. The Company recorded income taxes
utilizing an effective tax rate of 38% during the 1998 and 1999
periods.
Net Income (Loss)
The Company's net loss for the quarter ended March 31, 1999
was $965,000 compared to a profit of $477,000 for the
corresponding quarter in 1998. The decrease of $1.4 million in
net income for the quarter resulted from decreased sales and a
decrease in gross margin percentage. The Company has made some
adjustments in its spending and staffing levels and will continue
to monitor the industry and its capital expenditure short term
plans.
Preferred Stock Dividends
The preferred stock dividend, approved by the Company's
Board of Directors, relates to the Company's sale, on March 17,
1998, of 400 shares of authorized perpetual Class A Floating Rate
Preferred Stock (the "Preferred Stock") to the Company's
principal shareholder at $10,000 cash per share, or $4.0 million
in the aggregate.
Seasonality and Economic Conditions
The Company's sales are affected by the timing of planned
construction of new service stations and the retrofitting of
existing service stations by the end users, both of which are
influenced by inclement weather and general economic conditions.
During the quarter ended March 31, 1999, the Company did
experience adverse sales and operating results due to inclement
weather. The Company's sales have been adversely affected to a
slight extent due to the Asian economic crisis.
The recently announced merger plans of several large oil
companies have created short-term uncertainty regarding their
capital expenditure plans. During the quarter ended March 31,
1999, the Company did experience adverse sales and operating
<PAGE 11> results due to a reduction in spending by the large oil
companies.
Financial Condition
On March 17, 1998, the Company sold 400 shares of the
Preferred Stock to the Company's principal shareholder at
$10,000, cash, per share, or $4.0 million in the aggregate. For
more information, see "Note 4 - Sale of Preferred Stock" set
forth in the Notes to Condensed Consolidated Financial Statements
for March 31, 1999.
The increase in the Company's inventory to $8.9 million as
of March 31, 1999, as compared to $7.6 million as of December 31,
1998, is attributable to normal inventory increases due to
seasonality and building inventories for higher expected sales
volumes.
Liquidity and Capital Resources
The Company had working capital of $2.7 million and
$4.8 million at March 31, 1999 and December 31, 1998,
respectively. During the first quarter of 1999, the Company
utilized its line of credit to fund its pre-tax loss of
$1.6 million and make purchases of equipment of approximately
$500,000.
The Company satisfies its working capital needs primarily
through funds generated by operations and by borrowings under a
new $10.0 million secured credit facility with a commercial bank.
The Company believes that its presently available funds,
existing credit facility and the cash flow expected to be
generated from operations, will be adequate to satisfy its
anticipated working capital requirements for the foreseeable
future.
Year 2000 Disclosure
Management initiated, early in 1998, an enterprise-wide
program to identify areas where Company owned or operated
computer hardware, software, electronically operated
manufacturing and support equipment, and any other application,
could be adversely impacted by the problems presented by the year
2000, and prepare these computer systems, applications, and other
equipment for continuing use through the year 2000. Assessment
and testing of all computer hardware and software and
manufacturing hardware and software is complete. The Company has
identified where a small amount of remediation must be performed
where a few older personal computers will be replaced. The
Company expects all of its internal remediation to be completed
by June 1999; however, despite its best efforts, business may be
interrupted with potentially material impact on its financial
position or results of operations if any of the following occur:
<PAGE 12> external supply of raw materials or utilities is
delayed or unavailable for an extended period; manufacturing
systems fail; or, central corporate computer systems fail. To
limit the effects of these potential failures, the Company has
completed corporate contingency planning guidelines and will
prepare contingency plans for potential disruptions of critical
systems or processes. Examples of contingency plans include
modifications to computer systems, ensuring availability of
additional information technology personnel during the critical
time period, backing-up systems at off-site facilities, making
alternate raw material supply arrangements, and preparing for
temporary shut-downs of certain plants and facilities. In
addition, the Company has standard operating procedures in place
for a safe and orderly shut-down of systems and facilities should
this be necessary.
The Company has incurred or expects to incur internal staff
costs as well as consulting and other expenses related to
infrastructure and facilities enhancements necessary to prepare
the systems for the year 2000. Testing and conversion of system
applications is expected to cost approximately $350,000, of which
approximately $300,000 has already been incurred as part of the
acquisition of the Company's new information system.
In the opinion of management, the Company believes that all
of its important business resources, either currently or in the
near future, are expected allow the Company to continue operating
through the year 2000 and that there will be no disruption of any
material business operation or capability.
PAGE 13
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
The legal action that is pending against Dayco Products,
Inc., in the United States District Court for the Eastern
District of Pennsylvania, which was reported in the Company's
Annual Report and Form 10-K for the fiscal year ended
December 31, 1998, was scheduled to go to trial in July 1999.
However, it now appears that trial of this case will be delayed
at least until the fall of 1999. Dayco Products, Inc. recently
initiated a separate legal action against the Company in the
United States District Court for the Western District of
Missouri, alleging that the Company is infringing certain patents
held by Dayco relating to hose couplings and is seeking, among
other things, a determination of infringement, damages and
injunctive relief. The Company believes that it has meritorious
defenses to this action. It has filed a motion to have this case
dismissed on the basis that Dayco's claims relate to litigation
pending in the Eastern District of Pennsylvania. In the
alternative, the Company has moved that the action be transferred
to the Eastern District of Pennsylvania.
A description of the Company's other pending legal
proceedings has been previously reported in the Company's Annual
Report and Form 10-K for the fiscal year ended December 31, 1998.
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Company
(Incorporated herein by reference to Exhibit
3.1
to the Company's Quarterly Report of Form 10-Q
for
the quarter ended June 30, 1997).
3.2 Bylaws of the Company (Incorporated herein by
reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
11 Statement re: Computation of Earnings Per
Share (unaudited)
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
PAGE 14
<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.
Total Containment, Inc.
Date May 13, 1999 By/s/ Pierre Desjardins
Pierre Desjardins
President and Chief
Executive
Officer
Date May 13, 1999 By/s/ Keith R. Ruck
Keith R. Ruck
Vice President Finance
and
Chief Financial Officer
PAGE 15
<PAGE>
Exhibit Index
Exhibit No. Description
3.1 Articles of Incorporation of the Company
(Incorporated herein by reference to
Exhibit
3.1 to the Company's Quarterly Report of
Form 10-Q for the quarter ended June 30,
1997).
3.2 Bylaws of the company (Incorporated
herein by
reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the
quarter
ended June 30, 1997).
11 Statement re: computation of Earnings
Per
Share (unaudited)
27 Financial Data Schedule
<PAGE 16>
EXHIBIT 11
TOTAL CONTAINMENT, INC.
STATEMENT RE: COMPUTATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
Three months ended
March 31,
1998
(In thousands, except share data)
Basic:
Average shares outstanding 4,642
Net income (loss) $ 463
Net income (loss) per share
amount $0.10
Assuming dilution
Average shares outstanding 4,642
Effect of dilutive options 17
Totals 4,659
Net income (loss) $ 463
Net income (loss) per share amount $0.10
The effect of dilutive options is not shown for the three
month period ended March 31, 1999 since their effect would be
anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 20
<SECURITIES> 0
<RECEIVABLES> 10,384
<ALLOWANCES> 477
<INVENTORY> 8,930
<CURRENT-ASSETS> 22,173
<PP&E> 8,833
<DEPRECIATION> 3,817
<TOTAL-ASSETS> 35,672
<CURRENT-LIABILITIES> 19,438
<BONDS> 0
0
4,000
<COMMON> 47
<OTHER-SE> 9,951
<TOTAL-LIABILITY-AND-EQUITY> 35,672
<SALES> 7,770
<TOTAL-REVENUES> 7,770
<CGS> 6,088
<TOTAL-COSTS> 3,042
<OTHER-EXPENSES> 61
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131
<INCOME-PRETAX> (1,552)
<INCOME-TAX> (587)
<INCOME-CONTINUING> (965)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (965)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
