UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-24912
WELCOME HOME, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-1379322
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
309-D RALEIGH STREET, WILMINGTON, NORTH CAROLINA 28412
(Address of principal executive offices)
(Zip code)
(910) 791-4312
(Registrant's telephone number, including area code)
NONE
(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 and 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_____
Number of shares of common stock of registrant outstanding at August 14, 1996:
7,453,615
<PAGE>
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three and Six Month
Periods Ended June 30, 1996 and 1995. . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Six Month Periods
Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . 7
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
WELCOME HOME, INC.
Consolidated Balance Sheets at June 30, 1996 and December 31, 1995
(in thousands of dollars)
(Unaudited)
June 30, December 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 2 $ 7
Inventories 21,486 16,798
Prepaid assets 862 810
Deferred income taxes 470 470
Other current assets 50 8
_______ ______
Total Current Assets 22,870 18,093
Property & equipment, net 10,777 8,826
Deferred income taxes 2,971 1,715
Other assets 555 542
Total Assets $37,173 $29,176
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Note payable - line of credit $15,818 $ 5,213
Accounts payable 12,215 11,703
Accrued expenses 2,280 2,817
Current portion of capital lease obligation 541 514
Total Current Liabilities 30,854 20,247
Capital lease obligation 897 1,174
Note payable to Jordan Industries 6,280 4,128
Shareholders' equity (deficit):
Common stock, $.01 par value; 13,000,000 shares
authorized; 8,500,000 shares issued 85 85
Preferred stock, $.01 par value; 1,000,000
shares authorized; none outstanding --- ---
Additional paid-in capital 8,832 8,832
Cumulative translation adjustment (37) (37)
Retained earnings (deficit) (4,853) (368)
Subtotal 4,027 8,512
Less treasury stock, at cost
(1,046,385 shares) 4,885 4,885
Total Shareholders' Equity (Deficit) (858) 3,627
Total Liabilities and Shareholders' Equity (Deficit) $37,173 $29,176
See Notes to Consolidated Financial Statements
<PAGE>
WELCOME HOME, INC.
Consolidated Statements of Operations for the Three and Six Month Periods
Ended June 30, 1996 and 1995
(in thousands of dollars except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30 Ended June 30
1996 1995 1996 1995
(14 weeks) (13 weeks)(27 weeks)(26 weeks)
Net Sales $18,737 $17,997 $31,219 $30,134
Cost of sales 10,656 10,140 17,214 16,882
Gross margin 8,081 7,857 14,005 13,252
Selling, general and administrative
expenses (excluding depreciation) 9,431 8,321 17,945 15,742
Depreciation 483 513 954 963
Operating income (loss) (1,833) (977) (4,894) (3,453)
Interest expense:
Jordan Industries 102 242 191 473
Other 360 130 637 162
Other expense (income) 51 28 19 (19)
Pretax income (loss) (2,346) (1,377) (5,741) (4,069)
Provision (benefit) for income taxes -- (505) (1,256) (1,626)
Net income (loss) ($2,346) ($872) ($4,485) ($2,443)
Net income (loss) per share ($0.31) ($0.11) ($0.60) ($0.31)
Weighted average shares outstanding
(in thousands) 7,454 7,897 7,454 7,988
See Notes to Consolidated Financial Statements
<PAGE>
WELCOME HOME, INC.
Consolidated Statements of Cash Flows for the Six Month Periods Ended
June 30, 1996 and 1995
(in thousands of dollars)
(Unaudited)
1996 1995
(27 weeks)(26 weeks)
Cash flows from operating activities:
Net loss $(4,485) $(2,443)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 998 969
Deferred income taxes (1,256) (1,505)
Changes in operating assets and liabilities:
Inventories (4,688) (4,616)
Other current assets (94) 254
Accounts payable 512 (1,772)
Accrued liabilities (537) (863)
Income taxes payable -- (449)
Net cash used in operating activities (9,550) (10,425)
Cash flows from investing activities:
Capital expenditures (669) (2,995)
Progress payments on new information system (2,237) --
Net cash used in investing activities (2,906) (2,995)
Cash flows from financing activities:
Proceeds from advances from Jordan Industries 2,152 15,365
Repayments to Jordan Industries -- (12,318)
Proceeds from line of credit, net 10,605 12,803
Loan fees, line of credit (56) (382)
Purchases of treasury stock -- (2,633)
Other (250) (211)
Net cash provided by financing activities 12,451 12,624
Net decrease in cash and cash equivalents (5) (796)
Cash and cash equivalents at beginning of period 7 836
Cash and cash equivalents at end of period $ 2 $ 40
See Notes to Consolidated Financial Statements
<PAGE>
WELCOME HOME, INC.
Consolidated Statements of Cash Flows for the Six Month Periods Ended
June 30, 1996 and 1995
(in thousands of dollars)
(Unaudited)
(Continued)
1996 1995
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest - Jordan Industries $ -- $ 452
Interest - third party $ 590 $ 73
Income taxes $ 43 $ 327
Noncash investing and financing activities:
Capital leases $ -- $1,255
See Notes to Consolidated Financial Statements
<PAGE>
WELCOME HOME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars)
(Unaudited)
1. BASIS OF PRESENTATION
These consolidated financial statements have been prepared by Welcome Home,
Inc. (together with its subsidiary the "Company" or "Welcome Home") pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's Annual Report to Shareholders for the year ended December 31, 1995.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair presentation of the results for interim periods.
The Company's sales volumes have historically varied between quarters based on
factors such as the Christmas shopping season; accordingly, the results of
operations for the three and six month periods ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
2. PLANNED STORE CLOSINGS
During July 1996, the Company identified 37 additional stores which it intends
to close during the last half of 1996 or early 1997. Previously, the Company
had identified and reserved for closing 11 stores in 1996. As of June 30,
1996, the furniture, fixtures and equipment in these 37 stores had a total net
book value of approximately $795 which will be written off during the second
half of 1996. A number of these stores may ultimately not close if the Company
is successful in obtaining certain rent concessions from the lessors which are
currently under negotiation. The Company has not yet determined what
additional costs will be incurred to close these stores, some of which will
require early termination of the lease. The Company will accrue such costs as
they become estimable and known during the second half of 1996.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
The Company is a leading specialty retailer of gifts and decorative home
furnishings and accessories in North America, with 215 stores located
primarily in outlet/off-price malls in 41 states as of June 30, 1996. Welcome
Home's products, which currently range in price up to $1500, cover a broad
line of 8,000 to 12,000 stock keeping units and consist of three families of
business, including home textiles, home furnishings and wall decor, and gifts
and decorative accessories, which comprise approximately 85% of the Company's
sales volume. The Company's average sales transaction was approximately $14.72
for the six months ended June 30, 1996, as compared to $13.73 for the six
months ended June 30, 1995, a 7.2% increase.
During the fourth quarter of 1995, the Company planned and began implementing
a series of strategic restructuring initiatives designed to improve
profitability and better position the Company for a return to profitability
and future growth. The major elements of these initiatives include
modification to the Company's merchandising strategy and the liquidation of
merchandise which is not consistent with that strategy, closing unprofitable
stores, and strengthening the Company's executive team and information systems
as necessary to successfully implement the above strategies. The Company
recorded a $5.9 million restructuring charge in the fourth quarter of 1995 for
the cost of these initiatives.
Results of Operations
The following table sets forth selected income statement data of the Company
as a percentage of net sales and certain operating statistics of the Company:
Three Months Six Months
Ended June 30 Ended June 30
1996 1995 1996 1995
Selected income statement data
as a percentage of net sales:
Net sales. . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Cost of sales 56.9 56.3 55.1 56.0
Gross profit.. . . . . . . . . . 43.1 43.7 44.9 44.0
Selling, general and administrative
expenses (excluding depreciation). . . 50.3 46.2 57.5 52.2
Operating income (loss) . . . (9.8) (5.4) (15.7) (11.5)
Interest expense...... . . . . 2.5 2.1 2.7 2.1
Provision (benefit) for income
taxes . . . . . . . . . . . . . -- (2.8) (4.0) (5.4)
Net income (loss). . . . . . . . (12.5)% (4.8)% (14.4)% (8.1)%
Operating Statistics:
Stores open at period end. . . . 215 203 215 203
Total square feet of store space at
period end (in thousands). . . 585 534 585 534
Percentage decrease in
comparable store sales. . . . . (13.1)% (14.9)% (12.7)% (10.6)%
<PAGE>
Three Months Ended June 30, 1996 as compared to Three Months Ended June 30,
1995
Net Sales. Net sales for the three months ended June 30, 1996 increased by
approximately $0.7 million or 4.1%, as compared to the three months ended June
30, 1995. This increase reflects an additional $1.4 million of sales in the
second quarter ended June 30, 1996 due to that quarter having 14 weeks versus
13 weeks in the quarter ended June 30, 1995. Without the additional week, net
sales for the quarter ended June 30, 1996 would have declined $0.6 million, or
3.4%. This decline reflects a 13.1% decrease in comparable store sales (as
adjusted to reflect the change in the number of weeks), net of 12 net
additional stores open at June 30, 1996 as compared to June 30, 1995. The
Company believes the decrease in comparable store sales was primarily the
result of a weak overall retail environment and lower levels of traffic in
outlet malls (where approximately 91% of the Company's stores are located).
Management believes that all of the above factors contributed to a 22.8%
decrease in the number of sales transactions on a same store basis (as
adjusted for the change in the number of weeks), for the three months ended
June 30, 1996. This was partially offset by a 12.6% increase in the average
sales transaction on a same store basis from $13.73 for the quarter ended June
30, 1995 to $15.46 for the quarter ended June 30, 1996 due to the introduction
of higher priced items into the Company's home furnishings and decorative
accessories merchandise mix.
Gross Profit. Gross profit for the three months ended June 30, 1996 increased
by $0.2 million, or 2.9%, as compared to the three months ended June 30, 1995,
largely reflecting the additional week in the second quarter of 1996. Gross
profit as a percentage of sales decreased to 43.1% from 43.7%, reflecting
sales of clearance and discontinued merchandise.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended June 30, 1996 increased
$1.1 million, or 13.3%, as compared to the three months ended June 30, 1995
due primarily to the additional week in 1996 and to 12 net additional stores
open at June 30, 1996 as compared to June 30, 1995. Selling, general and
administrative expenses as a percent of net sales increased to 50.3% for the
three months ended June 30, 1996 as compared to 46.2% for the three months
ended June 30, 1995. The increase as a percentage of net sales is due
primarily to the decrease in same store sales combined with the additional
payroll and occupancy expenses associated with 12 net additional stores at the
end of the second quarter of 1996 versus 1995. On a same store basis, as
adjusted for the change in number of weeks, store selling, general and
administrative expenses decreased 0.3% for the quarter ended June 30, 1996 as
compared with 1995. Corporate general and administrative expenses were
approximately $1.5 million in the second quarter of both 1996 and 1995. Total
selling, general and administrative expense per square foot of selling space
(as adjusted for the change in number of weeks), decreased 11.6% from $18.23
in the second quarter of 1995 to $16.12 in the second quarter of 1996.
Interest Expense. Interest expense increased from $0.4 million for the three
months ended June 30, 1995 to $0.5 million for the three months ended June 30,
<PAGE>
1996 primarily as a result of an increase in the average borrowings
outstanding in 1996. The increase in average borrowings is due primarily to
the larger outstanding borrowings at December 31, 1995 as compared to December
31, 1994 as well as $2.1 million borrowed from Jordan Industries during the
quarter ended June 30, 1996 to finance progress payments on the Company's new
information systems.
Income Taxes. The Company, in accordance with Statement of Financial
Accounting Standards No. 109, has established a valuation reserve against the
additional deferred tax asset recorded in the quarter ended June 30, 1996 of
$0.9 million. Accordingly, no income tax benefit has been recorded in the
accompanying Statement of Operations for the three months ended June 30, 1996.
Net Loss. Net loss for the three months ended June 30, 1996 was approximately
$2.3 million, as opposed to a net loss of approximately $0.9 million for the
three months ended June 30, 1995. The increase occurred primarily as a result
of increases in selling, general and administrative expenses and a reduction
in income tax benefits, partially offset by increased sales.
Six Months Ended June 30, 1996 as compared to Six Months Ended June 30, 1995
Net Sales. Net sales for the six months ended June 30, 1996 increased by
approximately $1.1 million or 3.6%, as compared to the six months ended June
30, 1995. This increase reflects an additional $1.4 million of sales in the
six months ended June 30, 1996 due to that period having 27 weeks as opposed
to 26 weeks in the six months ended June 30, 1995. Without the additional
week, net sales for the six months ended June 30, 1996 would have declined
$0.3 million, or 0.1%. This decline reflects a 12.7% decrease in comparable
store sales, as adjusted for the change in number of weeks, net of the effect
of 12 net additional store open at June 30, 1996 as compared to June 30, 1995.
The Company believes the decrease in comparable store sales was primarily the
result of a weak overall retail environment and lower levels of traffic in
outlet malls (where approximately 91% of the Company's stores are located).
Management believes that all of the above contributed to a 17.1% decrease in
the number of sales transactions on a same store basis (as adjusted for the
change in number of weeks) for the six months ended June 30, 1996. This was
partially offset by a 5.4% increase in the average sales transaction on a same
store basis from $13.58 for the six months ended June 30, 1995 to $14.32 for
the six months ended June 30, 1996, due to the introduction of higher priced
items into the Company's merchandise mix.
Gross Profit. Gross profit for the six months ended June 30, 1996 increased
by $0.8 million, or 5.7%, as compared to the six months ended June 30, 1995,
largely reflecting the additional week in 1996. Gross profit as a percentage
of sales increased to 44.9% from 44.0% due primarily to clearance and
liquidation markdowns for de-emphasized and discontinued merchandise
categories having been included in the Company's restructuring charge recorded
in the fourth quarter of 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the six months ended June 30, 1996 increased $2.2
million, or 14.0%, as compared to the six months ended June 30, 1995 due
primarily to the additional week in 1996 and 12 net additional stores open at
<PAGE>
June 30, 1996 as opposed to June 30, 1995. Selling, general and administrative
expenses as a percent of net sales increased to 57.5% for the six months ended
June 30, 1996 as compared to 52.2% for the six months ended June 30, 1995. The
increase as percentage of net sales is due primarily to the decrease in same
store sales combined with the additional payroll and occupancy expenses
associated with 12 net additional stores at the end of the second quarter of
1996 versus 1995. On a same store basis, as adjusted for the change in number
of weeks, store selling, general and administrative expenses were unchanged
for the six months ended June 30, 1996 as compared to the same period in 1995.
Corporate general and administrative expenses were approximately $2.7 million
in the first six months of both 1996 and 1995. Total selling, general and
administrative expense per square foot of selling space, as adjusted for the
change in weeks, increased 1.5% from $30.23 in the first six months of 1995 to
$30.67 in the first six months of 1996.
Interest Expense. Interest expense increased from $0.6 million for the six
months ended June 30, 1995 to $0.8 million for the six months ended June 30,
1996 primarily as a result of an increase in the average borrowings
outstanding in 1996. The increase in average borrowings is due primarily to
the larger outstanding borrowings at December 31, 1995 as compared to December
31, 1994, as well as $2.1 million borrowed from Jordan Industries to finance
progress payments on the Company's new information systems.
Net Loss. Net loss for the six months ended June 30, 1996 was approximately
$4.5 million, as opposed to a net loss of approximately $2.4 million for the
six months ended June 30, 1995. The increase incurred primarily as a result of
increases in selling, general and administrative expenses and in interest
expense and a lower income tax benefit (due to the recording of an additional
valuation allowance in accordance with SFAS 109 of $0.9 million), partially
offset by increased sales and gross margin.
Liquidity and Capital Resources
The Company had $(8.0) million of working capital at June 30, 1996 as compared
to $(2.2) million at December 31, 1995. The decrease in working capital was
due primarily to an increase in notes payable, partially offset by higher
inventories. The increase in notes payable at June 30, 1996 is due partially
to the Company's operating losses during the six months then ended and
partially to the Company's increase in inventory during the same period. The
increase in inventories at June 30, 1996 is primarily due to the Company's
unusually low reported level of inventory at December 31, 1995 as a result of
the $2.4 million restructuring charge recorded by the Company in the fourth
quarter of 1995.
On May 15,1996, the Company closed the Waiver and Amendment No. 1 to the Loan
and Security Agreement (the "New Bank Credit Facility") with Fleet Capital
Corporation (formerly Shawmut Capital Corporation). The New Bank Credit
Facility provides for borrowings of up to 65% of Eligible Inventory (as
defined), with maximum borrowings of $20 million. As amended, the New Bank
Credit Facility also provides for up to $4 million in additional borrowings
through December 31, 1996 ("Additional Borrowings"). The Company's majority
shareholder, Jordan Industries Inc., agreed to purchase a fifty percent
participation in any Additional Borrowings. Additional Borrowings accrue
<PAGE>
interest at the lesser of the lender's prime rate plus one percent or LIBOR
plus three percent; other borrowings accrue interest at the lesser of the
lender's prime rate or LIBOR plus two percent. The New Bank Facility, as
amended, is secured by substantially all of the Company's assets and contains
covenants requiring minimum levels of tangible net worth and cash flow and
restricts capital expenditures, mergers and consolidations and the payment of
dividends. The Waiver and Amendment No. 1 to the Loan and Security Agreement
waived the Company's violations of certain financial covenants under the New
Bank Credit Facility prior to its amendment and revised such covenants for
future periods. As of June 30, 1996, the Company is in compliance with such
covenants. The maturity of the New Bank Facility, as amended, is May 22, 2000,
after which it will automatically renew for one year periods unless terminated
by the lender or the Company. At June 30, 1996, the Company had approximately
$2.1 million in availability under the New Bank Credit Facility.
Under the Company's subordinated credit agreement with its majority
shareholder, Jordan Industries, Inc. ("Jordan Industries") (the "Subordinated
Credit Agreement") the Company can borrow up to $10,000 for the purpose of
financing the repurchase of the Company's common stock pursuant to its stock
repurchase program and for any other purpose approved by Jordan Industries.
The Subordinated Credit Agreement bears interest at LIBOR plus 3.0% or prime
plus 1.5% and is secured by a second lien on substantially all of the
Company's assets. Unless terminated or otherwise extended by the parties, the
Subordinated Credit Agreement expires on August 15, 2000.
During the quarter ended June 30, 1996, the Company borrowed an additional
$2.1 million under the Subordinated Credit Agreement in order to finance
expenditures to date for the Company's new information systems, which became
operational on August 4, 1996. Jordan Industries has reached an agreement in
principal with an independent lender to finance substantially all of cost of
this project, approximately $3.2 million, via a secured loan. Concurrent with
the funding of this loan, Jordan Industries will execute an agreement with the
Company whereby the Company will borrow the $3.2 million from Jordan
Industries. Concurrently, the additional borrowings of $2.1 million from
Jordan Industries will be rolled into the loan agreement. Total availability
under the Subordinated Credit Agreement, assuming repayment of the additional
borrowings as described above, is approximately $5.9 million.
For the remainder of 1996, the Company plans to restrict new store growth and
the expansion and remodeling of existing stores. The Company estimates it will
require capital expenditures of approximately $0.7 million for such
investments during the remainder of 1996. To fund this investment, the Company
expects to utilize cash provided by operations, revolving borrowings under the
New Bank Credit Facility, as amended and the Subordinated Credit Agreement. In
addition, the Company has replaced its existing information systems with a
fully integrated retail information system at an approximate cost of $3.4
million, which the Company plans to finance via a loan from Jordan Industries
as described above. On the basis of these sources, the Company believes that
it can finance its business and operations and pay its debts as they are due
through 1996.
<PAGE>
Net Operating Loss Carryforward
At December 31, 1995, the Company had approximately $8.5 million in net
operating loss carryforwards for Federal income tax purposes. The Company will
be able to utilize these NOLs to offset future taxable income without
significant limitations through 2010.
Impact of Inflation
General inflation has had only a minor effect on the operations of the Company
and its internal and external sources for liquidity and capital.
PART II. OTHER INFORMATION
WELCOME HOME, INC.
ITEM 1. LEGAL PROCEEDINGS: NONE
ITEM 2. CHANGES IN SECURITIES: NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: NONE
ITEM 5. OTHER INFORMATION: NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: The separate Index to Exhibits accompanying this filing
is incorporated by reference.
(b) REPORTS FILED ON FORM 8-K: NONE
<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.
WELCOME HOME, INC.
By:
\s\ Mark S. Dudeck
Mark S. Dudeck
Chief Financial Officer
(Principal Financial Officer)
DATE: August 14, 1996
<PAGE>
INDEX TO EXHIBITS
Sequentially
No. Description Numbered Pages
99.1 Waiver and amendment No. 1 to the Loan and
Security Agreement dated May 15, 1996
between the Registrant and Fleet Capital
Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 21,486
<CURRENT-ASSETS> 22,870
<PP&E> 10,777
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,173
<CURRENT-LIABILITIES> 30,854
<BONDS> 0
0
0
<COMMON> 85
<OTHER-SE> 3,942
<TOTAL-LIABILITY-AND-EQUITY> 37,173
<SALES> 31,219
<TOTAL-REVENUES> 31,219
<CGS> 17,214
<TOTAL-COSTS> 17,214
<OTHER-EXPENSES> 18,899
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 828
<INCOME-PRETAX> (5,741)
<INCOME-TAX> (1,256)
<INCOME-CONTINUING> (4,485)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,485)
<EPS-PRIMARY> (.60)
<EPS-DILUTED> 0
</TABLE>
