<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File Number 0-25520
-------
-------------
THRUSTMASTER, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-1040330
(State or jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7175 N.W. EVERGREEN PARKWAY #400
HILLSBORO, OREGON, 97124-5839
(Address of principal executive offices)
(Zip Code)
(503) 615-3200
(Registrant's telephone number)
-------------
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common stock, no par value 4,874,019 shares
(Class) (Outstanding at May 11, 1999)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
THRUSTMASTER, INC.
Index to Form 10-Q
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
--------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets....................................... 2
Consolidated Statements of Operations............................ 3
Consolidated Statements of Cash Flows............................. 4
Consolidated Statements of Changes in
Shareholders' Equity......................................... 5
Notes to Consolidated Financial Statements........................ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 7
SIGNATURES.................................................................... 13
</TABLE>
<PAGE>
THRUSTMASTER, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 224 $ 460
Accounts receivable, net 7,253 10,581
Inventories 7,690 6,786
Prepaid expenses and other 487 252
Income taxes receivable - 2,078
Deferred income taxes 4,670 4,677
---------- ----------
Total current assets 20,324 24,834
Plant and equipment, net 2,131 2,350
Other 25 25
---------- ----------
Total assets $ 22,480 $ 27,209
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Operating line of credit $ 3,089 $ 5,821
Accounts payable 2,500 7,202
Accrued liabilities 1,630 2,633
---------- ----------
Total liabilities 7,219 15,656
Shareholders' equity:
Preferred stock - -
Common stock 18,848 14,846
Accumulated deficit (3,520) (3,262)
Cumulative translation adjustment (67) (31)
Total shareholders' equity 15,261 11,553
---------- ----------
Total liabilities and shareholders' equity $ 22,480 $ 27,209
---------- ----------
---------- ----------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
2
<PAGE>
THRUSTMASTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues $ 8,253 $ 6,282
Cost of goods sold 6,467 4,792
-------- --------
Gross profit 1,786 1,490
Operating expenses:
Research and engineering 338 722
Selling, general and administrative 1,626 2,708
-------- --------
Total operating expenses 1,964 3,430
Loss from operations (178) (1,940)
Interest/other income (expense) (219) 30
-------- --------
Loss before income taxes (397) (1,910)
Benefit from income taxes (139) (669)
-------- --------
Net loss $ (258) $(1,241)
-------- --------
-------- --------
Net loss per share:
Basic $ (0.05) $ (0.29)
-------- --------
-------- --------
Diluted $ (0.05) $ (0.29)
-------- --------
-------- --------
Weighted average shares outstanding:
Basic 4,783 4,303
-------- --------
-------- --------
Diluted 4,783 4,303
-------- --------
-------- --------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE>
THRUSTMASTER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
--------- ----------
<S> <C> <C>
Cash flows from operations:
Net loss $ (258) $ (1,241)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation 253 230
Deferred income taxes and taxes receivable 2,085 (88)
Changes in operating assets and liabilities:
Accounts receivable 3,328 9,026
Inventories (904) 986
Prepaid expenses and other assets (271) (1,058)
Payables and accrued liabilities (5,705) (4,358)
--------- ---------
Net cash provided by (used in) operating activities (1,472) 3,497
--------- ---------
Cash flows used in investing activities:
Purchase of plant and equipment (34) (291)
Cash flows from financing activities:
Payments on line of credit (2,732) (1,110)
Proceeds from issuance of common stock 4,002 41
--------- ---------
Net cash provided by (used in) financing activities 1,270 (1,069)
--------- ---------
Net increase (decrease) in cash
and cash equivalents (236) 2,137
Cash and cash equivalents, beginning of period 460 449
--------- ---------
Cash and cash equivalents, end of period $ 224 $ 2,586
--------- ---------
--------- ---------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
<PAGE>
THRUSTMASTER, INC.
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Other Accumulated
------------------------ Accumulated Comprehensive Comprehensive
Shares Amount Deficit Loss Loss
---------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1999 4,597 $ 14,846 $ (3,262) $ (31)
Issuance of stock equity funding 250 3,950
Stock options exercised 24 52 -
Translation Adjustment - - - (36) (36)
Net loss - - (258) (258)
---------- ---------- ------------ ------------- -------------
Balance, March 31, 1999 4,871 $ 18,848 $ (3,520) $ (67)
---------- ---------- ------------ -------------
---------- ---------- ------------ -------------
Comprehensive Income, March 31, 1999 $ (294)
-------------
-------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
5
<PAGE>
THRUSTMASTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of ThrustMaster, Inc., (the "Company"), an Oregon corporation, and its
wholly-owned subsidiaries, Thrustmaster (Europe) Limited, and its wholly-owned
subsidiary Thrustmaster (Deutschland) GmbH, and have been prepared by the
Company without audit and in conformity with generally accepted accounting
principles for interim financial information pursuant to rules and regulations
of the Securities and Exchange Commission. In the opinion of management, the
unaudited consolidated financial statements include all necessary adjustments
(which are of a normal and recurring nature) for the fair presentation of the
results of the interim periods presented. These consolidated financial
statements should be read in conjunction with the Company's audited financial
statements and notes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1998. The results of operations for the
periods presented are not necessarily indicative of the results that may be
expected for the entire fiscal year.
NOTE 2 -- INVENTORIES
Inventories are stated at the lower of cost or market on a first-in,
first-out basis. Inventories are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- ------------
<S> <C> <C>
Raw materials $ 527 $ 1,072
Work in progress 27 34
Finished goods 7,136 5,680
----------- ------------
$ 7,690 $ 6,786
----------- ------------
----------- ------------
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING INFORMATION
The discussion and analysis below contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. The Act provides a "safe harbor" for forward-looking statements
to encourage companies to provide prospective information about themselves so
long as they identify these statements as forward-looking and provide
meaningful cautionary statements identifying important factors that could
cause actual results to differ from the projected results. All statements
other than statements of historical fact that the Company makes in this
Report on Form 10-Q are forward-looking. In particular, statements regarding
year 2000 compliance and compliance costs, the adequacy of funds to meet the
Company's current or future cash needs and the Company's future results of
operations or financial position are forward-looking statements. Words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," and similar expressions identify forward-looking statements. But
the absence of these words does not mean the statement is not forward-looking.
The Company cannot guarantee any of the forward-looking statements, which are
subject to risks, uncertainties and assumptions that are difficult to predict.
Actual results may differ materially from those the Company forecasts in
forward-looking statements due to a variety of factors, including those set
forth in the Company's annual report on Form 10-K under the heading "Additional
Risk Factors that Could Affect Operating Results and Market Price of Stock."
The Company does not intend to update any forward-looking statements due to
new information, future events or otherwise.
The following discussion should be read in conjunction with the
Company's consolidated financial statements and the notes thereto.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentage of revenues represented by certain items included in the Company's
Consolidated Statements of Operations:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
------ ------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of goods sold 78.4 76.3
------ ------
Gross profit 21.6 23.7
Operating expenses:
Research and engineering 4.1 11.5
Selling, general and administrative 19.7 43.1
------ ------
Total operating expenses 23.8 54.6
------ ------
Loss from operations (2.2) (30.9)
Interest/other income (expense) (2.6) 0.5
------ ------
Loss before income taxes (4.8) (30.4)
Benefit from income taxes (1.7) (10.6)
------ ------
Net loss (3.1)% (19.8)%
------ ------
------ ------
</TABLE>
REVENUES
Revenues for the three months ended March 31, 1999 were $8,253,000, an
increase of $1,971,000, or 31.4%, compared to $6,282,000 for the three months
ended March 31, 1998. Revenues increased primarily as a result of stronger sales
in Europe, increased OEM sales, and the introduction of new products, including
the Company's new software product, Talk n' Play, which was introduced in
January, 1999.
7
<PAGE>
GROSS PROFIT
The Company continued to experience higher than normal returns and
decreasing selling prices due to competitive pressures causing a decrease in
gross profit percentage for the quarter ended March 31, 1999 compared to the
same periods of the prior year. Gross profit for the three months ended March
31, 1999 was $1,786,000, an increase of $296,000, or 19.9%, compared to
$1,490,000 for the three months ended March 31, 1998. As a percentage of
revenues, gross profit was 21.6% for the three months ended March 31, 1999
compared to 23.7% for the three months ended March 31,1998. Gross profit as a
percentage of revenue decreased primarily due to: a continuation of higher than
normal returns as a result of general end-user product installation challenges
in a Windows environment, and competitive pricing pressures.
RESEARCH AND ENGINEERING
Research and engineering expenses were $338,000 for the quarter ended
March 31,1999, a decrease of $384,000, or 53.2%, compared to $722,000 for the
quarter ended March 31,1998. This decrease was a result of a reduction in
personnel in 1999. As a percentage of revenues, research and engineering
expenses were 4.1%, for the three months ended March 31, 1999, compared to 11.5%
for the three months ended March 31, 1998. The decrease in research and
engineering expenses as a percentage of revenues resulted primarily from the
increase in revenues, the reduction in personnel in 1999 and, to a lesser
extent, the decrease in product development activity.
SELLING, GENERAL, AND ADMINISTRATIVE
Selling, general and administrative expenses were $1,626,000 for the
three months ended March 31, 1999, a decrease of $1,082,000, or 40.0%,
compared to $2,708,000 for the quarter ended March 31, 1998. As a percentage
of revenues, selling, general and administrative expenses decreased to 19.7%
for the three months ended March 31, 1999, compared to 43.1% for the three
months ended March 31, 1998. The expense decrease, as a percentage of
revenues, resulted primarily from the significant reduction in costs associated
primarily with sales incentive programs, marketing development costs, and
advertising.
INTEREST/OTHER INCOME (EXPENSE)
Interest income was $5,000 for the three months ended March 31,
1999, a decrease of $25,000, or 80.0%, compared to $30,000 for the quarter
ended March 31, 1998. Interest expense was $102,000 for the three months
ended March 31, 1999, an increase of $99,000, compared to $3,000 for the
quarter ended March 31,1998. Foreign currency transaction losses were
$122,000 for the three months ended March 31, 1999, an increase of $122,000,
compared to $0 for the quarter ended March 31, 1998. The decreases in
interest income was due to lower investment balances in
8
<PAGE>
the current quarter compared to those of the same period a year ago. The
increase in interest expense was primarily due to higher balances on the
operating line of credit in the current quarter compared to those of the same
period a year ago. ThrustMaster (Europe) Limited transacts business in
currencies other than U.S. Dollars, primarily the British Pound Sterling and
German Deutsche Mark. The foreign currency transaction losses in the recent
quarter were primarily due to the decreased value of currencies relative to
the U.S. Dollar.
BENEFIT FROM INCOME TAXES
The benefit from income taxes for the three-month period ended March
31, 1999, reflects an effective tax rate of 35.0%. This compares to an effective
tax rate of 35.0% for the three-month period ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its activities to date with a combination of
cash flow from operations, borrowed funds, and proceeds from the sale of equity
securities.
In late 1998, the Company entered into a demand discretionary
$16,000,000 line of credit. The Company has not utilized the line as expected,
and there have been operational issues between the lender and the Company.
The Company and the lender have agreed that the Company will replace the
lender by July 31, 1999. Simultaneously, the Company and the lender have
agreed to reduce the facility to $2,500,000 and reset advance rates to 45%
of eligible receivables and 30% of eligible inventory (subject to an inventory
sub-limit of $1,500,000). Borrowings are payable on demand and bear interest
at a fluctuating rate equal to the prime rate plus 4%. The line of credit is
collateralized by substantially all of the Company's assets. The line of credit
is a "demand discretionary" credit facility and does not require the Company to
maintain working capital and debt-to-equity ratios. At March 31, 1999,
$3,089,000 was outstanding under the facility and the Company was in compliance
with all loan covenants.
On January 28, 1999, the Company issued to three investors an
aggregate of 250,000 shares of the Company's Common Stock (subject to
adjustment as described below) and warrants exercisable for an aggregate of
70,754 shares of Common Stock for an aggregate of $4,000,000. The exercise
price applicable to 50% of the shares issuable upon exercise of the warrants
is $20.00 per share; the exercise price for the remaining warrant shares is
$22.40 per share. The Company has agreed to issue adjustment shares to the
investors for no additional consideration. The number of adjustment shares to
be issued will depend upon the average of the lowest 10 days' closing bid
prices of the common stock during each of the two consecutive 25-day periods
after the effective date of a registration statement to be filed in
connection with the issuance of the 250,000 shares. If the relevant average
closing bid price during each such 25-day period is $16.00 per share, the
same as the market price of the common stock on the date preceding the
issuance of the 250,000 shares to the investors, the Company will issue
312,500 adjustment shares. More or less adjustment shares may be issued
depending on the relevant average closing price during each 25-day period.
The Company may elect, subject to the satisfaction of certain
conditions, to sell two additional tranches of equity investment. As of the
date hereof, the conditions to the additional tranches of investment have not
been satisfied. The amount of each additional tranche would range from
$1,000,000 to $6,000,000 depending on the price of the Common Stock at the
time of the investment. Warrants to purchase additional shares of Common
Stock will be issued to investors if the aggregate investment exceeds
$12,000,000. There are two reset periods for each tranche, each covering 50%
of the shares issued on the applicable closing date. The first reset period
is the 25 days after the effective date of a registration statement to be
filed in connection with that tranche. The second reset period is the 25 days
after the end of the first reset period. For each reset period, the reset
price is the average of
9
<PAGE>
the lowest ten trading days' closing bid prices during the related 25-day
period. The number of shares to be issued at the end of each reset is
calculated by (a) multiplying the number of shares subject to price
adjustment by (b) (i) an amount equal to 112.5% of the applicable tranche
purchase price less the reset price divided by (ii) the reset price. The
investors have agreed that, until the expiration of the final reset period in
connection with the equity line, they will not enter into certain short sales
of the Company's Common Stock. For additional information, see the Company's
current report on Form 8-K dated February 16, 1999.
Net cash used in operating activities was $1,472,000 for the three
months ended March 31, 1999. The primary uses of cash were a net loss of
$258,000, an increase in inventories of $904,000, an increase in prepaid
expenses and other assets of $271,000, and a decrease in payables and accrued
liabilities of $5,705,000. These uses were offset in part by decreases in
accounts receivable and deferred income taxes and taxes receivable of $3,328,000
and $2,085,000, respectively. This compares to net cash provided by operating
activities of $3,497,000 for the three months ended March 31, 1998.
Capital expenditures for the three months ended March 31, 1999 were
$34,000, compared to $291,000 for the same period in the prior year. These
expenditures were primarily for new computer equipment and upgrades to the
Company product tooling.
The Company believes that available funds together with borrowings
from its credit facility and the issuance of additional equity as described
above will be adequate to meet the Company's cash needs during 1999. The
Company may require additional capital beyond the amounts currently forecast
by the Company. Any such required additional capital may not be available on
reasonable terms, if at all, at such time or times as required by the Company.
YEAR 2000 COMPLIANCE
The Year 2000 issue results from computer programs written
using two, rather than four, digits to define the applicable year. These
computer programs may recognize a date using "00" as the year 1900 instead of
2000 and cause system failures or miscalculations or material disruptions of
business operations, including, among other things, a temporary inability to
process transactions, send invoices, or engage in similar normal business
operations. If the Company or its significant customers, suppliers, service
providers and other related third parties fail to take the necessary steps to
correct or replace these problematic computer programs, the Year 2000 issue
could have a material adverse effect on the Company. The Company cannot,
however, quantify the impact at this time.
The Company has begun upgrading or replacing the software packages
underlying its financial, production, communication, desktop and other systems,
as appropriate, to address the Year 2000 issue. It has also performed an
in-depth analysis of its products and begun to modify those that are not Year
2000 compliant. Moreover, the Company has begun to contact all major external
third parties that provide products and services to the Company to assess their
readiness for the Year 2000.
10
<PAGE>
Management believes it has completed the review and assessment phase of
affected systems within the Company and those which are external to the Company.
This assessment indicated that most of the Company's significant internal
information systems could be affected by the Year 2000 issue, and that the
Company may be negatively impacted by non-compliance of related third parties.
The Company has begun the remediation phase of the Company's internal
information technology systems and has set September 1999 as the target for Year
2000 compliance of all of the Company's internal information technology systems.
The Company's internal information technology systems include its finance
systems and those systems used in the research and development of the Company's
products.
The Company is in the process of creating contingency plans for its
internal information technology systems. These contingency plans are expected to
be in place by September 30, 1999. In the event the Company's information
technology systems are not Year 2000 compliant by September 30, 1999, the
Company will decide at that time whether to implement the necessary contingency
plans.
The Company has queried its important suppliers and service providers
and has obtained assurances from those third parties that they are or will be
Year 2000 compliant. The inability of those parties to become Year 2000
compliant could have a material adverse effect on the Company. The effects of
non-compliance by third parties where no system interface exists is not
determinable.
The Company has made and will continue to make investments in systems
and applications to address Year 2000 issues. The Company has not tracked all
internal resources dedicated to the resolution of the Year 2000 issue and,
therefore, is unable to quantify precisely internal costs incurred to date that
are associated with the Year 2000 issue. Identifiable expenditures for these
investments were approximately $46,000 through March 31, 1999. Management
estimates that additional expenditures in 1999 will total approximately $84,000.
Investments to address the Year 2000 issue have been, and are expected to be,
funded through cash generated from operations.
The Company's plans to complete the Year 2000 modifications are
based upon management's best estimates, which were derived utilizing numerous
assumptions of future events, including continued availability of certain
resources, and other factors. However, these estimates may not be achieved
and actual results could differ materially from those plans. Specific factors
that might cause such material differences include the availability and cost
of personnel trained in this area and the ability to locate and correct all
relevant computer codes.
11
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
*3.1 Articles of Incorporation, as amended
**3.2 Amended and Restated Bylaws
*4.1 Description of Capital Stock contained in the Articles of
Incorporation, as amended (See Exhibit 3.1)
**4.2 Description of Rights of Security Holders contained in the
Amended and Restated Bylaws (See Exhibit 3.2)
*4.3 Form of Certificate for Shares of Common Stock
*4.4 Form of Representatives' Warrant Agreement among the Company,
Cruttenden Roth and Black & Company, Inc.
***4.5 Securities Purchase Agreement dated as of January 28, 1999
among the Company and the Purchasers party thereto.
***4.6 Form of Callable Warrant
***4.7 Registration Rights Agreement dated as of January 28, 1999
among the Company and the Purchasers party thereto.
11.1 Statements Regarding Computation of Per Share Earnings.
27 Financial Data Schedule as of March 31, 1999
</TABLE>
- -------------------------
* Incorporated by reference to the same exhibit number from the
Registration Statement on Form SB-2 filed on January 5, 1995, as
amended on February 7, 1995, and February 24, 1995 (File No.
33-88252-LA).
** Incorporated by reference to the same exhibit number from the Company's
Report on Form 10-K for the year ended December 31, 1996.
*** Incorporated by reference to the same exhibit number from the Company's
Current Report on Form 8-K filed on February 16, 1999.
(b) Reports on Form 8-K:
On February 16, 1999, the Registrant filed a Current Report on Form 8-K
with respect to its entering into an equity line financing arrangement and
the issuance of its securities and its contingent agreement to issue
additional securities in connection with the equity line financing.
12
<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.
THRUSTMASTER, INC.
Date: May 17, 1999 By /s/ Frank G. Hausmann
Frank G. Hausmann ----------------------------------
President and Chief Executive Officer
13
<PAGE>
EXHIBIT 11.1
THRUSTMASTER, INC.
STATEMENTS REGARDING COMPUTATION
OF PER SHARE EARNINGS
(Dollars in thousands, except net loss per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Weighted average number of
common shares outstanding - basic 4,783 4,303
Common stock equivalents
arising from stock options - -
---------- ----------
Weighted average number of
common shares outstanding - diluted 4,783 4,303
---------- ----------
---------- ----------
Net loss $ (258) $ (1,241)
---------- ----------
---------- ----------
Net loss per share - basic $ (0.05) $ (0.29)
---------- ----------
---------- ----------
Net loss per share - diluted $ (0.05) $ (0.29)
---------- ----------
---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1999 AND THE RELATED STATEMENT OF
INCOME FOR THE PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000932290
<NAME> THRUSTMASTER, INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 224
<SECURITIES> 0
<RECEIVABLES> 7,393
<ALLOWANCES> 140
<INVENTORY> 7,690
<CURRENT-ASSETS> 20,324
<PP&E> 5,798
<DEPRECIATION> 3,667
<TOTAL-ASSETS> 22,480
<CURRENT-LIABILITIES> 7,219
<BONDS> 0
0
0
<COMMON> 18,848
<OTHER-SE> (3,587)
<TOTAL-LIABILITY-AND-EQUITY> 22,480
<SALES> 8,253
<TOTAL-REVENUES> 8,253
<CGS> 6,467
<TOTAL-COSTS> 6,467
<OTHER-EXPENSES> 1,964
<LOSS-PROVISION> (120)
<INTEREST-EXPENSE> 102
<INCOME-PRETAX> (178)
<INCOME-TAX> (139)
<INCOME-CONTINUING> (258)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
