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, 1997
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: 1-14208
MOSSIMO, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-0684524
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
15320 Barranca Parkway
Irvine, California 92618
- ------------------------------- -----------------------
(Address of principal (Zip Code)
executive offices)
(714) 453-1300
-------------------------
(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 Securities Exchange Act of 1934 during
the preceding 12 months (or for any 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 practicable date.
Common Stock, par value 15,000,000
$.001 per share (Outstanding on May 8, 1997)
(Class)
Exhibit Index on Page 19
1
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MOSSIMO, INC.
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 (unaudited).........................................3
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1996 (unaudited).................................5
Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 and 1996 (unaudited)..................................6
Notes to Consolidated Financial Statements ..................................8
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations .............................11
PART II - OTHER INFORMATION
ITEM 2 - Legal Proceedings..................................................17
ITEM 6 - Exhibits and Reports on Form 8-K ..................................17
SIGNATURES .................................................................18
EXHIBIT INDEX ..............................................................19
EXHIBITS ...................................................................20
2
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MOSSIMO, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
MARCH 31, DECEMBER 31,
1997 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,895 $ 7,007
Accounts receivable, net 4,225 2,831
Due from factor 14,707 13,561
Refundable taxes 1,783 1,346
Inventories 19,113 17,415
Prepaid expenses and other current assets 2,225 869
Deferred taxes 1,455 1,455
------- -------
Total current assets 45,403 44,484
PROPERTY AND EQUIPMENT, net 6,994 4,859
OTHER ASSETS 1,412 1,411
------- -------
$53,809 $50,754
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable $ 1,000 $ -
Accounts payable 8,330 6,701
Accrued liabilities 2,215 1,118
Current portion of long-term debt 61 86
S distribution note 367 427
------- -------
Total current liabilities 11,973 8,332
DEFERRED ROYALTY INCOME 1,045 1,100
DEFERRED RENT 97 106
LONG-TERM DEBT, net of current portion 61 85
3
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001; authorized
shares 3,000,000, no shares issued or outstanding - -
Common stock, par value $.001; authorized shares
30,000,000, issued and outstanding
15,000,000 shares 15 15
Additional paid-in capital 31,386 31,386
Retained earnings 9,232 9,730
------- -------
Total stockholders' equity 40,633 41,131
------- -------
$53,809 $50,754
======= =======
See accompanying notes to consolidated financial statements.
4
<PAGE>
MOSSIMO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share date)
(unaudited)
For The Three Months
Ended March 31,
---------------
1997 1996
---- ----
NET SALES $24,588 $24,401
COST OF SALES 16,931 13,873
------- -------
GROSS PROFIT 7,657 10,528
ROYALTY INCOME 1,425 1,282
-------- --------
9,082 11,810
OPERATING EXPENSES:
General and administrative 3,454 1,679
Selling 3,125 2,228
Marketing 2,227 662
Design 1,146 453
-------- --------
9,952 5,022
-------- --------
OPERATING INCOME (LOSS) (870) 6,788
OTHER (EXPENSE) INCOME:
Other - 2
Interest 40 (62)
------- -------
40 (60)
------- -------
INCOME (LOSS) BEFORE INCOME TAXES (830) 6,728
PROVISION FOR (CREDIT IN LIEU OF)
INCOME TAXES (332) 910
------- -------
NET INCOME (LOSS) $ (498) $ 5,818
======== ========
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE ($.03)
========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 15,000
========
See accompanying notes to consolidated financial statements.
5
<PAGE>
MOSSIMO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For The Three Months
Ended March 31,
----------------
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 498) $ 5,818
Adjustment to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 302 111
Loss on disposition of property and equipment 18 2
Deferred rent (9) (10)
Provision for doubtful receivables 113 13
Changes in:
Accounts receivable, net (1,507) (778)
Due from factor (1,146) (10,260)
Inventories (1,698) (1,657)
Prepaid expenses and other current assets (1,356) (137)
Deferred taxes - (700)
Other assets (56) (7)
Accounts payable 1,629 (396)
Accrued liabilities 1,037 1,978
Refundable taxes (437) 1,486
------- -------
Net cash used in operating activities (3,608) (4,537)
------- -------
CASH FLOWS FROM INVESTING ACTIVITY -
Payments for acquisition of property
and equipment (2,455) (185)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 1,000 -
Repayment of long-term debt (49) (21)
Net change in factor advances - 422
Dividends paid - (17,208)
Net proceeds from issuance of common stock - 32,369
-------- --------
Net cash provided by financing activities 951 15,562
-------- --------
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (5,112) 10,840
CASH AND CASH EQUIVALENTS, beginning of period 7,007 481
--------- --------
CASH AND CASH EQUIVALENTS, end of period $ 1,895 $11,321
======== ========
See accompanying notes to consolidated financial statements.
6
<PAGE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION -
Cash paid during the period for:
Interest $ 18 $ 124
========= ========
Income taxes $ 142 $ 117
========= ========
SCHEDULE OF NONCASH INVESTING AND
FINANCING TRANSACTIONS:
Contractual obligations incurred for
the acquisition of equipment $ - $ 55
========= ========
S distribution note payable to stockholder $ - $ 150
========= ========
See accompanying notes to consolidated financial statements.
7
<PAGE>
MOSSIMO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization And Accounting Policies
------------------------------------
Mossimo, Inc. and subsidiary ("Mossimo" or the "Company") designs, sources and
markets a lifestyle collection of contemporary men's activewear and men's and
women's sportswear bearing Mossimo(R) trademarks. The Company also designs,
sources and markets men's and women's eyewear, and licenses its trademarks for
use in collections of women's swimwear and bodywear, men's neckwear, and men's
and women's shoes and accessories. The Company distributes its products to a
diversified account base, including department stores, specialty retailers, and
sports and activewear stores located throughout the United States, as well as
two signature retail stores in Southern California.
The accompanying unaudited interim consolidated financial statements of the
Company have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") for reporting on Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles ("GAAP") for complete financial
statements. The accompanying unaudited interim consolidated financial statements
should be read in conjunction with the Company's consolidated financial
statements for the year ended December 31, 1996 on Form 10-K.
In the opinion of management, the unaudited consolidated financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the consolidated balance sheets as of March
31, 1997 and December 31, 1996, and the consolidated statements of operations
and the consolidated statements of cash flows for the three months ended March
31, 1997 and 1996. Operating results for the three months ended March 31, 1997
are not necessarily indicative of the results that may be expected for the
entire fiscal year ending December 31, 1997.
Certain reclassifications have been made in the unaudited consolidated financial
statements to conform to the fiscal year 1997 presentation.
2. Initial Public Offering
-----------------------
In February 1996, the Company completed an initial public offering of 2,000,000
shares of its common stock for $18 per share, netting proceeds to the Company
after underwriting discounts and expenses of approximately $32.1 million.
8
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3. Income Taxes
------------
Prior to February 27, 1996, the Company had elected to be taxed as an S
corporation under the provisions of the Internal Revenue Code and similar
statutes in the State of California. Accordingly, the Company's taxable income
was treated as if it were distributed to the sole stockholder, who was
responsible for payment of taxes thereon. In addition, the Company was subject
to a California franchise tax rate of 1.5%. Effective February 27, 1996, the
Company converted to a C corporation and became subject to Federal and State
income taxes on an ongoing basis. As a result, the Company recorded $700,000 of
deferred income tax assets on February 27, 1996.
4. Credit Facilities
-----------------
Pursuant to the provisions of a factoring agreement, the Company assigns a
substantial portion of its trade accounts receivable to a factor who assumes the
credit risk with respect to collection of nonrecourse accounts receivable. The
Company may request advances against a percentage, determined by the factor, of
the qualifying accounts receivable factored at any time before their maturity
date. The factoring charge ranges from .5% to .6% of the receivables assigned.
Interest at the prime rate plus .5% per annum is charged on advances.
Outstanding advances are collateralized by the Company's inventories and are
payable on demand. At March 31, 1997, the Company had no amounts outstanding
pursuant to this arrangement.
The factoring agreement continues in force from year to year and may be
terminated by the Company on June 1, 1998 with 60 days prior written notice or
by the factor at any time with 180 days prior written notice.
The Company also has a $10 million unsecured line of credit with a bank which
matured on April 1, 1997 and was extended to June 1, 1997. The credit agreement
contains certain restrictive covenants that require the maintenance of various
financial levels and ratios and prohibits the payment of dividends by the
Company. At March 31, 1997, the Company had $1.0 million outstanding under this
agreement.
5. Commitments And Contingencies
-----------------------------
Litigation - On January 24, 1997 and April 7, 1997, shareholder class action
complaints were filed in the Superior Court for Orange County, California
alleging violations of the California Corporations Code and other California
state law claims, including for unlawful business practices and misleading
advertising, against the Company and certain of its officers and directors with
respect to statements made in connection with its initial public offering,
subsequent Securities and Exchange Commission filings, analysts reports and
9
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other public announcements. The suit is purportedly brought on behalf of all
persons who purchased the Company's Common Stock during the period from February
23, 1996, the date of its initial public offering, through January 14, 1997 by
named plaintiffs, Chaile Steinberg and Igor Glaudnikov, Cara Debra Marks and
Lois Burke, respectively. Such suits seek compensatory damages of unspecified
amounts and other relief. Although the outcome of this litigation cannot be
predicted with certainty, management believes that the Company has meritorious
defenses to the claims alleged and intends to vigorously defend against this
action.
The Company is involved in certain other legal and administrative proceedings
and threatened legal and administrative proceedings arising in the normal course
of its business. While the outcome of such proceedings and threatened
proceedings cannot be predicted with certainty, in the opinion of management,
the ultimate resolution of these matters individually or in the aggregate will
not have a material adverse effect on the Company.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion includes the operations of Mossimo, Inc. and subsidiary
for each of the periods discussed. This discussion and analysis should be read
in conjunction with the Company's Consolidated Financial Statements for the year
ended December 31, 1996 on Form 10-K.
RESULTS OF OPERATIONS
The following table sets forth operating results for the 1997 period and pro
forma operating results for the 1996 period indicated. Pro forma operations
reflect adjustments to historical operating results for federal and state income
taxes as if the Company had been taxed as a C corporation rather than an S
corporation.
For The Three Months
Ended March 31,
---------------
1997 1996
---- ----
(in thousands)
Net Sales $24,588 $24,401
Cost of Sales 16,931 13,873
------ ------
Gross Profit 7,657 10,528
Royalty Income 1,425 1,282
Operating Expenses:
General and administrative 3,454 1,679
Selling 3,125 2,228
Marketing 2,227 662
Design 1,146 453
------ ------
9,952 5,022
------ ------
Operating Income (Loss) (870) 6,788
Other (Expense) Income 40 (60)
------- -------
Income (Loss) Before Income Taxes (830) 6,728
Income Tax (Benefit) Provision (332) 2,758
-------- -------
Net Income (Loss) $ (498) $ 3,970
======== ========
11
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Three Months Ended March 31, 1997 And 1996
- ------------------------------------------
Net sales increased modestly to $24.6 million in 1997 from $24.4 million in
1996. The increase in net sales was principally driven by sales of women's
sportswear, essentially not available in the comparable quarter of 1996, offset
by a 44.3% decrease in sales of men's activewear. Net sales of the women's
sportswear line, which represented approximately 28.6% of the Company's net
sales for the three months ended March 31, 1997, increased to $7.0 million in
1997 from $105,000 in 1996. The decrease in net sales of men's activewear in
1997, which represented approximately 29.6% of the Company's net sales for the
quarter, was primarily a result of decreased sales of screenprinted tee-shirts.
Net sales of men's sportswear, which represented approximately 37.2% of the
Company's net sales for the quarter, decreased approximately 11.5% over such
sales in 1996, primarily as a result of a decrease in sales of knit tops. The
decrease in sales of knit tops was primarily related to production delays from
the Company's manufacturing sources in Peru. Net sales of the Company's eyewear
increased approximately 1.2% to $588,000 in 1997 from $581,000 in the comparable
period in 1996.
Gross profit decreased to $7.7 million in 1997 from $10.5 million in 1996. Gross
profit as a percentage of net sales decreased to 31.1% in 1997, from 43.1% in
1996. The decrease resulted primarily from the aforementioned decrease in sales
of high margined men's activewear, off-price sales of certain out-of-season
merchandise and a write-down of inventory associated with the Company's
discontinued watch division.
Royalty income increased 11.2%, to $1.4 million in 1997 from $1.3 million in
1996, primarily due to increased sales by the Company's women's swimwear and
bodywear licensee.
Operating expenses increased in all categories to $9.9 million in 1997 from $5.0
million in 1996. General and administrative expense increased to $3.5 million in
1997 compared to $1.7 million in 1996, primarily as a result of severance costs
associated with a 7% workforce reduction, the accrual of legal fees in
connection with shareholder lawsuits and salary costs reflecting increased
staffing over the comparable period a year earlier. Selling expense increased to
$3.1 million in 1997 from $2.2 million in 1996, primarily as a result of the
accrual of costs associated with certain promotional programs with the Company's
retail customers and increases in staffing levels over the comparable period a
year ago. Marketing expense increased to $2.2 million in 1997 from $662,000 in
1996, primarily due to increased advertising expenses and the cost of the
Company's first runway fashion show. Design expense increased to $1.1 million in
12
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1997 compared to $453,000 in 1996, primarily as a result of increases in
staffing levels necessary to support the development and expansion of the
Company's product offerings.
Interest income increased to $40,000 in 1997 compared to interest expense of
$62,000 in 1996. The increase related to interest income from cash investments.
The Company recorded a tax benefit of $332,000 in 1997 as a result of its pretax
loss compared with a pro forma tax provision of $2.8 million in 1996.
Liquidity And Capital Resources
- -------------------------------
The Company's primary cash requirements are to fund the Company's working
capital needs, primarily inventories and accounts receivable, and to purchase
property and equipment. Net cash used in operating activities totaled
approximately $3.6 million for the three months ended March 31, 1997. At March
31, 1997, working capital was approximately $33.4 million as compared to $33.3
million at March 31, 1996. Working capital may vary from time to time as a
result of seasonality, new product introductions, capital expenditures,
including purchases of equipment and construction of in-store shops, and changes
in accounts receivable and inventory levels.
The Company has historically sold a substantial portion of its trade accounts
receivable to a factor which assumes the credit risk with respect to collection
of such accounts. The factor pays the Company the receivable amount after the
factor receives payment from the Company's customer or, if earlier, shortly
following the bankruptcy or insolvency of the customer or when the receivable
becomes 90 days past due. The Company may request advances against a percentage,
determined by the factor, of the qualifying accounts receivable factored at any
time before their maturity date. The factor charges a commission on the net
sales factored and interest at a negotiated rate over prime on advances.
Advances on accounts sold to the factor are payable on demand. All obligations
under the factoring agreement, which also includes a letter of credit facility,
are collateralized by the Company's inventories.
The Company also maintains a $10.0 million revolving credit facility to be used
for general working capital purposes. The credit agreement contains normal
restrictive covenants with respect to the conduct of the Company's business and
requires the maintenance of various financial levels and ratios. The revolving
credit facility expired on April 1, 1997 and was extended to June 1, 1997. The
Company is currently negotiating a new credit facility.
13
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The Company believes that available cash, cash flow from operations and
available borrowings, either through its factoring arrangement or credit
facility, will be sufficient to meet operating needs and capital expenditure
requirements, including the cost of tenant improvements and equipment for the
Company's new leased headquarters/distribution facility and the construction of
in-store shops for the foreseeable future.
Cash flows used in investing activities totaled $2.5 million for the three
months ended March 31, 1997 and were comprised of capital expenditures related
primarily to the construction of in-store shops and tenant improvements and
equipment for the Company's new leased headquarters/distribution facility in
Irvine, California. The Company expects to occupy the facility in June 1997. The
Company currently estimates that its share of the cost to construct tenant
improvements and equip such facility will be approximately $4.0 million, of
which approximately $1.5 million was spent during the three months ended March
31, 1997 and $2.1 million anticipated over the balance of 1997.
The Company is currently evaluating its management information systems as part
of the development of an information technology strategy. The likely result of
this evaluation will be a systems conversion for the Company's core business
processes. Although the ultimate cost of a systems conversion has not yet been
determined, the Company believes it will incur between $500,000 and $1.0 million
related to this project in 1997.
The Company recently consolidated and/or eliminated a number of functions as
part of a workforce reduction and has initiated other cost-cutting measures that
collectively are expected to result in annualized savings of at least $3.3
million.
As a result of softness in its men's activewear business and higher expense
levels due, in part, to non-recurring charges of $950,000, the Company reported
a net loss of approximately $498,000 for the three months ended March 31, 1997.
The Company anticipates continued softness in its men's activewear business
throughout the remainder of 1997. In Spring 1998, the Company will launch its
new Moss line of value-priced activewear. The Moss line is being developed by a
segment of the Company's design team chartered with the task of addressing the
needs of Mossimo's specialty account base and improving activewear product
offerings.
The Company believes that its greatest future growth opportunity lies within the
status sportswear section of the department store and continues to transition
its business in that direction. This transition from a predominantly
14
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activewear-based resource to a supplier of finer men's and women's sportswear
has been a complex process that is taking longer than the Company originally
anticipated. Recent softness in men's activewear sales has overshadowed the
collective growth in men's and women's sportswear, a trend that the Company
anticipates will continue in the near term. As a result, the Company currently
believes it will experience a moderate revenue decline over the balance of 1997
compared to 1996 as it works to reinvigorate men's activewear sales while
continuing to further establish itself as a finer sportswear label.
A significant component of elevating brand identity and competing for attention
on the department and specialty store floor is the Company's in-store shop
program. The Company installed 17 new shops during the quarter ended March 31,
1997. The Company's original goal for 1997 was to install a total of 125 shops,
however, given the Company's first quarter results and the outlook for the
remainder of 1997, shop installation estimates have been revised to a range of
75 to 125 shops. The actual number of installations will be dependent, to some
degree, on the Company's performance at retail over the balance of 1997.
Seasonality
- -----------
The Company's business is impacted by general seasonal trends that are
characteristic of the many companies in the apparel industry. However, due
primarily to the significant growth that the Company has experienced, past
quarterly sales and profit trends have not reflected the normal apparel industry
seasonality. For the balance of 1997 and future years, the Company expects that
its sales may reflect greater seasonal trends.
Forward Looking Information
- ---------------------------
The matters discussed herein with respect to the effects of expected capital
expenditures in connection with the Company's new headquarters and distribution
facility, management information system and in-store shop program, the ongoing
softness in its men's activewear sales, the expectation of a moderate revenue
decline over the balance of 1997, the sufficiency of the Company's current
sources of liquidity to meet operating needs and capital expenditures for the
next 12 months and the expected greater seasonal trends in the Company's sales
in future periods are forward looking statements and are subject to
uncertainties associated with such statements. Such uncertainties include
construction delays and other events that could increase the costs incurred by
the Company in connection with its new headquarters and distribution facility,
the ability of the Company's contract manufacturers to produce sufficient
quantities of products in a timely manner, changes in consumer demands and
preferences which could adversely impact the Company's sales in general and its
15
<PAGE>
in-store program in particular, and the ability of the Company to place its
products in desired sections of its department store customers. The Company's
financial results are subject to other risks and uncertainties, including
competition from other lines and uncertainties generally associated with new
product introductions, such as the new Moss line of activewear, and apparel
retailing. Such uncertainties are discussed in greater detail in the Company's
prospectus dated February 22, 1996 filed with the SEC.
New Accounting Pronouncements
- -----------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, Earnings Per Share (SFAS 128) which is
effective for financial statements issued for periods ending after December 15,
1997. SFAS No. 128 requires the disclosure of basic and diluted earnings per
share. For the three months ended March 31, 1997, the amount reported as net
loss per common and common equivalent share is not materially different than
that which would have been reported for basic and diluted earnings per share in
accordance with SFAS No. 128.
16
<PAGE>
PART II - OTHER INFORMATION
ITEM 2 - LEGAL PROCEEDINGS (See Footnote 5 to Financial Statements)
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company*
11 Computation of Net Income per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
The Registrant did not file any reports on Form 8-K
during the three months ended March 31, 1997.
*(Incorporated by reference from the Company's
Registration Statement on Form S-1, File Number
33-80597)
17
<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.
Mossimo, Inc.
May 8, 1997 /s/ Mossimo Giannulli
------------------------------
Mossimo Giannulli
Chairman of the Board,
Chief Executive Officer,
President (authorized officer)
May 8, 1997 /s/ Tony Cherbak
------------------------------
Tony Cherbak
Executive Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
18
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
- ------------------------------------------------------------------------------
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company*
11 Computation of Net Income per Share 20
27 Financial Data Schedule 21
*(Incorporated by reference from the Company's Registration Statement
on Form S-1,File Number 33-80597)
19
<PAGE>
EXHIBIT 11
MOSSIMO, INC. AND SUBSIDIARY
COMPUTATION OF NET INCOME PER SHARE
(in thousands, except per share data)
Three Months
Ended
March 31, 1997
--------------
Weighted average shares outstanding
during the period 15,000
Dilutive effect of stock options (1) -
Equivalent shares issuable for the
outstanding S distribution note (1) -
------
15,000
======
Net loss for primary loss per share ($498)
======
Net loss per share ($.03)
======
(1) No amounts have been provided as the effect would be anti-dilutive.
20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,895
<SECURITIES> 0
<RECEIVABLES> 21,045
<ALLOWANCES> 2,113
<INVENTORY> 19,113
<CURRENT-ASSETS> 45,403
<PP&E> 8,416
<DEPRECIATION> 1,422
<TOTAL-ASSETS> 53,809
<CURRENT-LIABILITIES> 11,973
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 40,618
<TOTAL-LIABILITY-AND-EQUITY> 53,809
<SALES> 24,588
<TOTAL-REVENUES> 26,053
<CGS> 16,931
<TOTAL-COSTS> 9,952
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (830)
<INCOME-TAX> (332)
<INCOME-CONTINUING> (498)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (498)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
