FORM 10 Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
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 0-20829
DIAMOND HOME SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3886872
(State or other jurisdiction of (I.R.S. Employer Identification
No.)
incorporation or organization)
222 Church Street, Woodstock, Illinois 60098
(Address of principal executive offices, including zip code)
(815) 334-1414
(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 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 ( )
The number of shares of the registrant's common stock outstanding as of April
30, 1998, the latest practicable date, was 8,507,375 shares.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1998 1997
($ in thousands, except per
share data)
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . $28,876 $30,175
Cost of sales 16,189 16,812
Gross profit . . . . . . . . . . . . . . . . . . . . 12,687 13,363
Operating expenses:
Selling, general, and administrative expense . . 12,289 13,186
Operating interest expense . . . . . . . . . . . 55 0
Amortization expense . . . . . . . . . . . . . . 160 143
Operating income . . . . . . . . . . . . . . . . . . 183 34
Interest income, net . . . . . . . . . . . . . . . . 126 220
Income before income taxes . . . . . . . . . . . . . 309 254
Income tax provision . . . . . . . . . . . . . . . . 124 99
Net income . . . . . . . . . . . . . . . . . . . . . $185 $155
Net income per share:
Basic . . . . . . . . . . . . . . . . . . . . . $.02 $.02
Diluted . . . . . . . . . . . . . . . . . . . . $.02 $.02
Weighted average number of common shares
outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . 8,507,375 9,079,675
Diluted . . . . . . . . . . . . . . . . . . . . 8,507,375 9,192,000
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, 1998 December 31, 1997
(Unaudited)
(In thousands)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . $7,480 $9,966
Accounts receivable . . . . . . . . . . . . . . . . 7,554 6,630
Refundable income 746 986
taxes...................................
Prepaids and other current assets . . . . . . . . 2,293 1,959
Total current assets . . . . . . . . . . . . . . . . 19,411 20,413
Finance company accounts receivable, net . . . . . . 9,694 8,758
Net property and equipment . . . . . . . . . . . . . 5,808 5,546
Intangible assets, net . . . . . . . . . . . . . . . 16,363 16,514
Deferred income taxes . . . . . . . . . . . . . . . . 1,893 1,892
Other . . . . . . . . . . . . . . . . . . . . . . . . 4,479 3,466
Total assets . . . . . . . . . . . . . . . . . . . . $57,648 $56,589
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities
Due to bank . . . . . . . . . . . . . . . . . . . . $3,300 $2,050
Accounts payable and accrued liabilities . . . . . 9,617 10,070
Due to stockholders . . . . . . . . . . . . . . . . 554 554
Total current liabilities . . . . . . . . . . . . . . 13,471 12,674
Long-term liabilities:
Warranty and retention . . . . . . . . . . . . . . 9,355 9,161
Due to stockholders . . . . . . . . . . . . . . . . 399 544
Total long-term liabilities . . . . . . . . . . . . . 9,754 9,705
Common stockholders' equity . . . . . . . . . . . . . 34,423 34,210
Total liabilities and common stockholders'
equity . . . . . . . . . . . . . . . . . . . . . . $57,648 $56,589
See accompanying notes.
</TABLE>
<TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31
(In thousands)
1998 1997
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $185 $155
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 263 224
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (467) 64
Changes in operating assets and liabilities:
Accounts receivable and other assets . . . . . . . . . . . . . . . . . . . (1,752) 1,436
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . (453) (5,366)
Warranty and retention . . . . . . . . . . . . . . . . . . . . . . . . . . 194 340
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . (2,030) (3,147)
Investing activities:
Consumer finance loans originated, net of collections . . . . . . . . . . . (936) (1,529)
Advances to "captive" insurance company and other . . . . . . . . . . . . . . . (288) (542)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (365) (341)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . (1,589) (2,412)
Financing activities:
Borrowings on bank line of credit, net . . . . . . . . . . . . . . . . . . . . . 1,250 --
Payments on notes receivable from officers for treasury stock and other . . . . 28 212
Payments due to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . (145) (84)
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . 1,133 128
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . (2,486) (5,431)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 9,966 18,982
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . .
$7,480 $13,551
Supplemental cash flow disclosure:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55 $--
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $-- $52
See accompanying notes.
</TABLE>
DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(TABULAR AMOUNTS ARE IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the consolidated financial
statements included in the Company's 1997 Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. CONSUMER FINANCING
The following summarized condensed financial information for Marquise
Financial, the Company's finance subsidiary, is before elimination of inter-
company transactions in consolidation:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
(Unaudited)
<S> <C> <C>
ASSETS:
Cash $309 $23
Financing receivables, net 9,694 8,758
Other assets 1,007 1,046
Total assets $11,010 $9,827
LIABILITIES AND STOCKHOLDER'S EQUITY:
Due to Bank $3,300 $2,050
Due to Diamond Exteriors, Inc. 7,321 7,388
Other 129 147
Total liabilities 10,750 9,585
Total stockholder's equity 260 242
Total liabilities and stockholder's equity $11,010 $9,827
</TABLE>
Results of operations for the three months ended March 31, 1998 and 1997,
respectively:
<TABLE>
<CAPTION>
Three Months Ended
March 31
1998 1997
(Unaudited)
<S> <C> <C>
Financing income $375 $239
General and administrative expenses (1) 457 349
Loss before tax benefit 82 110
Income tax benefit 33 43
Net loss $49 $67
(1) Includes interest expense paid to Diamond and provision for credit losses.
</TABLE>
Cash flow for the three months ended March 31, 1998 and 1997, respectively:
<TABLE>
<CAPTION>
Three Months Ended March 31
1998 1997
(Unaudited)
<S> <C> <C>
Cash at beginning of period $23 $50
Net cash used in operating activities (82) (67)
Net cash used in investing activities (815) (1,700)
Net cash provided by financing activities 1,183 1,999
Cash at end of period $309 $282
</TABLE>
At March 31, 1998, Marquise Financial had approximately $2.0 million in
approved but not funded loan commitments.
3. SUBSEQUENT EVENT
On April 20, 1998, the Company acquired all of the issued and outstanding
capital stock of Reeves Southeastern Corporation for approximately $42 million
in cash and notes. In connection with the acquisition, the Company replaced its
$15 million unsecured bank line of credit with a $45 million secured bank line
of credit.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997
Net Sales
Net sales decreased $1.3 million, or 4.3%, from $30.2 million for the
first quarter 1997 to $28.9 million for the first quarter 1998. Net sales
attributable to roofing and gutter products and services decreased $1.6 million,
or 7.9%, to $18.6 million in the first quarter 1998. Net sales attributable to
fencing products and services increased $321 thousand, or 9.1%, to $3.8 million
in the first quarter of 1998. Net sales attributable to garage doors, entry
doors, and other products and services decreased $170 thousand, or 2.9%, to $5.7
million in the first quarter 1998. Net sales attributable to credit
participation fee income increased $6 thousand to $356 thousand in the first
quarter 1998. Net sales attributable to finance interest income increased $136
thousand to $375 thousand on receivables financed by the Company's finance
subsidiary, Marquise Financial. Backlog, defined as jobs sold but not
installed, increased $1.2 million from $10.9 million at the end of December 1997
to $12.1 million at the end of the first quarter 1998. Backlog decreased $1.9
million from $14.8 million at the end of December 1996 to $12.9 million at the
end of the first quarter 1997.
Gross Profit
Gross profit decreased $676 thousand, or 5.1%, from $13.4 million, or
44.3% of net sales, for the first quarter 1997 to $12.7 million, or 43.9% of net
sales, for the first quarter 1998. The decrease in gross profit, expressed as a
percentage of net sales, resulted from a decrease in proprietary product
offerings and an increase in the balance of sales to lower margin products and
services, partially offset by a $142 thousand increase in credit participation
fee income and in finance interest income. The license fee incurred to Sears
decreased $288 thousand, or 8.9%, from $3.2 million, or 10.9% of net installed
sales, for the first quarter 1997 to $2.9 million, or 10.4% of net installed
sales, for the first quarter 1998. The decrease in the license fee incurred to
Sears for the first quarter 1998 was due to an overall decrease in sales and to
a shift in the balance of sales, primarily roofing repairs, to lower license fee
products and services. Sears and the Company entered into a three-year license
agreement effective January 1, 1996. Among other things, the license agreement
provides for a fixed license fee, at the March 1995 license fee rate, to be
charged during the term of the license agreement. Gross profit before the Sears
license fee, credit participation fee and finance interest income decreased $1.1
million, or 6.9%, from $16.0 million, or 54.0% of net installed sales, for the
first quarter 1997 to $14.9 million, or 52.9% of net installed sales, for the
first quarter 1998. The unit costs of materials, installation labor and
warranty expense remained relatively constant during the quarterly period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $897 thousand, or
6.8%, from $13.2 million in the first quarter 1997 to $12.3 million in the first
quarter 1998 and, as a percentage of net sales, decreased from 43.7% to 42.6%.
The reduction in selling, general and administrative expenses resulted primarily
from decreased expenses associated with lower net sales, and reduction of the
number of and the cost of recruiting and training new sales associates,
partially offset by expenses related to the hiring of additional personnel to
support the expansion of the infrastructure of the Company's core sales and
installation business including the expansion of Marquise Financial. Direct
advertising expense decreased $511 thousand, or 28.6%, from $1.8 million for the
first quarter 1997 to $1.3 million for the first quarter 1998; as a percentage
of net sales, direct advertising expense decreased from 5.9% for the first
quarter 1997 to 4.4% for the first quarter 1998, reflecting decreased direct
advertising placements and below plan lead generating effectiveness of ad
placements during the quarter. Selling commission expense, including attendant
payroll-related benefits, decreased $212 thousand, or 7.0%, from $3.0 million in
the first quarter 1997 to $2.8 million in the first quarter 1998; as a
percentage of net installed sales, selling commission expense decreased from
10.2% to 9.9% in the first quarter 1998. Sales representatives are compensated
on a variable commission basis depending upon the type and gross profit of
product sold. Performance-based compensation paid to officers and field, sales
and production managers remained relatively constant at $100 thousand,
commensurate with the change in pretax income. The balance of selling, general
and administrative expenses, primarily sales lead-generation activities,
administrative, field operations and Marquise Financial payrolls and related
costs and general expenses, decreased $175 thousand, or 2.1%, from $8.3 million,
or 27.5% of net sales, in the first quarter 1997 to $8.1 million, or 28.1% of
net sales, in the first quarter 1998. The decrease was primarily due to
decreased expenses related to recruiting and training new sales associates,
partially offset by support personnel and services required to manage the
Company's anticipated sales volume increases, expanding infrastructure and
finance subsidiary, Marquise Financial.
Operating Interest Expense
Operating interest expense increased from $0 in the first quarter 1997 to
$55 thousand in the first quarter 1998. The increase in operating interest
expense resulted from the Company's finance subsidiary's borrowings during the
quarter.
Amortization of Intangibles
Amortization of intangibles increased from $143 thousand in the first
quarter 1997 to $160 thousand in the first quarter 1998. The amortization
expense relates primarily to goodwill incurred in connection with the September
1994 stock repurchase from management.
Interest Income, Net
Net interest income decreased $94 thousand from $220 thousand in the
first quarter 1997 to $126 thousand in the first quarter 1998, primarily due to
decreased interest income from lower invested cash balances.
Income Tax Provision
The Company's income tax provision increased from $99 thousand, or an
effective rate of 39.0%, for the first quarter 1997 to $124 thousand, or an
effective rate of 40.1%, for the first quarter 1998. The difference in the
effective income tax rate and the federal statutory rate (34%) is due primarily
to amortization of intangibles which are not deductible for income tax purposes
and the effect of state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs have been to fund the growth of the
Company, to fund the September 1994 stock repurchase from management, and, more
recently, to fund the operations of the Company's finance subsidiary, Marquise
Financial. The Company's primary sources of liquidity have been cash flow from
operations, borrowings under its bank credit facility, and, in June 1996, the
net proceeds of its initial public offering. The Company's core sales and
installation business is not capital intensive. Capital expenditures for first
quarter 1998 and years 1997 and 1996 were approximately $365 thousand, $4.3
million, and $461 thousand, respectively. Capital expenditures for 1998 are
expected to approximate $3.0 million, primarily related to ongoing new equipment
purchases and software development for the Company's information technology
systems. Future requirements for new information technology and other capital
expenditures are expected to be funded by cash flow from operations and
operating leases. On April 30, 1997, the Company announced a stock repurchase
program to repurchase up to 500,000 shares of its common stock and on August 12,
1997, the Company increased the number of shares it is authorized to repurchase
by 500,000 to 1,000,000 shares. During the second and third quarters 1997 the
Company purchased 572,300 shares of its common stock for $4.7 million.
On April 20, 1998, the Company acquired all of the issued and outstanding
stock of Reeves Southeastern Corp. for approximately $42 million. In connection
with the Reeves acquisition, in April 1998, the Company replaced its $15,000,000
unsecured bank line of credit with a $45,000,000 secured syndicated bank credit
facility. The credit facility is for a term of five years expiring April 2002.
The credit facility provides, among other things: 1) $30,000,000 in term notes
(to be used solely for the Reeves acquisition) with quarterly principal payments
of $1,047,000 commencing in December 1998; and 2) a $15,000,000 revolving line
of credit (to be used for Reeves' working capital requirements and general
corporate purposes). The term notes and revolving line of credit provide for
monthly interest payments at varying premiums over LIBOR or bank prime rates, at
borrower's option, based on EBITDA coverage ratios. Through the first quarter
1999, the interest rates are fixed as follows: 1) Term Notes: LIBOR plus
2.50% or prime plus .50%; and 2) Revolving line of credit: LIBOR plus 2.00% or
prime plus .50%. The terms of the credit facility contain, among other
provisions, restrictive requirements for maintaining cash flow and debt coverage
ratios, minimum net worth, restrictions on incurring additional debt, dividends
and stock repurchases. Deferred loan fees and costs are amortized over the term
of the credit facility (5 years) on a straight-line basis.
The Company believes that it has sufficient operating cash flow, working
capital base, and available bank lines of credit to meet all of its obligations
for the foreseeable future, including ongoing funding for Marquise Financial,
for the stock repurchase program announced in 1997, for investments in
information technology, and for the acquisition, development, and expansion of
complementary new products and services and markets.
In November 1995, the Company commenced the operations of Marquise
Financial. Marquise's primary objective is to support, along with other
designated third-party finance companies, the Company's requirement for
providing financing to its core installation business customers. In the fourth
quarter 1996, as a follow-on objective to expanding Marquise Financial's
consumer financing markets and products, Marquise introduced a new finance
product -- fixed rate loans secured by developed residential real estate -- to a
segment of its creditworthy customers that cannot obtain unsecured consumer
loans. During the second quarter 1997, Marquise Financial expanded its scope of
operations, in part to leverage its consumer finance infrastructure to i)
purchase from third parties portfolios of secured receivables, and ii) originate
secured receivables from customers of, and/or purchase individual secured
receivables originated by, entities other than the Company and its affiliates.
These entities do not necessarily engage in business in any of the Company's
product lines. As a general proposition, these entities are all expected to
operate businesses related to installed home improvement products and services,
although from time to time Marquise Financial may also originate or purchase
receivables secured by commercial real estate or otherwise acquire or originate
loans that do not constitute obligations arising from installed home
improvements. The outstanding principal amount of individual receivables
purchased by Marquise Financial from entities other than the Company may
significantly exceed the average amount of all receivables owned by Marquise
Financial. The Company is continually mindful of the risks associated with
consumer financing and plans to increase its consumer finance receivable
portfolio at a measured pace commensurate with its available resources and
acceptable levels for losses on finance receivables. Marquise Financial has
been capitalized and funded with the Company's excess operating cash flow and
borrowings under the Company's former $15 million bank line of credit, which
were subsequently paid down with a portion of the proceeds from the Company's
June 1996 initial public offering. In December 1997, Marquise Financial
obtained a $10 million secured line of credit and, at March 31, 1998, had
borrowed $3.3 million. At March 31, 1998, Marquise Financial has approximately
$9.7 million in net finance receivables. During 1997, Marquise Financial
originated or purchased approximately $5.5 million of fixed rate, secured loans.
At March 31, 1998, Marquise had approximately $2.0 million in outstanding
commitments of the fixed rate, secured loans. The Company anticipates that its
existing cash balances, the bank lines of credit, the sale of Marquise
Financial's consumer loan finance receivables as market conditions may warrant
from time to time and excess cash flow from its core installation operations
will be sufficient to satisfy the Company's financing cash requirements in the
foreseeable future.
In December 1996, with an initial investment of approximately $450
thousand, the Company completed agreements with insurance companies with the
effect of establishing a captive insurance company. At March 31, 1998, the
investment in the captive insurance company approximated $1.0 million. The
primary objective of this captive insurance business is to provide the means for
offering workers' compensation and general liability insurance coverage,
primarily for Company installations, to qualified installers as the Company
seeks to maintain and expand its core complement of independent installers.
Premiums are immediately collected through deductions from payments to
installers; and the excess cash balances, after administrative expenses, are
invested, pursuant to agreement, with the insurance companies. Losses are
comprised of actual claims paid, reserves for open claims and allowances for
incurred but not reported claims. The Company maintains individual and
aggregate stop-loss reinsurance coverage at levels deemed to be adequate by
management of the Company. Premiums collected in the first quarter 1998 and
year 1997 were approximately $80 thousand and $571 thousand, respectively.
From its inception in June 1993, the Company has generated cash flow from
operations of approximately $21.3 million. The Company used $12.5 million of
cash in connection with the repurchase of 40.2% of its Common Stock in September
1994, $6.9 million for capital expenditures and $5.0 million for the initial
funding of Marquise's financing activities and start-up operations. At March
31, 1998, the Company had approximately $15.0 million in cash and cash
equivalents and trade receivables and net working capital of $5.9 million. At
March 31, 1998, the Company had $25 million in bank lines of credit (increased
to $55 million in April, 1998) and $4.3 million total debt including $3.3
million under its bank line of credit.
The Company has not completed its assessment of compliance issues for the
Year 2000 date change. The Company has also not determined the cost of these
compliance issues or the time it will take to complete compliance. As a
preliminary assessment, the Company believes its new investments in information
technology systems, including software, are Year 2000 compliant and as a such
should not pose significant operational problems for its computer systems. The
Company expects to complete its full assessment of the Year 2000 issue not later
than December 31, 1998, which is prior to any anticipated impact on its
operating systems. As part of the Year 2000 assessment, the Company has
initiated formal communications with all of its significant suppliers, third-
party finance sources, and Sears to determine the extent to which the Company's
interface systems are vulnerable to those parties' failure to remedy their Year
2000 issues. There is no guarantee that the systems of other companies on which
the Company relies will corrected in a timely manner or that the failure to
correct will not have a material adverse effect on the Company's systems. Year
2000 modifications and assessments are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
availability of certain resources and other factors. However, there can be no
guarantee the estimates and assessments will be achieved or come to pass, and
actual results could differ materially from those anticipated.
Certain statements contained herein, including without limitation, statements
addressing the beliefs, plans, objectives estimates or expectations of the
Company or future results or events constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known or unknown risks, including, but
not limited to, general economic and business conditions, matters related to the
licensing agreements between Sears Roebuck and Co. and Diamond Exteriors, Inc.,
warranty exposure, the Company's reliance on sales associates and on the
availability of qualified independent installers, and conditions in the
installed home improvement industry including without limitation the fencing and
perimeter security products business. There can be no assurance that the actual
future results, performance, or achievements expressed or implied by such
forward-looking statements will occur. Users of forward-looking statements are
encouraged to review Item 7 of the Company's 1997 annual report on Form 10-K,
its filings on Form 10-Q, management's discussion and analysis in the Company's
1997 annual report to stockholders, the Company's filings on Form 8-Ks, and
other federal securities law filings for a description of other important
factors that may effect the Company's business, results of operations and
financial condition.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule.
(b) A report on Form 8-K was filed on March 6, 1998 announcing the
Company's agreement to acquire Reeves Southeastern Corporation.
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.
DIAMOND HOME SERVICES, INC.
/S/ Richard G. Reece
Date: May 13, 1998
By:_________________________
Richard G. Reece
Vice President and
Chief Financial Officer
(For the Registrant and as
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997<F1>
<CASH> 7,480,000 13,551,000
<SECURITIES> 0 0
<RECEIVABLES> 7,554,000 13,614,000
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 19,411,000 30,995,000
<PP&E> 6,833,000 2,534,000
<DEPRECIATION> 1,025,000 667,000
<TOTAL-ASSETS> 57,648,000 54,050,000
<CURRENT-LIABILITIES> 13,471,000 8,991,000
<BONDS> 0 0
0 0
0 0
<COMMON> 10,000 10,000
<OTHER-SE> 34,413,000 36,593,000
<TOTAL-LIABILITY-AND-EQUITY> 57,648,000 54,050,000
<SALES> 28,876,000 30,175,000
<TOTAL-REVENUES> 28,876,000 30,175,000
<CGS> 16,189,000 16,812,000
<TOTAL-COSTS> 28,693,000 30,141,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (126,000) (220,000)
<INCOME-PRETAX> 309,000 254,000
<INCOME-TAX> 124,000 99,000
<INCOME-CONTINUING> 185,000 155,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 185,000 155,000
<EPS-PRIMARY> .02 0.02
<EPS-DILUTED> .02 0.02
<FN>
<F1>Restated
</FN>
</TABLE>
