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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NO. 1-12641
RDO EQUIPMENT CO.
(Exact name of registrant as specified in its charter)
DELAWARE 45-0306084
(State of incorporation) (I.R.S. Employer Identification No.)
2829 SOUTH UNIVERSITY DRIVE
FARGO, NORTH DAKOTA 58103
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (701) 297-4288
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 outstanding of the registrant as of November 30,
1999:
Class A Common Stock 5,731,008
Class B Common Stock 7,450,492
----------
Total 13,181,500
==========
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<PAGE>
CAUTIONARY STATEMENT REGARDING
FUTURE RESULTS AND FORWARD-LOOKING STATEMENTS
The future results of RDO Equipment Co. (the "Company"), including
results reflected in any forward-looking statement made by or on behalf of the
Company, will be impacted by a number of important factors. The factors
identified below in Item 2 under the subsection entitled "Safe Harbor Statement"
are important factors (but not necessarily all important factors) that could
cause the Company's actual future results to differ materially from those
expressed in any forward-looking statement made by or on behalf of the Company.
Words such as "may," "will," "expect," "believe," "anticipate," "estimate," or
"continue" or comparable terminology are intended to identify forward-looking
statements. Forward-looking statements, by their nature, involve substantial
risks and uncertainties.
PART I - FINANCIAL INFORMATON
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
RDO EQUIPMENT CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
October 31, October 31,
--------------------------- ---------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Equipment & truck sales $ 108,644 $ 99,822 $ 361,154 $ 298,632
Parts and service 46,393 40,370 131,646 108,529
Rental 8,817 9,028 24,990 18,176
Financial services 1,668 1,544 5,485 3,709
----------- ----------- ----------- -----------
Total revenues 165,522 150,764 523,275 429,046
Cost of revenues (Note 5) 133,318 134,900 427,145 358,655
----------- ----------- ----------- -----------
Gross profit 32,204 15,864 96,130 70,391
Selling, general and
administrative expenses 24,762 22,128 71,963 59,422
Restructuring charges (Note 5) -- 2,200 -- 2,200
----------- ----------- ----------- -----------
24,762 24,328 71,963 61,622
Operating income (loss) 7,442 (8,464) 24,167 8,769
Interest expense (3,606) (3,824) (10,724) (9,384)
Interest income 175 275 573 408
----------- ----------- ----------- -----------
Income (loss) before income taxes
and minority interest 4,011 (12,013) 14,016 (207)
Income tax benefit (provision) (1,633) 4,889 (5,705) 84
----------- ----------- ----------- -----------
Income (loss) before minority interest 2,378 (7,124) 8,311 (123)
Minority interest (65) (140) (26) (166)
----------- ----------- ----------- -----------
Net income (loss) $ 2,313 $ (7,264) $ 8,285 $ (289)
=========== =========== =========== ===========
Net income (loss) per share -
basic and diluted $ 0.18 $ (0.55) $ 0.63 $ (0.02)
=========== =========== =========== ===========
Weighted average shares outstanding-basic 13,182 13,182 13,182 13,182
=========== =========== =========== ===========
Weighted average shares outstanding-diluted 13,182 13,182 13,184 13,182
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
RDO EQUIPMENT CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, January 31,
(IN THOUSANDS)(UNAUDITED) 1999 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,708 $ 51
Accounts receivable (less allowance for doubtful accounts) 67,152 59,233
Receivables from affiliates 479 3,197
Inventories (Note 3, 5) 232,465 208,368
Prepaid expenses 1,201 1,588
Deferred income tax benefit 4,240 5,680
---------- ----------
Total current assets 309,245 278,117
Property and equipment, net 54,923 63,702
Other assets:
Goodwill and other, net of accumulated amortization 46,076 36,326
Deposits 993 1,075
---------- ----------
Total assets $ 411,237 $ 379,220
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
RDO EQUIPMENT CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, January 31,
(IN THOUSANDS)(UNAUDITED) 1999 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floor plan payables (Note 4) $ 203,303 $ 191,030
Notes payable and current maturities of long-term debt:
Banks and others 15,014 13,942
Affiliates 19,533 13,536
Accounts payable 9,354 8,373
Accrued liabilities 10,770 11,649
Customer advance deposits 1,045 2,114
Dividends payable 742 734
---------- ----------
Total current liabilities 259,761 241,378
Long-term debt, net of current maturities:
Banks and others 24,075 24,565
Affiliates 6,273 3,490
Deferred income taxes 8,240 5,210
---------- ----------
Total liabilities 298,349 274,643
Minority interest 1,865 1,839
Stockholders' equity:
Preferred stock -- --
Common stocks-
Class A 57 57
Class B 75 75
Additional paid-in-capital 84,471 84,471
Retained earnings 26,420 18,135
---------- ----------
Total stockholders' equity 111,023 102,738
---------- ----------
Total liabilities and stockholders' equity $ 411,237 $ 379,220
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
RDO EQUIPMENT CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended October 31,
(IN THOUSANDS) (UNAUDITED) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 8,285 $ (289)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 9,960 6,845
Deferred taxes 4,470 (3,730)
Minority interest 26 166
Change in operating assets and liabilities:
Accounts receivable (5,876) (14,056)
Inventories (5,891) (4,424)
Prepaid expenses 396 (647)
Deposits 99 615
Floor plan payables 1,074 46,559
Accounts payable and accrued liabilities 553 1,319
Customer advance deposits (1,077) (1,652)
---------- ----------
Net cash provided by operating activities 12,019 30,706
Investing activities:
Net purchases of rental equipment 347 (15,483)
Net purchase of property and equipment (2,241) (4,349)
Net assets of acquisitions (4,404) (24,697)
Retained investment and service fee on securitized receivables (1,028) (2,743)
Other, net (3,524) (1,579)
---------- ----------
Net cash used for investing activities (10,850) (48,851)
Financing activities:
Proceeds from issuance of long-term debt 6,419 13,920
Payments on long-term debt (11,271) (6,254)
Net proceeds of operating lines and short-term notes payable 7,340 11,226
---------- ----------
Net cash provided by financing activities 2,488 18,892
---------- ----------
Increase in cash 3,657 747
Cash and cash equivalents, beginning of period 51 37
---------- ----------
Cash and cash equivalents, end of period $ 3,708 $ 784
========== ==========
Supplemental disclosures:
Cash payments for interest $ 11,342 $ 9,666
========== ==========
Cash payments for income taxes $ 2,444 $ 6,715
========== ==========
Noncash investing and financing activities:
Increase in assets related to acquisitions of dealerships through
issuance and assumption of debt $ 20,843 $ 25,522
========== ==========
Increase in long-term debt related to refinancing of short-term debt $ 5,000 --
========== ==========
Sale of rental assets for purchaser's assumption of debt $ 2,526 --
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
RDO EQUIPMENT CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PREPARATION:
The condensed consolidated financial statements for the three and nine
months ended October 31, 1999 and 1998 are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto, contained in the Company's Annual Report to
Stockholders incorporated by reference in the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1999. The results of operations for
the three and nine months ended October 31, 1999 are not necessarily indicative
of the results to be expected for the full year.
2. BUSINESS COMBINATIONS:
During the first three quarters of fiscal 2000 and 1999, the Company
made several acquisitions. These acquisitions have been accounted for using the
purchase method of accounting and, accordingly, the assets acquired and
liabilities assumed have been recorded at their estimated fair values as of the
dates of acquisition. The excess purchase price over the fair value of the
assets acquired and liabilities assumed has been recorded as goodwill which is
amortized over 30 years.
The following summarizes the net assets acquired, liabilities assumed
and cash purchase price of the acquisitions made during the periods indicated
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Assets acquired $ 11,602 $ 24,617 $ 25,247 $ 50,219
Less: liabilities assumed 8,963 11,721 20,843 25,522
--------- --------- --------- ---------
Cash purchase price $ 2,639 $ 12,896 $ 4,404 $ 24,697
========= ========= ========= =========
Number of acquisitions 1 2 2 5
========= ========= ========= =========
</TABLE>
Results of operations for the acquisitions have been included in the
accompanying condensed consolidated financial statements since their respective
acquisition dates. The following unaudited consolidated pro forma results of
operations give effect to these acquisitions as if they were completed at the
beginning of fiscal 1999. The unaudited pro forma financial information does not
purport to represent what the Company's results of operations would actually
have been if such transactions in fact had occurred at such a date or to project
the Company's results of future operations (in thousands, except for per share
data):
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 168,608 $ 173,924 $ 551,488 $ 532,296
========== ========== ========== ==========
Net income $ 2,159 $ (7,267) $ 8,060 $ 61
========== ========== ========== ==========
Weighted average shares
outstanding-basic 13,182 13,182 13,182 13,182
========== ========== ========== ==========
Weighted average shares
outstanding-diluted 13,182 13,182 13,184 13,209
========== ========== ========== ==========
Net income per share -
basic and diluted $ 0.16 $ (0.55) $ 0.61 $ 0.00
========== ========== ========== ==========
</TABLE>
6
<PAGE>
3. INVENTORIES:
All inventories are valued at the lower of cost or market. Cost is
determined using the first-in, first-out method for new equipment, trucks and
parts inventory. The specific identification method is used to determine cost
for used equipment and trucks.
Inventories consisted of the following at (in thousands):
October 31, January 31,
1999 1999
---- ----
New equipment & trucks $164,410 $152,707
Used equipment & trucks 36,734 28,865
Parts and other 31,321 26,796
-------- --------
$232,465 $208,368
======== ========
4. FLOOR PLAN PAYABLES:
Floor plan payables include both interest and noninterest-bearing
financing arrangements for inventory. The terms of certain arrangements may
include an interest-free term followed by a term during which interest is
charged. Floor plan payables consisted of the following at (in thousands):
October 31, January 31,
1999 1999
---- ----
Interest-bearing $168,357 $146,127
Noninterest-bearing 34,946 44,903
-------- --------
$203,303 $191,030
======== ========
5. INVENTORY AND RESTRUCTURING CHARGES:
During the third quarter of fiscal year 1999, the Company initiated
corporate actions designed to generate cash, to fund future growth
opportunities, to discontinue non-strategic operations and to achieve more cost
efficient operations. These initiatives included charges relating to inventory
and asset write-downs, reserves and severance costs. The Company took a $15.0
million inventory charge which is included in cost of revenues and a $2.2
million restructuring charge in connection with asset write-downs and severance
costs, which included exiting the agricultural irrigation equipment business.
7
<PAGE>
6. EARNINGS PER SHARE:
The following summarizes the computation of weighted average shares
outstanding and net income per share for the periods indicated (in thousands,
except per share data):
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income available to
common shareholders $ 2,313 $ (7,264) $ 8,285 $ (289)
========= ========= ========= =========
Weighted average number
of shares outstanding - basic 13,182 13,182 13,182 13,182
Dilutive effect of stock
options outstanding -- -- 2 --
--------- --------- --------- ---------
Common and potential common
shares outstanding - diluted 13,182 13,182 13,184 13,182
========= ========= ========= =========
Basic and dilutive net income per share $ 0.18 $ (0.55) $ 0.63 $ (0.02)
========= ========= ========= =========
</TABLE>
Net income and net income per share before the inventory and restructuring
charges for the three and nine months ended October 31, 1998 were $2.9 million
or $0.22 per basic and diluted share and $9.9 million or $0.75 per basic and
diluted share, respectively.
7. SEGMENT INFORMATION:
The Company's operations are classified into five business segments:
construction, agricultural, truck, rental and financial services and corporate.
Construction operations include the sale, service and rental of construction and
material handling equipment to customers primarily in the construction,
manufacturing, warehousing and utility industries and to units of government.
Agricultural operations include the sale, service and rental of agricultural
equipment primarily to customers in the agricultural industry. Truck operations
include the sale and service of heavy-duty and medium-duty trucks to customers
primarily in the transportation and construction industries and to units of
government. The rental operations provide rental of construction and
agricultural equipment to customers primarily in construction and agricultural
industries and units of government. The financial services operations primarily
provide financing arrangements to customers of the Company's other business
segments, and these operations are therefore combined with corporate activities.
Identifiable assets are those used exclusively in the operations of
each business segment or which are allocated when used jointly. Corporate assets
are principally comprised of cash, certain property and equipment, and deferred
income taxes. Interest income and interest expense are included in revenues and
cost of revenues, respectively, for the financial services segment.
8
<PAGE>
The following tables show the Company's business segments and related
financial information for the three and nine months ended October 31, 1999 and
1998 (in thousands):
<TABLE>
<CAPTION>
Financial
Services and
Three Months Ended Oct. 31, Construction Agricultural Truck Rental Corporate Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999:
Revenues from
external customers $ 83,134 $ 27,757 $ 42,373 $ 10,590 $ 1,668 $ 165,522
Interest income (20) 96 55 44 -- 175
Interest expense 1,625 768 732 481 -- 3,606
Depreciation and
amortization 537 228 262 1,924 254 3,205
Income (loss) before income
taxes and minority interest 3,014 725 (456) 277 451 4,011
Capital expenditures, net (2,828) 109 350 (6) 390 (1,985)
1998:
Revenues from
external customers $ 75,944 $ 37,773 $ 26,042 $ 9,461 $ 1,544 $ 150,764
Interest income (34) 228 31 50 -- 275
Interest expense 1,781 960 256 827 -- 3,824
Depreciation and
amortization 426 257 157 1,874 594 3,308
Income (loss) before income
taxes and minority interest (2,445) (11,710) 453 976 713 (12,013)
Capital expenditures, net 980 107 316 4,816 387 6,606
<CAPTION>
Financial
Services and
Nine Months Ended Oct. 31, Construction Agricultural Truck Rental Corporate Total
- -------------------------------------------------------------------------------------------------------------------------
1999:
Revenues from
external customers $ 259,579 $ 100,002 $ 127,862 $ 30,347 $ 5,485 $ 523,275
Interest income 22 263 162 126 -- 573
Interest expense 5,094 1,959 1,581 2,090 -- 10,724
Depreciation and
amortization 1,926 678 644 5,794 918 9,960
Income (loss) before income
taxes and minority interest 10,401 1,849 467 (526) 1,825 14,016
Identifiable assets 168,910 73,885 81,716 51,623 35,103 411,237
Capital expenditures, net (1,208) (61) 805 1,579 779 1,894
1998:
Revenues from
external customers $ 229,608 $ 123,186 $ 52,959 $ 19,584 $ 3,709 $ 429,046
Interest income (4) 300 36 76 -- 408
Interest expense 4,506 2,395 486 1,997 -- 9,384
Depreciation and
amortization 1,400 731 278 3,647 789 6,845
Income (loss) before income
taxes and minority interest 5,648 (9,383) 983 1,049 1,496 (207)
Identifiable assets 189,845 107,878 33,622 55,162 26,952 413,459
Capital expenditures, net 3,068 407 453 14,273 1,631 19,832
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's strategic plan of internal growth along with growth
through acquisitions resulted in the Company completing two acquisitions during
the first three quarters of fiscal 2000. During the first quarter of fiscal
2000, the Company completed the acquisition of a heavy and medium-duty truck
dealership, primarily supplied by Volvo and GMC, with locations in Dallas and
Ft. Worth, Texas. Total assets acquired relating to the acquisition were
approximately $13.6 million with unaudited annual revenues of approximately
$33.0 million. During the third quarter of fiscal 2000, the Company completed
the acquisition of two full-service truck centers located in Long Beach and
Riverside, California and a used truck outlet in Fontana, California. The
acquired business operations include the sales and service of trucks and related
parts and equipment primarily supplied by Volvo, GMC, Isuzu and Hino. Total
assets acquired relating to the acquisition were approximately $11.6 million
with unaudited annual revenues of approximately $40.0 million.
During the third quarter of fiscal 1999, the Company initiated a number
of corporate actions designed to generate cash, to fund growth opportunities, to
discontinue non-strategic operations and to achieve more cost efficient
operations. These initiatives included charges related to inventory and asset
write-downs, reserves and severance costs. The Company took a $15.0 million
inventory charge that enabled the Company to initiate a new and more aggressive
pricing strategy with respect to equipment sales in the agricultural business
line. This charge is included in cost of revenues. In addition, the Company
recorded a restructuring charge of $2.2 million in connection with asset
write-downs and severance costs, which included exiting the agricultural
irrigation equipment business.
10
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
financial data:
<TABLE>
<CAPTION>
Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE DATA (IN MILLIONS):
Total revenues $ 165.5 $ 150.8 $ 523.3 $ 429.0
Construction 50.2% 50.4% 49.6% 53.5%
Agricultural 16.8% 25.0% 19.1% 28.7%
Truck 25.6% 17.3% 24.5% 12.3%
Rental 6.4% 6.3% 5.8% 4.6%
Financial 1.0% 1.0% 1.0% 0.9%
Construction revenues $ 83.1 $ 75.9 $ 259.6 $ 229.6
Equipment sales 69.2% 70.7% 71.0% 74.2%
Parts and service 29.5% 27.9% 27.9% 25.3%
Rental 1.3% 1.4% 1.1% 0.5%
Agricultural revenues $ 27.8 $ 37.8 $ 100.0 $ 123.2
Equipment sales 58.3% 65.6% 67.5% 69.3%
Parts and service 41.7% 34.2% 32.5% 30.5%
Rental --% 0.2% --% 0.2%
Truck revenues $ 42.4 $ 26.1 $ 127.9 $ 53.0
Truck sales 76.6% 76.7% 79.9% 76.5%
Parts and service 23.4% 23.3% 20.1% 23.5%
Rental revenues $ 10.6 $ 9.5 $ 30.3 $ 19.6
Equipment sales 23.3% 14.2% 23.5% 12.2%
Parts and service 3.8% 1.9% 3.7% 2.0%
Rental 72.9% 83.9% 72.8% 85.8%
STATEMENT OF OPERATIONS (AS A PERCENTAGE OF TOTAL REVENUES):
Revenues
Equipment and truck sales 65.7% 66.2% 69.0% 69.6%
Parts and service 28.0 26.8 25.2 25.3
Rental 5.3 6.0 4.8 4.2
Financial services 1.0 1.0 1.0 0.9
------- ------- ------- -------
Total revenues 100.0 100.0 100.0 100.0
Gross profit 19.5% 10.5%(1) 18.4% 16.4%(1)
Selling, general and
administrative expenses 15.0 14.7 13.8 13.9
Restructuring charge -- 1.4 -- 0.5
------- ------- ------- -------
15.0 16.1 13.8 14.4
Operating income (loss) 4.5 (5.6) 4.6 2.0
Interest expense, net 2.1 2.4 1.9 2.1
Provision for (benefit from) taxes 1.0 (3.2) 1.1 0.0
------- ------- ------- -------
Net income (loss) 1.4% (4.8)% 1.6% (0.1)%
======= ======= ======= =======
</TABLE>
(1) For the three and nine months ended October 31, 1998, gross profit as a
percent of total revenues before the $15.0 million inventory charge was 20.5%
and 19.9%, respectively.
11
<PAGE>
THREE MONTHS ENDED OCTOBER 31, 1999 COMPARED TO THREE MONTHS ENDED OCTOBER 31,
1998
REVENUES
Revenues increased approximately $14.7 million, or 9.8%, from $150.8
million for the third quarter of fiscal 1999 to $165.5 million for the third
quarter of fiscal 2000. Construction operations, including material handling
operations, contributed approximately $7.2 million of this increase, with
revenues increasing 9.5% to $83.1 million for the third quarter of fiscal 2000.
Truck operations contributed approximately $16.3 million of the overall increase
in revenues, with revenues increasing 62.5% to $42.4 million for the third
quarter of fiscal 2000. Most of the increase in truck revenues was due to the
Company's acquisitions since the third quarter of fiscal 1999. Rental operations
contributed an increase in revenues of approximately $1.1 million, with revenues
increasing 11.6% to $10.6 million. Rental revenues increased approximately
$500,000 due to the Company's acquisitions since the third quarter of fiscal
1999. Financial services contributed an increase in revenues of approximately
$100,000, with revenues increasing 6.7% to $1.6 million. Offsetting these
revenue increases, agricultural revenues decreased approximately $10.0 million,
with revenues for the third quarter of fiscal 2000 decreasing 26.5% to $27.8
million. The decrease in agricultural revenues was primarily attributable to the
depressed agricultural economy and the Company's exit from the agricultural
irrigation equipment business.
Equipment and truck sales increased approximately $8.8 million, or
8.8%, from $99.8 million for the third quarter of fiscal 1999 to $108.6 million
for the third quarter of fiscal 2000. Construction operations contributed
approximately $3.8 million of this increase, with sales increasing 7.1% to $57.5
million. Truck operations contributed an increase of approximately $12.5
million, with sales increasing 62.5% to $32.5 million. Truck acquisitions since
the third quarter of fiscal 1999 resulted in truck sales of $12.0 million in the
third quarter of fiscal 2000. Rental operations contributed an increase of
approximately $1.1 million, with sales increasing from $1.3 million to $2.4
million. Agricultural equipment sales operations decreased approximately $8.6
million, with sales decreasing 34.7% to $16.2 million.
Parts and service revenues increased approximately $6.0 million, or
14.9%, from $40.4 million for the third quarter of fiscal 1999 to $46.4 million
for the third quarter of fiscal 2000. Construction operations contributed
approximately $3.3 million of the increase as sales grew 15.6% to $24.5 million.
Truck operations contributed approximately $3.8 million of the increase as sales
increased 62.3% to $9.9 million. Truck acquisitions since the third quarter of
fiscal 1999 contributed $14.1 million of increased sales in the third quarter of
fiscal 2000. Rental operations contributed approximately $200,000 of the
increase as sales grew from $200,000 to $400,000. Parts and service revenues
from agricultural operations decreased 10.1%, or $1.3 million, to $11.6 million.
Rental revenues of $8.8 million were generated in the third quarter of
fiscal 2000 compared to $9.0 million in the third quarter of fiscal 1999, a
decrease of $200,000, or 2.2%. The Company's acquisitions since the third
quarter of fiscal 1999 contributed rental revenues of approximately $400,000
during the third quarter of fiscal 2000.
GROSS PROFIT
Gross profit increased approximately $16.3 million, or 102.5%, from
$15.9 million for the third quarter of fiscal 1999 to $32.2 million for the
third quarter of fiscal 2000. Gross profit as a percentage of total revenues for
the third quarter of fiscal 2000 and 1999 was 19.5% and 10.5%, respectively. The
increase in gross profit was largely attributable to the $15.0 million inventory
charge which affected gross profit for the third quarter of fiscal 1999. Gross
profit as a percentage of total revenues before the $15.0 million inventory
charge was 20.5% for the third quarter of fiscal 1999. Gross profit is affected
by the contribution of revenues by business segment, by the mix of revenues
within each business segment, and by competition. Revenues from construction,
rental and financial services operations generally provide
12
<PAGE>
the Company with higher gross margins than do agricultural and truck operations.
The Company's highest gross margins are generally derived from its parts and
service, rental and financial services revenues. As truck revenues expand as a
percentage of the total revenues, gross margins tend to decline as a percentage
of sales. The Company also is experiencing margin tightening in the rental of
construction equipment. In the third quarter, agricultural gross margin as a
percentage of revenues increased due mostly to an increase in proportion of
sales coming from higher margin parts and service.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (SG&A) expenses as a percent of
total revenues increased from 14.7% for the third quarter of fiscal 1999 to
15.0% for the third quarter of fiscal 2000. SG&A expenses increased
approximately $2.7 million, from $22.1 million for the third quarter of fiscal
1999 to $24.8 million for the third quarter of fiscal 2000. The Company's
acquisitions since the third quarter of fiscal 1999 contributed most of this
increase. SG&A expenses are affected by the contribution of revenues by business
segment and by the mix of revenues within each business segment. As a percentage
of revenues, SG&A expenses are generally higher for construction and financial
services operations than for agricultural, truck and rental operations, and
lower for equipment and truck sales than for parts and service and rental
revenues. The increase in SG&A expenses in the third quarter as a percentage of
total revenues was mostly attributable to lower sales of agricultural equipment
and to support for continued revenue growth from truck operations.
INTEREST EXPENSE
Interest expense as a percent of total revenues decreased from 2.5% for
the third quarter of fiscal 1999 to 2.2% for the third quarter of fiscal 2000.
Interest expense decreased approximately $200,000, or 5.3%, from $3.8 million
for the third quarter of fiscal 1999 to $3.6 million for the third quarter of
fiscal 2000. Planned reductions of construction and agricultural inventories
have resulted in lower interest expense for the third quarter.
INCOME TAXES
The estimated provision for and benefit from taxes as a percentage of
pretax income or loss for the third quarter of fiscal 2000 and 1999 was 40.7%.
NET INCOME
The Company reported net income of $2.3 million, or $0.18 per share for
the third quarter of fiscal 2000, compared to a net loss of $(7.3) million, or
$(0.55) per share, for the third quarter of fiscal 1999. Net income and net
income per share for the third quarter of fiscal 1999 includes a $15.0 million
inventory charge and a $2.2 million restructuring charge.
NINE MONTHS ENDED OCTOBER 31, 1999 COMPARED TO NINE MONTHS ENDED OCTOBER 31,
1998
REVENUES
Revenues increased approximately $94.3 million, or 22.0%, from $429.0
million for the first nine months of fiscal 1999 to $523.3 million for the first
nine months of fiscal 2000. Construction operations, including material handling
operations, contributed approximately $30.0 million of this increase, with
revenues increasing 13.1% to $259.6 million for the first nine months of fiscal
2000. Truck operations contributed an increase in revenues of approximately
$74.9 million, with revenues increasing from $53.0 million to $127.9 million.
Truck revenues increased approximately $42.8 million due to the Company's
acquisitions since the third quarter of fiscal 1999. Rental operations
contributed an increase in revenues of approximately $10.7 million, with
revenues increasing 54.6% to $30.3 million. Rental revenues
13
<PAGE>
increased approximately $900,000 due to the Company's acquisitions since the
third quarter of fiscal 1999. Financial services contributed an increase in
revenues of approximately $1.8 million, with revenues increasing 48.7% to $5.5
million. Agricultural revenues decreased approximately $23.2 million, with
revenues for the first nine months of fiscal 2000 decreasing 18.8% to $100.0
million. The decrease in agricultural revenues was primarily attributable to the
depressed agricultural economy and the Company's exit from the agricultural
irrigation equipment business.
Equipment and truck sales increased approximately $62.6 million, or
21.0%, from $298.6 million for the first nine months of fiscal 1999 to $361.2
million for the first nine months of fiscal 2000. Construction operations
contributed approximately $14.1 million of this increase, with sales increasing
8.3% to $184.4 million. Truck operations contributed an increase of
approximately $61.7 million, with sales increasing from $40.5 million to $102.2
million. Truck acquisitions since the third quarter of fiscal 1999 resulted in
truck sales of $34.1 million in the first nine months of fiscal 2000. Rental
operations contributed an increase of approximately $4.7 million, with sales
increasing from $2.4 million to $7.1 million. Of this increase, $100,000 was due
to the Company's acquisitions since the third quarter of fiscal 1999.
Agricultural operations decreased approximately $17.9 million, with sales
decreasing 21.0% to $67.5 million.
Parts and service revenues increased approximately $23.1 million, or
21.3%, from $108.5 million for the first nine months of fiscal 1999 to $131.6
million for the first nine months of fiscal 2000. Construction operations
contributed approximately $14.2 million of the increase as sales grew 24.4% to
$72.3 million. Truck operations contributed approximately $13.2 million of the
increase as sales grew from $12.5 million to $25.7 million. Truck acquisitions
since the third quarter of fiscal 1999 contributed $8.6 million of this increase
in the first nine months of fiscal 2000. Rental operations contributed
approximately $700,000 of the increase as sales grew from $400,000 to $1.1
million. Parts and service revenues from agricultural operations decreased
13.3%, or $5.0 million, to $32.5 million.
Rental revenues of $25.0 million were generated in the first nine
months of fiscal 2000 compared to $18.2 million in the first nine months of
fiscal 1999. Construction and rental operations contributed substantially all of
this $6.8 million increase. $800,000 of the increase in rental revenues for the
first nine months of fiscal 2000 was attributable to the Company's acquisitions
since the third quarter of fiscal 1999.
GROSS PROFIT
Gross profit increased approximately $25.7 million, or 36.5%, from
$70.4 million for the first nine months of fiscal 1999 to $96.1 million for the
first nine months of fiscal 2000. Gross profit as a percentage of total revenues
for the first nine months of fiscal 2000 and 1999 was 18.4% and 16.4%,
respectively. The increase in gross profit was largely attributable to the $15.0
million inventory charge which affected gross profit for the third quarter of
fiscal 1999. Gross profit, as a percentage of total revenues before the $15.0
million inventory charge, was 19.9% for the first nine months of fiscal 1999.
Gross profit is affected by the contribution of revenues by business segment, by
the mix of revenues within each business segment, and by competition. Revenues
from construction, rental and financial services operations generally provide
the Company with higher gross margins than do agricultural and truck operations.
The Company's highest gross margins are generally derived from its parts and
service, rental and financial services revenues. As truck revenues expand as a
percentage of the total revenues, gross margins tend to decline as a percentage
of sales. The Company also is experiencing margin tightening in the rental of
construction equipment.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (SG&A) expenses as a percent of
total revenues decreased from 13.9% for the first nine months of fiscal 1999 to
13.8% for the first nine months of fiscal 2000. SG&A expenses increased
approximately $12.6 million, from $59.4 million for the first nine months of
fiscal 1999 to $72.0 million for the first nine months of
14
<PAGE>
fiscal 2000. Approximately $4.9 million of the increase was due to the
operations of the Company's acquisitions since the third quarter of fiscal 1999.
SG&A expenses are affected by the contribution of revenues by business segment
and by the mix of revenues within each business segment. As a percentage of
revenues, SG&A expenses are generally higher for construction and financial
services operations than for agricultural, truck and rental operations, and
lower for equipment and truck sales than for parts and service and rental
revenues.
INTEREST EXPENSE
Interest expense as a percent of total revenues decreased from 2.2% for
the first nine months of fiscal 1999 to 2.0% for the first nine months of fiscal
2000. Interest expense increased approximately $1.3 million, or 13.8%, from $9.4
million for the first nine months of fiscal 1999 to $10.7 million for the first
nine months of fiscal 2000. Interest expense as a percentage of total revenues
declined due to the planned reduction of construction and agricultural
inventories.
INCOME TAXES
The estimated provision for and benefit from taxes as a percentage of
pretax income or loss for the first nine months of fiscal 2000 and 1999 was
40.7%.
NET INCOME
The Company reported net income of $8.3 million, or $0.63 per share for
the first nine months of fiscal 2000, compared to a net loss of $(289,000), or
$(0.02) per share, for the first nine months of fiscal 1999. Net income and net
income per share for the first nine months of fiscal 1999 includes a $15.0
million inventory charge and a $2.2 million restructuring charge.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires cash primarily for financing its inventories of
equipment, trucks and replacement parts, acquisitions and openings of additional
retail locations, rental equipment and capital expenditures. Historically, the
Company has met these liquidity requirements primarily through cash flow
generated from operating activities, floor plan financing, and borrowings under
credit agreements with Deere & Company (Deere), Deere Credit Services, Inc.
(Deere Credit), Ag Capital Company (Ag Capital), Bank of America, Deutsche
Financial Services Corporation (Deutsche), Associates Commercial Corporation
(Associates), General Motors Acceptance Corporation (GMAC), Volvo Commercial
Finance (Volvo) and commercial banks.
Floor plan financing from Deere, Deere Credit and Bank of America
represents the primary source of financing for equipment inventories,
particularly for equipment supplied by Deere. Floor plan financing of truck
inventories is primarily supplied by Associates, GMAC and Volvo. On- and
off-balance sheet financing of rental equipment is primarily provided by
Deutsche and Deere Credit. Most lenders receive a security interest in the
inventory financed. In addition to floor plan financing supplied by
manufacturers, the Company had unused credit commitments related to floor plan
financing and on- and off-balance sheet financing of rental equipment of
approximately $52.5 million.
Deere and Deere Credit offer floor plan financing to Deere dealers for
extended periods and with varying interest-free periods, depending on the type
of equipment, to enable dealers to carry representative inventories of equipment
and to encourage the purchase of goods by dealers in advance of seasonal retail
demand. Down payments are not required and interest may not be charged for a
substantial part of the period for which inventories are financed. Occasionally
additional discounts may be available in lieu of interest-free periods. Variable
market rates of interest based on the prime rate are charged on balances
outstanding after any interest-free periods, which are currently six to twelve
months for agricultural equipment and one to five months for construction
equipment. Deere also provides financing
15
<PAGE>
to dealers on used equipment accepted in trade. Deere Credit and Bank of America
provide equipment floor plan financing with variable market rates of interest
based on the prime rate and LIBOR, respectively. Associates, GMAC and Volvo
provide truck floor plan financing with variable market rates of interest based
on the prime rate. Deutsche provides rental equipment financing using variable
market rates of interest based on LIBOR.
The Company has available operating lines of credit totaling $30.0
million with varying maturity dates through January 31, 2000 with variable
interest rates based on LIBOR and the prime rate. The Company had approximately
$7.3 million of unused availability relating to these lines of credit at October
31, 1999.
The Company periodically reviews the terms of its financing with its
lenders, including the interest rate. For the first nine months of fiscal 2000
and 1999 the average interest rate under interest-bearing floor plan financing
was approximately 7.43% and 7.60%, respectively. As of October 31, 1999 the
Company had outstanding floor plan payables of approximately $203.3 million, of
which $168.4 million was then interest-bearing. The average interest rates on
the Company's lines of credit during the nine months ended October 31, 1999 and
1998 were 7.99% and 8.17%, respectively.
The Company's financing agreements contain various restrictive
covenants which, among other matters, require the Company to maintain minimum
financial ratios, as defined, and place limits on certain activities. The
Company was in compliance with or obtained waiver letters for all debt covenants
at October 31, 1999.
Operating activities provided net cash of approximately $12.0 million
for the first nine months of fiscal 2000, compared to $30.7 million for the
first nine months of fiscal 1999. The cash generated from operating activities
for the first nine months of fiscal 2000 resulted primarily from net income,
depreciation, amortization and increases in floor plan financing, which were
partially offset by increases in trade receivables from customers and increases
in the Company's inventories. The cash generated from operating activities for
the first nine months of fiscal 1999 resulted primarily from increases in floor
plan financing, accounts payable and accrued liabilities. Partially offsetting
the increase in cash from these operating activities were increases in trade
receivables from customers and increases in the Company's inventories.
Cash used for investing activities during the first nine months of
fiscal 2000 was $10.9 million, which was primarily related to acquisitions and
the purchase of property and equipment. Cash used for investing activities
during the first nine months of fiscal 1999 was $48.9 million, which was
primarily due to purchases of net assets of acquisitions and purchases of rental
equipment.
Cash provided by financing activities during the first nine months of
fiscal 2000 was $2.5 million. The primary source of cash from financing
activities was issuance of long-term debt and increases in the Company's
operating lines to fund increased accounts receivable. Cash provided by
financing activities during the first nine months of fiscal 1999 was
approximately $18.9 million. The primary source of cash from financing
activities was issuance of long-term debt and increases in the Company's
operating lines primarily to fund purchases of rental equipment and increased
accounts receivable.
The Company believes cash from operations, available cash and borrowing
capacity will be sufficient to fund its planned internal capital expenditures
for fiscal 2000.
CYCLICALITY
Sales of equipment and trucks, particularly new units, historically
have been cyclical, fluctuating with general economic cycles. During economic
downturns, equipment and truck retailers tend to experience similar periods of
decline and recession as the general economy. The impact of an economic downturn
on retailers is generally less than the impact on manufacturers due to the sale
of parts and
16
<PAGE>
service by retailers to maintain used equipment and trucks. The Company believes
that its businesses are influenced by worldwide and local economic conditions
(see "Safe Harbor Statement" below) and that its geographic and business
diversification will generally reduce the overall impact of economic cycles on
the Company's operations.
SEASONALITY
The Company's agricultural operations generally experience a higher
volume of equipment sales in the second and third fiscal quarters due to the
crop growing season. Typically, farmers purchase equipment prior to planting or
harvesting crops. Winter weather conditions in the Midwest limit equipment
purchases during the Company's first and fourth fiscal quarters. This seasonal
effect is diminished during periods of significant and sustained weakness in the
agricultural economy during which farmers generally purchase less equipment.
The Company's construction operations also generally experience a
higher volume of equipment sales in the second and third fiscal quarters due to
favorable weather patterns. The general slowdown in construction activity at the
end of the calendar year influences the fourth fiscal quarter. Further, winter
weather conditions in the Midwest and parts of the Southwest and South Central
also limit construction activity to some degree, typically resulting in lower
sales and rentals of construction equipment.
Since the Company's truck operations do not generally have any
significant seasonality, the Company's overall seasonality has tended to decline
as truck revenues have become a greater percentage of total revenues. If the
Company acquires businesses in geographical areas other than where it currently
has operations, it may be affected by other seasonal or equipment buying trends.
YEAR 2000 COMPLIANCE
The Company uses both information technology ("IT") and non-IT systems
and assets which will be affected by the date change in the year 2000. Many
existing computer systems and related applications use only two digits to
identify a year in the date field. As the year 2000 approaches, such programs
may be unable to distinguish years beginning with 20 from years beginning with
19. In addition, such programs may not recognize the year 2000 as a leap year
and fail to include February 29 as a date during the year 2000 or incorrectly
include February 29 in years after 2000. As a result, date sensitive systems and
related applications may fail, or may not process data accurately, before,
during or after the year 2000. The Company is in the midst of an ongoing
analysis to evaluate and address the potential for year 2000 issues to impact
its operations and management of its businesses.
The Company's dealership, equipment rental and financial services
operations rely heavily upon third party systems to support critical day-to-day
operations, including sales, inventory, service and parts operations, accounting
functions, submitting warranty claims, ordering equipment, trucks and parts,
reporting financial information, and receiving technical information for service
activities. The Company has received and is relying upon assurances from each of
the providers of these systems that the versions the Company is currently
running are year 2000 compliant. In addition, all application server hardware is
year 2000 compliant. The Company will continue to evaluate these systems, and
will monitor all hardware and software vendors to identify and implement any
future releases of corrections relating to the year 2000.
The Company has also completed sending surveys to manufacturers and
other suppliers with which it conducts business (such as public utilities and
financial institutions) attempting to verify that products and services provided
by these vendors will be available without interruption during the transition to
the year 2000. Approximately ninety percent of these vendors have thus far
responded to the survey, including all major manufacturers and suppliers. About
seventy percent of these responses indicate that the vendor is year 2000
compliant, and the remaining responses indicate that the vendor has a plan to be
compliant by the end of this year. None of the vendors that have not responded
are
17
<PAGE>
considered to be critical to the operations of the Company. The Company is
continuing to follow up with all vendors who have not responded or whose year
2000 projects are still in process. In the event any of these vendors do not
verify their ability to address year 2000 issues, the Company will explore
alternative sources for such services.
In addition, the Company's operations use a variety of non-IT devices
and systems containing embedded technology which may fail, or may not process
data accurately, before, during or after the year 2000. Due to the nature of its
operations, the Company has minimal exposure to embedded technology. Such
non-critical devices and systems include personal computers, software
applications, phone systems, control systems, security systems and alarms. The
Company has completed its evaluation of these non-IT devices and systems. All
non-compliant equipment used in date sensitive functions will be replaced prior
to December 31, 1999.
Despite the Company's efforts, there is a risk not all possible
problems associated with year 2000 issues will be corrected. Further, despite
assurances that the Company has received or will receive, there can be no
guarantee that the products, systems and services provided by vendors, or that
the systems of other companies with which the Company does business, will be
year 2000 compliant. In addition to risks associated with manufacturers and
their year 2000 readiness, the Company believes that its largest risks are
associated with utilities (e.g., electrical power, telephones, data
communication lines) which are beyond the control of the Company. Any
non-compliance could result in the reduction or shutdown of the Company's
ability to sell, rent, service and finance equipment, trucks, parts and
ancillary products, which could have a material adverse effect on the Company.
In connection with acquisitions, the Company attempts to determine
beforehand whether a business being acquired is year 2000 compliant. But that
objective is not always possible, and the Company may be unable to verify year
2000 compliance until after an acquisition is completed. Any business systems
inherited through acquisition that are determined to be non-compliant will be
updated or replaced.
All costs associated with evaluating and correcting year 2000 issues
are expensed as incurred. To date, the costs associated with reviewing and
correcting year 2000 issues have not been material. Costs of any new equipment
will be expensed or capitalized over the asset's useful life, consistent with
the Company's financial policies. The Company is evaluating the estimated cost
of its year 2000 remediation program in concert with the review of year 2000
issues. The Company expects the total cost of these expenditures will be less
than $250,000 of which approximately $50,000 will be expensed and $200,000
capitalized.
SAFE HARBOR STATEMENT
This statement is made under the Private Securities Litigation Reform
Act of 1995. The future results of the Company, including results related to
forward-looking statements in this Report, involve a number of risks and
uncertainties. Important factors that will affect future results of the Company,
including factors that could cause actual results to differ materially from
those indicated by forward-looking statements, include, but may not be limited
to, those set forth under the caption "Certain Important Factors" in Item 1 of
the Company's Form 10-K dated April 23, 1999, in the Company's Form 8-K dated
April 23, 1999, and in other filings with the Securities and Exchange
Commission. These factors, which are subject to change, include: general
economic conditions worldwide and locally; interest rates; housing starts; fuel
prices; the many interrelated factors that affect farmers' confidence, including
farm cash income, farmer debt levels, credit availability, worldwide demand for
agricultural products, world grain stocks, commodity prices, weather, animal and
plant diseases, crop pests, harvest yields, real estate values and government
farm programs; legislation, primarily legislation relating to agriculture, the
environment, commerce, transportation and government spending on infrastructure;
climatic phenomena such as La Nina and El Nino; pricing, product initiatives and
other actions of competitors in the various industries in which the Company
competes, including manufacturers and retailers; the level of new and
18
<PAGE>
used inventories in these industries; the Company's relationships with its
suppliers; production difficulties, including capacity and supply constraints
experienced by the Company's suppliers; practices by the Company's suppliers;
changes in governmental regulations; labor shortages; employee relations;
currency exchange rates; availability, sufficiency and cost of insurance;
securitization transactions and other financing arrangements relating to the
Company's financial services operations, including credit availability and
customer credit risks; dependence upon the Company's suppliers; termination
rights and other provisions which the Company's suppliers have under dealer and
other agreements; risks associated with growth, expansion and acquisitions; the
positions of the Company's suppliers and other manufacturers with respect to
publicly-traded dealers, dealer consolidation and specific acquisition
opportunities; the Company's acquisition strategies and the integration and
successful operation of acquired businesses; capital needs and capital market
conditions; operating and financial systems to manage rapidly growing
operations; dependence upon key personnel; accounting standards; technological
difficulties, especially involving the Company's suppliers and other third
parties, including potential impact of the year 2000 on processing
date-sensitive information, which could cause the Company to be unable to
process customer orders, deliver products or services, or perform other
essential functions; and other risks and uncertainties. The Company's
forward-looking statements are based upon assumptions relating to these factors.
These assumptions are sometimes based upon estimates, data, communications and
other information from suppliers, government agencies and other sources which
are often revised. The Company makes no commitment to revise forward-looking
statements, or to disclose subsequent facts, events or circumstances that may
bear upon forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There has been no material change in the information set forth in Item
7A of the Company's Annual Report on Form 10-K for the fiscal year ended January
31, 1999.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
Exhibits filed with this report are listed in the Exhibit
Index on page 20.
(b) REPORTS ON FORM 8-K.
None.
19
<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.
RDO EQUIPMENT CO.
(Registrant)
Date: December 6, 1999 By: /s/ Thomas K. Espel
-------------------------------------
Thomas K. Espel
Chief Financial Officer
(principal financial officer)
EXHIBIT INDEX
ITEM NO. ITEM PAGE OF THIS REPORT
- -------- ---- -------------------
27 Financial Data Schedule 21
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
3RD QUARTER ENDED OCTOBER 31, 1999
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 3,708
<SECURITIES> 0
<RECEIVABLES> 69,656
<ALLOWANCES> 2,025
<INVENTORY> 232,465
<CURRENT-ASSETS> 309,245
<PP&E> 79,142
<DEPRECIATION> 24,219
<TOTAL-ASSETS> 411,237
<CURRENT-LIABILITIES> 259,761
<BONDS> 30,348
0
0
<COMMON> 132
<OTHER-SE> 111,023
<TOTAL-LIABILITY-AND-EQUITY> 411,237
<SALES> 523,275
<TOTAL-REVENUES> 523,275
<CGS> 427,145
<TOTAL-COSTS> 427,145
<OTHER-EXPENSES> 71,963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,724
<INCOME-PRETAX> 14,016
<INCOME-TAX> 5,705
<INCOME-CONTINUING> 8,311
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,285
<EPS-BASIC> 0.63
<EPS-DILUTED> 0.63
</TABLE>
