<PAGE> 1
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 April 4, 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 2-20910
TRUSERV
CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2099896
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8600 West Bryn Mawr Avenue
Chicago, Illinois 60631-3505
(Address of principal executive offices) (Zip Code)
(773) 695-5000
(Registrant's telephone number, including area code)
not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities 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 each of the issuer's classes
of common stock, as of May 2, 1998.
Class A Common Stock, $100 Par Value. 565,206 Shares.
Class B Common Stock, $100 Par Value. 1,824,912 Shares.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TRUSERV CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(000's Omitted)
<TABLE>
<CAPTION>
April 4, December 31,
1998 1997
--------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,365 $ 2,224
Accounts and notes receivable 631,976 476,527
Inventories 654,590 543,946
Prepaid expenses 19,911 16,092
---------
Total current assets 1,307,842 1,038,789
Properties less
accumulated depreciation 250,289 241,236
Estimated goodwill, net 106,984 107,711
Other assets 50,065 51,177
---------- ----------
TOTAL ASSETS $1,715,180 $1,438,913
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 3
TRUSERV CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(000's Omitted)
<TABLE>
<CAPTION>
April 4, December 31,
1998 1997
--------- -----------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND CAPITALIZATION
Current liabilities:
Accounts payable and accrued expenses $ 724,354 $ 572,565
Short-term borrowings 351,445 215,467
Current maturities of notes,
long-term debt and lease obligations 63,048 62,640
Patronage dividends payable in cash 6,098 12,142
--------- ---------
Total current liabilities 1,144,945 862,814
--------- ---------
Long-term debt and obligations under
capital leases 169,171 169,209
--------- ---------
Capitalization:
Estimated patronage dividends to be distributed
principally by the issuance of Class B nonvoting
common stock and if necessary, cash. 1,530 --
Promissory (subordinated) and installment notes 166,051 172,579
Class A common stock, net of subscriptions
receivable; authorized 750,000 shares; issued
and subscribed 564,548 and 537,115 shares
(net of stock subscription receivable
of $5,181,000 and $6,289,000) 51,274 47,423
Class B nonvoting common stock and
paid-in capital; authorized 4,000,000 shares;
issued and fully paid, 1,833,093 and 1,681,934
shares; issuable as partial payment of patronage
dividends 177,655 shares as of December 31, 1997. 182,560 187,259
Retained earnings 670 685
---------- ----------
402,085 407,946
Foreign currency translation adjustment (1,021) (1,056)
---------- ----------
Total capitalization 401,064 406,890
---------- ----------
TOTAL LIABILITIES AND CAPITALIZATION $1,715,180 $1,438,913
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
TRUSERV CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(000's Omitted)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three For the thirteen
months ended weeks ended
April 4, March 29,
1998 1997
------------- ----------------
<S> <C> <C>
Revenues $1,030,205 $561,696
---------- --------
Cost and expenses:
Cost of revenues 949,726 518,179
Warehouse, general and
administrative 64,109 35,119
Interest paid to Members 3,890 4,297
Other interest expense 8,421 3,033
Other income, net 160 (163)
Income tax expense (119) 160
---------- --------
1,026,187 560,625
---------- --------
Net margin before
merger integration costs 4,018 1,071
Merger integration cost 1,847 --
---------- --------
Net margins $ 2,171 $ 1,071
========== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
TRUSERV CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(000's Omitted)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three For the thirteen
months ended weeks ended
April 4, March 29,
1998 1997
------------- ----------------
<S> <C> <C>
Operating activities:
Net margins $ 2,171 $ 1,071
Adjustments to reconcile net margins to
cash and cash equivalents from operating
activities:
Statement of operations components not
affecting cash and cash equivalents 7,960 6,307
Net change in working capital components (123,183) (28,013)
--------- --------
Net cash and cash equivalents used for
operating activities (113,052) (20,635)
--------- --------
Investing activities:
Additions to properties owned (15,497) (6,571)
Changes in other assets 1,112 (318)
--------- --------
Net cash and cash equivalents used for
investing activities (14,385) (6,889)
--------- --------
Financing activities:
Proceeds from short-term borrowings 135,978 45,507
Proceeds from long-term borrowings 1,504 1,088
Payment of annual patronage dividend (6,700) (15,435)
Payment of notes, long-term debt, lease
obligations and common stock (4,204) (3,435)
--------- --------
Net cash and cash equivalents provided by
financing activities 126,578 27,725
--------- --------
Net increase (decrease)
in cash and cash equivalents (859) 201
Cash and cash equivalents at
beginning of the period 2,224 1,662
--------- --------
Cash and cash equivalents at end of the period $ 1,365 $ 1,863
========= ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
TRUSERV CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BUSINESS COMBINATIONS
On July 1, 1997, pursuant to an Agreement and Plan of Merger dated
December 9, 1996 between Cotter & Company ("Cotter"), a Delaware
corporation and Servistar Coast of Coast ("SCC"), SCC merged with and
into Cotter, with Cotter being the surviving corporation (the
"Merger"). Cotter was renamed TruServ Corporation ("TruServ" or the
"Company"), effective with the Merger. Each outstanding share of SCC
Common Stock and SCC Series A Stock (excluding those shares canceled
pursuant to Article III of the Merger Agreement) were converted into
the right to receive one fully paid and nonassessable share of TruServ
Class A common stock and each two outstanding shares of SCC Preferred
Stock were converted into the right to receive one fully paid and non-
assessable share of TruServ Class B Common Stock. A total of 270,500
and 1,170,670 shares of TruServ Class A Common Stock and Class B
Common Stock, respectively, were issued in connection with the Merger.
Also 231,000 additional shares of TruServ Class A Common Stock were
issued in exchange for Class B common stock to pre-Merger Stockholders
of Cotter to satisfy the Class A Common Stock ownership requirement of
60 shares per store (up to a maximum of 5 stores) applicable to such
Members as a result of the Merger.
The Condensed Consolidated Balance Sheets as of April 4, 1998 and
December 31, 1997 reflect the post-Merger Company. The financial
information for the three months ended April 4, 1998, reflects the
post-Merger results of the Company. The thirteen weeks ended March 29,
1997 reflect the financial information of the pre-Merger Company
only.
The following summarized unaudited pro forma operating data for the
thirteen weeks ended March 29, 1997 are presented below giving effect
to the Merger, as if it had been consummated at the beginning of the
period. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations that actually would have resulted had the Merger been in
effect on the date indicated, or which may result in the future. The
pro forma results exclude one-time non-recurring charges or credits
directly attributable to the transaction.
The pro forma adjustments consist of (i) an adjustment for
amortization of the estimated excess of cost over the fair value of
the net assets of SCC, (ii) an adjustment for interest expense on
promissory notes issued in connection with the Merger, (iii) an
adjustment for interest expenses on short-term borrowings issued in
connection with the Merger and (iv) an adjustment for incremental
differences in depreciation expense.
<TABLE>
<CAPTION>
Three Thirteen
Months Ended Weeks Ended
April 4, March 29,
1998 1997
------------ ------------
Actual Pro Forma (1)
------------ ------------
(000's OMITTED)
<S> <C> <C>
Revenue $1,030,205 $967,173
========== ========
Net margin $ 2,171 $ 1,376
========== ========
(1) Assumes the Merger was consummated at January 1, 1997.
</TABLE>
<PAGE> 7
To refinance the existing debt of SCC and pay related fees and
expenses, the Company entered into a revolving loan agreement of up to
$300,000,000 in short-term credit facilities with a group of banks and
an additional $100,000,000 of long-term debt.
The total purchase price of approximately $141,400,000 was allocated
to assets and liabilities of the Company based on the estimated fair
value as of the date of acquisition. The allocation was based on
preliminary estimates which may be revised up until July 1, 1998. The
excess of consideration paid over the estimated fair value of net
assets acquired in the amount of $109,200,000 has been recorded as
goodwill and is being amortized on a straight-line basis over forty
years.
In connection with the purchase business combination, an estimated
liability of $38,200,000 was recognized for costs associated with the
Merger plan. The Merger plan specifies that certain former SCC
positions approximately 1,200 in total, will be eliminated
substantially within one year. As of April 4, 1998, approximately 86%
of these employees have been terminated with the related cost of
benefits of approximately $8,300,000 charged against the liability.
The Merger plan specifies the closing of redundant former SCC
distribution centers and the elimination of overlapping former SCC
inventory items stockkeeping units substantially within a one-year
period. Distribution centers closing costs include net occupancy and
costs after facilities are vacated. In addition, stockkeeping unit
reduction costs include losses on the sale of inventory items which
have been discontinued solely as a result of the Merger. As of April
4, 1998, $1,659,000 relating to distribution center closing cost and
the reduction of stockkeeping units have been charged against the
liability. Merger integrations costs of $2,529,000 consist of one
time non-recurring expenses directly attributable to the Merger
including distribution center closings, severance pay, information
service costs and general and administrative costs.
NOTE 2 - GENERAL
The condensed consolidated balance sheet, statement of operations and
statement of cash flows at and for the period ended April 4, 1998 and
the condensed consolidated statement of operations and statement of
cash flows for the period ended March 29, 1997 are unaudited and, in
the opinion of the management of the Company, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of financial position, results of operations and cash
flows for the respective interim periods. The accompanying unaudited
condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q 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. This
financial information should be read in conjunction with the
consolidated financial statements for the year ended December 31, 1997
included in the Company's 1997 Annual Report on Form 10-K.
NOTE 3 - ESTIMATED PATRONAGE DIVIDENDS
Patronage dividends are declared and paid by the Company after the
close of each fiscal year. The 1997 annual patronage dividend was
distributed through a payment of 30% of the total distribution in
cash, with the balance being paid through the issuance of the
Company's Class B nonvoting common stock. Such patronage dividends,
consisting of substantially all of the Company's patronage source
income, have been paid since 1949. The estimated patronage dividend
for the three months ended April 4, 1998 is $2,186,000 compared to
$1,341,000 for the corresponding thirteen weeks period in 1997.
<PAGE> 8
NOTE 4 - INVENTORIES
<TABLE>
<CAPTION>
Inventories consisted of: April 4, December 31,
1998 1997
-------- -----------
(UNAUDITED)
(000's Omitted)
<S> <C> <C>
Manufacturing inventories:
Raw materials $ 5,445 $ 4,878
Work-in-process and finished goods 41,405 29,241
-------- --------
46,850 34,119
Merchandise inventories 607,740 509,827
-------- --------
$654,590 $543,946
======== ========
</TABLE>
NOTE 5 - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the
reporting and display of comprehensive income and its components;
however, the adoption of this Statement had no impact on the Company's
net margin or capitalization. Statement 130 requires unrealized
gains or losses on the Company's foreign currency translation
adjustments, which prior to adoption were reported separately in
shareholder's equity to be included in other comprehensive income.
Prior year financial statements have been reclassified to conform to
the requirements of Statement 130. The impact of the foreign currency
translation adjustment had no material impact on the Comprehensive
Income on the Company.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS COMBINATION
On July 1, 1997, TruServ Corporation (the "Company"), formerly Cotter
& Company ("Cotter"), merged with Servistar Coast to Coast Corporation
("SCC") ( the "Merger" ). The transaction was accounted for using the
purchase accounting method. Accordingly, the financial information
for the three months ended April 4, 1998 reflects the results of the
post-Merger Company and the financial information for the thirteen
weeks ended March 29, 1997 reflects the results of the pre-Merger
Company. To facilitate the comparison of interim results for 1998 and
1997, supplemental comparisons have been provided using pro forma
financial information. This pro forma information has been prepared
for comparative purposes only and does not purport to be indicative of
the results of operation that actually would have resulted had the
Merger been in effect on the dates indicated, or which may result in
the future.
<TABLE>
<CAPTION>
Three months ended Thirteen weeks ended
April 4, March 29,1997
1998 --------------------
Actual Actual Pro Forma (1)
----------------- ------ ------------
<S> <C> <C> <C>
(000'S OMITTED)
Revenue $1,030,205 $561,696 $967,173
Gross margin 80,479 43,517 74,365
Warehouse, general and
administrative expense 64,109 35,119 63,142
Interest expense 12,311 7,330 10,412
Merger integration cost 1,847 -- --
Net margin 2,171 1,071 1,376
(1) Assumes the Merger was consummated at January 1, 1997.
</TABLE>
<PAGE> 9
THREE MONTHS ENDED APRIL 4, 1998 COMPARED TO THIRTEEN WEEKS ENDED
MARCH 29, 1997
RESULTS OF OPERATIONS:
Revenues for the three months ended April 4, 1998 totaled
$1,030,205,000. This represented an increase of $468,509,000 or 83.4%
compared to the comparable period last year. The increase was due to
the addition of Servistar Coast to Coast revenues that resulted from
the July 1, 1997 merger of Cotter and SCC.
Gross margins increased by $36,962,000 or 84.9% and as a percentage of
revenues, increased to 7.8% from 7.7% for the comparable period last
year. The increase in gross margin percentage resulted primarily from
increased sales in manufactured products.
Warehouse, general and administrative expenses as a percentage
of revenues decreased to 6.2% from 6.3% compared with the prior
year. The Company incurred additional warehousing expenses in
association with commonizing inventory assortments and increased
inventory levels but continued to reduce other expense in its
continuing efforts to reduce operating costs. Many of the potential
cost efficiencies related to the Merger have not yet been realized
and costs should be reduced as the Merger strategy is further
implemented.
Interest paid to Members decreased by $407,000 or 9.5% primarily due
to a lower average interest rate and the lower principal balance.
Other interest expense increased $5,388,000 due to higher borrowings
compared to the same period last year. The higher borrowings were
required because of the increased cash requirement resulting from
increased inventory levels. The effective borrowing rate has been
lowered due to the renegotiation of the rates since the
date of the Merger.
The combination of increased gross margins, offset by increased
expenses and increased borrowing costs, resulted in a net margin of
$2,171,000 compared to $1,071,000 for the same period last year.
ACTUAL THREE MONTHS ENDED APRIL 4, 1998 COMPARED TO PRO FORMA
THIRTEEN WEEKS ENDED MARCH 29, 1997 ASSUMING THE MERGER WAS
CONSUMMATED ON JANUARY 1, 1997
RESULTS OF OPERATIONS:
Revenues for the three months ended April 4, 1998 totaled
$1,030,205,000. This represented an increase of $63,032,000 or 6.5%
compared to the comparable period last year. The increase was
attributable to revenue increases in lumber/building materials,
manufacturing products, and seasonal merchandise.
Gross margins increased by $6,114,000 or 8.2% and as a percentage of
revenues, increased to 7.8% from 7.7% for the comparable period last
year. The increase in gross margins resulted from improved vendor
negotiations and improved manufacturing margins.
Warehouse, general and administrative expenses increased by $967,000
or 1.5% but as a percentage of revenues decreased to 6.2% from 6.5%.
The decrease in the percentage of revenues was attributed to the
Company's continued efforts to reduce operating costs through
reduction of duplicate office and distribution center functions.
Interest paid to Members decreased by $607,000 or 13.5% primarily
due to lower principal balance and lower average interest rates.
Other interest expense increased from $5,915,000 to $8,421,000
primarily due to higher short-term borrowings because of the increased
cash requirement resulting from increased inventory levels.
The combination of increased gross margin and controlled warehouse,
general and administrative expense, partially offset by higher
interest expense, resulted in a net margin of $2,171,000 compared to
$1,376,000 for the comparable period last year.
<PAGE> 10
THREE MONTHS ENDED APRIL 4, 1998 COMPARED WITH THE YEAR ENDED
DECEMBER 31, 1997
LIQUIDITY AND CAPITAL RESOURCES:
The Company has a seasonal need for cash. During the first quarter of
the year, as seasonal inventories are purchased for resale or
manufacture and shipment, cash and cash equivalents are used for
operating activities. In subsequent quarterly periods, the Company
anticipates that cash and cash equivalents will be provided by
operating activities and financing activities, if necessary.
During the first quarter of 1998, inventories increased by
$110,644,000 to support anticipated future orders of seasonal
merchandise resulting from the commonization of inventory. Accounts
and notes receivable increased by $155,449,000 due to the seasonal
payment terms extended to the Company's Members. Short-term
borrowings increased by $135,978,000 and accounts payable
and accrued expenses increased by $151,789,000 in support of the
increased inventories and favorable seasonal terms obtained from
vendors which were passed on to the Company's Members.
At April 4, 1998, net working capital decreased to $162,897,000 from
$175,975,000 at December 31, 1997. The current ratio decreased to
1.14 at April 4, 1998 compared to 1.20 at December 31, 1997.
At December 31, 1997, the Company had established a $300,000,000 five-
year revolving credit facility with a group of banks. In addition,
the Company has various short-term lines of credit available under
informal agreements with lending banks, cancelable by either party
under specific circumstances. The borrowings under these agreements
were $350,000,000 and $210,000,000 at April 4, 1998 and December 31,
1997, respectively.
The Company's capital is primarily derived from Class A common stock
and retained earnings, together with promissory (subordinated) notes
and nonvoting Class B common stock issued in connection with the
Company's annual patronage dividend. The Company believes the funds
derived from these capital resources, as well as operations and the
credit facilities noted above, will be sufficient to satisfy capital
needs.
Total capital expenditures, including those made under capital leases,
were $15,497,000 for the three months ended April 4, 1998 compared
to $6,571,000 during the comparable period in 1997. These capital
expenditures relate to additional equipment and technological
improvements at the regional distribution centers and at the corporate
headquarters.
<PAGE> 11
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on April 7, 1998,
the following individuals were reelected to the Board of Directors:
<TABLE>
<CAPTION>
Votes Withheld
Term Votes for Votes against Abstained
------- --------- ------------- ---------
<S> <C> <C> <C> <C>
J.W.(Bill) Blagg 3 years 320,640 --- 7,200
Daniel A. Cotter 3 years 318,420 --- 9,420
Jay B. Feinsod 3 years 320,460 --- 7,380
Dennis A. Swanson 3 years 320,760 --- 7,080
John M.(Mitch) West, Jr. 3 years 320,640 --- 7,200
Barbara B. Wilkerson 3 years 320,460 --- 7,380
</TABLE>
In addition to the foregoing, the following persons were, on April 7,
1998, Directors of the Company whose terms of office continued after
the annual meeting:
<TABLE>
<S> <C> <C>
James Burnett James Howenstine Paul E. Pentz
William M. Claypool, III Jarrald T. Kabelin George V. Sheffer
William M. Halterman Peter G. Kelley John Wake Jr.
William Hood Robert J. Ladner
</TABLE>
The annual meeting also included the following votes:
1) The proposal to amend Article Fourth, Paragraph 7 of the
Company's Certificate of incorporation to delete the words "provided,
however, that the stockholders shall approve any such provision in the
By-Laws" was passed. The number of affirmative votes cast was
298,260, the number of negative votes cast was 14,280, and the number
of abstentions was 15,300.
2) The proposal to approve the appointment of Ernst & Young LLP,
independent public accountants, as auditor of the company for the
fiscal year 1998 was passed. The number of affirmative votes cast was
319,440, the number of negative votes cast was 3,600, and the number
of abstentions was 4,800.
Item 5. OTHER INFORMATION.
The Board accepted the resignation of David Guthrie from the Board of
Directors effective April 1, 1998. Mr. Guthrie submitted his
resignation for the purpose of devoting more time to his personal
business. The Board approved the appointment of James Burnett,
effective April 1, 1998 to fill the vacancy created by Mr. Guthrie's
resignation.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4. Instruments defining the rights of security holders,
including indentures; incorporated herein by reference those items
included as Exhibits 4A through 4K, inclusive, in the Company's
Post-Effective Amendment No. 5 on Form S-2 to Form S-4
Registration Statement (No. 333-18397) filed with the Securities
and Exchange Commission on March 31, 1998.
(b) Reports on Form 8-K
NONE
<PAGE> 12
SIGNATURE
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.
TRUSERV CORPORATION
Date: May 15, 1998 By /s/ KERRY J. KIRBY
Kerry J. Kirby
Executive Vice President, Finance
and Chief Financial Officer
(Mr. Kirby is the principal accounting officer and has been duly
authorized to sign on behalf of the Registrant.)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINES SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> APR-04-1998
<CASH> 1,365
<SECURITIES> 0
<RECEIVABLES> 631,976
<ALLOWANCES> 0
<INVENTORY> 654,590
<CURRENT-ASSETS> 1,307,842
<PP&E> 505,003
<DEPRECIATION> 254,714
<TOTAL-ASSETS> 1,715,180
<CURRENT-LIABILITIES> 1,142,037
<BONDS> 166,051
0
0
<COMMON> 51,274
<OTHER-SE> 182,560
<TOTAL-LIABILITY-AND-EQUITY> 1,715,180
<SALES> 1,030,205
<TOTAL-REVENUES> 1,030,205
<CGS> 949,726
<TOTAL-COSTS> 949,726
<OTHER-EXPENSES> 65,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,311
<INCOME-PRETAX> 2,053
<INCOME-TAX> (118)
<INCOME-CONTINUING> 2,171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,171
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
