<PAGE>
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, 1995
-------------------------------------------------
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: 04954
------------------------------
APPAREL AMERICA, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2648900
- ------------------------------------- ------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1175 State Street
New Haven, Connecticut 06511
- ------------------------------------------------ -------------------------------
(Address of principal executive offices) (Zip Code)
(203) 777-5531
- --------------------------------------------------------------------------------
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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ ------
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
------- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.05 par value -- 7,689,559 shares as of December 5, 1995.
<PAGE>
INDEX
FORM 10-Q
APPAREL AMERICA, INC.
Part I. Financial Information Page No.
- ------------------------------ --------
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets -
October 31, 1995 and July 31, 1995 3 - 4
Condensed Statements of Operations -
Three Months Ended October 31, 1995 and 1994 5
Condensed Statements of Cash Flows -
Three Months Ended October 31, 1995 and 1994 6
Condensed Statement of Stockholders'
Deficit - Three Months Ended October 31, 1995 7
Notes to Condensed Financial Statements -
October 31, 1995 8 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 13
Part II. Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
APPAREL AMERICA, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
ASSETS October 31, July 31,
1995 1995
----------- ---------
(Unaudited) (Note)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $7 $29
Accounts receivable - net 3,041 463
Due from factor - net -- Note C -- 2,249
Inventories -- Note B 14,117 5,517
Due from affiliates 240 256
Prepaid expenses and other current assets 264 307
----------- -----------
TOTAL CURRENT ASSETS 17,669 8,821
PROPERTY AND EQUIPMENT -- at cost
Machinery and equipment 4,471 4,320
Leasehold improvements 2,470 2,420
----------- -----------
6,941 6,740
Less accumulated depreciation and amortization 5,243 5,123
----------- -----------
1,698 1,617
INTANGIBLES AND OTHER ASSETS:
Trademark, less accumulated amortization of
$28 -- Note C 1,672 --
Cost in excess of net assets acquired, less
accumulated amortization of $1,077 and $1,037 4,607 4,647
Other assets 11 10
----------- -----------
6,290 4,657
----------- -----------
$25,657 $15,095
----------- -----------
----------- -----------
</TABLE>
NOTE: The balance sheet at July 31, 1995 has been derived from the audited
financial statements at that date.
See notes to condensed financial statements
3
<PAGE>
APPAREL AMERICA, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT October 31, July 31,
1995 1995
----------- ---------
(Unaudited) (Note)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt -- Note C $1,525 $1,520
Current portion of deferred interest -- Note C 573 573
Accounts payable 4,269 1,366
Loan payable - revolver -- Note C 9,062 --
Other current liabilities and accrued expenses 732 690
Accrued compensation 561 859
Due to affiliates 151 525
----------- ---------
TOTAL CURRENT LIABILITIES 16,873 5,533
LONG-TERM DEBT, LESS CURRENT PORTION -- NOTE C 7,172 6,002
DEFERRED INTEREST --LONG TERM PORTION -- NOTE C 1,031 1,182
DIVIDENDS PAYABLE -- NOTE E 1,417 1,339
SUBORDINATED NOTE PAYABLE -- NOTE D 1,000 1,000
----------- ---------
TOTAL LIABILITIES 27,493 15,056
----------- ---------
$9 CUMULATIVE REDEEMABLE PREFERRED STOCK -- NOTE E 3,395 3,372
$8.50 CUMULATIVE REDEEMABLE PREFERRED STOCK -- NOTE E 1,165 1,165
STOCKHOLDERS' DEFICIT -- Notes E and F
$12 Preferred Stock, Series E - par value $.05 per share (stated
value $100 per share); authorized 300,000 shares; issued and
outstanding 163,833 shares 16,383 16,383
$12 Preferred Stock, Series F - par value $.05 per share (stated
value $100 per share); authorized 100,000 shares; issued and
outstanding 70,221 shares 7,022 7,022
$10 Preferred Stock, Series G - par value $.05 per share (stated
value $100 per share); authorized 200,000 shares; issued and
outstanding 170,793 shares 17,079 17,079
Common stock, par value $.05 per share; authorized 15,000,000
shares; issued 7,710,224 and 7,410,223 386 371
Additional paid-in capital 23,803 23,803
Deficit (43,108) (41,195)
Less:
Treasury stock-at cost - 20,665 shares (129) (129)
Acquisition cost in excess of historical basis of net assets
acquired from an affiliate (27,832) (27,832)
----------- ---------
TOTAL STOCKHOLDERS' DEFICIT (6,396) (4,498)
----------- ---------
$25,657 $15,095
----------- ---------
----------- ---------
</TABLE>
NOTE: The balance sheet at July 31, 1995 has been derived from the audited
financial statements at that date.
See notes to condensed financial statements.
4
<PAGE>
APPAREL AMERICA, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
-----------------------
1995 1994
-----------------------
<S> <C> <C>
NET SALES $2,796 $2,167
COST OF GOODS SOLD 2,384 1,563
---------- ---------
GROSS PROFIT 412 604
OPERATING EXPENSES
Selling, design and promotion 825 531
Shipping and warehousing 327 202
General and administrative 857 796
---------- ---------
Total operating expenses 2,009 1,529
---------- ---------
OPERATING LOSS (1,597) (925)
OTHER NON-OPERATING CHARGES:
Interest and financing costs - net 171 44
Other expense -- Note F -- 412
---------- ---------
171 456
---------- ---------
LOSS BEFORE PROVISION FOR INCOME TAXES
(1,768) (1,381)
Provision for income taxes 5 5
---------- ---------
NET LOSS (1,773) (1,386)
Preferred stock dividends and accretion on
redeemable preferred stock 140 200
---------- ---------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS ($1,913) ($1,586)
---------- ---------
---------- ---------
Net loss per common share ($0.25) ($0.21)
---------- ---------
---------- ---------
Average number of common shares outstanding 7,689,559 7,389,550
--------- ---------
--------- ---------
</TABLE>
See notes to condensed financial statements.
5
<PAGE>
APPAREL AMERICA, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
-----------------------
1995 1994
-----------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net cash used in operating activities ($10,601) ($4,803)
--------- --------
--------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (201) (367)
Purchase of trademark (1,700) --
--------- --------
Net cash used in investing activities (1,901) (367)
--------- --------
FINANCING ACTIVITIES:
Increase in loan payable - revolver 9,062 --
Increase in long-term debt 1,200 --
Decrease in due from factor 2,249 5,550
Payments on long-term debt (31) (364)
--------- --------
Net cash provided by financing activities 12,480 5,186
--------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (22) 16
Cash and cash equivalents, at beginning of period 29 80
--------- --------
Cash and cash equivalents, at end of period $7 $96
--------- --------
--------- --------
</TABLE>
See notes to condensed financial statements.
6
<PAGE>
APPAREL AMERICA, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED)
(in thousands, except share data)
<TABLE>
<CAPTION>
PREFERRED COMMON ADDITIONAL
STOCK ISSUED STOCK ISSUED PAID-IN
--------------- -----------------
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, at August 1, 1995 404,847 $40,484 7,410,223 $371 $23,803 ($41,195)
Issuance of common stock 300,000 15
Fractional shares 1
Net loss for the three months
ended October 31, 1995 (1,773)
Dividends and accretion on Redeemable
Preferred Stock (140)
------- ------- --------- ---- ------- ---------
Balance, at October 31, 1995 404,847 $40,484 7,710,224 $386 $23,803 ($43,108)
------- ------- --------- ---- ------- ---------
------- ------- --------- ---- ------- ---------
</TABLE>
See notes to condensed financial statements.
7
<PAGE>
APPAREL AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
October 31, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with the 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. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended July 31, 1995.
The operations of the Company's sole division, Robby Len Fashions, are
significantly affected by seasonal influences. The results for the three month
period ended October 31, 1995 are not necessarily indicative of the results that
may be expected for a full fiscal year.
NOTE B--INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
October 31, July 31,
1995 1995
---------- -------
(000's omitted)
<S> <C> <C>
Raw materials $ 4,237 $ 2,791
Work in process 3,244 790
Finished goods 6,636 1,936
-------- --------
$ 14,117 $ 5,517
-------- --------
-------- --------
</TABLE>
8
<PAGE>
APPAREL AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - continued
October 31, 1995
NOTE C -- LONG-TERM DEBT AND CREDIT ARRANGEMENTS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
October 31, July 31,
1995 1995
---------- -------
(000's omitted)
<S> <C> <C>
Term loan payable $ 6,999 $ 6,999
Litigation settlement (see Note F) 234 229
Trademark purchase payable 1,200 -
Other (including $120 due to
a related party) 264 294
------------ -----------
$ 8,697 $ 7,522
Less: current portion (1,525) (1,520)
------------ -----------
$ 7,172 $ 6,002
------------ -----------
------------ -----------
</TABLE>
Effective July 31, 1994, the Company and its lenders entered into a Fifth
Amended and Restated Credit Agreement which, among other things, extended the
maturity dates of the term loan, modified the payment terms and interest rates
and reduced the outstanding principal amount of the debt by a total of
$4,755,000. The loan principal is repayable in varying amounts through fiscal
2001. Interest is payable monthly on the outstanding loan balance.
Accounting for the amended agreement was based on Statement of Financial
Accounting Standards No. 15, "Accounting by Debtors and Creditors for Troubled
Debt Restructurings." Accordingly, the carrying amount of the debt was reduced
to the equivalent of the total future cash payments (approximately $8,745,000 of
principal and $2,457,000 of estimated future interest), resulting in the
recognition of an extraordinary gain of $4,165,000 in the fourth quarter of
fiscal year 1994. The estimated future interest is to be amortized against
interest expense over the term of the credit agreement. For the three months
ended October 31, 1995, amortization of deferred interest amounted to $151,000.
The amended agreement contains various covenants and limitations on a) the
creation of new debt, b) the amortization of the subordinated debt (see Note D)
and the redemption of the cumulative redeemable preferred stock (see Note E), c)
the level of capital expenditures, and d) dividends and other restricted
payments, as defined. The amended agreement also contains certain mandatory
repayment provisions.
In August 1995, the Company acquired from Milady Brassiere and Corset Co., Inc.
the trademarks Roxanne and Harbour Casual and the tradename Coco Reef. The
purchase price for the trademarks and tradename is to be determined based on
percentage of net sales of goods bearing the Roxanne and Harbour Casual
tradenames over the next seven years, with a minimum guaranteed purchase price
of $1,700,000. The Company has paid a $500,000 advance against such purchase
price and the unpaid minimum balance of $1,200,000 is included in long-term
debt. The Company is amortizing the trademark on a straight line basis over a
period of fifteen years.
Other long-term debt is composed of certain equipment loans under which the
Company is to make equal principal payments of $10,250 per month and will pay
interest equal to the prime rate plus 2% on the unpaid principal balance.
9
<PAGE>
APPAREL AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - continued
October 31, 1995
NOTE C--LONG TERM DEBT AND CREDIT ARRANGEMENTS (continued)
Prior to September 1, 1995 the Company was party to a $15,000,000 factoring
agreement whereby the Company assigned substantially all accounts receivable to
the factor for advances up to 80% of unmatured accounts receivable and 35% of
eligible inventories. The assignment was on a recourse basis, whereby the
Company assumed all credit risk associated with the factored receivables.
Effective September 1, 1995, the Company entered into a $15,000,000 revolving
credit facility under which the Company can borrow up to 85% of eligible
receivables and 50% of eligible inventories along with specified seasonal
overadvances. The revolving credit agreement expires on August 31, 1997.
NOTE D--SUBORDINATED NOTE
In 1989, the Company issued a $1,000,000 subordinated promissory note to a
related party. Under the terms of an amendment to the note in 1993, a) the
maturity was extended from December 31, 1993 to June 30, 1998, b) the interest
rate was changed from 9% to 8% and c) accrued and unpaid interest of $266,250
was forgiven. The subordinated note is subject to certain restricted prepayment
covenants and is subordinate to payment in full of all senior debt.
NOTE E -- CUMULATIVE REDEEMABLE PREFERRED STOCK
The Company's $9 Series B Cumulative Redeemable Preferred Stock has a redemption
value of $100 per share and is subject to mandatory semi-annual redemption
requirements commencing on June 30, 1995, with a final redemption on December
31, 1997. Such redemptions are subject to certain restricted payment covenants
of senior debt. The shares were issued at a discount which is being amortized
over the redemption period. Accrued dividends on the Series B Preferred Stock
are subject to certain restricted payment covenants of senior debt. At October
31, 1995, such accrued dividends amounted to $1,417,000.
In fiscal 1995, the Company entered into agreements providing for the exchange
of 25,000 shares of the $9 Series B Redeemable Preferred Stock and accrued
dividends thereon for 11,650 shares of the Company's $8.50 Series H Redeemable
Preferred Stock plus consideration of $85,000. The excess of the carrying value
of the exchanged Series B Preferred Stock and accrued dividends thereon over the
redemption value of the Series H Preferred Stock and consideration paid has been
recorded as a capital contribution of approximately $2,097,000. Annual dividend
and stock redemption payments related to the Series H Preferred Stock (as
permitted under the term loan agreement) are approximately $200,000 to $250,000
through fiscal year 2002.
10
<PAGE>
APPAREL AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - continued
October 31, 1995
NOTE F -- STOCKHOLDER'S EQUITY
In connection with the August 1995 acquisition of the Roxanne and Harbour Casual
trademarks and the Coco Reef tradename, the Company issued 300,000 shares of
common stock to the principals of Milady Brassiere and Corset Co., Inc.
NOTE G - OTHER EXPENSE
For the three months ended October 31, 1994, other expense of $412,000 is
composed of expenses related to the settlement of certain litigation to which
the Company was a party. Under the terms of the settlement, which involved a
former Company executive, an initial payment of $150,000 was made in December
1994 with the balance payable in semi-annual installments through December 1997.
The settlement has been discounted at an annual effective rate at 9% to reflect
its present value at October 31, 1995.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1995
Net sales increased by $629,000, or 29.0%, to $2,796,000 for the three months
ended October 31, 1995 as compared to $2,167,000 for the three months ended
October 31, 1994. The increase in sales is primarily attributable to an
increase in unit volume as unit selling prices remained relatively flat as
compared to the prior year period.
Gross profit decreased to 14.7% for the three months ended October 31, 1995 as
compared to 27.9% for the three months ended October 31, 1994. This decrease is
primarily attributable to increased manufacturing and product development costs
associated with production of goods under the newly acquired Roxanne and Harbour
Casual trademarks (see Note C to the condensed financial statements). These
increased costs had a heightened impact on gross profit percentage due to the
highly seasonal nature of the Company's business (approximately 5% of annual
sales is shipped in the first quarter). It is anticipated that gross profit
will increase during the remainder of the fiscal year. In addition, certain
changes in product mix also contributed to the decline in gross profit.
Operating expenses increased by $480,000, or 31.4%, to $2,009,000 for the three
months ended October 31, 1995 as compared to $1,529,000 for the three months
ended October 31, 1994. Increases in certain variable selling, shipping and
administrative expenses (including certain staff additions) as well as certain
non-recurring expenses associated with the acquisition and development of the
Roxanne and Harbour Casual trademarks were primarily responsible for the
increase in operating expenses. In addition, certain inflationary increases in
salaries, supplies and other operating overhead costs contributed to the
increase in operating expenses.
The above activities resulted in an increase in the operating loss to $1,597,000
for the three months ended October 31, 1995 as compared to an operating loss of
$925,000 for the three months ended October 31, 1994.
Interest and financing costs increased to $171,000 for the three months ended
October 31, 1995 as compared to $44,000 for the prior year period. Primary
factors contributing to this increase were increased revolving debt borrowing
levels principally related to the acquisition and development of the Roxanne and
Harbour Casual business.
Other expense of $412,000 for the three months ended October 31, 1994 is related
to the settlement of certain litigation described in Note G to the condensed
financial statements.
The aggregate effect of the above activities resulted in a loss before provision
for income taxes of $1,768,000 for the three months ended October 31, 1995 as
compared to a loss before provision for income taxes $1,381,000 for the three
months ended October 31, 1994.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
LIQUIDITY AND CAPITAL RESOURCES
The ratio of current assets to current liabilities was 1.05 to 1.00 at October
31, 1995 as compared to 1.59 to 1.00 at July 31, 1995. Working capital
decreased by $2,492,000 to $796,000 at October 31, 1995 as compared to
$3,288,000 at July 31, 1995. This decrease in working capital is primarily
attributable to the net loss for the period of $1,773,000 coupled with a
$500,000 payment in connection with the purchase of the Roxanne and Harbour
Casual trademarks. In addition, capital expenditures of approximately $200,000
for the three months ended October 31, 1995 also contributed to the decline in
working capital.
The Company's working capital requirements are affected significantly by the
highly seasonal nature of Robby Len Fashions, its sole operating division. As a
leading manufacturer of women's swimwear, Robby Len builds inventory during the
first five months of the fiscal year (August - December) in order to meet its
shipping requirements in January through June (approximately 80% of annual sales
are shipped in this time period). The $8,600,000 increase in inventory,
$9,062,000 increase in the revolving loan balance, $2,249,000 decrease in the
due from factor balance, and $2,903,000 increase in accounts payable for the
three months ended October 31, 1995 are attributable to the seasonality of the
business. The $10,601,000 of net cash used in operating activities for the three
months ended October 31, 1995 is primarily reflected in the net loss for the
period as well as the increases in inventory, accounts receivable and accounts
payable.
The Company's investing activities consist primarily of purchases of machinery
and equipment. During fiscal year 1995, the Company purchased certain
production and pattern making equipment financed primarily through long-term
arrangements (see Note D to the condensed financial statements for further
information). The Company expects to finance its capital expenditures in the
next twelve months through internally generated funds or short-term borrowings.
The Company's primary ongoing cash needs are for working capital requirements,
capital expenditures, dividends and redemption of Series H Preferred Stock and
term debt amortization (both principal and interest). The two present sources
for the Company's liquidity needs are internally generated funds and short-term
borrowing available under its revolving loan agreement (see Note D to the
condensed financial statements). Through this agreement, the Company finances
its inventory and receivables build-up during the first five months of the
fiscal year and repays these borrowings over the remainder of the fiscal year.
The outstanding loan balance under the agreement at October 31, 1995 was
$9,062,000.
Management believes that the current financial resources available to the
Company (short-term borrowings under revolving credit facility and funds from
operations) are expected to be adequate to meet its foreseeable liquidity
requirements, including scheduled repayments of term indebtedness, in the next
twelve months.
13
<PAGE>
PART II. - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits -- none
b) Reports on Form 8-K
Refer to Form 8-K dated August 16, 1995 and related Form 8-
K/A dated September 27, 1995 disclosing the acquistion of
the Roxanne, Harbour Casual, and Coco Reef tradenames by the
Company.
14
<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.
Apparel America, Inc.
------------------------------------------
Registrant
Date December 14, 1995 /s/ Frederick M. D'Amato
-------------------------------- ----------------------------------------
Frederick M. D'Amato, Vice President -
Finance, both on behalf of the
Registrant and as its Principal
Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEET AS OF OCTOBER 31, 1995 AND THE STATEMENT OF
INCOME FOR THE THREE MONTHS ENDED OCTOBER 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 7
<SECURITIES> 0
<RECEIVABLES> 3,383
<ALLOWANCES> 342
<INVENTORY> 14,117
<CURRENT-ASSETS> 17,669
<PP&E> 6,941
<DEPRECIATION> 5,243
<TOTAL-ASSETS> 25,657
<CURRENT-LIABILITIES> 16,873
<BONDS> 10,620
<COMMON> 386
4,560
40,484
<OTHER-SE> (47,266)
<TOTAL-LIABILITY-AND-EQUITY> 25,657
<SALES> 2,796
<TOTAL-REVENUES> 2,796
<CGS> 2,384
<TOTAL-COSTS> 2,384
<OTHER-EXPENSES> 1,955
<LOSS-PROVISION> 54
<INTEREST-EXPENSE> 171
<INCOME-PRETAX> (1,768)
<INCOME-TAX> 5
<INCOME-CONTINUING> (1,773)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,773)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
