<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- --------------
Commission file number 1-8176
------
LITTLEFIELD, ADAMS & COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey #22-1469846
- ----------------------------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
253 North First Avenue, Sturgeon Bay, Wisconsin 54235-2551
- --------------------------------------------------------------------------------
(Address of principal executive offices, and Zip Code)
Registrant's telephone number, including area code (414) 743-8743
--------------
- --------------------------------------------------------------------------------
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at June 30, 1996
----------------------- ----------------------------
<S> <C>
Common Stock, par value 2,279,647 shares
$1.00 per share
</TABLE>
<PAGE> 2
LITTLEFIELD, ADAMS & COMPANY
<TABLE>
<CAPTION>
INDEX Page No.
--------------------------------------------------- --------
<S> <C> <C>
Part I. Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Report of Independent Public Accountants 3
Consolidated Balance Sheets-
June 30, 1996 and December 31, 1995 4
Consolidated Statements of Operations -
for the three and six months ended
June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows -
for the six months ended
June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17
Part II. Other Information
Item 1. Legal Proceedings 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
</TABLE>
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 2
<PAGE> 3
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To the Board of Directors and Shareholders of
Littlefield, Adams & Company:
We have reviewed the accompanying consolidated balance sheet of Littlefield,
Adams & Company (a New Jersey corporation) and subsidiaries (the Company) as of
June 30, 1996, and the related consolidated statements of operations for the
three-month and six-month periods ended June 30, 1996 and 1995, and the
consolidated statements of cash flows for the six-month periods ended June 30,
1996 and 1995. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
/S/ ARTHUR ANDERSEN LLP /S/
Arthur Andersen LLP
San Antonio, Texas
August 1, 1996
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 3
<PAGE> 4
LITTLEFIELD, ADAMS & COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31,
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash $ 59 $ 241
Accounts receivable:
Trade, less allowances of $149 at 6/30/96 and
$288 at 12/31/95 562 1,010
Due from factor 1,996 --
Other 12 43
Inventories 2,434 3,332
Prepaid expenses and other current assets 163 163
------ ------
Total current assets 5,226 4,789
Property, plant and equipment, net 1,035 1,109
Goodwill, net 487 524
Notes receivable and other assets, net of allowances of
$75 at 6/30/96 and 12/31/95 256 254
------ ------
TOTAL ASSETS $7,004 $6,676
====== ======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable $1,183 $1,041
Accrued expenses 1,510 1,805
Notes payable -- 28
Factor borrowing 542 --
Revolving lines of credit 1,234 1,754
Current portion of long-term debt 424 456
------ -------
Total current liabilities 4,893 5,084
Creditors' debt settlement 109 109
Long-term debt, less current portion 3 10
Deferred compensation 49 49
Class action settlement payable in common stock 1,400 1,400
Commitments and contingencies -- --
Shareholders' investment:
Common stock, $1.00 par; authorized 25,000,000;
issued 2,296,145; outstanding 2,279,647 for 1996 and 1995 2,296 2,296
Capital in excess of par value 5,406 5,406
Accumulated deficit (7,049) (7,575)
------ -------
653 127
Treasury stock, at cost - 16,498 shares for 1996 and 1995 (103) (103)
------ -------
550 24
------ -------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $7,004 $6,676
====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 4
<PAGE> 5
LITTLEFIELD, ADAMS & COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the 3 months ended June 30, For the 6 months ended June 30,
1996 1995 1996 1995
------------------------------- -------------------------------
(DOLLARS IN THOUSANDS, (DOLLARS IN THOUSANDS,
Except per share amounts) Except per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Net product sales $ 3,026 $ 3,802 $ 6,421 $ 9,274
Other revenues 98 51 130 159
--------- --------- --------- ---------
Total revenues 3,124 3,853 6,551 9,433
Costs and expenses:
Cost of products sold 1,983 2,801 4,263 6,183
Selling and administrative 736 1,459 1,625 3,219
--------- --------- --------- ---------
Total costs and expenses 2,719 4,260 5,888 9,402
--------- --------- --------- ---------
Income (loss) from operations 405 (407) 663 31
Other income (expense):
Gain on sale of property and equipment 7 -- 7 --
Interest (61) (84) (122) (153)
---------- ---------- --------- ---------
Income (loss) before income taxes 351 (491) 548 (122)
Benefit (provision) for income taxes (11) 153 (22) 32
---------- ---------- --------- ---------
Net income (loss) $ 340 $ (338) $ 526 $ (90)
========= ========= ========= =========
Weighted average common shares outstanding 2,290,350 2,272,423 2,290,350 2,272,423
========= ========= ========= =========
Net income (loss) per common share $ 0.15 $ (0.15) $ .23 $ (0.04)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 5
<PAGE> 6
LITTLEFIELD, ADAMS & COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the 6 months ended June 30,
1996 1995
---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 526 $ (90)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 136 245
Gain on sale of property and equipment (7) --
Changes in operating assets and liabilities:
(Increase) decrease in accounts and other receivables, net (1,517) 1,299
(Increase) decrease in inventories, net 898 (379)
Increase in prepaid expenses and other current assets -- (48)
Increase (decrease) in accounts payable 142 (44)
Decrease in accrued expenses and other (295) (650)
------- --------
Net cash provided by (used in) operating activities (117) 333
Cash flows from investing activities:
Proceeds from sale of property and equipment 18 --
Purchase of property and equipment (36) (203)
Increase in notes receivable and other assets (2) (4)
------- --------
Net cash used in investing activities (20) (207)
Cash flows from financing activities:
Proceeds from line of credit and short term borrowings 4,835 10,526
Repayments of line of credit and short term borrowings (4,813) (10,671)
Payment on creditors' debt settlement -- (135)
Proceeds from bank and other notes payable -- 93
Repayment of bank and other notes payable (67) (55)
Cost to purchase treasury stock -- (68)
------- --------
Net cash used in financing activities (45) (310)
------- --------
Net decrease in cash (182) (184)
Cash at beginning of period 241 221
------- --------
Cash at end of period $ 59 $ 37
======= ========
Supplemental disclosures of cash flows information:
Cash paid during the period for interest $ 129 $ 160
Cash paid during the period for income taxes $ 25 $ 320
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 6
<PAGE> 7
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1: CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts of
Littlefield, Adams & Company and its subsidiaries, Medical Sales Associates,
Inc., Cornerstone Laboratories, Inc., and NUTECH, Inc. ("the Company"). The
former wholly owned subsidiaries, Collegiate Pacific Company and Sports
Imprints, Inc. were merged into Littlefield, Adams & Company effective June 30,
1995. Medical Sales Associates, Inc., Cornerstone Laboratories, Inc., and
NUTECH, Inc. were dissolved subsequent to December 31, 1995, and had no
significant operations for the year ended December 31, 1995, and no
consolidated assets or liabilities as of December 31, 1995. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The consolidated balance sheet at June 30, 1996, and the consolidated
statements of operations and cash flows for the interim periods ended June 30,
1996 and 1995, have been prepared by the Company without audit. In the opinion
of management, all adjustments, consisting only of normal recurring
adjustments, necessary to fairly present the consolidated financial position,
results of operations and cash flows have been made. However, it should be
understood that accounting measurements at interim dates may be less precise
than at year end. The results of operations for the interim periods are not
necessarily indicative of the operating results for a full year or of future
operations.
Certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted. The accompanying consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
Certain prior period amounts have been reclassified for comparative
purposes.
NOTE 2: NATURE OF BUSINESS
The Company is principally engaged in the imprinting and distribution of
knitted athletic and leisure wear products, under various license agreements.
Prior to August 31, 1995, the Company sold its products to customers in various
markets such as major nationwide retailers, college bookstores, resort areas
and theme parks across the United States. On August 31, 1995, the Collegiate
Pacific division was closed. Henceforth, the Company's distribution is
primarily to nationwide retailers.
NOTE 3: FUTURE OPERATIONS
The Company has been largely dependent on sales of Harley-Davidson
licensed products to generate cash flow from operations and provide funds to
meet the Company's obligations as they become due. Harley-Davidson advised the
Company that it desires to upgrade the quality of apparel associated with its
trademarks, trade dress and designs and to sell these licensed products through
second-tier department stores rather than mass merchandisers. Harley-Davidson
offered to enter into a new license agreement which would have allowed the
Company to move from the mass merchandising market into the second-tier
department store market. The Company declined this offer based on its
evaluation of Harley-Davidson as a second-tier department store license rather
than a mass merchandising market license. Accordingly, as described in Note 4,
the Company's Harley-Davidson license agreement will expire on December 31,
1996, and it will not be renewed. Sales of Harley-Davidson licensed products
accounted for 70% and 81% of total consolidated net product sales for the three
months ended June 30, 1996 and 1995, respectively. The termination of the
Company's relationship with Harley-Davidson as of December 31, 1996, could have
a material adverse effect on its future results of operations. In the event
that the Company cannot generate sufficient sales of other licensed products
subsequent to December 31, 1996, it is probable that the Company will not be
able to continue as a going concern. The accompanying consolidated financial
statements have been prepared assuming the Company will
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 7
<PAGE> 8
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
continue as a going concern which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
The Company incurred a net loss of $992 for the year ended December 31,
1995, had a working capital deficit of $295 at December 31, 1995, and has had
limited financial resources available to support future operations until such
time as sales of other licensed products are sufficient to generate positive
cash flow at levels necessary to meet the Company's obligations as they become
due. These factors raise substantial doubt concerning the ability of the
Company to continue as a going concern. The ability of the Company to continue
as a going concern is dependent upon the ongoing support of its customers and
creditors, and its ability to generate sales of other licensed products
subsequent to the termination of the Harley-Davidson license agreement.
In response to the matters discussed above, the Company has developed
certain new licenses as described in Note 4, and intends to pursue other new
license agreements throughout 1996 to replace the sales volume currently
attributable to the Company's Harley-Davidson licensed products. Further, the
Company had net income of $526 for the first six months of 1996, and had
working capital of $333 at June 30, 1996. Furthermore, the Company closed its
Collegiate Pacific Division, which incurred an operating loss of $495 for the
year ended December 31, 1995. This loss will be non-recurring for 1996 and
beyond. Closure of this division eliminates the negative operating cash flow
associated with these operations. The sale of various Collegiate Pacific assets
generated in excess of $600 during the first seven months of 1996, and was used
to reduce debt (Note 13). The Company is closing its Sturgeon Bay, Wisconsin
office in August 1996, and will consolidate those operations in Huber Heights,
Ohio. The Company believes that the consolidation of its operations in Ohio
will, over time, result in significant cost savings.
As part of its effort to enhance and stabilize its business through the
acquisition of significant new licenses and the development of new product
lines, the Company, during the quarter ended March 31, 1996, entered into a
two year license agreement with PepsiCo, Inc. for its soft drink brands (Note
4). Management anticipates that the Company's Pepsi and Mountain Dew lines of
product will have the potential to significantly decrease the Company's
dependence on sales of Harley-Davidson licensed products. The Company is also
pursuing other new license opportunities to further decrease that dependence.
See Note 4.
Management believes that if sales increase or remain at levels consistent
with those for 1995, income from operations will increase in 1996 due to
reductions in certain expenses. If accomplished, this combined with
anticipated 1997 sales of newly acquired licensed product, this will, in
management's estimation, generate sufficient cash flow from operations during
1996 and 1997 to sustain the Company at least through 1997, and support the
Company's effort to achieve sufficient sales revenue from new licenses to
offset the reduction in revenue resulting from the expiration of the
Harley-Davidson license on December 31, 1996. There can be no assurance,
however, that the Company will be successful in its efforts to maintain or
increase sales levels, or that the anticipated 1997 sales will be achieved, or
that, if it is able to do so, that the revenue from such sales will be
sufficient to sustain the Company for any particular period.
NOTE 4: CONCENTRATION OF SALES AND CREDIT RISK
Significant Customers-
The Company manufactures and sells imprinted apparel to retailers. The
Company's customers are reputable national retail discount chains. As discussed
in Note 7, effective February 1, 1996, the Company entered into a factoring
arrangement for all accounts, except the Company's largest retail customer.
The Company, at its option and its credit risk, can factor accounts receivable
that the factor does not approve for credit. Management believes that,
historically, bad debt expense has been minimal.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 8
<PAGE> 9
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Sales to two customers, which individually exceeded 10% of consolidated
net product sales, totaled 52% and 22% for the six months ended June 30, 1996.
Sales to the same two customers for the six months ended June 30, 1995 were 63%
and 4%, respectively. Trade receivable balances relating to these customers
were approximately $541 and $1,428 at June 30, 1996, and $713 and $197 at
December 31, 1995.
Significant Licensors-
The Company has two significant licenses: Harley-Davidson, which expires
December 31, 1996 and PepsiCo, Inc. (Pepsi and Mountain Dew), which expires
January 31, 1998.
Other licenses and their respective expiration dates are as follows:
<TABLE>
<CAPTION>
LICENSE EXPIRATION
-------------------- -------------
<S> <C>
The National Pastime December 1996
MGM / United Artists December 1997
Tales From the Crypt December 1997
</TABLE>
Harley-Davidson licensed sales accounted for 85% and 86% of consolidated
net product sales for the six months ended June 30, 1996 and 1995,
respectively. The Harley-Davidson license agreement will terminate on December
31, 1996, and will not be renewed. The Company's termination of the
relationship with Harley-Davidson could have a material adverse effect on its
future results of operations (Note 3).
In response to the Harley-Davidson license termination discussed above,
the Company has developed, and will continue to pursue, new license
opportunities in order to replace the sales volume attributable to the
Company's Harley-Davidson licensed products. During the quarter ended March
31, 1996, the Company entered into a two-year license agreement with PepsiCo,
Inc., covering PepsiCo soft drink brands for national distribution. Sales of
PepsiCo. licensed products, which began late in the second quarter of 1996,
were 24% of sales for the three months ended June 30, 1996. However, there can
be no assurance that the Company will be successful in its efforts to acquire
other significant new licenses or that, if it is able to do so, that the
revenue from such licenses will be sufficient to replace the sales volume and
revenue attributable to the Company's Harley-Davidson licensed products.
The minimum royalties to be paid in future years are:
<TABLE>
<S> <C>
Remainder of 1996 $ 98
1997 40
-----
$ 138
</TABLE>
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 9
<PAGE> 10
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 5.: INVENTORIES
Inventories are stated at lower of cost (determined by the first-in,
first-out method) or market (net realizable value). Costs include direct
materials, direct labor and certain indirect manufacturing overhead expenses.
<TABLE>
<CAPTION>
Inventories are summarized as follows:
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Raw materials $ 1,601 $ 1,945
Finished goods 1,080 1,788
Allowance for inventory obsolescence (247) (401)
------- -------
$ 2,434 $ 3,332
======= =======
</TABLE>
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Land $ 95 $ 95
Building and improvements 906 906
Machinery and equipment 1,511 1,609
------- -------
2,512 2,610
Less: Accumulated depreciation
and amortization (1,477) (1,501)
------- -------
$ 1,035 $ 1,109
======= =======
</TABLE>
NOTE 7: REVOLVING LINES OF CREDIT AND FACTOR BORROWING
On January 17, 1992, Collegiate Pacific Company entered into a line of
credit agreement with the Bank of Floyd, Virginia for a maximum principal
amount of $750 payable on demand, but not less than monthly payments of .25% of
the outstanding principal balance and accrued interest. Effective August 29,
1994, the Bank of Floyd reduced the maximum principal amount available to $500
payable on demand. In addition, the Bank of Floyd set the interest rate on the
line of credit at prime plus 1%. The Company is required to make monthly
payments of .25% of the outstanding principal balance and accrued interest
until the line is paid in full. Collateral consists of all of the plant and
equipment of Collegiate Pacific Company and is guaranteed by Littlefield, Adams
& Company. At June 30, 1996, there is no remaining availability under this
line of credit.
The Company had an accounts receivable financing agreement with Merchant
Factors Corp., which expired January 31, 1996, and which allowed the Company to
borrow up to 75% of net qualified accounts receivable. The balance as of
December 31, 1995, was approximately $1,269 and was repaid as the receivables
were collected. The agreement bore interest at prime plus 3.5%. The Company's
accounts receivable were the collateral for this loan, as well as the guarantee
provided by Littlefield, Adams & Company. Additionally, Merchant Factors
Corp., when needed, issued purchase guarantees and/or letters of credit against
this line of credit which are collateralized by the related inventory
purchases. At December 31, 1995, there were no outstanding purchase guarantees
and/or letters of credit
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 10
<PAGE> 11
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
issued by Merchant Factors Corp. At December 31, 1995, there were no
additional borrowings available under this agreement.
For the year ended December 31, 1995, Merchant Factors Corp., under a
special loan arrangement, lent the Company additional amounts not exceeding
$600 at any one time, secured by the Company's inventory. This arrangement was
repaid in full in January 1996.
Effective February 1, 1996, the Company entered into a new discount
factoring agreement with Merchant Factors Corp., which expires in August 1997.
All of the Company's accounts receivable which Merchant Factors Corp. approves
for credit, excluding Wal-Mart, are being factored at the rate of 1 1/8%, which
eliminates credit risk to the Company. The Company, at its option, can factor
at a rate of 1 1/8%, with recourse, accounts that Merchant Factors Corp. does
not approve for credit. Under this factoring agreement, the Company may borrow
up to 75% of the net accounts receivable at an annual interest rate of prime
plus 2.5%.
In addition, the Company has an accounts receivable financing arrangement
with Merchant Factors Corp., covering only its accounts receivable from
Wal-Mart. This agreement allows the Company to borrow up to 75% of its net
receivables from Wal-Mart at an annual interest rate of prime plus 5%. The
Company does not pay any factoring fees for the financing of the Wal-Mart
accounts receivable. At June 30, 1996, outstanding purchase guarantees and/or
letters of credit issued by Merchant Factors Corp. amounted to approximately
$387. At June 30, 1996, the combined remaining availability from Merchant
Factors Corp. was approximately $204.
Outstanding balances are as follows:
June 30, December 31,
1996 1995
-------- ------------
Bank of Floyd $ 478 $ 485
Merchant Factors - Line of Credit 756 1,269
------ ------
Subtotal - Revolving Lines of Credit 1,234 1,754
Merchant Factors - Factor borrowing 542 --
------ ------
Total $1,776 $1,754
====== ======
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 11
<PAGE> 12
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 8: LONG-TERM DEBT
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ----------
<S> <C> <C>
Long-term debt balances are as follows:
Mortgage payable, principal callable after
January 1995, interest at 9.38%, due July 1, 2003,
payable monthly, collateralized by real property $ 241 $ 253
Note payable to a bank, principal callable on demand,
due September 1, 1999, interest at 8.75%, payable
monthly, collateralized by machinery and equipment 173 192
Other 13 21
----- -----
Total debt 427 466
Less - current portion (424) (456)
----- -----
$ 3 $ 10
===== =====
<CAPTION>
Following are the maturities of long-term debt outstanding at June 30, 1996.
<S> <C>
Current $ 424
1997 2
1998 1
-----
$ 427
=====
</TABLE>
The schedule above reflects the classification of the mortgage payable and
the note payable to a bank as current maturities of long-term debt. The
Company believes the likelihood of the note payable being called is remote and
that the obligation will be satisfied by scheduled payments through September
1999. See Note 13 for discussion of the satisfaction of the mortgage payable
subsequent to June 30, 1996.
NOTE 9: COMMON STOCK
As of June 30, 1996 and December 31, 1995, the Company had issued a total
of 2,296,145 shares of its common stock. Treasury stock consisted of 16,498
shares, making a total of 2,279,647 shares outstanding.
The Registrant's Common Stock is traded on the American Stock Exchange
under the symbol "LFA". Currently, however, the Company does not fully meet
all of the financial guidelines for continued listing on the American Stock
Exchange, and accordingly, there can be no assurance that such listing will
continue.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 12
<PAGE> 13
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 10: INCENTIVE PLAN (THE "PLAN")
The Company has granted stock options to directors and employees as
follows:
<TABLE>
<CAPTION>
Number of Price Range of Shares Under
Shares Option
--------- ---------------------------
<S> <C> <C>
Outstanding, December 31, 1995 352,500
Canceled (2,500) $2.19
Granted 320,000 $1.25 - $2.00
Exercised -- --
-------
Outstanding, June 30, 1996 670,000
=======
Exercisable, June 30, 1996 670,000
</TABLE>
During the second quarter of 1996, an outside director was granted options
to purchase 5,000 shares under the Plan. The exercise price for these options
is $2.00 per share and the options are exercisable over a ten-year period.
None of these options has been exercised.
In addition, during the second quarter of 1996, as part of this Plan,
options to purchase 185,000 and 130,000 shares of common stock were issued to
officers and a group of key employees of the Company, respectively. The
exercise price for these options is $1.25 per share and the options are
exercisable over a ten-year period. None of these options has been exercised
or canceled.
NOTE 11: RELATED PARTY TRANSACTIONS
For the six months ended June 30, 1995, the Company paid approximately $33
in sales commissions to JSA, Inc., a sales and marketing company founded by
John K. Stuth, former Chairman of the Board of Directors, Chief Executive
Officer and President of Littlefield, Adams & Company. The relationship
between the Company and JSA, Inc. has been terminated. In January 1996, JSA,
Inc. made demand on the Company for $67 in sales commissions allegedly owed.
The Company believes that there is no legal basis for the demand and has so
advised JSA, Inc.
During the six months ended June 30, 1995, the Company incurred
approximately $95 in legal fees and reimbursed expenses to David M. Simmonds,
Esquire. Mr. Simmonds was elected President of the Company by the Board of
Directors on May 30, 1995. Currently, Mr. Simmonds is the Company's Chief
Executive Officer and Chairman of the Board of Directors. As a result, Mr.
Simmonds in now compensated as an employee of the Company.
NOTE 12: LEGAL MATTERS
Securities Class Action
The Company and certain of its current and past officers and directors,
and others, have been named as defendants in three actions brought by
individual plaintiffs, purportedly representing persons who purchased
securities of the Company during a total period running from July 1, 1991
through May 17, 1994. These actions were filed by the plaintiffs on July 22,
1993, August 13, 1993 and March 16, 1994. These actions have been consolidated
for discovery and pretrial purposes in the United States District Court of the
Western District of Texas and are captioned In re Littlefield, Adams & Co.
Securities Litigation, Civil Action No. SA 93 CA 0561 ("Consolidated Action").
The plaintiffs allege that the Company and certain of its current and past
officers and directors, and others violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated thereunder, and
other law, as a
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 13
<PAGE> 14
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
result of alleged misrepresentations and omissions in connection with the
annual report for 1992, the 1993 quarterly reports, and certain press releases.
The complaint also alleges a claim for treble-damages under the Racketeer
Influenced and Corrupt Organization Act, 18 U.S.C. Sec. 1964. The amount of
damages sought is not specified. On February 21, 1995, the Company reached an
agreement with the plaintiffs to settle these claims, as well as certain
related claims involving other parties. Under the terms of this agreement,
which is subject to court approval, the Company will issue $1,400 in stock and
pay $210 in cash to the members of the class to settle the claims brought by
the securities litigation plaintiffs. In return, the Company will receive
releases from the class plaintiffs and the other defendants. On April 3, 1996,
the Court issued an Order Preliminarily Approving Class and Derivative
Settlements and Providing for Notice.
Charlotte E. Picard, Derivatively on Behalf of Littlefield, Adams &
Company, v. Curtis A. Younts, Jr., et al.-
This action was filed in the United States District Court, Western
District of Texas on June 29, 1994, under Cause No. SA 94 CA 0544. The Company
is named as a nominal defendant. The complaint alleges that certain current
and former officers and directors of the Company, some of the Company's former
lawyers, and the Company's former auditors "damaged LFA by causing or
permitting LFA to commit securities fraud and by damaging or destroying the
Company's reputation," and otherwise. The parties to this action, with the
exception of certain of the Company's former lawyers, have agreed to settle
this action. Under the terms of this agreement, which is subject to court
approval, the Company's former auditors will pay $130 to the Company and the
Company will issue $50 in stock to those former auditors in settlement of
claims for fees. In addition, (1) John K. Stuth, the Company's former
Chairman of the Board and CEO, will relinquish to the Company rights that he
has to 5,000 shares of LFA stock and rights that he has to an option to acquire
50,000 shares of LFA stock; (2) Director Stanley Halbreich, currently the
Company's Treasurer and Chief Financial Officer, will relinquish to the Company
rights that he has to 5,000 shares of LFA stock; and (3) former President Wade
Hudman will return 1,000 shares of LFA stock to the Company. On April 3, 1996,
the Court issued an Order Preliminarily Approving Class and Derivative
Settlements and Providing for Notice.
Littlefield, Adams & Company v. Younts, et al.-
This action was filed on June 15, 1994, in the Texas District Court in the
57th Judicial District, Bexar County, Texas, by the Company against its former
Chairman, Curtis A. Younts, Jr., his wife and various of their affiliated
entities seeking the immediate repayment of $912 and other amounts alleged to
have been misappropriated by the defendants. Younts filed a counterclaim
against the Company seeking compensation for an unstated amount for services
and expense funds he claims to have provided the Company. The Company denies
that it owes any amount to Younts. As a result of Younts agreeing to
contribute $330 to settle the class action litigation described above, all of
the parties have agreed to dismiss their claims and provide mutual releases of
liability. This agreement is subject to the final judicial approval of the
Class and Derivative settlements, described above.
Curtis A. Younts, Jr. v. Littlefield, Adams & Company, et al.-
This action was filed on June 16, 1994, in the Texas District Court in the
169th Judicial District, Bell County, Texas, against the Company and one of its
officers by its former Chairman, Curtis A. Younts, Jr. Mr. Younts seeks an
unspecified amount for the reasonable value of his services, allegedly rendered
on behalf of the Company since 1991. The Company denies that it owes any
amount to Younts. As a result of Younts agreeing to contribute $330 to settle
the class action litigation described above, all of the parties have agreed to
dismiss their claims and provide mutual releases of liability. This agreement
is subject to the final judicial approval of the Class and Derivative
settlements, described above.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 14
<PAGE> 15
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Atkisson v. Littlefield, Adams & Company and Curtis A. Younts, Jr.
The Company and a former chief executive officer have been named as
defendants in an action filed on October 15, 1995 by A. Carroll Atkisson in the
United States District Court for the Western District of Virginia, Cause No.
95-1107-R. Atkisson was the owner of a company known as Personal Screening,
Inc. In approximately 1991, Atkisson transferred all of his stock in Personal
Screening, Inc. to LFA, in exchange for shares of LFA. Subsequently, Personal
Screening, Inc. was merged into Collegiate Pacific. Thereafter, Atkisson
served, for a period of time, as a director of LFA and an officer of Collegiate
Pacific.
Atkisson alleges that LFA has wrongly deprived him of a total of 52,500
(post-split) shares of LFA stock, to which he claims he is entitled in
compensation for services rendered as a director, pursuant to an alleged stock
option agreement, and otherwise. He alleges that he is entitled to damages, in
lieu of the referenced stock, of approximately $370. He also alleges that he
is entitled to damages of $16, which he claims to be owed by virtue of LFA's
breach of an employment agreement under which LFA allegedly promised to pay him
$4 per month salary for four months in 1993, but failed to do so. In an
apparently separate claim, he alleges what appears to be a claim for
compensatory damages of not less than $600. Atkisson's complaint seeks
judgment of $1,000.
The Company answered and filed a counterclaim on December 22, 1995. The
Company denies Atkisson's allegations against it, denies that it is indebted to
Atkisson in any amount and contends that it is entitled to recovery against
Atkisson on its counterclaims. In its counterclaim, the Company asserts causes
of action for breach of fiduciary duty, negligence, fraud, conspiracy and
violation of the Texas Deceptive Trade Practices Act. Trial has been set for
December 6, 1996. Based on the Company's belief that the plaintiff's claims
against it lack merit, the Company does not expect the outcome of this
litigation will have a material adverse effect on the Company's financial
position or results of operations.
Littlefield, Adams & Co. v. Midlantic Bank, N.A.
On October 17, 1995, the Company commenced an action against Midlantic
National Bank, N.A., in the District Court, 131st Judicial District, Bexar
County, Texas. The Company alleges that Midlantic, acting as transfer agent
for LFA, breached its contract and common law duties by facilitating the
wrongful transfer of shares of common stock, and in connection with a scheme
concocted by LFA's former chief executive officer, Curtis Younts, Jr., to steal
and convert shares of LFA's common stock which were legally and/or beneficially
owned by LFA. The Company seeks damages, from Midlantic, in a minimum amount
of $765, together with additional direct damages, and punitive damages under
applicable Texas law.
On December 15, 1995, Midlantic Bank counterclaimed on grounds that LFA's
action was brought in bad faith and for purposes of harassment. Midlantic
seeks unspecified damages, including attorneys fees and costs incurred in
defending the action, and damages under the Texas Deceptive Trade Practices
Act. The Company denies Midlantic's allegations.
Subsequent to the end of the second quarter, the Company and Midlantic
Bank reached an agreement to settle their claims, pursuant to which this action
will be dismissed. The terms of the settlement are subject to a
confidentiality agreement.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 15
<PAGE> 16
LITTLEFIELD, ADAMS & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Jerrold Luloff v Littlefield, Adams & Company, et al.-
In May 1996, the Company's former President, Co-CEO and director filed a
lawsuit against the Company and certain of its current officers and directors
in The Court of Common Pleas of Franklin County, Ohio. The plaintiff is
seeking combined damages of $284, plus punitive damages and attorney's fees,
based on an alleged breach by the Company of a purported severance agreement
relating to the plaintiff's termination/resignation as an officer, employee and
director of the Company.
The Company answered and filed a counterclaim on June 28, 1996. In its
counterclaim, the Company asserts causes of action for breach of fiduciary
duty, mismanagement and waste, conversion and defalcation, and for judgment
declaring that an alleged agreement under which Luloff claims rights and
benefits creates no such rights and entitles him to no such benefits. The
Company denies the plaintiff's allegations against it, and contends that it is
entitled to recover against Luloff on its counterclaim. Based on the Company's
belief that the plaintiff's claims against it lack merit, the Company does not
expect the outcome of this litigation will have a material adverse effect on
the Company's financial position or results of operations.
NOTE 13: SUBSEQUENT EVENTS
A. In August 1996, the Company reached a settlement of its litigation
with Midlantic National Bank. See Note 12.
B. In July 1996, the Company consummated the sale of real estate in
Roanoke, Virginia. As a result, the underlying mortgage on the property
was paid in full, and the balance of the proceeds were used to reduce
debt. Management anticipates a net gain of approximately $200 from this
transaction and the sales of other fixed assets will be reported in the
third quarter.
C. In July 1996, an order was entered by a court relieving the Company
of $109 of liability for the settlement of creditors' debt. The gain
from the extinguishment of debt, net of associated legal costs, will be
reported in the third quarter.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 16
<PAGE> 17
LITTLEFIELD, ADAMS, & COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net product sales decreased from $3,802,000 in the second quarter of 1995
to $3,026,000 in the second quarter of 1996, a decrease of 20%. Net sales for
the first two quarters of 1996 were $6,421,000 compared to $9,274,000 for the
first two quarters of 1995. The decrease was attributable primarily to the
closing of Collegiate Pacific and a slowdown in Harley-Davidson sales. Sales
of the Company's new Pepsi and Mountain Dew product lines did not commence
until late in the second quarter, but nonetheless constituted 24% of second
quarter sales.
For the second quarter of 1995 and 1996, other revenues increased from
$51,000 to $98,000, respectively, due to an increase in rental income and the
settlement of a sub-lease agreement relating to property the Company leased.
At this time, the Company does not expect to receive any material amounts of
other revenue during the remainder of 1996.
Gross profit margin, as a percentage of sales, for the second quarter
increased from 26% in 1995 to 34% in 1996, and year to date from 33% in 1995 to
34% in 1996. The increase was due to the sale of certain goods to smaller
customers which generated a higher margin. Selling and administrative expenses
were reduced from approximately $1,459,000 in the second quarter of 1995, to
$736,000 in the second quarter of 1996, a decrease of 50%. Year to date
selling and administrative expenses were 1,625,000 and 3,219,000 for 1996 and
1995, respectively. The decrease was attributable to the closing of Collegiate
Pacific and a reduction in royalties and overhead. Professional fees for the
quarter ended June 30, 1996, compared to second quarter of last year, declined
from $183,000 to $141,000. Professional fees for the six months ended June 30,
1996, amounted to $256,000 compared to $514,000 last year. Income from
operations, as a percentage of sales, for the second quarter was 13% and (11)%
for 1996 and 1995, respectively. For the six months ended June 30, income from
operations, as a percentage of sales, was 10% and 0.3% for 1996 and 1995,
respectively.
The above increases in income from operations were attributable to the
sale of certain goods to smaller customers which generated higher margins, and
reductions in salary expense, professional fees, royalties, bad debt expense
and the closing of Collegiate Pacific.
The Company has been largely dependent on sales of Harley-Davidson
licensed products to generate cash flow from operations and provide funds to
meet the Company's obligations as they become due. The Company's
Harley-Davidson license agreement will expire on December 31, 1996, and will
not be renewed. Sales of Harley-Davidson licensed products accounted for 70%
of net product sales for the quarter ended June 30, 1996. Sales of Pepsi and
Mountain Dew licensed products, which commenced late in the quarter, accounted
for 24% of net product sales for the quarter ended June 30, 1996. During the
first quarter, the Company acquired the license from PepsiCo, Inc. Management
anticipates that the Company's Pepsi and Mountain Dew lines of product will
have the potential to significantly decrease the Company's dependence on sales
of Harley-Davidson licensed products, however, there can be no assurance of
this. The Company is also pursuing other new license opportunities to further
decrease that dependence. If, however, the Company cannot generate sufficient
sales of licensed products other than Harley-Davidson after the termination of
the Harley-Davidson license on December 31, 1996, the Company may not be able
to continue as a going concern beyond 1997. The accompanying consolidated
financial statements have been prepared assuming the Company will continue as a
going concern which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. (Note 3).
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 17
<PAGE> 18
LITTLEFIELD, ADAMS, & COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company is also continuing its efforts to further reduce its
costs of operations during the current year. During 1995, the Company closed
its Collegiate Pacific Division, which incurred an operating loss of $495,000
for the year ended December 31, 1995. This loss will be non-recurring for 1996
and beyond. Closure of that division eliminates the negative operating cash
flow associated with those operations. The sale of various Collegiate Pacific
assets will generate in excess of $600,000 during 1996, which will be used to
reduce debt. The Company will close its Sturgeon Bay, Wisconsin office in
August 1996, and consolidate those operations in Huber Heights, Ohio. The
Company believes that the consolidation of its operations in Ohio will, over
time, result in significant cost savings. Management believes that if sales
increase or remain at levels consistent with those for 1995, income from
operations will increase in 1996 due to reductions in certain expenses which it
achieved during 1995 and 1996. (Note 3).
From December 31, 1995 to June 30, 1996, management's efforts to reduce
inventory by controlling purchases resulted in a decrease in net inventories of
$898,000. From June 30, 1995 to June 30, 1996, net inventories decreased by
$1,569,000. The inventory turnover rate, which increased, was approximately
3.5 turns per year as of June 30, 1996, compared to 3.1 turns per year as of
June 30, 1995.
LIQUIDITY AND CAPITAL SOURCES
- -----------------------------
At December 31, 1995, the Company had an accounts receivable financing
agreement with Merchant Factors Corp., which subsequently expired January 31,
1996, and which allowed the Company to borrow up to 75% of net qualified
accounts receivable. The balance as of December 31, 1995, was approximately
$1,269,000, and has been repaid as the receivables were collected. The
agreement bore interest at prime plus 3.5%; however the Company did not pay any
additional financing fees. The Company's accounts receivable were the
collateral for this loan, which was also guaranteed by Littlefield, Adams &
Company. (Note 7).
Effective February 1, 1996, the Company entered into a new discount
factoring agreement with Merchant Factors Corp., which expires in August 1997.
All of the Company's accounts receivable which Merchant Factors Corp. approves
for credit, excluding Wal-Mart, are being factored at the rate of 1 1/8%, which
eliminates credit risk to the Company. The Company, at its option, can factor
at a rate of 1 1/8%, with recourse, accounts that Merchant Factors Corp. does
not approve for credit. Under the factoring agreement, the Company may borrow
up to 75% of the net accounts receivable at an annual interest rate of prime
plus 2.5%. At June 30, 1996 the Company had factored receivables amounting to
$1,996,000, most of which had been approved for credit by Merchant Factors.
(Note 7).
In addition, the Company has an accounts receivable financing arrangement
with Merchant Factors Corp., covering only its accounts receivable from
Wal-Mart. This agreement allows the Company to borrow up to 75% of its net
receivables from Wal-Mart at an annual interest rate of prime plus 5%. The
Company does not pay any factoring fees for the financing of the Wal-Mart
accounts receivable. (Note 7).
In addition, Merchant Factors Corp. has periodically issued purchase
guarantees and/or letters of credit against this line of credit. At June 30,
1996, outstanding purchase guarantees and/or letters of credit issued by
Merchant Factors Corp. amounted to approximately $468,000. At June 30, 1996
the remaining availability from both agreements with Merchant Factors Corp. was
approximately $123,000. (Note 7).
For the six months ended June 30, 1996, cash used in operating activities
was $117,000, while $21,000 was used in investing activities. The Company
borrowed a total of $4,836,000 for the six months ended June 30, 1996 and
repaid $4,880,000, resulting in net cash of $44,000 being used in financing
activities. During the 1996 second quarter, there was a net decrease in cash
of $182,000. At June 30, 1996, the Company had working capital of $333,000
compared to a deficit of $295,000 at December 31, 1995.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 18
<PAGE> 19
LITTLEFIELD, ADAMS, & COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company believes that cash generated from operations and borrowings
under this factoring and line of credit agreement with Merchant Factors Corp.
will be adequate to fund working capital requirements, debt service payments
and planned capital expenditures through 1997. The Company expects to renew
its agreement with Merchant Factors Corp. when the current agreement expires in
August of 1997. However, the availability of cash flow from operations
subsequent to December 31, 1996 is dependent on the ability of the Company to
acquire and sell licensed products other than Harley-Davidson during the
balance of 1996 and throughout 1997. As discussed above, the success of the
Company's new Pepsi and Mountain Dew licensed products is an integral part of
that effort, although there can be no assurance that such licensed products
will be successful.
For a discussion of subsequent events which positively affect the
Company's liquidity and capital sources, refer to Note 13.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 19
<PAGE> 20
LITTLEFIELD, ADAMS & COMPANY
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS:
The Company is involved in various legal proceedings. Information
required by this Item is included in Note 12 to the interim
Consolidated Financial Statements, which information is incorporated
herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
(a) The 1996 annual meeting of shareholders was held on June 4,
1996, with a quorum of more than 50% of the outstanding
shares represent by proxy or in person.
(b) The following director was elected at the 1996
annual meeting - Stanley I. Halbreich. Directors William E.
Goettelman and David M Simmonds, previously elected as
directors for terms ending at the Annual Meeting of
Stockholders for 1998, and 1997, respectively, continue to
serve as directors of the Company.
(c) There were 1,890,908 votes cast for the election
of Mr. Halbreich, 41,451 votes were withheld, and there were
no broker non-votes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
27. Financial Data Schedule.
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 20
<PAGE> 21
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.
LITTLEFIELD, ADAMS & COMPANY
----------------------------
(Registrant)
Date: August 9, 1996 /s/ David M. Simmonds /s/
------------------------------------------
David M. Simmonds
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: August 9, 1996 /s/ Stanley I. Halbreich /s/
------------------------------------------
Stanley I. Halbreich
Chief Financial Officer, Treasurer
(Principal Financial & Accounting Officer)
Littlefield, Adams & Company, June 30, 1996 Form 10-Q; Page 21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 59
<SECURITIES> 0
<RECEIVABLES> 2,707
<ALLOWANCES> 149
<INVENTORY> 2,434
<CURRENT-ASSETS> 5,226
<PP&E> 2,512
<DEPRECIATION> 1,477
<TOTAL-ASSETS> 7,004
<CURRENT-LIABILITIES> 4,893
<BONDS> 3
0
0
<COMMON> 2,296
<OTHER-SE> (1,746)
<TOTAL-LIABILITY-AND-EQUITY> 7,004
<SALES> 6,421
<TOTAL-REVENUES> 6,551
<CGS> 4,263
<TOTAL-COSTS> 4,263
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 122
<INCOME-PRETAX> 548
<INCOME-TAX> 22
<INCOME-CONTINUING> 526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 526
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
<FN>
<F1>Bad debt expense of (104) is included in the 1,625 reported as Selling and
Administrative expenses.
</FN>
</TABLE>
