<PAGE> 1
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 SEPTEMBER 30, 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 1-9511
------
THE COAST DISTRIBUTION SYSTEM, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2490990
- -------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1982 ZANKER ROAD, SAN JOSE, CALIFORNIA 95112
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(408) 436-8611
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed, since last year)
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 XX NO
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
5,279,854 shares of Common Stock
as of October 22, 1998
<PAGE> 2
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 219 $ 308
Accounts receivable - net 14,066 11,268
Inventories 37,248 37,581
Other current assets 3,737 8,247
-------- --------
Total current assets 55,270 57,404
PROPERTY, PLANT, AND EQUIPMENT - NET 4,114 4,709
OTHER ASSETS 10,408 10,550
-------- --------
$ 69,792 $ 72,663
======== ========
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term obligations $ 2,700 $ 2,758
Accounts payable - trade 7,545 3,421
Other current liabilities 2,342 2,226
-------- --------
Total current liabilities 12,587 8,405
LONG-TERM OBLIGATIONS
Secured note payable to bank 19,230 25,121
Subordinated term note -- 2,334
Other long-term liabilities 2,227 2,453
-------- --------
21,457 29,908
REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 234 354
SHAREHOLDERS' EQUITY
Preferred stock, $.001 par value;
authorized: 5,000,000 shares;
none issued and outstanding: -- --
Common stock, $.001 par value;
authorized: 20,000,000 shares;
5,279,854 and 5,246,879 issued as of
September 30, 1998 and December 31, 1997,
respectively: 5 5
Additional paid-in capital 19,635 19,554
Cumulative translation adjustment (588) (305)
Retained earnings 16,462 14,742
-------- --------
35,514 33,996
-------- --------
$ 69,792 $ 72,663
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 3
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
INTERIM CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------
1998 1997 1998 1997
--------- ---------- --------- --------
<S> <C> <C> <C> <C>
Net sales $ 41,555 $ 37,847 $ 126,107 $114,652
Cost of sales, including distribution
costs 35,279 32,715 105,358 98,004
--------- ---------- --------- --------
Gross profit 6,276 5,132 20,749 16,648
Selling, general and administrative
expenses 5,501 5,188 15,540 15,917
--------- ---------- --------- --------
Operating income (loss) 775 (56) 5,209 731
Other income (expense)
Equity in net earnings of affiliates -- (311) -- 636
Interest (607) (787) (2,119) (2,630)
Other -- (822) -- (823)
--------- ---------- --------- --------
(607) (1,920) (2,119) (2,817)
---------- --------- --------- --------
Earnings (loss) before
income taxes 168 (1,976) 3,090 (2,086)
Income tax provision (benefit) 99 (526) 1,361 (493)
--------- ---------- --------- --------
NET EARNINGS (LOSS) $ 69 $ (1,450) $ 1,729 $ (1,593)
========= ========== ========= ========
Earnings (loss) per common
share (Note 3):
Basic $ .01 $ (.28) $ .33 $ (.31)
====== ====== ====== ======
Diluted $ .01 $ (.28) $ .33 $ (.31)
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Dollars in thousands)
Nine months ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,729 $(1,593)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 1,105 1,228
Equity in net earnings of affiliated companies -- (636)
Loss on sale of investment -- 523
Changes in assets and liabilities:
(Increase) in accounts receivable (2,798) (106)
Decrease in inventories 1,265 2,282
(Increase) in prepaids and other current assets (828) (182)
Increase in accounts payable 4,124 2,840
Increase in note, accrueds, and other
current liabilities 116 409
-------- -------
Total adjustments 2,984 6,358
-------- -------
Net cash from operating activities 4,713 4,765
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (1,142) --
Proceeds from sale of investment 5,338 4,024
Capital expenditures (137) (319)
(Increase) in other assets (21) (186)
-------- -------
Net cash used in investing activities 4,038 3,519
Cash flows from financing activities:
Net borrowings under line-of-credit agreement (5,891) (3,508)
Net borrowings (repayments) of other long-term debt (2,618) (2,401)
Issuance of Common Stock pursuant to Employee
Stock Option and Stock Purchase Plans 81 120
Redemption of redeemable preferred stock of subsidiary (120) (111)
Dividends on preferred stock of subsidiary (9) (10)
-------- -------
Net cash provided by (used in) financing activities (8,557) (5,910)
-------- -------
Effect of exchange rate changes on cash (283) (96)
-------- -------
NET INCREASE (DECREASE) IN CASH (89) 2,278
Cash beginning of period 308 214
-------- -------
Cash end of period $ 219 $ 2,492
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present the Company's financial position as of September 30, 1998 and the
results of its operations and cash flows for the three and nine month
periods ended September 30, 1998 and 1997. The accounting policies
followed by the Company are set forth in Note A to the Company's financial
statements in its Annual Report on Form 10-K for its fiscal year ended
December 31, 1997.
2. The Company's business is seasonal and its results of operations for the
three and nine month periods ended September 30, 1998 and 1997 are not
necessarily indicative of the results to be expected for the full year.
See "Management's Discussion & Analysis of Financial Condition and Results
of Operations" elsewhere in this Report.
3. Earnings per share are based upon the average number of common and common
equivalent (dilutive stock options and warrants) shares outstanding during
each period.
4. The Company leases its corporate offices, warehouse facilities and data
processing equipment. Those leases are classified as operating leases as
they do not meet the capitalization criteria of FASB Statement No. 13. The
office and warehouse leases expire over the next eleven years and the
equipment leases expire over the next four years.
The minimum future rental commitments under noncancellable operating
leases having an initial or remaining term in excess of one year as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Equipment Facilities Total
------------ --------- ---------- --------
(dollars in thousands)
<S> <C> <C> <C>
1998 $123 $2,395 $ 2,518
1999 57 1,523 1,580
2000 15 604 619
2001 8 577 585
2002 1 354 355
Thereafter -- 836 836
---- ------ -------
$204 $6,289 $ 6,493
==== ====== =======
</TABLE>
5. Certain reclassifications not affecting earnings or retained earnings have
been made to the prior years' financial statements to conform to the
current year presentation.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Factors Generally Affecting Sales of RV and Boating Products
The Company is the largest wholesale distributor of replacement parts,
accessories and supplies for recreational vehicles ("RVs"), and one of the
largest distributors of replacement parts, accessories and supplies for boats,
in North America. Sales are made by the Company to retail parts and supplies
stores, service and repair establishments and new and used RV and boat dealers
("After-Market Customers"). The Company's sales are affected primarily by (i)
usage of RVs and boats and (ii) sales of new RVs and boats, because consumers
often "accessorize" their RVs and boats at the time of purchase.
The usage and the purchase, by consumers, of RVs and boats depend, in
large measure, upon the extent of discretionary income available to consumers
and their confidence about economic conditions. Weather conditions also affect
the usage of RVs and boats. As a result, the Company's sales and operating
results can be, and in the past have been, adversely affected by recessionary
economic conditions, increases in interest rates, which affect the availability
and affordability of financing for purchases of RVs and boats, increases in
gasoline prices which adversely affect the costs of using RVs and boats, and
unusually adverse weather conditions.
Over the past three-to-four years, the recreational products
After-Market in North America has become increasingly competitive, as
participants in the After-Market have sought to reduce their costs of goods and
their prices and to increase market share. The Company, itself, was one of the
first After-Market participants to change its business by designing and
arranging for the manufacture, by third party manufacturers in North America,
Europe and Asia, of a growing line of proprietary products that it is able to
obtain at lower costs than functionally equivalent products from traditional
sources. More recently, some product manufacturers have chosen to integrate
their operations vertically to include distribution as well as manufacturing.
These developments resulted in significant changes in supply relationships
within the recreational products After-Market and adversely affected the
Company's operating results in 1997 and 1996. During 1997 the Company began
implementing strategies to respond to the changed conditions in the After-Market
which have resulted in improved 1998 operating results. However, there is no
assurance that other changes in supply relationships will not occur in the
future.
Results of Operations
NET SALES. Net Sales increased by approximately $3,708,000 or 10%, and
by approximately $11,455,000 or 10%, respectively, in the quarter and nine
months ended September 30, 1998, as compared to the corresponding quarter and
nine months of 1997. These sales increases were due to a strengthening in
consumer demand for the products that the Company sells, and, to the
acquisition, in May 1998, of the aftermarket wholesale distribution business of
Marine Distributors, Inc., which resulted in an increase in the Company's marine
product sales.
GROSS MARGIN. The Company's gross margin increased to 15.1% of net sales
in the three months ended September 30, 1998 from 13.6% for the same period of
1997. In the nine months ended September 30, 1998, the Company's gross margin
increased to 16.5% of net sales from 14.5% in 1997. These increases were due
primarily to (i) price increases on selected products that the Company sells,
and (ii) the impact of fixed costs on a higher sales base.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of net
sales, selling, general and administrative expenses decreased to 13.2% for the
third quarter of 1998 from 13.7% in the comparable quarter of 1997. In the nine
months ended September 30, 1998, these expenses decreased to 12.3% of net sales
from 13.9% for the same period of 1997. These decreases were primarily the
result of reductions in advertising and telephone expenses, and costs savings
resulting from a restructuring of the Company's sales force.
6
<PAGE> 7
OPERATING INCOME. Due to the combined effects of the increases in sales
and gross margin during the third quarter and nine months ended September 30,
1998, the Company increased its operating profits to $775,000 in the quarter
ended September 30, 1998 from an operating loss of $56,000 for the same quarter
of 1997 and to $5,209,000 for the nine months ended September 30, 1998 as
compared to $731,000 for the same nine month period of 1997.
EQUITY IN NET EARNINGS OF AFFILIATED COMPANIES. For several years, the
Company maintained ownership interests in several companies in related
industries ("affiliated companies"). The Company's ownership interests in these
affiliated companies were accounted for under the equity method of accounting,
under which the Company included in its operating results, as "equity in net
earnings (loss) of affiliates" its pro rata share of the net income of (or any
loss incurred by) these companies. H. Burden Limited ("Burden"), a distributor
of caravan and boating products in Western Europe, in which the Company had
owned a 35% ownership interest, and HWH, Inc., a manufacturer of hydraulic
leveling devices and other products for RVs, in which the Company held a 34%
ownership interest ("HWH), accounted for substantially all of the Company's
equity in the net earnings of affiliates. In the third quarter of 1997, the
Company sold its ownership interest in Burden for a cash price of $4,198,000;
and in early 1998, it sold its ownership interest in HWH for a cash price of
$5,338,000, in order to provide funds to support the growth of the Company's
core business of distributing aftermarket products in North America. As a
result, equity in the net earnings of affiliates was immaterial in the third
quarter and nine months ended September 30, 1998 and is not expected to be
material to the Company's operating results in the future.
INTEREST EXPENSE. In the quarter ended September 30, 1998, interest
expense declined by $180,000 or 23%, as compared to the same quarter of 1997.
Interest expense for the nine months ended September 30, 1998 decreased by
$511,000 or 19%, as compared to the same period of 1997. These decreases were
the result of reductions in average long-term borrowings outstanding during the
first nine months of 1998 as compared to 1997, which were funded primarily with
the net proceeds to the Company of the sales of its investments in Burden and
HWH and, to a lesser extent, internally generated funds. The Company will
continue to rely on borrowings to fund a substantial portion of its working
capital requirements and future growth and, as a result, it anticipates that
interest will continue to be a significant expense for the Company.
Liquidity and Capital Resources
The Company finances its working capital requirements for its operations
primarily with borrowings under a long-term revolving bank credit facility and
internally generated funds. Under that credit facility, the Company may borrow
up to the lesser of (i) $35,000,000 (subject to a seasonal reduction to
$30,000,000 between October 1 and January 1 of each year), or (ii) an amount
equal to 80% of its eligible accounts receivable and 50% of its eligible
inventory (the "borrowing base"). Borrowings under this credit facility bear
interest at a per annum rate of interest equal to the bank's prime rate plus
0.75% or, at the Company's option but subject to certain limitations, borrowings
under the credit facility will bear interest at the bank's available LIBOR rate,
plus 2.5% per annum. During the first nine months of 1998, borrowings under the
Company's revolving line of credit decreased by $5,891,000, as compared to
$3,508,000 in the same period of 1997 and, at October 21, 1998, outstanding
borrowings under the revolving credit facility were approximately $20,000,000.
The reductions were due primarily to the use of the net proceeds from the sale
of the Company's shares of HWH in the first quarter of 1998, and from the sale
of the Company's shares in Burden in the third quarter of 1997, to reduce
outstanding bank borrowings. Borrowings under the credit facility are secured by
substantially all of the Company's assets and rank senior in priority to other
indebtedness of the Company.
The Company made principal reduction payments of $2,333,000 on its
outstanding senior subordinated notes (the "Subordinated Notes") in each of 1998
and 1997, principally with borrowings under its long-term bank credit facility.
A final principal payment, in the amount of $2,334,000, is payable in June 1999.
7
<PAGE> 8
The Company believes that available credit under its revolving credit
facility, together with internally generated funds, will be sufficient to enable
the Company to meet its working capital requirements and other cash requirements
over the next twelve months.
During the nine months ended September 30, 1998, reductions in
inventories, increases in accounts payable and net income enabled the Company to
generate cash from operating activities of $4,713,000 as compared to $4,765,000
in the same nine months of 1997.
Net cash provided by investing activities was $4,038,000 in the nine
months ended September 30, 1998, as compared to $3,519,000 in the same period of
1997. During the first quarter of 1998, the Company received proceeds of
$5,338,000 for the sale of its investment in HWH. During the third quarter of
1997, the Company received proceeds of $4,024,000 from the sale of its
investment in Burden. In addition, in May 1998, the Company used cash of
$1,142,000 to acquire the inventory of Marine Distributors, Inc., a distributor
of marine products. Capital expenditures were $137,000 in 1998 and $319,000 in
1997.
Seasonality and Inflation
Sales of RV and boating parts, supplies and accessories are seasonal.
The Company has significantly higher sales during the six-month period from
April through September than it does during the remainder of the year. Because a
substantial portion of the Company's expenses are fixed, operating income
declines and the Company sometimes incurs losses and must rely more heavily on
borrowings to fund operating requirements in the months when sales are lower.
Generally, the Company has been able to pass inflationary price
increases on to its customers. However, inflation also may cause or may be
accompanied by increases in gasoline prices and interest rates. Such increases,
or even the prospect of increase in the price or shortages in the supply of
gasoline, can adversely affect the purchase and usage of RVs and boats, which
can result in a decline in the demand for the Company's products.
Year 2000
The Year 2000 issue ("Y2K") is the result of computer programs using a
two-digit format, as opposed to four digits, to indicate the year. Such computer
systems will be unable to interpret dates beyond the year 1999, which could
cause a system failure or other computer errors, leading to disruptions in
operations. In 1998, the Company developed a three-phase program for Y2K
information systems compliance. Phase I, which has been completed, involved the
identification of those operational areas in which the Company had exposure to
Y2K issues. Phase II involves the development and implementation of action plans
to be Y2K compliant in those areas, which is scheduled to be completed by late
1998. Phase III, to be completed by mid-1999, involves the final testing of each
major area of exposure to ensure compliance. The Company currently is proceeding
with Phase II of its Y2K program and has identified, and arranged for the
installation in early 1999 of, new Y2K compliant information systems to replace
existing, non-compliant systems, at a cost estimated to be approximately
$1,600,000. The Company expects to be able to finance the costs primarily
through equipment leasing or purchase money financing arrangements.
Phase III of the Company's compliance program, consisting of compliance
testing of the new systems, will begin shortly after their installation The
Company also has contacted its service providers, including its banks, and its
suppliers and customers that have computer and information systems the failure
of which could have a significant impact on the Company. Most of these
third-party service providers and suppliers and customers have advised the
Company that they expect to be Y2K compliant by the end of 1999.
8
<PAGE> 9
--------------------------------
This Report contains forward-looking information which reflects
Management's current views of future financial performance. The forward-looking
information is subject to certain risks and uncertainties, including, but not
limited to, the effect on future performance of changing product supply
relationships in the industry and the uncertainties created by those changes;
the potential for increased price competition; possible changes in economic
conditions, prevailing interest rates or gasoline prices, or the occurrence of
unusually severe weather conditions, that can affect both the purchase and usage
of RVs and boats and which, in turn, affects purchases by consumers of the
products that the Company sells; and the risks that the costs of resolving Y2K
issues could prove to be greater than currently anticipated or that the
Company's efforts to resolve those issues in a timely manner could prove to be
unsuccessful. For information concerning such factors and risks, see the
foregoing discussion in this section of this Report titled, "Management's
Discussion and Analysis of Financial Condition and Results of Operation." Due to
such uncertainties and risks, readers are cautioned not to place undue reliance
on such forward-looking statements, which speak only as of the date of this
Report.
PART II
ITEM 4. SUBMISSION OF MATTERS FOR VOTE OF SECURITY HOLDERS
(a) The Company's Annual Meeting of Stockholders was held on August 11,
1998.
(b) Set forth below is the name of each director elected at the meeting
and the number of votes cast for their election and the number of votes
withheld. The election was uncontested and there were no broker non-votes in the
election.
DIRECTORS ELECTED AT THE ANNUAL MEETING:
<TABLE>
<CAPTION>
Name of Number of Number of
Nominee/Director Votes "For" Votes "Withheld"
---------------- ----------- ----------------
<S> <C> <C>
Robert S. Throop 4,412,651 215,282
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K AND EXHIBITS
(a) Exhibits.
Exhibit 11.1 Computation of Earnings (Loss) Per Share for the
quarter and nine months, ended September 30, 1998
and 1997.
Exhibit 27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
9
<PAGE> 10
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.
Dated: November 12, 1998 THE COAST DISTRIBUTION SYSTEM, INC.
By: /s/ SANDRA A. KNELL
-------------------------------
Sandra A. Knell
Executive Vice President
and Chief Financial Officer
S-1
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered Page
- ------- -------------
<S> <C> <C>
Exhibit 11.1 Computation of Income (Loss) Per Share 12
for the Quarter and the Nine Months,
ended September 30, 1998 and 1997
Exhibit 27. Financial Data Schedule 14
</TABLE>
E-1
<PAGE> 1
EXHIBIT 11.1
THE COAST DISTRIBUTION SYSTEM, INC.
Computation of Earnings (Loss) Per Share
Quarter Ended September 30,
<TABLE>
<CAPTION>
1998
----------------------------------------------
Income (Loss) Shares Per-Share
(Numerator) (Denominator) Amount
------------- ------------- ---------
<S> <C> <C> <C>
Net earnings $69,000
Dividends paid on preferred
stock of subsidiary (3,000)
-------
Net earnings available to common
shareholders $66,000
=======
Basic and diluted earnings per share $66,000 5,279,854 $0.01
======= ========= =====
</TABLE>
<TABLE>
<CAPTION>
1997
----------------------------------------------
Income (Loss) Shares Per-Share
(Numerator) (Denominator) Amount
------------- ------------- ---------
<S> <C> <C> <C>
Net loss $(1,450,000)
Dividends paid on preferred
stock of subsidiary (3,000)
-----------
Net loss attributable to common
shareholders $(1,453,000)
===========
Basic and diluted earnings (loss) per share $(1,453,000) 5,246,879 $(0.28)
=========== ========= ======
</TABLE>
<PAGE> 2
EXHIBIT 11.1 (Cont.-)
THE COAST DISTRIBUTION SYSTEM, INC.
Computation of Earnings (Loss) Per Share
Nine Months Ended September 30,
<TABLE>
<CAPTION>
1998
----------------------------------------------
Income (Loss) Shares Per-Share
(Numerator) (Denominator) Amount
------------- ------------- ---------
<S> <C> <C> <C>
Net earnings $1,729,000
Dividends paid on preferred
stock of subsidiary (9,000)
----------
Net earnings available to common
shareholders $1,720,000
==========
Basic and diluted earnings per share $1,720,000 5,266,567 $0.33
========== ========= =====
</TABLE>
<TABLE>
<CAPTION>
1997
----------------------------------------------
Income (Loss) Shares Per-Share
(Numerator) (Denominator) Amount
------------- ------------- ---------
<S> <C> <C> <C>
Net earnings $(1,593,000)
Dividends paid on preferred stock
of subsidiary (10,000)
-----------
Net loss attributable to common
shareholders $(1,603,000)
===========
Basic and diluted earnings (loss) per share $(1,603,000) 5,235,489 $(0.31)
=========== ========= ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF, AND THE STATEMENT OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30,
1998 INCLUDED IN REGISTRANT'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER
ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
BALANCE SHEET AND STATEMENT OF OPERATIONS AND THE NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 219
<SECURITIES> 0
<RECEIVABLES> 14,066
<ALLOWANCES> 0
<INVENTORY> 37,248
<CURRENT-ASSETS> 55,270
<PP&E> 4,114
<DEPRECIATION> 0
<TOTAL-ASSETS> 69,792
<CURRENT-LIABILITIES> 12,587
<BONDS> 21,457
234
0
<COMMON> 5
<OTHER-SE> 35,590
<TOTAL-LIABILITY-AND-EQUITY> 69,792
<SALES> 126,107
<TOTAL-REVENUES> 126,107
<CGS> 105,358
<TOTAL-COSTS> 120,898
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,119
<INCOME-PRETAX> 3,090
<INCOME-TAX> 1,361
<INCOME-CONTINUING> 1,729
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,729
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
