<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 JUNE 30, 1999
-----------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ------------------
Commission File 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)
350 WOODVIEW AVENUE, MORGAN HILL, CALIFORNIA 95037
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(408) 782-6686
- --------------------------------------------------------------------------------
(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.
4,450,041 shares of Common Stock as of July 30, 1999
<PAGE> 2
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, 1999 and December 31, 1998
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,774 $ 435
Accounts receivable - net 25,891 12,412
Inventories 40,456 37,246
Other current assets 824 2,258
-------- --------
Total current assets 69,945 52,351
PROPERTY, PLANT, AND EQUIPMENT - NET 4,001 3,904
OTHER ASSETS 9,395 10,558
-------- --------
$ 83,341 $ 66,813
======== ========
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term obligations $ 346 $ 2,696
Accounts payable - trade 14,964 4,647
Other current liabilities 1,901 2,071
-------- --------
Total current liabilities 17,211 9,414
LONG-TERM OBLIGATIONS
Secured note payable to bank 31,098 21,245
Other long-term liabilities 1,867 2,086
-------- --------
32,965 23,331
REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 197 237
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;
4,453,941 and 5,279,854 issued as of
June 30, 1999 and December 31, 1998,
respectively 4 5
Additional paid-in capital 17,124 19,635
Cumulative translation adjustment (507) (665)
Retained earnings 16,347 14,856
-------- --------
32,968 33,831
-------- --------
$ 83,341 $ 66,813
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 3
THE COAST DISTRIBUTION SYSTEM, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 49,624 $ 46,188 $ 90,753 $ 84,552
Cost of sales, including distribution
costs 40,243 38,204 74,244 70,079
-------- -------- -------- --------
Gross Profit 9,381 7,984 16,509 14,473
Selling, general and administrative
expenses 5,896 5,343 11,614 10,039
-------- -------- -------- --------
Operating income 3,485 2,641 4,895 4,434
Other income (expense)
Interest expense (670) (789) (1,291) (1,512)
Other 6 -- (6) --
-------- -------- -------- --------
(664) (789) (1,297) (1,512)
-------- -------- -------- --------
Income before income taxes 2,821 1,852 3,598 2,922
Income tax expense 1,666 800 2,103 1,262
-------- -------- -------- --------
NET INCOME $ 1,155 $ 1,052 $ 1,495 $ 1,660
======== ======== ======== ========
Income per common share:
Basic $ .25 $ .20 $ .31 $ .31
======== ======== ======== ========
Diluted $ .25 $ .20 $ .31 $ .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)
Six months ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,495 $ 1,660
-------- --------
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 758 715
Changes in assets and liabilities:
(Increase) in accounts receivable (13,479) (12,201)
(Increase) decrease in inventories (3,210) (727)
(Increase) decrease in prepaids and other current assets 1,434 (815)
Increase in accounts payable 10,317 10,781
(Increase) decrease in accrueds and other current liabilities (170) 110
-------- --------
Total adjustments (4,350) (2,137)
-------- --------
Net cash generated from (used in) operating activities (2,855) (477)
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired -- (1,142)
Capital expenditures (564) (68)
Decrease (increase) in other assets 872 117
Proceeds from sale of investment -- 5,338
-------- --------
Net cash used in (provided by) investing activities 308 4,245
Cash flows from financing activities:
Net borrowings under line-of-credit agreement 9,853 1,976
Net repayments of other long-term debt (2,569) (2,496)
Issuance of Common Stock pursuant to Employee
Stock Option and Stock Purchase Plans 86 81
Redemption of redeemable preferred stock of subsidiary (40) (59)
Dividends on preferred stock of subsidiary (4) (6)
Repurchases of Common Stock (2,598) --
-------- --------
Net cash provided by financing activities 4,728 (504)
Effect of exchange rate changes on cash 158 103
-------- --------
NET INCREASE IN CASH 2,339 3,161
Cash beginning of period 435 308
-------- --------
Cash end of period $ 2,774 $ 3,469
======== ========
</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 June 30, 1999 and the
results of its operations and cash flows for the three and six month
periods ended June 30, 1999 and 1998. 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, 1998.
2. The results of operations for the three and six month periods ended
June 30, 1999 and 1998 are not necessarily indicative of the results to
be expected for the full year. See, "Seasonality and Inflation" in Item
2 of Part I of this Report.
3. Earnings per share. Basic earnings per share are computed using the
weighted average number of common shares outstanding during the period.
Diluted earnings per share are computed using the weighted average
number of common and common equivalent shares outstanding during the
period. Common equivalent shares consist of the incremental common
shares issuable upon the exercise of stock options (using the treasury
stock method). Common equivalent shares are excluded from the
computation if their effect is anti-dilutive.
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 eight years
and the equipment leases expire over the next five years.
The minimum future rental commitments under noncancellable operating
leases having an initial or remaining term in excess of one year as of
December 3, 1998 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, EQUIPMENT FACILITIES TOTAL
------------ --------- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
1999 $57 $ 2,521 $2,578
2000 15 1,734 1,749
2001 8 1,632 1,640
2002 1 1,368 1,369
2003 -- 1,313 1,313
Thereafter -- 4,250 4,250
--- ------- -----
$81 $12,818 $12,899
=== ======= =======
</TABLE>
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, 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 recreational vehicle and
boat dealers ("After-Market Customers"). The Company's sales are affected
primarily by (i) usage of recreational vehicles and boats which affects the
consumers' needs for and purchases of replacement parts, repair services and
supplies, and (ii) sales of new recreational vehicles and boats, because
consumers often "accessorize" their recreational vehicles and boats at the time
of purchase.
The usage and the purchase, by consumers, of recreational vehicles 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 recreational vehicles 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 recreational vehicles and boats, increases in gasoline prices which
adversely affect the costs of using recreational vehicles and boats, and
unusually adverse weather conditions.
Results of Operations
Net Sales. Net sales increased both in the quarter and six months ended
June 30, 1999 by $3,436,000, or 7.4%, and $6,201,000, or 7.3%, respectively, as
compared to the corresponding periods of 1998. These sales increases were
primarily due to continued consumer demand for the products that we sell as a
result of increased sales of new and increased usage of existing recreational
vehicles and boats. Also contributing to these increases was the addition, in
the quarter and six months ended June 30, 1999, of sales from the business of
Marine Distributors, Inc. That business was acquired by us in May 1998 and,
therefore, did not make a meaningful contribution to our sales in the first half
of 1998.
Gross Margin. Our gross margin increased to 18.9% of net sales in the
three months ended June 30, 1999 from 17.3% for the same period of 1998. In the
six months ended June 30, 1999, our gross margin increased to 18.2% of net sales
from 17.1% in the same six months of 1998. These increases were due primarily to
(i) price increases on selected products that the Company sells, and (ii) a
change in the mix of products sold to include a greater proportion of
higher-margin items.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased in the quarter and six months ended June 30,
1999 by $553,000, or 10.3%, and $1,575,000, or 15.7%, respectively. These
increases were primarily attributable to costs associated with the relocation of
our corporate headquarters from San Jose, California to Morgan Hill, California,
and the installation of a new computer system, which will become operational in
the fourth quarter of 1999. Selling expenses also increased somewhat because of
the addition of sales personnel at our marine products division during the first
half of 1999.
6
<PAGE> 7
Operating Income. The increases in the Company's sales and gross margin
more than offset the effect of the Company's increased selling, general and
administrative expenses during the second quarter and six months ended June 30,
1999. As a result, the Company's operating income increased by 32%, to
$3,485,000, in the quarter ended June 30, 1999 as compared to $2,641,000 in the
same quarter of 1998, and by 10.4%, to $4,895,000, in the six months ended June
30, 1999 as compared to $4,434,000 in the same six months of 1998.
Interest Expense. In the quarter and six months ended June 30, 1999,
interest expense declined by $119,000 or 15.0%, and by $221,000, or 14.6%,
respectively, as compared to the corresponding periods of 1998. These decreases
were the result of reductions in average long-term borrowings outstanding during
the first six months of 1999 as compared to 1998, and a reduction in the rate of
interest the Company pays on its long-term borrowings. We will continue to rely
on borrowings to fund a substantial portion of our working capital requirements
and future growth and, as a result, we anticipate that interest will continue to
be a significant expense for us.
Liquidity and Capital Resources
We finance our working capital requirements for our operations
primarily with borrowings under a long-term revolving bank credit facility and
internally generated funds. Under that credit facility, we may borrow up to the
lesser of (i) $35,000,000 with a seasonal increase to $40,000,000 between March
1 and June 20 of each year, or (ii) an amount equal to 80% of its eligible
accounts receivable and 50% of its eligible inventory plus an additional amount
of up to $5,000,000 that may be used for general corporate purposes, such as
acquisitions or stock repurchases (the "borrowing base"). Borrowings under this
credit facility bear interest at a per annum rate of interest equal to the
bank's prime rate or, at the Company's option but subject to certain
limitations, at the bank's available LIBOR rate, plus 1.75% (or, in the case of
borrowings other than for working capital purposes, at Libor plus 2.25% per
annum. At July 30, 1999, outstanding borrowings under the revolving credit
facility were $26,100,000. 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 believes that available credit under the revolving credit
facility, together with internally generated funds, will be sufficient to enable
the Company to meet its working capital requirements over the next twelve
months.
The Company generally uses cash for, rather than generating cash from,
operations during the first half of the year, because the Company builds
inventories, and accounts receivables increase, as its customers begin
increasing their product purchases for the spring and summer selling months (see
"Seasonality and Inflation").
Net cash provided by investing activities was $308,000 in the first six
months of 1999, as compared to $4,245,000 in the same period of 1998. During the
first six months of 1998, the Company received cash proceeds of $5,338,000 from
the sale of an investment. 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 $564,000 in the first six months
of 1999 and $68,000 in the same period of 1998.
In June 1999, we made the final principal payment, in the amount of
$2,333,000, on our outstanding senior subordinated notes. In early 1999 we
commenced an open market and private stock repurchase program and, as of July
30, 1999, we had purchased $2,598,000 of shares of our common stock. We used a
combination of borrowings under the bank line of credit and internally generated
funds to make the principal payment on the senior subordinated notes and to fund
the purchase price paid for the repurchased shares.
7
<PAGE> 8
The Company leases the majority of its facilities and certain of its
equipment under non-cancelable operating leases. The Company's future lease
commitments are described in Note 4 of Notes to the Company's Interim Condensed
Consolidated Financial Statements included elsewhere in this report.
Seasonality and Inflation
Sales of recreational vehicle and boating parts, supplies and
accessories are seasonal. We have significantly higher sales during the
six-month period from April through September than we do during the remainder of
the year. Because a substantial portion of our expenses do not vary
significantly as a result of seasonal fluctuations in sales volume, 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 increases in the price or shortages in the supply of
gasoline, can adversely affect the purchase and usage of recreational vehicles,
which can result in a decline in the demand for the Company's products.
Year 2000
The software for most computer systems was written using two digits
(rather that four) to define the applicable year. As a result, those computer
systems will be unable to interpret dates beginning with the year 2000 ("Y2K"),
which could cause computer errors or even system failures, leading to
disruptions in operations.
The Company recently acquired a new primary computer system, as part of
a capital equipment improvement program, to take advantage of improvements in
computer technology and functionality that have occurred since the last major
upgrading of its computer systems. Although the primary purpose of acquiring the
new computer system was not to address the Y2K issue, the Company has been
assured by its computer vendors and consultants that the software employed by
the new system was written to recognize and process date sensitive information
after 1999 and that, as a result, the new computer system is Y2K compliant. Most
of the costs of the new and upgraded systems, which total approximately
$2,000,000 and are being financed with bank borrowings or equipment lease
financing, would have been incurred without regard to the Y2K issue. As a
result, the Company believes that the costs of achieving Y2K compliance will
represent only a fraction of the costs of obtaining the new system and such
costs will not have a material effect on the Company's financial condition or
operating results.
8
<PAGE> 9
The Company also uses other electronic and communication systems that
contained software that would be unable to interpret dates after 1999. As a
result, we developed a three-phase program designed to make those other systems
Y2K compliant. Phase I, which has been completed, involved the identification of
those systems. Phase II, which also has been completed, involved the development
and implementation of action plans, including the upgrading or replacement of
existing software, designed to make those systems Y2K compliant. Phase III, to
be completed during the fourth quarter of 1999, involves the final testing of
each of those systems and also the testing of the new computer system to ensure
that all of those systems are Y2K compliant.
Based on currently available information, the Company believes that the
impact of the Year 2000 issue, as it relates to its internal computer systems,
will not be material to the Company. However, notwithstanding the Company's Y2K
compliance and testing programs, it will not be possible, until the beginning of
2000, to determine, with certainty, whether or not some processing problems or
disruptions will occur that could cause delays in the processing, shipping and
invoicing of customer orders, the processing and transmission of product
purchase orders to and the receipt of products from vendors, and the gathering
and analysis of financial data used by the Company in its operations. The impact
of any such delays on the Company's operating results and financial condition
cannot be accurately predicted, however, as this would depend on which computer
systems are affected by the time it takes and the expense that must be incurred
to correct those problems.
The Company currently expects that most of its vendors and customers
that rely heavily on computer systems in transacting business with the Company,
including public utilities that provide telephone and other utility services to
the Company, and the financial institutions with which the Company has banking
and borrowing relationships, will be Y2K compliant prior to the beginning of
2000. However, that expectation is based on information furnished to the Company
by those vendors and customers, and the Company has no cost-effective means of
independently confirming that these third parties will, in fact, achieve Y2K
compliance in sufficient time to avoid disruptions in their businesses that
could affect the Company. As a result, the Company's business operations and its
results of operations could be adversely affected, if and to the extent its
major vendors or customers fail to remedy their Y2K issues on a timely basis.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk with respect to financial
instruments is primarily related to changes in interest rates with respect to
borrowings activities, which may adversely affect its financial position,
results of operations and cash flows. To a lesser degree, the Company is exposed
to market risk from foreign currency fluctuations associated with the Company's
Canadian operations and its Canadian currency denominated debt. The Company does
not use financial instruments for trading or other speculative purposes and is
not party to any derivative financial instruments.
In seeking to minimize the risks from interest rate fluctuations, the
Company manages exposures through its regular operating and financing
activities. As of June 30, 1999, the Company had outstanding $31.1 million under
its revolving credit facility. At June 30, 1999, a hypothetical 100 basis point
increase in interest rates would result in a reduction of approximately $150,000
in annual pretax earnings. The fair value of borrowings under the Company's
revolving credit facility approximate the carrying value of such obligations.
9
<PAGE> 10
The Company sometimes enters into forward exchange agreements to reduce
the effect of foreign currency fluctuations on a portion of its inventory
purchases in Canada for its Canadian operations. The gains and losses on these
contracts are reflected in earnings in the period during which the transactions
being hedged are recognized. The Company believes that these agreements do not
subject the Company to significant market risk from exchange rate movements
because the agreements offset gains and losses on the balances and transactions
being hedged. As of June 30, 1999, there were no such agreements outstanding.
Approximately 20% of our debt is denominated in Canadian currency,
which also exposes us to market risk associated with exchange rate movements.
Historically, the Company has not used derivative financial instruments to
manage its exposure to foreign currency rate fluctuations since the market risk
associated with our foreign currency denominated debt has not been considered
significant.
----------------
This Report contains forward-looking information which reflects
Management's current view 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 the changing product supply
relationships in the industry and the uncertainties created by those changes;
the potential for increased price competition; and 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 recreational vehicles and boats and which, in turn, affects purchases by
consumers of the products that the Company sells. 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.
10
<PAGE> 11
PART II
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 six months, ended June 30, 1999
and 1998.
Exhibit 27. Financial Data Schedule.
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed during the quarter ended June 30,
1999.
11
<PAGE> 12
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: August 12, 1999 THE COAST DISTRIBUTION SYSTEM, INC.
By: /s/ SANDRA A. KNELL
------------------------------------
Sandra A. Knell
Executive Vice President
and Chief Financial Officer
S-1
<PAGE> 13
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered Page
- ------- -------------
Exhibit 11.1 Computation of Income (Loss) Per Share 14
for the Quarter and the Six Months,
ended June 30, 1999 and 1998
Exhibit 27. Financial Data Schedule 16
<PAGE> 1
EXHIBIT 11.1
THE COAST DISTRIBUTION SYSTEM, INC.
Computation of Earnings Per Share
Quarter Ended June 30,
<TABLE>
<CAPTION>
1999
------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net earnings $1,155,000
Dividends paid on preferred stock of subsidiary (2,000)
----------
Net earnings available to common shareholders $1,153,000
==========
Basic and diluted earnings per share $1,153,000 4,625,403 $0.25
========== ========= =====
</TABLE>
<TABLE>
<CAPTION>
1998
------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net earnings $1,052,000
Dividends paid on preferred stock of subsidiary (3,000)
----------
Net earnings available to common shareholders $1,049,000
==========
Basic and diluted earnings per share $1,049,000 5,272,607 $0.20
========== ========= =====
</TABLE>
THE COAST DISTRIBUTION SYSTEM, INC.
Computation of Earnings Per Share
Six Months Ended June 30,
<TABLE>
<CAPTION>
1999
------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net earnings $1,495,000
Dividends paid on preferred stock of subsidiary (4,000)
----------
Net earnings available to common shareholders $1,491,000
==========
Basic and diluted earnings per share $1,491,000 4,883,033 $0.31
========== ========= =====
</TABLE>
<TABLE>
<CAPTION>
1998
------------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Net earnings $1,660,000
Dividends paid on preferred stock of subsidiary (6,000)
----------
Net earnings available to common shareholders $1,654,000
==========
Basic and diluted earnings per share $1,654,000 5,259,814 $0.31
========== ========= =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1999 AND THE STATEMENT OF EARNINGS FOR THE PERIOD ENDED
JUNE 30, 1999 INCLUDED IN REGISTRANT'S QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH BALANCE SHEET AND STATEMENT OF INCOME AND THE NOTES THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,774
<SECURITIES> 0
<RECEIVABLES> 25,891
<ALLOWANCES> 0
<INVENTORY> 40,456
<CURRENT-ASSETS> 69,945
<PP&E> 4,001
<DEPRECIATION> 0
<TOTAL-ASSETS> 83,341
<CURRENT-LIABILITIES> 17,211
<BONDS> 32,965
197
0
<COMMON> 17,128
<OTHER-SE> 16,347
<TOTAL-LIABILITY-AND-EQUITY> 83,341
<SALES> 90,753
<TOTAL-REVENUES> 90,753
<CGS> 74,244
<TOTAL-COSTS> 11,614
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,291
<INCOME-PRETAX> 3,598
<INCOME-TAX> 2,103
<INCOME-CONTINUING> 1,495
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,495
<EPS-BASIC> .31
<EPS-DILUTED> .31
</TABLE>
