<PAGE>
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 November 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: 1-9595
BEST BUY CO., INC.
(Exact Name of Registrant as Specified in Charter)
Minnesota 41-0907483
(State of Incorporation) (IRS Employer Identification Number)
7075 Flying Cloud Drive 55344
Eden Prairie, Minnesota (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: 612/947-2000
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 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
--- ---
At November 30, 1996, there were 43,273,152 shares of common stock, $.10 par
value, outstanding.
<PAGE>
BEST BUY CO., INC.
FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 1996
INDEX
Page
----
Part I. Financial Information
Item 1. Consolidated Financial Statements:
a. Consolidated balance sheets as of November 30, 1996, 3-4
March 2, 1996 and November 25, 1995
b. Consolidated statements of operations for the 5
three and nine months ended November 30, 1996
and November 25, 1995
c. Consolidated statement of changes in shareholders' 6
equity for the nine months ended November 30, 1996
d. Consolidated statements of cash flows for the 7
nine months ended November 30, 1996 and
November 25, 1995
e. Notes to consolidated financial statements 8
Item 2. Management's Discussion and Analysis of Financial 9-13
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
Part I - Financial Information
Item 1. Consolidated Financial Statements
BEST BUY CO., INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
($ in 000, except per share amounts)
<TABLE>
<CAPTION>
November 30, March 2, November 25,
1996 1996 1995
(Unaudited) (Unaudited)
------------ ----------- ------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 43,195 $ 86,445 $ 107,041
Receivables 217,106 121,438 191,920
Recoverable costs from developed
properties 91,420 126,237 129,302
Merchandise inventories 1,844,782 1,201,142 1,973,967
Deferred and refundable income taxes 32,478 20,165 21,728
Prepaid expenses 13,763 5,116 8,249
------------ ----------- ------------
Total current assets 2,242,744 1,560,543 2,432,207
PROPERTY AND EQUIPMENT, at cost:
Land and buildings 17,738 16,423 15,774
Property under capital leases 29,138 29,421 27,865
Leasehold improvements 140,842 131,289 120,904
Furniture, fixtures, and equipment 306,530 266,582 253,912
------------ ----------- ------------
494,248 443,715 418,455
Less accumulated depreciation and
amortization 173,783 132,676 120,668
------------ ----------- ------------
Net property and equipment 320,465 311,039 297,787
OTHER ASSETS:
Deferred income taxes - 7,204 11,058
Other assets 12,838 12,046 17,163
------------ ----------- ------------
Total other assets 12,838 19,250 28,221
------------ ----------- ------------
TOTAL ASSETS $ 2,576,047 $ 1,890,832 $ 2,758,215
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BEST BUY CO., INC.
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
($ in 000, except per share amounts)
<TABLE>
<CAPTION>
November 30, March 2, November 25,
1996 1996 1995
(Unaudited) (Unaudited)
------------ ----------- ------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Note payable, bank $ 271,500 $ - $ 310,000
Obligations under financing arrangements 124,632 93,951 174,402
Accounts payable 1,047,941 673,852 1,122,865
Accrued salaries and related expenses 33,686 26,890 34,747
Other accrued liabilities 153,292 125,582 145,653
Deferred service plan revenue
and warranty reserve 26,086 30,845 32,240
Accrued income taxes - - 10,437
Current portion of long-term debt 17,249 23,568 23,109
------------ ----------- ------------
Total current liabilities 1,674,386 974,688 1,853,453
Deferred Service Plan Revenue and Warranty
Reserve, Long-Term 29,208 48,243 55,333
Long-Term Debt 212,768 206,287 208,767
Convertible Preferred Securities of Subsidiary 230,000 230,000 230,000
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
authorized 400,000 shares; none issued
Common stock, $.10 par value; authorized
120,000,000 shares; issued and
outstanding 43,273,000, 42,842,000,
and 42,705,000 shares, respectively 4,327 4,284 4,271
Additional paid-in capital 241,196 236,392 235,284
Retained earnings 184,162 190,938 171,107
------------ ----------- ------------
Total shareholders' equity 429,685 431,614 410,662
------------ ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,576,047 $ 1,890,832 $ 2,758,215
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in 000, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
November 30, November 25, November 30, November 25,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 2,007,324 $ 1,929,277 $ 5,423,148 $ 4,641,884
Cost of goods sold 1,758,556 1,686,394 4,690,064 4,020,092
------------ ------------ ------------ ------------
Gross profit 248,768 242,883 733,084 621,792
Selling, general &
administrative expenses 251,878 200,295 703,558 543,638
------------ ------------ ------------ ------------
Operating income (loss) (3,110) 42,588 29,526 78,154
Interest expense, net 14,883 13,186 40,639 31,528
------------ ------------ ------------ ------------
Earnings (loss) before income
taxes (17,993) 29,402 (11,113) 46,626
Income tax benefit (expense) 7,020 (11,600) 4,337 (18,438)
------------ ------------ ------------ ------------
Net earnings (loss) $ (10,973) $ 17,802 $ (6,776) $ 28,188
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings (loss) per share $ (.25) $ .41 $ (.16) $ .65
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average common
shares outstanding (000) 43,251 43,525 43,119 43,628
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BEST BUY CO., INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996
($ in 000)
(unaudited)
Additional
paid-in Retained
Common stock capital earnings
------------ ---------- --------
Balance, March 2, 1996 $4,284 $236,392 $190,938
Stock options exercised 43 4,804
Net loss (6,776)
------ -------- --------
Balance, November 30, 1996 $4,327 $241,196 $184,162
------ -------- --------
------ -------- --------
See notes to consolidated financial statements.
6
<PAGE>
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in 000)
(unaudited)
Nine Months Ended
-------------------------
November 30, November 25,
1996 1995
------------ -----------
OPERATING ACTIVITIES:
Net earnings (loss) $ (6,776) $ 28,188
Charges to earnings not affecting cash:
Depreciation and amortization 50,743 40,320
Inventory write-down 15,000 -
------------ -----------
58,967 68,508
Changes in operating assets and liabilities:
Receivables (95,668) (107,480)
Merchandise inventories (658,640) (1,066,290)
Prepaid income taxes and expenses (11,564) (14,184)
Accounts payable 374,089 716,183
Other current liabilities 34,506 90,061
Deferred service plan revenue and warranty
reserve (23,794) 20,493
------------ -----------
Total cash used in operating activities (322,104) (292,709)
INVESTING ACTIVITIES:
Additions to property and equipment (60,169) (98,997)
Recoverable costs from developed properties 34,817 (43,080)
(Increase)decrease in other assets (792) 2,595
------------ -----------
Total cash used in investing activities (26,144) (139,482)
FINANCING ACTIVITIES:
Borrowings on revolving credit line, net 271,500 310,000
Increase in obligations under
financing arrangements 30,681 92,647
Long-term borrowings 21,542 -
Payments on long-term debt (21,380) (10,723)
Common stock issued 2,655 2,608
------------ -----------
Total cash provided by
financing activities 304,998 394,532
------------ -----------
DECREASE IN CASH AND CASH EQUIVALENTS (43,250) (37,659)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 86,445 144,700
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 43,195 $ 107,041
------------ -----------
------------ -----------
Amounts in this statement are presented on a cash basis and therefore may differ
from those shown in other sections of this quarterly report.
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest $ 41,411 $ 34,153
Income taxes $ (3,487) $ 27,578
See notes to consolidated financial statements.
7
<PAGE>
BEST BUY CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The consolidated balance sheets as of November 30, 1996, and November 25,
1995, the related consolidated statements of operations for the three and
nine months ended November 30, 1996 and November 25, 1995, the consolidated
statements of cash flow for the nine months ended November 30, 1996 and
November 25, 1995 and the consolidated statement of changes in
shareholders' equity for the nine months ended November 30, 1996, are
unaudited; in the opinion of management, all adjustments necessary for a
fair presentation of such financial statements have been included and were
normal and recurring in nature (see note 5). Interim results are not
necessarily indicative of results for a full year. These interim financial
statements and notes thereto should be read in conjunction with the
financial statements and notes included in the Company's Annual Report to
Shareholders for the fiscal year ended March 2, 1996.
2. RECLASSIFICATION:
Certain prior year amounts have been reclassified to conform to current
year presentation.
3. INCOME TAXES:
Income taxes are provided on an interim basis based upon management's
estimate of the annual effective tax rate.
4. EARNINGS PER SHARE:
Earnings per share relate to fully diluted earnings per share.
5. INVENTORY WRITE-DOWN:
The results of operations for the three and nine month periods ended
November 30, 1996 include a $15 million pretax charge to adjust certain
inventories, primarily personal computers, to their expected net realizable
values.
8
<PAGE>
BEST BUY CO., INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company reported a net loss of $11.0 million, or $.25 per share, for the
third quarter of fiscal 1997, compared to net earnings of $17.8 million, or $.41
per share, in the comparable period last year. For the first nine months of the
current fiscal year, a loss of $6.8 million, or $.16 per share, was reported
compared to earnings of $28.2 million, or $.65 per share, for the same period
last year. The results for the current quarter and year-to-date periods were
impacted by a rapid decline in the pricing of personal computers during the
quarter and continued softness in the consumer electronics and entertainment
software categories. A $15 million pretax charge was recorded in the third
quarter to adjust personal computer inventories to net realizable values based
on market pricing conditions at the end of the period. A decision to narrow the
Company's assortment of office supplies also contributed to that charge.
Results were also impacted by higher selling, general and administrative
expenses which, as a percent of sales, increased as a result of a decline in
comparable store sales and higher operating expenses associated with markets
entered in the past two years.
Revenues in the third quarter increased 4% to $2.007 billion compared to $1.929
billion in the third quarter last year. Revenues for the year-to-date period
increased 17% to $5.423 billion. The increases were due to the contribution
from the 21 new stores opened in the current year as comparable store sales
decreased 8% in the quarter and 1% for the year-to-date period. New stores
opened during the current fiscal year included five stores in the new market of
Philadelphia, Pennsylvania, in May and four stores in Tampa, Florida, in
October. The Company operated 272 stores at November 30, 1996 compared to 251
stores at November 25, 1995. The Company currently plans to open ten to fifteen
additional new stores in fiscal 1998, including entry into the new markets of
Pittsburgh, Pennsylvania, Knoxville, Tennessee and Palm Springs, California.
Comparable store sales results for the third quarter were impacted by difficult
comparisons from the prior year's third quarter when the Company reported a
comparable store sales increase of 11%. That increase was driven by the
introduction of extended consumer financing offers and the Windows '95
introduction which resulted in strong sales of personal computers.
Additionally, as reported earlier by the Company and other retailers in the
Company's sector, the consumer electronics and entertainment software categories
continue to be soft due to the general absence of new technology and lack of
consumer interest for new music titles. The weakness in these categories is
somewhat mitigated by comparable store sales increases in major appliances
resulting from an expansion of the Company's product assortment this year.
Sales of extended
9
<PAGE>
service plans also continue to show significant increases over last year.
However, because three of the Company's four major product categories are
expected to remain soft, total Company comparable store sales are expected to
show declines for the next several quarters.
Retail store sales mix by major product category for the third quarter and nine
month period was as follows:
Third Quarter Ended Nine Months Ended
-------------------- --------------------
11/30/96 11/25/95 11/30/96 11/25/95
-------------------- --------------------
Home Office 41% 46% 41% 42%
Consumer Electronics
Video 17 18 17 18
Audio 11 11 12 12
Entertainment Software 14 14 14 15
Appliances 9 6 9 8
Extended Service Plans 2 1 2 1
Other 6 4 5 4
---- ---- ---- ----
Total 100% 100% 100% 100%
---- ---- ---- ----
---- ---- ---- ----
Gross profit margins were 12.4% for the third quarter and 13.5% for the
year-to-date period compared to 12.6% and 13.4%, respectively, in the comparable
periods of the prior year. Margins in the current year periods were impacted by
intense competition in personal computers in anticipation of the introduction of
new products with Intel's MMX microprocessor in January 1997. As a result of
the need to reduce current inventories and the expected price compression when
the new models are introduced, the promotional activity of personal computer
manufacturers and retailers became extremely aggressive in November. Promotions
included sizable price reductions, free merchandise and financing offers used to
stimulate sales. Due to the sizeable price reductions, it was necessary to
adjust carrying values of personal computer inventories to their expected net
realizable values. That valuation, along with the Company's decision to narrow
its product assortment of office supplies, resulted in a $15 million write-down
of inventories at November 30, 1996. The charge impacted margins by .7% and .3%
for the quarter and year-to-date periods, respectively. Margins generated by
personal computers sold in November also negatively impacted gross profit
margins for the periods. Management expects that margin pressure will continue
in the personal computer category. Exclusive of the margin impact of the
current personal computer environment, the Company's gross profit margins have
improved in the current year. The improvement has come from the increased
contributions from sales of major appliances and extended service plans. These
two categories yield gross profit margins substantially higher than the Company
average. Major appliance sales have increased to 9% of total Company sales for
the current fiscal year compared to 7% for all of the prior fiscal year. The
contribution in
10
<PAGE>
the Company's sales mix from extended service plans in the current fiscal year
has increased to 2.1% of sales in the third quarter and 1.8% for the
year-to-date, compared to less than 1% in each of the comparable periods last
year. Extended service plans sold in the current year are administered and
insured by a third party, resulting in recognition of revenue and profit at the
time of sale. Revenues and profits from extended service plans sold through the
third quarter of last year are recognized over the lives of the contracts.
Announced consolidation and store closures by competitors could apply additional
margin pressure in the near term as inventories are liquidated, although reduced
competition may favorably impact margins in the long term.
Selling, general and administrative (S,G&A) expenses were 12.5% and 13.0% of
sales for the quarter and nine month periods, compared to 10.4% and 11.7%,
respectively, in the prior year. The increases in this ratio are due to the
decline in comparable store sales and the resulting loss of leverage on fixed
operating costs. Additionally, the higher operating costs of the stores opened
in the past two years have contributed to the increases in the ratio. Net
advertising expenses have also increased due to the promotional environment and
reduced advertising support from vendors due to a decline in purchase volumes.
Management expects that the S,G&A ratio in the next several quarters will be
higher than the comparable prior year periods due to expected declines in
comparable store sales.
Interest expense was moderately higher in the third quarter compared to the
comparable quarter of the prior year, in part due to slightly higher interest
rates. Interest expense for the year-to-date period has also increased compared
to the prior year due to higher levels of completed real estate held for sale,
as well as the utilization of the $230 million raised in a preferred securities
offering late in fiscal 1995 that resulted in lower net borrowings in the first
half of fiscal 1996.
FINANCIAL CONDITION
Working capital at November 30, 1996 was $568 million, essentially unchanged
from November 25, 1995. Cash and cash equivalents were $64 million lower than
the prior year third quarter end as receivables increased $25 million and bank
borrowings declined approximately $40 million. As a result of reduced buying
and tighter controls over purchases of personal computers in anticipation of the
January model transition, inventories were approximately $130 million below
prior year levels, despite the addition of 21 new stores. Accounts payable and
obligations under financing arrangements were a combined $125 million below year
ago levels. Other current assets increased as compared to the prior year and
last fiscal year end due mainly to refundable income taxes related to the
current year loss and the realization of the deferred income taxes previously
provided on deferred service plan revenues.
11
<PAGE>
At November 30, 1996, the Company owned eleven operating retail locations that
were available for sale and leaseback and included in recoverable costs from
developed properties. The Company also owns three retail locations under
development for opening in the next twelve months. Proceeds from the sale of
developed properties were approximately $61 million in the first nine months of
the current fiscal year and another $8 million subsequent to the end of the
third quarter. Through the first nine months of fiscal 1997, the Company's net
cash flow from developed properties was a positive $35 million compared to a net
outflow of $43 million in the first nine months of the prior year. The Company
expects to sell and lease back the majority of the remaining operating
properties, prior to the current fiscal year end. Conditions in the
marketplace for the Company's real estate and the economy in general may
affect the timing of sale/leaseback transactions.
The Company obtained $21 million from intermediate term equipment financings in
the first nine months of fiscal 1997. In June, the Company repaid the $8.7
million contract for deed on its corporate headquarters facility. The Company
has a commitment from a lender to provide a fifteen year mortgage on this
facility and this financing is expected to be completed in the fourth quarter.
The Company currently expects that capital spending for the fiscal year,
exclusive of property development costs anticipated to be recovered through
long-term financing, will approximate $90 million.
As a result of the operating results for the third quarter, the Company was in
violation of an interest coverage ratio financial covenant in its working
capital credit facility. In December, the Company and the participating banks
in the facility waived compliance with the covenant. The covenant was also
revised through the second quarter of the next fiscal year, after which the
covenant reverts to the original ratio. Management intends to work with the
bank group following the end of the current fiscal year to permanently amend and
extend the term of the facility which currently matures in June 1998. The
Company's ability to meet the interest coverage ratio, and other financial
covenants, is dependent upon future operating results.
The third quarter operating results also caused violations of the terms of two
of the Company's long-term real estate financings. The Company is in the
process of obtaining a waiver and permanent change to the violated covenant on
one of those financings. The other has been resolved under terms similar to
those in the working capital facility. Management expects to work with the
participants in this financing facility following the end of the fiscal year to
permanently address the covenant issue through the duration of this facility,
which currently extends through September 1998.
Management expects that funds available through cash flow from operations, the
Company's working capital credit facility as currently in place or modified in
the future, inventory financing facilities and customary vendor
12
<PAGE>
terms, will be sufficient to meet the Company's working capital needs for the
next year. Management believes that the Company will be able to obtain
sufficient borrowing capacity to meet its borrowing needs for the next year.
Management anticipates that expected improvement in inventory turns and an
anticipated substantial reduction in the amount of real estate held for sale
will likely reduce the Company's borrowing requirements in the coming year.
SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
The Company filed a Current Report on Form 8-K on May 8, 1996, with the
Securities and Exchange Commission. The Report contains cautionary statements
identifying important factors that could cause the Company's actual results to
differ materially from those projected in forward looking statements made by the
Company herein. Such forward looking statements include statements regarding
the Company's ability to comply with the covenants of its financing arrangements
and obtain adequate working capital financing.
13
<PAGE>
BEST BUY CO., INC.
Part II - Other Information
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
a. Exhibits: Method of Filing
----------------
11.1 Computation of net earnings (loss)
per common share Filed herewith
27.1 Financial Data Schedule Filed herewith
b. Reports on Form 8-K:
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEST BUY CO., INC.
(Registrant)
Date: January 13, 1997 By: /s/ ALLEN U. LENZMEIER
-------------------------------------
Allen U. Lenzmeier, Executive Vice
President & Chief Financial Officer
(principal financial officer)
By: /s/ ROBERT C. FOX
-------------------------------------
Robert C. Fox, Senior Vice President-
Finance & Treasurer (principal
accounting officer)
15
<PAGE>
EXHIBIT 11.1
BEST BUY CO., INC.
COMPUTATION OF NET EARNINGS (LOSS) PER COMMON SHARE
(Amounts in 000, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
November 30, November 25, November 30, November 25,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings (Loss):
Net earnings (loss) available
to common shares $ (10,973) $17,802 $(6,776) $28,188
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Shares:
Weighted average common shares
outstanding 43,251 42,692 43,119 42,569
Adjustments:
Assumed issuance of shares
purchased under stock
option plans - 833 - 1,059
------------ ------------ ------------ ------------
Total common equivalent shares 43,251 43,525 43,119 43,628
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings (loss) per common
share $ (.25) $ .41 $ (.16) $ .65
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Note: The computation of earnings per common share assuming full dilution
results in anti-dilution.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements for the periods indicated and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-1-1997
<PERIOD-START> MAR-3-1996
<PERIOD-END> NOV-30-1996
<CASH> 43,195
<SECURITIES> 0
<RECEIVABLES> 217,106
<ALLOWANCES> 0
<INVENTORY> 1,844,782
<CURRENT-ASSETS> 2,242,744
<PP&E> 494,248
<DEPRECIATION> 173,783
<TOTAL-ASSETS> 2,576,047
<CURRENT-LIABILITIES> 1,674,386
<BONDS> 212,768
0
0
<COMMON> 4,327
<OTHER-SE> 425,358
<TOTAL-LIABILITY-AND-EQUITY> 2,576,047
<SALES> 5,423,148
<TOTAL-REVENUES> 5,423,148
<CGS> 4,690,064
<TOTAL-COSTS> 4,690,064
<OTHER-EXPENSES> 703,558
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,639
<INCOME-PRETAX> (11,113)
<INCOME-TAX> (4,337)
<INCOME-CONTINUING> (6,776)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,776)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
