<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 February 24, 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 1-8210
PAYLESS CASHWAYS, INC.
(Exact name of registrant as specified in its charter)
Iowa 42-0945849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Pershing Square
2300 Main, P.O. Box 419466
Kansas City, Missouri 64141-0466
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 234-6000
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.
Common Stock, $.01 par value, outstanding as of March 29, 1996:
Voting -- 37,669,436 shares
Class A Non-Voting -- 2,250,000 shares
<PAGE> 2
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (1)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
February 24, February 25,
1996 1995
----------------- ----------------
<S> <C> <C>
Income
Net sales $ 526,767 $ 556,218
Other income 1,597 1,344
----------------- ----------------
528,364 557,562
Costs and Expenses
Cost of merchandise sold 372,916 389,065
Selling, general and administrative 141,405 142,669
Provision for depreciation and amortization 13,184 14,689
Interest expense 15,352 15,273
----------------- ----------------
542,857 561,696
----------------- ----------------
LOSS BEFORE INCOME TAXES (14,493) (4,134)
Federal and state income taxes (6,870) (1,770)
----------------- -----------------
Loss before equity in loss of joint venture (7,623) (2,364)
Equity in loss of joint venture -- (1,500)
----------------- -----------------
NET LOSS $ (7,623) $ (3,864)
================= =================
Net loss per common share (2) $ (.23) $ (.13)
================= =================
Weighted average common shares outstanding 39,916 39,878
================= =================
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1)
<TABLE>
<CAPTION>
February 24, November 25, February 25,
(In thousands) 1996 1995 1995
------------- -------------- -------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 23,165 $ 960 $ 19,209
Merchandise inventories (3) 388,584 392,604 397,935
Prepaid expenses and other current assets 19,896 29,375 15,465
Deferred income taxes 19,083 19,740 9,927
------------- -------------- -------------
TOTAL CURRENT ASSETS 450,728 442,679 442,536
OTHER ASSETS
Real estate held for sale 9,224 6,082 5,496
Cost in excess of net assets acquired, less
accumulated amortization of $97,856,
$95,372 and $85,610, respectively 322,686 323,819 435,057
Deferred financing costs 11,014 11,421 12,533
Other 15,054 14,925 20,978
LAND, BUILDINGS AND EQUIPMENT 797,795 826,455 824,635
Allowance for depreciation and amortization (261,665) (280,945)
------------- -------------- (246,522)
TOTAL LAND, BUILDINGS AND EQUIPMENT 536,130 545,510 578,113
------------- -------------- -------------
$ 1,344,836 $ 1,344,436 $ 1,494,713
============= ============== =============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 4
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued (Unaudited) (1)
<TABLE>
<CAPTION>
February 24, November 25, February 25,
(In thousands) 1996 1995 1995
------------- -------------- -------------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 14,798 $ 31,472 $ 50,732
Trade accounts payable 179,622 159,844 142,250
Other current liabilities 147,090 146,278 117,466
Income taxes payable 5,304 6,685 8,929
------------- -------------- -------------
TOTAL CURRENT LIABILITIES 346,814 344,279 319,377
LONG-TERM DEBT, less portion
classified as current liability (4) 614,222 608,627 650,002
NON-CURRENT LIABILITIES
Deferred income taxes 59,631 59,994 71,566
Other 23,507 23,373 23,204
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value, 25,000,000 shares
authorized; issued:
Cumulative Preferred Stock, 406,000 shares,
$74.0 million aggregate liquidation preference 40,600 40,600 40,600
Common Stock, $.01 par value:
Voting, 150,000,000 shares authorized,
37,668,206, 37,663,922, and 37,662,022
shares issued, respectively 376 376 377
Non-Voting Class A, 5,000,000 shares
authorized, 2,250,000 shares issued 23 23 23
Additional paid-in capital 487,206 487,083 486,703
Foreign currency translation adjustment -- -- (1,905)
Accumulated deficit (227,543) (219,919) (95,234)
------------- -------------- -------------
TOTAL SHAREHOLDERS' EQUITY 300,662 308,163 430,564
------------- -------------- -------------
$ 1,344,836 $ 1,344,436 $ 1,494,713
============= ============== =============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1)
<TABLE>
<CAPTION>
(In thousands)
Thirteen Weeks Ended
----------------------------------------------------
February 24, February 25,
1996 1995
----------------- -----------------
<S> <C> <C>
Cash Flows from Operating Activities
Net loss $ (7,623) $ (3,864)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 13,184 14,689
Non-cash interest 600 550
Equity in loss of joint venture -- 1,500
Deferred income taxes 294 (941)
Other 394 332
Changes in assets and liabilities 20,975 2,657
----------------- -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 27,824 14,923
Cash Flows from Investing Activities
Additions to land, buildings and equipment (4,375) (19,278)
Proceeds from sale of land, buildings and equipment 11,893 22
Acquisition of business, excluding working capital
Land, buildings and equipment (193) --
Purchase price in excess of net assets acquired (1,351) --
Investment in joint venture -- (2,941)
Increase in other assets (129) (891)
----------------- -----------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 5,845 (23,088)
Cash Flows from Financing Activities
Retirements of long-term debt (4) (20,079) (3,666)
Proceeds from long-term debt 9,000 30,000
Sale of Common Stock under stock option plan 10 --
Other (395) (1,640)
----------------- -----------------
NET CASH USED IN FINANCING ACTIVITIES (11,464) 24,694
----------------- -----------------
Net increase in cash and cash equivalents 22,205 16,529
Cash and cash equivalents, beginning of period 960 2,680
----------------- -----------------
Cash and cash equivalents, end of period $ 23,165 $ 19,209
================= =================
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirteen weeks ended February 24, 1996 and February 25, 1995.
(1) The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. To the extent
that information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or
consistent with the audited consolidated financial statements
incorporated by reference in the Company's Form 10-K for the year ended
November 25, 1995, such information and footnotes have not been
duplicated herein. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation of financial statements have been reflected herein. The
November 25, 1995, condensed consolidated balance sheet has been derived
from the audited consolidated financial statements as of that date.
(2) Net loss per common share has been computed based on the weighted average
number of common shares outstanding during the period plus common stock
equivalents, when dilutive, consisting of certain stock options and
warrants. For purposes of this computation, net loss was adjusted for
dividend requirements on preferred stock.
(3) Approximately 83% of the Company's inventories are valued using the LIFO
(last-in, first-out) method. Because inventory determination under the
LIFO method is only made at the end of each fiscal year based on the
inventory levels and costs at that time, interim LIFO determinations must
necessarily be based on management's estimates of expected year-end
inventory levels and costs. Since future estimates of inventory levels
and costs are subject to change, interim financial results reflect the
Company's most recent estimate of the effect of inflation and are subject
to final year-end LIFO inventory amounts. If the FIFO (first-in,
first-out) method of inventory accounting had been used by the Company,
inventories would have been $29.0 million, $27.5 million and $24.5
million higher than reported at February 24, 1996, November 25, 1995 and
February 25, 1995, respectively.
(4) Long-term debt consisted of the following:
<TABLE>
<CAPTION>
February 24, November 25, February 25,
(In thousands) 1996 1995 1995
------------- -------------- ---------------
<S> <C> <C> <C>
Amended Credit Agreement $ 335,000 $ 326,000 $ 375,000
Mortgage loan payable to insurance company 118,934 138,987 150,551
Senior subordinated notes - 9-1/8% 173,655 173,655 173,655
Other senior debt 1,431 1,457 1,528
------------- -------------- -------------
629,020 640,099 700,734
Less portion classified as current liability (14,798) (31,472)
------------- -------------- (50,732)
$ 614,222 $ 608,627 $ 650,002
============= ============== =============
</TABLE>
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
INCOME
Net sales for the quarter ended February 24, 1996 decreased 5.3% from the same
period of 1995 in total and 6.8% on a comparable-store sales basis. (Comparable
stores are those open one full year.) Sales for the first quarter of 1996 were
negatively impacted by severe weather in many of the Company's markets and the
factors that adversely affected fiscal 1995: deflated lumber costs, a slower
housing environment, softness in consumer spending, competitive pressures and,
in a number of markets, an excess of retail space devoted to the sale of
building materials. Six stores were closed during the first quarter of 1996 in
connection with the restructuring plan announced in the fourth quarter of 1995.
Those six stores accounted for $4.9 million and $13.1 million of sales in the
first quarters of 1996 and 1995, respectively. During the first quarter of 1995,
the Company opened one new store and sold two stores.
COSTS AND EXPENSES
Cost of merchandise sold as a percent of sales was 70.8% and 70.0% for the first
quarter of 1996 and 1995, respectively. The increase was primarily due to the
Company's pricing initiatives.
Selling, general and administrative expenses were 26.8% and 25.6% of sales for
the first quarter of 1996 and 1995, respectively. The increase as a percent of
sales was due primarily to lower sales in 1996.
The provision for depreciation and amortization decreased from the first quarter
of 1995 due primarily to goodwill written-off and assets removed from service in
connection with the 1995 restructuring plan.
Interest expense for the first quarter of 1996 was essentially unchanged
compared to the same period of 1995. While borrowing levels were lower in 1996,
this was offset by higher rates under the Amended Credit Agreement.
The income tax benefit for the first quarter of 1996 was $6.9 million compared
to $1.8 million for the first quarter of 1995. The effective tax rates for both
periods were different from the 35% statutory rate primarily due to the effect
of goodwill amortization, which is non-deductible for income tax purposes. Such
tax benefits reflect management's estimates of the annual effective tax rates at
the end of each quarter.
NET LOSS
Net loss for the quarter ended February 24, 1996 was $7.6 million compared to
$3.9 million for the same period of 1995. The decrease in net loss was primarily
the result of decreased comparable store sales. Net loss for the first quarter
of 1995 also reflects a $1.5 million loss attributable to the Company's former
joint venture in Mexico discussed further below.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash is from operations. Cash provided by
operating activities was $27.8 million for the first quarter of 1996 compared to
$14.9 million for the same period of 1995. The primary reason for the increase
in cash from operating activities was an increase in trade accounts payable.
During the first quarter of 1996, the Company used cash of approximately $3.7
million in operating activities related to the execution of the 1995
restructuring plan announced in the fourth quarter of 1995. Due to seasonally
lower sales in the winter months, cash flow in the first quarter represents a
small amount of annual operating cash flow.
Borrowings are available under the Amended Credit Agreement to supplement cash
generated by operations. At February 24, 1996, $74.5 million was available for
borrowing under the Amended Credit Agreement. At February 24, 1996, working
capital was $103.9 million compared to $98.4 million and $123.2 million at
November 25, 1995 and February 25, 1995, respectively. The current ratios at
February 24, 1996, November 25, 1995, and February 25, 1995 were 1.30 to 1, 1.29
to 1, and 1.39 to 1, respectively.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
The Company's primary investing activities are capital expenditures for
strategic initiatives, renovation of existing stores, and additional equipment.
The Amended Credit Agreement governs the amount of capital expenditures which
can be made. The Company spent approximately $5.9 million and $19.3 million
during the first quarter of 1996 and 1995, respectively, for strategic
initiatives including the acquisition of a door and trim manufacturer during
January 1996, renovation of existing stores, additional equipment and, in fiscal
1995, new stores. The Company intends to finance the remaining fiscal 1996
capital expenditures of approximately $49 million, consisting primarily of
strategic initiatives, renovation of existing stores and additional equipment,
with funds generated from operations. For fiscal 1996, the Company has shifted
its emphasis from new store openings to an initiative that further addresses the
needs of the professional and do-it-yourself customers. Several stores have been
reoriented to concentrate on the professional customer and merchandise
assortment is being added to many stores to address do-it-yourself customer
demand for more choices of price, quality and style. During the first quarter of
1996, the Company sold a distribution center in connection with the 1995
restructuring plan, providing approximately $11.9 million of cash proceeds.
During the first quarter of fiscal 1995, the Company had also invested $2.9
million in its joint venture, Total Home de Mexico, S.A. de C.V. Significant
changes in the Mexican economy caused the Company to reassess its position and
sell its Mexican investment to an affiliate of its former joint venture partner
in October 1995.
The Company's most significant financing activity is and will continue to be the
retirement of indebtedness. In connection with the sale of the distribution
center, discussed above, and in anticipation of selling real estate related to
recently closed stores, the Company repaid approximately $16.5 million of
related indebtedness during the first quarter of 1996. Although the Company's
consolidated indebtedness is and will continue to be substantial, management
believes that, based upon its analysis of the Company's financial condition, the
cash flow generated from operations during the past 12 months and the expected
results of operations in the future, cash flow from operations and borrowing
availability under the Amended Credit Agreement should provide sufficient
liquidity to meet all cash requirements for the next 12 months without
additional borrowings.
The Amended Credit Agreement and certain lease agreements contain covenants
relating to, among other things, the maximum debt to earnings before interest,
taxes, depreciation, and amortization (EBITDA) ratios and minimum interest
coverage ratios. Compliance with these covenants is determined on a "rolling
four-quarter" basis. In order to achieve compliance with these covenants during
1996, the Company's operating results must substantially meet management's
expectations for the remainder of 1996. Management currently expects that it
will achieve compliance with these covenants throughout 1996; however, factors
beyond management's control, including economic conditions, lumber prices,
competitive conditions and weather, could cause non-compliance. If compliance
with these covenants is not achieved, the Company may be required to renegotiate
its existing covenants with lenders or to refinance borrowings. During the past
several years the Company has been able to negotiate operating flexibility with
its lenders, although future success in achieving any such renegotiations or
refinancings, or the specific terms thereof, including interest rates, capital
expenditure limits or borrowing capacity, cannot be assured.
Forward-looking statements in this Quarterly Report are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
There are certain important factors that could cause results to differ
materially from those anticipated by some of the statements made above.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. In addition to the factors discussed above, among the other factors
that could cause actual results to differ materially are the following: consumer
spending and debt levels; interest rates; housing activity, including existing
home turnover and new home construction; lumber prices; product mix; sale of
certain real estate; growth of certain market segments; competitive pressure on
sales and pricing, and an excess of retail space devoted to the sale of building
materials. Additional information concerning those and other factors is
contained in the Company's Securities and Exchange Commission filings, including
but not limited to the Form 10-K, copies of which are available from the Company
without charge.
<PAGE> 9
REVIEW BY INDEPENDENT AUDITORS
The condensed consolidated financial statements of Payless Cashways, Inc. and
its subsidiary for the thirteen week periods ended February 24, 1996 and
February 25, 1995, have been reviewed by KPMG Peat Marwick LLP, independent
auditors. Their report is included in this filing.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
A group of terminated employees and others have filed a lawsuit against
the Company and other named defendants in the United States District Court for
the Southern District of Iowa. (See the full description of the lawsuit in Item
3-Legal Proceedings contained in the Company's Form 10-K for the year ended
November 25, 1995.) The lawsuit was brought in connection with a reduction in
force pursuant to a January 1994 restructuring. The suit has asserted a variety
of claims including federal and state securities fraud claims, alleged
violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act,
federal and state claims of age discrimination, alleged violations of the
Employment Retirement Income Security Act of 1974, and various state law claims
including, but not limited to, fraudulent misrepresentation allegations. The
Company filed a motion to dismiss the majority of the claims; and Rulings and an
Order have been issued with respect thereto, substantially narrowing plaintiff's
legal claims by dismissing some age discrimination counts, all federal
securities fraud and RICO counts except one each, and all state law counts
related to an alleged partnership. An Answer to the Complaint has been filed and
discovery is proceeding.
The Company denies any and all claimed liability and is vigorously
defending this litigation, but, given the early state of this litigation, is
unable to estimate a potential range of monetary exposure, if any, to the
Company or to predict the likely outcome of this matter.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
4.0 Long-term debt instruments of Payless in amounts not
exceeding ten percent (10%) of the total assets of
Payless and its subsidiary on a consolidated basis will
be furnished to the Commission upon request.
11.1 Computation of per share earnings.
15.1 Letter re unaudited financial information - KPMG Peat
Marwick LLP.
27.1 Financial data schedule.
b. Reports on Form 8-K.
No reports on Form 8-K were filed by Payless during the quarter
ended February 24, 1996.
<PAGE> 10
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
SIGNATURE
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.
PAYLESS CASHWAYS, INC.
(Registrant)
Date: April 8, 1996 By s/Stephen A. Lightstone
---------------------------------------------
Stephen A. Lightstone, Senior Vice President,
Finance and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
<PAGE> 1
Exhibit 11.1
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
COMPUTATION OF PER SHARE LOSS
- -------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter and Year Ended
-----------------------------------------------
February 24, February 25,
1996 1995
------------ ------------
<S> <C> <C>
PRIMARY
- -------
Net loss $ (7,623) $ (3,864)
Less:
Preferred stock dividends (1,452) (1,341)
------------ ------------
Net loss available to common shareholders $ (9,075) $ (5,205)
------------ ------------
Weighted average common and dilutive common
equivalent shares outstanding 39,916 (1) 39,878 (1)
------------ ------------
Net loss per common share $ (.23) $ (.13)
============ ============
FULLY DILUTED
- -------------
Net loss $ (7,623) $ (3,864)
Less:
Preferred stock dividends (1,452) (1,341)
------------ ------------
Net loss available to common shareholders $ (9,075) $ (5,205)
------------ ------------
Weighted average common and dilutive common
equivalent shares outstanding 39,916 (1) 39,878 (1)
------------ ------------
Net loss per common share $ (.23) $ (.13)
============ ============
<FN>
(1) Due to a loss being incurred for the period, dilutive common equivalent
shares have not been computed as the resulting earnings per share would be
antidilutive.
</TABLE>
<PAGE> 1
EXHIBIT 15.1
- ------------
[Letterhead of KPMG Peat Marwick LLP]
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Payless Cashways, Inc.:
We have reviewed the accompanying condensed consolidated balance sheets of
Payless Cashways, Inc. and subsidiary as of February 24, 1996 and February 25,
1995 and the related condensed consolidated statements of operations and cash
flows for the thirteen week periods then ended. 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 as opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Payless Cashways, Inc. and
subsidiary as of November 25, 1995 and the related consolidated statements of
operations, shareholders' equity and cash flows for the fiscal year then ended
(not presented herein); and in our report dated January 9, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of November 25, 1995 is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
s/ KPMG Peat Marwick LLP
Kansas City, Missouri
March 11, 1996
<PAGE> 2
EXHIBIT 15.1
- ------------
[Letterhead of KPMG Peat Marwick LLP]
Payless Cashways, Inc.
Kansas City, Missouri
Gentlemen:
With respect to the subject registration statements on Form S-8 and Form S-3, we
acknowledge our awareness of the use therein of our report dated March 11, 1996
related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1993, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act.
s/ KPMG Peat Marwick LLP
Kansas City, Missouri
April 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
February 24, 1996, financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> FEB-24-1996
<CASH> 23165
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 388584
<CURRENT-ASSETS> 450728
<PP&E> 797795
<DEPRECIATION> 261665
<TOTAL-ASSETS> 1344836
<CURRENT-LIABILITIES> 346814
<BONDS> 614222
0
40600
<COMMON> 399
<OTHER-SE> 259663
<TOTAL-LIABILITY-AND-EQUITY> 1344836
<SALES> 526767
<TOTAL-REVENUES> 528364
<CGS> 372916
<TOTAL-COSTS> 372916
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15352
<INCOME-PRETAX> (14493)
<INCOME-TAX> (6870)
<INCOME-CONTINUING> (7623)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7623)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> 0
</TABLE>
