<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE PERIOD ENDED NOVEMBER 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER: 0-15017
BARRY'S JEWELERS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3746316
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 WEST LEMON AVENUE, MONROVIA, CA 91016
(Address of principal executive offices)
Registrant's telephone number, including area code: (818) 303-4741
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.
[X] Yes [ ] No
<PAGE> 2
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 27, 1996:
Common Stock, no par value, 3,999,416 shares
<PAGE> 3
BARRY'S JEWELERS, INC.
FORM 10-Q
NOVEMBER 30, 1996
INDEX
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements (Unaudited)
Balance Sheets
November 30, 1996 and May 31, 1996 2
Statements of Operations
Three and six months ended November 30, 1996 and 1995 3
Statements of Cash Flows
Six months ended November 30, 1996 and 1995 4
Notes to Financial Statements - November 30, 1996 5
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security - Holders 9
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE> 4
PART 1 - FINANCIAL INFORMATION
BARRY'S JEWELERS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, May 31,
1996 1996
(Unaudited) (Note)
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash $ 1,035,000 $ 1,765,000
Customer receivables, net of allowance for doubtful
accounts of $8,674,000 (November 30, 1996) and
$10,930,000 (May 31, 1996) 64,942,000 68,374,000
Merchandise inventories 73,531,000 54,559,000
Prepaid expenses and other current assets 1,849,000 2,031,000
------------ ------------
Total current assets 141,357,000 126,729,000
Net property and equipment 20,719,000 16,366,000
Deferred income taxes 122,000 122,000
Other assets, net of accumulated amortization of
deferred debt issuance costs of $2,254,000 (November 30, 1996)
and $1,864,000 (May 31, 1996) 3,490,000 2,756,000
------------ ------------
Total assets $165,688,000 $145,973,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 61,814,000 $ 181,000
Accounts payable - trade 26,566,000 3,837,000
Other accrued liabilities 6,489,000 5,336,000
------------ ------------
Total current liabilities 94,869,000 9,354,000
Long-term debt, less current maturities 50,000,000 103,398,000
Shareholders' equity
Common stock, no par value: authorized - 8,000,000
shares; issued and outstanding 3,999,416 shares 33,196,000 33,196,000
(Accumulated deficit) Retained earnings (12,377,000) 25,000
------------ ------------
Total shareholders' equity 20,819,000 33,221,000
------------ ------------
Total liabilities and shareholders' equity $165,688,000 $145,973,000
============ ============
</TABLE>
Note: The balance sheet at May 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See Notes to Financial Statements.
2
<PAGE> 5
BARRY'S JEWELERS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended November 30, Six Months Ended November 30,
------------------------------- -----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 29,348,000 $ 33,124,000 $ 55,449,000 $ 59,864,000
Finance and credit insurance charges 3,449,000 3,871,000 7,182,000 8,047,000
------------ ------------ ------------ ------------
32,797,000 36,995,000 62,631,000 67,911,000
Costs and expenses:
Cost of goods sold,
buying and occupancy 19,349,000 19,305,000 36,743,000 35,694,000
Selling, general and
administrative expenses 14,424,000 13,067,000 26,985,000 24,474,000
Provision for doubtful accounts 2,420,000 2,649,000 4,558,000 4,787,000
------------ ------------ ------------ ------------
Operating (loss) income (3,396,000) 1,974,000 (5,655,000) 2,956,000
Interest expense, net 3,259,000 2,719,000 5,871,000 5,377,000
------------ ------------ ------------ ------------
Loss before income taxes and
extraordinary item (6,655,000) (745,000) (11,526,000) (2,421,000)
Income taxes -- (298,000) -- (968,000)
------------ ------------ ------------ ------------
Loss before extraordinary item (6,655,000) (447,000) (11,526,000) (1,453,000)
Extraordinary item -- -- 876,000 --
------------ ------------ ------------ ------------
Net loss ($ 6,655,000) ($ 447,000) ($12,402,000) ($ 1,453,000)
============ ============ ============ ============
Loss per share:
Loss before extraordinary item ($ 1.66) ($ 0.11) ($ 2.88) ($ 0.36)
Extraordinary item -- -- ($ 0.22) --
------------ ------------ ------------ ------------
Net loss per share ($ 1.66) ($ 0.11) ($ 3.10) ($ 0.36)
============ ============ ============ ============
Weighted average common shares
outstanding 3,999,416 3,968,975 3,999,416 3,968,975
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 6
BARRY'S JEWELERS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended November 30,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Operating activities:
Net loss ($12,402,000) ($1,453,000)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 2,224,000 2,031,000
Provision for doubtful accounts 4,558,000 4,787,000
Loss on sale or abandonment of property and equipment 73,000 24,000
Changes in operating assets and liabilities:
Customer receivables (1,126,000) (3,142,000)
Merchandise inventories (18,972,000) (15,921,000)
Prepaid expenses and other current assets 158,000 (897,000)
Other assets (1,124,000) (472,000)
Accounts payable - trade 22,729,000 6,127,000
Accrued liabilities 1,153,000 (835,000)
------------ ------------
Net cash used in operating activities (2,729,000) (9,751,000)
Investing activities:
Purchase of property and equipment (6,319,000) (2,865,000)
Proceeds from sale of equipment 83,000 --
------------ ------------
Net cash used in investing activities (6,236,000) (2,865,000)
Financing activities:
Principal payments on long-term debt (90,000) (244,000)
Repayment under securitization facility (45,119,000) --
Net borrowings under revolving facility 53,444,000 12,196,000
------------ ------------
Net cash provided by financing activities 8,235,000 11,952,000
------------ ------------
Decrease in cash (730,000) (664,000)
Cash at beginning of period 1,765,000 954,000
------------ ------------
Cash at end of period $1,035,000 $290,000
============ ============
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 7
BARRY'S JEWELERS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PREPARATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months and the six months ended
November 30, 1996 are not necessarily indicative of the results that may be
expected for the year ending May 31, 1997. For further information, refer to the
financial statements and footnotes thereto included in the Registrant Company's
Annual Report on Form 10-K for the year ended May 31, 1996 and its Annual Report
on Form 10-K/A for the year ended May 31, 1995.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the impairment
of long-lived assets and for long-lived assets to be disposed of". This
statement is effective for the Company beginning June 1, 1996. Among other
provisions, the statement standardizes the accounting practices for the
recognition and measurement of impairment losses on certain long-lived assets.
Adoption of the statement did not have a material impact on the Company's
financial statements.
The Company currently accounts for its stock-based compensation plans
using the provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25). In 1995, the Financial Accounting
Standards Board issued a new statement on accounting for stock-based
compensation (SFAS 123). This statement is effective for the Company beginning
June 1, 1996. Among other provisions, the statement allows companies to elect to
account for stock-based compensation plans using a fair-value-based method or
continue measuring compensation expense for those plans using the intrinsic
value method prescribed in APB 25. SFAS 123 requires that companies electing to
continue using the intrinsic value method must make pro forma disclosures of net
income and earnings per share as if the fair-value-based method of accounting
had been applied. The adoption of SFAS 123 will be reflected in the Company's
1997 fiscal year-end financial statements. As the Company will continue to
account for stock-based compensation using the intrinsic value method, SFAS 123
will not have an impact on the Company's results of operations or financial
position but will require additional disclosures.
During the first quarter of fiscal 1997, the Company was notified that
the agent under the accounts receivable securitization facility established in
December 1995 (the "Securitization Facility") desired to extinguish the
commitment under the facility. Consequently, on August 30, 1996, the Company
entered into a Second Amended and Restated Revolving Credit Agreement
5
<PAGE> 8
with its syndicate of banks (the "Amended Revolving Credit Agreement"). Funds
drawn under the Amended Revolving Credit Facility were used, in part, to
refinance the Securitization Facility, which was thereupon terminated. In
connection with the Amended Revolving Credit Agreement, the Company incurred
financing fees of approximately $2,300,000, which will be charged to earnings
over the life of the facility. Such financing fees are included in the
accompanying balance sheet. During the first quarter of 1997, the Company
recorded an extraordinary charge of $876,000 that is composed of deferred
financing fees related to the terminated Securitization Facility.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net sales in the second quarter of fiscal year 1997 decreased
$3,776,000 or 11.4%, versus net sales in the comparable quarter of the previous
year. Net sales from comparable stores (those open both the entire quarter this
year and the corresponding quarter of the previous year) also decreased, by
14.9%. The decrease in comparable store sales was partially offset by sales from
the addition of 13 net new stores opened since August 31, 1995. For the first
six months of fiscal year 1997, net sales of $55,449,000 were $4,415,000 or 7.4%
lower than the comparable period of the prior year. Net sales in comparable
stores decreased 10.7% over the prior year's six month period. A total of
twelve net new stores have opened since May 31, 1995. The sales decrease in both
the second quarter and first half was due, in part, to tighter credit standards
implemented in November 1995, which has reduced sales in the short term
but favorably impacted the quality of receivables, lower than expected average
unit sales, and an inventory imbalance at stores converted to the super store
format in the prior fiscal year. Finally, net sales were adversely impacted by
five fewer selling days between Thanksgiving and November 30th in 1996 than
there were in 1995.
Finance and insurance revenues decreased $422,000 or 10.9%, and
$865,000 or 10.7%, for the three- and six-month periods of fiscal year 1997
versus the comparable periods of the previous year due, in part, to a decrease
in the average total outstanding customer receivables. The average total
outstanding customer receivables for the 6 months ended November 30, 1996 were
$74,713,000, a decrease of $2,384,000, or 3.1%, from the prior year. The
remaining decrease in finance and insurance revenues was due primarily to
a decrease in the average effective finance charge rate.
Cost of goods sold, buying and occupancy expenses were 65.9% and 58.3%
of net sales for the second quarter of fiscal years 1997 and 1996, respectively.
For the comparable six month periods, cost of goods sold, buying and occupancy
expenses were 66.3% and 59.6% of net sales, respectively. The increases in both
periods were due, in part, to a combination of the Company's continued value
pricing strategy, rent which is largely a fixed expense, and a higher shrinkage
reserve in fiscal 1997 than in fiscal 1996. Cost of goods sold was also impacted
by the sales mix of promotionally priced merchandise and a competitive
discounting environment.
6
<PAGE> 9
Selling, general and administrative expenses were 49.1% and 39.4% of
net sales for the three months ended November 30, 1996 and November 30, 1995,
respectively. The dollar increase was 10.4% for the second quarter of the
current year. For the six months ended November 30, 1996 and November 30, 1995,
selling, general and administrative expenses as a percentage of net sales were
48.7% and 40.9%, respectively. The dollar increase was 10.3% for the first half
of the current year. The increases as a percentage of sales are attributable
principally to the decline in net sales for both periods. The dollar increases
for both periods, which approximately reflect the growth in net new stores, were
primarily the result of increases in advertising and display, professional
services, and other miscellaneous expenses, but partially offset by decreases in
telephone expense.
The provision for doubtful accounts was 8.2% of net sales in the second
quarter and first half of fiscal year 1997 compared to 8.0% for the comparable
periods in the prior year. For the fiscal year ended May 31, 1996, the provision
for doubtful accounts was 8.4% of net sales.
Net interest expense increased $540,000 and $494,000 in the three- and
six-month periods ended November 30, 1996, respectively, versus the comparable
periods of the prior year. Such increase in the second quarter of the current
year was primarily due to a combination of an increase in the amortization of
deferred financing fees associated with the Amended Revolving Credit Agreement
and an increase in average total long-term debt. The average total long-term
debt for the second quarter of the current year was approximately $9.8 million
higher than the comparable period of the prior year.
The effective tax rates for both the three and six month periods ended
November 30, 1996 were 0% compared to 40% in the same periods of the prior
year. The benefit for income taxes was calculated based on the Company's
expected annual effective tax rate for each year. As described more fully below
under "Liquidity and Capital Resources," the Company has available net operating
loss carryovers (the "NOL") to offset future taxable income.
Liquidity and Capital Resources
The Company's operations require working capital to fund the purchase
of inventory and growth of customer receivables. Also, the seasonality of the
Company's business requires a significant build-up of inventory for the December
holiday selling period. These additional inventory needs must be funded during
the late summer and fall months because of the necessary lead time to obtain
additional inventory. The heavy holiday selling period leads to a seasonal
build-up of customer receivables that must be funded during the winter and
spring months.
In addition, the Company requires working capital to fund capital
expenditures. Capital expenditures for the first six months of fiscal year 1997
and 1996 were $6,319,000 and $2,865,000, respectively. Such expenditures were
made primarily in connection with the opening of 17 new stores and the
remodeling of 9 stores during the first six months of fiscal year 1997, and the
opening of 4 new stores and remodeling of 14 stores in the same period of fiscal
year 1996, respectively. The Company intends to continue improving its existing
operations through increased inventory investment in existing high-volume
locations while also carrying out a multi-year new store expansion program. As
of November 30, 1996, the Company has
7
<PAGE> 10
completed its planned new store expansion for fiscal 1997. Through the end of
fiscal 1997, additional capital expenditures estimated at $475,000 are expected
to be incurred for upgrading certain of the Company's management information
systems and other general corporate purposes.
The Company failed to meet the minimum EBITDA and Debt Service
financial covenants contained in its Amended Revolving Credit Agreement (the
"Credit Agreement") as of the November 30, 1996 testing date and is, as a
result, currently in default under the Credit Agreement. The Company is in
negotiations with its bank under the Credit Agreement (the "Bank") to waive the
default, as well as to reset the same covenants for future quarters. However,
there can be no assurance that the Company and the Bank will agree upon a
waiver of the default, or upon resetting of the applicable covenants for future
quarters. Because the default has not been waived and the covenants for future
quarters have not been reset as of the date of filing of this Form 10-Q, under
generally accepted accounting principles the debt under the Credit Agreement
has been reclassified as a current liability. If the Company and Bank agree to
reset the covenants for future quarters, the Company expects to reclassify such
debt as a long term liability. Continued availability of the Credit Agreement
is dependent upon the Company reaching agreement with the Bank to waive the
default and reset the covenants for future periods, as well as meeting all of
the Credit Agreement covenants as of future dates. While the Company expects
to meet such covenants, its ability to do so depends, in part, upon its results
of operations and various factors beyond its control. Such factors include,
but are not limited to, general economic conditions, especially as such
conditions impact retail sales in general and sales in the retail credit
jewelry market in particular, and bad debt experience, which is also impacted
by general economic conditions. Additionally, the Company's interest expense
under the Credit Agreement, if available, will exceed that which would have
been incurred for the same amount of financing under the terminated
Securitization Facility, due to a higher cost of funds under the Credit
Agreement. While the Bank has continued funding under the Credit Agreement
notwithstanding the default, the existence of the default, if not waived,
enables the Bank to accelerate the maturity of the obligations underlying
the Credit Agreement.
On January 14, 1997, the Company announced that it will implement
Company-wide restructuring initiatives beginning during the third and fourth
fiscal quarters to reduce operating and administrative costs and debt. These
include declining to renew leases on twelve stores and closing eighteen to
twenty-four additional stores and concurrent reductions in overhead at the
Company's remaining stores and reductions in corporate expenses are expected to
result in significant savings. These changes will require various charges to
third quarter results of operations of between $10 million - $14 million. These
charges include, but are not limited to, mall store rent settlements, leasehold
improvements, and anticipated bad debt write-offs from these closed stores.
Except for mall store rent settlements and certain costs of collecting customer
receivables generated from the closed stores, the charges are non-cash in
nature. The restructuring is expected to be substantially completed by May 31,
1997.
The restructuring is expected to improve results from operations in
fiscal 1998 by increasing cash flow from operations by raising cash from the
sale of inventory at stores closed or to be closed without the corresponding
need to replenish inventory sold and by redeploying remaining inventory not sold
at closed stores to stores that will remain open. In addition, new funds will
not need to be invested to fund new customer receivables at closed stores.
At November 30, 1996, the Company had available approximately
$14,000,000 of the remaining pre-reorganization usable NOL for federal income
tax purposes that expire in the years ending May 31, 2006 through 2008. The
utilization of the remaining NOL is limited to $1,159,000 of taxable income
annually. Additionally, the Company had approximately $1,336,000 of
post-reorganization net operating loss carryovers that originated in fiscal 1996
and expire in 2011.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: The statements contained in this Form 10-Q that are not historical
facts include those that may be considered forward-looking statements and that
involve a number of known and unknown risks and uncertainties that could cause
actual results to differ materially from those discussed. Such risks and
uncertainties include, among others, general economic conditions, especially as
such conditions impact retail sales in general and sales in the retail credit
jewelry market in particular; bad debt experience, which is also impacted by
general economic conditions; the transition to value pricing as the Company's
principal marketing strategy; and the ability of the Company to continue to
successfully transition stores to the "superstore" format. For additional
details concerning those markets and other risks and uncertainties, please refer
to the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1996.
8
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 3. Defaults Upon Senior Securities
See Item 2 -- "Liquidity and Capital Resources" regarding a default under the
Company's Credit Agreement.
ITEM 4. Submission of Matters to a Vote of Security - Holders.
At the Annual Meeting of Shareholders of the Company held on November
5, 1996, in Monrovia, California, 2,489,979 shares of the Company's common stock
were present either in person or by proxies solicited by management pursuant to
Regulation 14A under the Securities Exchange Act of 1934.
A brief description of each matter voted upon at the meeting and the
number of votes cast for, against or withheld as to each matter, is as follows:
1. Election of Board of Directors:
<TABLE>
<CAPTION>
Number of Shares
------------------------------
For Withheld Total
--- -------- -----
<S> <C> <C> <C>
Robert W. Bridel 2,463,327 26,652 2,489,979
David W. Cochran 2,463,352 26,627 2,489,979
William D. Eberle 2,462,032 27,947 2,489,979
John W. Gildea 2,463,032 26,947 2,489,979
Carol R. Goldberg 2,462,032 27,947 2,489,979
Thomas S. Liston 2,462,494 27,485 2,489,979
Cleaveland D. Miller 2,463,094 26,885 2,489,979
William P. O'Donnell 2,462,752 27,227 2,489,979
</TABLE>
2. Amendment to the 1994 Employee Stock Option Plan to increase the
number of shares of the Company's common stock reserved for
issuance thereunder from 220,000 shares to 420,000 shares
<TABLE>
<CAPTION>
Number of Shares
----------------------------------------------------------
For Against or Withheld Broker Nonvotes Total
--- ------------------- --------------- -----
<S> <C> <C> <C>
1,033,019 169,273 1,287,687 2,489,979
</TABLE>
This amendment passed as it received the affirmative vote of the
holders of at least a majority of the shares of outstanding Common
Stock represented and voting at the Meeting and cast on this
Proposal.
9
<PAGE> 12
ITEM 5. Other Information.
On January 14, 1997, the Company announced that it will implement
Company-wide restructuring initiatives beginning during the third and fourth
fiscal quarters to reduce operating and administrative costs and debt. These
include declining to renew leases on twelve stores and closing eighteen to
twenty-four additional stores and concurrent reductions in overhead at the
Company's remaining stores and reductions in corporate expenses are expected to
result in significant savings. These changes will require various charges to
third quarter results of operations of between $10 million - $14 million. These
charges include, but are not limited to, mall store rent settlements, leasehold
improvements, and anticipated bad debt write-offs from these closed stores.
Except for mall store rent settlements and certain costs of collecting customer
receivables generated from the closed stores, the charges are non-cash in
nature. The restructuring is expected to be substantially completed by May 31,
1997.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None filed for the quarter ended November 30, 1996.
10
<PAGE> 13
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.
BARRY'S JEWELERS, INC.
Date: January 21, 1997 /S/ROBERT W. BRIDEL
---------------- ------------------------------
Robert W. Bridel
President and
Chief Executive Officer
Date: January 21, 1997 /S/THOMAS S. LISTON
---------------- ------------------------------
Thomas S. Liston
Vice Chairman of the Board,
Secretary, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES 2 AND 3 OF THE COMPANY'S FORM
10-Q FOR THE SECOND QUARTER ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,035,000
<SECURITIES> 0
<RECEIVABLES> 73,616,000
<ALLOWANCES> 8,674,000
<INVENTORY> 73,531,000
<CURRENT-ASSETS> 141,357,000
<PP&E> 31,993,000
<DEPRECIATION> 11,274,000
<TOTAL-ASSETS> 165,688,000
<CURRENT-LIABILITIES> 33,235,000
<BONDS> 111,634,000
0
0
<COMMON> 33,196,000
<OTHER-SE> (12,377,000)
<TOTAL-LIABILITY-AND-EQUITY> 165,688,000
<SALES> 55,449,000
<TOTAL-REVENUES> 62,631,000
<CGS> 36,743,000
<TOTAL-COSTS> 26,985,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,558,000
<INTEREST-EXPENSE> 5,871,000
<INCOME-PRETAX> (11,526,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,526,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 876,000
<CHANGES> 0
<NET-INCOME> (12,402,000)
<EPS-PRIMARY> (3.10)
<EPS-DILUTED> (3.10)
</TABLE>
