SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A No. 1
(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 1, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-15995
MICROAGE, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0321346
(State of incorporation) (I. R. S. Employer
Identification No.)
2400 South MicroAge Way, Tempe, AZ 85282
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 366-2000
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 and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of the registrant's Common Stock (par value $.01 per share)
outstanding at December 31, 1998 was 20,315,711.
<PAGE>
This Form 10Q/A No. 1 for MicroAge, Inc. (the "Company") is being filed pursuant
to Regulation S-K Item 601(c)(2)(iii) to amend the Form 10Q for the quarterly
period ended February 1, 1998 due to an aquisition in fiscal 1997 originally
accounted for as a pooling of interests that has been restated under the
purchase method of accounting (see Note A of Notes to Consolidated Financial
Statements (Unaudited) for additional information).
INDEX
MICROAGE, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets -- February 1, 1998 and
November 2, 1997. 2
Consolidated statements of operations -- Quarters ended
February 1, 1998 and February 2, 1997. 3
Consolidated statements of cash flows -- Quarters ended
February 1, 1998 and February 2, 1997. 4
Notes to consolidated financial statements. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
MICROAGE, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share data)
ASSETS
February 1, November 2,
1998 1997
----------- -----------
Current assets:
Cash and cash equivalents $ 37,439 $ 22,279
Accounts and notes receivable, net 177,529 233,942
Inventory, net 601,161 479,332
Other 10,877 11,356
---------- ---------
Total current assets 827,006 746,909
Property and equipment, net 85,731 73,975
Intangible assets, net 111,847 85,903
Other 13,660 12,609
---------- ---------
Total assets $1,038,244 $ 919,396
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 647,126 $ 591,538
Accrued liabilities 18,470 22,527
Current portion of long-term obligations 3,027 2,744
Other 3,402 3,836
---------- ---------
Total current liabilities 672,025 620,645
Line of credit 69,650 30,650
Long-term obligations 4,802 4,537
Other long-term liabilities 8,884 1,239
Stockholders' equity:
Preferred stock, par value $1.00 per share;
Shares authorized: 5,000,000
Issued and outstanding: none -- --
Common stock, par value $.01 per share;
Shares authorized: 40,000,000
Issued: February 1, 1998 - 19,574,852
November 2, 1997 - 18,451,653 196 184
Additional paid-in capital 196,968 170,829
Retained earnings 85,885 92,129
Treasury stock, at cost;
Shares: February 1, 1998 - 16,378
November 2, 1997 - 80,378 (166) (817)
---------- ---------
Total stockholders' equity 282,883 262,325
---------- ---------
Total liabilities and stockholders' equity $1,038,244 $ 919,396
========== =========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Quarter ended
----------------------------
February 1, February 2,
1998 1997
----------- -----------
Revenue $ 1,179,011 $884,758
Cost of sales 1,105,186 824,218
----------- --------
Gross profit 73,825 60,540
Operating expenses 73,061 46,870
----------- --------
Operating income 764 13,670
Other expenses - net 10,941 4,881
----------- --------
Income (loss) before income taxes (10,177) 8,789
Income tax provision (benefit) (4,061) 3,719
----------- --------
Net income (loss) $ (6,116) $ 5,070
=========== ========
Net income (loss) per common and
common equivalent share:
Basic $ (0.31) $ 0.31
=========== ========
Diluted $ (0.31) $ 0.29
=========== ========
Weighted average common and common
equivalent shares outstanding:
Basic 19,456 16,242
=========== ========
Diluted 19,456 17,227
=========== ========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
Quarter ended
-------------------------
February 1, February 2,
1998 1997
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (6,116) $ 5,070
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 8,744 5,702
Provision for losses on accounts and notes
receivable 2,300 1,634
Changes in assets and liabilities, net of
business acquisitions:
Accounts and notes receivable 81,295 71,475
Inventory (112,240) (141,315)
Other current assets 661 868
Other assets (5,953) (986)
Accounts payable 21,193 (10,764)
Accrued liabilities (5,806) (6,127)
Other liabilities 6,580 5,347
--------- ---------
Net cash used in operating activities (9,342) (69,096)
Cash flows from investing activities:
Purchases of property and equipment (15,401) (5,496)
--------- ---------
Net cash used in investing activities (15,401) (5,496)
Cash flows from financing activities:
Proceeds from issuance of stock - stock option
and employee stock purchase plans 1,802 2,628
Net borrowings under line of credit 39,000 62,735
Amounts received from ESOT -- 123
Shareholder distributions - pooled companies (128) --
Net change in long-term obligations (771) (277)
--------- ---------
Net cash provided by financing activities 39,903 65,209
--------- ---------
Net increase (decrease) in cash and cash equivalents 15,160 (9,383)
Cash and cash equivalents at beginning of period 22,279 21,935
--------- ---------
Cash and cash equivalents at end of period $ 37,439 $ 12,552
========= =========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
MICROAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of MicroAge, Inc.
(the "Company") 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 statement of results for the periods
have been included. Certain prior year amounts have been reclassified to conform
with current year financial statement presentation. Operating results for the
quarter ended February 1, 1998 are not necessarily indicative of the results
that may be expected for the year ending November 1, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
November 2, 1997.
On November 14, 1997, the Company issued shares of its common stock in exchange
for all of the outstanding shares of a reseller. The merger has been accounted
for as a pooling of interests and, accordingly, the Company's consolidated
financial statements have been restated to include the accounts and operations
of the acquired company for all periods presented.
In addition, the Company's consolidated financial statements have been restated
for a fiscal 1997 acquisition. This acquisition was originally accounted for on
a pooling of interests basis. Information came to light indicating that actions
taken by the former owners of the acquired business rendered the pooling of
interests accounting inappropriate. The Company has restated the fiscal 1997 and
1996 financial statements to reflect such acquisition using the purchase method
of accounting. The Company has also restated the previously issued consolidated
results for each of the first three fiscal quarters of 1998 to reflect such
acquisition using the purchase method of accounting. The charge was $702,000 per
quarter of additional goodwill amortization shown as other expense in the income
statement.
The results of operations previously reported by the separate enterprises and
the combined amounts presented in the accompanying consolidated financial
statements are summarized below (in thousands).
Quarter ended February 2, 1997:
Pooling
Converted to
MicroAge, Inc. Acquired Co. Purchase Combined
-------------- ------------ -------- --------
Revenue $ 890,748 $ 6,672 $(12,662) $884,758
Net income $ 4,857 $ 180 $ 33 $ 5,070
In addition, certain amounts receivable from vendors have been reclassified to
accounts payable to conform with industry practice
5
<PAGE>
NOTE B - OTHER EXPENSES - NET
Other expenses - net consists of the following (in thousands):
Quarters ended
-------------------------
February 1, February 2,
1998 1997
---- ----
Interest expense $ 2,346 $ 595
Expenses from sales of
accounts receivable 5,577 4,264
Amortization expense 2,117 392
Other 901 (370)
------- ------
$10,941 $4,881
======= ======
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Certain statements contained in this Item may be "forward-looking statements"
within the meaning of The Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include projections of revenue and net
income and issues that may affect revenue or net income; projections of capital
expenditures; plans for future operations; financing needs or plans; plans
relating to the Company's products and services; and assumptions relating to the
foregoing. Forward looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying the forward-looking information. Some of the important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements made by the Company include, but are not
limited to, the following: intense competition; narrow margins; dependence on
supplier incentive funds; product supply and dependence on key vendors;
potential fluctuations in quarterly results; risks of declines in inventory
values; no assurance of successful acquisitions or investments; the capital
intensive nature of the Company's business; dependence on information systems;
year 2000 issues; dependence on independent shipping companies; rapid
technological change; and possible volatility of stock price. Reference is made
to Exhibit 99.1 of the Company's Report on Form 10-K for the year ended November
2, 1997 for additional discussion of the foregoing factors. The Company
undertakes no obligations to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
On November 14, 1997, the Company issued shares of its common stock in exchange
for all of the outstanding shares of a reseller location. The merger has been
accounted for as a pooling of interests and, accordingly, the Company's
consolidated financial statements have been restated to include the accounts and
operations of the acquired company for all periods presented. In addition, a
1997 acquisition originally accounted for as a pooling of interests has been
restated under the purchase method of accounting. See Note A of Notes to
Consolidated Financial Statements (Unaudited) for additional information.
RESULTS OF OPERATIONS
The following table sets forth, for the indicated periods, data as percentages
of total revenue:
<TABLE>
<CAPTION>
Quarter ended
------------------------------------------------------------
Feb. 1, Nov. 2, Aug. 3, May 4, Feb. 2,
1998 1997 1997 1997 1997
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Revenue (in thousands) $1,179,011 $1,318,871 $1,117,275 $1,058,304 $884,758
Cost of sales 93.7% 93.2% 93.1% 93.3% 93.2%
---------- ---------- ---------- ---------- --------
Gross profit 6.3 6.8 6.9 6.7 6.8
Operating expenses 6.2 5.2 5.2 5.0 5.3
---------- ---------- ---------- ---------- --------
Operating income 0.1 1.6 1.7 1.7 1.5
Other expenses - net 0.9 0.6 0.7 0.7 0.5
---------- ---------- ---------- ---------- --------
Income (loss) before income
taxes (0.8) 1.0 1.0 1.0 1.0
Income tax provision (benefit) (0.3) 0.4 0.4 0.4 0.4
---------- ---------- ---------- ---------- --------
Net income (loss) (0.5)% 0.6% 0.6% 0.6% 0.6%
========== ========== ========== ========== ========
</TABLE>
7
<PAGE>
TOTAL REVENUE. Total revenue of $1.2 billion increased $294 million, or 33%, for
the quarter ended February 1, 1998 as compared to the quarter ended February 2,
1997. This revenue increase included a $197 million, or 37%, increase in
distribution business revenue and a $96 million, or 28%, increase in systems
integration business revenue. The increase in revenue was attributable to sales
to resellers added since February 2, 1997, increased demand for the Company's
major suppliers' products, the Company's addition of new product offerings, the
growth of the microcomputer products industry and acquisitions of reseller
locations.
Total revenue decreased $140 million, or 11%, when compared to the quarter ended
November 2, 1997. This revenue decrease included a $108 million, or 13%,
decrease in distribution business revenue and a $30 million, or 6%, decrease in
systems integration business revenue. The distribution business was impacted by
competitive issues (see Gross Profit Percentage below) and the integration
business was impacted by issues related to the purchases of company-owned
locations. During the calendar year ended December 31, 1997, the Company added
32 company-owned locations. The process of assimilating the new locations
diverted management time from sales and profit momentum to internal systems and
organizational issues.
GROSS PROFIT PERCENTAGE. The Company's gross profit percentage was 6.3% for the
quarter ended February 1, 1998 and 6.8% for the quarter ended February 2, 1997.
The decrease in the Company's gross profit percentage was primarily in the
Company's distribution business. In an effort to reduce inventory levels and
reduce price protection risk, the Company initially decided not to participate
in inventory buy-in opportunities offered by certain key suppliers in the first
fiscal quarter of 1998. Certain competitors that did participate in the buy-in
opportunities received more of the products that were in high demand and had
supplier incentive funds which allowed them to aggressively price products to
customers. This affected both the Company's sales volume and margins as prices
were reduced to maintain market share. In response to the competitive situation,
the Company did elect to participate in the buy-in opportunities mid-way through
the quarter, however, executing these buy-ins mid-quarter resulted in the
Company not achieving certain suppliers' sales out objectives, which would have
generated additional incentive funds.
OPERATING EXPENSES. As a percentage of revenue, operating expenses were 6.2% for
the quarter ended February 1, 1998 compared to 5.3% for the quarter ended
February 2, 1997. Operating expenses increased $26.2 million to $73.1 million
for the quarter ended February 1, 1998, as compared to the quarter ended
February 2, 1997. The increase in operating expenses was primarily attributable
to acquisitions of reseller locations (which generally have higher gross margin
and operating expense percentages than the Company's other businesses),
increased spending in support of electronic commerce initiatives and capacity
expansion in personnel, systems and facilities.
OTHER EXPENSES - NET. Other expenses - net increased to $10.93 million for the
quarter ended February 1, 1998 from $4.9 million for the quarter ended February
2, 1997. This increase was primarily due to increases in average daily
borrowings to support higher inventory and accounts receivable levels and to
increased amortization expense associated with goodwill from acquisitions.
8
<PAGE>
SUPPLIER INCENTIVE FUNDS
The Company receives funds from certain suppliers which are earned through
marketing programs or meeting purchasing or other objectives established by the
supplier. A large portion of the incentives are passed on to the Company's
customers. However, a portion of the incentives positively impact the Company's
income. There can be no assurance that these programs will be continued by the
suppliers. A substantial reduction in the supplier funds available to the
Company would have an adverse effect on the Company's results of operations.
SUBSEQUENT EVENT
In February, 1998, the Company announced a plan to restructure the Company into
two independent businesses - a distribution business and an integration
business. These businesses will have separate management teams, will operate
autonomously in their respective marketplaces, and will contract with
headquarters for a limited number of services, such as payroll processing,
employee benefits and information services. Restructuring and other one-time
charges will be recognized in the second quarter of fiscal 1998 to reflect
employee termination benefits and other costs related to the restructuring. The
amount of the charges has not yet been determined.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's operating results may vary significantly from quarter to quarter
depending on certain factors, including, but not limited to, demand for the
Company's information technology products and services, the amount of supplier
incentive funds received by the Company, the results of acquired businesses,
product availability, competitive conditions, new product introductions, changes
in customer order patterns and general economic conditions. In particular, the
Company's operating results are sensitive to changes in the mix of product and
service revenues, product margins, inventory adjustments and interest rates.
Although the Company attempts to control its expense levels, these levels are
based, in part, on anticipated revenues. Therefore, the Company may not be able
to control spending in a timely manner to compensate for any unexpected revenue
shortfall. As a result, quarterly period-to-period comparisons of the Company's
financial results are not necessarily meaningful and should not be relied upon
as an indication of future performance. In addition, although the Company's
financial performance has not exhibited significant seasonality in the past, the
Company and the computer industry in general tend to follow a sales pattern with
peaks occurring near the end of the calendar year, due primarily to special
supplier promotions and year-end business purchases.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its growth and cash needs to date primarily through
working capital financing facilities, bank credit lines, common stock offerings
and cash generated from operations. The primary uses of cash have been to fund
increases in inventory and accounts receivable resulting from increased sales.
If the Company is successful in achieving continued revenue growth, its working
capital requirements are likely to increase.
The Company has acquired or invested in, and intends to acquire or invest in,
resellers to increase core service competencies, expand the Company's geographic
coverage in key market areas, and strengthen the Company's direct relationships
with end-user customers. During the quarter ended February 1, 1998, the Company
completed three acquisitions in exchange for 1,632,382 shares of common stock.
See Part II, Item 2(c) below for additional information about these
9
<PAGE>
acquisitions. The Company's future acquisitions or investments may be made
utilizing cash, stock, or a combination of cash and stock.
Cash used in operating activities was $9 million for the quarter ended February
1, 1998 as compared to $69 million for the quarter ended February 2, 1997. The
decrease was primarily due to a change in cash used by inventory and accounts
payable. During the quarter ended February 1, 1998, $91 million was used in
operating activities for inventory and accounts payable compared to $152 million
during the quarter ended February 2, 1997. In addition, cash provided by
accounts receivable increased from $71 million to $81 million.
The number of days cost of sales in ending inventory increased from 35 days at
November 2, 1997 to 49 days at February 1, 1998. This increase in inventory was
due to inventory buy-ins executed during the quarter (see discussion above under
Gross Profit Percentage). The number of days' cost of sales in ending accounts
payable increased from 49 days at November 2, 1997 to 53 days at February 1,
1998. The number of days' sales in ending accounts receivable was 14 days at
February 1, 1998 compared to 16 days at November 2, 1997. The receivables days
adjusted for sold receivables were 37 days and 35 days at February 1, 1998 and
November 2, 1997, respectively.
Cash used in investing activities increased from $6 million during the quarter
ended February 2, 1997 to $15 million during the quarter ended February 1, 1998
due to increased purchases of property and equipment as a result of increased
spending for electronic commerce initiatives and capacity expansion in systems
and facilities.
Cash provided by financing activities was $40 million during the quarter ended
February 1, 1998 compared to $65 million during the quarter ended February 1,
1997. This change was primarily due to a smaller increase in borrowings under
the Company's line of credit.
The Company maintains three financing agreements (the "Agreements") with
financing facilities totaling $675 million. The Agreements include an accounts
receivable facility (the "A/R Facility") and inventory financing facilities (the
"Inventory Facilities").
Under the A/R Facility, the Company has the right to sell certain accounts
receivable from time to time, on a limited recourse basis, up to an aggregate
amount of $350 million sold at any given time. At February 1, 1998, the net
amount of sold accounts receivable was $296 million.
The Inventory Facilities provide for borrowings up to $325 million. Within the
Inventory Facilities, the Company has lines of credit for the purchase of
inventory from selected product suppliers ("Inventory Lines of Credit") of $175
million and a line of credit for general working capital requirements
("Supplemental Line of Credit") of $150 million. Payments for products purchased
under the Inventory Lines of Credit vary depending upon the product supplier,
but generally are due between 45 and 60 days from the date of the advance.
Amounts borrowed under the Supplemental Line of Credit may remain outstanding
until the expiration date of the Agreements (August 2000). No interest or
finance charges are payable on the Inventory Lines of Credit if payments are
made when due. At February 1, 1998, the Company had $47 million outstanding
under the Inventory Lines of Credit (included in accounts payable in the
accompanying Balance Sheets), and $70 million outstanding under the Supplemental
Line of Credit.
Of the $675 million of financing capacity represented by the Agreements, $262
million was unused as of February 1, 1998. Utilization of the unused portion is
dependent upon the Company's collateral availability at the time the funds would
10
<PAGE>
be needed. There can be no assurance that the Company will be able to borrow
adequate amounts on terms acceptable to the Company.
Borrowings under the Agreements are secured by substantially all of the
Company's assets, and the Agreements contain certain restrictive covenants,
including tangible net worth requirements and ratios of debt to tangible net
worth and current assets to current liabilities. At February 1, 1998, the
Company was in compliance with these covenants.
In addition to the financing facilities discussed above, the Company maintains
an accounts receivable purchase agreement (the "Purchase Agreement") with a
commercial credit corporation (the "Buyer") whereby the Buyer agrees to
purchase, from time to time at its option, on a limited recourse basis, certain
accounts receivable of the Company. Under the terms of the Purchase Agreement,
no finance charges are assessed if the accounts are settled within forty days.
At February 1, 1998, the net amount of sold accounts receivable under the
Purchase Agreement was $6.1 million.
The Company also maintains trade credit arrangements with its suppliers and
other creditors to finance product purchases. A few major suppliers maintain
security interests in their products sold to the Company.
The unavailability of a significant portion of, or the loss of, the Agreements
or trade credit from suppliers would have a material adverse effect on the
Company.
Although the Company has no material capital commitments, the Company expects to
make capital expenditures of approximately $5 to $10 million during the second
quarter of fiscal 1998.
INFLATION
The Company believes that inflation has generally not had a material impact on
its operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 - Calculation of Net Income (Loss) Per Common Share
27 - Financial Data Schedule
(b) Report on Form 8-K
During the quarter ended February 1, 1998, the Company filed one
report on Form 8-K, dated and filed December 10, 1997, pursuant to
Items 5 and 7, to file a copy of the Company's press release
entitled, "Strong Fourth Quarter Highlights Fiscal 1997 Financial
Results."
11
<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.
MICROAGE, INC.
(Registrant)
Date: January 28, 1999 By: /s/ Jeffrey D. McKeever
--------------------------------
Jeffrey D. McKeever
Chairman of the Board and
Chief Executive Officer
Date: January 28, 1999 By: /s/ James R. Daniel
--------------------------------
James R. Daniel
Senior Vice President
Chief Financial Officer and Treasurer
12
EXHIBIT 11 - CALCULATION OF NET INCOME (LOSS) PER COMMON SHARE
MICROAGE, INC
NET INCOME (LOSS) PER COMMON SHARE CALCULATION
(in thousands)
Quarter ended
---------------------------
February 1, February 2,
1998 1997
----------- -----------
BASIC
Weighted average common shares 19,456 16,242
-------- -------
DILUTED
Weighted average shares from
primary calculation 19,456 16,242
Dilutive effect of stock options
and warrants -- 985
-------- -------
Weighted average common and common
equivalent shares outstanding - diluted 19,456 17,227
-------- -------
NET INCOME (LOSS) $ (6,116) $ 5,070
Net income (loss) per common and common
equivalent share:
Basic $ (0.31) $ 0.31
======== =======
Diluted $ (0.31) $ 0.29
======== =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF FEBRUARY 1, 1998 AND NOVEMBER 2,
1997 AND THE CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE QUARTERS
ENDED FEBRUARY 1, 1998 AND FEBRUARY 2, 1997
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-01-1998
<PERIOD-START> NOV-03-1997
<PERIOD-END> FEB-01-1998
<EXCHANGE-RATE> 1
<CASH> 37,439
<SECURITIES> 0
<RECEIVABLES> 190,281
<ALLOWANCES> 12,752
<INVENTORY> 601,161
<CURRENT-ASSETS> 827,006
<PP&E> 169,587
<DEPRECIATION> 83,856
<TOTAL-ASSETS> 1,038,244
<CURRENT-LIABILITIES> 672,025
<BONDS> 0
0
0
<COMMON> 196
<OTHER-SE> 282,687
<TOTAL-LIABILITY-AND-EQUITY> 1,038,244
<SALES> 1,179,011
<TOTAL-REVENUES> 1,179,011
<CGS> 1,105,186
<TOTAL-COSTS> 1,105,186
<OTHER-EXPENSES> 73,061
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,346
<INCOME-PRETAX> (10,177)
<INCOME-TAX> (4,061)
<INCOME-CONTINUING> (6,116)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,116)
<EPS-PRIMARY> (0.31)
<EPS-DILUTED> (0.31)
</TABLE>
