U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the transition period from ---------- to----------
Commission file number 0-27552
REALCO, INC.
_______________
(Exact name of small business issuer as specified in its charter)
New Mexico 85-0316176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1650 University Blvd., N.E., Suite 5-100
Albuquerque, New Mexico 87102
(Address of principal Executive offices)
(505) 242-4561
(Issuer's telephone number)
--------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer has (1) filed all documents
and reports required to be filed by Sections 13 or 15(d)
of the Securities Exchange Act of 1934 during the past
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 XX No
------- -------
The number of shares of the registrants no par
value common stock, the issuers only class of
common stock, outstanding as of August 10, 1998, was:
2,768,000
Transitional Small Business Format (check one) Yes [ ]No[XX]
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION.
Item 1. FINANCIAL STATEMENTS
REALCO, INC.
CONDENSED BALANCE SHEET
June 30, 1998
ASSETS (Unaudited)
<S> <C>
Cash and cash equivalents $ 3,504,571
Restricted cash 134,208
Securities available for sale 168,692
Accounts and notes receivable 2,586,735
Inventories 17,089,955
Property & equipment (net) 1,006,195
Investments - equity method 1,844,749
Deferred income taxes 130,961
Other assets 2,397,483
-----------
$28,863,549
===========
LIABILITIES
Notes payable $ 6,555,441
Lease obligations 96,694
Construction advances and notes
payable, collateralized by inventories 8,573,419
Accounts payable and accrued
liabilities 2,624,424
Escrow funds held for others 134,208
----------
Total liabilities 17,984,186
----------
STOCKHOLDERS' EQUITY
Preferred stock no par value - authorized
500,000 shares;
Series A - issued and outstanding
82,569 shares 825,690
Series B - issued and outstanding
212,859 shares 2,128,590
Series D - issued and outstanding
23,919 shares 239,190
Common stock no par value;
authorized, 6,000,000 shares, issued
2,845,000 shares 7,712,461
Retained earnings 194,594
----------
11,100,525
Less cost of 77,000 shares held in treasury 221,162
----------
10,879,363
----------
$28,863,549
===========
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
REALCO, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three months Three months
Ended Ended
June 30, June 30,
1998 1997
<S> <C> <C>
REVENUES
Brokerage commissions and fees $ 6,883,310 $ 4,759,100
Construction sales 2,524,769 2,845,870
Sales of developed lots 378,000 440,500
Equity in net earnings of investees 170,643 174,429
Interest and other, net 108,122 595,698
----------- -----------
10,064,844 8,815,597
COSTS AND EXPENSES
Cost of brokerage revenue 4,995,682 3,333,212
Cost of construction sales 2,292,894 2,568,699
Cost of developed lots sold 314,319 447,744
Selling, general and administrative 2,012,572 1,702,003
Depreciation and amortization 114,355 113,084
Interest and other expense 210,148 158,383
----------- -----------
9,939,970 8,323,125
----------- -----------
Income before provision
for income taxes 124,874 492,472
INCOME TAX EXPENSE 47,900 191,500
----------- -----------
NET EARNINGS BEFORE PREFERRED
STOCK DIVIDEND REQUIREMENT 76,974 300,972
PREFERRED STOCK DIVIDEND REQUIREMENT 30,144 30,547
----------- -----------
NET EARNINGS AVAILABLE FOR
COMMON SHARES $ 46,830 $ 270,425
=========== ===========
Earnings per common share
before preferred stock
dividend requirements $ 0.03 $ 0.10
Basic and diluted earnings
per share $ 0.02 $ 0.09
=========== ===========
Weighted average shares outstanding 2,768,747 2,820,489
----------- -----------
The accompanying notes are an integral part of these statements.
</TABLE>
REALCO, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months Nine months
Ended Ended
June 30, June 30,
1998 1997
<S> <C> <C>
REVENUES
Brokerage commissions and fees $15,468,503 $10,464,950
Construction sales 7,924,157 12,351,549
Sales of developed lots 1,028,473 829,500
Equity in net earnings of investees 347,531 616,607
Interest and other, net 722,113 1,116,074
----------- -----------
25,490,777 25,378,680
COSTS AND EXPENSES
Cost of brokerage revenue 10,980,950 7,458,315
Cost of construction sales 7,185,923 11,396,083
Cost of developed lots sold 865,165 854,520
Selling, general and administrative 5,999,345 4,248,833
Depreciation and amortization 363,562 330,098
Interest and other expense 584,823 478,080
----------- -----------
25,979,768 24,765,929
----------- -----------
Income (loss) before provision
for income taxes (488,991) 612,751
INCOME TAX EXPENSE (BENEFIT) (188,000) 244,000
----------- -----------
NET EARNINGS (LOSS) BEFORE PREFERRED
STOCK DIVIDEND REQUIREMENT $ (300,991) $ 368,751
PREFERRED STOCK DIVIDEND REQUIREMENT 90,432 91,641
----------- -----------
NET EARNINGS (LOSS) AVAILABLE FOR
COMMON SHARES $ (391,423) $ 277,110
=========== ===========
Earnings (loss) per common share
before preferred stock dividend
requirements $ ( 0.11) $ 0.13
Basic and diluted earnings (loss)
per share $ ( 0.14) $ 0.10
=========== ===========
Weighted average shares outstanding 2,780,974 2,835,130
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
REALCO, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine months ended
June 30,
1998 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ (300,991) $ 368,751
Adjustments to reconcile net earnings (loss)
to net cash used by operating activities
Depreciation and amortization 322,136 330,098
Accretion of discount on notes payable 41,426 41,426
Distributions of investees in excess
of earnings (net earnings in excess
distributions) 101,612 (547,617)
Gain on sale of securities (389,718) (42,680)
Change in operating assets and liabilities
(net of business acquired)
Increase in accounts receivable (109,354) (585,862)
Increase in inventories (3,511,234) (153,565)
Decrease in costs and estimated earnings
related to net billings on uncompleted
contracts 127,634 307,433
Decrease (increase) in other assets 75,868 (930,045)
(Increase) decrease in deferred tax asset (200,300) 16,959
Increase in accounts payable and accrued
liabilities 164,776 876,905
---------- ----------
Net cash used by operating activities (3,678,145) (318,197)
---------- ----------
Cash flows from investing activities
Purchases of property and equipment (231,734) (801,230)
Proceeds from sale of securities 675,520 73,156
Purchase of securities available for sale (168,692) (44,781)
Advances on notes receivable (623,854) (1,298,123)
Receipts on notes receivable 518,764 1,515,881
Purchases of investments - equity method 0 (61,000)
Payments for business acquired (426,250) (376,404)
Cash acquired in business acquired 292,453 205,912
---------- ----------
Net cash provided (used) in investing
activities 36,207 (786,589)
----------- ---------
Cash flows from financing activities
Construction advances and notes
payable, net 3,434,135 2,290,491
Payments on capital lease obligations (53,052) (95,007)
Addition to capital lease obligations 44,946 0
Payments on notes payable (394,052) 0
Purchase of common stock (127,773) (82,637)
----------- ----------
Net cash provided from financing
activities 2,904,204 2,112,847
----------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (737,734) 1,008,061
Cash and cash equivalents at beginning
of period 4,242,305 4,480,880
--------- ---------
Cash and cash equivalents at end
of period $ 3,504,571 $ 5,488,941
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
REALCO, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The condensed balance sheet as of June 30, 1998, the
statements of operations for the three month and nine month periods
ended June 30, 1998 and 1997 and the statements of cash flows
for the nine month periods ended June 30, 1998 and 1997 have been
prepared by the Company without audit. In the opinion of
Management all adjustments (which include normal recurring
adjustments) necessary to present fairly the financial position
as of June 30, 1998 and results of operations and cash flows
for the three month and nine month periods ended June 30, 1998
and 1997 have been made.
Certain information and footnotes normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read
in conjunction with the consolidated financial statements and
notes thereto included in the Form 10KSB for the fiscal year
ended September 30, 1997. The results of operations for the
periods ended June 30, 1998 are not necessarily indicative of
the operating results for a full year.
The Company adopted the Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 128, Earnings
Per Share, during the quarter ended December 31, 1997. Because the
conversion prices for convertible debentures, warrents, and options
are greater than the average market prices for the periods
presented, the assumed conversion of such securities are
antidilutive.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share are computed using the
weighted number of common shares outstanding of 2,780,974 for
the nine month period ended June 30, 1998 and 2,835,130 for the
nine month period ended June 30, 1997, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operations by Segment
Revenues of the Company are generated through the following
segments: (1) real estate brokerage both residential and commercial;
(2) construction both residential and commercial, including land
development activities, and (3) financing activities which include
residential construction lending through participation agreements
with banks, land acquisition and development loans for single family
residential subdivisions, and from recognition of revenues generated
by other entities in which the Company owns equity interests whose
businesses currently consist of commercial and residential mortgage
lending, and to a minor extent, property and casualty insurance.
The Company may participate from time to time as a 50% joint venture
partner while affiliated companies may act as a financier, mortgage
banker or insurance agent to the joint venture. The Company
recognizes its share of income from affiliate investee's profits and
losses on the equity recognition method.
The Company currently operates its business within the Albuquerque,
New Mexico and Phoenix, Arizona metropolitan areas. Since inception,
management has planned expanding the Company's businesses and
business concepts to other geographical areas, preferably within the
southwest, that have similar demographics.
Because of the various businesses in which the Company is engaged,
it has defined the following business segments for purposes of
accounting for revenue, costs and expenses: Real Estate Brokerage
Segment, Construction and Land Development Segment and Financial
Services Segment. These areas of the Company's business are more
fully discussed below.
Real Estate Brokerage Segment:
The real estate brokerage segment presently consists of Prudential
Preferred Properties, NM (PPP-NM)(formerly Prudential Hooten/Stahl,
Realtors) Prudential Preferred Properties, Az (PPP-Az)(formerly Mull
- -Smith, Inc.) and First Commercial Real Estate Services, Inc. The
Mull-Smith company was acquired January 1, 1997, and the First
Commercial Real Estate Services, Inc. (First Commercial) business
was acquired May 1, 1997. Effective February 1, 1998, PPP-Az
acquired Cliff Winn, Realty, Inc. (Winn) which also operates in the
Phoenix area.
Operations for the quarter ended June 30, 1998:
The Real Estate Brokerage Segment provided a pre-tax profit of
$242,000 for the quarter ended June 30, 1998, an increase of
$65,000 or 37% over the 1997 quarter pre-tax profit of $177,000.
Quarterly pre-tax profits were $255,000 for PPP-Az and $185,000 for
Winn which were partially offset by a pre-tax loss by PPP-NM. PPP-NM
had a pre-tax loss of ($115,000) compared to a loss of ($83,000) in
1997. However, the current quarterly loss was a substantial
improvement over the ($369,000) loss for PPP-NM for the quarter
ended March 31, 1998.
Brokerage commission income for the 1998 quarter increased
$2,124,000 or 45% over 1997, primarily due to the Winn commission
income of $2,140,000 in 1998; that was not present in the 1997
quarter. PPP-NM realized a decrease in income of ($212,000) or (8%)
from 1997 while PPP-Az had an increase of $228,000 or 11% over the
1997 quarter.
PPP-NM's improved operating results (compared to the second quarter
ended March 31, 1998) resulted from an increase of $715,000 in
commission income while slightly improving its percentage of Company
Dollar (commission income less portions paid to independant agents
or other brokers) and significantly reducing the percentage of
selling, general and administrative expenses in relation to income.
Operations for the nine months ended June 30, 1998:
Brokerage commission income for the nine months increased
$5,004,000 to $15,469,000 or 48% over the 1997 period. The newly
acquired Winn division provided $2,707,000 of the increase while
PPP-Az provided another $2,391,000 of increase. PPP-NM realized a
drop of ($705,000) in commission income to $6,124,000 in 1998 or an
(10%) drop in relation to the nine months ended June 30, 1997.
The segment pre-tax loss for the nine months increased by
($140,000) to ($327,000) in 1998, an increase of (75%) in
relation to the ($187,000) loss in 1997. PPP-Az had a pre-tax
profit $448,000 while Winn contributed a five month pre-tax profit
of $206,000. PPP-NM realized an increase in pre-tax loss of
($239,000) to ($829,000) for the nine month period compared to the
($590,000) loss realized in 1997. Selling, general and
administrative expenses (including advertising expenses) running as
high as 42% of income had contributed to the PP-NM losses. As
peviously noted, significant improvements have been realized in this
area during the current quarter.
Construction and Land Development Segment:
The construction and land development segment operates in the
Albuquerque and Rio Rancho, New Mexico metropolitan area, and
consists of Charter Building & Development Corp. (Charter) and
Amity, Inc. (Amity). This segment also includes the Company's
Land Development Division (LDD) which acquires raw land and
develops it into residential homesite lots for Charter and
other homebuilders. The LDD also holds equity interest in joint
ventures with other developers of home subdivisions.
Charter builds homes in price ranges of $145,000 to $350,000 in up
to eleven subdivisions in the area. Homesite lots have been
acquired from LDD and related joint ventures and from other
developers. Charter occasionally sells lots from their inventory
as markets dictate. Amity is principally a builder of small
commercial buildings. They also do remodeling and occasionally
build upper range homes. The LDD recognizes their share of
earnings from joint ventures on an equity basis. Profits on lot sold
to Charter, either directly by LDD or by joint venture, are deferred
so long as the lot remains in Charter's inventory. Charter obtains
construction and lot acquisition financing from various local banks
and from the Company. Interest from Charter to the Company is
deferred and/or eliminated in consolidation as appropriate.
Operations for the quarter ended June 30, 1998
Cosntruction revenues decreased ($321,000) to $2,525,000 for
1998 when compared to the quarter ended June 30, 1997. This
drop was primarily due to Charter realizing a reduction in homes
sales revenues of ($414,000) to $1,985,000 in 1998, or a drop of
17% when compared to 1997. Segment lot sales declined ($63,000)
to $376,000 and equity in earnings of joint venture investees
declined ($54,000) to $46,000 in 1998. The changes in joint
venture earnings relate more to the ownership structure than to
operating activities as the Company acquired the outside interests
in two ventures effective June 1, 1997. These operations were
being reported only as LDD's share of their net earnings but are
now reported gross in the Company's financial statements.
The segment's pre-tax loss declined slightly from a loss of
($172,000) in 1997 to a pre-tax loss of ($164,000) for the quarter
ended June 30, 1998. A current quarter pre-tax profit of $88,000
from LLD was reduced by a ($52,000) loss from Amity and a ($202,000)
loss from Charter. The Charter loss of ($202,000) was an improvement
over the ($251,000) loss for the quarter ended March 31, 1998.
Operations for the nine months ended June 30, 1998
Construction revenues for the segment declined ($4,427,000) to
$7,924,000 in 1998 compared to revenues of $12,351,000 for the nine
months ended June 30, 1997. The timing of certain Amity contracts
contributed to ($2,429,000) of the drop, however, Charter homes
sales were down ($1,998,000) to $6,439,000 or 24% when compared
to 1997. Lot sales were up $198,000 to $1,028,000, however joint
venture equity earnings were down ($309,000) to $120,000 for 1998,
again primarily due to the restructuring of ownership in land
development activities.
The segment's pre-tax earnings of $107,000 in 1997 dropped
($630,000) to a pre-tax loss of ($523,000) for the nine months ended
June 30, 1998. Pre-tax earnings of $275,000 for LDD was offset
by pre-tax losses of ($23,000) for Amity and a ($714,000) loss for
Charter for the 1998 nine months period. In addition, deferred
gains on lots sold to and still in inventory at Charter contribute
to the segment total loss. At June 30, 1998, over $143,000 of
such gain was deferred.
New home sales in the Albuquerque market have been fairly stable
for the past year or so with increases in new home permits during
the recent quarters which have resulted in significant increases in
new homes available to home buyers. Charter homes have been subject
to strong competition and for the past several months have not
compared well as to price per square foot or price ranges in a
particular subdivision. Management has made changes and refinements
in new home products and operations and recent activity indicates
future improvements in operating results. However, it has required
several months to clear stale inventory at discounted prices;
to develop and build new models and it will take a few more months
to build and close sales of new products. Charter has over 135 lots
in nine subdivisions available for new homes and has a backlog of
33 homes under contract with an indicated revenue of approximately
$5,950,000.
The Land Development Division holds equity interests in two joint
ventures. One development in the Northeast Heights of Albuquerque
has been most successful with development activity totally complete
and with sales generating about $122,000 of earnings during the
nine months ended June 30, 1998. The other venture's devlopment
activity was terminated by the City of Albuquerque's condemnation
proceedings as previously reported. The LDD has recently completed
a 100 lot golf course residential subdivision and is currently
developing another 96 lot subdivision which will feature homes in
the $75,000 to $100,000 range. LDD also has 37 lots remaining
from former joint ventures which are clear of any debt and are
available for Charter use or for sale to other builders.
Financial Services Segment:
The financial services segment consists of the Company (Realco) and
Great American Equity Corporation (GAEC) and PHS, Inc. Income
also includes equity earnings of various finance entities including
a 50% interest in PHS Mortgage partnership and a 13% interest in
MI Acquisition Corporation.
The Company owned a 20% interest in First American Title Company of
New Mexico until November, 1997 when is was sold for $500,000 cash
resulting in a gain of $333,585.
Operations for the quarter ended June 30, 1998
Interest and other income decreased ($488,000) to $108,000 for
the quarter ended June 30, 1998, when compared to 1997. The decline
was due to 1997 including accelerated recognition of participation
and profit sharing earnings from the land development project which
was subject to condemnation action by the City of Albuquerque as
previously reported. The Company has had no such condemnation
related gain thus far in 1998.
Equity in net earnings of investees remained fairly constant
compared to the prior year quarter. The PHS, Inc. share of equity
earnings of PHS Mortgage increased $15,000 to $70,000 for the
quarter ended June 30, 1998. The equity share of earnings in MI
Acquisition was a profit of $55,000.
Operations for the nine months ended June 30, 1998
Interest and other income for the segment decreased ($403,000)
to $722,000 for 1998. The 1998 amount includes the $333,585 gain
on the sale of the investment in First American Title of New Mexico,
and in equity earnings of $207,000 on the investment in PHS
Mortgage. The 1997 amount includes the gains produced by the
condemnation action by the City of Albuquerque and over $400,000
from land development joint ventures.
Overall Company Operations:
The Company's pre-tax income of $125,000 was a decrease of
($367,000) for the quarter ended June 30, 1998, compared to the
quarter ended June 30, 1997. This resulted primarily from the
condemnation action in 1997, as the other segments were generally
consistent between quarterly periods.
The nine-months pre-tax loss of ($489,000) in 1998, compared to
the pre-tax gain of $613,000 in 1997, reflects the condemnation item
in 1997, and for 1998, the difficulties encountered in the
Albuquerque new and used home sales market. The Charter loss grew
to ($714,000) while the PPP-NM loss grew to ($829,000). These
amounts are reported prior to elimination of intercompany interest
paid to the Registrant which totalled over $450,000 for the nine
months. Also not reflected are the earnings made possible to other
elements such as PHS mortgage earnings and the GAEC builder program
loan fees and interest, both of which result from the PPP-NM
connection; and the land development profits enabled by Charter.
As noted above, PPP-NM and Charter reported improved operating
results for the current quarter compared to the 2nd quarter ended
March 31, 1998, indicating that changes are providing favorable
benefits. However, the Albuquerque market presently has near record
levels of both new and used homes available for sale resulting in
very strong competition in the Albuquerque housing market; and
profitable quarters for these companies may not occur until after
The Company's September 30, 1998, fiscal year end.
Liquidity and Sources of Capital
The Company's principal sources of liquidity are cash
flow from operating activities, bank borrowing under both
term and revolving credit arrangements and approximately
$3,504,000 of the Registrant's current cash and cash
equivalents. During the current quarter, the Company had
utilized approximately $4,563,000 of revolving interim
construction and inventory lines of credit from the
approximately $15,000,000 available with various banks.
The Company believes that the cash flow from its
operations and its current cash and equivalents will sustain
its operations and anticipated internal growth for the
ensuing twelve months.
Year 2000
The Company has addressed the possible problems in present
computer software due to the year 2000 and has initiated actions to
make all applications Year 2000 compliant. New software has been
acquired and will be installed effective October 1, 1998, for the
Construction Segment companies. The software for the Real Estate
Brokerage Segment companies has been upgraded to be Year 2000
complaint and such upgrades will be installed no later than December
31, 1998. Other minor computer software applications will be
replaced or upgraded by December 31, 1998. The costs of these
actions are not significant in relation to the financial
statements of the Registrant.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to certain legal claims from
time to time and is involved in litigation that has arisen
in the ordinary course of business. It is the Company's
opinion that it either has adequate legal defenses to such
claims or that any liability that might be incurred due to
such claims will not, in the aggregate exceed the limits of
the Company's insurance policies or otherwise result in any
material adverse effect on the Company's operations or financial
position. The only litigation in which the Company is involved that
might be considered other than routine and ordinary is the
following:
On April 11, 1997, the City of Albuquerque instituted condemnation
procedings related to a parcel of land upon which the Company had a
joint venture financing arrangement for development. This matter is
more fully described in the Company's 10-QSB filing of June 30,
1997. There has been continueing correspondence, verbally and
written between the legal counsel for both parties in an effort to
settle the matter, however, no settlement has been achieved and
litigation may be necessary to determine the value of the property.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS IN SENIOR SECURITIES.
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
None
ITEM 5. OTHER INFORMATION.,
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) There are no exhibits filed with this report.
(b) There were no Forms filed during this reporting period.
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALCO, INC.
Date: August 10, 1998 S/ James A.Arias
_________________________
James A. Arias, President
Date: August 10, 1998 S/ Melvin A.Hardison
_________________________
Melvin A. Hardison Secretary\Treasurer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC form (type) and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 3505000
<SECURITIES> 169000
<RECEIVABLES> 2669000
<ALLOWANCES> 82000
<INVENTORY> 17090000
<CURRENT-ASSETS> 0
<PP&E> 2134000
<DEPRECIATION> 1128000
<TOTAL-ASSETS> 28864000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
3193000
<COMMON> 7712000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 28864000
<SALES> 24421000
<TOTAL-REVENUES> 25491000
<CGS> 19032000
<TOTAL-COSTS> 19032000
<OTHER-EXPENSES> 6363000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 585000
<INCOME-PRETAX> (489000)
<INCOME-TAX> (188000)
<INCOME-CONTINUING> (301000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (301000)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.14)
</TABLE>
