RSI HOLDINGS INC, 10QSB, 1996-04-12

RSI HOLDINGS INC
10QSB, 1996-04-12
MACHINERY, EQUIPMENT & SUPPLIES

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<PAGE> 1
U. S. Securities and Exchange Commission
Washington, D.C. 20549

FORM 10 - QSB

(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 29, 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 0-18091

RSI HOLDINGS, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

NORTH CAROLINA 56-1200363
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)

245 E. Broad Street, Suite A, P. O. Box 6847
Greenville, South Carolina 29606
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(Address of principal executive offices)

(803) 271-7171
-------------------------------------------------------------
Issuer's telephone number

Not Applicable
-------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
--- ---
<PAGE> 2

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

Common Stock - $.01 Par Value -- 7,994,292 shares outstanding as of March
25, 1996

Transitional Small Business Disclosure Format (check one);
Yes No X
---- ----

2
<PAGE> 3

INDEX

RSI HOLDINGS, INC.

PART I. FINANCIAL INFORMATION PAGE

Item I. Financial Statements (Unaudited) PAGE
----
<S> <C>
Condensed consolidated statement of net assets in liquidation --
February 29, 1996 4

Condensed consolidated statements of changes in net assets in
liquidation -- Six months ended February 29, 1996 and
February 28, 1995 5

Notes to condensed consolidated financial statements -- February 29,
1996 6

Item 2. Management's Discussion and Analysis of Financial Condition 14

PART II. OTHER INFORMATION 20

Item 1. Legal Proceedings 20
Item 2. Changes in Securities 26
Item 3. Defaults upon Senior Securities 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 27

SIGNATURES 28
</TABLE>

<PAGE> 4
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RSI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF NET ASSETS IN
LIQUIDATION (Unaudited)

February 29, 1996

<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash and cash equivalents $1,258,000
Accounts receivable 23,000
Property and equipment 1,559,000
Other assets 3,000
----------

2,843,000

LIABILITIES
Trade accounts payable 1,000
Accrued expenses 318,000
Estimated costs during the period of liquidation -- Note A 349,000
----------

668,000
Contingencies -- Note B ----------

Net assets in liquidation -- Note A $2,175,000
==========

</TABLE>

See accompanying notes.

<PAGE> 5

RSI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN NET ASSETS IN LIQUIDATION (Unaudited)

Six Months Ended February 29, 1996 and February 28, 1995

<TABLE>
<CAPTION>
1996 1995
-----------------------
<S> <C> <C>
Net assets in liquidation at beginning of period $2,143,000 $ 1,930,000

Changes in nets assets in liquidation attributed to:
(Decrease) increase in cash and cash equivalents (214,000) 896,000
Decrease in trade accounts payable 4,000 566,000
Decrease in accrued expenses 51,000 321,000
Decrease in estimated costs during remaining period of liquidation 195,000 727,000
Decrease in estimated net realizable value of
accounts receivable (4,000) (1,405,000)
Decrease in notes payable and capital lease obligation 2,194,000
Decrease in inventory floor plan debt resulting from sale of
inventory to supplier 4,123,000
Decrease in accrued compensation 54,000
Decrease in inventory resulting principally from sale of inventory
to suppliers and other dealers (5,845,000)
Sales of property and equipment (1,631,000)
-----------------------

Increase in net assets in liquidation 32,000 0
-----------------------
Net assets in liquidation at end of period $2,175,000 $ 1,930,000
=======================

</TABLE>

See accompanying notes.

<PAGE> 6

RSI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A - BASIS OF PRESENTATION

As of August 31, 1994, RSI Holdings, Inc. (the "Company") adopted the
liquidation basis of accounting. The Company had experienced significant
recurring losses and the Company was notified by its primary supplier of turf
care products that after October 31, 1994, the Company would no longer be
authorized to sell its products. Because substantially all of the Company's
assets were related to the turf care business and the Company would no longer
be authorized to sell the products of its major supplier, it was concluded by
the Board of Directors of the Company and announced on July 29, 1994 that the
Company should cease its existing business operations and sell its operating
assets as of August 31, 1994. Since August of 1994, the Company has been
actively seeking to sell its assets. The shareholders approved the sale of
substantially all its assets at its annual meeting held on January 17, 1995.

As a result of the decision to sell the operating assets of the Company
and the subsequent efforts to sell all of the operating assets, the Company
changed its basis of accounting for its financial statements at August 31, 1994
from the going concern basis of accounting to the liquidation basis of
accounting in accordance with generally accepted accounting principles.
Consequently, assets have been valued at estimated net realizable value and
liabilities are presented at their estimated settlement amounts, including
estimated costs associated with carrying out the liquidation. The valuation of
assets and liabilities necessarily requires many estimates and assumptions and
there are substantial uncertainties in carrying out the liquidation. The
actual realization of assets and settlement of liabilities could be higher or
lower than amounts indicated and is based upon management estimates as of the
date of the financial statements. In addition, as described in Note B,
significant uncertainties exist with respect to the outcome of litigation in
which the Company is a defendant. No provision has been made as of February
29, 1996 for any liability that may result upon ultimate resolution of these
litigation matters.

The statement of consolidated net assets in liquidation as of February 29,
1996 includes approximately $349,000 of costs that the Company estimates will
be incurred during the period of liquidation, based on management's assumption
that the liquidation process will be completed by December 1996. The Company's
estimate of the period required to sell its remaining assets and resolve the
remaining contingencies is based on management's best estimates, and the
liquidation period may be shorter than projected or it may be extended beyond
the projected period.

The accompanying unaudited condensed consolidated financial statements at
February 29, 1996 have been prepared in accordance with generally accepted
accounting principles for interim financial information under the liquidation
basis of accounting and with the instructions to Form 10 - QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments including
normal recurring accruals considered necessary for a fair presentation on the
liquidation basis have been included.

6
<PAGE> 7

For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10 - KSB
for the year ended August 31, 1995.

NOTE B - CONTINGENCIES

WIEGMANN & ROSE

ENVIRONMENTAL LITIGATION

In 1987, Triple A Machine Shop, Inc. ("Triple A") purchased property at
2801 Giant Road in Richmond, California from Wiegmann & Rose International Corp.
("Wiegmann & Rose"), a wholly-owned subsidiary of the Company. As part of this
transaction, Wiegmann & Rose agreed to prepare a proposed plan of abatement for
environmental contamination at the property, submit it to the Regional Water
Quality Control Board, and upon approval, implement the abatement plan. Soon
afterwards, consultants for Wiegmann & Rose prepared a proposed plan of
abatement and submitted it to the Regional Board. However, the California
Department of Health Services asserted jurisdiction over the matter, demanded
that Wiegmann & Rose investigate the possibility of buried drums at the
property, and initiated a planning process that produced a Remedial
Investigation and Feasibility Study, Remedial Action Plan, and Community
Relations Plan. Buried drums, which contained various substances including
solvents and other volatile organic compounds ("VOCs") were found and removed in
1988. Planning and remediation continued for solvents that had leaked from the
drums and for heavy metals that had also been disposed of at the property.

In 1988, Wiegmann & Rose filed suit against NL Industries, Inc. ("NL")
and Esselte Pendaflex Corporation ("Esselte"), and alleged that these two
defendants were responsible for the contamination on the property. NL and
Esselte filed third-party complaints against Triple A. This litigation was
resolved December 31, 1991 through the entry of a consent decree (the "1991
Decree") that required NL to abate the contamination at Site R on the property
diligently and to the satisfaction of the regulatory agencies. In effect, NL
took over Wiegmann & Rose's obligations under its agreement with Triple A with
respect to Site R. ("Site R" is the phrase used to describe the portion of the
property formerly owned by Wiegmann & Rose that by 1987 had been targeted by the
regulatory agencies for investigation and remediation.)

During July of 1993, Triple A sued Wiegmann & Rose and RSI Corporation,
the former parent corporation of Wiegmann & Rose and of the Company, and which
is now known as Delta Woodside Industries, Inc. ("Delta Woodside"), alleging
that Wiegmann & Rose breached the sales contract, breached the covenant of good
faith and fair dealing implied in the contract, and maintained a continuing
nuisance on the property as a result of a failure to abate the contamination
within a reasonable time. In connection with the distribution of the Company's
Common Stock to the shareholders of RSI Corporation in 1989, the Company
indemnified RSI Corporation against certain types of potential liabilities and
expenses, including those arising in connection with the lawsuit by Triple A.
Triple A's complaint seeks special damages in excess of $2,700,000, general
damages according to proof, and punitive damages of $1,000,000.

<PAGE> 8

The Triple A action, which was filed in the Contra Costa County,
California Superior Court on July 19, 1993, was removed to the federal district
court for the Northern District of California on August 25, 1993, and Wiegmann &
Rose answered the complaint. The court granted Wiegmann & Rose's motion to
reopen its previous litigation against NL, which was made with the intention of
obtaining from the court a determination that NL had complied with the 1991
Decree (and therefore that Wiegmann & Rose had complied with its obligations to
Triple A), or, failing that, that NL had failed to comply with the 1991 Decree
(and therefore is responsible for any damages for events following the entry of
the 1991 Decree).

Wiegmann & Rose did not cause any of the contamination on the site. In
addition, the Company had diligently proceeded to abate the contamination
through the date of the 1991 Decree, and the terms of the 1991 Decree required
NL, not the Company, to abate the contamination on Site R diligently and to the
satisfaction of regulatory agencies. Based upon these facts, management
believes that the allegations of Triple A are without merit, is contesting the
case vigorously, and filed a motion to dismiss the case during January of 1996.

In April 1994, the court granted Wiegmann & Rose's motion for partial
summary judgment, which effectively relieved Wiegmann & Rose from liability for
events occurring before the entry of the 1991 Decree with respect to Site R.
Wiegmann & Rose had argued, and the court apparently agreed, that in the 1991
Decree Triple A had released Wiegmann & Rose "for any and all liability for
costs paid and services performed . . . through the date of this Decree that are
related to remediation of hazardous substances at Site R or to this action."
For events occurring after the date of its entry, the 1991 Decree provides that
NL is principally responsible for the remediation of the portion of the property
known as Site R, although Wiegmann & Rose retains liability in the event that NL
does not perform. The 1991 Decree did not address the liability of any party
with respect to portions of the property outside Site R.

Resolution of this case has been delayed because of a disagreement
between Triple A and NL about which of them should be responsible for future
maintenance of a protective cap installed at Site R. Triple A has suggested
that it may dismiss the suit if this issue is resolved, and the parties are
currently discussing settlement. There is no assurance, however, that any
settlement can be reached on terms satisfactory to the Company.

Since the 1991 Decree, NL has been working towards completion of the
remediation of Site R, and during 1994 requested that the California
Environmental Protection Agency, Department of Toxic Substances Control
("California DTSC") declare that the remediation of Site R is complete. The
California DTSC has requested additional commitments from NL and Triple A on
future operation, maintenance, and sampling of Site R. The Company believes
that NL has the financial ability to remediate Site R. This belief is based
upon the Company's knowledge of the remediation of Site R that NL has performed
to date, and upon the Company's review of the annual report of NL for the year
ended December 31, 1995 (the "1995 Annual Report"). The 1995 Annual Report
indicates that, at December 31, 1995, the working capital of NL was $249,000,000
and that NL's working capital ratio was 1.8 to 1.0.

<PAGE> 9

During 1994 NL reported to the California DTSC that it had discovered
additional contamination in the form of elevated levels of petroleum
hydrocarbons or VOCs on the property at issue but adjacent to Site R. Such
property is now owned by Triple A. Because the contamination is not within the
boundaries of Site R, NL has taken the position to the California DTSC that it
is not responsible for the remediation of this contamination. The extent of the
contamination, the estimated cost of its remediation, and Wiegmann & Rose's
responsibility for it have not yet been determined, but the cleanup costs and
legal expenses related to this additional contamination could be significant
and could materially and adversely affect the Company's financial position.
The California DTSC has not yet requested remediation of this area of
additional contamination. In the event that a claim is asserted against
Wiegmann & Rose in connection with this additional contamination, Wiegmann &
Rose expects to take the position that NL is primarily responsible for the
additional contamination. However, no assurance can be given that Wiegmann &
Rose will be successful in this matter and, if the matter were litigated, the
litigation could take years and be very expensive to the Company.

During the six months ended February 29, 1996, the Company incurred
approximately $10,000 in legal expenses related to the Triple A lawsuit.

ASBESTOS LITIGATION

Wiegmann & Rose is also one of numerous defendants with respect to seven
claims for exposure to asbestos, arising in the normal course of business. All
seven of these claims have been dismissed without prejudice with respect to
Wiegmann & Rose, and the applicable statute of limitations has passed with
respect to at least two of the dismissed claims. The dismissed claims are made
in the following lawsuits, in each case seeking unspecified damages for injury
allegedly due to asbestos exposure: (i) Brophy v. Abex et al. (filed April 9,
1992), pending in the San Francisco, California Superior Court, seeks damages
for wrongful death allegedly due to asbestos exposure. Wiegmann & Rose has been
dismissed without prejudice in this action and the applicable statute of
limitations has now passed, barring any subsequent action by the plaintiff
against Wiegmann & Rose. (ii) Canga v. Abex et al. (filed March 18, 1993),
pending in the San Francisco Superior Court, seeks damages for personal injuries
allegedly due to asbestos exposure. Wiegmann & Rose has been dismissed without
prejudice in this action. (iii) Jordison v. Abex et al. (filed January 21,
1994), pending in the San Francisco Superior Court, seeks damages for personal
injuries allegedly due to asbestos exposure. The case against Wiegmann & Rose
has been dismissed without prejudice. (iv) Barnes v. Abex et al. (filed December
3, 1993), pending in the San Francisco Superior Court, seeks damages for
wrongful death allegedly due to asbestos exposure. The case against Wiegmann &
Rose has been dismissed without prejudice, and the applicable statute of
limitation has passed, barring any subsequent action by plaintiff against
Wiegmann & Rose. (v) Richardson v. Abex et al. (filed August 5, 1993), pending
in the San Francisco Superior Court, seeks damages for personal injuries
allegedly due to asbestos exposure. The case against Wiegmann & Rose has been
dismissed without prejudice. (vi) Sorensen v. Abex et al. (filed July 20,
1993), pending in the San Francisco Superior Court, seeks damages for personal
injuries allegedly due to asbestos exposure. The case against Wiegmann & Rose
has been dismissed without prejudice. (vii) Hall v. Abex et al. (filed February
25, 1994), pending in the San Francisco Superior Court, seeks damages for
personal injuries allegedly due to asbestos

<PAGE> 10

exposure. The case against Wiegmann & Rose has been dismissed without
prejudice.

As to the substantive nature of the asbestos claims, the Company believes
substantial defenses would be available and for that reason the Company has
been successful in having all seven of these filed actions dismissed without
prejudice as against Wiegmann & Rose.

INSURANCE

The Company has contacted its two primary insurance companies relating
to the environmental and asbestos claims against Wiegmann & Rose described
above. One insurance company has denied coverage with respect to the
environmental claims, but the other insurance company is reimbursing the Company
for a portion of its defense costs related to the environmental matter under a
reservation of rights. Both insurance companies are also, under a reservation
of rights, reimbursing the Company for a portion of its defense costs related to
the asbestos claims. The Company has received $6,000 from its insurers during
the six months ended February 29, 1996 in payment of certain of its defense
costs incurred with respect to these claims. The Company believes that the
likelihood of continued recovery of defense costs relating to these claims
pursuant to its current arrangements with these insurance companies is probable,
but there can be no assurance that insurance coverage will be available to
reimburse the Company to any extent for any damages or costs it must pay as a
result of the settlement or adjudication of these claims.

HOLIDAY INNS, INC. LITIGATION

RSI Corporation (now Delta Woodside), the former parent corporation of the
Company, and Sparjax Corporation, RSI Corporation's now-dissolved subsidiary,
are among several defendants in a lawsuit filed on July 29, 1993 by Holiday
Inns, Inc. in the Circuit Court of the Fourth Judicial Circuit for Duval
County, Florida. In connection with the distribution of the Company's Common
Stock to the shareholders of RSI Corporation in 1989, the Company indemnified
RSI Corporation against certain types of potential liabilities and expenses,
including those arising in connection with the lawsuit by Holiday Inns, Inc.

This suit seeks indemnification for payments made or to be made by Holiday
Inns, Inc., as the guarantor, to the lessor for obligations under a land lease
agreement allegedly in default. The lease agreement was commenced in 1967 and
has a term of ninety-nine years. The lessor under the lease agreement was
originally Fernandina Contractors, Inc., and by assignment is currently Sam
Spevak. Holiday Inns, Inc. was the original lessee under the lease agreement.
Payments under the lease agreement are the greater of $24,000 annually or the
highest average annual payments during any five-year period during the first
twenty (20) years of the lease, using a percentage of income formula.

The lessee's interest in the lease agreement has been assigned to a series
of parties including RSI Corporation and Sparjax Corporation. RSI Corporation
was the lessee under the lease agreement from June, 1979 to August, 1979, and
Sparjax Corporation was the lessee thereunder from August, 1979 to January,
1981. The current lessee is American Hotel Investors,

<PAGE> 11

Inc. ("AHI"). AHI allegedly has failed to make lease payments due under the
lease agreement and otherwise to comply with its obligations under the lease
agreement.

Holiday Inns, Inc. has alleged that Sparjax Corporation, which is the
assignee of the lease agreement from RSI Corporation, is in breach of a written
Indemnification Agreement executed by Sparjax Corporation in favor of Holiday
Inns, Inc. upon its assumption of the lease agreement in 1979. All of the
outstanding common stock of Sparjax Corporation was acquired by RSI Corporation
during fiscal 1983, and Sparjax Corporation was dissolved by forfeiture during
fiscal 1990. In connection with such dissolution, no material assets were
distributed from Sparjax Corporation to RSI Corporation. Other than as
described herein, there is no contractual relationship whatsoever between RSI
Corporation and Holiday Inns, Inc.

On or about September 23, 1992, Sam Spevak filed a lawsuit against Holiday
Inns, Inc. for allegedly failing to pay monthly rent under the lease agreement.
This lawsuit is pending in the Circuit Court of the Fourth Judicial Circuit, in
and for Duval County, Florida. On May 4, 1993, Sam Spevak filed a Second
Amended Complaint seeking from Holiday Inns, Inc. unpaid rent, unpaid taxes,
interest, attorney fees and costs. On November 19, 1993, Sam Spevak filed a
Third Amended Complaint in the Court seeking from Holiday Inns, Inc. unpaid
rent, unpaid taxes, attorneys fees and costs, and seeking a declaratory
judgment against Holiday Inns, Inc. to establish whether or not Holiday Inns,
Inc. is liable for costs of repair and maintenance to the leased premises.
Holiday Inns, Inc. amended its complaint to assert similar claims against all
subsequent lessees (including RSI Corporation and Sparjax Corporation) under
the lease agreement, seeking indemnification against sums paid or to be paid to
Sam Spevak pursuant to his lawsuit. Currently Holiday Inns, Inc. claims to
have paid the lessor in excess of $260,000 to date as a result of the lawsuit.
The Company has no independent information with respect to the particulars of
the payment of this sum.

The most recent activity in the case has been a cross-claim filed by Mr.
Donald Roberts against all assignees of W. M. R., Inc., including RSI
Corporation and Sparjax Corporation. Mr. Roberts was an individual guarantor of
W. M. R., Inc.'s obligations under the land lease. Counsel for RSI Corporation
and Sparjax Corporation have moved to dismiss Mr. Roberts' cross-claims and the
court has granted these motions, without prejudice. Counsel for Sparjax
Corporation and RSI Corporation have informed the Company that the cross-claims
do not raise any new substantive issues, but merely seek indemnification from
all assignees in the event that Mr. Roberts is required to pay Holiday Inns,
Inc. on his individual guaranty.

The potential maximum amount of Holiday Inns, Inc.'s exposure for rent
under the lease, reduced to present value, has been estimated by counsel to be
approximately $3,500,000. In addition, should the court determine that Holiday
Inns, Inc. has an obligation to pay the cost of repairs and maintenance incurred
to date and throughout the balance of the lease term, the amount of such costs
could be substantial but cannot be quantified with any reasonable degree of
accuracy. The Company believes the existing motel property is in a state of
disrepair such that it is not commercially usable.

RSI Corporation denies its alleged liability to Holiday Inns, Inc. and
intends to defend this

<PAGE> 12

matter vigorously. Upon a motion of counsel for RSI Corporation, Holiday Inns,
Inc.'s claims against RSI Corporation were dismissed without prejudice, but
Holiday Inns, Inc. has filed an Amended Complaint to reinstate certain of its
claims, and to add a claim for equitable subrogation, against RSI Corporation
and Sparjax Corporation. Counsel for RSI Corporation and Sparjax Corporation
has answered the equitable subrogation claim, and has moved for dismissal with
prejudice with respect to the claims that have previously been dismissed.

The deposition of James "Duke" Williams, a critical witness in the case,
has now been taken. Mr. Williams was involved in a contract to assume the lease
from Holiday Inns, Inc., which contract was later canceled by Holiday Inns,
Inc. The parties are presently scheduling the depositions of other important
fact witnesses. These include Mr. Spevak and several of the other officers of
Holiday Inns, Inc. who were involved in the negotiations to cancel the lease
with Mr. Williams. The mediation conference held in January, 1995 was not
successful. No trial date has been set.

If found liable for any sum as a result of Holiday Inns, Inc.'s claims,
the Company believes RSI Corporation and Sparjax Corporation would have a claim
in equity against AHI, the current and allegedly defaulting lessee under the
lease agreement, and its principal shareholders, who guaranteed AHI's
obligations under the lease. AHI is a private corporation and the Company has
no information regarding the financial ability of AHI or its principal
shareholders to perform AHI's obligations under the lease or to reimburse any
third party for any payments made under the lease as a result of the lawsuit
described above.

The ultimate outcome of this matter is not known. No provision has been
made in the accompanying financial statements for any liability which may result
from this matter.

OTHER LITIGATION

On January 12, 1995, a Mr. Cesar A. Cuenca served a complaint against
the Company in the 11th Judicial Circuit Court, Dade County, Florida seeking
damages in excess of the minimal jurisdictional amount of the Court, exclusive
of costs and interest, and demanding costs of the action together with such
further relief as the Court shall deem fit. The Plaintiff alleges that he was
injured while operating a vehicle that was sold by the Company. The Complaint
also named the manufacturer of the vehicle. The manufacturer has accepted,
under reservation of rights, defense of the Company regarding this matter. This
matter is still in the discovery stage. The plaintiff recently amended the
complaint to add the School Board of Dade County as a defendant for negligent
maintenance of the subject premises. The Company believes, based on the
arrangements with the manufacturer of the vehicle and the Company's own
insurance, that this action should not have a material adverse effect on the
Company's financial position.

On February 4, 1994, a Mr. Everette Moncur and Edwina Moncur, his wife,
served a complaint against the Company in the 17th Judicial Circuit Court,
Broward County, Florida seeking damages in excess of $15,000 for injuries
sustained while operating a turf care product sold by the Company. The
complaint also named the manufacturer of the product. The manufacturer and its
insurance carrier have accepted defense of the Company regarding this

<PAGE> 13

matter. The Company believes, based on the arrangements with the manufacturer,
the manufacturer's insurance company, and the Company's own insurance, that this
action should not have a material adverse effect on the Company's financial
position.

13
<PAGE> 14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

SALE OF ASSETS

During July of 1994, the Company was notified by the Jacobsen Division of
Textron, Inc. ("Jacobsen"), its principal supplier of turf care products, that
after October 31, 1994 the Company would no longer be authorized to sell
Jacobsen products. Because substantially all of the Company's assets were
related to the turf care business and the Company would no longer be authorized
to sell the products of its primary supplier, the Board of Directors determined
in July of 1994 that the Company should cease its existing business operations
and sell the operating assets of the Company. Accordingly, the Company ceased
substantially all of its existing business operations by August 31, 1994. The
Company received shareholder approval of its plan to sell substantially all of
the Company's assets (the "Sale of Assets") at its annual meeting of
shareholders held on January 17, 1995.

As discussed below, the Sale of Assets plan has not yet been fully
consummated. The holders of an aggregate of 167,591 shares of Common Stock
dissented from the Sale of Assets. These holders are entitled under North
Carolina law to receive the "fair value" of their shares of Common Stock as
determined in accordance with North Carolina law. The Company has not yet
determined the "fair value" of these shares. It intends to make this
determination promptly following the sale of the Fort Lauderdale property
described further below, as part of the consummation of the Sale of Assets.

ADJUSTMENT TO LIQUIDATION BASIS

Because the Company decided in 1994 that it should cease its existing
business operations and sell substantially all of its operating assets, the
Company has reported its financial position on the liquidation basis of
accounting for the six months ended February 29, 1996. In the liquidation basis
of accounting, assets are valued at their net realizable value (rather than at
their net historical cost), and liabilities include estimated costs associated
with carrying out the sale of substantially all of the assets of the Company.

At August 31, 1994, management believed that it would be able to
complete the Sale of Assets by December 31, 1995, and the costs estimated at
that time by the Company to be incurred during the period of liquidation were
based upon that assumption. However, despite the Company's efforts, two major
properties of the Company have not been sold, and in August 1995 the Company
extended the period of liquidation. Management currently estimates that it will
be able to complete the Sale of Assets by December 31, 1996, though there can be
no assurance that this goal will be achieved. See the section entitled
"Property and Equipment" for a discussion of the Company's efforts to sell its
remaining properties.

At the end of fiscal year 1995, net assets were higher than at the end
of fiscal year 1994 by

14
<PAGE> 15

$213,000. This increase reflects the changes in the Company's estimates of the
following items: increase of rental income of $280,000, increase of interest
earned of $58,000, increase in recovery from insurance companies of legal fees
paid in the amount of $134,000, increase in collections of accounts receivable
in the amount of $36,000, and an increase in estimated costs during the period
of liquidation of $295,000. The increase in estimated costs during the period
of liquidation results primarily from extending the period of liquidation from
December 31, 1995 to December 31, 1996.

The Company's estimate of net assets in liquidation increased $32,000
during the six months ended February 29, 1996. The principal reason for the
increase in net assets in liquidation was the increase in rental income
estimated to be received from the lessee during the period of liquidation
relating to the unsold property located in Fort Lauderdale, Florida and Tampa,
Florida.

At February 29, 1996, the Company had accrued $318,000 to record all
known expenses incurred through February 29, 1996, but not yet paid. As of
February 29, 1996 the Company's estimated costs to be incurred during the
remaining period of liquidation through December 31, 1996 were $349,000 as
compared to $544,000 at August 31, 1995. This reduction of $195,000 resulted
primarily from payments made and adjustments to expense categories based on
actual costs (net of estimated rental income) as compared to costs estimated at
August 31, 1995 to be incurred during the six months ended February 29, 1996.
These costs include costs expected to be incurred in connection with the
consummation of the Sale of Assets during the liquidation period through
December 31, 1996, including anticipated legal fees ($54,000), accounting and
auditing fees ($30,000), salaries ($118,000), lease commitments ($18,000),
property taxes ($37,000), insurance and other overhead items ($33,000),
shareholder relation expenses ($9,000), and the Company's estimate of unforeseen
costs ($50,000) that the Company expects to incur during the remaining
liquidation period through December 31, 1996. These amounts are only estimates,
however, and there is no assurance that management will be able to complete the
Sale of Assets during this period or that known and unknown contingencies will
not require the Company to make significant additional expenditures.

FINANCIAL POSITION AT FEBRUARY 29, 1996

The Company's activities during the period beginning in September of 1994
through February of 1996 have consisted primarily of implementing the Sale of
Assets. The following paragraphs describe such activities and the composition
of the net assets of the Company at February 29, 1996.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the amount of $1,258,000 as of February 29,
1996 included United States treasury bills with a maturity of three months when
purchased and having a cost basis of $1,128,000. Cash in excess of the amounts
invested in United States treasury bills is invested as available in a bank
master note, which may be liquidated by the Company to meet its cash needs on a
daily basis. The Company earned $38,000 on its investments during the six
months ended February 29, 1996.

15
<PAGE> 16

ACCOUNTS RECEIVABLE

As of February 29, 1996, the Company's estimate of the net realizable
value of total accounts receivable was $23,000, as compared to $27,000 at August
31, 1995. The $4,000 decrease in the estimate of net realizable value at
February 29, 1996 as compared to August 31, 1995 is the result of net
collections during the six months ended February 29, 1996. Collections of
accounts receivable during the six months ended February 29, 1996 were $11,000
($4,000 from former customers). The remaining accounts receivable as at
February 29, 1996 have a face value of $109,000, but have been reduced by an
aggregate of $86,000 to reflect the Company's estimate of the net realizable
value of the accounts receivable. Of these remaining accounts receivable,
accounts receivable with a face value of $86,000 were due from former customers,
and the remaining $23,000 in face value of accounts receivable consists of
miscellaneous receivables arising in the ordinary course of business.

The Company is using its best efforts to collect the remaining amounts
owed to it. There is no assurance, however, that the Company will be
successful in its collection efforts. The Company has experienced difficulty
in collecting these remaining accounts receivable. Amounts due from former
customers at February 29, 1996 of approximately $86,000 in face value are in
the hands of attorneys to collect. The fees of such attorneys for collection
are up to approximately 40% of the amount recovered. The Company will attempt
to recover its collection costs from the customers, but there is no assurance
that it will be successful in these efforts. The remaining $23,000 in face
value of accounts receivable includes $12,000 of sales tax deposits made to the
State of Florida that are being reduced each month through sales tax collected
on rents charged on the two remaining properties. The uncollected amount
remaining at the expiration of the lease period will be refundable from the
State of Florida. The remaining $11,000 of miscellaneous receivables are the
result of transactions made in the ordinary course of business and are subject
to the Company's collection efforts.

PROPERTY AND EQUIPMENT

The Company's remaining unsold real properties are owned by RSI Holdings
of Florida, Inc. ("RSI Florida"), and consist of 2.5 acres of land with a
59,000 square foot building in Fort Lauderdale, Florida, and 2.03 acres of land
with a 22,000 square foot building in Tampa, Florida. These properties were
utilized by RSI Florida as warehouse, office and showroom space for the sale of
turf care equipment prior to the cessation of the Company's business activities
in August of 1994. The properties have an estimated liquidation value of
$1,559,000 (net of estimated selling expenses), and are not subject to any
material debt. The estimated liquidation values are based in part upon an
independent appraisal of the Fort Lauderdale property, dated March 11, 1994,
indicating a market value for that property of $1,200,000, and an independent
appraisal of the Tampa property, dated March 21, 1994 (updated effective
October 10, 1995), indicating a market value for that property of $530,000,
(the "Appraisals") which appraisals and market values have not been
independently verified by the Company. The Company is not aware of any
material changes in the market value of the property since the respective dates
of the Appraisals. The Appraisals each assume a "reasonable" marketing time
for each property (assumed to be six

16
<PAGE> 17

months to one year by the Fort Lauderdale appraisal and one year with respect
to the Tampa property), as well as various other material assumptions set forth
in the Appraisals, as bases for the estimated value of each property. There is
no assurance that the Company will realize sales prices for the properties
comparable to the values estimated for each property by the Appraisals or that
the other assumptions set forth in the Appraisals will prove to be accurate to
any extent.

The Company has been unable to sell these properties to date at prices
deemed acceptable to the Company, but has a sales contract to sell the Fort
Lauderdale property and is actively engaged in marketing the Tampa property. The
properties have been listed for sale with Florida commercial real estate brokers
at prices somewhat higher than the market values indicated by the Appraisal for
each property. The Company executed on February 6, 1996 a contract to
sell the Fort Lauderdale property whereby the prospective buyer will purchase
effective August 1, 1996 the Fort Lauderdale property for $1,221,190 less
allowances and selling expenses which the Company currently estimates will
total approximately $103,000. This agreement was subject to a forty five day
due diligence period that was subsequently extended to April 10, 1996. The
prospective buyer has paid the Company's real estate broker a $50,000 deposit
and the real estate broker is holding this deposit in escrow.

With respect to the Tampa property, the property is listed for sale with a
Florida commercial real estate broker at a price somewhat higher than the
market values indicated by the Appraisal for the property. During fiscal 1995
the Company engaged in negotiations with two potential buyers out of a number
of interested parties, but one of these parties has located an alternative site
and the other party has discontinued negotiations with the Company for the
property. In addition, the Company has received oral expressions of interest
from Tresca Industries, the current lessee of the Tampa property, and has
received a written offer from another potential buyer, but neither of these
offers was at a price deemed acceptable by the Company.

The Company believes, in light of the fact that its current liquidity
requirements are met by its existing cash and cash equivalents, that it is in
the best interest of the Company to consummate the sale of the Fort Lauderdale
property and continue to hold the Tampa property in an attempt to realize its
market value. The level of interest in the property, as well as the nature of
the market in which the property is located, lead the Company to believe that,
given adequate marketing time, there is a reasonable likelihood that the
Company will be able to realize sale prices comparable to the value for the
property indicated by its Appraisal. However, there can be no assurance that
the Company will be successful in locating a buyer for the property at such
price. Further, in the event expenses and costs arising out of the Company's
contingent liabilities or

<PAGE> 18

other expenses of liquidation exceed its liquid resources, and if the contract
to sell the Fort Lauderdale property on August 1, 1996 is not consummated, the
Company may be forced to reduce the price of either or both of these properties
in order to induce a rapid sale. There is no assurance that any buyer will be
available even at such reduced prices. See Part II, Item 1 - "Legal
Proceedings."

PLANNED ACTIVITIES DURING THE PERIOD OF LIQUIDATION

During the remainder of the period of liquidation (currently estimated
to end December 31, 1996), proceeds of the Sale of Assets will continue to be
applied first to the payment of expenses related to the liquidation of the
Company's assets, next to pay or make provisions for the payment of contingent
liabilities of the Company, and next to pay "fair value" to the holders of the
167,591 shares of Common Stock dissenting from the Sale of Assets. There is no
assurance that the Company's proceeds from the sale of its remaining assets will
be sufficient to cover these expenses.

The Company currently intends to use the assets, if any, remaining after
the consummation of the Sale of Assets and the payment or provision for payment
of the foregoing items to acquire, invest in, or commence another business
enterprise. In addition to continuing to implement the liquidation of the
Company's assets, the Company plans during the remainder of the period of
liquidation to continue to seek to identify a suitable new business in which to
engage or invest. The Company has reviewed a number of potential business
opportunities, and has held discussions with respect to certain of such
opportunities, but to date no suitable business enterprise has been identified
by the Company.

LIQUIDITY AND CAPITAL RESOURCES

ANTICIPATED LIQUIDITY REQUIREMENTS

Proceeds from the consummation of the Sale of Assets Plan have been or
will be applied first to satisfy debt associated with the particular assets
sold, next to the general debts of the Company, next to pay for or make
provision for the payment of contingent liabilities of the Company and next to
pay "fair value" to the holders of Common Stock dissenting from the Sale of
Assets Plan. All material debts associated with the remaining assets to be sold
have been paid and the general debts of the Company have been paid as they
became due. There is no assurance that the Company's proceeds from the sale of
its remaining assets will be sufficient to cover the contingent liabilities and
the remaining debts and expenses. The Company expects to pay "fair value" to
the holders of the 167,591 shares of Common Stock dissenting from the Sale of
Assets Plan following the consummation of the expected sale of the Fort
Lauderdale property in August of 1996. The Company expects to follow the
procedures for determining "fair value" in accordance with North Carolina law.

As discussed below under "Cash and Cash Equivalents," the Company has
substantial cash

<PAGE> 19

liquidity, and anticipates that such cash resources will be sufficient to
enable the Company to pay ordinary expenses expected to arise during the
remaining period of liquidation of Company assets and identification of a new
business enterprise in which to engage or invest. Further, the Company
currently anticipates that it will be able to sell its remaining assets (other
than cash and cash equivalents) by December 31, 1996, which sales will provide
additional liquidity to the Company. There can be no assurance, however, that
the Company will be able to sell the remainder of its assets or to identify a
suitable business in which to engage or invest during this period. If this
transition period is extended, the Company may not have sufficient proceeds to
cover its anticipated expenses. It also may be required to register under the
Investment Company Act of 1940, as amended, during such period. The Company is
unable to predict with certainty when the Tampa property will be sold, but has
estimated costs during the remaining period of liquidation based on such sales
occurring by December 31, 1996.

In addition to its ordinary expenses, the Company will continue to incur
legal expenses relating to its contingent liabilities. The Company plans to
continue to attempt to settle its contingent liabilities during the remainder
of its period of liquidation, but it cannot estimate when these will be settled
or the ultimate outcome of the lawsuits or environmental matters described
below under Item 1 of Part II, "Legal Proceedings" or of any unknown
contingencies. There can be no assurance that the Company's cash balances
will be sufficient to allow it to meet its recorded liabilities and any known
or unknown contingent liabilities. The ultimate outcome of these contingencies
is not known. No provision has been made in the accompanying financial
statements for any liability which may result from these matters, except for
an estimate of the legal costs that the Company expects to incur in the defense
of these matters.

CASH AND CASH EQUIVALENTS

DEBT ARRANGEMENTS

The Company's $500,000 revolving unsecured line of credit (the "Line of
Credit") expired on December 31, 1995. The Line of Credit was not used by the
Company. The Company does not believe that it will need a line of credit
during the remaining period of liquidation.

<PAGE> 20

RSI HOLDINGS, INC.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

WIEGMANN & ROSE

ENVIRONMENTAL LITIGATION

20
<PAGE> 21

The Triple A action, which was filed in the Contra Costa County,
California Superior Court on July 19, 1993, was removed to the federal district
court for the Northern District of California on August 25, 1993, and Wiegmann
& Rose answered the complaint. The court granted Wiegmann & Rose's motion to
reopen its previous litigation against NL, which was made with the intention of
obtaining from the court a determination that NL had complied with the 1991
Decree (and therefore that Wiegmann & Rose had complied with its obligations to
Triple A), or, failing that, that NL had failed to comply with the 1991 Decree
(and therefore is responsible for any damages for events following the entry of
the 1991 Decree).

Since the 1991 Decree, NL has been working towards completion of the
remediation of Site R, and during 1994 requested that the California
Environmental Protection Agency, Department of Toxic Substances Control
("California DTSC") declare that the remediation of Site R is complete. The
California DTSC has requested additional commitments from NL and Triple A on
future operation, maintenance, and sampling of Site R. The Company believes
that NL has the financial ability to remediate Site R. This belief is based
upon the Company's knowledge of the remediation of Site R that NL has performed
to date, and upon the Company's review of the annual report of NL for the year
ended December 31, 1995 (the "1995 Annual Report"). The 1995 Annual Report
indicates that, at December 31, 1995, the working capital of NL was
$249,000,000 and that NL's working capital ratio was 1.8 to 1.0.

21
<PAGE> 22

During 1994 NL reported to the California DTSC that it had discovered
additional contamination in the form of elevated levels of petroleum
hydrocarbons or VOCs on the property at issue but adjacent to Site R. Such
property is now owned by Triple A. Because the contamination is not within the
boundaries of Site R, NL has taken the position to the California DTSC that it
is not responsible for the remediation of this contamination. The extent of the
contamination, the estimated cost of its remediation, and Wiegmann & Rose's
responsibility for it have not yet been determined, but the cleanup costs and
legal expenses related to this additional contamination could be significant and
could materially and adversely affect the Company's financial position. The
California DTSC has not yet requested remediation of this area of additional
contamination. In the event that a claim is asserted against Wiegmann & Rose in
connection with this additional contamination, Wiegmann & Rose expects to take
the position that NL is primarily responsible for the additional contamination.
However, no assurance can be given that Wiegmann & Rose will be successful in
this matter and, if the matter were litigated, the litigation could take years
and be very expensive to the Company.

During the six months ended February 29, 1996, the Company incurred
approximately $10,000 in legal expenses related to the Triple A lawsuit.

ASBESTOS LITIGATION

<PAGE> 23

exposure. The case against Wiegmann & Rose has been dismissed without prejudice.

As to the substantive nature of the asbestos claims, the Company
believes substantial defenses would be available and for that reason the Company
has been successful in having all seven of these filed actions dismissed without
prejudice as against Wiegmann & Rose.

INSURANCE

HOLIDAY INNS, INC. LITIGATION

RSI Corporation (now Delta Woodside), the former parent corporation of
the Company, and Sparjax Corporation, RSI Corporation's now-dissolved
subsidiary, are among several defendants in a lawsuit filed on July 29, 1993 by
Holiday Inns, Inc. in the Circuit Court of the Fourth Judicial Circuit for Duval
County, Florida. In connection with the distribution of the Company's Common
Stock to the shareholders of RSI Corporation in 1989, the Company indemnified
RSI Corporation against certain types of potential liabilities and expenses,
including those arising in connection with the lawsuit by Holiday Inns, Inc.

This suit seeks indemnification for payments made or to be made by
Holiday Inns, Inc., as the guarantor, to the lessor for obligations under a land
lease agreement allegedly in default. The lease agreement was commenced in 1967
and has a term of ninety-nine years. The lessor under the lease agreement was
originally Fernandina Contractors, Inc., and by assignment is currently Sam
Spevak. Holiday Inns, Inc. was the original lessee under the lease agreement.
Payments under the lease agreement are the greater of $24,000 annually or the
highest average annual payments during any five-year period during the first
twenty (20) years of the lease, using a percentage of income formula.

The lessee's interest in the lease agreement has been assigned to a
series of parties including RSI Corporation and Sparjax Corporation. RSI
Corporation was the lessee under the lease agreement from June, 1979 to August,
1979, and Sparjax Corporation was the lessee thereunder from August, 1979 to
January, 1981. The current lessee is American Hotel Investors,

23
<PAGE> 24

Inc. ("AHI"). AHI allegedly has failed to make lease payments due under the
lease agreement and otherwise to comply with its obligations under the lease
agreement.

On or about September 23, 1992, Sam Spevak filed a lawsuit against
Holiday Inns, Inc. for allegedly failing to pay monthly rent under the lease
agreement. This lawsuit is pending in the Circuit Court of the Fourth Judicial
Circuit, in and for Duval County, Florida. On May 4, 1993, Sam Spevak filed a
Second Amended Complaint seeking from Holiday Inns, Inc. unpaid rent, unpaid
taxes, interest, attorney fees and costs. On November 19, 1993, Sam Spevak
filed a Third Amended Complaint in the Court seeking from Holiday Inns, Inc.
unpaid rent, unpaid taxes, attorneys fees and costs, and seeking a declaratory
judgment against Holiday Inns, Inc. to establish whether or not Holiday Inns,
Inc. is liable for costs of repair and maintenance to the leased premises.
Holiday Inns, Inc. amended its complaint to assert similar claims against all
subsequent lessees (including RSI Corporation and Sparjax Corporation) under the
lease agreement, seeking indemnification against sums paid or to be paid to Sam
Spevak pursuant to his lawsuit. Currently Holiday Inns, Inc. claims to have
paid the lessor in excess of $260,000 to date as a result of the lawsuit. The
Company has no independent information with respect to the particulars of the
payment of this sum.

RSI Corporation denies its alleged liability to Holiday Inns, Inc. and
intends to defend this

<PAGE> 25

The ultimate outcome of this matter is not known. No provision has been
made in the accompanying financial statements for any liability which may result
from this matter.

OTHER LITIGATION

25
<PAGE> 26

ITEM 2. CHANGES IN SECURITIES*

ITEM 3. DEFAULTS UPON SENIOR SECURITIES*

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The following summarizes the votes at the Annual Meeting of the Company's
shareholders held on January 18, 1996.

Broker
--------
Matter For Against Withheld Abstentions Nonvotes
- -------------------- --------- ------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Election of
Directors

C. C. Guy 7,078,348 0 36,091 0 0
Buck Mickel 7,078,348 0 36,091 0 0
Charles M. Bolt 7,078,348 0 36,091 0 0

Ratification of
appointment of
Ernst & Young LLP
Independent auditors
for fiscal 1996 7,091,352 21,557 0 1,530 0
</TABLE>

ITEM 5. OTHER INFORMATION*

*Items 2, 3, and 5 are not presented as they are not applicable or the
information required thereunder is substantially the same as information
previously reported.

<PAGE> 27

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Listing of Exhibits

3.1 Articles of Incorporation of RSI Holdings, Inc., as
amended: Incorporated by reference to Exhibits 3.2 and 3.2.2 to
the Registration Statement on Form S-4 of RSI Corporation and
Porter Brothers, Inc., File No. 33-30247 (the "Form S-4").

3.1.1 Articles of Amendment and Certificate of Reduction of Capital of
Porter Brothers, Inc.: Incorporated by reference to Exhibit 4.1
to the Form 8-K of the Registrant filed with the Securities and
Exchange Commission on November 28, 1989, File No. 0-7067.

3.2.1 By-laws of RSI Holdings, Inc., as amended: Incorporated by
reference to Exhibit 3.2.1 to the Form S-4.

3.2.2 Amendment to By-laws of RSI Holdings, Inc. Incorporated by
reference to Exhibit 4.2.2 to the Form 10-QSB of the Registrant
file with the Securities and Exchange Commission on January 13,
1995

4.1 Specimen of Certificate for RSI Holdings, Inc., common stock:
Incorporated by reference to Exhibit 4.1.2 to the Form S-4.

4.2 See Exhibits 3.1, 3.1.1, 3.2.1 and 3.2.2.

10.1 Agreement by and between the Company and Treadco, Inc. dated as
of February 6, 1996.

27 Financial Data Schedule (For SEC use only)

(b) Reports on Form 8-K

The Company did not file any reports on Form 8-K during the three
months ended February 29, 1996.

<PAGE> 28

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.

RSI HOLDINGS, INC.
--------------------------

April 12, 1996 /s/ Joe F. Ogburn
- -------------- --------------------------------------------
(Date) Joe F. Ogburn, Vice President and Treasurer
(Principal Accounting Officer)

<PAGE> 1
EXHIBIT 10.1

BUYER TREADCO, INC.
of P O BOX 10048, FORT SMITH, AR 72917-0048 Tel: (501)788-6485 and
SELLER RSI HOLDINGS, INC., 1005 EAST DIXON BOULEVARD
of SHELBY, NORTH CAROLINA 28150 Tel: (305) 938-6940
hereby agree that the Seller shall sell and the Buyer shall buy the following
described property together with existing improvements thereon, UPON THE TERMS
AND CONDITIONS HEREINAFTER SET FORTH.

1. LEGAL DESCRIPTION of real estate located in Broward County, Florida. Tax
Folio # 504206000041

COMPLETE PROPERTY ADDRESS: 901 NW 31 AVE, FORT LAUDERDALE, FL
(Address) (City)
PERSONAL PROPERTY INCLUDED: All fixed equipment, all window screens, treatments
and hardware, all attached floor coverings and attached lighting fixtures as
now installed on said property. Also included are the checked major
appliances:
range___, refrigerator ___ , dishwasher ____ , disposal ____ , microwave oven___
___, trash compactor______, washer______, dryer______, owned pool equipment____
__, ceiling fans______.

ADDITIONAL PERSONAL PROPERTY INCLUDED:

PERSONAL PROPERTY NOT INCLUDED:

LEASED EQUIPMENT:
Seller represents that the property can be used for the following purposes:
Light Manufacturing/Warehouse

CONCURRENCY: No representation is made regarding the ability to change the
current use of, or improve, the subject property under the Local Government
Comprehensive Planning and Land Development Regulation Act (Chapter 163 et
seq., Florida Statutes) or any comprehensive plan or other similar ordinance
promulgated by local governmental authorities in accordance with the Act.

2. PURCHASE PRICE IS: (In U.S. funds) $1,221,190
METHOD OF PAYMENT:
(a) Deposit $ 50,000

(b) Additional deposit due within _____________ United States
banking days after date of acceptance. Time is of the
essence as to additional deposit $

ALL DEPOSITS TO BE HELD BY: Escrow Account of Lehrer and Company
(c) Amount of new note and mortgage to be executed by the Buyer $
to any lender other than the Seller.
TYPE OF MORTGAGE:
(CHECK ONE) Conventional ( ),FHA ( ),VA ( )(If FHA or VA see Rider)
(CHECK ONE) Fixed Rate ( ), Variable ( )
Interest Rate _______ %, with initial Monthly Payment of $
Other terms: __________________________________________

(d) Existing mortgage balance encumbering the property
to be ASSUMED by the Buyer approximately $
Name of the mortgagee
Loan No. _______________
At an interest rate which may be changeable to the rate of
interest at time of closing not to exceed the rate ___________ %
per annum. (CHECK ONE) Fixed rate ( ) or Adjustable rate( )
with a maximum ceiling of ___________%.
Buyer is assuming a balloon mortgage. YES ________ NO _________.
Balloon due date _____________________________________________ .
Other terms:

<PAGE> 2

(e) Purchase money note and mortgage, first ( ) second ( ), to Seller $
bearing interest at the rate of ______ % per annum and payable
$________________ principal and interest per ____________________
based upon an amortization period of ____ years. If balloon
mortgage, final maturity date (balloon payment) shall be
_____ years from closing.

(f) OTHER CONSIDERATION:____________________________________________ $

(g) Balance of funds due from Buyer in the form of U.S. currency,
cashier's check or equivalent drawn on a Broward County financial
institution, on closing and delivery of deed (or such greater or
lessor amount as may be necessary to complete payment of purchase
price after credits, adjustments and prorations). Said funds may
be held in escrow pursuant to provisions of Paragraph S of this
Contract (if FHA or VA see Rider) $1,171,190
TOTAL PURCHASE PRICE $1,221,190

3. FHA, VA or Condominium Contracts: See required rider attached hereto and
made a part hereof which shall control.

4. SPECIAL CLAUSES: See page ___________ or Addendum, if any.

5. ACCEPTANCE DATE: This offer shall be null and void unless accepted, in
writing, and a signed copy received by _____________________ on or before
eighth day of February, 1996 by 5:00 PM.

6. CLOSING DATE: This Contract shall be closed and the deed and possession
shall be delivered on or before the first day of August 1996, unless
extended by other provisions of this Contract or separate agreement.

A. EVIDENCE OF TITLE: The Seller shall within _____ banking days (ten banking
days if this blank is not filled in), order for Buyer a complete abstract of
title prepared by a reputable abstract firm purporting to be an accurate
synopsis of the instruments affecting the title to real property recorded in
the Public Records of that county to the date of this Contract or alternate
title information acceptable to Buyer's closing agent, in his sole discretion,
showing in Seller a marketable title in accordance with title standards adopted
from time to time by the Florida Bar subject only to liens, encumbrances,
exceptions or qualification set forth in this Contract, and those which shall
be discharged by Seller at or before closing. The abstract shall be delivered
within a reasonable time. Buyer shall have fifteen (15) days from the date of
receiving said abstract of title to examine same. Seller shall use best
efforts to obtain releases of canal reservations, if any. In the event there
are oil, gas and/or mineral reservations, Seller shall use best efforts to
obtain releases of same. Failure to release reservations or right to entry for
oil, mineral and gas reservations shall constitute a title defect. If title is
found to be defective, in Buyer's sole discretion, Buyer shall, within said
period, notify the Seller in writing, specifying the defects. If the said
defects render the title unmarketable, the Seller shall have ninety (90) days
from receipt of such notice to cure the defects, and if after said period,
Seller shall not have cured the defects, Buyer shall have the option of (1)
accepting title as it then is, or (2) demanding a refund of all monies paid
thereunder which shall forthwith be returned to the Buyer, and thereupon, the
Buyer and Seller shall be released of all further obligations to each other
under this contract.
B. CONVEYANCE: Seller shall convey title to the subject property to Buyer by
statutory warranty deed or fiduciary special warranty deed, if applicable,
subject to: (1) zoning and/or restrictions and prohibitions imposed by
governmental authority; (2) restrictions, easements and other matters appearing
on the plat and/or common to the subdivision; (3) taxes for the year of
closing; and (4) other matters specified in this contract, if any.
C. ASSIGNMENT: This contract is not assignable without the specific
written consent of the Seller if new mortgage financing or an assumption of an
existing mortgage is

<PAGE> 3

a contingency.
D. SURVEY: The Buyer, within the time allowed for delivery of evidence of title
and examination thereof, may have the property surveyed at his expense. If the
survey shows any encroachment on said property or shows the improvements
located on the subject property in fact encroach on adjoining property, or
violate any of the covenants herein, the same shall be treated as a title
defect.
E. ENVIRONMENTAL CONDITION: Seller is not aware of any prior or existing
environmental condition, situation or incident on, at, or concerning the
subject property or any adjacent property that may give rise as against Seller
or the subject property to an action or to liability under any law, rule,
ordinance or common law theory. This representation shall survive the closing.
F. RADON GAS: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health unit.
G. Representations and Warranties: Buyer shall defend, hold harmless and
indemnify Seller and its directors, officers, agents, employees, contractors,
successors and assigns from and against all claims liabilities, suits,
actions, demands, orders, violations, losses, damages, penalties, costs,
attorneys fees, consultant fees and expenses of any kind whatsoever (including,
but not limited to, claims or demands arising out of or asserting loss of life,
injury to person or property, injury to business, nuisance, trespass, recovery
of assessment, response or cleanup costs or damage to natural resources) which
arise out of or result in any way from the following: (i) the Buyer's breach
of any of its representations, warranties or promises as specified in this
Agreement, or (ii) the act, failure to act or negligence of Buyer, it's agents
or employees, arising from Buyer's inspection of the property.
The representations, warranties, promises and obligations of Buyer and
Seller as set forth in this Agreement shall survive the closing and purchase of
the Property by Buyer. Warranties of Buyer: Buyer represents and warrants
that it is authorized to enter into this transaction. Buyer's Inspection: For
a period of forty-five (45) days after the effective date of this Agreement
(Inspection Period), the Buyer shall have access to and the right to inspect
the Property as set out hereinafter.
(a) Within five (5) days after the effective date hereof, Seller shall
provide Buyer with copies of all surveys, environmental reports and records
presently available to Seller. All such surveys, reports and records are for
informational purposes only and shall not be construed or deemed to be a
representation or guarantee by Seller of the accuracy of the contents.
(b) Buyer may proceed to have the property surveyed and shall promptly
provide a copy of the survey to Seller upon receipt of the survey.
(c) Buyer may (NOTE SPECIAL CLAUSES) conduct an environmental examination
and analysis of the property.
(d) Buyer may, at Buyer's sole cost and expense, conduct such other
investigations of the property as Buyer deems appropriate.
(e) Buyer may apply to any appropriate government agencies for tax
abatements or other incentives concerning Buyer's proposed development of the
property. If the Buyer, for any reason, determines that the property is
unacceptable, Buyer will, within the Inspection Period, terminate this
Agreement by so notifying the Seller and, in such event, Buyer, as its sole and
exclusive remedy, shall receive a full refund of the earnest money deposit.
Nothing in this Agreement shall be construed or deemed to impose any obligation
on the part of the Seller to cure any condition which exists on the Property.
If Buyer has not notified Seller at the end of the forty-five (45) day
Inspection Period that the Property is unacceptable, it is understood and
agreed that the Property is being sold "AS IS," Buyer has inspected the
Property, and the Seller makes no representation or warranty as to the physical
condition of the property or

<PAGE> 4

its suitability for Buyer's intended use.
H. INSURANCE: The premium on any hazard or flood insurance policy in force
covering improvements on the subject property, shall be prorated between the
parties, or the policy may be cancelled as the Buyer may elect. If insurance
is to be prorated, the Seller shall, on or before the closing date, furnish to
the Buyer all insurance policies or copies thereof. The Buyer has the option
of accepting or rejecting any continuation of service contract if accepted, the
charge thereof shall be prorated providing the service contract is assignable
to Buyer. Any transfer fee shall be borne by the Buyer.
I. LEASES: Possession free and clear of all leases and tenants will be
delivered to Buyer upon closing.
J. SELLER'S AFFIDAVIT: Seller shall furnish to Buyer at time of closing an
affidavit attesting to the absence of any claims of lien or potential lienors
known to Seller. If the property has been improved within ninety (90) days
prior to closing, Seller shall deliver to Buyer an affidavit setting forth
names and addresses of all contractors, subcontractors, suppliers and
materialmen and stating that all bills for work on subject property have been
paid, and Buyer may require releases of all such potential liens. Furthermore,
the affidavit shall state that there are no matters pending against the
affiant that could give rise to a lien that would attach to the property
between the disbursing of the closing funds and the recording of the instrument
of conveyance, and that Seller has not, and will not, execute any instrument
that could adversely affect the title of the property.
K. PLACE OF CLOSING: Closing shall be held at the office of the Buyer's closing
agent, if located within the county where the property is located, and if not,
then at the office of Seller's agent, if located within the county where the
property is located, and if not, then at such place as mutually agreed upon.
L. DOCUMENTS FOR CLOSING: Seller shall prepare and provide deed, purchase money
mortgage, mortgage note, bill of sale, Seller's affidavits regarding liens,
FIRPTA affidavit, survey or affidavit regarding coastal construction control
line, F. S. 161.57, if applicable, and any corrective instruments that may be
required in connection with perfecting the title. Buyer's closing agent shall
prepare closing statement.
M. EXPENSES: Abstracting prior to closing, state documentary stamps which are
required to be affixed to the instrument of conveyance and the cost of
recording any corrective instruments, shall be paid by the Seller. Intangible
personal property taxes and documentary stamps to be affixed to the purchase
money mortgage, if any, or required on any mortgage modification, the cost of
recording the deed and purchase money mortgage and documentary stamps and
recording costs assessed in connection with assumption of any existing mortgage
shall be paid by the Buyer.
N. PRORATION OF TAXES (REAL AND PERSONAL): Taxes shall be prorated on the
current year's tax, if known. If the closing occurs at a date when the current
year's taxes are not fixed, and the current year's assessment is available,
taxes will be prorated based upon such assessment and the prior year's millage.
If the current year's assessment is not available, then taxes will be prorated
on the prior year's tax; provided, however, if there are completed improvements
on the subject premises by January 1st of the year of closing, which
improvements were not in existence on January 1st of the prior year, then the
taxes shall be prorated to the date of closing based upon the prior year's
millage and at an equitable assessment to be agreed upon between the parties,
failing which, requests will be made to the county tax assessor for an informal
assessment taking into consideration homestead exemption, if any. However, any
tax proration based on an estimate may, at the request of either party to the
transaction, be subsequently readjusted upon receipt of tax bill, and this
agreement shall survive the closing. All such prorations whether on actual
tax or estimated tax will make appropriate allowance for the maximum allowable
discount and for homestead or other exemptions if allowed for the current year.
O. PRORATIONS AND ESCROW BALANCE: Taxes, insurance, assumed interest,
utilities, rents, and other expenses and revenue of said property shall be
prorated through the day prior to closing. In the event that Buyer assumes
mortgage, Seller shall receive as credit at closing an amount equal to the
escrow funds held by the mortgagee, which

<PAGE> 5

funds shall thereupon be transferred to the Buyer.
P. SPECIAL ASSESSMENT LIENS: Certified, confirmed and ratified special
assessment liens through the day prior to closing (and not as of the date of
this Contract) are to be paid by the Seller. Pending liens as of the date of
closing shall be assumed by the Buyer.
Q. RISK OF LOSS: If the improvements are damaged by fire or other casualty
before delivery of the deed and can be restored to substantially the same
condition as now existing within a period of sixty (60) days thereafter, Seller
may restore the improvements and the closing date and date of delivery of
possession herein before provided shall be extended accordingly. If Seller
fails to do so, the Buyer shall have the option of (1) taking the property as
is together with insurance proceeds, if any, or (2) cancelling the Contract and
all deposits will be forthwith returned to the Buyer and the parties released
of any further liability hereunder.
R. MAINTENANCE: Between the date of the Contract and the date of closing, the
property, including lawn, shrubbery and pool, if any, shall be maintained by
the Seller in the condition as it existed as of the date of the Contract,
ordinary wear and tear excepted.
S. ESCROW OF PROCEEDS OF SALE AND CLOSING PROCEDURE: The deed shall be recorded
and evidence of the title continued at Buyer's expense, to show title in Buyer,
without any encumbrances or changes which would render Seller's title
unmarketable, from the date of the last evidence and the cash proceeds of sale
may be held in escrow by Seller's attorney or by such other escrow agent as may
be mutually agreed upon for a period of not longer than ten (10) days. If
Seller's title is rendered unmarketable in Buyer's sole discretion, Buyer's
closing agent shall, within said ten (10) day period, notify Seller or Seller's
attorney in writing of the defect, and Seller shall have thirty (30) days from
date of receipt of such notice to cure said defect and shall use best efforts
to do so. In the event Seller fails to timely cure said defect, all monies
paid hereunder by Buyer shall, upon written demand therefor, and within five
(5) days thereafter, be returned to Buyer and, simultaneously with such
repayment, Buyer shall vacate the premises and reconvey the property in
question to the Seller by special warranty deed. In the event Buyer fails to
make timely demand for refund, he shall take title as is, waiving all rights
against Seller as to such intervening defect except such rights as may be
available to Buyer by virtue of warranties contained in deed. Possession and
occupancy will be delivered to Buyer at time of closing. The Broker's
professional service fee shall be disbursed simultaneously with disbursement of
Seller's closing proceeds. At the option of the closing agent, the
professional service fee may be disbursed; 1) directly from the deposit held by
the escrow agent; or 2) through the closing agent. Payment shall be made in
the form of U. S. currency, local cashier's check, local certified check,
unless in the event a portion of the purchase price is to be derived from
institutional financing or refinancing, the requirements of the lending
institution as to place, time and procedures for closing and for disbursement
of mortgage proceeds shall control, anything in this Contract to the contrary
notwithstanding. The foregoing notwithstanding, if title insurance is
available, at standard rates insuring Buyer as to any title defects arising
between the effective date of title binder and recording of Buyer's deed,
proceeds of sales shall be disbursed to the Seller at closing.
T. ESCROW: The party receiving the deposit agrees by the acceptance thereof to
hold same in escrow and to disburse it in accordance with the terms and
conditions of this Contract. Provided, however, that in the event a dispute
shall arise between any of the parties to this Contract as to the proper
disbursement of the deposit, the party holding the deposit may, at his option:
(1) take no action and hold all funds (and documents, if any) until agreement
is reached between the disputing parties, or until a judgment has been entered
by a court of competent jurisdiction and the appeal period has expired thereon,
or if appealed then until the matter has been finally concluded, and then to
act in accordance with such final judgment; or (2) institute an action for
declaratory judgment, interpleader or otherwise joining all affected parties
and thereafter complying with the ultimate judgment of the court with regard to
the disbursement of the deposit and disposition of documents, if any. In the
event of any suit between Buyer and Seller wherein an escrow agent

<PAGE> 6

is made a party by virtue of acting as such escrow agent hereunder, or in the
event of any suit wherein escrow agent interpleads the subject matter of this
escrow, the escrow agent shall be entitled to recover all attorney's fees and
costs incurred, including costs and attorney's fees for appellate proceeding,
if any, said fees and costs are to be charged and assessed as court costs
against the losing party or parties, jointly and severally. The party
receiving the deposit shall be entitled to the foregoing interpleader relief
and award of attorney's fees and costs regardless of whether said party is also
claiming a portion of the deposit monies as real estate commission and whether
or not suit is first filed by one or both Buyer and Seller in a suit involving
the escrow holder and whether or not any party, Buyer or Seller, has an
independent action against the escrow holder and whether or not the escrow
holder has instituted the interpleader action for his own protection.
U. ATTORNEY FEES AND COSTS: In connection with any arbitration or litigation
arising out of this Contract, the prevailing party, whether Buyer, Seller or
brokers, shall be entitled to recover all costs incurred including attorney's
fees and legal assistant fees for services rendered in connection therewith,
including appellate proceedings and post judgment proceedings.
V. DEFAULT: In the event of default of either party, the rights of the
non-defaulting party and the broker shall be as provided herein and such rights
shall be deemed to be the sole and exclusive rights in such event; (a) If Buyer
fails to perform any of the covenants of this Contract, all money paid or
deposited pursuant to this Contract by the Buyer shall be retained by or for
the account of the Seller as consideration for the execution of this Contract
as agreed and liquidated damages and in full settlement of any claims for
damages and specific performance by the Seller against the Buyer. (b) If
Seller fails to perform any of the covenants of this Contract, all money paid
or deposited pursuant to this Contract by the Buyer shall be returned to the
Buyer upon demand, or the Buyer shall have the right of specific performance.
In addition, Seller shall pay forthwith to broker the full professional service
fee provided for in this Contract. Any controversy or claim between Buyer and
Seller arising out of or relating to this Contract, or a breach thereof, may,
at the election of the parties, be settled by mediation or by arbitration or by
litigation. Any of the above proceedings shall be brought in the county where
the Real Property is located and shall be conducted pursuant to Florida
Statutes relating to mediation, arbitration or litigation.
W. CONTRACT NOT RECORDABLE AND PERSONS BOUND: The benefits and obligations of
the covenants herein shall inure to and bind the respective heirs,
representatives, successors and assigns (when assignment permitted) of the
parties hereto. Whenever used, the singular number shall include the plural,
the plural the singular, and the use of any gender shall include all genders.
Neither this contract nor any notice shall be recorded in any public records.
X. SURVIVAL OF COVENANTS AND SPECIAL COVENANTS: Seller covenants and warrants
that there is ingress and egress to subject property over public or private
roads or easements, which covenants shall survive delivery of deed. No other
provision, covenant or warranty of this Contract shall survive the delivery of
the deed except as expressly provided herein.

FINAL AGREEMENT: This Contract represents a final agreement of the parties and
no agreements or representations, unless incorporated into this Contract, shall
be binding on any of the parties. Typewritten provisions shall supersede
printed provisions and handwritten provisions shall supersede typewritten
and/or printed provisions. Such handwritten or typewritten provisions as are
appropriate may be inserted on this form or attached hereto as an addendum.
The date of this Contract shall be the day upon which it becomes fully executed
by all parties.

SPECIAL CLAUSES:

Buyer and seller shall split cost of Phase I environmental audit equally. Such
cost shall not exceed $1,000 to Seller and will be credited at closing. In the
event transaction does not close then, no credit shall be given to Buyer.

<PAGE> 7

All parties are advised that the I.R.S. code requires the Buyer to withhold ten
(10%) of the sales price for tax on sales by certain foreigners. The tax will
be withheld unless affidavits and compliance with the I.R.S. code or an I.R.S.
qualifying statement are provided to Buyer at closing.

Executed by Buyer

on February 6, 1996 Time: 3:00

BUYER /s/ Treadco, Inc. By Dan Evans (SEAL)

Social Security or Tax I.D.# 71-0706271

BUYER ________________________________ (SEAL)

Deposit received on _________________________________________, 19________
__________ to be held subject to this Contract; if check, subject to clearance.
By:_____________________________ By:___________________________________________

ACCEPTANCE OF CONTRACT & PROFESSIONAL SERVICE FEE: The Seller hereby
approves and accepts the offer contained herein and recognizes Lehrer and
Company
Address: 4850 W. Prospect Road, Fort Laud, Fl 33309 Phone No. 305-731-6000
AND _________________________________________________________________________

Address: _______________________________________________ Phone No. __________
as Broker(s) in this transaction.

(CHECK and COMPLETE THE ONE APPLICABLE)
(x)IF A WRITTEN LISTING AGREEMENT IS CURRENTLY IN EFFECT:
Seller agrees to pay the Broker named above including cooperating sub-agents
named, according to the terms of an existing, separate written agreement;

OR
( ) IF NO WRITTEN LISTING AGREEMENT IS CURRENTLY IN EFFECT:
Seller shall pay the Broker(s) named above, at the time of closing, from the
disbursements of the proceeds of the sale, compensation in the amount of
(COMPLETE ONLY ONE) _________________ % of gross purchase price OR
$ ________________________ , for Broker(s) services in effecting the sale by
finding the Buyer ready willing and able to purchase pursuant to the
foregoing Contract.

If Buyer fails to perform and deposit(s) is retained, 50% thereof, but not
exceeding the Broker's fee above provided, shall be paid Broker, as full
consideration for Broker's services including costs expended by Broker, and
the balance shall be paid to seller.

Executed by Seller
on February 8, 1996 Time: _______________

SELLER /s/ C. M. Bolt (SEAL)
Social Security or Tax I. D. # ______________________

SELLER _______________________________________ (SEAL)
Social Security or Tax I. D.# _______________________

BE ADVISED: When this agreement has been completely executed, it becomes a
legally binding instrument. The form of this "Deposit Receipt and Contract
for Sale and Purchase" has been approved by the Broward County Bar
Association and the Fort Lauderdale Area Association of REALTORS, Inc.

<PAGE> 8

FIRST AMENDMENT TO
REAL ESTATE PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO REAL ESTATE PURCHASE AGREEMENT (this "First Amendment")
is made and entered this the 21st day of March 1996, by and between TREADCO,
INC., a Delaware corporation ("Buyer"), and RSI HOLDING, INC. ("Seller").

W I T N E S S E T H:

WHEREAS, Buyer and Seller entered into that certain Real Estate Purchase
Agreement having an Effective Date of February 8, 1996 (the "Agreement"), for
the proposed purchase and sale of certain real property located in Broward
County, Florida, which property is more particularly described in the
Agreement; and

WHEREAS, Paragraph G of the Agreement provides for a forty-five (45) day
inspection period; and

WHEREAS, Buyer and Seller desire to amend Paragraph G of the Agreement as
hereinafter provided.

NOW, THEREFORE, for good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, Buyer and Seller hereby agree as follows:

1. Paragraph G of the Agreement entitled "Buyer's Inspection" shall be amended
to extend the inspection period through April 10, 1996.

2. Except as modified herein, the terms and provisions of the Agreement shall
remain in full force and effect and binding on the parties hereto.

3. Buyer and Seller agree to amend the Purchase Price at Closing in the form of
a one-time $15,000.00 credit to Buyer for roof repairs.

4. Buyer and Seller shall share cost of Phase 2 environmental audit equally.

IN WITNESS WHEREOF, Buyer and Seller have caused this First Amendment to
be executed by their respective duly authorized representatives, as of the day
and year first above written.

BUYER: SELLER:

TREADCO, INC. RSI HOLDINGS, INC.

By: /s/ Shaun M. McCaffrey By: /s/ C. M. Bolt

Name: Shaun M. McCaffrey Name: C. M. Bolt

Title: Corporate Attorney

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT. THE AFOREMENTIONED
STATEMENT IS UNCLASSIFIED AND STATES THE NET ASSETS IN LIQUIDATION BUT DOES NOT
CONTAIN EQUITY ACCOUNTS.
</LEGEND>
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 1,258,000
<SECURITIES> 0
<RECEIVABLES> 23,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,559,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,843,000
<CURRENT-LIABILITIES> 668,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,175,000
<TOTAL-LIABILITY-AND-EQUITY> 2,843,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
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<EPS-DILUTED> 0

</TABLE>