SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
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 0-18198
DeVlieg-Bullard, Inc.
(Exact name of registrant as specified in its charter)
Delaware 62-1270573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Gorham Island, Westport, CT 06880
(Address of principal executive offices) (Zip Code)
203-221-8201
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No _____
The number of shares of common stock outstanding as of December 1, 1997 was
12,275,400.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DeVlieg-Bullard, Inc.
Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
October 31, July 31,
1997 1997
--------- ---------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,019 $ 637
Accounts receivable, net 22,648 25,798
Inventories, net 39,773 38,195
Other current assets 1,593 1,519
--------- ---------
Total current assets 65,033 66,149
Property, plant and equipment, net 13,085 12,657
Engineering drawings 17,583 18,039
Goodwill 11,998 11,948
Other assets 12,476 12,651
--------- ---------
Total assets $ 120,175 $ 121,444
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,633 $ 9,751
Accrued expenses and other current liabilities 9,279 11,969
Revolving credit agreement 23,582 22,525
Current portion of long-term debt 3,795 3,631
--------- ---------
Total current liabilities 47,289 47,876
Long-term debt (related party $4,227) 13,832 14,179
Postretirement benefit obligation 21,362 21,999
Other noncurrent liabilities 11,766 11,677
--------- ---------
Total liabilities 94,249 95,731
Stockholders' equity:
Common stock, $0.01 par value; authorized
30,000 shares; issued and outstanding
12,275,400 and 12,250,000 shares 123 123
Additional paid-in capital 34,096 34,096
Excess purchase price over net assets acquired from
related parties (16,242) (16,242)
Retained earnings 8,116 7,844
Cumulative translation adjustment (167) (108)
--------- ---------
Total stockholders' equity 25,926 25,713
--------- ---------
Total liabilities and stockholders' equity $ 120,175 $ 121,444
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
DeVlieg-Bullard, Inc.
Statement of Operations
(unaudited - in thousands, except per share data)
Three Months Ended
October 31,
-------------------
1997 1996
------- -------
Net sales $26,483 $32,134
Cost of sales 18,495 23,799
------- -------
Gross profit 7,988 8,335
Operating expenses:
Engineering 496 391
Selling 2,744 2,669
General and administrative 2,968 2,819
------- -------
Total operating expenses 6,208 5,879
------- -------
Operating profit 1,780 2,456
Other income, net 11 15
------- -------
Income before interest and income taxes 1,791 2,471
Interest expense (including related party interest
of $176 and $171) 1,320 1,217
------- -------
Income before income taxes 471 1,254
Provision for income taxes 199 525
------- -------
Net income $ 272 $ 729
======= =======
Income per common share $ 0.02 $ 0.05
======= =======
Average common shares and equivalents outstanding 15,458 15,228
======= =======
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
DeVlieg-Bullard, Inc.
Statements of Cash Flows
(unaudited - in thousands)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
----------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 272 $ 729
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,221 1,160
Provision for losses on accounts receivable 47 66
Changes in assets and liabilities, net of effects from acquisitions
Decrease/(increase) in accounts receivable 3,103 (3,735)
(Increase)/decrease in inventories (1,578) 2,992
Increase in other current assets (74) (100)
Increase/(decrease) in accounts payable 882 (87)
(Decrease)/increase in accrued expenses and
other current liabilities (2,690) 82
Other, net (497) (167)
-------- --------
Net cash provided by operating activities 686 940
Cash flows from investing activities:
Capital expenditures (534) (434)
-------- --------
Net cash used for investing activities (534) (434)
Cash flows from financing activities:
Borrowings under revolving credit agreement 30,302 29,019
Repayments under revolving credit agreement (29,245) (27,815)
Payments of long-term debt (768) (1,026)
-------- --------
Net cash provided by financing activities 289 178
Effect of exchange rate changes on cash (59) 46
-------- --------
Net increase in cash and cash equivalents 382 730
Cash and cash equivalents at beginning of period 637 768
-------- --------
Cash and cash equivalents at end of period $ 1,019 $ 1,498
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 1,166 $ 934
Income taxes, net of refunds 13 8
</TABLE>
During the three months ended October 31, 1997 and 1996, the Company entered
into capital leases for computer equipment totaling $448 and $192, respectively,
which were financed by capital lease obligations.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
DeVlieg-Bullard, Inc.
Notes to Financial Statements
NOTE 1: Basis of Presentation
Pursuant to the rules and regulations of the Securities and Exchange Commission
for Form 10-Q, the financial statements, footnote disclosures and other
information normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed. The financial
statements contained in this report are unaudited but, in the opinion of
DeVlieg-Bullard, Inc. (the "Company"), reflect all adjustments, consisting of
only normal recurring adjustments, necessary to fairly present the financial
position as of October 31, 1997 and the results of operations and cash flows for
the interim periods of the fiscal year ending July 31, 1998 ("fiscal 1998") and
the fiscal year ended July 31, 1997 ("fiscal 1997") presented herein. The
results of operations for any interim period are not necessarily indicative of
results for the full year. These financial statements, footnote disclosures and
other information should be read in conjunction with the financial statements
and the notes thereto included in the Company's annual report on Form 10-K for
the year ended July 31, 1997. Certain amounts in the fiscal 1997 financial
statements have been reclassified to conform to the fiscal 1998 presentation.
The financial statements include all accounts of the Company after elimination
of all significant interdivision transactions and balances. Amounts in these
notes, except per share data, are expressed in thousands.
NOTE 2: Inventories
October 31, July 31,
1997 1997
------- -------
(unaudited)
Inventories consisted of:
Raw materials $ 1,496 $ 1,448
Work-in-process 12,275 11,452
Finished goods 26,002 25,295
------- -------
$39,773 $38,195
======= =======
Valuation reserves for obsolete, excess and slow-moving inventory aggregated
$10,557 and $10,504 at October 31, 1997 and July 31, 1997, respectively.
Inventories valued using LIFO were $12,546 and $12,819 at October 31, 1997 and
July 31, 1997, respectively. There was no LIFO reserve against those
inventories. The financial accounting basis for the inventories of acquired
companies exceeds the tax basis of $12,224 at October 31, 1997 and July 31,
1997.
5
<PAGE>
DeVlieg-Bullard, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Summarized below is a discussion of the results of operations of the Company,
including its Machine Tool, Tooling Systems and Industrial operating groups.
Amounts, except per share data, are expressed in thousands.
Three months ended October 31, 1997 compared to three months ended October 31,
1996.
Net sales for the first quarter of fiscal 1998 were $26,483 compared to $32,134
for the first quarter of fiscal 1997, a decrease of $5,651, or 17.6%. The
decrease in net sales was primarily new and rebuilt machines in the Machine Tool
Group. As more fully discussed as part of the Machine Tool Group business
segment below, the decline in sales in the first quarter of fiscal 1998 was the
result of inadequate inventory levels to support the Company during a transition
to outsourcing a major portion of machine and/or aftermarket parts that had
previously been produced internally. The inadequate levels of inventory led to
disruptions in production and meeting shipping schedules of machines during the
quarter. Net sales of the aftermarket business of the Machine Tool Group during
the first quarter of fiscal 1998 was even with the prior year, while the Tooling
Systems Group and Industrial Group both showed improvements over the prior year
of 7.6% and 14.1%, respectively.
Gross profit for the first quarter of fiscal 1997 was $7,988 compared to $8,335
for the first quarter of fiscal 1997, a decrease of $347, or 4.2%. The Tooling
Systems Group, Industrial Group and the aftermarket business of the Machine Tool
Group all showed substantial improvement as a result of cost reductions, changes
in postretirement medical benefit programs and increased productivity. This was
offset by the production and shipping problems in the new and rebuilt machines
business of the Machine Tool Group.
E S G & A expenses were $6,208, or 23.4% of net sales, and $5,879, or 18.3% of
net sales, in the first quarter of fiscal 1998 and fiscal 1997, respectively.
The increase in the operating expenses as a percent to sales is the result of a
decline in sales as discussed above.
Interest expense was $1,320 in the first quarter of fiscal 1998 compared to
$1,217 in fiscal 1997's first quarter. The increase in interest expense is a
result of increased debt.
Income tax expense of $199 was recorded for the first three months of fiscal
1998 compared to $525 for the same period last year, reflecting the reduced
earnings levels in fiscal 1998.
Operating Results by Business Segment
Machine Tool Group. On August 1, 1997, the Machine Tool Group implemented a
change to outsourcing a major portion of National Acme's parts, which had been
produced internally prior to August 1, 1997. The outsourced parts are used in
the manufacture of new Acme-Gridley machines and are also sold separately in the
aftermarket. As a result of planning difficulties encountered during the
changeover to outsourcing, which resulted in inadequate inventory levels to
support the Company during the transition, the Machine Tool Group encountered
disruptions in production during the quarter. Due to this inadequate supply of
parts needed for new machine production and aftermarket sales, fiscal 1998 first
quarter sales were $15,093, or $6,778 lower than the $21,781 reported in the
first quarter of fiscal 1997. Operating income for the first quarter of fiscal
1998 was $1,414 compared to
6
<PAGE>
$2,929 in the first quarter of the prior year. This is the result of reduction
in sales volume, as well as lower productivity levels due to the difficulties
mentioned above.
Tooling Systems Group sales were $5,322 in the first quarter of fiscal 1998,
compared to $4,945 in the first quarter of the prior year, an increase of $377,
or 7.6%. Operating income for the first quarter of fiscal 1998 was $813,
compared with $215 in the first quarter of the prior year. The improvement in
operating income is the result of the increased volume, as well as reductions in
benefit costs from changes in the postretirement medical program.
Industrial Group sales were $6,068 in the first quarter of fiscal 1998, compared
to $5,318 in the first quarter of the prior year, an increase of $750, or 14.1%,
with improvement primarily in the woodworking equipment product line. Operating
income was $400 for the first quarter of fiscal 1998, compared to $80 in the
same period a year ago. The improvement in operating income is the result of the
increased volume and improved productivity.
New Accounting Pronouncements
In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" ("SFAS 128") was issued. Management will adopt SFAS 128 for the
second quarter ending January 31, 1998, and expects that the diluted earnings
per share calculation under SFAS 128 will not be materially different from the
earnings per share the Company currently reports.
Liquidity and Capital Resources
Cash Flows
Historically, the Company's continuing operations have been financed by
internally generated funds. Acquisitions have been funded with increases in
indebtedness, while funds from divestitures have generally been used to reduce
indebtedness.
Net cash provided by operating activities was $686 for the three months ended
October 31, 1997, compared to $940 for the first quarter of fiscal 1997.
Cash used for capital expenditures was $534 and $434 for the first quarter of
fiscal 1998 and 1997, respectively. The Company currently has no material
commitments for specific capital expenditures.
Financing and Investing
The balance outstanding under the Company's revolving credit agreement was
$23,582 at October 31, 1997, compared to $22,525 at July 31, 1997. Long-term
debt, including current maturities, at October 31, 1997, was $17,627, compared
to $17,810 at July 31, 1997, a decrease of $183. The Company's total
indebtedness was $41,209 and $40,335 at October 31, 1997 and July 31, 1997,
respectively, an increase of $874. The increase in debt was used to finance
working capital needs. Cash and equivalents at October 31, 1997 were $1,019, an
increase of $382 compared to July 31, 1997. Net cash provided by financing
activities was $289 in the first quarter of fiscal 1998 compared to $178 in the
first quarter of the prior year.
The senior credit facility aggregating $40,000 is comprised of $5,693 in term
loans and a revolving credit agreement, which provides for borrowings up to
$30,000. Interest on the outstanding borrowings under the revolving credit
agreement is payable monthly in arrears at 1% above the prime rate or, at the
Company's option, at alternative rates based on LIBOR. The effective rate based
on LIBOR was 8.69% at October 31, 1997. The amount the Company may borrow under
the revolving credit agreement is
7
<PAGE>
based upon a formula related to the Company's eligible accounts receivable and
inventories, reduced by outstanding letters of credit. Unused borrowings
available at October 31, 1997 were $3,309.
The term loans in the amounts of $5,000, $3,000 and $1,500, respectively,
require monthly principal payments of $86 beginning November 30, 1995, $83
beginning June 30, 1996 and $33 beginning January 31, 1997, respectively.
Interest on the term loans is payable monthly at 1.25% above prime rate or, at
the Company's option, at alternative rates based on LIBOR. The effective rate
based on LIBOR was 8.94% at October 31, 1997.
Pursuant to the subordinated debt facility, the Company issued Subordinated
Debentures in May 1994 in the principal amount of $12,000. Of this amount,
$4,000 was replaced by Junior Subordinated Debentures. Interest payments on the
Subordinated Debentures of 11.5% per annum are payable quarterly in arrears
commencing July 1, 1994. The Subordinated Debentures provide for the repayment
of principal of $2,000 in fiscal 1999 and fiscal 2000 and $4,000 in fiscal 2001.
Interest on the Junior Subordinated Debentures accrues at 14.5%, and the cash
interest of 11% per annum is payable quarterly in arrears commencing January 1,
1996. The Junior Subordinated Debentures provide for the repayment of principal
of $4,000 and unpaid interest in June 2001 or thirty days after the payment of
the Subordinated Debentures.
The Company expects to continue to provide liquidity and finance its ongoing
operational needs primarily through internally generated funds.
Outlook
As more fully described above in Operating Results by Business Segment under the
heading Machine Tool Group, difficulties encountered during the changeover to
outsourcing on August 1, 1997, caused fiscal 1998 first quarter net sales and
net earnings per share to be $5,651 and $0.03 lower, respectively, than in the
first quarter of fiscal 1997. The difficulties encountered were primarily the
result of inadequate levels of parts inventory needed for first and second
quarter new machine production and aftermarket sales. Although the Company
expects the problem to be resolved by the end of the second quarter, second
quarter sales and net earnings per share are expected to be similar to those of
the first quarter of fiscal 1998.
The Company plans to continue expanding product and service offerings, both
internally and through strategic acquisitions, while continuing to identify and
implement additional cost savings measures.
A number of factors may affect future results, liquidity and capital resources;
actual results may differ materially from those reflected by forward-looking
statements made by the Company. These factors are discussed in the Company's
Annual Report on Form 10-K for the year ended July 31, 1997.
8
<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Second Amendment to Amended and Restated Financing and Security Agreement
dated September 17, 1997 among DeVlieg-Bullard, Inc., the CIT
Group/Business Credit, Inc. and BNY Financial Corporation.
11 Computation of Earnings per Share
27 Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K
During the quarter ended October 31, 1997, the Company did not file any reports
on Form 8-K.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DeVlieg-Bullard, Inc.
-----------------------------
(Registrant)
Date: December 12, 1997 By: \s\ Lawrence M. Murray
-----------------------------
Lawrence M. Murray
Vice President and Chief
Financial Officer
10
Exhibit 10.1
Execution Copy
SECOND AMENDMENT TO AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
SECOND AMENDMENT TO AMENDED AND RESTATED FINANCING AND SECURITY AGREEMEMT
("Second Amendment") dated as of September 17, 1997 among DEVLIEG-BULLARD, INC.
(the "Borrower"), THE CIT GROUP/BUSINESS CREDIT, INC. ("CITBC"), BNY FINANCIAL
CORPORATION ("BNYFC") (each of CITBC and BNYFC referred to as a "Lender" and
collectively, the "Lenders") and THE CIT GROUP/BUSINESS CREDIT, INC. as agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Lenders Agent").
PRELIMINARY STATEMENT. Reference is made to the Amended and Restated
Financing and Security Agreement dated as of January 17, 1997 among the
Borrower, CITBC, each other lender which may thereafter execute and deliver an
instrument of assignment under the Financing Agreement pursuant to Section 9(18)
(each a "Lender" and collectively, the "Lenders") and the Lenders Agent, as
amended by a First Amendment to Amended and Restated Financing and Security
Agreement dated of April 1, 1997 (as it may be further amended, supplemented or
modified from time to time, the "Financing Agreement"). Any term used in this
Second Amendment and not otherwise defined in this Second Amendment shall have
the meaning assigned to such term in the Financing Agreement.
The parties hereto have agreed to amend certain terms and provisions of the
Financing Agreement as hereinafter set forth.
SECTION 1. Amendments to Financing Agreement. The Financing Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) Section 8(14), Consolidated Fixed Charge Coverage Ratio, is amended by
changing the Ratio for each "Rolling Period" all as specified below:
"Rolling Period Ratio
--------------- -----
July 31, 1997 1.20 to 1.00
October 31, 1997 1.20 to 1.00
January 31, 1998 1.20 to 1.00
April 30, 1998 1.20 to 1.00
July 31, 1998 1.20 to 1.00
October 31, 1998 and
thereafter 1.20 to 1.00"
<PAGE>
(b) Section 8(17), Capital Expenditures, is amended in full to read as
follows:
17. Capital Expenditures. The aggregate amount of all Capital Expenditures
of Borrower and its Subsidiaries (if any) will not exceed (1) for the period
from October 23, 1995 through July 31, 1996, $1,500,000, (2) for the period from
August 1, 1996 to July 31, 1997, $1,500,000, (3) for the period from August 1,
1997 to July 31, 1998, $2,500,000, and (4) for the period from August 1, 1998 to
July 31, 1999, $2,500,000, and (5) for each period thereafter from August 1, to
the following July 31, $2,500,000. In any period specified above under (1) and
(2) the Borrower and its Subsidiaries (if any) shall be entitled to add to the
$1,500,000 ceiling for such period Capital Expenditures equal to one-half of the
amount, if any, by which $1,500,000 exceeds the amount of Capital Expenditures
which were made in the preceding period. In addition, in any period specified
above under (4) and (5) the Borrower and its Subsidiaries (if any) shall be
entitled to add to the $2,500,000 ceiling for such period Capital Expenditures
equal to one-half of the amount, if any, by which $2,500,000 exceeds the amount
of Capital Expenditures which were made in the preceding period.
SECTIONS 2. Conditions of Effectiveness. This Second Amendment shall become
effective as of the date on which each of the following conditions has been
fulfilled:
(a) This Second Amendment. The Borrower, CITBC, BNYFC, and the Lenders
Agent shall each have executed and delivered this Second Amendment;
(b) Officer's Certificate. The following statements shall be true and the
Lenders Agent shall have received a certificate signed by a duly authorized
officer of the Borrower dated the date hereof stating that, after giving effect
to this Second Amendment and the transactions contemplated hereby:
(i) The representations and warranties contained in each of the Loan
Documents are true and correct on and as of the date hereof as though
made on and as of such date; and
(ii) no Default or Event of Default has occurred and is continuing; and
(c) Legal Bills. Dewey Ballantine has been paid in full for all past due
legal fees, costs and expenses and for all fees, costs and expenses in
connection with this Second Amendment.
(d) Other Documents. The Bank shall have received such other approvals,
opinions or documents as the bank may reasonably request.
SECTION 3. Reference to and Effect on the Loan Documents. (a) Upon the
effectiveness of Section 1 hereof, on and after the date hereof each reference
in the Financing Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import, and each reference in the other Loan Documents to the
Financing Agreement, shall mean and be a reference to the Financing Agreement as
amended hereby.
<PAGE>
(b) The execution, delivery and effectiveness of this Second Amendment
shall not operate as a waiver of any right, power or remedy of the Bank under
any of the Loan Documents, nor constitute a waiver of any provision of any of
the Loan Documents, and, except as specifically provided herein, the Financing
Agreement and each other Loan Document shall remain in full force and effect and
are hereby ratified and confirmed.
SECTION 4. Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. Headings. Section headings in this Second Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Second Amendment for any other purpose.
SECTION 6. Counterparts. This Second Amendment may be executed in any
number of counterparts, all of which taken together shall constituted one and
the same instrument, and any party hereto may execute this Second Amendment by
signing any such counterpart.
[INTENTIALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed as of the day and year first above mentioned.
DEVLIEG-BULLARD, INC.
By /s/ Lawrence M. Murray
----------------------------------
Name: Lawrence M. Murray
Title: V.P. Finance & CFO
THE CIT GROUP/BUSINESS CREDIT,
as Lender
By /s/ Edward Hirshfield
----------------------------------
Name: Edward Hirshfield
Title: Assistant Secretary
BNY FINANCIAL CORPORATION,
as Lender
By /s/ Anthony P. Vassallo
----------------------------------
Name: Anthony P. Vassallo
Title: Assistant Vice President
THE CIT GROUP/BUSINESS CREDIT,
as Lenders Agent
By /s/ Edward Hirshfield
----------------------------------
Name: Edward Hirshfield
Title: Assistant Secretary
Exhibit 11
DeVlieg-Bullard, Inc.
Computation of Earnings per Share
(unaudited - in thousands, except per share data)
Three Months Ended
October 31,
-----------------------
1997 1996
------- -------
Net income $272 $729
======= =======
Average number of common shares
outstanding 12,275 12,250
Dilutive effect of outstanding options (a) 650 218
Dilutive effect of outstanding stock
purchase warrants (a):
Class A 1,497 1,494
Class B (b) 288 519
Class C (c) 748 747
------- -------
Total shares used in calculation of
earnings per share 15,458 15,228
======= =======
Income per share $0.02 $0.05
======= =======
(a) As determined by application of the treasury stock method.
(b) A total of 289 Class B stock purchase warrants were issuable May 1997 using
a formula based on the average closing stock price for the 90 days prior to
issuance. The Class B warrants became issuable on March 18, 1996, but at
that time, the number of shares was unknown. The prior year has not been
restated since it has no impact on the earnings per share calculation.
(c) In connection with the refinancing of the senior debt facility in October
1995, 750 Class C stock purchase warrants ("Class C Warrants") were issued.
The Company has the opportunity to earn back these warrants based on
earnings as defined in the agreement. For the three months ended October
31, 1997 and 1996, the Company did not meet the defined earnings level,
therefore all Class C Warrants were considered outstanding.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q FOR THE QUARTER ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 1,019
<SECURITIES> 0
<RECEIVABLES> 16,903
<ALLOWANCES> 622
<INVENTORY> 39,773
<CURRENT-ASSETS> 65,033
<PP&E> 28,466
<DEPRECIATION> 15,381
<TOTAL-ASSETS> 120,175
<CURRENT-LIABILITIES> 47,289
<BONDS> 0
0
0
<COMMON> 123
<OTHER-SE> 25,803
<TOTAL-LIABILITY-AND-EQUITY> 120,175
<SALES> 26,483
<TOTAL-REVENUES> 26,483
<CGS> 18,495
<TOTAL-COSTS> 18,495
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 47
<INTEREST-EXPENSE> 1,320
<INCOME-PRETAX> 471
<INCOME-TAX> 199
<INCOME-CONTINUING> 272
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0
</TABLE>
