<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d) of
The Securities Exchange Act of 1934
FOR QUARTER ENDED: COMMISSION FILE NUMBER
March 31, 1998 0-22852
---------------------------------------------------------------
AFFINITY GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3377709
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
64 Inverness Drive East (303) 792-7284
Englewood, CO 80112 (Registrant's telephone
(Address of principal executive offices) number, including area code)
-----------------------------------------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
11 1/2% Senior Subordinated Notes Due 2003
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AS OF
CLASS MAY 11, 1998
- ----- ------------
<S> <C> <C>
Common Stock, $.001 par value 2,000
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE:
NONE
<PAGE>
AFFINITY GROUP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. Financial Information
ITEM 1: FINANCIAL STATEMENTS
<S> <C>
Consolidated Balance Sheets 1
As of March 31, 1998 and December 31, 1997
Consolidated Statements of Operations 2
For the three months ended March 31, 1998 and 1997
Consolidated Statements of Cash Flows 3
For the three months ended March 31, 1998 and 1997
Notes to Consolidated Financial Statements 4
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF 6
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. Other Information 12
SIGNATURES 13
</TABLE>
<PAGE>
AFFINITY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
3/31/98 12/31/97
------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $50,307 $43,978
Investments 2,596 2,590
Accounts receivable, less allowance for doubtful accounts 21,726 25,802
Inventories 29,959 30,283
Prepaid expenses and other assets 12,615 11,089
--------- ---------
Total current assets 117,203 113,742
PROPERTY AND EQUIPMENT 53,679 51,559
LOANS RECEIVABLE 64,858 44,973
INTANGIBLE ASSETS 199,653 201,758
DEFERRED TAX ASSET 8,508 8,545
RESTRICTED INVESTMENTS 2,096 2,096
OTHER ASSETS 5,679 5,391
--------- ---------
$ 451,676 $ 428,064
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $16,370 $16,334
Accrued interest 6,459 3,026
Accrued taxes 12,253 9,639
Accrued liabiities 22,099 23,498
Customer deposits 99,206 74,528
Deferred tax liability - current 2,132 2,132
Current portion of long-term debt 6,119 6,132
--------- ---------
Total current liabilities 164,638 135,289
DEFERRED REVENUES 80,667 79,572
LONG-TERM DEBT 141,104 147,729
OTHER LONG-TERM LIABILITIES 5,213 5,467
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
391,622 368,057
--------- ---------
STOCKHOLDER'S EQUITY:
Preferred stock, $.001 par value, 1,000 shares authorized,
none issued or outstanding - -
Common stock, $.001 par value, 2,000 shares authorized,
2,000 shares issued and outstanding 1 1
Additional paid-in capital 151,462 151,462
Accumulated deficit (91,409) (91,456)
--------- ---------
Total stockholder's equity 60,054 60,007
--------- ---------
$ 451,676 $ 428,064
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
AFFINITY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
3/31/98 3/31/97
------- -------
<S> <C> <C>
REVENUES:
Membership services $29,716 $24,250
Publications 12,599 9,733
Merchandise 37,825 ---
------- -------
80,140 33,983
COSTS APPLICABLE TO REVENUES:
Membership services 18,725 14,545
Publications 10,324 7,705
Merchandise 25,607 ---
------- -------
54,656 22,250
GROSS PROFIT 25,484 11,733
OPERATING EXPENSES:
Selling, general and administrative 17,885 4,225
Depreciation and amortization 3,527 2,093
------- -------
21,412 6,318
------- -------
INCOME FROM OPERATIONS 4,072 5,415
NON-OPERATING ITEMS:
Interest expense, net (4,122) (4,090)
Other non-operating income, net 134 8
------- -------
(3,988) (4,082)
------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 84 1,333
INCOME TAX EXPENSE (37) (698)
------- -------
NET INCOME $ 47 $ 635
------- -------
------- -------
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
AFFINITY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 47 $ 635
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred tax provision 37 261
Depreciation and amortization 3,527 2,093
Provision for losses on accounts receivable 230 36
Deferred compensation - 300
Loss on disposal of property and equipment 3 7
Changes in operating assets and liabilities
(net of purchased businesses):
Accounts receivable 3,846 1,241
Inventories 324 816
Restricted investments (6) -
Prepaids and other assets (1,814) (2,212)
Accounts payable 36 1,148
Accrued and other liabilities 4,394 1,453
Deferred revenues 1,095 1,181
Net assets and liabilities of discontinued
operations - (222)
------ ------
Net cash provided by operating activities 11,719 6,737
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,529) (562)
Net changes in intangible assets (16) (211)
Net changes in loans receivable (19,885) 756
Purchase of investments - 350
Purchase of Ehlert Publishing Group, Inc. - (20,800)
------ ------
Net cash used in investing activities (23,430) (20,467)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from Parent - 5,000
Net change in customer deposits 24,678 2,761
Borrowings on long-term debt 9,898 23,950
Principal payments of long-term debt (16,536) (10,547)
------ ------
Net cash provided by financing activities 18,040 21,164
------ ------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,329 7,434
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 43,978 4,278
------ ------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 50,307 $ 11,712
------ ------
------ ------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 721 690
Income Taxes 81 16
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AFFINITY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The financial statements included herein include the accounts of Affinity Group,
Inc., and subsidiaries (the "Company") without audit, in accordance with
generally accepted accounting principles, and pursuant to the rules and
regulations of the Securities and Exchange Commission. These interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes in the Company's 10-K report for the
year ended December 31, 1997 as filed with the Securities and Exchange
Commission. In the opinion of management of the Company, these consolidated
financial statements contain all adjustments of a normal recurring nature
necessary to present fairly the financial position, results of operations and
cash flows of the Company for the interim periods presented.
On March 6, 1997, the Company acquired the stock of Ehlert Publishing Group
("EPG"). EPG is a specialty publisher of sports and recreation magazines
focusing on five niches: snowmobiling, personal watercraft, archery, all-terrain
vehicles and motorcycles. Further, on April 2, 1997, the Company acquired the
common stock of Camping World, Inc. ("CWI"). CWI is a national specialty
retailer of merchandise and services for RV owners. The operating results of
EPG and CWI have been included in the Company's consolidated results of
operations from the dates of acquisition. The acquisitions have been accounted
for using the purchase method of accounting and, accordingly, the assets and
liabilities of EPG and CWI have been recorded at the estimated fair market value
at the dates of the acquisitions.
Certain reclassifications of prior year amounts have been made to conform to the
current presentation.
(2) RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," which establishes
standards for reporting and presentation of comprehensive income and its
components. It requires that all changes in equity during a period, except
those resulting from investment by owners and distributions to owners, be
reported as a component of comprehensive income and that comprehensive income be
displayed in annual financial statements with the same prominence as other
financial statements that constitute a full set of financial statements. The
Company's comprehensive income for the three months ended March 31, 1998 and
1997 is the same amount as the Company's net income for these periods.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
will be effective for the Company beginning January 1, 1998. SFAS No. 131
redefines how operating segments are determined and requires disclosure of
certain financial and descriptive information about a
4
<PAGE>
(2) RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
company's operating segments. The Company believes the segment information
required to be disclosed under SFAS No. 131 will be more comprehensive than
previously provided, including expanded disclosure of income statement and
balance sheet items for each of its reportable operating segments. SFAS No. 131
will be first reflected in the Company's 1998 Annual Report.
5
<PAGE>
AFFINITY GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 2:
The following table is derived from the Company's Consolidated Statements of
Operations and expresses the results from operations as a percentage of revenues
and reflects the net increase (decrease) between periods:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------
3/31/98 3/31/97 Inc/(Dec)
------- ------- --------
<S> <C> <C> <C>
REVENUES:
Membership services 37.1% 71.4% 22.5%
Publications 15.7% 28.6% 29.4%
Merchandise 47.2% --- ---
------ ------ ------
100.0% 100.0% 135.8%
COSTS APPLICABLE TO REVENUES:
Membership services 23.3% 42.8% 28.7%
Publications 12.9% 22.7% 34.0%
Merchandise 32.0% --- ---
------ ------ ------
68.2% 65.5% 145.6%
------ ------ ------
GROSS PROFIT 31.8% 34.5% 117.2%
OPERATING EXPENSES:
Selling, general and administrative 22.3% 12.4% 323.3%
Depreciation and amortization 4.4% 6.2% 68.5%
------ ------ ------
26.7% 18.6% 238.9%
------ ------ ------
INCOME FROM OPERATIONS 5.1% 15.9% (24.8%)
NON-OPERATING ITEMS:
Interest expense, net (5.2%) (12.0%) 0.8%
Other non-operating income, net 0.2% --- ---
------ ------ ------
(5.0%) (12.0%) (2.3%)
------ ------ ------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 0.1% 3.9% (93.7%)
INCOME TAX EXPENSE --- (2.0%) (94.7%)
------ ------ ------
NET INCOME 0.1% 1.9% (92.6%)
------ ------ ------
------ ------ ------
</TABLE>
6
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
COMPARED WITH THREE MONTHS ENDED MARCH 31, 1997
REVENUES
Revenues of $80.1 million for the first quarter of 1998 increased by
approximately $46.2 million or 135.8% from the comparable period in 1997.
Excluding the Ehlert operations acquired March 1997 and the Camping World
operations acquired April 1997, revenues were $35.9 million for the first
quarter of 1998 compared to $32.8 million for the comparable period in 1997, a
9.5% increase.
Membership services revenues of $29.7 million for the first quarter of 1998
increased by approximately $5.5 million from the comparable period in 1997.
Excluding the Camping World membership services operations, membership services
revenue increased by approximately $2.5 million to $26.8 million, a 10.4%
increase. This revenue increase was largely attributable to a $1.8 million
increase in financial and insurance services revenue, a $1.1 million increase in
ancillary product revenue consisting of a $0.9 million increase from the
extended vehicle warranty program, an $0.8 million increase from the Rapid
Response emergency road service contracts acquired August 4, 1997, and a $0.6
million decrease due to reduced GoodSam emergency road service enrollment, which
were partially offset by a membership services revenue decrease of $0.4 million
principally associated with reduced Coast to Coast Club enrollment.
Publication revenue of $12.6 million for the first quarter of 1998 increased by
$2.9 million from the comparable period in 1997. Excluding Ehlert, publication
revenue increased by approximately $0.6 million largely attributable to
increased revenue from TRAILER LIFE CAMPGROUND/ RV PARK AND SERVICES DIRECTORY
and new books mailed.
Merchandise revenue was $37.8 million and was related entirely to Camping World
acquired in April 1997. On a pro forma basis, assuming the Camping World
acquisition had occurred at January 1, 1997, merchandise revenue for the quarter
increased $0.2 million or 0.5%. This increase was principally attributable to a
$0.7 million increase in mail order sales which was partially offset by a $0.5
million decrease in retail showroom sales.
COSTS APPLICABLE TO REVENUES
Costs applicable to revenues totaled $54.7 million for the first quarter of
1998, an increase of $32.4 million or 145.6% over the comparable period in 1997.
Excluding the Ehlert and Camping World operations, costs applicable to revenues
increased $3.5 million for the first quarter of 1998 compared to the first
quarter of 1997, a 16.5% increase.
7
<PAGE>
Membership services costs and expenses increased by approximately $4.2 million
or 28.7% to $18.7 million in the first quarter of 1998 compared to $14.5 million
in 1997. Excluding the Camping World acquisition, membership services costs
increased $2.9 million to $17.4 million largely as a result of increased
expenses of $1.9 million associated with the financial and insurance services,
$0.9 million associated with the increase in extended warranty policies, and
$0.5 million in costs associated with the Rapid Response emergency road service
contracts. These increases were partially offset by $0.4 million in reduced
expenses for the Coast to Coast Clubs.
Publication costs and expenses of $10.3 million for the first quarter of 1998
increased $2.6 million or 34.0% compared to the first quarter of 1997.
Excluding the Ehlert and Camping World acquisitions, costs increased by $0.7
million over the comparable period in 1997. This increase was primarily due to
increased book sales, and increases in promotion, postage, website costs and
other related expenses.
Merchandise costs applicable to revenues were $25.6 million and were related
entirely to Camping World acquired in April 1997. On a pro forma basis,
assuming the Camping World acquisition had occurred at January 1, 1997,
merchandise costs for the quarter decreased $0.4 million. In addition to the
corresponding $0.2 million increase attributable to the increase in merchandise
sales, the gross profit margin increased by $0.6 million from 30.8% in the first
quarter of 1997 to 32.3% for the same period in 1998.
OPERATING EXPENSES
Selling, general and administrative expenses of $17.9 million for the first
quarter of 1998 were $13.7 million over the first quarter of 1997. Excluding
the Camping World and Ehlert acquisitions, general and administrative expenses
increased by $0.5 million compared to the prior year primarily as a result of an
increase of $0.6 million in expenses for consulting and professional services
and $0.2 million increase in wage-related expenses, which were partially offset
by no accrual for deferred executive compensation in the first quarter of 1998.
Depreciation and amortization expenses of $3.5 million were $1.4 million over
the first quarter of 1997. This variance was principally due to depreciation
and amortization of assets attributable to the Ehlert and Camping World
acquisitions.
INCOME FROM OPERATIONS
Income from operations for the first quarter of 1998 decreased by $1.3 million
or 24.8% to $4.1 million compared to $5.4 million for the first quarter of 1997.
Excluding income from operations recognized from the acquired operations of
Camping World and Ehlert, income from operations decreased by $0.8 million.
This decrease was due to increased operating expenses of $0.3 million, decreased
gross profit from the membership services segment of $0.3 million, and decreased
publication gross profit of $0.2 million.
8
<PAGE>
NON-OPERATING EXPENSES
Non-operating expenses were $4.0 million for the first quarter of 1998 and
remained relatively unchanged as compared to $4.1 million for the same period in
1997.
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
Income from continuing operations before income taxes in the first quarter of
1998 was approximately $84,000 compared to $1.3 million for the first quarter of
1997. This decrease was principally due to the increase in depreciation and
amortization resulting from the Ehlert and Camping World acquisitions.
INCOME TAX EXPENSE
In the first quarter of 1998, the Company recognized a $37,000 tax expense
compared to $0.7 million tax expense in the first quarter of 1997.
NET INCOME
The net loss in the first quarter of 1998 was $47,000 compared to net income of
$0.6 million for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998 the Company's senior subordinated debt and the Senior Credit
Facility ("SCF") totaled $146.0 million compared to $153.9 million at December
31, 1997.
Cash, cash equivalents and investments totaled $52.9 million at March 31, 1998
compared to $46.6 million at December 31, 1997. Included in the March 31, 1997
cash, cash equivalents and investments is $45.9 million which is restricted for
use by Affinity Bank (AB) and Affinity Insurance Group (AINS) subsidiaries. The
assets of AB and AINS are subject to regulatory restrictions on dividends or
other distributions to the Company and are unavailable to reduce Company debt.
In addition, both AB and AINS, although required to be consolidated with the
Company, are recognized as "unrestricted" or non-guarantying subsidiaries as
defined in the SCF, as discussed further below, and AB only is an "unrestricted"
subsidiary under the terms of the $120.0 million 11.5% senior subordinated notes
of the Company.
Both AB and AINS are subject to regulatory guidelines which, among other things,
stipulate the minimum capital requirements for each entity based on certain
operating ratios. The Company was not required to contribute and did not
contribute capital to AB and AINS during the first quarter of 1998 to maintain
these ratios. It is anticipated that capital contributions of $1.0 million will
be made to AB during 1998.
9
<PAGE>
The $75.0 million SCF provides a term loan of $30.0 million (reducing in
quarterly principal installments of $1.5 million) and a $45.0 million revolving
credit line. The interest on borrowings under the senior credit facility is at
variable rates based on the ratio of total cash flow to outstanding indebtedness
(as defined). Interest rates float with prime and the London Interbank Offered
Rates (LIBOR), plus an applicable margin ranging from 0.75% to 2.75% over the
stated rates. The Company also pays a commitment fee of 0.5% per annum on the
unused amount of the revolving credit line. The SCF is secured by a security
interest in the assets of the Company and its subsidiaries and a pledge of the
stock of the Company and its subsidiaries. The AGI Indenture ("Indenture"),
dated October 29, 1993, limits borrowings under the SCF to 150% of the Company's
consolidated cashflow (as defined) for the preceding four fiscal quarters. At
March 31, 1998, $2.0 million was outstanding and permitted borrowings under the
undrawn revolving credit line of the SCF were $43.0 million. At March 31, 1998,
$24.0 million remained outstanding under the term portion of the SCF.
The SCF and Indenture allow for, among other things, the distribution of
payments by the Company to Affinity Group Holding, Inc. ("AGHI") to service the
semi-annual interest due on the AGHI $130.0 million 11% senior notes and the
annual amounts due under the Camping World Management Incentive Agreements.
Such distributions are subject to the Company's compliance with certain
restrictive covenants, including, but not limited to, an interest coverage
ratio, fixed charge coverage ratio, minimum operating cash flow, and limitations
on capital expenditures and total indebtedness.
During the three months ended March 31, 1998, payments under the terms of
several phantom stock agreements totaled $1.8 million. Additional phantom stock
payments of $0.2 million are scheduled to be made for the remainder of 1998.
Capital expenditures in the three months ended March 31, 1998 totaled $3.5
million compared to capital expenditures of $0.6 million during the same period
in 1997. This increase is partially attributable to the $1.3 million purchase
of a commercial building by Affinity Bank, for Affinity Bank's corporate
headquarters and branch office. The balance of the increase is primarily
computer software and hardware, of which the largest component is an enhanced
retail merchandising system for Camping World's retail operations. Capital
expenditures are anticipated to be approximately $4.5 million for the remainder
of 1998. The anticipated expenditures include the purchase of the Bolingbrook,
IL Camping World supercenter, currently under lease, along with the addition of
two new Camping World supercenters, continued enhancements to membership
marketing databases, inbound and outbound telecommunications, and computer
software and hardware.
Regarding the Year 2000 compliance issue for information systems, the Company
has recognized the need to ensure that its computer operations and operating
systems will not be adversely affected by the upcoming calendar Year 2000 and is
cognizant of the time sensitive nature of the problem. The Company has assessed
how it may be impacted by Year 2000 and has formulated and commenced
implementation of a comprehensive plan to address known issues as they relate to
its information systems. The plan, as it relates to information systems,
involves a combination of software modification, upgrades and replacement. The
10
<PAGE>
Company preliminarily estimates that the cost of Year 2000 compliance for its
information systems will be in the range of $1.0 to $1.5 million and all
necessary modifications will be completed by the first quarter of 1999. The
Company is not yet able to estimate the cost of Year 2000 compliance with
respect to subcontracted production systems, products, customers and suppliers;
however, based on a preliminary review, management does not expect that such
costs will have a material adverse effect on the future consolidated results of
operations of the Company.
Management believes that funds generated by operations together with available
borrowings under its revolving credit line will be sufficient to satisfy the
Company's operating cash needs, debt obligations and capital requirements of its
existing operations during the next twelve months.
This filing contains statements that are "forward looking statements," and
includes, among other things, discussions of the Company's business strategy and
expectations concerning market position, future operations, margins,
profitability, liquidity and capital resources, as well as statements concerning
the integration of acquired operations and the achievement of financial benefits
and operational efficiencies in connections with acquisitions. Although the
Company believes that the expectations reflected in such forward looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. All phases of the operations of the Company are
subject to a number of uncertainties, risks and other influences, including
consumer spending, fuel prices, general economic conditions, regulatory changes
and competition, many of which are outside the control of the Company, and any
one of which, or a combination of which, could materially affect the results of
the Company's operations and whether the forward looking statements made by the
Company ultimately prove to be accurate.
11
<PAGE>
PART II: OTHER INFORMATION
Items 1-6: Not Applicable
12
<PAGE>
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AFFINITY GROUP, INC.
/S/ Mark J. Boggess
-----------------------
Date: May 11, 1998 Mark J. Boggess
Senior Vice President
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 50,307
<SECURITIES> 2,596
<RECEIVABLES> 22,681
<ALLOWANCES> (955)
<INVENTORY> 29,959
<CURRENT-ASSETS> 117,203
<PP&E> 66,128
<DEPRECIATION> (12,449)
<TOTAL-ASSETS> 451,676
<CURRENT-LIABILITIES> 164,638
<BONDS> 120,000
0
0
<COMMON> 1
<OTHER-SE> 60,053
<TOTAL-LIABILITY-AND-EQUITY> 451,676
<SALES> 37,825
<TOTAL-REVENUES> 80,140
<CGS> 25,607
<TOTAL-COSTS> 54,656
<OTHER-EXPENSES> 21,054
<LOSS-PROVISION> 224
<INTEREST-EXPENSE> (4,122)
<INCOME-PRETAX> 84
<INCOME-TAX> (37)
<INCOME-CONTINUING> 47
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47
<EPS-PRIMARY> 0.024
<EPS-DILUTED> 0.024
</TABLE>
