FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended September 30, 1998
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ........ to .........
Commission file number: 0-22268
NATIONAL R.V. HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0371079
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3411 N. Perris Blvd.
Perris, California 92571
(909) 943-6007
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
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.
Class Outstanding at November 2, 1998
- ----- -------------------------------
Common stock, par value 10,206,588
$.01 per share
1
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
INDEX
PAGE
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheet -
September 30, 1998 and December 31, 1997 3
Consolidated Statement of Income -
Three and Nine Months Ended September 30, 1998 and 1997 4
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1998 and 1997 5
Consolidated Statement of Changes in Stockholders' Equity 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
2
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 10,182 $ 3,542
Trade receivables, less allowance for
doubtful accounts of $180,000 25,613 11,388
Inventories 39,504 37,543
Deferred income taxes 3,928 2,741
Prepaid expenses 1,334 1,375
---------------- ----------------
Total current assets 80,561 56,589
Goodwill 7,468 7,778
Property, plant and equipment, net 21,881 19,817
Other 3,214 3,020
---------------- ----------------
$ 113,124 $ 87,204
================ ================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 255 $ 554
Accounts payable 14,798 9,006
Accrued expenses 11,712 7,758
---------------- ----------------
Total current liabilities 26,765 17,318
Deferred income taxes 2,079 2,225
Long-term debt 1,653 6,703
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.01 par value; 5,000 shares
authorized, 4,000 issued and outstanding - -
Common stock - $.01 par value; 25,000,000 shares
authorized 102 63
Additional paid-in capital 39,547 35,263
Accumulated earnings 42,978 25,632
---------------- ----------------
Total stockholders' equity 82,627 60,958
---------------- ----------------
$ 113,124 $ 87,204
================ ================
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 96,403 $ 76,780 $ 267,562 $ 204,567
Cost of goods sold 81,124 65,749 225,596 176,826
-------- -------- --------- ---------
Gross profit 15,279 11,031 41,966 27,741
Selling expenses 2,842 2,499 8,117 6,726
General and administrative expenses 1,684 1,511 4,710 4,294
Amortization of intangibles 103 103 310 310
-------- -------- --------- ---------
Operating income 10,650 6,918 28,829 16,411
Other expense (income):
Interest expense 24 104 129 254
Interest income (110) (37) (269) (107)
Other (3) 13 220 74
-------- -------- --------- ---------
Income before income taxes 10,739 6,838 28,749 16,190
Provision for income taxes 4,138 2,696 11,403 6,540
-------- -------- --------- ---------
Net income $ 6,601 $ 4,142 $ 17,346 $ 9,650
Earnings per common share and common equivalent shares:
Basic $ 0.65 $ 0.44 $ 1.76 $ 1.03
Diluted $ 0.57 $ 0.40 $ 1.52 $ 0.95
Weighted average number of shares:
Basic 10,113 9,372 9,861 9,359
Diluted 11,498 10,449 11,409 10,208
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1998 1997
Cash flows from operating activities:
<S> <C> <C>
Net income $ 17,346 $ 9,650
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation expense 1,333 928
Amortization of intangibles 310 310
Increase in trade receivables (14,225) (8,716)
Increase in inventories (1,961) (6,505)
Decrease in prepaid expenses 41 279
Increase in accounts payable 5,792 3,976
Increase in accrued expenses 3,954 4,939
Increase in deferred income taxes (1,333) (1,104)
---------- ---------
Net cash provided by operating activities 11,257 3,757
Cash flows from investing activities:
Increase in other assets (194) (2,934)
Purchases of property, plant and equipment (3,397) (4,706)
---------- ---------
Net cash used by investing activities (3,591) (7,640)
Cash flows from financing activities:
Increase in cash overdraft - 1,237
Increase under line of credit - 704
Decrease in restricted funds - 1,210
Principal payments on long-term debt (5,349) (205)
Proceeds from issuance of common stock 4,323 338
Purchase of treasury stock - (220)
---------- ---------
Net cash (used) provided by financing activities (1,026) 3,064
---------- ---------
Net increase (decrease) in cash 6,640 (819)
Cash beginning of period 3,542 819
---------- ---------
Cash end of period $ 10,182 $ -
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands except shares)
(Unaudited)
<TABLE>
<CAPTION>
Preferred Common Stock Paid-in Accumulated
Stock Shares Amount Capital Earnings Total
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ - 9,467,075 $ 63 $35,263 $ 25,632 $ 60,958
Common Stock issued upon
exercise of warrants 57,782 - 229 229
Common Stock issued under
option plan 660,398 6 2,772 2,778
3-for-2 stock split 33 (33) -
Tax benefit related to
exercise of stock options 1,316 1,316
Net income 17,346 17,346
----------------------------------------------------------------------------------
Balance, September 30, 1998 $ - 10,185,255 $ 102 $39,547 $ 42,978 $ 82,627
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
PART I, ITEM 1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - GENERAL
In the opinion of National R.V. Holdings, Inc. (collectively, with its
subsidiaries National R.V., Inc., and Country Coach, Inc. referred to herein as
the "Company"), the accompanying unaudited consolidated financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the financial position, results of
operations and cash flows for all periods presented. Results for the interim
periods are not necessarily indicative of the results for an entire year and the
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles. These financial statements
should be read in conjunction with the financial statements and notes thereto
contained in the Company's latest annual report on Form 10-K.
On July 1, 1998, the Board of Directors declared a 3-for-2 stock split in
the form of a 50% stock dividend on the Company's common stock, payable July 24,
1998 to stockholders of record July 10, 1998. All share and per share data, as
appropriate, reflect this split. The effect of the split is presented within
stockholders' equity at June 30, 1998 by transferring the par value for the
additional shares issued of $33,229 from the additional paid-in capital account
to the common stock account.
NOTE 2 - INVENTORIES
Inventories consist of the following:
September 30, December 31,
1998 1997
------------------ -------------------
Finished goods $ 8,258,000 $10,751,000
Work-in-process 13,880,000 12,769,000
Raw materials 11,090,000 11,747,000
Chassis 6,276,000 2,276,000
------------------ -------------------
$ 39,504,000 $37,543,000
================== ===================
7
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
At September 30, 1998, the Company had working capital of $53.8 million
compared to $39.3 million at December 31, 1997. Net cash provided by operating
activities was $11.3 million for the nine months ended September 30, 1998,
compared to $3.8 million for the same period in 1997. An increase in net income,
accounts payable and accrued expenses was offset by an increase in accounts
receivable, inventories and deferred income taxes.
Cash used by investing activities was $3.6 million compared to $7.6 million
for the comparable period last year.
Cash used by financing activities was $1.0 million compared to cash provided
by financing activities of $3.1 million for the comparable period last year. The
change was primarily due to a $5.3 million reduction in long-term debt offset
somewhat by proceeds from the issuance of common stock.
The Company believes that the combination of internally generated funds,
existing capital and funds available from its existing credit facility, will be
sufficient to meet the Company's planned capital and operational requirements
for at least the next 24 months.
Results of Operations
- ---------------------
Net sales for the third quarter of 1998 increased by $19.6 million or 25.6%
from the comparable period last year. For the first nine months of 1998, the
Company reported sales of $267.6 million, 30.8% higher than sales of $204.6
million for the first nine months of last year. The Company's Country Coach
subsidiary shipped 419 Class A motorhomes for the nine months ending September
30,1998 compared to 352 for the same time period last year. The National RV
subsidiary shipped 2,334 Class A motorhomes and 297 fifth-wheel units for the
nine months ending September 30,1998 compared to 1,856 and 184, respectively,
for the same time period last year. The average sales price for Class A
motorhomes at the National RV subsidiary increased 5.2% to $70,819 reflecting
strong demand for higher-priced motorhomes with slide-out rooms. The average
sales price for Class A motorhomes at the Country Coach subsidiary increased
1.6% to $213,685.
Cost of goods sold of $81.1 million for the third quarter of 1998 resulted in
a gross margin of 15.8% compared to a gross margin of 14.4% for the same period
last year. Cost of goods sold of $225.6 million for the first nine months of
1998 resulted in a gross margin of 15.7% compared to a gross margin of 13.6% for
the same period last year. The gross margin increase was due primarily to
manufacturing efficiencies at the Company's National RV subsidiary which
operated at a 19.9% higher rate of production than last year.
Selling expense for the third quarter of 1998 increased to $2.8 million or
2.9% of net sales, compared to $2.5 million or 3.3% of net sales for the same
period last year. Selling expense for the first nine months of 1998 increased to
$8.1 million or 3.0% of net sales, compared to $6.7 million or 3.3% of net sales
for the same period last year. The increase was due primarily to higher sales
volume. NATIONAL R.V. HOLDINGS, INC. PART 1, ITEM 2
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
General and administrative expense for the third quarter of 1998 increased to
$1.7 million or 1.7% of net sales, compared to $1.5 million or 2.0% of net sales
for the same period last year. General and administrative expense for the first
nine months of 1998 increased to $4.7 million or 1.8% of net sales, compared to
$4.3 million or 2.1% of net sales for the same period last year.
As a result of the foregoing, operating income for the third quarter of 1998
increased 53.9% to $10.7 million or 11.0% of net sales, compared to $6.9 million
or 9.0% of net sales for the same period last year. Operating income for the
first nine months of 1998 increased 75.7% to $28.8 million or 10.8% of net
sales, compared to $16.4 million or 8.0% of net sales for the same period last
year.
Net interest expense and other financing related costs for the first nine
months of 1998 decreased $141,000.
As a result of the foregoing, income before income taxes for the third
quarter of 1998 increased to $10.7 million or 11.1% of net sales, compared to
$6.8 million or 8.9% of net sales for the same period last year. Income before
income taxes for the first nine months of 1998 increased to $28.7 million or
10.7% of net sales, compared to $16.2 million or 7.9% of net sales for the same
period last year.
Provision for income taxes for the third quarter of fiscal 1998 was $4.1
million compared to $2.7 million for the same period last year. Provision for
income taxes for the first nine months of 1998 was $11.4 million compared to
$6.5 million for the same period last year. The effective tax rate for the first
nine months of 1998 was 39.7% compared to 40.4% for the same period last year.
The decrease was due mainly to apportioning sales to states with lower tax rates
and a tax refund in the state of Oregon.
As a result of the foregoing, net income for the third quarter of 1998
increased to $6.6 million or 6.8% of net sales, compared to $4.1 million or 5.4%
of net sales for the same period last year. Net income for the first nine months
of 1998 increased to $17.3 million or 6.5% of net sales, compared to $9.7
million or 4.7% of net sales for the same period last year.
9
<PAGE>
NATIONAL R.V. HOLDINGS, INC.
PART 1, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Year 2000 Date Conversion
- -------------------------
An issue affecting the Company and most other companies is whether computer
systems and applications will recognize and process the year 2000 and beyond.
The Company is in the process of assessing and implementing necessary changes
for all areas of the Company's business which could be impacted; these include
such areas as business computer systems, dealership systems, plant floor
equipment, end-user computing, financial institutions and suppliers.
Based on assessments completed to date and compliance plans in process, the
Company does not expect that the year 2000 issue will have a material effect on
its business operations, consolidated financial condition, cash flows, or
results of operations. However, if appropriate modifications are not made by the
Company's suppliers or dealers on a timely basis, or if the Company's actual
costs or timing for the year 2000 date conversion differ materially from its
present estimates, the Company's operations and financial results could be
significantly adversely affected.
Disclosure Regarding Forward Looking Statements
- -----------------------------------------------
Statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
forward-looking statements are inherently uncertain. Actual performance and
results may differ materially from that projected or suggested herein due to
certain risks and uncertainties including, without limitation, the cyclical
nature of the recreational vehicle industry; seasonality and potential
fluctuations in the Company's operating results; the Company's dependence on
chassis suppliers; the integration by the Company of acquired businesses and the
management of growth; potential liabilities under repurchase agreements;
competition; government regulation; product liability; dependence on key
personnel and dependence on certain dealers and concentration of dealers in
certain regions. Additional information concerning certain risks and
uncertainties that could cause actual results to differ materially from that
projected or suggested may be identified from time to time in the Company's
filings with the Securities and Exchange Commission (SEC) and the Company's
public announcements, copies of which are available from the SEC or from the
Company upon request.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
99.1 Disclosure Regarding Forward Looking Statements
B. Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL R.V. HOLDINGS, INC.
(Registrant)
Date: November 2, 1998 By /s/ KENNETH W. ASHLEY
Kenneth W. Ashley
Senior Vice President and Chief Financial
Officer (Principal Accounting and Finance Officer)
12
<PAGE>
Exhibit 99.1
Disclosure Regarding Forward Looking Statements
Statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
forward-looking statements are inherently uncertain. Actual performance and
results may differ materially from that projected or suggested herein due to
certain risks and uncertainties including, without limitation, the following:
Cyclical Nature of the RV Industry, Seasonality and Potential
Fluctuations in Operating Results. The RV industry has been characterized by
cycles of growth and contraction in consumer demand, reflecting prevailing
economic conditions which affect disposable income for leisure-time activities.
Concerns about the availability and price of gasoline, decreases in consumer
confidence, increases in interest rates and reductions in available financing
have had, and may in the future have, an adverse impact on RV sales. In
addition, because of the relatively high selling price of the Company's Highline
motorhomes, a small variation in the number of motorhomes sold in any quarter
could have a significant effect on sales and operating results for that quarter.
Seasonal factors, over which the Company has no control, also have an effect on
the demand for the Company's products. Demand in the RV industry declines over
the winter season, while sales are generally highest during the spring and
summer months.
Integration of Acquired Businesses; Management of Growth. One
of the Company's objectives is to acquire businesses in the RV industry or
related areas. Successfully accomplishing this goal depends upon a number of
factors, including the Company's ability to find suitable acquisition
candidates, negotiate acquisitions on acceptable terms, retain key personnel of
the acquired entities, hire and train other competent managers, and effectively
and profitably integrate the operations of the acquired businesses into the
Company's existing operations. The process of integrating acquired businesses,
including Country Coach, may require a significant amount of resources and
management attention which will temporarily detract attention from the
day-to-day business of the Company. The Company's ability to manage its growth
effectively will require it to continue to improve its operational, financial
and management information systems and controls, and to attract, retain,
motivate and manage employees effectively. The failure of the Company to manage
growth in its business effectively could have a material adverse effect on the
financial condition and results of operations of the Company.
Expansion of Manufacturing Facilities. In 1997, the Company's
National RV subsidiary expanded its current production capacity of 200,000
square feet through the construction of a 154,000 square foot manufacturing
facility on its property in Perris, California. In addition, the Company's
Country Coach subsidiary recently expanded its Junction City, Oregon location.
There can be no assurance that such facilities or future additional facilities
will be able to meet the manufacturing needs of the Company or that the Company
will be able to attract and retain qualified technical, supervisory and
manufacturing personnel required in order to operate such facility in an
effective and efficient manner.
<PAGE>
Dependence on Key Personnel. The Company's growth and
continued success depend to a substantial degree on Wayne M. Mertes, a founder
of National RV and President, Chief Executive Officer and a director of the
Company, Robert B. Lee, a founder and Chief Executive Officer of Country Coach
and a director of the Company and other key personnel. The Company has
employment agreements which expire in October 1998 and November 1999 with Mr.
Mertes and Mr. Lee, respectively. In addition, the Company has obtained key-man
insurance on the life of Mr. Mertes and Mr. Lee in the amounts of $2.0 and $3.0
million, respectively. The loss to the Company of the services of Mr. Mertes,
Mr. Lee or any of its other key personnel could have a material adverse effect
on the business of the Company.
Dependence on Certain Dealers; Concentration of Dealers in
Certain Regions. Although no one dealer accounted for more than 10% of the
Company's net sales during the year ended December 31, 1997 and the nine months
ended September 30, 1998, the Company's top ten dealers accounted for
approximately 44.7% and 44.4% of the Company's sales during the year ended
December 31, 1997 and the nine months ended September 30, 1998, respectively.
The loss by the Company of one or more of these dealers could have a material
adverse effect on the Company's financial condition and results of operations.
In addition, as is typical in the RV industry, a significant portion of the
Company's sales are from dealers located in states in the western part of the
United States. Consequently, the Company's sales could be materially adversely
affected by a general downturn in economic conditions or other material events
in such region.
Dependence on Chassis Suppliers. One of the principal
components used in the manufacture of motorhomes and bus conversions is the
chassis and bus shell, respectively, which include the engine, drive train and
other operating components. Although Country Coach manufactures chassis used in
certain of its products, the Company obtains the required chassis for most of
its Class A motorhomes from a limited number of manufacturers and the required
bus shells from Prevost Corporation. Prevost is the only manufacturer of bus
shells used in the Company's bus conversions and there is only one other
manufacturer of bus shells in North America. As is standard in the industry,
arrangements with such suppliers permit them to terminate their relationship
with the Company at any time. Lead times for the delivery of chassis frequently
exceed five weeks, and the RV industry as a whole has from time to time
experienced temporary shortages of chassis. If any of the Company's suppliers
were to discontinue the manufacture of chassis utilized by the Company in the
manufacture of its Class A motorhomes, materially reduce their availability to
the RV industry in general or limit or terminate their availability to the
Company in particular, the business and financial condition of the Company could
be materially and adversely affected.
Potential Liabilities Under Repurchase Agreements. As is
common in the industry, the Company enters into repurchase agreements with the
financing institutions used by its dealers to finance their purchases. These
agreements obligate the Company to purchase a dealer's inventory under certain
circumstances in the event of a default by the dealer to its lender. The risk of
loss, however, is spread over many dealers and is further reduced by the resale
value of the RVs that the Company would be required to repurchase. Although
losses under these agreements have not been significant in the past, if the
<PAGE>
Company were obligated to repurchase a significant number of RVs in the future,
it could result in losses and a reduction in new RV sales. The Company's
contingent obligations under repurchase agreements vary from period to period
and totalled approximately $74.5 million as of December 31, 1997.
Competition. The Company competes with numerous manufacturers,
many of which have multiple product lines of RVs, are larger and have
substantially greater financial and other resources than the Company. According
to an industry source, the two largest motorhome manufacturers had sales
aggregating 45.0% and 44.3% of total industry-wide retail unit sales of Class A
motorhomes for the years ended December 31, 1997 and 1996, respectively. In
addition, sales of used RVs provide competition to RV manufacturers.
Government Regulation. The Company is subject to the
provisions of the National Traffic and Motor Vehicle Safety Act (the "Motor
Vehicle Act") and the safety standards for RVs and components which have been
promulgated thereunder by the Department of Transportation. The Motor Vehicle
Act authorizes the National Highway Traffic Safety Administration ("NHTSA") to
require a manufacturer to recall and repair vehicles which contain certain
hazards or defects. The Company has from time to time instituted voluntary
recalls of certain motorhome units, none of which had a material adverse effect
on the Company. The Company is also subject to numerous state consumer
protection laws and regulations relating to the operation of motor vehicles,
including so-called "Lemon Laws."
The Company's manufacturing operations are subject to a
variety of federal and state environmental regulations relating to the use,
generation, storage, treatment, emissions, and disposal of hazardous material
sand wastes and noise pollution. Such laws and regulations are becoming more
stringent, and it is likely that future amendments to these environmental
statutes and additional regulations promulgated thereunder will be applicable to
the Company, its manufacturing operations and its products in the future. The
failure of the Company to comply with present or future regulations could result
in fines being imposed on the Company, potential civil and criminal liability,
suspension of production or operations, alterations to the manufacturing process
or costly cleanup or capital expenditures.
Product Liability. The Company maintains product liability
insurance with coverage in amounts which management believes is reasonable. To
date, the Company has been successful in obtaining product liability insurance
on terms the Company considers acceptable. The Company's current policy provides
coverage against claims based on occurrences within the policy periods up to a
maximum of $11 million. Given the nature of the Company's business, product
liability in excess of the Company's insurance coverage, if incurred, could have
a material adverse effect on the Company.
Control by Affiliates. As of October 1, 1998, affiliates of
Siegler, Collery & Co., a New York-based investment firm ("Siegler Collery"),
beneficially owned approximately 12.9% of the outstanding shares of Common
Stock. Gary N. Siegler, Chairman of the Board and a director of the Company,
controls each of these affiliates. In addition, as of October 1, 1998, the
executive officers and directors of the Company as a group beneficially own
approximately 27.3% of the outstanding shares of Common Stock. As a result of
<PAGE>
such ownership, Mr. Siegler, individually, and the executive officers and
directors, as a group, have the ability to exert significant influence on the
Company's policies, the election of directors and the authorization of certain
transactions that require stockholder approval.
Antitakeover Provisions. Certain provisions of the Company's
Certificate of Incorporation, as well as Delaware corporate law and the
Company's Stockholder Rights Plan (the "Rights Plan"), may be deemed to have
anti-takeover effects and may delay, defer or prevent a takeover attempt that a
stockholder might consider in its best interest. Such provisions also may
adversely affect prevailing market prices for the Common Stock. Certain of such
provisions allow the Company's Board of Directors to issue, without additional
stockholder approval, preferred stock having rights senior to those of the
Common Stock. In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which
prohibits the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed matter. In August 1996, the
Company adopted the Rights Plan, pursuant to which holders of the Common Stock
received a distribution of rights to purchase additional shares of Common Stock,
which rights become exercisable upon the occurrence of certain events.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,182
<SECURITIES> 0
<RECEIVABLES> 25,793
<ALLOWANCES> 180
<INVENTORY> 39,504
<CURRENT-ASSETS> 80,561
<PP&E> 29,114
<DEPRECIATION> 7,233
<TOTAL-ASSETS> 113,124
<CURRENT-LIABILITIES> 26,765
<BONDS> 1,653
0
0
<COMMON> 102
<OTHER-SE> 82,525
<TOTAL-LIABILITY-AND-EQUITY> 113,124
<SALES> 267,562
<TOTAL-REVENUES> 267,562
<CGS> 225,596
<TOTAL-COSTS> 225,596
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129
<INCOME-PRETAX> 28,749
<INCOME-TAX> 11,403
<INCOME-CONTINUING> 17,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,346
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.52
</TABLE>
