<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended December 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 0-22716
BOLLINGER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2502577
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
602 FOUNTAIN PARKWAY, GRAND PRAIRIE, TEXAS 75050
(Address of principal executive offices)
(Zip Code)
(972) 343-1000
(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
___ ___
As of December 31, 1997, 4,000,210 shares of the registrant's common
stock, $0.01 par value per share, were outstanding.
<PAGE> 2
BOLLINGER INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
---------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -
December 31, 1997 (unaudited), and March 31, 1997 3
Consolidated Statements of Earnings -
Three Months and Nine Months Ended December 31, 1997 and December 29,
1996 (unaudited) 4
Consolidated Statements of Cash Flows -
Nine Months Ended December 31, 1997 and December 29, 1996 (unaudited)
5
Notes to Consolidated Financial Statements (unaudited) 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
INDEX TO EXHIBITS AND EXHIBITS 16
</TABLE>
2
<PAGE> 3
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1997 1997
------------ ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash .................................................................................. $ 17,321 $ 3,481
Accounts receivable
Trade, net of allowance for doubtful accounts of $671,002 and
$844,312 and allowance for returns and allowances of $820,154 and
$1,855,000, respectively .......................................................... 12,873,111 16,804,959
Escrow receivable ................................................................. 1,000,000 --
Other ............................................................................. 53,388 177,208
Inventories (Note C) .................................................................. 7,825,105 16,201,780
Prepaid expenses ...................................................................... 1,048,827 533,215
------------ ------------
Total current assets .............................................................. 22,817,752 33,720,643
PROPERTY PLANT AND EQUIPMENT - NET ....................................................... 926,596 2,083,402
OTHER ASSETS
Goodwill and other intangibles - net .................................................. -- 1,138,654
Notes receivable and other assets ..................................................... 371,077 951,085
Deferred financing fees - net ......................................................... 456,982 495,568
------------ ------------
Total Other Assets ............................................................... 828,059 2,585,307
------------ ------------
TOTAL ASSETS ............................................................................. $ 24,572,407 $ 38,389,352
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt and other debt (Note D) ........................... $ 1,235,502 $ 2,841,645
Accounts payable - trade ............................................................ 4,640,712 11,620,367
Income tax payable .................................................................. 837,700 --
Other current liabilities ........................................................... 1,518,125 1,104,318
Provision for restructuring of operations (Note F) .................................. 340,023 2,160,169
------------ ------------
Total current liabilities .................................................... 8,572,062 17,726,499
LONG-TERM LIABILITIES
Long term debt, net of current portion .............................................. 4,445,424 15,641,720
------------ ------------
Total liabilities .......................................................... 13,017,486 33,368,219
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTE G) ................................................... -- --
STOCKHOLDERS' EQUITY
Preferred stock -- $.01 par value; 1,000,000 shares authorized;
none issued .................................................................... -- --
Common stock -- $.01 par value; 8,000,000 shares authorized; issued
and outstanding 4,000,210 at December 31, 1997, and March 31,
1997 ........................................................................... 40,002 40,002
Capital in excess of par ............................................................ 15,323,058 15,323,058
Retained earnings (accumulated deficit) ............................................. (3,808,139) (10,341,927)
------------ ------------
Total stockholders' equity .................................................... 11,554,921 5,021,133
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................................... $ 24,572,407 $ 38,389,352
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, December 29, December 31, December 29,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales ................................... $ 15,888,556 $ 24,609,076 $ 51,512,517 $ 66,135,657
Cost of goods sold .......................... 13,068,363 21,264,045 41,926,520 54,399,287
------------ ------------ ------------ ------------
Gross profit ........................... 2,820,193 3,345,031 9,585,997 11,736,370
Selling expenses ............................ 1,399,606 1,798,644 3,928,424 5,295,088
Distribution, general and
administrative expenses ................. 2,894,770 2,846,265 7,963,245 8,305,265
------------ ------------ ------------ ------------
4,294,376 4,644,909 11,891,669 13,600,353
------------ ------------ ------------ ------------
Operating profit (loss) ................ (1,474,183) (1,299,878) (2,305,672) (1,863,983)
Other expense (income)
Interest expense ....................... 420,022 635,539 1,576,225 1,946,681
Interest income ........................ (325) (17,253) (7,607) (53,670)
Gain on Sale of Assets................... (10,377,593) 74,983 (11,246,838) 74,986
------------ ------------ ------------ ------------
(9,957,896) 693,269 (9,678,220) 1,967,997
------------ ------------ ------------ ------------
Earnings (loss) before
income taxes...................... 8,483,713 (1,993,147) 7,372,548 (3,831,980)
Income tax (expense) benefit
(Note E).......................... (837,700) (24,029) (838,760) (24,029)
------------ ------------ ------------ ------------
Earnings (loss) from
continuing operations ....................... $ 7,646,013 $ (2,017,176) $ 6,533,788 $ (3,856,009)
============ ============ ============ ============
Gain (loss) on disposal of
discontinued Healthcare
operation .................................. -- (95,976) -- 710,720
------------ ------------ ------------ ------------
Net earnings (loss) ........................ $ 7,646,013 $ (2,113,152) $ 6,533,788 $ (3,145,289)
Per share data:
Earnings (loss) from
continuing operations ................... $ 1.91 $ (.50) $ 1.63 $ (.96)
============ ============ ============ ============
Net earnings (loss) ......................... $ 1.91 $ (.53) $ 1.63 $ (.79)
============ ============ ============ ============
Weighted average common
and common equivalent
shares outstanding....................... 4,000,210 4,000,210 4,000,210 4,000,210
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 29,
1997 1996
------------ ------------
<S> <C> <C>
Cash flow from operating activities
Net earnings (loss) ............................................... $ 6,533,788 $ (3,145,289)
Adjustments to reconcile net earnings loss) to net cash
provided by (used in) operating activities
(Gain) loss on disposal of assets .................................. (11,246,838) (710,720)
Depreciation and amortization ...................................... 1,036,416 670,524
Provision for restructuring of operations ..................... (1,820,146) (1,397,898)
Provision for Returns and Allowances .......................... (1,034,846) (280,490)
Provision for Doubtful Accounts ............................... 208,335 334,518
Provision for Obsolete Inventory .............................. 1,355,783 306,854
Changes in operating assets and liabilities
Trade accounts receivable ..................................... 4,459,731 (5,339,980)
Other receivables ............................................. 123,820 (51,788)
Inventories ................................................... 5,222,264 5,148,276
Income tax refund ............................................. -- 2,182,545
Prepaid expenses .............................................. (515,612) (198,911)
Other assets .................................................. 18,082 396,436
Accounts payable - Trade ...................................... (7,513,173) (1,446,326)
Income tax payable ............................................ 837,700 (43,847)
Other current liabilities ..................................... 413,807 175,091
Current assets of discontinued operations ..................... -- 1,595,323
------------ ------------
Net cash provided by (used in) operating activities ........ (1,920,889) (1,805,682)
Cash flow from investing activities
Purchases of property and equipment ................................ (271,050) (349,222)
Payments (advances made) on note receivable ........................ 199,315 81,345
Proceeds from sale of assets (Note B) .............................. 14,753,949 1,402,110
Non-current assets from discontinued operations .................... -- 52,332
------------ ------------
Net cash provided by (used in) investing activities ......... 14,682,214 1,186,565
Cash flow from financing activities
Net proceeds from (payments on) long term debt .................... (12,342,485) 973,954
Payments to Officers .............................................. (280,000) --
Financing Fees .................................................... (125,000) (635,954)
------------ ------------
Net cash provided by (used in) financing activities ......... (12,747,485) 338,000
Net increase (decrease) in cash ............................. 13,840 (281,117)
Cash at beginning of period ............................................ 3,481 408,871
------------ ------------
Cash at end of period .................................................. $ 17,321 $ 127,754
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - GENERAL
The consolidated interim financial statements include the accounts of
Bollinger Industries, Inc., its wholly owned subsidiaries and Bollinger
Industries, L.P., a partnership wholly owned by Bollinger's subsidiaries
(collectively the "Company").
The consolidated interim financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission (the "SEC"). Certain information and footnote disclosure
normally included in financial statements prepared in accordance with Generally
Accepted Accounting Principals ("GAAP") have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction with the
Company's form 10-K consolidated financial statements and notes for the year
ended March 31, 1997.
In the opinion of management, the unaudited interim consolidated
financial statements of the Company contains all adjustments, consisting only of
those of a normal recurring nature, necessary to present fairly the Company's
financial position and the results of its operations and cash flows for the
periods presented. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions. Such estimates and
assumptions affect the reported amounts of assets and liabilities, as well as
the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expense during the reporting
period. Actual results could differ from these estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year presentation.
ADOPTION OF NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per
Share," requiring companies to present basic earnings per share (EPS) and
diluted earnings per share, instead of the primary and fully diluted EPS. The
new standard requires additional informational disclosures, and also makes
certain modifications to the currently applicable EPS calculations defined in
Accounting Principles Board No. 15. The new standard is required to be adopted
by all public companies for reporting periods ending after December 15, 1997,
and requires restatement of EPS for all prior periods reported. The Company
adopted SFAS No. 128 during the third quarter of fiscal 1998 and it did not
have any effect on the Company's EPS calculation and disclosures.
Revenue Recognition and Provisions for Chargebacks and Buybacks
The Company recognizes sales revenue at the time the products are
shipped to its customer. Provision is made currently for estimated product
returns and deductions which may occur. These returns are generally for products
that are salable with minor reworking of packaging or replacement of missing
components. The term "chargebacks" refers to the action taken by the customer to
withhold from payments or to apply for credit amounts for items such as volume
discounts or rebates under marketing programs or pricing discrepancies,
penalties, vendor compliance issues, shipping shortages and any other similar
item under vendor compliance guidelines established by the customer. The
provision for returns is estimated based on current trends and historical
experience of returns. The provision for chargebacks is estimated based on the
marketing programs designed for the customer, and recent historical experience
based on volume.
6
<PAGE> 7
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - continued)
NOTE B - CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosures:
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
December 31, December 29,
----------- -----------
1997 1996
----------- -----------
<S> <C> <C>
Interest Paid $ 1,684,338 $ 1,980,220
Income tax refund received $ (2,154,917)
Non cash financing transactions:
Sale of assets-financed by notes from buyer $ 293,547
Sale of assets-paid in escrow by buyer $ 1,000,000 $ 17,328
Liabilities assumed by buyer $ 16,843
</TABLE>
On July 18, 1997, the Company entered into an agreement for the sale of the
Irving facility. On September 26, 1997, the contract was executed with the
following cash flow effect:
<TABLE>
<S> <C>
Sales Price $ 1,200,000
Commission and Fees 81,224
----------
Proceeds from sale of building $ 1,118,776
Liabilities assumed by buyer 12,249
----------
Cash received $ 1,106,347
</TABLE>
On November 13, 1997, Bollinger Industries, Inc. and its wholly owned
subsidiary NBF, Inc. entered into an asset purchase agreement for the sale of
its trampoline product line to Hedstrom Corporation. The contract was executed
on November 21, 1997 and Bollinger received $13,250,000 cash from the sale of
assets and $298,628 cash for sale of the adjusted inventory.
NOTE C - INVENTORIES
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
------------ ------------
<S> <C> <C>
Raw materials $ 1,836,879 $ 9,013,914
Work-in-process 29,285 328,436
Finished goods 8,067,656 8,419,200
Reserve for obsolescence (2,108,715) (1,559,770)
------------ ------------
$ 7,825,105 $ 16,201,780
============ ============
</TABLE>
7
<PAGE> 8
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - continued)
NOTE D - NOTES PAYABLE
The Company obtained a credit facility with a financial institution on
August 16, 1996 with a maximum line of $25 million and a three-year term. This
credit line was subsequently extended to four years with modification to several
of the financial covenants. Availability, pursuant to the credit line, is based
on the levels of specific current assets namely accounts receivable and
inventory. The outstanding obligation at December 31, 1997, was $5.4 million
with undrawn availability of $5.7 million, pursuant to the asset based formula.
NOTE E - INCOME TAXES
The Company's effective federal income tax rates for the three month
and nine month period ended December 29, 1996 and December 31, 1997 respectively
were 0% and 2%. The income taxes for the three and nine months ended December
31, 1997 are comprised of state and alternative minimum federal income taxes.
The company has a 100% valuation allowance provided for against the remaining
deferred tax benefit.
NOTE F - RESTRUCTURED INVENTORY
In connection with the Company plan for restructuring of
inventory, as disclosed in the Company's annual report and Form 10-K for year
ended March 31, 1996, the Company has implemented measures to reduce inventory
levels of targeted products. Of the approximately $12 million in inventory
originally designated for liquidation, approximately $11.2 million of inventory
was sold for $7.6 million with a resultant charge to the reserve of $3.6
million.
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1997 December 31, 1997
-------------- -------------- -----------------
Inventory Reserve Inventory Reserve Inventory Reserve
Value Amount Value Amount Value Amount
------------ ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Celebrity
Endorsed
Product $ 5,175,000 $ 1,730,000 $ 843,000 $ 250,000 $ 84,000 $ 25,000
Other
Product 6,625,000 2,028,000 3,188,000 1,910,000 531,000 315,000
Other Costs -- 202,000 -- -- -- --
------------ ----------- ----------- ----------- ----------- ----------
Total $ 11,800,000 $ 3,960,000 $ 4,031,000 $ 2,160,000 $ 615,000 $ 340,000
============ =========== =========== =========== =========== ==========
</TABLE>
NOTE G -- COMMITMENTS AND CONTINGENCIES
The Company, certain of its officers and directors, former officers,
former independent auditor, and the underwriters of the Company's initial IPO
are defendants in certain shareholder lawsuits. The Company believes the
lawsuits are without merit. However, if the plaintiffs prevail, the lawsuits
could have a material adverse effect on the Company. The Company is unable to
estimate the range of loss, if any. See Item 1. legal Proceedings.
In the normal course of business, the Company is involved in various
litigation. Management believes that the aggregate effect of any liability
arising from such items would not be material to the consolidated statements of
operations of financial position at December 31, 1997.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's Form
10-K and consolidated financial statements for the fiscal year ended March 31,
1997 and March 31, 1996; the Company's Form 10-Q's for the quarters ending June
30, 1996, September 29, 1996, December 29, 1996, June 30, 1997, September 30,
1997; and the Company's Form 8-K and Form 8-K/A dated November 26, 1997; and the
consolidated financial statements and related notes, for the quarter ended
December 31, 1997, found elsewhere in this report.
THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1997, COMPARED WITH THE THREE
MONTH AND NINE MONTH PERIOD ENDED DECEMBER 29 , 1996
As disclosed in the Company's annual report and Form 10-K for the year ended
March 31, 1996, and updated at March 31, 1997, the Company has embarked on a
restructuring plan whereby it has focused on its name brand products and greatly
reducing its use of celebrity endorsed products. In addition, the Company has
divested the trampoline product line.
Consolidated net sales for the quarter ended December 31, 1997, decreased by
$8.7 million as compared to the quarter ended December 29, 1996, a decrease of
35%. The trampoline division was sold in November, 1997 which accounted for
approximately $3.6 million of the decline. The balance of the reduction,
approximately $5.1 million, is attributable to net sales of other fitness
accessory products, which decreased 36.7%. The Company successfully sold
approximately $.7 million of targeted inventory as part of the restructuring
plan for this quarter. Net sales for the nine months ended December 31, 1997,
decreased by $14.6 million compared to the same period in 1996, a decrease of
22.1%. Sales of the fitness accessory product line declined $12.1 million, a
decrease of 31.6% and sales of trampolines declined $2.5 million, a decrease of
9.1%. The decrease in net sales of other fitness accessory products resulted
from a significant slowdown of purchases by a former major customer. The decline
in trampoline product sales is due to the sale of the trampoline division before
the quarter ended. In the first nine months of the current year, the Company
successfully sold approximately $3.4 million of targeted inventory as part of
the restructuring plan.
Gross profit for the quarter ended December 31, 1997, decreased $.5 million as
compared to the quarter ended December 29, 1996, but increased as a percentage
of net sales from 13.6% in 1996 to 17.7% in 1997 for the same period. The
decrease in gross profit was primarily due to the sale of the trampoline
division and the decline in fitness accessory product sales, partially offset by
improved margins on fitness accessories and trampolines brought about by better
purchasing overseas. Gross profit percentage on trampoline sales has increased
significantly from 15.3% to 20.3% for the comparable quarters. Gross profit for
the nine months ended December 31, 1997, decreased $2.2 million and increased
.9% as a percentage of net sales as compared to the nine months ended
9
<PAGE> 10
December 29, 1996. The shift in the margin percent was the result of the low
margin on targeted inventory sales and the increase in trampoline sales that
traditionally earn a lower gross margin than other fitness products. In
addition, trampolines were a higher proportion of total company sales in the
nine months ended December 31, 1997.
The major thrust of the restructuring plan comprised the liquidation of certain
inventories. The Company's initiative on vendor pricing, designed to
significantly reduce purchase prices, has begun to have a significant effect on
gross profit but will not be fully realized until the targeted inventory is
completely liquidated. Management expects to sell or dispose of the remainder of
the targeted inventory during the fourth quarter of fiscal 1998.
Selling expenses for the quarter ended December 31, 1997, decreased by $399,000
as compared to the quarter ended December 29, 1996, and increased as a
percentage of net sales from 7.3% to 8.8%. The dollar decrease in selling
expense was related to the elimination of celebrity royalties and commissions
on lower sales volume. Selling expenses for the nine months ended December 31,
1997, decreased by $1,367,000 as compared to the first nine months of 1996, and
decreased as a percentage of net sales from 8.0% to 7.6%. The decrease was
attributable to lower celebrity royalties and commissions on lower sales
volume.
Distribution, general and administrative expenses for the quarter ended December
31, 1997, increased by $49,000 as compared to the quarter ended December 29,
1996, and increased as a percentage of net sales from 11.6% in 1996 to 18.2% in
1997. Distribution, general and administrative expenses for the nine months
ended December 31, 1997 decreased $342,000 from the same period in the prior
year. As a percentage, this category of expenses increased from 12.6% of net
sales in the prior year to 15.5% in the current year. Reduction in rent,
contract labor, consulting fees, and bad debt expense, partially offset by
increased legal fees, led to the overall dollar reduction. The percentage
increase resulted in much of distribution, general and administrative costs
being fixed.
The Company sustained an operating loss of $1,474,000 for the quarter ended
December 31, 1997, as compared to an operating loss of $1,300,000 in the same
quarter last year. The gross profit decline of $525,000 is partially offset by a
decrease in selling expenses of $399,000. The Company sustained an operating
loss of $2,306,000 for the nine months ended December 31, 1997, as compared to
an operating loss of $1,864,000 for the same period last year. The gross profit
decline of $2,150,000 is partially offset by lower selling and distribution,
general and administrative expenses.
Interest expense for the quarter ended December 31, 1997, was $420,000 compared
to $636,000 the previous year. Interest expense for the nine months ended
December 31, 1997 was $1,576,000 compared to $1,947,000 the same period last
year. The significant reduction in interest expense was due to the steady
reduction of long term debt and the accelerated reduction on debt made possible
by the sale of the assets associated with the trampoline product line.
In the quarter ending December 31, 1997, the Company recorded $10,378,000 as a
gain on the sale of fixed assets primarily from the sale of the trampoline
division. In the quarter ending December 29, 1996 the Company recorded $96,000
as a loss on disposal of discontinued Healthcare operation.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company's principal source of financing has been borrowings from
various financial institutions and its initial public offering. Net cash used by
operating activities for the nine months ended December 31, 1997, was $1,921,000
compared to cash used by operating activities for the same period in the prior
year of $1,806,000. Cash generated was primarily from the reduction of accounts
receivables and inventories in 1997, and from the reduction of inventories and
collection of an income tax refund in 1996. Most of the proceeds from the sales
of the trampoline division were used to reduce long term debt, trade payables
and repay loans from officers of the Company.
In 1996, the Company secured a revolving credit facility with a financial
institution providing a maximum line of credit of $25.0 million, subject to
certain borrowing base requirements and covenants. Availability, pursuant to
the credit line, is based on the levels of specific current assets namely
accounts receivable and inventory. As of December 31, 1997, the outstanding
balance was approximately $5.4 million with an unused availability of
approximately $5.7 million. This facility matures August 16, 2000. The Company
is currently in compliance with all financial covenants of the agreement. The
Company received waivers for noncompliance of certain negative performance
covenants of the loan agreement involving compensation and subordinated debt.
The Company increased the overall aggregate compensation to executive officers
and senior management employees due to bonuses paid or accrued which had not
been paid or accrued in previous years. The Company paid the subordinated debt
to the officers following the sale of the trampoline business. Cash generated
from investment activities was used to reduce the balance of the line of credit
by $12,467,000 and repay loans from officers in the amount of $280,000.
Outstanding balances in the second quarter bore interest at an approximate rate
of 10.25% compared to a rate of 10.5% for the second quarter last year. The
Company also had a long term note payable which bore interest at 11.50% per
annum which was paid after the sale of the Irving building.
In 1997 the Company received $1,106,347 cash from the sale of the Irving
facility and $13,250,000 from the sale of the trampoline business. In 1996, the
Company received $1,246,157 cash and $293,547 in notes on the disposal of the
Healthcare operation.
FACTORS THAT COULD AFFECT FUTURE PERFORMANCE
Certain statements contained in this Quarterly Report on Form 10-Q, including
without limitation, statements containing the words "believes", "anticipates",
"intends", "expects", and words of similar import, constitute "forward-looking
statements". Such forward-looking statements involve numerous assumptions about
known and unknown risks, uncertainties and other factors which may ultimately
prove to be inaccurate. Certain of these factors are discussed in more detail
elsewhere in this Quarterly Report, including without limitation under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and include the Company's ability to maintain sufficient gross
margins, to reduce general, administrative and warehouse expenses, to increase
sales of fitness accessory products, and to achieve profitability. Actual
results may differ materially from
<PAGE> 12
any future results expressed or implied by such forward-looking statements. The
Company disclaims any obligation to update any forward-looking statements or
publicly revise any of the forward-looking statements contained herein to
reflect future events or developments.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cause No. 96-02952; Suntrust Bank Atlanta, as Trustee for Suntrust Retirement
Sunbelt Equity Fund v. Bollinger Industries, Inc. Glenn D. Bollinger, Bobby D.
Bollinger, Curtis D. Logan, Michael J. Beck, John L. Maguire, William Blair &
Company, Rauscher Pierce Refsnes, Inc. and Grant Thornton, L.L.P.; in the 68th
Judicial District Court of Dallas County, Texas (the "Suntrust Lawsuit"):
Bollinger, Glenn D. Bollinger (Chairman and CEO), Bobby D. Bollinger
(President), Curtis D. Logan (former CFO), Michael J. Beck (former CAO), John L.
Maguire (Director), William Blair & Company (former underwriters of initial
public offering), Rauscher Pierce Refsnes, Inc. (former underwriters of initial
public offering) and Grant Thornton, L.L.P. (former independent accountants),
are defendants in a lawsuit filed on March 22, 1996, by shareholder Suntrust
Bank Atlanta, as Trustee for Suntrust Retirement Sunbelt Equity Fund, on behalf
of themselves, and all persons similarly situated. This lawsuit was filed as a
class action suit on behalf of those who purchased securities through a public
offering that were issued by Bollinger, alleging that the prices were
artificially inflated and maintained in violation of the anti-fraud provisions
of the securities law as well as common law. The lawsuit seeks recovery of
actual, treble, and exemplary damages, attorney's fees and experts fees, as well
as rescission, pre-judgment interest and extraordinary equitable and/or
injunctive relief. The Company does not believe the Suntrust Lawsuit has merit
and is vigorously defending same.
Civil Action No. 3:96C-V-0823-R; STI Classic Fund and STI Classic Sunbelt v.
Bollinger Industries, Inc. Glenn D. Bollinger, Bobby D. Bollinger, Curtis D.
Logan, and Michael J. Beck; in the United States District Court for the Northern
District of Texas, Dallas Division ("the STI Lawsuit"):
Bollinger, Glenn D. Bollinger, Bobby D. Bollinger, Mr. Logan and Mr, Beck, are
defendents in this lawsuit filed on March 22, 1996, in the United States
District Court for the Northern District of Texas, Dallas Division, by
shareholders STI Classic Fund and STI Classic Sunbelt, on behalf of themselves
and all persons similarly situated and like the Suntrust Lawsuit, this lawsuit
was also filed as a class action on behalf of a class of the persons who
purchased securities issued by the Company at prices which allegedly were
artificially inflated and maintained in violation of the anti-fraud provisions
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. The Plaintiffs seek damages, costs, and expenses. Management
does not believe the STI Lawsuit has merit and is vigorously defending same.
The Company filed a lawsuit against Denise Austin on December 2, 1996
in the 162nd District Court of Dallas County, Texas that was subsequently
removed to the United States District Court for the Northern District of Texas,
Dallas Division Case Number 3-97-CV-0246-G on February 6, 1997. Subsequently a
suit was filed on December 30, 1996 by Denise Austin in the United States
District Court, Eastern District of Virginia. The suit was filed for payment of
royalties alleged to be due of approximately $655,000 . The Company filed
counter claims in excess of such amount. Both of these suits were settled in
July, 1997. In connection with the settlement, the Company recorded the reversal
of accrued royalty commission of $508,000 which is reflected in the income of
the second quarter of fiscal 1998.
The Company has been contacted by the Department of Labor (DOL) in
regard to certain questions about its former Employee Stock Ownership Plan (the
"ESOP"). Assets of the ESOP are held in the Company's 401(K) plan which is the
successor to the ESOP. The Company has responded to and cooperated with the
DOL. The DOL has not initiated any proceeding with respect to the ESOP or any
other of the Company's employee benefit plans.
The Company consented to the entry of an order of permanent injunction
which enjoins the Company from violating the antifraud, periodic reporting,
record keeping and internal accounting controls provisions of the Securities and
Exchange Act of 1934 and regulations promulgated thereunder in the future in the
conduct of its business. Glenn Bollinger also consented to the entry of an
order of permanent injunction enjoining him from violations of the antifraud,
record keeping, periodic reporting and internal accounting controls provisions
of the Securities and Exchange Act of 1934 and regulations promulgated
thereunder in the future, and agreed to the payment of a monetary penalty in the
amount of $40,000. Ronald Bollinger also consented to the entry of an order of
permanent injunction enjoining him from violations of the antifraud, record
keeping, periodic reporting and internal accounting controls provisions of the
Securities and Exchange Act of 1934 and regulation promulgated thereunder in the
future, and agreed not to act as director or officer of a registered or
reporting entity.
From time to time, the Company is a party to various legal proceedings
arising in the ordinary course of business. The Company is not currently a
party to any other material litigation and is not aware of any litigation
threatened against the Company, arising in the ordinary course of business, that
could have a material adverse effect on the Company.
13
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held it's Annual Meeting of Stockholders on October 2,
1997. During this meeting five directors, which constitutes the entire Board of
Directors, were elected to serve until the next Annual Meeting of Stockholders
or until their successors are elected and qualified. The following individuals
were elected:
<TABLE>
<CAPTION>
VOTING SUMMARY
----------------------------------------------------------------
NAME FOR WITHHELD NOT VOTING
---- --- -------- ----------
<S> <C> <C> <C>
Glenn D. Bollinger 3,463,028 54,994 482,188
Bobby D. Bollinger 3,463,028 54,994 482,188
John L. Maguire 3,469,122 48,900 482,188
Stephen L. Parr 3,469,122 48,900 482,188
Richard J. Tucker 3,467,522 50,500 482,188
</TABLE>
King Griffin & Adamson, P.C. were appointed as the Company's auditors for
fiscal 1998.
ITEM 5. OTHER INFORMATION
The Company has begun to upgrade its Management Information System to enhance
the long term commitment to its customers and to lower the cost of doing
business. To provide a stable platform to deliver its commitments, the Company
has selected hardware and software from IBM, SAP, and HOLLAND TECHNOLOGY
as the source of its Enterprise Resource Planning, (or ERP) system. The upgrade
to the new system should be completed during the second quarter of fiscal 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
10.61 Assignment and Assumption of Lease (this
"Assignment") between Americus Sumter Payroll
Development Authority ("Landlord"), NBF, Inc., a
Georgia Corporation ("Assignor"), and Plains Products,
Inc., a Georgia Corporation ("Assignee")
10.62 Lease Termination Agreement ("this Agreement")
between National Life Insurance Company ("Landlord")
and Bollinger Industries, Inc. ("Tenant")
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
Two reports on Form 8-K were filed during the three month period ended
December 31, 1997.
Form 8-K was filed November 26, 1997 for the disposition of assets.
Bollinger Industries, Inc. and its wholly owned subsidiary NBF, Inc. entered
into an asset purchase agreement for the sale of its trampoline division to
Hedstrom Corporation.
Form 8-K/A was filed as of November 26, 1997 with a Pro Forma Condensed
Consolidated Balance Sheet and Statement of Earnings to illustrate the offset of
the sales of the trampoline division to Hedstrom Corporation.
14
<PAGE> 15
(c) 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.
BOLLINGER INDUSTRIES, INC.
Date: February 13, 1998 /s/ Glenn D. Bollinger
----------------------------------------
Glenn D. Bollinger
Chairman of the Board and
Chief Executive Officer
Date: February 13, 1998 /s/ Rose Turner
----------------------------------------
Rose Turner
Executive Vice President - Finance, Chief
Financial Officer, Treasurer and Secretary
Date: February 13, 1998 /s/ Floyd DePauw
----------------------------------------
Floyd DePauw
Controller and Chief Accounting Officer
15
<PAGE> 16
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
-------- ------------
<S> <C>
10.61 Assignment and Assumption of Lease (this "Assignment")
between Americus Sumter Payroll Development Authority
("Landlord"), NBF, Inc., a Georgia Corporation
("Assignor"), and Plains Products, Inc., a Georgia
Corporation ("Assignee")
10.62 Lease Termination Agreement ("this Agreement")
between National Life Insurance Company ("Landlord")
and Bollinger Industries, Inc. ("Tenant")
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
</TABLE>
16
<PAGE> 1
EXHIBIT 10.61
ASSIGNMENT AND ASSUMPTION OF LEASE
This Assignment and Assumption of Lease (this "Assignment") is entered
by Americus-Sumter Payroll Development Authority ("Landlord"), NBF, Inc., a
Georgia corporation ("Assignor"), and Plains Products, Inc., a Georgia
corporation ("Assignee").
WITNESSETH:
WHEREAS, pursuant to that certain Lease (the "Lease"), dated December
21, 1990, as subsequently amended, between Landlord, as landlord, and N.B.F.,
Inc. (A Florida corporation) and R. Wayne Rich, as tenant ("N.B.F./Rich"),
Landlord leased to N.B.F./Rich certain real property and the improvements
located thereon at Swett Avenue, East Industrial Park, Americus, Georgia,
31709, as more particularly described on EXHIBIT A hereto;
WHEREAS, pursuant to that certain Assignment and Assumption of Lease
dated effective May 1, 1994 and recorded at Book 385, Pages 90-92, N.B.F./Rich
assigned the Lease to Assignor herein and Landlord consented to such
assignment; and
WHEREAS, Assignor desires to assign to Assignee all of the Assignor's
right, title, interest in and obligations under the Lease, including but not
limited to the obligation to purchase the real property as more particularly
described therein, and Assignee desires to acquire all of Assignor's right,
title and interest in and to the Lease, and to assume all of Assignor's rights,
duties and obligations thereunder; and
WHEREAS, Landlord consents to such assignment and assumption upon the
terms and conditions described herein;
NOW, THEREFORE, for and in consideration of the mutual obligations set
forth in this Assignment and the Lease and other good and valuable
consideration, the receipt and sufficiency of which are herby acknowledged, the
parties hereby agree as follows:
1. As of the Effective Date (as defined below), Assignor hereby
assigns, transfers, sets over, conveys and delivers to Assignee all of its
right, title and interest in the Lease and delegates all of its duties and
obligations in and to and/or created under the Lease.
2. Assignee hereby accepts this Assignment and, from and after the
Effective Date (as defined below) Assignee assumes the Lease, and agrees to
perform and be bound as tenant (as if Assignee had executed the Lease as
Tenant), as a direct obligation to the Landlord thereunder, and shall comply
with all of the terms, covenants, and conditions thereof.
3. Landlord consents to this assignment and the assumption by Assignee
of the obligations under the Lease, as of the Effective
<PAGE> 2
Date (as defined below), and Landlord releases Assignor from such obligations as
of the Effective Date (as defined below).
4. Landlord further releases R. Wayne Rich from that certain Personal
Guaranty dated May 10, 1994 from R. Wayne Rich to Landlord and cancels such
guaranty.
5. Landlord and Assignor agree that: (1) the Lease is legal, valid,
binding, enforceable, and in full force and effect, (2) no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder, and (3) there are
no disputes, oral agreements, or forbearance programs in effect as to the Lease;
6. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
7. This Assignment may be executed in counterparts, and when
together, such executed original counterparts shall constitute but one original
hereof.
The parties sign this Assignment and Assumption of Lease on the dates set forth
with the name of each, but the assignment is to be effective as of September
20, 1997 (the "Effective Date").
ASSIGNOR:
NBF, INC.
/s/ BOB BOLLINGER
-------------------------------
By: Bob Bollinger
Its President
ASSIGNEE:
PLAINS PRODUCTS, INC.
By: /S/ ALLEN MOUNTJOY
-------------------------------
Name: Allen Mountjoy, President
P. O. Box 248
Plains, Georgia, 31780
LANDLORD:
AMERICUS-SUMTER PAYROLL
DEVELOPMENT AUTHORITY
BY: /S/ W. SCOTT IVEY
-------------------------------
NAME: W. SCOTT IVEY
TITLE: CHAIRMAN
<PAGE> 3
STATE OF TEXAS )
COUNTY OF TARRANT )
This instrument was acknowledged before me on _______________, 1997 by
Bob Bollinger, president of NBF, Inc., a Georgia corporation, on behalf of said
corporation.
/s/ LESLIE L. JOLLY
-------------------------------
Title: Executive Assistant
My Commission expires: 6/3/2000
STATE OF GEORGIA )
COUNTY OF _________ )
This instrument was acknowledged before me on November 10, 1997 by
Allen Mountjoy, president of Plains Products, Inc., a Georgia corporation, on
behalf of said corporation.
/s/
-------------------------------
STATE OF GEORGIA ) Title: Notary Public
My Commission expires: 6/9/2000
COUNTY OF SUMTER )
This instrument was acknowledged before me on October 14, 1997 by W.
Scott Ivey, Chairman of Americus Sumter Payroll Development Authority, a
Georgia corporation, on behalf of said corporation.
/s/
-------------------------------
Title: Notary Public
My Commission expires: 8/19/1999
<PAGE> 4
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
The building, land and related improvements located on a parcel of
land in the City of Americus, Sumter County, Georgia on the west side of Swett
Avenue Extension and owned by the Americus-Sumter Payroll Development
Authority, and all easements related thereto, as more particularly described in
a lease dated December 21, 1990, as subsequently amended, and entered into by
Americus-Sumter Payroll Development Authority as landlord and N.B.F., Inc., a
Florida corporation, as tenant.
<PAGE> 1
EXHIBIT 10.62
LEASE TERMINATION AGREEMENT
This Lease Termination Agreement (this"Agreement") is between National
Life Insurance Company ("Landlord") and Bollinger Industries, Inc. ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have previously executed that certain
Standard Industrial Lease dated March 17, 1993 (the "Lease") covering and
describing approximately 101,839 square feet of space situated at 1905 110th
Street, Grand Prairie, Texas (the "Premises"); and
WHEREAS, Landlord and Tenant have agreed that it is to their mutual
benefit to terminate the Lease on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS:
THAT, for and in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby mutually acknowledged and confessed, Landlord and Tenant have agreed
and do hereby agree as follows:
1. Capitalized Terms. Capitalized terms used but not defined in this
Agreement shall have the meanings ascribed thereto in the Lease.
2. Payment of December Rent. Prior to or contemporaneously with the
execution of this Agreement, Tenant shall pay to Landlord the Fixed Minimum
Rent for December 1997.
3. Termination of Lease. Landlord and Tenant agree that the Lease
shall terminate on December 31, 1997 (the "Termination Date"). Tenant shall
vacate the Premises on or before the Termination Date and shall surrender the
Premises to Landlord in a broom clean condition. If Tenant complies with all
of its obligations under this Agreement, no Fixed Minimum Rent or Additional
Rents shall be payable by Tenant to Landlord under the Lease for any period of
time after the Termination Date. If Tenant fails to vacate the Premises and
surrender the Premises to Landlord in a broom clean condition on or before the
Termination Date, Tenant shall indemnify, defend and hold harmless Landlord
from and against any and all loss, cost, damage or expense (including, without
limitation, attorneys' fees, accountants' fees, consultants' fees, court costs
and interest which Landlord may suffer as a result of Tenant's failure to
perform such obligations. The aforementioned indemnification shall include,
but shall not be limited to, any out-of-pocket damages and/or consequential
damages which Landlord may suffer as a result of the loss of any leasing
opportunity with regard to all or part of the Premises.
<PAGE> 2
4. Security Deposit. Provided Tenant vacates the Premises and
surrenders the Premises to Landlord in a broom clean condition on or before
the Termination Date and performs all of its obligations under this Agreement,
including, without limitation, its obligations under paragraphs 5 and 6 hereof,
Landlord shall return the Security Deposit to Tenant within ten (10) days after
the Termination Date. In the event Tenant does not vacate the Premises and
surrender the Premises to Landlord in broom clean condition on or before the
Termination Date or otherwise fails to perform its obligations under this
Agreement, the Security Deposit shall conclusively be deemed forfeited by
Tenant and may be retained by Landlord.
5. Removal of Connecting Corridors. Prior to the Termination Date,
Tenant shall, at Tenant's sole cost and expense, properly remove both existing
corridors that connect the building on the Premises to the building located to
the west of the Premises. The foregoing work shall be performed in a good and
workmanlike manner by qualified contractors approved in advance by Landlord.
Tenant may leave the existing fire doors in place, so long as Tenant performs
its obligations under this Paragraph 5.
6. Condition of Premises. All dock doors, levelers and bumpers and
all electrical, HVAC, plumbing and fire protection (i.e., sprinklers) systems
located on the Premises shall be surrendered with the Premises in good
operating condition.
7. Continuing Liabilities. Notwithstanding the limited release set
forth in Paragraph 8 below, Tenant is and shall remain liable to Landlord and
hereby agrees to indemnify, defend and hold Landlord harmless from and against
the following matters (collectively, the "Continuing Liabilities"):
(a) Any monetary sum, including without limitation, Fixed Minimum
Rent and Additional Rents, which have accrued or accrue under the
Lease prior to the Termination Date (Landlord acknowledges that Tenant
is current in the payment of Minimum Rent and Additional Rents as of
the date of this Agreement);
(b) Any storage, use, discharge or disposition of
dangerous/hazardous chemicals, materials and/or wastes that have
occurred or occur on the Premises during the term of the Lease (as
amended hereby);
(c) Any latent defects to the Premises that arose or occurred
during the term of this Lease (as amended hereby) as a result of the
failure of Tenant to fully and timely comply with its obligations
under the Lease, including, without limitation, its maintenance and
repair obligations, and which are not readily identifiable based upon
the walkthrough inspection of the Premises contemplated by Paragraph
9 hereof; and
<PAGE> 3
(d) Any material damage to the Premises that occurs during a
period of time from the date of this Agreement through the
Termination Date.
Any Continuing Liabilities which are quantifiable on the Termination Date shall
be paid by Tenant to Landlord within ten(10)days after Landlord delivers to
Tenant a written invoice for such sums, together with reasonable supporting
documentation. Any Continuing Liabilities that are not qualifiable on the
Termination Date shall be billed to Tenant by Landlord within a reasonable time
after the amount of such Continuing Liabilities is known and shall be paid by
Tenant to Landlord within ten(10)days after the receipt of such written invoice,
together with reasonable supporting documentation. Tenant's failure to comply
with its obligation under this Paragraph 7 shall, at Landlord's election, render
the termination of the Lease effectuated hereby null and void, in which case,
Tenant shall be fully liable for the performance of all of its obligations,
past, present, and future, under the Lease.
8. Limited Release. Except for the Continuing Liabilities, Landlord
agrees that it will make no claim upon Tenant as result of Tenant's failure to
fully and timely comply with its maintenance and repair obligations set forth in
the Lease. Without limiting the foregoing, Landlord expressly agrees that it
will make no claim against Tenant as a result of Tenant's failure to properly
repair and maintain the surface of the parking lot on the Premises.
9. Inspection of Premises. Within three(3)days prior to the Termination
Date, Landlord and Tenant shall schedule and conduct walk-through inspection of
the Premises by Landlord's on-site property manager and a designated
representative of Tenant familiar with the Premises. If during such walk-through
inspection, Landlord's on-site property manager determines, in his or her sole
but reasonable judgement, that Tenant has failed to perform its obligations
under this Agreement, Landlord shall have the right, but not the obligation, to
terminate this Agreement upon written notice to Landlord delivered at any time
prior to the Termination Date, in which event the Lease shall not terminate as
set forth herein and Tenant shall remain fully liable for the performance of all
of its obligations thereunder.
IN WITNESS WHEREFORE, Landlord and Tenant have executed this Agreement on
the dates set forth below, to be effective for all purposes as of December 9,
1997.
LANDLORD
NATIONAL LIFE INSURANCE COMPANY
BY: Atlantic Investment Management, Inc.
its authorized representative
Executed by Landlord By: /s/ David L. Rabin
this 9th day of -------------------------------------
December, 1997 Name: David L. Rabin
-----------------------------------
Title: President
----------------------------------
TENANT:
BOLLINGER INDUSTRIES, INC.
Executed by Tenant By: /s/ Glenn Bollinger
this 8 day of -------------------------------------
December, 1997 Name: Glenn D. Bollinger
-----------------------------------
Title: CEO
----------------------------------
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Period Period Period Period
Ended Ended Ended Ended
December 31, December 29, December 31, December 29,
1997 1996 1997 1996
------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Earnings (loss) from Continuing
Operations.......................... $7,646,013 $(2,017,176) $ 6,533,788 $(3,856,009)
Net earnings (loss)...................... $7,646,013 $(2,113,152) $ 6,533,788 $(3,145,289)
========== =========== =========== ===========
Weighted average number of common shares
outstanding during the period . 4,000,210 4,000,210 4,000,210 4,000,210
Net effect of dilutive stock options based
on the treasury stock method at - - - -
market prices....................... ---------- ----------- ----------- -----------
Shares used for computation ............. 4,000,210 4,000,210 4,000,210 4,000,210
========== =========== =========== ===========
Net earnings (loss) from continuing
operations ......................... $ 1.91 $ (.50) $ 1.63 $ (.96)
========== =========== =========== ===========
Net earnings (loss) per share .......... $ 1.91 $ (.53) $ 1.63 $ (.79)
========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 17,321
<SECURITIES> 0
<RECEIVABLES> 12,873,111
<ALLOWANCES> 671,002
<INVENTORY> 7,825,105
<CURRENT-ASSETS> 22,817,752
<PP&E> 2,348,806
<DEPRECIATION> 1,422,210
<TOTAL-ASSETS> 24,572,407
<CURRENT-LIABILITIES> 8,572,062
<BONDS> 0
0
0
<COMMON> 40,002
<OTHER-SE> 11,514,919
<TOTAL-LIABILITY-AND-EQUITY> 24,572,407
<SALES> 51,512,517
<TOTAL-REVENUES> 51,512,517
<CGS> 41,926,520
<TOTAL-COSTS> 3,928,424
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 208,335
<INTEREST-EXPENSE> 1,576,225
<INCOME-PRETAX> 7,372,548
<INCOME-TAX> 838,760
<INCOME-CONTINUING> 6,533,788
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,533,788
<EPS-PRIMARY> 1.63
<EPS-DILUTED> 1.63
</TABLE>
