<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the Quarterly Period Ended December 31, 1998
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 1-12842
ScanSource, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-0965380
- -------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporated or organization)
6 Logue Court, Suite G
Greenville, SC 29615
- ---------------------------------- ------------------------------------
(Address of principal executive (Zip Code)
offices)
(864) 288-2432
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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, 1998, 5,475,810 shares of the registrant's common stock, no
par value, were outstanding.
<PAGE>
SCANSOURCE, INC.
INDEX
FORM 10-Q
December 31, 1998
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C> <C>
Item 1. Consolidated Financial Statements (Unaudited)........... 2
Condensed Balance Sheets................................ 2
Condensed Income Statements............................. 4
Condensed Statements of Cash Flows...................... 5
Notes to Condensed Financial Statements................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 8
Item 3. Quantitative and Qualitative Disclosures About Market
Risk................................................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 13
Item 2. Changes in Securities................................... 13
Item 3. Defaults Upon Senior Securities......................... 13
Item 4. Submission of Matters to a Vote of Security-Holders..... 13
Item 5. Other Information....................................... 14
Item 6. Exhibits and Reports on Form 8-K........................ 14
SIGNATURES................................................................. 15
</TABLE>
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
SCANSOURCE, INC.
CONDENSED BALANCE SHEETS
June 30, December 31,
1998 1998
------- -------
(Note 1) (Note 1)
(Unaudited)
Assets (In thousands)
------
Current assets:
Cash............................................. $ 88 2,007
Receivables:
Trade, less allowance for doubtful accounts of
$2,045,000 at June 30, 1998 and
$2,709,000 at December 31, 1998................. 28,198 35,346
Other............................................... 1,524 1,299
------- -------
29,722 36,645
Inventories......................................... 31,444 45,264
Prepaid expenses and other assets................... 268 306
Deferred income taxes............................... 2,381 2,381
------- -------
Total current assets............................ 63,903 86,603
------- -------
Property and equipment, net.......................... 6,491 6,786
Intangible assets, net............................... 1,532 1,466
Other assets......................................... 186 329
------- -------
Total assets.................................... $72,112 $95,184
======= =======
See notes to condensed financial statements.
2
<PAGE>
SCANSOURCE, INC.
CONDENSED BALANCE SHEETS (Continued)
June 30, December 31,
Liabilities and Shareholders' Equity 1998 1998
------------------------------------ -------- ------------
(Note 1) (Note 1)
(Unaudited)
(In thousands)
Current liabilities:
Current portion of long-term debt........................ $ 22 $ 22
Trade accounts payable................................... 14,029 37,643
Accrued compensation..................................... 456 875
Accrued expenses and other liabilities................... 1,242 1,387
Income taxes payable..................................... --- 90
------- -------
Total current liabilities............................... 15,749 40,017
Deferred income taxes.................................... 24 24
Long-term debt........................................... 1,697 1,686
Line of credit........................................... 4,861 ---
------- -------
Total liabilities...................................... 22,331 41,727
------- -------
Shareholders' equity:
Preferred stock, no par value; 3,000,000 shares
authorized, none issued and outstanding................ --- ---
Common stock, no par value; 10,000,000 shares
authorized, 5,353,310 and 5,475,810 shares issued and
outstanding at June 30, 1998 and
December 31, 1998, respectively........................ 38,710 39,113
Retained earnings........................................ 11,071 14,344
------- -------
Total shareholders' equity............................. 49,781 53,457
------- -------
Total liabilities and shareholders' equity............. $72,112 $95,184
======= =======
See notes to condensed financial statements.
3
<PAGE>
SCANSOURCE, INC.
CONDENSED INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31,
1997 1998 1997 1998
---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C>
Net sales..................................... $41,677 65,543 79,610 126,262
Cost of goods sold............................ 36,149 57,931 69,509 111,664
------- ------ ------ -------
Gross profit................................ 5,528 7,612 10,101 14,598
Selling, general and administrative
expenses.................................... 3,750 4,854 6,708 9,313
Amortization of intangibles................... 30 34 50 67
------- ------ ------ -------
Total operating expenses...................... 3,780 4,888 6,758 9,380
------- ------ ------ -------
Operating income............................ 1,748 2,724 3,343 5,218
Other income (expense):
Interest income (expense), net.............. 214 10 111 (32)
Other income (expense), net................. (4) 8 (34) 10
------- ------ ------ -------
Total other income (expense)............. 210 18 77 (22)
------- ------ ------ -------
Income before income taxes.................... 1,958 2,742 3,420 5,196
Income taxes................................ 728 1,015 1,263 1,923
------- ------ ------ -------
Net income.................................... $ 1,230 1,727 2,157 3,273
======= ====== ====== =======
Basic EPS
Net income per share......................... $ .25 .32 .51 .60
======= ====== ====== =======
Weighted average shares outstanding.......... 4,904 5,464 4,199 5,448
======= ====== ====== =======
Diluted EPS
Net income per share......................... $ .24 .31 .48 .58
======= ====== ====== =======
Weighted average shares outstanding.......... 5,209 5,624 4,466 5,604
======= ====== ====== =======
</TABLE>
See notes to condensed financial statements.
4
<PAGE>
SCANSOURCE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1997 1998
------- -------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income...................................................... $ 2,157 3,273
Adjustments to reconcile net income to cash (used
in) provided by operating activities:
Depreciation............................................. 321 516
Amortization of intangible assets........................ 50 66
Changes in operating assets and liabilities:
Trade receivables........................................ (6,787) (7,148)
Other receivables........................................ (425) 225
Inventories.............................................. (8,621) (13,820)
Prepaid expenses and other............................... (104) (38)
Trade accounts payable................................... 3,852 23,614
Accrued compensation..................................... 103 419
Accrued expenses and other liabilities................... 553 145
Income tax payable....................................... (257) 90
Other noncurrent assets.................................. 199 (143)
------- -------
Net cash (used in) provided by operating activities............. (8,959) 7,199
Cash flows from investing activities:
Capital expenditures, net....................................... (686) (811)
Cash paid in business acquisition............................... (700) ---
------- -------
Net cash used in investing activities........................... (1,386) (811)
Cash flows from financing activities:
Borrowings (payments) on line of credit......................... (5,391) (4,861)
Proceeds from option exercises.................................. 67 403
Payments on building loan....................................... --- (11)
Proceeds from stock offering.................................... 26,212 ---
------- -------
Net cash provided by (used in) financing activities............. 20,888 (4,469)
Increase in cash................................................ 10,543 1,919
Cash at beginning of period.............................................. 429 88
------- -------
Cash at end of period.................................................... $10,972 2,007
======= =======
</TABLE>
5
<PAGE>
SCANSOURCE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) Basis of Presentation
The interim financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC), although the
Company believes that the disclosures made are adequate to make the
information presented not misleading. These financial statements should be
read in conjunction with the financial statements and related notes
contained in the Company's annual report on Form 10-K for the period ended
June 30, 1998. Other than as indicated herein, there have been no
significant changes from the financial data published in that report. In
the opinion of management, such unaudited information reflects all
adjustments, consisting only of normal recurring accruals and other
adjustments as disclosed herein, necessary for a fair presentation of the
unaudited information.
In February 1998, the Company merged with The CTI Authority, Inc. ("CTI")
in a stock-for-stock transaction accounted for as a pooling-of-interest.
Accordingly, the consolidated financial statements for the periods prior to
the combination have been restated to include the accounts and results of
CTI.
Results for interim periods are not necessarily indicative of results
expected for the full year, or for any subsequent period.
The balance sheet for June 30, 1998 has been derived from the audited
balance sheet for that date.
(2) Significant Accounting Policies
Revenue Recognition - The Company records revenue when products are
shipped.
Inventories - Inventories consisting of point of sale and bar code
equipment are stated at the lower of cost (first-in, first-out method) or
market.
Net Income Per Share - Basic net income per share is computed by dividing
net income by the weighted average number of common shares outstanding.
Diluted net income per share is computed by dividing net income by the
weighted average number of common and potential common shares outstanding.
Diluted weighted average common and potential common shares include common
shares and stock options using the treasury stock method. Basic and diluted
weighted average shares differed only by the effect of dilutive stock
options. There were no differences between the net income
6
<PAGE>
used to calculate basic and diluted net income per share for the three and
six months ended December 31, 1997 and 1998.
(3) Line of Credit
In January 1999 the Company amended its bank line of credit extending its
term to October 31, 2001 and raising its borrowing limit to $35 million,
based upon 80% of eligible accounts receivable and 40% of eligible
inventory at the 30 day LIBOR rate of interest plus a rate varying from
1.50% to 2.00% tied to the Company's debt-to-net worth ratio ranging from
.75:1 to 2:1. Since there were no borrowings on the line of credit, $35
million was available at December 31, 1998.
(4) Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133") SFAS No. 133 requires that an enterprise recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is
effective for all fiscal quarters and all fiscal years beginning after June
15, 1999. The Company is currently assessing the potential effects of SFAS
No. 133 on its financial position.
7
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net Sales. Net sales for the quarter ended December 31, 1998 increased
57.1% to $65.5 million from $41.7 million for the comparable prior year quarter.
Net sales increased 58.7% to $126.3 million for the six months ended December
31, 1998 from $79.6 million for the comparable prior year period. Growth of net
sales resulted primarily from additions to the Company's sales force,
competitive product pricing, selective expansion of its product line, and
increased marketing efforts to specialty technology resellers.
Gross Profit. Gross profit for the quarter ended December 31, 1998
increased 38.2% to $7.6 million from $5.5 million for the comparable prior year
quarter. Gross profit increased 44.6% to $14.6 million for the six months ended
December 31, 1998 from $10.1 million for the comparable prior year period.
Gross profit as a percentage of sales for both the quarter and six months ended
December 31, 1998 was 11.6% compared to 13.2% and 12.7%, respectively, for the
comparable prior year periods. The decrease in gross profit as a percentage of
sales is the result of a change in the mix of sales of more lower-margin
products and the volume discounts provided to resellers on large orders.
Operating Expenses. Operating expenses, which include selling, general and
administrative expenses and amortization, for the quarter ended December 31,
1998 increased 28.9% to $4.9 million compared to $3.8 million for the comparable
prior year period. Operating expenses for the six months ended December 31,
1998 increased 38.2% to $9.4 million from $6.8 million for the comparable prior
year period. Operating expenses as a percentage of sales was 7.5% and 7.4%,
respectively, for the quarter and six months ended December 31, 1998, compared
to 9.1% and 8.5%, respectively, for the comparable prior year periods.
Generally, lower gross margin sales require the Company to provide fewer value-
added services causing a corresponding decrease in operating expenses. The
general and administrative portion of operating expenses also decreased as a
percentage of sales due to efficiencies gained through increased sales volume.
Operating Income. Operating income for the quarter ended December 31,
1998 increased 58.8% to $2.7 million from $1.7 million for the same period in
1997, driven by the improvement in gross profit as described above. Operating
income increased 57.6% to $5.2 million for the six months ended December 31,
1998 from $3.3 million for the comparable prior year period. Operating income
as a percentage of sales was 4.1% for both the quarter and six months ended
December 31, 1998, compared to 4.1% for both of the comparable prior year
periods.
Other Income (Expense). Total other income (expense) net consists of
interest income (expense), net, and other expense, net. Net interest income for
the quarters ended December 31, 1998 and 1997 was $10,000 and $214,000,
respectively, resulting from interest income from
8
<PAGE>
invested cash. The 1998 amount was offset by interest expense of approximately
$40,000 paid on the building loan. Net interest expense for the six months ended
December 31, 1998 was $32,000 resulting from interest expense on the Company's
line of credit and the building loan of $107,000 offset by interest income of
$75,000.
Income Taxes. Tax expense was provided at a 37% effective rate for both
periods presented, and represented the state and federal tax expected to be due
after annualizing income to the fiscal year end.
Net Income. Improved operating income resulted in net income increasing
41.7% to $1.7 million for the quarter ended December 31, 1998 from $1.2 million
for the year-earlier quarter. Net income for the six months ended December 31,
1998 increased 50.0% to $3.3 million from $2.2 million for the comparable prior
year period. Net income as a percentage of sales was 2.6% for both the quarter
and six months ended December 31, 1998 compared to 2.9% and 2.8%, respectively,
for the quarter and six months ended December 31, 1997.
Liquidity and Capital Resources
The Company's primary sources of liquidity are results of operations,
borrowings under its revolving credit facility, and proceeds from the sales of
securities. In October 1997 the Company completed a secondary offering of stock
which provided the Company approximately $26.2 million for general corporate
purposes.
In January 1999 the Company amended its bank revolving credit facility
extending its term to October 31, 2001 and raising its borrowing limit to $35.0
million at an interest rate equal to the 30 day LIBOR, plus a rate varying from
1.50% to 2.00% tied to the Company's debt-to-net worth ratio ranging from .75:1
to 2:1. The borrowing base available under the credit facility is limited to 80%
of eligible accounts receivable and 40% of eligible inventory. The revolving
credit is secured by accounts receivable and inventory. Since there were no
borrowings on the line of credit, $35 million was available at December 31,
1998.
In June 1998 the Company assumed a non-recourse loan for $1,719,000 in
connection with the purchase of its office building. The loan's fixed interest
rate is 9.19%. The loan matures in October 2006 and is collateralized by the
land and building acquired.
For the six months ended December 31, 1998 net cash of $7.2 million was
provided by operating activities compared to $9.0 million used in operations for
the six months ended December 31, 1997. Cash provided by operations was
primarily from an increase in accounts payable which exceeded the amount needed
to pay for increases in receivables and inventory.
Cash used in investing activities of $811,000 for the quarter ended
December 31, 1998 was for capital expenditures. Cash used in investing
activities for the six months ended December 31, 1997 included $700,000 for cash
paid in business combination and $686,000 for capital expenditures, including
$170,000 for the Company's computer conversion to a UNIX-based operating system.
Cash used in financing activities for the six months ended December 31,
1998 was $4.5 million, primarily from payments on the Company's line of credit.
Cash provided by financing
9
<PAGE>
activities for the six months ended December 31, 1997 was $20.9 million. For
1997, cash of $26.2 million and $67,000 was provided from the sale of common
stock in an October 1997 public offering and from the exercise of stock options,
respectively. Approximately $6.6 million of this cash was used to pay down the
outstanding balance under the company's line of credit, compared to $1.3 million
borrowed on the line of credit from the same period.
The Company's current ratios at December 31, 1998 and at June 30, 1998 were
2.16 and 4.06, respectively.
Year 2000
It is possible that the Company's currently installed computer systems,
software products or other business systems, or those of the Company's vendors
or resellers, working either alone or in conjunction with other software or
systems, will not accept input of, store, manipulate and output dates in the
years 1999, 2000 or thereafter without error of interruption (commonly known as
the "Y2K" problem). Following is a summary of the initiatives the Company has
taken to address this issue.
The Company has conducted a review of its computer systems, including its
primary business software, and believes that such software is Y2K compliant.
The Company is also querying its vendors and resellers as to their progress in
identifying and addressing problems that their computer systems may face in
correctly processing date information as the year 2000 approaches and is
reached.
Since early 1996, ScanSource, in support of its long-term plans, has
significantly upgraded and continues to upgrade its information technology (IT)
and communication systems. These upgrades include: enterprise-wide application
system, a Digital Alpha Server, personal computers "PC's", PC software
(standardized on Windows NT, Windows 9x, Microsoft Office Suite and Lotus
Notes), local area networks (LAN's), LAN software (Novell NetWare, Windows NT),
wide area networks (WAN's) and network integration of advanced fax, printer, and
copier systems. As a result, a large portion of ScanSource's IT and non-voice
communication systems, along with many of its voice communication systems, are
now Y2K compliant.
ScanSource's exceptions to the Y2K compliance are: certain PC's require
BIOS and/or operating system and application system upgrades; certain network
operating systems need to be upgraded; other intelligent office equipment in a
stand alone mode such as fax machines, copiers, printers, etc. may not be Y2K
compliant. These issues are anticipated to be remediated by the end of the
first calendar quarter of 1999 at a cost not expected to be material. The IT
System software upgrades are being executed under agreements with software
vendors, and the BIOS upgrades to certain hardware are being executed under
similar arrangements with hardware vendors. The replacement cost of non-
remediable PC's, network hardware components, copiers and fax machines is not
expected to be material.
ScanSource is not yet in a position to estimate the cost of Non-IT system
and third party compliance issues, but has no reason to believe, based upon its
evaluations done to date, that such
10
<PAGE>
There can be no assurance that the Company's systems will address all Y2K
problems, that its current and ongoing efforts will identify all such problems
in its own computer systems or those of its vendors or resellers in advance of
their occurrence, or that the Company will be able to successfully remedy any
problems that are discovered. To date the expenses of the Company's efforts to
identify and address such problems have not been material. However, the
expenses or liabilities to which the Company may become subject as a result of
any such problems that may arise could have a material adverse effect on the
Company's business, financial condition, and results of operations. In
addition, the purchasing patterns of existing and potential customers may be
affected by Y2K problems, which could cause fluctuations in the Company's sales
volumes. Maintenance or modification costs have been and will continue to be
expensed as incurred.
Forward Looking Statements
Certain of the statements contained in this report to shareholders as well
as in the Company's other filings with the Securities and Exchange Commission
that are not historical facts are forward-looking statements subject to the safe
harbor created by the Private Securities Litigation Reform Act of 1995. The
Company cautions readers of this report that a number of important factors could
cause the Company's activities and/or actual results in fiscal 1999 and beyond
to differ materially from those expressed in any such forward-looking
statements. These factors include, without limitation, the Company's dependence
on vendors, product supply, senior management, centralized functions, and third-
party shippers, the Company's ability to compete successfully in a highly
competitive market and manage significant additions in personnel and increases
in working capital, the Company's entry into new products markets in which it
has no prior experience, the Company's susceptibility to quarterly fluctuations
in net sales and operations results, the Company's ability to manage
successfully price protection or stock rotation opportunities associated with
inventory value decreases, and other factors described in other reports and
documents filed by the Company with the Securities and Exchange Commission.
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
The Company is exposed to changes in financial market conditions in the
normal course of its business as a result of its selective use of bank debt as
well as transacting in Canadian currency in connection with its Canadian
operations.
The Company is exposed to changes in interest rates primarily as a result
of its borrowing activities, which includes a revolving credit facility with a
bank used to maintain liquidity and fund the Company's business operations. The
nature and amount of the Company's debt may vary as a result of future business
requirements, market conditions and other factors. The definitive extent of the
Company's interest rate risk is not quantifiable or predictable because of the
variability of future interest rates and business financing requirements, but
the Company does not believe such risk is material. The Company does not
currently use derivative instruments to adjust the Company's interest rate risk
profile.
The table below presents principal amounts and related weighted average
rates by year of maturity for the Company's debt obligations at December 31,
1998:
<TABLE>
<CAPTION>
(In thousands) 1999 2000 2001 2002 2003 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term debt 11 24 26 29 31 1,587 1,708 1,864
Average interest
rate (fixed) 9.19% 9.19% 9.19% 9.19% 9.19% 9.19% 9.19%
</TABLE>
The Company is exposed to changes in foreign exchange rates in connection
with its Canadian operations. It is the Company's policy to enter into foreign
currency transactions only to the extent considered necessary to support its
Canadian operations. The amount of the Company's cash deposits denominated in
Canadian currency has not been, and is not expected to be, material.
Furthermore, the Company has no capital expenditure or other purchase
commitments denominated in foreign currency. The Company does not utilize
forward exchange contracts, currency options or other traditional hedging
vehicles to adjust the Company's foreign exchange rate risk profile. The
Company does not enter into foreign currency transactions for speculative
purposes.
The Company does not utilize financial instruments for trading or other
speculative purposes, nor does it utilize leveraged financial instruments. On
the basis of the fair value of the Company's market sensitive instruments at
December 31, 1998, the Company does not consider the potential near-term losses
in future earnings, fair values and cash flows from reasonable possible near-
term changes in interest rates and exchange rates to be material.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable
Item 2. Changes in Securities.
Not applicable
Item 3. Defaults Upon Senior Securities.
Not applicable
Item 4. Submission of Matters to a Vote of Security-Holders.
(a) The Company's annual meeting of shareholders was held on December 3,
1998.
(b) The four directors listed in subsection (c) below were elected at the
meeting. The Company has no other directors whose term of office
continued after the meeting.
(c) (i) Election of Directors.
Number of Shares
----------------
Withhold
Nominees For Authority
-------- --- ---------
Michael L. Baur 4,399,506 2725
Steven H. Owings 4,399,506 2725
Steven R. Fischer 4,398,206 4025
James G. Foody 4,397,706 4525
(ii) Proposal to ratify the amendment to the Company's 1997 Stock
Incentive Plan.
Number of Shares
----------------
For 4,286,012
Against 90,650
Abstain 25,569
Not voted 0
(iii) Proposal to ratify the appointment of KPMG Peat Marwick LLP as
the Company's independent auditors for the fiscal year ending
June 30, 1999.
Number of Shares
----------------
For 4,398,556
Against 2,450
Abstain 1,225
Not voted 0
13
<PAGE>
Item 5. Other information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K
None
14
<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.
SCANSOURCE, INC.
/s/ Steven H. Owings
-----------------------
STEVEN H. OWINGS
Chief Executive Officer
/s/ Jeffery A. Bryson
------------------------
JEFFERY A. BRYSON
Chief Financial Officer
Date: February 12, 1999
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET & INCOME STATEMENT FOR PERIOD ENDED 12/31/98.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,007
<SECURITIES> 0
<RECEIVABLES> 35,346
<ALLOWANCES> 2,709
<INVENTORY> 45,264
<CURRENT-ASSETS> 86,603
<PP&E> 8,835
<DEPRECIATION> 2,049
<TOTAL-ASSETS> 95,184
<CURRENT-LIABILITIES> 40,017
<BONDS> 0
0
0
<COMMON> 39,113
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 95,184
<SALES> 126,262
<TOTAL-REVENUES> 126,262
<CGS> 111,664
<TOTAL-COSTS> 9,380
<OTHER-EXPENSES> 67
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,196
<INCOME-TAX> 1,923
<INCOME-CONTINUING> 3,273
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,273
<EPS-PRIMARY> .60
<EPS-DILUTED> .58
</TABLE>
