<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1996
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 1-1000
SPARTON CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 38-1054690
------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 East Ganson Street, Jackson, Michigan 49202
------------------------------------------ --------
(Address of principal executive offices) (Zip Code)
517-787-8600
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by checkmark 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. The number of shares of common
stock outstanding as of October 31, 1996 was 7,818,370.
1
<PAGE> 2
<TABLE>
<CAPTION>
SPARTON CORPORATION
INDEX
Financial Statements: Page No.
-------
<S> <C>
Consolidated Condensed Balance Sheet - September 30 and June 30, 1996 3
Consolidated Condensed Statement of Operations - Three-Month Periods Ended
September 30, 1996 and 1995 4
Consolidated Condensed Statement of Cash Flows - Three-Month Periods Ended
September 30, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial Condition and Results of Operations 9
Other Information and Signatures 12
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
SPARTON CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheet (Unaudited)
September 30 and June 30, 1996
September 30 June 30
------------ -----------
Assets
<S> <C> <C>
Current assets:
Cash $ 1,038,800 $ 718,363
Income taxes recoverable 403,520 2,300,000
Accounts receivable 18,614,968 18,805,122
Inventories and costs on contracts in progress,
less progress payments of $4,509,000 at
September 30 ($4,535,000 at June 30) 33,613,650 34,217,538
Prepaid expenses 2,820,589 2,840,189
Current assets of discontinued automotive operations 29,368,197 34,351,930
---------- ----------
Total current assets 85,859,724 93,233,142
Miscellaneous receivables and other assets 3,946,108 3,587,835
Property, plant and equipment - net 10,188,639 9,402,283
Noncurrent assets, principally property plant and
equipment of discontinued automotive operations - net 12,358,175 13,047,403
---------- ----------
Total assets $112,352,646 $119,270,663
============ ============
Liabilities and Shareowners' Equity
Current liabilities:
Notes payable - due within one year $ 31,472,726 $ 33,594,225
Accounts payable 12,255,012 11,289,716
Taxes on income 206,826 279,676
Accrued liabilities 5,276,916 6,127,877
Current liabilities of discontinued automotive operations 7,577,055 12,000,855
--------- ----------
Total current liabilities 56,788,535 63,292,349
Deferred income taxes 1,961,500 1,961,500
Deferred compensation 2,234,062 2,180,903
Long-term obligations, net of current maturities -- 75,000
Other liabilities of discontinued automotive operations 209,632 231,032
Shareowners' equity:
Common stock - 7,811,370 shares outstanding after
deducting 123,342 shares in treasury 9,764,213 9,764,213
Capital in excess of par value 403,067 403,067
Retained earnings 40,991,637 41,362,599
---------- ----------
Total shareowners' equity 51,158,917 51,529,879
---------- ----------
Total liabilities and shareowners' equity $112,352,646 $119,270,663
============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 4
<TABLE>
<CAPTION>
SPARTON CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statement of Operations (Unaudited)
For the Three-month Periods Ended September 30, 1996 and 1995
1996 1995
------ -----
<S> <C> <C>
Net sales $33,280,285 $17,862,015
Costs and expenses 33,315,983 20,093,163
----------- -----------
(35,698) (2,231,148)
Other income (expense):
Interest (407,662) (202,276)
Other - net 64,118 115,596
------------ -----------
Loss from continuing operations before income tax credits (379,242) (2,317,828)
Credits for income taxes (137,000) (835,000)
------------ -----------
Loss from continuing operations (242,242) (1,482,828)
Loss from discontinued automotive operations,
net of income tax credits of $72,000 and $667,000 (128,720) (1,186,564)
------------ -----------
Net loss $ (370,962) $(2,669,392)
============ ===========
Information per share of common stock:
Income (loss):
Continuing operations $(.03) $(.19)
Discontinued operations (.02) (.15)
----- -----
$(.05) $(.34)
===== =====
Dividends $ -0- $ -0-
====== =====
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
SPARTON CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statement of Cash Flows (Unaudited)
For the Three-month Periods Ended September 30, 1996 and 1995
1996 1995
----------- -----------
<S> <C> <C>
Cash flows provided (used) by operating activities:
Loss from continuing operations $ (242,242) $(1,482,828)
Add non-cash items affecting continuing operations:
Depreciation 381,653 302,076
Deferred compensation 53,159 49,828
----------- -----------
192,570 (1,130,924)
Add (deduct) changes in operating assets and liabilities:
Income taxes recoverable 1,896,480 47,046
Accounts payable 965,296 (2,645,166)
Inventories 603,888 (549,495)
Accounts receivable 190,154 4,630,364
Taxes on income (72,850) (278,376)
Other, principally accrued liabilities (831,361) (634,914)
----------- -----------
Net cash provided (used) by continuing operations 2,944,177 (561,465)
Cash flow provided by discontinued operations 1,236,451 1,759,909
----------- -----------
4,180,628 1,198,444
Cash flows provided (used) by investing activities:
Purchases of property, plant and equipment - net (1,168,009) (1,806,253)
Noncurrent other assets (358,273) (5,987)
Discontinued operations, principally purchases of automotive
property, plant and equipment - net (116,139) (495,603)
----------- -----------
(1,642,421) (2,307,843)
Cash flows provided (used) by financing activities:
(Decrease) increase in notes payable (2,121,499) 927,779
Changes in long-term obligations (75,000) (75,000)
Discontinued operations, changes in long-term obligations (21,271) (21,145)
----------- -----------
(2,217,770) 831,634
----------- -----------
Increase (decrease) in cash and cash equivalents 320,437 (277,765)
Cash and cash equivalents at beginning of period 718,363 873,783
----------- -----------
Cash and cash equivalents at end of period $ 1,038,800 $ 596,018
=========== ===========
Cash paid (refunded) during the period for:
Interest $ 699,000 $ 400,000
=========== ===========
Income taxes $(2,053,000) $(1,503,000)
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
SPARTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) The accompanying consolidated condensed balance sheet at
September 30, 1996, and the related consolidated condensed statements of
operations and cash flows for the three-month periods ended September 30, 1996
and 1995 are unaudited, but include all adjustments (consisting only of normal
recurring accruals) which the Company considers necessary for a fair
presentation of such financial statements. The results of operations for the
three-month period ended September 30, 1996 are not necessarily indicative of
the results that may be expected for the full fiscal year.
2) Earnings per share are computed using the weighted average number
of shares outstanding of 7,811,370 in both 1996 and 1995.
3) In August 1996, the Company formalized its plan to offer for sale
its automotive operations. Accordingly, these operating results have been
reclassified and reported as discontinued operations. In October 1996, the
Company completed a definitive purchase agreement to sell substantially all of
the operations and assets of the Sparton Engineered Products, Inc.-KPI Group
(KPI) business unit for $80.5 million in cash. The sale is subject to shareowner
approval and is expected to be completed by the end of the second quarter. The
Company intends to use the KPI sale proceeds to both eliminate short-term bank
borrowings and provide working capital for its expanding electronic contract
manufacturing business.
The remaining discontinued automotive operations unit, Sparton
Engineered Products, Inc.-Flora Group (Flora), is actively being offered for
sale and the Company expects that the Flora sale will be completed sometime in
fiscal 1997.
Management does not anticipate a loss on the sale of the
discontinued automotive operations.
Operating results of discontinued automotive operations are as
follows for the three months ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Revenues $ 30,461,930 $ 26,707,933
============ ============
Loss before income taxes $ (200,720) $ (1,853,564)
Income tax credits (72,000) (667,000)
------------ ------------
Net loss $ (128,720) $ (1,186,564)
============ ============
</TABLE>
Corporate office expenses and interest costs, historically allocated
and charged to the automotive operations, were reversed and allocated back to
continuing operations as these expenses were not considered to be directly
attributable to discontinued operations. Expenses allocated back to continuing
operations for the respective three-month periods ended September 30 were
$569,535 in 1996 and $486,565 in 1995.
6
<PAGE> 7
Interest on borrowings under the Company's general credit facilities was then
allocated back to discontinued operations based on the ratio of net assets of
discontinued automotive operations to total net assets of the Company plus
existing debt under the Company's general credit facilities. Interest expense
allocated back to discontinued automotive operations for the respective
three-month periods ended September 30 were $286,821 in 1996 and $183,746 in
1995.
Assets and liabilities of discontinued automotive operations are as
follows at September 30 and June 30, 1996:
<TABLE>
<CAPTION>
September 30 June 30
------------ -----------
<S> <C> <C>
Current assets:
Cash $ 196,627 $ 21,841
Accounts receivable 19,660,617 21,528,650
Inventories 8,660,289 12,423,376
Prepaid expenses 850,664 378,063
----------- -----------
$29,368,197 $34,351,930
=========== ===========
Property, plant and equipment - net $12,358,175 $13,047,403
=========== ===========
Current liabilities:
Accounts payable $ 5,381,747 $ 9,836,617
Accrued liabilities 2,195,308 2,164,238
----------- -----------
$ 7,577,055 $12,000,855
=========== ===========
Long-term obligations, net of current maturities $ 209,632 $ 231,032
=========== ===========
</TABLE>
4) Various litigation is pending against the Company, in many cases
involving ordinary and routine claims incidental to the business of the Company
and in others presenting allegations that are non-routine. The Company and its
subsidiaries are also involved in certain compliance issues with the United
States Environmental Protection Agency and various state agencies, including
being named as a potentially responsible party at several sites. Potentially
responsible parties (PRP's) can be held jointly and severally liable for the
cleanup costs at any specific site. The Company's past experience, however, has
indicated that when it has contributed only relatively small amounts of
materials or waste to a specific site relative to other PRP's, its ultimate
share of any cleanup costs has been minor. Based upon available information, the
Company believes it has contributed only small amounts to those sites in which
it is currently viewed a potentially responsible party.
One of Sparton's facilities located in New Mexico has been the
subject of ongoing investigations with the United States Environmental
Protection Agency (EPA) under the Resource Conservation and Recovery Act (RCRA).
To date, this work has involved, among other things, on-site and off-site
investigations of environmental impacts, negotiation and execution of an
Administrative Order on Consent (AOC) with EPA and the installation of some
on-site groundwater recovery wells and air stripping equipment. A remedial
investigation called for in the AOC has been completed and approved. In May
1996, Sparton submitted to EPA a final Corrective Measures Study, based upon the
results of its investigation, as required in the AOC. In June 1996, EPA issued
its final decision selecting remedies for corrective action at the site. EPA
estimated that the present value cost of its remedies would range from between
$15,000,000 and $26,400,000 based on a 30-year time frame. In Sparton's
judgment, the remedies proposed by EPA are either unnecessary or technically
impractical. Sparton is vigorously challenging EPA's remedy selection and has
filed suit in Federal District Court in Dallas asserting that EPA's decision on
remedy selection violates the AOC. In September 1996, EPA issued an Initial
Administrative
7
<PAGE> 8
Order under RCRA ordering Sparton to implement their selected remedy for
corrective action. Sparton is vigorously contesting this action and does not
believe that EPA has the authority to issue such an order. Sparton is currently
negotiating with other involved regulatory agencies for alternative remedies
that Sparton believes would protect public health and the environment with
estimated costs ranging from $500,000 to $1,000,000. These negotiations have not
yet been completed. Successful resolution of these negotiations and Sparton's
litigation with EPA may be difficult, given the simultaneous involvement of
local, state and federal governmental agencies. To date, Sparton has incurred
approximately $6,300,000 since this contamination problem was first identified
in the early 1980's. $3,000,000 of this amount has been recovered from insurance
companies. A reserve was initiated in 1991 to cover the then estimated future
minimum costs. For the three months ended September 30, 1996 and 1995, Sparton
incurred costs of $362,000 and $27,000 respectively, which were charged to
operations in 1996 and against this reserve in 1995. At September 30, 1996, the
remaining reserve to cover future minimum costs totaled $444,000. If a remedy is
imposed on Sparton, other than the one it has proposed, the ultimate cleanup
costs may significantly increase. There is no assurance that additional costs
greater than the amount reserved will not be incurred or that significant
changes in environmental laws or their interpretation will not require that
additional amounts be spent.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
events affecting the Company's earnings and financial condition during the
periods included in the accompanying financial statements. The Company's
continuing operations are in one line of business, the design, development
and/or manufacture of electronic parts and assemblies for both government and
commercial customers worldwide. In August 1996, the Company formalized its plan
to offer for sale its automotive operations. Accordingly, these operations,
formerly classified as the Automotive and Industrial Products segment, have been
reclassified and reported as discontinued operations.
RESULTS OF OPERATIONS
- ---------------------
Sales for the three-month period ended September 30, 1996 were $33,280,000, an
increase of $15,418,000 (86%) over the low revenue levels of the corresponding
period last year. Sales more than doubled at Sparton Electronics and both
commercial and defense areas were within management's expectations. Revenues
increased 50% at Sparton Technology, primarily due to significant foreign and
proprietary product revenues to the worldwide telecommunications industry as
well as sustained sales of border protection devices to the U.S. Immigration and
Naturalization Service. Sales at the Canadian unit were the same as last year as
it continues to develop a new commercial sales base.
An operating loss of $36,000 was reported for the three months ended September
30, 1996 compared to an operating loss of $2,231,000 last year. These 1996
operating results were consistent with expectations. Sparton Electronics had a
small operating profit compared to an operating loss of $1,319,000 last year.
These significantly improved operating results were primarily due to higher
sales volume, stringent internal cost controls, and greater proficiency in the
management of the Electronic Contract Manufacturing (ECM) multiple product mix.
Sparton Technology operated at a profit for the three-month period compared to a
loss last year primarily due to higher sales volume and a favorable product mix.
The year long delay in a contract for emergency warning radios has been resolved
with product shipments expected to start either late in the second quarter or
early in the third quarter. The Canadian unit incurred a slightly larger
operating loss for the current period compared to the operating loss last year,
due to low sales volume.
In August 1996, the Company formalized its plans to sell its automotive
operations and, accordingly, reclassified and reported operating results as
discontinued operations. As detailed in Note 3 to the financial statements, the
Company has accepted an offer to sell substantially all of the assets of the
Sparton Engineered Products, Inc. - KPI Group (KPI) business unit for
$80,500,000 in cash. The sale is subject to shareowner approval at the Annual
Meeting and is expected to be completed in December 1996. The Company intends to
use KPI sale proceeds to both reduce debt and provide working capital for its
expanding ECM business. The remaining discontinued automotive operations unit,
Sparton Engineered Products, Inc. - Flora Group (Flora), is actively being
offered for sale and the Company expects that the Flora sale will be completed
sometime in fiscal 1997. Management does not anticipate a loss on the sale of
the discontinued automotive operations.
Interest expense increased $205,000 to $408,000 due to higher average borrowings
and higher borrowing costs. Other Income decreased $52,000 to $64,000. After an
annualized provision for applicable income taxes, the Company incurred a loss
from continuing operations of $242,000 ($.03 per share) for the three-month
period ended September 30, 1996 compared to a loss of $1,483,000 ($.19 per
share) for the corresponding period last year. A loss of $129,000 ($.02 per
share) from discontinued automotive operations was incurred for the three-month
period ended September 30, 1996 compared to a loss of $1,186,000 ($.15 per
share) for the same period last
9
<PAGE> 10
year. The Company's net loss was $371,000 ($.05 per share) for the three-month
period ended September 30, 1996 compared to a net loss of $2,669,000 ($.34 per
share) for the corresponding period last year.
FINANCIAL POSITION
- ------------------
For the three-month period ended September 30, 1996, Cash and Cash Equivalents
increased $320,000 to $1,039,000. Operating activities provided $4,181,000 in
net cash flows. Principal sources of cash flows from operating activities
included decreases in recoverable income taxes and inventories, increases in
accounts payable, and cash flows provided by discontinued operations. The
principal use of cash flows from operating activities was a reduction in accrued
liabilities. Cash flows used for investing activities were $1,642,000, primarily
for the purchase of equipment within the Company's ECM business operations. The
Company will continue to strategically invest in additional property, plant and
equipment to accommodate growth in the ECM business.
Cash flows from financing activities were $2,218,000, primarily for the
reduction of short-term borrowings. The Company has a one year secured formal
credit facility (the Agreement) with a group of three banks which provides
borrowings of up to $36,000,000 through October 1996. In October 1996, the
Agreement was extended through January 1997 under the same terms and conditions.
As detailed in Note 3 to these financial statements, it is the Company's
intention to use cash proceeds from the sale of discontinued automotive
operations to both reduce debt and provide working capital for its ECM business.
No dividends were declared in either period presented. At September 30, 1996,
the Company had $51,159,000 ($6.55 per share) of recorded shareowners' equity,
$29,071,000 of working capital, and a 1.51:1.00 working capital ratio.
OTHER
- -----
Various litigation is pending against the Company, in many cases involving
ordinary and routine claims incidental to the business of the Company and in
others presenting allegations that are non-routine. The Company and its
subsidiaries are also involved in certain compliance issues with the United
States Environmental Protection Agency and various state agencies, including
being named as a potentially responsible party at several sites. Potentially
responsible parties (PRP's) can be held jointly and severally liable for the
cleanup costs at any specific site. The Company's past experience, however, has
indicated that when it has contributed only relatively small amounts of
materials or waste to a specific site relative to other PRP's, its ultimate
share of any cleanup costs has been minor. Based upon available information, the
Company believes it has contributed only small amounts to those sites in which
it is currently viewed a potentially responsible party.
One of Sparton's facilities located in New Mexico has been the subject of
ongoing investigations with the United States Environmental Protection Agency
(EPA) under the Resource Conservation and Recovery Act (RCRA). To date, this
work has involved, among other things, on-site and off-site investigations of
environmental impacts, negotiation and execution of an Administrative Order on
Consent (AOC) with EPA and the installation of some on-site groundwater recovery
wells and air stripping equipment. A remedial investigation called for in the
AOC has been completed and approved. In May 1996, Sparton submitted to EPA a
final Corrective Measures Study, based upon the results of its investigation, as
required in the AOC. In June 1996, EPA issued its final decision selecting
remedies for corrective action at the site. EPA estimated that the present value
cost of its remedies would range from between $15,000,000 and $26,400,000 based
on a 30-year time frame. In Sparton's judgment, the remedies proposed by EPA are
either unnecessary or technically impractical. Sparton is vigorously challenging
EPA's remedy selection and has filed suit in Federal District Court in Dallas
asserting that EPA's decision on remedy selection violates the AOC. In September
1996, EPA issued an Initial Administrative Order under RCRA ordering Sparton to
implement their selected remedy for corrective action. Sparton is vigorously
contesting this action and does not believe that EPA has the authority to issue
such an order. Sparton is currently negotiating with other involved regulatory
agencies for alternative remedies that Sparton believes would protect
10
<PAGE> 11
public health and the environment with estimated costs ranging from $500,000 to
$1,000,000. These negotiations have not yet been completed. Successful
resolution of these negotiations and Sparton's litigation with EPA may be
difficult, given the simultaneous involvement of local, state and federal
governmental agencies. To date, Sparton has incurred approximately $6,300,000
since this contamination problem was first identified in the early 1980's.
$3,000,000 of this amount has been recovered from insurance companies. A reserve
was initiated in 1991 to cover the then estimated future minimum costs. For the
three months ended September 30, 1996 and 1995, Sparton incurred costs of
$362,000 and $27,000 respectively, which were charged to operations in 1996 and
against this reserve in 1995. At September 30, 1996, the remaining reserve to
cover future minimum costs totaled $444,000. If a remedy is imposed on Sparton,
other than the one it has proposed, the ultimate cleanup costs may significantly
increase. There is no assurance that additional costs greater than the amount
reserved will not be incurred or that significant changes in environmental laws
or their interpretation will not require that additional amounts be spent.
The Company's sales of sonobuoys, principally to the U.S. Navy, have declined
dramatically over the past several years from a high point of $151,024,000 in
fiscal 1992 to a level of $35,589,000 in fiscal 1996. In anticipation of this
decline, the Company has been developing commercial electronics opportunities
which will utilize its existing technological and manufacturing capabilities,
largely in the U.S. and Canadian ECM markets. The Company's experience to date
indicates that significant commercial opportunities exist, and the Company
appears to be starting to realize some of these opportunities. Because of the
many new customers and markets involved, however, management continues to be
challenged in its attempts to forecast near-term sales. In addition, ECM product
margins will be less than those historically earned with sonobuoy products and
will be adversely impacted in the near term by multiple program start-up costs
as the Company expands in this new market area. As with any change of this
magnitude, unanticipated problems can be reasonably expected to occur. Investors
should be aware of this uncertainty and make their own independent evaluation.
11
<PAGE> 12
OTHER INFORMATION
PART II
- -------
Item 6 - Exhibits and Reports on Form 10-K and 10-Q
- ---------------------------------------------------
(a) Exhibits
3 & 4 Instruments defining the rights of security holders have been
previously filed as follows:
Articles of Incorporation of the Registrant were filed on
form 10-K for the year ended June 30, 1981 and an amendment
thereto was filed on Form 10-Q for the three-month period
ended September 30, 1983 and are incorporated herein by
reference.
By-laws of the Registrant were filed on Form 10-K for the
year ended June 30, 1981 and are incorporated herein by reference.
Code of Regulation of the Registrant was filed on Form 10-K
for the year ended June 30, 1981 and an amendment thereto
was filed on Form 10-Q for the three-month period ended
September 30, 1982 and are incorporated herein by
reference.
27 Submitted to the Securities and Exchange Commission for its
information.
(b) Reports on Form 8-K filed in the First Quarter of Fiscal 1997: None
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.
SPARTON CORPORATION
-------------------
Registrant
Date: November 12, 1996 /s/ John J. Smith
----------------- ---------------------------------------------
John J. Smith, Chairman of the Board and Chief
Executive Officer
Date: November 12, 1996 /s/ Richard Langley
----------------- ---------------------------------------------
Richard Langley, Vice President/Treasurer and
Principal Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,038,800
<SECURITIES> 0
<RECEIVABLES> 18,614,968
<ALLOWANCES> 0
<INVENTORY> 33,613,650
<CURRENT-ASSETS> 85,859,724
<PP&E> 10,188,639
<DEPRECIATION> 0
<TOTAL-ASSETS> 112,352,646
<CURRENT-LIABILITIES> 56,788,535
<BONDS> 0
<COMMON> 9,764,213
0
0
<OTHER-SE> 41,394,704
<TOTAL-LIABILITY-AND-EQUITY> 112,352,646
<SALES> 33,280,285
<TOTAL-REVENUES> 33,280,285
<CGS> 33,315,983
<TOTAL-COSTS> 33,315,983
<OTHER-EXPENSES> (64,118)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 407,662
<INCOME-PRETAX> (379,242)
<INCOME-TAX> (137,000)
<INCOME-CONTINUING> (242,242)
<DISCONTINUED> (128,720)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (370,962)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.02)
</TABLE>
