-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NNhffHXLDLzX10PrQWdFt9abdEUmDyy8C5E1UMyfNDIwWQjeqpBYkyV6ujC7VwJU iJpuKuQwIqsvrr0OpolkcQ== 0000002024-94-000015.txt : 19940602 0000002024-94-000015.hdr.sgml : 19940602 ACCESSION NUMBER: 0000002024-94-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACE HARDWARE CORP CENTRAL INDEX KEY: 0000002024 STANDARD INDUSTRIAL CLASSIFICATION: 5070 IRS NUMBER: 360700810 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-55860 FILM NUMBER: 94528116 BUSINESS ADDRESS: STREET 1: 2200 KENSINGTON COURT CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7089906600 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter ended March 31, 1994 Commission File Number 2-63880 ACE HARDWARE CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 36-0700810 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2200 Kensington Court, Oak Brook, IL 60521 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (708) 990-6600 NONE 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 XX NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding at March 31, 1994 Class A Voting Stock - $1,000 par value 3,949 shares Class B Stock - $1,000 par value 3,380 shares Class C Stock - $ 100 par value 1,519,517 shares ACE HARDWARE CORPORATION INDEX Part I. - Financial Information: Page No. Balance Sheet - March 31, 1994 and December 31, 1993 1 Statement of Earnings - Three Months Ended March 31, 1994 and 1993 2 Statement of Cash Flows - Three Months Ended March 31, 1994 and 1993 3 Notes to Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II. - Other Information 6 PART I FINANCIAL INFORMATION ACE HARDWARE CORPORATION BALANCE SHEET
MARCH 31, DECEMBER 31, 1994 1993 (000'S OMITTED) ASSETS Current assets: Cash $ -- $ 4,142 Accounts receivable, net 265,472 212,604 Merchandise inventory 277,539 263,576 Prepaid expenses and other current assets 5,811 6,869 Total current assets 548,822 487,191 Property and equipment, net 167,784 166,137 Other assets 14,784 14,160 Total assets $ 731,390 $ 667,488 LIABILITIES AND MEMBER DEALERS' EQUITY Current liabilities: Current installments of long-term debt $ 3,937 $ 10,707 Short-term borrowings 108,000 38,500 Accounts payable 242,978 234,190 Patronage dividends payable in cash 32,091 25,766 Patronage refund certificates payable 1,350 11,059 Accrued expenses 27,364 33,682 Total current liabilities 415,720 353,904 Long-term debt: Notes Payable 68,007 69,552 Industrial development revenue bonds 840 1,000 Capitalized leases 610 734 Total long-term debt 69,457 71,286 Patronage refund certificates payable 57,791 56,270 Member dealers' equity: Class A stock of $1,000 par value 4,005 3,946 Class B stock of $1,000 par value 6,499 6,499 Class C stock of $100 par value - CR 153,457 153,155 Class C stock of $100 par value, issuable to dealers for patronage dividends 23,463 19,064 Additional stock subscribed, net of unpaid portion 492 613 Retained Earnings 5,014 5,622 Contributed Capital 3,295 3,295 196,225 192,194 Less: Treasury stock, at cost 7,803 6,166 188,422 186,028 Total liabilities and member dealers' equity $ 731,390 $ 667,488
See accompanying notes to financial statements. -1- ACE HARDWARE CORPORATION STATEMENT OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1994 1993 (000's omitted) Net Sales $ 515,830 $ 443,104 Cost of Sales 477,718 409,060 Gross Profit 38,112 34,044 Operating expenses: Warehouse and distribution 6,702 8,971 Selling, general and administrative 14,911 11,982 Total operating expenses 21,613 20,953 Operating income 16,499 13,091 Interest expense (2,975) (2,241) Other income, net 342 523 Earnings before patronage dividends 13,866 11,373 Patronage dividends (Note 2) 14,474 11,988 Net earnings $ (608) $ (615) See accompanying notes to financial statements.
-2- ACE HARDWARE CORPORATION STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, (000's OMITTED) 1994 1993 OPERATING ACTIVITIES: Earnings before patronage dividends $ 13,866 $ 11,373 Patronage dividends (14,474) (11,988) Net earnings (608) (615) Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation 4,087 3,932 Loss on sale of property & equipment 118 8 Changes in operating assets and liabilities: Increase in accounts receivable, net (52,868) (27,088) Increase in inventories (13,963) (17,551) Increase in prepaids and other current assets 1,058 1,048 Increase in accounts payable and accrued expenses 2,470 36,593 NET CASH USED IN OPERATING ACTIVITIES (59,706) (3,673) INVESTING ACTIVITIES: Purchases of property and equipment (5,850) (3,601) Increase in other assets (624) (1,487) NET CASH USED IN INVESTING ACTIVITIES (6,474) (5,088) FINANCING ACTIVITIES: Proceeds from short-term borrowings 69,500 14,500 Principal payments on long-term debt and patronage refund certificates (19,810) (17,546) Patronage dividends payable in cash 6,325 5,174 Patronage refund certificates 3,021 2,705 Class C stock issuable to dealers for patronage dividends 4,399 3,883 Proceeds from sale of common stock 240 233 Repurchase of common stock (1,637) (2,332) NET CASH PROVIDED BY FINANCING ACTIVITIES 62,038 6,617 Decrease in Cash and Cash Equivalents (4,142) (2,144) Cash and Cash Equivalents at Beginning of Period 4,142 2,144 Cash and Cash Equivalents at End of Period $ -- $ -- See accompanying notes to financial statements.
-3- ACE HARDWARE CORPORATION NOTES TO FINANCIAL STATEMENTS 1) General The accompanying financial statements have not been examined by independent public accountants except for the December 31, 1993 balance sheet but in the opinion of the Company reflect all adjustments necessary to present fairly the financial position as of March 31, 1994 and 1993 and the results of operations and cash flows for the three months then ended. These interim figures are not necessarily indicative of the results to be expected for the full year. 2) Patronage Dividends The Company operates as a cooperative organization and will pay patronage dividends to consenting dealers on the earnings derived from business done with such dealers. It has been the practice of the Company to distribute substantially all earnings in the form of patronage dividends. Approximately 99% of the Company's patronage sourced earnings (before patronage dividends and taxes) are paid to consenting member dealers. International dealers signed under the International Retail Merchant Agreement are not eligible for patronage dividends and related earnings are not included in patronage sourced earnings. 3) Statement of Cash Flows The Company considers all highly liquid investments with an original maturity of one month or less when purchased to be cash equivalents. A portion of the patronage refund certificates payable on January 1, 1995 were paid on January 1, 1994 and accordingly, were classified as current liabilities in the December 31, 1993 financial statements. 4) Reclassifications Certain financial statement reclassifications have been made to prior year amounts to conform to comparable classifications followed in 1994. -4- ACE HARDWARE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended March 31, 1994 compared to Three Months Ended March 31, 1993. Results of Operations Net sales increased 16.4% as a result of an increase in the volume to existing members and increased International sales. Gross profit, as a percent of sales, decreased as a result of reduced handling charges due to a shift in sales mix, increased net merchandise markdowns and increases in inventoriable distribution costs, primarily receiving and storage costs, being absorbed into cost of sales. Warehouse and distribution expenses decreased vs. 1993 and as a percent of sales due to increased traffic revenues, reduced building costs due to the closing of a facility in 1993 and increased distribution costs absorbed into cost of sales. Selling, general and administrative expenses increased vs. 1993 and as a percent of sales due to reduced net advertising income and higher personnel costs. Interest expense increased as a result of increased borrowing levels to meet sales growth demands. Other income, net decreased vs. 1993 due to reduced domestic dealer penalty charges partially offset by increased interest income related to member financing programs. Liquidity and Capital Resources The Company expects that internally generated funds, along with new and established lines of credit and long-term financing, will be the primary financing sources for capital expenditures in the future. PART II. OTHER INFORMATION ACE HARDWARE CORPORATION Item 6. Exhibits and Reports on Form 8-K. (b) There were no reports on Form 8-K filed for the three month period ended March 31, 1994. 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. ACE HARDWARE CORPORATION RITA D. KAHLE DATE MAY 12, 1994 Rita D. Kahle Vice President, Finance (Principal Financial Officer, and duly authorized Officer of the registrant) -----END PRIVACY-ENHANCED MESSAGE-----