-----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, S/3B2B8cKkfzci438mqdNrxMKEkhwLxx2hztv2KncYEqVddRAxvOgYs9j9lVuV9R fsXKh0f6xVEvIISn2t9lVA== 0000002024-94-000020.txt : 19941116 0000002024-94-000020.hdr.sgml : 19941116 ACCESSION NUMBER: 0000002024-94-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941115 SROS: NONE 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: 94560233 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 September 30, 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 September 30, 1994 Class A Voting Stock - $1,000 par value 3,922 shares Class B Stock - $1,000 par value 3,276 shares Class C Stock - $ 100 par value 1,663,652 shares ACE HARDWARE CORPORATION INDEX Part I. - Financial Information: Page No. Balance Sheet - September 30, 1994 and December 31, 1993 1 Statement of Earnings - Nine Months and Three Months Ended September 30, 1994 and 1993 2 Statement of Cash Flows - Nine Months Ended September 30, 1994 and 1993 3 Notes to Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 & 6 Part II. - Other Information 7 PART I FINANCIAL INFORMATION ACE HARDWARE CORPORATION BALANCE SHEET
SEPTEMBER 30, DECEMBER 31, 1994 1993 (000'S OMITTED) ASSETS Current assets: Cash $ -- $ 4,142 Accounts receivable, net 236,327 212,604 Merchandise inventory 267,256 263,576 Prepaid expenses and other current assets 6,480 6,869 Total current assets 510,063 487,191 Property and equipment, net 173,283 166,137 Other assets 16,175 14,160 Total assets $ 699,521 $ 667,488 LIABILITIES AND MEMBER DEALERS' EQUITY Current liabilities: Current installments of long-term debt 6,403 10,707 Short-term borrowings 76,500 38,500 Accounts payable 233,190 234,190 Patronage dividends payable in cash 22,064 25,766 Patronage refund certificates payable 1,323 11,059 Accrued expenses 34,900 33,682 Total current liabilities 374,380 353,904 Long-term debt: Notes Payable 64,994 69,552 Industrial development revenue and variable rate bonds 589 1,000 Capitalized leases 378 734 Total long-term debt 65,961 71,286 Patronage refund certificates payable 63,861 56,270 Member dealers' equity: Class A stock of $1,000 par value 4,104 3,946 Class B stock of $1,000 par value 6,499 6,499 Class C stock of $100 par value 172,077 153,155 Class C stock of $100 par value, issuable to dealers for patronage dividends 15,044 19,064 Additional stock subscribed, net of unpaid portion 552 613 Retained Earnings 6,088 5,622 Contributed Capital 3,295 3,295 207,659 192,194 Less: Treasury stock, at cost 12,340 6,166 195,319 186,028 Total liabilities and member dealers' equity $ 699,521 $ 667,488
See accompanying notes to financial statements. -1- ACE HARDWARE CORPORATION STATEMENT OF EARNINGS
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1994 1993 1994 1993 (000's omitted) (000's omitted) Net Sales $572,094 $510,089 $1,714,710 $1,491,071 Cost of Sales 530,171 472,377 1,587,989 1,380,419 Gross Profit 41,923 37,712 126,721 110,652 Operating expenses: Warehouse and distribution 7,347 7,261 20,865 23,948 Selling, general and administrative 14,552 13,182 48,046 39,000 Total operating expenses 21,899 20,443 68,911 62,948 Operating income 20,024 17,269 57,810 47,704 Interest expense (3,426) (2,446) (9,796) (7,088) Other income, net 1,023 864 2,597 2,178 Earnings before patronage dividends 17,621 15,687 50,611 42,794 Patronage dividends (Note 2) 17,234 16,232 50,145 44,677 Net earnings $ 387 $ (545) $ 466 $ (1,883)
See accompanying notes to financial statements. -2- ACE HARDWARE CORPORATION STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, (000's OMITTED) 1994 1993 OPERATING ACTIVITIES: Earnings before patronage dividends $ 50,611 $ 42,794 Patronage dividends (50,145) (44,677) Net earnings 466 (1,883) Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation 12,693 12,047 Loss on sale of property & equipment 127 379 Changes in operating assets and liabilities: Increase in accounts receivable, net (23,723) (5,622) Increase in inventories (3,680) (19,149) Decrease (increase) in prepaids and other current assets 389 (1,263) Increase (decrease) in accounts payable and accrued expenses 218 32,278 NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES (13,510) 16,787 INVESTING ACTIVITIES: Purchases of property and equipment (20,123) (11,004) Proceeds from sale of property and equipment 157 218 Increase in other assets (2,015) (2,504) NET CASH USED IN INVESTING ACTIVITIES (21,981) (13,290) FINANCING ACTIVITIES: Proceeds from (repayments of) short-term borrowings 38,000 (28,000) Proceeds from notes payable 0 30,000 Principal payments on long-term debt and patronage refund certificates (22,888) (18,631) Patronage dividends payable in cash 22,064 19,644 Patronage refund certificates 10,029 10,073 Class C stock issuable to dealers for patronage dividends 15,044 14,002 Proceeds from sale of common stock 1,040 704 Repurchase of common stock (6,174) (5,895) Payment of cash portion of patronage dividends (25,766) (27,538) NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 31,349 (5,641) 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 September 30, 1994 and 1993 and the results of operations and cash flows for the nine 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 based on the earnings derived from business done with such dealers. It has been the practice of the Company to distribute substantially all patronage sourced earnings in the form of patronage dividends. Earnings before patronage dividends and patronage dividends will normally be the same with approximately 99% of the Company's patronage sourced net earnings being paid to consenting member dealers. International dealers signed under an International Retail Merchant Agreement are not eligible for patronage dividends and related earnings are not included in patronage sourced earnings. 3) Reclassifications Certain financial statement reclassifications have been made to prior year and prior quarter 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 September 30, 1994 compared to Three Months Ended September 30, 1993. Results of Operations Net sales increased 12.2% as a result of an increase in the volume to existing members and increased International sales. Gross profit increased 11.2% due to the strong sales results, particularly in the warehouse sales categories and increased manufacturing gross profit. Warehouse and distribution expenses increased vs. 1993 but have declined as a percent of sales due to increased personnel costs to support the sales increase which are offset by increased traffic revenues. Selling, general and administrative expenses increased vs. 1993 due to higher field support personnel costs, increased data processing costs and reduced net advertising income. Interest expense increased as a result of increased borrowing levels to meet sales growth demands and rising interest rates. 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. -5- ACE HARDWARE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended September 30, 1994 compared to Nine Months Ended September 30, 1993. Results of Operations Net sales increased 15.0% as a result of an increase in the volume to existing members and increased International sales. Increased advertising activity has increased promotional sales, largely through warehouse sales programs. Gross profit increased due to the strong sales results and strong manufacturing profits, with a slight shift in sales mix on a year to date basis. Warehouse and distribution expenses decreased vs. 1993 and as a percent of sales due to increased traffic revenues and reduced building costs due to the closing of a facility in 1993. Selling, general and administrative expenses increased vs. 1993 and as a percent of sales due to reduced net advertising income and higher field support personnel costs. Interest expense increased as a result of increased borrowing levels to meet sales growth demands and higher interest rates. Other income, net increased due to increased interest income related to member financing programs and 1993 losses on asset disposals at a replaced facility which did not re-occur in 1994. 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. -6- 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 September 30, 1994. -7- 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 DATE RITA D. KAHLE Vice President, Finance (Principal Financial Officer, and duly authorized Officer of the registrant) EX-27 2 ART.5 FDS FOR THIRD QTR 10-Q
5 This schedule contains summary financial information extracted from SEC Form 10-Q and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-1994 SEP-30-1994 0 0 237,879 1,552 267,256 510,063 290,168 116,885 699,521 374,380 129,822 0 0 0 195,319 699,521 1,714,710 1,714,710 1,587,989 1,587,989 68,911 0 9,796 0 0 0 0 0 0 466 0 0
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