-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PmHQqZaWe/hIfNeqqwPXLryNBm0aY0SeFBqPhEpwU+/elwdovTRYVak1arxvDQkP HEvq82UftHCKRZHqt9RmMg== 0000002024-95-000054.txt : 19951120 0000002024-95-000054.hdr.sgml : 19951120 ACCESSION NUMBER: 0000002024-95-000054 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951115 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACE HARDWARE CORP CENTRAL INDEX KEY: 0000002024 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [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: 95593554 BUSINESS ADDRESS: STREET 1: 2200 KENSINGTON COURT CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7089906600 MAIL ADDRESS: STREET 1: 1300 KENSINGTON RD CITY: OAKBROOK STATE: IL ZIP: 60521 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, 1995 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, 1995 Class A Voting Stock - $1,000 par value 3,927 shares Class B Stock - $1,000 par value 3,088 shares Class C Stock - $ 100 par value 1,806,814 shares ACE HARDWARE CORPORATION INDEX Part I. - Financial Information: Page No. Balance Sheets - September 30, 1995 and December 31, 1994 1 Statements of Earnings - Nine Months and Three Months Ended September 30, 1995 and 1994 2 Statements of Cash Flows - Nine Months Ended September 30, 1995 and 1994 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 SHEETS
SEPTEMBER 30, DECEMBER 31, 1995 1994 (000'S OMITTED) ASSETS Current assets: Cash and cash equivalents $ 101 $ 4,868 Accounts receivable, net 263,846 259,552 Merchandise inventory 276,815 270,391 Prepaid expenses and other current assets 8,124 7,189 Total current assets 548,886 542,000 Property and equipment, net 188,087 177,108 Other assets 8,690 4,502 Total assets $ 745,663 $ 723,610 LIABILITIES AND MEMBER DEALERS' EQUITY Current liabilities: Current installments of long-term debt 7,444 7,369 Short-term borrowings 29,500 30,000 Accounts payable 311,500 291,185 Patronage dividends payable in cash 19,198 27,302 Patronage refund certificates payable 12,770 1,315 Accrued expenses 37,301 38,659 Total current liabilities 417,713 395,830 Long-term debt: Notes and bonds payable 58,985 64,030 Capitalized leases 422 257 Total long-term debt 59,407 64,287 Patronage refund certificates payable 53,660 63,666 Member dealers' equity: Class A stock of $1,000 par value 4,120 3,924 Class B stock of $1,000 par value 6,499 6,499 Class C stock of $100 par value 187,340 164,666 Class C stock of $100 par value, issuable to dealers for patronage dividends 21,986 21,766 Additional stock subscribed, net of unpaid portion 546 555 Retained Earnings 4,856 5,624 Contributed Capital 3,295 3,295 228,642 206,329 Less: Treasury stock, at cost 13,759 6,502 Total member dealers' equity 214,883 199,827 Total liabilities and member dealers' equity $ 745,663 $ 723,610
See accompanying notes to financial statements. -1- ACE HARDWARE CORPORATION STATEMENTS OF EARNINGS
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1995 1994 1995 1994 (000's omitted) (000's omitted) Net Sales $604,570 $572,094 $1,808,039 $1,714,710 Cost of Sales 558,938 529,995 1,671,451 1,587,343 Gross Profit 45,632 42,099 136,588 127,367 Operating expenses: Warehouse and distribution 6,993 7,385 22,970 20,751 Selling, general and administrative 19,480 13,777 56,391 47,021 Total operating expenses 26,473 21,162 79,361 67,772 Operating income 19,159 20,937 57,227 59,595 Interest expense (3,127) (3,602) (10,746) (10,442) Other income, net 1,330 1,023 3,856 2,597 Income taxes (600) (737) (1,103) (1,139) Net earnings 16,762 17,621 49,234 50,611 Distribution of net earnings Patronage Dividends 17,220 17,234 50,002 50,145 Retained earnings (458) 387 (768) 466 Net earnings $ 16,762 $ 17,621 $ 49,234 $ 50,611
See accompanying notes to financial statements. -2- ACE HARDWARE CORPORATION STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, (000's OMITTED) 1995 1994 Operating Activities: Net earnings $ 49,234 $ 50,611 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 12,612 12,693 Loss (Gain) on sale of property & equipment (10) 127 Increase in accounts receivable, net (4,294) (23,802) Increase in merchandise inventory (6,424) (3,680) Decrease (Increase) in prepaids and other current assets (935) 660 Increase (Decrease) in accounts payable and accrued expenses 17,324 (109) Net cash provided by operating activities 67,507 36,500 Investing Activities: Purchases of property and equipment (23,603) (20,123) Proceeds from sale of property and equipment 22 157 Increase in other assets (4,189) (1,880) Net cash used in investing activities (27,770) (21,846) Financing Activities: Proceeds (payments) from short-term borrowings (500) 38,000 Principal payments on long-term debt (4,805) (9,629) Payments on refund certificates and patronage financing programs (7,477) (16,267) Proceeds from sale of common stock 1,204 1,040 Repurchase of common stock (7,257) (6,174) Payments of cash portion of patronage dividend (27,302) (25,766) Net cash used in financing activities (46,137) (18,796) Decrease in cash and cash equivalents (6,400) (4,142) Cash and cash equivalents at beginning of period 6,501 4,142 Cash and cash equivalents at end of period $ 101 $ -
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, 1994 balance sheet, however, in the opinion of the Company reflect all adjustments necessary to present fairly the financial position as of September 30, 1995 and 1994 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 member dealers based on the earnings derived from business with such dealers. It has been the practice of the Company to distribute substantially all patronage sourced earnings in the form of patronage dividends. Net earnings 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 1995. -4- ACE HARDWARE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended September 30, 1995 compared to Three Months Ended September 30, 1994. Results of Operations Net sales increased 5.7% as a result of an increase in the volume to existing members and new member sales, partially offset by lower international sales to Mexico. Gross profit increased 8.4% vs. 1994 and as a percent of sales due to sales mix shifts toward warehouse categories and increased vendor allowances, partially offset by an increased LIFO provision. Warehouse and distribution expenses decreased vs. 1994 due to increased traffic revenues from freight consolidation and crossdocking activities, partially offset by increased distribution costs. Selling, general and administrative expenses increased vs. 1994 and as a percent of sales due to higher field support personnel costs, increased data processing costs and reduced net advertising income. Interest expense decreased due to lower borrowing levels vs. 1994. Other income increased primarily due to growth in dealer financing programs. -5- ACE HARDWARE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended September 30, 1995 compared to Nine Months Ended September 30, 1994. Results of Operations Net sales increased 5.4% in 1995 primarily due to increases in volume from existing dealers and new store development and conversions. 1995 net sales have been effected by slow retail and economic growth, more moderate seasonal sales related to late spring weather, moderate lumber and building material increases due to lower lumber prices, and lower international sales to Mexico related to the peso decline and resulting decreases in export sales to that country. Gross profit increased 7.2% vs. 1994 and as a percent of sales due to sales mix shifts toward warehouse sales categories and increased vendor allowances, partially offset by an increased LIFO provision. Warehouse and distribution expenses increased vs. 1994 due to increased building and distribution costs to support the sales growth, partially offset by improved warehouse productivity and increased freight consolidation revenues. Selling, general and administrative expenses increased vs. 1994 and as a percent of sales due to increased personnel costs for field retail support and new business development and increased costs for data processing supplies and print advertising due to industry wide paper increases. Interest expense and other income increased primarily due to growth in dealer 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 future capital expenditures. The Company believes that these sources, along with retail growth of the membership leading to patronage stock growth, will provide adequate liquidity for the long-term. -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, 1995. -7- SIGNATURE 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 Rita D. Kahle Vice President, Finance (Principal Financial and Accounting Officer, and duly authorized Officer of the registrant) -8- 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-31-1995 SEP-30-1995 101 0 266,069 2,223 276,815 548,886 321,125 133,038 745,663 417,713 0 220,491 0 0 8,151 745,663 1,808,039 1,808,039 1,671,451 1,671,451 79,361 0 10,746 50,337 1,103 49,234 0 0 0 49,234 0 0
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