-----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, A6vEhKQ8fcEp5EHqV7k4u7VmoSom24NZc9de+wTcT2AKhAZMFxt+8sMB6U0icJN+ x5DPz+Yk1KN7ScfzUT/CBA== 0000002024-96-000017.txt : 19960515 0000002024-96-000017.hdr.sgml : 19960515 ACCESSION NUMBER: 0000002024-96-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96563904 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 March 31, 1996 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, 1996 Class A Voting Stock - $1,000 par value 3,925 shares Class B Stock - $1,000 par value 3,012 shares Class C Stock - $ 100 par value 1,874,955 shares ACE HARDWARE CORPORATION INDEX Page No. PART I. - Financial Information Balance Sheet - March 31, 1996 and December 31, 1995 1 Statement of Earnings - Three Months Ended March 31, 1996 and 1995 2 Statement of Cash Flows - Three Months Ended March 31, 1996 and 1995 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, 1996 1995 (000'S OMITTED) ASSETS Current assets: Cash $ 101 $ 12,853 Accounts Receivable, Net 325,971 287,078 Merchandise Inventory 278,328 254,451 Prepaid Expenses and Other Current Assets 11,228 9,324 Total Current Assets 615,628 563,706 Property and Equipment, Net 196,347 191,504 Other Assets 4,072 3,923 Total Assets $ 816,047 $ 759,133 LIABILITIES AND MEMBER DEALERS' EQUITY Current Liabilities: Current Installment of Long-Term Debt 7,245 7,378 Short-Term Borrowings 35,500 13,000 Accounts Payable 369,930 337,414 Patronage Dividends Payable in Cash 27,290 23,522 Patronage Refund Certificates Payable 14,377 12,641 Accrued Expenses 44,787 35,397 Total Current Liabilities 499,129 429,352 Notes Payable 56,491 57,795 Patronage Refund Certificates Payable 41,250 54,741 Total Liabilities 596,870 541,888 Member Dealers' Equity: Class A Stock of $1,000 Par Value 3,979 3,905 Class B Stock of $1,000 Par Value 6,499 6,499 Class C Stock of $100 Par Value 178,104 177,817 Class C Stock of $100 Par Value, Issuable to Dealers for Patronage Dividends 31,797 27,506 Additional Stock Subscribed, Net of Unpaid Portion 536 515 Retained Earnings and Contributed Capital 7,057 7,945 227,972 224,187 Less: Treasury Stock, at Cost 8,795 6,942 Total Member Dealers' Equity 219,177 217,245 Total Liabilities and Member Dealers' Equity $ 816,047 $ 759,133
See accompanying notes to financial statements. -1- ACE HARDWARE CORPORATION STATEMENT OF EARNINGS
THREE MONTHS ENDED MARCH 31, MARCH 31 1996 1995 (000's omitted) Net Sales $593,186 $559,487 Cost of Sales 551,741 515,804 Gross Profit 41,445 43,683 Operating Expenses: Warehouse and Distribution 8,506 8,463 Selling, General and Administrative 15,814 14,648 Retail Success and Development 5,907 3,765 Total Operating Expenses 30,227 26,876 Operating Income 11,218 16,807 Interest Expense (2,472) (3,372) Other Income, Net 1,219 926 Income Taxes (386) (373) Net Earnings 9,579 13,988 Distribution of Net Earnings Patronage Dividends 10,467 14,257 Retained Earnings (888) (269) Net Earnings $ 9,579 $ 13,988
See accompanying notes to financial statements. -2- ACE HARDWARE CORPORATION STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, (000's OMITTED) 1996 1995 Operating activities: Net earnings $ 9,579 $ 13,988 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation 4,051 4,179 Increase in accounts receivable, net (38,893) (52,943) Increase in merchandise inventory (23,877) (32,535) Increase in prepaids and other current assets (1,904) (769) Increase in accounts payable and accrued expenses 41,906 18,886 Net cash used in operating expenses (9,138) (49,194) Investing activities: Purchases of property and equipment (8,894) (7,944) Increase in other assets (149) (1,285) Net cash used in investing activities (9,043) (9,229) Financing activities: Proceeds from short-term borrowings 22,500 61,000 Principal payments on long-term debt (1,437) (1,836) Payments on refund certificates and patronage financing programs (14,163) (3,306) Proceeds from sale of common stock 382 398 Repurchase of common stock (1,853) (2,597) Net cash provided by financing activities 5,429 53,659 Decrease in cash and cash equivalents (12,752) (4,764) Cash and cash equivalents at beginning of period 12,853 4,868 Cash and cash equivalents at end of period $ 101 $ 104
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, 1995 balance sheet, however, in the opinion of the Company reflect all adjustments necessary to present fairly the financial position as of March 31, 1996 and 1995 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 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 1996. -4- ACE HARDWARE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended March 31, 1996 compared to Three Months Ended March 31, 1995. Results of Operations Net sales increased 6.0% in 1996 primarily due to increases in volume from existing dealers, targeted efforts on new store development and conversions to the Ace program. Gross profit declined 5.1% vs. 1995 and as a percent of sales due to reduced levels of vendor and dealer price increases and lower manufacturing gross profit. This decrease is partially offset by increased vendor allowances and a lower LIFO provision. Warehouse and distribution expenses increased slightly vs. 1995 but decreased as a percent of sales. 1996 start-up costs for the opening of two facilities are partially offset by increased freight consolidation income and increased levels of warehouse costs absorbed into inventory. Selling, general and administrative expenses increased by 7.9% vs. 1995 and as a percent of sales due to increased personnel and relocation costs for the start-up facilities and increased data processing expenses. Retail success and development increased $2.1 million vs. 1995 and as a percent of sales due to increased personnel costs for field retail support and new business development, decreased Retail Computer Systems income and additional advertising costs. Interest expenses decreased 27.0% or $900,000 vs. 1995 primarily due to inventory turnover improvements over the prior year. The use of both short-term borrowing and long-term financing is expected to continue to fund planned capital expenditures in 1996. Other income increased $293,000 vs. 1995 due primarily to the 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 capital expenditures in the future. -5- 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, 1996. -6- 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 05/14/96 Rita D. Kahle Vice President, Finance (Principal Financial and Accounting Officer, and duly authorized Officer of the registrant) -7- EX-27 2 ART.5 FDS FOR 1996 FIRST 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 3-MOS DEC-31-1996 MAR-31-1996 101 0 327,754 1,783 278,328 615,628 336,672 140,325 816,047 499,129 0 0 0 220,915 7,057 816,047 593,186 593,186 551,741 551,741 30,227 0 2,472 9,965 386 9,579 0 0 0 9,579 0 0
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