-----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, CmMtwqtyPZZCJ10B2Pd62TEBnsR7jMFI8ZxsVIXTcNWX6YUCUpj/fw/nXSJW8I5+ oyknyGJHptSiNTYSCqkjEw== 0000002024-97-000011.txt : 19970514 0000002024-97-000011.hdr.sgml : 19970514 ACCESSION NUMBER: 0000002024-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 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: 97601714 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, 1ST QUARTER 1997 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, 1997 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 (630) 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, 1997 Class A Voting Stock - $1,000 par value 3,940 shares Class B Stock - $1,000 par value 2,840 shares Class C Stock - $ 100 par value 1,947,470 shares ACE HARDWARE CORPORATION INDEX Part I. - Financial Information: Page No. Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 1 Consolidated Statements of Earnings - Three Months Ended March 31, 1997 and 1996 2 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 3 Notes to Consolidated 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 CONSOLIDATED BALANCE SHEETS March 31, December 31, 1997 1996 (000's omitted) ASSETS Current Assets: Cash $ 8,871 $ 12,657 Accounts Receivable, Net 371,499 347,248 Merchandise Inventory 317,325 327,145 Prepaid Expenses and Other Current Assets 12,250 11,880 -------------- -------------- Total Current Assets 709,945 698,930 Property and Equipment, Net 220,905 213,534 Other Assets 6,324 3,911 -------------- -------------- Total Assets $ 937,174 $ 916,375 ============== ============== LIABILITIES AND MEMBER DEALERS' EQUITY Current Liabilities: Current Installment of Long-Term Debt $ 6,953 $ 6,727 Short-Term Borrowings 86,968 71,000 Accounts Payable 369,506 394,070 Patronage Dividends Payable in Cash 30,783 28,178 Patronage Refund Certificates Payable 13,748 14,138 Accrued Expenses 46,173 36,349 -------------- -------------- Total Current Liabilities 554,131 550,462 Notes Payable 100,556 71,837 Patronage Refund Certificates Payable 36,612 49,639 Other Long-Term Liabilities 12,115 11,074 -------------- -------------- Total Liabilities 703,414 683,012 Member Dealers' Equity: Class A Stock of $1,000 Par Value 3,990 3,937 Class B Stock of $1,000 Par Value 6,499 6,499 Class C Stock of $100 Par Value 197,150 196,742 Class C Stock of $100 Par Value, Issuable 28,902 26,474 Additional Stock Subscribed, Net of Unpaid Portion 515 502 Retained Earnings and Contributed Capital 6,496 6,415 -------------- -------------- Total Member Dealers' Equity 243,552 240,569 Less: Treasury Stock, at Cost 9,792 7,206 -------------- -------------- Total Member Dealers' Equity 233,760 233,363 Total Liabilities and Member Dealers' Equity $ 937,174 $ 916,375 ============== ============== See accompanying notes to consolidated financial statements. ACE HARDWARE CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended March 31, 1997 1996 (000's omitted) Net Sales $ 642,137 $ 593,186 Cost of Sales 595,858 551,741 -------------- -------------- Gross Profit 46,279 41,445 Operating Expenses: Warehouse and Distribution 11,468 8,506 Selling, General and Administrative 18,241 15,792 Retail Success and Development 5,555 5,908 -------------- -------------- Total Operating Expenses 35,264 30,206 -------------- -------------- Operating Income 11,015 11,239 Interest Expense (3,607) (2,472) Other Income, Net 1,204 1,167 Income Taxes (310) (355) -------------- -------------- Net Earnings $ 8,302 $ 9,579 ============== ============== Distribution of Net Earnings: Patronage Dividends $ 8,221 $ 10,467 Retained Earnings 81 (888) -------------- -------------- Net Earnings $ 8,302 $ 9,579 ============== ============== See accompanying notes to consolidated financial statements. ACE HARDWARE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1997 1996 (000's omitted) Operating Activities: Net Earnings $ 8,302 $ 9,579 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 4,620 4,051 Loss on sale of property and equipment 113 0 Increase in accounts receivable, net (24,251) (38,893) Decrease (Increase) in merchandise inventory 9,820 (23,877) Increase in prepaid expenses and other current assets (370) (1,904) Increase (Decrease) in accounts payable and accrued expenses (14,740) 41,900 Increase (Decrease) in other long-term liabilities 1,041 6 -------------- --------------- Net Cash Used In Operating Activities (15,465) (9,138) Investing Activities: Purchases of property and equipment (12,239) (8,894) Proceeds from sale of property and equipment 135 0 Increase in other assets (2,413) (149) -------------- --------------- Net Cash Used In Investing Activities (14,517) (9,043) Financing Activities: Proceeds from short-term borrowings 15,968 22,500 Proceeds from notes payable 30,000 0 Principal payments on long-term debt (1,055) (1,437) Payments on refund certificates and patronage financing programs (16,605) (14,163) Proceeds from sale of common stock 474 382 Repurchase of common stock (2,586) (1,853) -------------- --------------- Net Cash Provided by Financing Activities 26,196 5,429 -------------- --------------- Decrease in Cash and Cash Equivalents (3,786) (12,752) Cash and Cash Equivalents at Beginning of Period 12,657 12,853 -------------- --------------- Cash and Cash Equivalents at End of Period $ 8,871 $ 101 ============== =============== See accompanying notes to consolidated financial statements. ACE HARDWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1) General The accompanying consolidated financial statements have not been examined by independent public accountants except for the December 31, 1996 balance sheet but in the opinion of the Company reflect all adjustments necessary to present fairly the financial position as of March 31, 1997 and 1996 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 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. Net earnings and patronage dividends will normally be similar since patronage sourced net earnings is paid to consenting member dealers. International dealers signed under a Retail Merchant Agreement are not eligible for patronage dividends and related earnings or loss 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 1997. 4) Notes Payable In March 1997, the Company entered into a $30,000,000 loan agreement due March 25, 2009. The note bears interest at 7.55% per annum, payable quarterly. Annual principle payments commence on March 25, 2005 and continue through 2009. ACE HARDWARE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended March 31, 1997 compared to Three Months Ended March 31, 1996. Results of Operations Net sales increased 8.3% in 1997 primarily due to increased existing dealer volume, targeted efforts on new store development and conversions to the Ace program and the June 1996 start-up of Canada operations. Gross profit increased 11.7% vs. 1996, and increased as a percent of sales due to increased cash and vendor discounts, improved manufacturing gross profit and gross profit from the Canadian operation. Warehouse and distribution expenses increased $3.0 million and as a percent of sales versus 1996 due to costs for the operation of one additional domestic and two Canadian facilities opened in mid 1996 and wages to support the sales increase. Lower traffic and freight consolidations income also contributed to the 1997 expense increase. Selling, general and administrative expenses increased $2.5 million or 15.5% and as a percent of sales due to costs associated with the Canadian operation and increased data processing expenses. Retail success and development expenses decreased $353,000 or 6.0%, and as a percent of sales primarily due to increased advertising income. Increased retail investments partially offset the first quarter advertising income increase. Interest expense increased 45.9% or $1.1 million vs. 1996 due to increased inventory levels, additional dealer dating programs and higher interest rates. Additional long-term debt was issued in the first quarter to fund long-term capital investments. 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 From 8-K. (b) There were no reports on Form 8-K filed for the three month period ended March 31, 1997. 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 MAY 13, 1997 Rita D. Kahle Vice President, Finance (Principal Financial and Accounting Officer, and duly authorized Officer of the registrant) EX-27 2 ART.5 FDS FOR FIRST QTR 1997
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-31-1997 MAR-31-1997 8871 0 373727 2228 317325 709945 372050 151145 937174 554131 0 0 0 236541 7011 937174 642137 642137 595858 595858 0 0 3607 8612 310 8302 0 0 0 8302 0 0
-----END PRIVACY-ENHANCED MESSAGE-----