<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 8, 1996
------------
WILMAR INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant specified in its charter)
New Jersey 0-27424 22-2232386
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
303 Harper Drive
Moorestown, New Jersey 08057
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code: (609) 439-1222
--------------
- --------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Consolidated Financial Statements of HMA Enterprises, Inc. and its
Subsidiaries.
(1) Independent Auditors' Reports.
(2) Consolidated Balance Sheets of HMA and its Subsidiaries as of
February 29, 1996 and February 28, 1995.
(3) Consolidated Statements of Income of HMA and its Subsidiaries
for the year ended February 29, 1996 and the year ended
February 28, 1995.
(4) Consolidated Statements of Cash Flows of HMA and its
Subsidiaries for the year ended February 29,1996 and the year
ended February 28, 1996.
(5) Consolidated Statements of Stockholders' Equity of HMA and
its Subsidiaries for the year ended February 29, 1996 and the
year ended February 28, 1995.
(6) Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information (Unaudited).
(1) Unaudited Pro Forma Balance Sheet as of March 29, 1996.
(2) Unaudited Pro Forma Statements of Operations for the year
ended December 29, 1995.
(3) Unaudited Pro Forma Statements of Operations for the three
months ended March 29, 1996.
(c) Exhibits.
27.1+ Financial Data Schedule.
_________________________
+ Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 28, 1996.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to the report to be signed on its
behalf by the undersigned hereunto duly authorized.
WILMAR INDUSTRIES, INC.
(Registrant)
By /s/ William S. Green
---------------------------------
William S. Green
Chairman, President and
Chief Executive Officer
Dated: August 30, 1996
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
HMA Enterprises, Inc.:
We have audited the accompanying consolidated balance sheet of HMA
Enterprises, Inc., and subsidiaries (the "Company") as of February 29, 1996,
and the related consolidated statements of income, stockholders equity and
cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of HMA
Enterprises, Inc., and subsidiaries as of February 29, 1996, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Houston, Texas
May 30, 1996
<PAGE>
INDEPENDENT AUDITORS REPORT
The Board of Directors
HMA Enterprises, Inc.:
We have audited the accompanying consolidated balance sheet of HMA
Enterprises, Inc., and subsidiaries (the "Company") as of February 28, 1995,
and the related consolidated statements of income, stockholders, equity and
cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of HMA
Enterprises, Inc., and subsidiaries as of February 28, 1995, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
April 21, 1995
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................... $ 206,973 $ 211,876
Accounts receivable:
Trade, less allowance for doubtful accounts of
$213,518 and $239,832, respectively............. 2,412,686 3,543,773
Related party and other.......................... 101,003 53,281
Inventory.......................................... 2,509,905 3,073,661
Investment in trading securities................... 150,892 1,166
Prepaid expenses and other current assets.......... 147,892 267,526
---------- ----------
Total current assets............................. 5,529,351 7,151,283
PROPERTY AND EQUIPMENT, NET.......................... 316,564 310,023
DEFERRED TAX ASSETS.................................. 48,482 115,500
---------- ----------
TOTAL................................................ $5,894,397 $7,576,806
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable...................................... $1,430,100 $1,830,100
Trade accounts payable............................. 1,496,651 1,955,688
Accrued expenses................................... 379,848 454,617
Current portion of long-term debt and capital
leases............................................ 76,591 63,499
Federal income taxes payable....................... 33,801 170,795
---------- ----------
Total current liabilities........................ 3,416,991 4,474,699
LONG-TERM DEBT AND CAPITAL LEASES, EXCLUDING CURRENT
PORTION............................................. 105,147 65,664
---------- ----------
Total liabilities................................ 3,522,138 4,540,363
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 1,000,000 shares
authorized; 115,170 shares issued and
outstanding....................................... 1,152 1,152
Additional paid-in capital......................... 156,656 156,656
Retained earnings.................................. 2,214,451 2,878,635
---------- ----------
Total stockholders' equity....................... 2,372,259 3,036,443
---------- ----------
TOTAL................................................ $5,894,397 $7,576,806
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 29,
1995 1996
------------ ------------
<S> <C> <C>
SALES............................................... $20,641,719 $24,858,213
COST OF SALES....................................... 15,381,560 18,530,571
----------- -----------
GROSS PROFIT........................................ 5,260,159 6,327,642
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES........ 4,997,868 5,262,985
----------- -----------
262,291 1,064,657
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense, net............................. (130,729) (154,941)
Other income...................................... 159,998 44,272
Gain on sale of property and equipment, net....... 8,696
----------- -----------
Total........................................... 29,269 (101,973)
----------- -----------
INCOME BEFORE INCOME TAXES.......................... 291,560 962,684
INCOME TAXES........................................ (98,119) (298,500)
----------- -----------
NET INCOME.......................................... $ 193,441 $ 664,184
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
FEBRUARY 28, FEBRUARY 29,
1995 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 193,441 $ 664,184
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation...................................... 160,070 144,383
Employee stock ownership plan contribution........ 156,700
Gain on sale of property and equipment............ (8,696)
(Gain) writedown on investment in trading
securities....................................... 10,620 (19,055)
Deferred income taxes............................. (48,482) (67,018)
Change in assets and liabilities:
Accounts receivable--trade........................ (154,425) (1,131,087)
Accounts receivable--related party and other...... 472 47,722
Inventory......................................... (749,101) (563,756)
Prepaid expenses and other current assets......... (36,592) (119,634)
Federal income tax receivable..................... 120,485
Trade accounts payable............................ 424,577 459,037
Accrued expenses.................................. 51,776 74,769
Federal income taxes payable...................... 33,801 136,994
--------- -----------
Net cash provided by (used in) operating
activities..................................... 163,342 (382,157)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net of proceeds of disposals.. (35,838) (129,146)
Purchase of trading securities...................... (161,512)
Sales of trading securities......................... 168,781
--------- -----------
Net cash (used in) provided by investing
activities..................................... (197,350) 39,635
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares......................... (200,000)
Principal payments on notes payable................. (103,400) (400,000)
Principal payments on long-term debt and capital
leases............................................. (56,541) (70,056)
Proceeds from notes payable......................... 7,500 800,000
Proceeds from long-term debt and capital leases..... 17,481
--------- -----------
Net cash provided by (used in) financing
activities..................................... (352,441) 347,425
--------- -----------
NET INCREASE (DECREASE) IN CASH....................... (386,449) 4,903
CASH AT BEGINNING OF YEAR............................. 593,422 206,973
--------- -----------
CASH AT END OF YEAR................................... $ 206,973 $ 211,876
========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest payments................................... $ 139,136 $ 191,253
Income tax payments................................. 102,500 228,524
NONCASH INVESTING AND FINANCING ACTIVITIES:
Capital leases assumed in acquisitions of property
and equipment...................................... $ 89,354
Retirement of treasury shares....................... 210,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY
28, 1995
--------------------------------------------------------
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT FEBRUARY 28,
1994................... $ 2,204 $2,229,914 $ (10,000) $2,222,118
Net income............ 193,441 193,441
Issuance of common
stock................ 44 $156,656 156,700
Purchase of treasury
shares............... (200,000) (200,000)
Retirement of 1,096
treasury shares...... (1,096) (208,904) 210,000
------- -------- ---------- --------- ----------
BALANCE AT FEBRUARY 28,
1995................... 1,152 156,656 2,214,451 2,372,259
Net income............ 664,184 664,184
------- -------- ---------- --------- ----------
BALANCE AT FEBRUARY 29,
1996................... $ 1,152 $156,656 $2,878,635 $ $3,036,443
======= ======== ========== ========= ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business--HMA Enterprises, Inc. was incorporated in the state
of Texas in May 1983. Operating primarily in Texas, HMA Enterprises, Inc., and
subsidiaries (the "Company") acquire and distribute fixtures, hardware,
household items and supplies to apartment complexes and building contractors.
The Company's locations include Houston, Arlington and, as of April 1996, San
Antonio, Texas.
Most of the Company's customers are located in Texas. No single customer
accounted for more than five percent of the Company's sales, and no accounts
receivable from any customer exceeded $186,000 at February 29, 1996.
Principles of Consolidation--The consolidated financial statements include
the accounts of HMA Enterprises, Inc., and its wholly owned subsidiaries, Gulf
Coast Supply, Inc., and One Stop Supply, Inc. All intercompany accounts and
transactions have been eliminated in consolidation.
Investment in Equity Securities--The Company adopted the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," ("Statement 115") effective March
1, 1994. Under Statement 115, marketable investment securities are classified
in three categories: trading, available for sale, or held to maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. Held-to-maturity securities are those securities which the
Company has the ability and intent to hold until maturity. All other
securities not included in trading or held to maturity are classified as
available for sale. In accordance with Statement 115, the Company classifies
its investments in equity securities as trading securities.
Trading securities are recorded at fair value. Unrealized holding gains and
losses on trading securities, net of the related tax effect, are included in
earnings. A decline in the market value of any trading security below cost is
charged to earnings, resulting in the establishment of a new cost basis for
the security.
Dividend and interest income are recognized when earned. Realized gains and
losses for securities classified as trading are included in earnings and are
derived using the specific identification method for determining the cost of
securities sold.
Inventory--Inventory is stated at the lower of cost or market using the
average cost method. Inventory consists entirely of finished goods.
Property and Equipment--Property and equipment are stated at cost. Equipment
under capital lease is stated at the present value of future minimum lease
payments at the date of acquisition.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets, which range from 3 to 7 years. Equipment under
capital leases and leasehold improvements are amortized over the shorter of
the lease term or estimated useful life of the asset.
Federal Income Taxes--The Company accounts for income taxes using the asset
and liability method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Reclassifications--Certain reclassifications have been made to the prior
year financial statements to conform to the presentation and classification
used in fiscal 1996.
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
1995 1996
-------- ----------
<S> <C> <C>
Vehicles................................................ $474,881 $ 478,945
Furniture and equipment................................. 356,988 418,746
Leasehold improvements.................................. 120,496 130,973
-------- ----------
Total............................................... 952,365 1,028,664
Less accumulated depreciation and amortization.......... 635,801 718,641
-------- ----------
Property and equipment, net............................. $316,564 $ 310,023
======== ==========
</TABLE>
3. NOTES PAYABLE
Notes payable consisted of the following:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Notes payable to bank, interest at prime plus 0.5%
(8.75% at February 29, 1996), due September 1, 1996.. $1,400,000 $1,800,000
Notes payable to related parties, interest at 10%,
maturities vary through February 1997................ 30,100 30,100
---------- ----------
Total............................................. $1,430,100 $1,830,100
========== ==========
</TABLE>
At February 29, 1996, $1,800,000 was outstanding under the Company's
$2,500,000 revolving line of credit which matures on September 1, 1996.
Interest payments are due monthly on the first day of each month and accrue at
the bank's prime rate plus 0.5%. The Company has pledged its accounts
receivable, inventory, and property and equipment as collateral for this
obligation. The line of credit facility contains certain financial covenants
which require the Company to maintain a minimum net worth and ratio of debt to
net worth. Compliance with covenants has been met.
4. LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt and capital leases consist of the following:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Obligations under capital leases, interest rates ranging
from 6.0% to 13.6%, varying payments..................... $166,334 $129,163
Long-term debt collateralized by certain equipment,
interest at prime plus 1%, payable in monthly
installments of $483..................................... 15,404
-------- --------
Total long-term debt and capital leases............... 181,738 129,163
Less current portion...................................... 76,591 63,499
-------- --------
Long-term debt and capital leases, excluding current
portion.................................................. $105,147 $ 65,664
======== ========
</TABLE>
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The aggregate maturities of long-term debt and capital leases for each year
subsequent to February 29, 1996 are: 1997, $63,499; 1998, $50,018; and 1999,
$15,646.
5. INCOME TAXES
The Company's income tax provision for the years ended February 29, 1996 and
February 28, 1995 comprised the following:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Current.................................................. $146,601 $365,518
Deferred................................................. (48,482) (67,018)
-------- --------
Total.................................................. $ 98,119 $298,500
======== ========
</TABLE>
The provision for income taxes differs from the amount of income taxes
computed by applying the U.S. federal income tax rate of 34% to pretax income
as a result of limitations on the deductibility of meals and entertainment and
the nontaxable income on officers' life insurance policies for fiscal 1995 and
1996.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at February 29, 1996 and February 28, 1995
are presented below:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................ $ 72,596 $ 81,543
Differences between book and tax depreciation.......... 24,858 25,718
Accrued vacation....................................... 14,067 8,239
-------- --------
Total gross deferred tax assets...................... 111,521 115,500
Less valuation allowance................................. (63,039)
-------- --------
Net deferred tax assets.................................. $ 48,482 $115,500
======== ========
</TABLE>
6. EMPLOYEE STOCK OWNERSHIP PLAN
The Company adopted the Employee Stock Ownership Plan (the "Plan") during
1995 to enable eligible employees to participate in the growth of the Company.
Employees who have been employed with the Company for one or more years and
have completed a minimum of 1,000 hours of service are eligible to become
participants in the Plan. Employer contributions to the Plan are held in trust
in each participants individual account. The contributions are allocated to
the participant accounts based on each participant's covered compensation,
which is the total wages paid to the participant by the Company for each plan
year. The realized and unrealized gain or loss on the Plan's assets, as well
as dividends on the Company's stock not distributed to participants, are
allocated to each participant's account in the same manner. In fiscal 1995,
the company recognized $156,700 in compensation expense related to the Plan,
which represents the estimated fair market value of the 43.7 shares (prior to
stock split--see Note 8) of Company stock contributed to the Plan. In fiscal
1996 the Company recognized $100,000 in compensation expense related to a cash
contribution.
7. RELATED-PARTY TRANSACTIONS
Included in trade receivables as of February 28, 1995 and February 29, 1996
was $255,845 and $249,717, respectively, from a related party which has common
shareholders with the Company. Sales to this related party for fiscal 1995 and
1996 were $255,845 and $94,916, respectively.
<PAGE>
HMA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. COMMON STOCK
In June 1994 the Company purchased 96 shares of its common stock from a
shareholder at a cost of $200,000. In December 1994 the Company retired 1,096
shares of common stock previously held in treasury.
In December 1994 the Company effected a 100 for 1 stock split for each
issued and outstanding share of its common stock, and decreased the par value
per share of common stock from $1 to $.01. There was no change in the
authorized number of shares.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, investment in trading securities, accounts
receivable, accounts payable and accrued expenses approximate fair value
because of the short maturities of these items. Interest rates which are
currently available to the Company for new issuances of debt with similar
terms and maturities are used to estimate the fair value of long-term debt and
capital leases which at February 29, 1996 approximated the recorded amount.
10. COMMITMENTS AND CONTINGENCIES
Until December 1995 the Company participated in a self-insurance pool for
health care costs. The Company is liable for claims up to $12,500 per employee
annually and Company claims aggregate up to $45,000 annually. The Company has
funded the insurance pool to cover the annual aggregate claims. Claims
exceeding these limits are covered by a stop loss policy covering claims up to
$2,000,000 annually. Based on historical experience, management does not
anticipate potential future claims would have a material impact on the
Company's consolidated financial statements.
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a materially adverse effect on the
Company's consolidated financial statements.
The Company is obligated under certain noncancelable operating leases (with
initial or remaining lease terms in excess of one year). These leases
generally contain renewal options for periods ranging from three to five years
and require the Company to pay executory costs such as maintenance and
insurance. The future minimum lease payments under such leases as of February
29, 1996 are:
<TABLE>
<CAPTION>
YEARS ENDING
------------
<S> <C>
1997........................................................ $ 315,704
1998........................................................ 265,236
1999........................................................ 188,686
2000........................................................ 162,000
2001........................................................ 162,000
----------
Total..................................................... $1,093,626
==========
</TABLE>
The Company recognized rent expense of $227,062 and $233,044 during fiscal
1995 and 1996, respectively.
11. SUBSEQUENT EVENT
Subsequent to February 29, 1996 the shareholders of the Company entered into
a letter of intent to sell all of the common stock to a publicly held company
for an amount in excess of book value. Closing is expected to be the end of
June 1996.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma combined balance sheet gives effect to
the HMA Acquisition as if the acquisition had occurred on March 29, 1996. The
unaudited pro forma combined statements of operations for the year ended
December 29, 1995 and the three months ended March 29, 1996 give effect to the
HMA Acquisition as if it had occurred on January 1, 1995. Amounts shown for the
three months ended February 29, 1996 for HMA are also included in amounts shown
for the year ended February 29, 1996.
The pro forma combined financial data should be read in conjunction with the
notes included herewith, the Company's Financial Statements, HMA's Financial
Statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The pro forma combined data do not purport to represent
what the Company's results of operations or financial position actually would
have been had such transactions and events occurred on the dates specified, or
to project the Company's results of operations or financial position for any
future period or date. The pro forma adjustments are based upon available
information and certain adjustments that management believes are reasonable. In
the opinion of management, all adjustments have been made that are necessary to
present fairly the pro forma data.
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 29, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL ACQUISITION PRO FORMA
WILMAR HMA(a) ADJUSTMENTS(b) COMBINED
---------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash require-
ments................. $ 4,310 $ 212 $(3,564) $ 958
Cash--restricted....... 200 200
Short-term investment--
available for sale se-
curities.............. 1,765 1,765
Short-term investment--
trading securities.... 1 1
Accounts receivable--
trade, net............ 10,205 3,544 13,749
Accounts receivable--
related party and
other................. 53 53
Inventory.............. 12,978 3,074 16,052
Prepaid expenses and
other current assets.. 511 267 778
Deferred income taxes.. 486 486
-------- ------ ------- --------
Total current as-
sets................ 30,455 7,151 (3,564) 34,042
Property and equipment,
net.................... 1,385 310 1,695
Deferred income taxes... 116 116
Other assets............ 2,152 2,744 4,896
-------- ------ ------- --------
Total assets............ $ 33,992 $7,577 $ (820) $ 40,749
======== ====== ======= ========
LIABILITIES AND
STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Notes payable.......... $1,830 $ 608 $ 2,438
Current portion of
long-term debt and
capital leases........ 63 63
Accounts payable....... $ 6,514 1,956 8,470
Accrued expenses and
other current liabili-
ties.................. 1,622 455 2,077
Income taxes payable... 949 171 1,120
-------- ------ ------- --------
Total current liabil-
ities............... 9,085 4,475 608 14,168
Long-term debt and capi-
tal leases............. 66 66
-------- ------ ------- --------
Total liabilities.... 9,085 4,541 608 14,234
-------- ------ ------- --------
Stockholders' Equity:
Preferred stock, $.01
par value, 5,000,000
shares authorized;
none issued...........
Common stock, no par
value--50,000,000
shares authorized;
10,374,545 shares
issued and
outstanding........... 51,289 1,608 52,897
Common stock, $.01 par
value, 1,000,000
shares authorized;
115,170 shares issued
and outstanding....... 1 (1)
Additional paid-in cap-
ital.................. 157 (157)
Retained earnings
(accumulated
deficit).............. (26,382) 2,878 (2,878) (26,382)
-------- ------ ------- --------
Total stockholders'
equity (deficit).... 24,907 3,036 (1,428) 26,515
-------- ------ ------- --------
Total Liabilities and
Stockholders' Equity... $ 33,992 $7,577 $ (820) $ 40,749
======== ====== ======= ========
</TABLE>
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 29, 1995
<TABLE>
<CAPTION>
PRO
HISTORICAL HISTORICAL ACQUISITION FORMA
WILMAR HMA(c,e) ADJUSTMENTS COMBINED
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales............... $60,823 $24,858 $85,681
Cost of sales........... 41,835 19,411 (8)(f) 61,238
------- ------- ------ -------
Gross profit.......... 18,988 5,447 8 24,443
Operating expenses
Operating and selling
expenses............. 9,099 2,353 (51)(g) 11,401
Corporate general and
administrative
expenses............. 3,985 2,030 1 (h) 6,016
------- ------- ------ -------
13,084 4,383 (50) 17,417
------- ------- ------ -------
Operating income...... 5,904 1,064 58 7,026
Other income............ 53 53
Interest expense, net... (1,164) (155) (55)(i) (1,374)
------- ------- ------ -------
Income before income
taxes.................. 4,740 962 3 5,705
Pro Forma Data (m):
Income tax provision.. 1,896 299 87 2,282
------- ------- ------ -------
Net income............ $ 2,844 $ 663 $ (84) $ 3,423
======= ======= ====== =======
Net income per common
share................ $ 0.36 $ 0.43
======= =======
Weighted average
common shares
outstanding (n)...... 7,937 68 (o) 8,005
======= ====== =======
</TABLE>
THREE MONTHS ENDED MARCH 29, 1996
<TABLE>
<CAPTION>
PRO
HISTORICAL HISTORICAL ACQUISITION FORMA
WILMAR HMA (d,e) ADJUSTMENTS COMBINED
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales........................... $19,309 $5,661 $24,970
Cost of sales....................... 13,373 4,269 $ (2)(j) 17,640
------- ------ ---- -------
Gross profit...................... 5,936 1,392 2 7,330
------- ------ ---- -------
Operating expenses
Operating and selling expenses.... 2,987 564 (13)(j) 3,538
Corporate general and
administrative expenses.......... 1,242 509 (1)(k) 1,752
------- ------ ---- -------
4,229 1,073 (12) 5,290
------- ------ ---- -------
Operating income.................. 1,707 319 14 2,040
Other income........................ 13 13
Interest expense, net............... (81) (39) (14)(l) (134)
------- ------ ---- -------
Income before income taxes........ 1,626 293 1,919
Income tax provision.............. 666 91 26 783
------- ------ ---- -------
Net income........................ $ 960 $ 202 $(26) $ 1,136
======= ====== ==== =======
Pro Forma Data:
Net income per common share....... $ 0.10 $ 0.11
======= =======
Weighted average common shares
outstanding (n).................. 9,946 68 (o) 10,014
======= ==== =======
</TABLE>
<PAGE>
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(a) Balance Sheet as of February 29, 1996.
(b) Represents adjustments for the acquisition of HMA (the "HMA Acquisition")
based on a purchase price of $7,610 (including $1,830 of HMA debt repaid by
Wilmar). The HMA Acquisition has been accounted for using the purchase
method. The purchase price has been allocated on a preliminary basis to the
assets acquired based on the fair values of such assets which are estimated
to equal their book value. The balance of the purchase price was allocated
as follows: $1,180 to intangible assets (including covenants-not-to-compete
and customer lists) and $1,564 to goodwill. This results in total other
assets of $2,744. The other assets will be amortized on a straight-line
basis over the following lives: the covenants-not-to-compete will be
amortized over three years; the customer lists will be amortized over 20
years; and the goodwill will be amortized over 30 years.
(c) Statement of Operations for year ended February 29, 1996.
(d) Statement of Operations for three months ended February 29, 1996.
(e) Certain amounts in the historical financial statements of HMA have been
reclassified to conform with the Wilmar presentation.
(f) Represents $8 of expense related to the HMA Employee Stock Ownership Trust
("HMA ESOP"), which was terminated after the HMA Acquisition.
(g) Represents $51 of expense related to the HMA ESOP, which was terminated
after the HMA Acquisition.
(h) Adjustments to reflect: (i) $41 of expense related to the HMA ESOP, which
was terminated after the HMA Acquisition, (ii) $100 of compensation paid to
an officer of HMA in excess of the compensation due under the officer's
employment contract effective after the HMA Acquisition, offset by: (iii)
additional expenses of $142 which represent the amortization of intangible
assets, including goodwill, covenants-not-to-compete and customer lists
acquired by Wilmar in the HMA Acquisition.
(i) Represents interest expense on amounts drawn on the Company's line of
credit to finance the HMA Acquisition as if the acquisition had occurred on
January 1, 1995.
(j) Adjustments to reflect the HMA ESOP, which was terminated after the HMA
Acquisition as follows: (i) $2 of cost of sales and (ii) $13 of operating
and selling expenses.
(k) Adjustments to reflect: (i) $10 of expenses related to the HMA ESOP, which
was terminated after the HMA Acquisition and (ii) $25 of compensation paid
to an officer of HMA in excess of the compensation due under the officer's
employment contract effective after the HMA Acquisition, offset by (iii)
additional expenses of $36 which represents the amortization of intangible
assets, including goodwill, covenants-not-to-compete and customer lists
acquired by Wilmar in the HMA Acquisition.
(l) Represents interest expense on amounts drawn on the Company's line of
credit to finance the HMA Acquisition as if the acquisition had occurred
on January 1, 1995.
(m) Prior to March 1, 1995, the Company elected to be taxed as an S
Corporation for federal (and certain state) income tax purposes. Pro forma
information has been computed as if the Company had been subject to
federal income tax and all applicable state corporate income taxes for
each period presented.
(n) See Note 3 of Notes to Consolidated Financial Statements for a description
of the determination of weighted average common shares outstanding.
(o) Represents shares of Common Stock issued in connection with the HMA
Acquisition as if the acquisition had occurred on January 1, 1995.
