<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
Commission File No. 0-27424
-------
WILMAR INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2232386
-------------------------- -------------------
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
303 Harper Drive
Moorestown, New Jersey 08057
-------------------------- ------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (609) 439-1222
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 X No
-------- -------
The number of shares of the registrant's common stock, no par value,
outstanding as of October 30, 1999 was 12,407,826.
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 24, December 25,
1999 1998
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 25,586,135 $ 30,611,955
Cash - restricted 307,254 297,236
Accounts Receivable - trade, net of allowance for doubtful accounts
of $1,259,240 in 1999 and $1,399,200 in 1998. 36,184,116 27,535,016
Inventory 29,378,518 30,128,680
Prepaid expenses and other current assets 370,305 385,992
Deferred income taxes 1,419,000 1,498,000
---------------- ----------------
Total current assets 93,245,328 90,456,879
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $5,490,393 in 1999 and $4,740,501 in 1998. 4,731,271 4,183,348
GOODWILL, net of accumulated amortization of $1,453,795 in 1999 and $973,445 in 1998. 21,687,173 22,133,860
INTANGIBLE ASSETS AND OTHER, Net 4,829,873 4,921,704
---------------- ----------------
TOTAL ASSETS $ 124,493,645 $ 121,695,791
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ - $ 1,208,518
Accounts payable 17,584,222 11,991,661
Accrued expenses and other current liabilities 4,923,027 4,294,425
Income taxes payable 651,540 412,160
---------------- ----------------
Total current liabilities 23,158,789 17,906,764
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued Common
stock, no par value - 50,000,000 shares authorized;
12,407,826 shares issued and outstanding in 1999
13,389,827 shares issued and outstanding in 1998 103,725,914 103,568,743
Retained earnings 10,412,505 220,284
---------------- ----------------
114,138,419 103,789,027
Less: Treasury stock, at cost (1,000,000 shares in 1999) (12,803,563)
---------------- ----------------
Total stockholders' equity 101,334,856 103,789,027
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 124,493,645 $ 121,695,791
================ ================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
September 24, September 25, September 24, September 25,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 58,616,006 $ 52,093,171 $ 162,380,267 $ 145,297,415
COST OF SALES 41,783,146 37,029,987 114,930,540 103,322,150
--------------- -------------- --------------- ---------------
Gross profit 16,832,860 15,063,184 47,449,727 41,975,265
OPERATING EXPENSES:
Operating and selling expenses 7,726,854 6,876,052 22,495,927 19,750,733
Corporate general and administrative expenses 3,198,925 2,645,613 9,282,512 8,166,499
--------------- -------------- --------------- ---------------
Total operating expenses 10,925,779 9,521,665 31,778,439 27,917,232
--------------- -------------- --------------- ---------------
Operating income 5,907,081 5,541,519 15,671,288 14,058,033
INTEREST INCOME, NET 253,532 362,536 901,333 1,137,458
--------------- -------------- --------------- ---------------
Income before income taxes 6,160,613 5,904,055 16,572,621 15,195,491
PROVISION FOR INCOME TAXES 2,371,800 2,273,000 6,380,400 5,782,400
--------------- --------------- --------------- ---------------
Net income $ 3,788,813 $ 3,631,055 $ 10,192,221 $ 9,413,091
=============== =============== =============== ===============
Net income per share - Basic $ 0.31 $ 0.27 $ 0.79 $ 0.70
=============== =============== =============== ===============
Net income per share - Diluted $ 0.30 $ 0.27 $ 0.79 $ 0.70
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
page 5
WILMAR INDUSTERIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) -
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Accumulated
Deficit) / Total
Common Stock Retained Treasury Stockholders'
Shares Amount Earnings Stock (Deficit) Equity
------------ --------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 26, 1997 13,335,754 $ 102,793,984 $ (12,244,900) $ - $ 90,549,084
Exercised Stock Options 48,350 360,446 360,446
Tax Benefit from Exercised Stock Options 283,600 283,600
Issuance of Common Stock -
Apartment Cleaning Acquisition 5,723 130,713 130,713
Net income 12,465,184 12,465,184
------------ --------------- --------------- --------------- ----------------
BALANCE, DECEMBER 25, 1998 13,389,827 $ 103,568,743 $ 220,284 $ - $ 103,789,027
Exercised Stock Options 17,999 93,041 93,041
Tax Benefit from Exercised Stock Options 64,130 64,130
Repurchase of Common Stock (1,000,000) (12,803,563) (12,803,563)
Net income 10,192,221 10,192,221
------------ --------------- --------------- --------------- -----------------
BALANCE, SEPTEMBER 24, 1999 12,407,826 $ 103,725,914 $ 10,412,505 $ (12,803,563) $ 101,334,856
============ =============== =============== =============== =================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ending Months Ending
September 24, 1999 September 25, 1998
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 10,192,221 $ 9,413,091
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,684,600 1,431,313
Deferred income taxes 79,000 (286,000)
Loss (gain) on disposition of property and equipment 12,939
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable (8,462,986) (6,178,507)
Inventory 877,043 (5,390,146)
Prepaid expenses and other current assets 5,669 34,452
Intangible assets and other (31,388) (340,062)
Accounts payable 5,592,561 1,346,407
Accrued expenses and other current liabilities 618,251 980,614
Income taxes payable 303,510 375,757
--------------- -----------------
Net cash provided by operating activities 10,871,420 1,386,919
--------------- -----------------
INVESTING ACTIVITIES:
Purchase of property and equipment (1,404,393) (1,208,568)
Proceeds from sale of property and equipment 2,500
Acquisition of businesses, including escrow (576,307) (1,962,923)
--------------- -----------------
Net cash used in investing activities (1,978,200) (3,171,491)
--------------- -----------------
FINANCING ACTIVITIES:
(Repayment of) proceeds from notes payable (1,208,518) 300,000
Purchases of stock for treasury (12,803,563)
Net proceeds from exercise of stock options 93,041 321,689
--------------- -----------------
Net cash (used in) provided by financing activities (13,919,040) 621,689
--------------- -----------------
NET INCREASE IN CASH (5,025,820) (1,162,883)
CASH, BEGINNING OF PERIOD 30,611,955 30,723,746
--------------- -----------------
CASH, END OF PERIOD $ 25,586,135 $ 29,560,863
=============== =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 96,628 $ 11,328
=============== =================
Income taxes $ 4,167,454 $ 5,765,843
=============== =================
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of Common Stock in connection with the purchase of:
Apartment Cleaning Supply and Pool Supply, Inc. $ 130,713
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- ------------------------------
The condensed consolidated financial statements include the accounts of Wilmar
Industries, Inc. ("Wilmar" or the "Company") and its subsidiaries. Inter-
company balances and transactions have been eliminated.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring adjustments) necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods presented. The results of operations for these interim periods are not
necessarily indicative of the results to be expected for the full year ending
December 31, 1999. These financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in the
Company's Form 10-K for the year ended December 25, 1998.
Note 2 - Accounting Policies
- ----------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as "derivatives") and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The effective date for this statement
(originally for all fiscal quarters of fiscal years beginning after June 15,
1999) has been delayed until July 1, 2000. Management has not yet determined
what effect, if any, this statement will have on the Company.
Note 3 - Acquisition
- --------------------
On July 30, 1999, the Company acquired certain assets of The Mini Blind Company
("Mini Blind"), a distributor of vertical and mini blinds to the multi-family or
apartment housing market, based in San Antonio, TX. The total purchase price of
the acquisition was paid in cash. Goodwill and other intangibles recorded in
connection with this acquisition are being amortized on a straight-line basis.
The acquisition is being accounted for using the Purchase method.
Note 4 - Income Taxes
- ---------------------
The Company provides for income taxes based upon SFAS No. 109, "Accounting for
Income Taxes", which requires an asset and liability approach to financial
accounting and reporting for income taxes.
<PAGE>
WILMAR INDUSTRIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note 5 - Computation of Basic and Diluted Net Income Per Share
- --------------------------------------------------------------
Net income per share presented for all periods have been computed in accordance
with SFAS No. 128, "Earnings per Share." Basic net income per share is computed
by dividing net income by the weighted-average number of shares outstanding
during the period. Diluted net income per share is computed by dividing net
income by the weighted-average number of shares outstanding during the period,
assuming dilution.
The amounts used in calculating net income per share data are as follows:
<TABLE>
<CAPTION>
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
September 24, September 25, September 24, September 25,
1999 1998 1999 1998
---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net Income $ 3,788,813 $ 3,631,055 $10,192,221 $ 9,413,091
=========== =========== =========== ===========
Weighted Average Shares
Outstanding - Basic 12,402,735 13,383,352 12,835,654 13,361,833
Effect of Dilutive Stock
Options 131,083 133,250 128,319 142,440
----------- ----------- ----------- -----------
Weighted Average Shares
Outstanding - Diluted 12,533,818 13,516,602 12,963,973 13,504,273
=========== =========== =========== ===========
</TABLE>
The following options to purchase common stock, although outstanding, were not
included in the computation of weighted average shares outstanding - Diluted
because the options' exercise price was greater than the average market price of
common shares during the period. For the three months ended September 24, 1999
and September 25, 1998, 417,037 and 70,450, respectively, as well as 395,437 and
52,050 options to purchase shares of common stock that were outstanding during
the nine months ended September 24, 1999 and September 25, 1998, respectively,
were not included.
Note 6 - Contingencies
- ----------------------
The Company is involved in various legal proceedings in the ordinary course of
its business, which are not anticipated to have a material adverse effect on the
Company's results of operations or financial position.
Note 7 - Subsequent Events
- --------------------------
On October 1, 1999, the Company acquired 100% of the capital stock of Ace
Maintenance Mart ("Ace"), a direct marketer of repair and maintenance products
to the multi-family or apartment housing market, based in San Diego, CA. The
purchase price of this acquisition was paid in cash and has been allocated to
the assets acquired based upon their estimated fair market values. Goodwill and
other intangibles recorded in connection with this acquisition will be amortized
on a straight-line basis. The acquisition is being accounted for using the
Purchase method.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
This document contains certain forward-looking statements that are subject to
risks and uncertainties. Forward-looking statements include certain information
relating to future growth plans, the anticipated costs associated with those
plans, the Company's liability and capital resources, as well as information
contained elsewhere in this report where statements are preceded by, followed by
or include the words "believes," "expects," "anticipates" or similar
expressions. For such statements the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including without limitation, general market conditions, increased
competition, failure to locate and acquire acquisition candidates, and factors
discussed elsewhere in this report and in the documents incorporated herein by
reference. The following discussion should be read in conjunction with the
interim financial statements and the notes thereto contained elsewhere in this
report on Form 10-Q.
Results of Operations
Nine Months Ended September 24, 1999 Compared to Nine Months Ended September 25,
1998.
Net Sales. Net sales increased by $17.1 million, or 11.8%, to $162.4 million
for the nine months ended September 24, 1999 from $145.3 million for the
corresponding period in 1998. This increase was attributable to continuing
penetration of existing sales territories, sales force additions, the Company's
telesales effort and increased sales to national accounts. Sales attributable
to the existing sales force (salesmen employed for all of both periods)
increased 9.1%. In addition, the acquisitions of certain assets of Apartment
Cleaning Supply and Pool Supply, Inc. ("ACSPS"), the California-based American
Maintenance Supply, Inc. ("AMS-CA"), the Nevada-based American Maintenance
Supply, Inc. ("AMS-NV"), Kurzon Supply Company, Inc. ("Kurzon"), and The Mini
Blind Company ("Mini Blind"), which occurred in June 1998, March 1998, May 1998,
November 1998 and July 1999, respectively, also contributed to the Company's
growth. Price increases during both periods were modest and made only on
selected items. During the nine months ended September 24, 1999, Wilmar
generated approximately $8.5million in net sales to new end markets as a result
of the Company's decision to target customers outside its core apartment housing
market.
Gross Profit. Cost of sales includes merchandise, freight, distribution center
occupancy and delivery costs. As a percentage of net sales, gross profit was
29.2% for the nine months ended September 24, 1999 compared to 28.9% for the
corresponding period in 1998. The increase is attributable to the July 1998
divestiture of our high-end appliance division, as well as the Company's
continuing merchandising efforts.
Operating and Selling Expenses. Operating and selling expenses consist of labor
and other costs associated with operating a distribution center as well as
selling expenses and commissions. Operating and selling expenses increased by
$2.7 million, or 13.9%, to $22.5 million for the nine months ended September 24,
1999 from $19.8 million for the corresponding period in 1998. As a percentage
of net sales, these expenses represented 13.9% for the nine months ended
September 24, 1999 compared to 13.6% for the corresponding period in 1998. This
increase was primarily due to the Company's continual investment in its field
sales force.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased by $1.1 million or 13.7%, to $9.3 million for
the nine months ended September 24, 1999 from $8.2 million for the corresponding
period in 1998. This increase is primarily the result of the enhanced staffing
required to manage a larger volume of business. As a percentage of net sales,
corporate general and administrative expenses represented 5.7% for the nine
months ended September 24, 1999 and 5.6% for the corresponding period in 1998.
Operating Income. Operating income increased by $1.6 million, or 11.5%, to
$15.7 million for the nine months ended September 24, 1999 from $14.1 million
for the corresponding period in 1998. As a percentage of net sales, operating
income was 9.7% for both the nine months ended September 24, 1999 and September
25, 1998.
Interest Income. Net interest income for the nine months ended September 24,
1999 was $901,000 and $1.1 million for the corresponding period in 1998. The
interest income occurred as a result of the investment income from the proceeds
of the secondary public offering completed in July 1996. The decrease in
interest income was a result of the Company's stock repurchase program. During
the first six month of 1999 the Company repurchased one million shares of common
stock at an average price of $12.80.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Results of Operations
Three Months Ended September 24, 1999 Compared to Three Months Ended September
25, 1998
Net Sales. Net sales increased by $6.5 million, or 12.5%, to $58.6 million for
the three months ended September 24, 1999 from $52.1 million for the
corresponding period in 1998. This increase was attributable to continuing
penetration of existing sales territories, sales force additions, the Company's
telesales effort, and increased sales to national accounts. Sales attributable
to the existing sales force (salesmen employed for all of both periods)
increased 9.0%. In addition the acquisitions of certain assets of Kurzon and
Mini Blind which occurred in November 1998 and July 1999, respectively, also
contributed to the Company's growth. Price increases during both periods were
modest and made only on selected items. During the three months ended September
24, 1999, Wilmar generated approximately $3.0 million in net sales to new end
markets as a result of the Company's decision to target customers outside its
core apartment housing market.
Gross Profit. Cost of sales includes merchandise, freight, distribution center
occupancy and delivery costs. As a percentage of net sales, gross profit was
28.7% for the three months ended September 24, 1999 compared to 28.9 % for the
corresponding period in 1998. This slight decrease in the gross margin was a
result of the Company's decision to invest in improved delivery service for
existing customers, as well as to better penetrate new geographic markets and
regions where a local distribution center is not located.
Operating and Selling Expenses. Operating and selling expenses consist of labor
and other costs associated with operating a distribution center as well as
selling expenses and commissions. Operating and selling expenses increased by
$851,000, or 12.4%, to $7.7 million for the three months ended September 24,
1999 from $6.9 million for the corresponding period in 1998. As a percentage of
net sales, these expenses represented 13.2% for the three months ended September
24, 1999 and September 25, 1998. The percent of sales remained constant even
though the Company continued to invest in addition field sales representatives.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased by $553,000, or 20.9%, to $3.2 million for the
three months ended September 24, 1999 from $2.6 million for the corresponding
period in 1998. As a percentage of net sales, these expenses represented 5.5%
for the three months ended September 24, 1999 and 5.1% for the corresponding
period in 1998. This increase is primarily the result of the enhanced staffing
required to manage a larger volume of business.
Operating Income. Operating income increased by $366,000 or 6.6%, to $5.9
million for the three months ended September 24, 1999 from $5.5 million for the
corresponding period in 1998. As a percentage of net sales, operating income was
10.1% for the three months ended September 24, 1999 and 10.6% for the
corresponding period in 1998.
Interest Income. Net interest income for the three months ended September 24,
1999 was $254,000 and $363,000 for the corresponding period in 1998. The
interest income occurred as a result of the investment income from the proceeds
of the secondary public offering completed in July 1996. The decrease in
interest income was a result of the Company's stock repurchase program. During
the first six month of 1999 the Company repurchased one million shares of common
stock at an average price of $12.80.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Results of Operations
Three Months Ended September 24, 1999 Compared to Three Months Ended September
25, 1998
Liquidity and Capital Resources
Historically, Wilmar's primary source of liquidity has been cash flow from
operations, supplemented by borrowings under its bank line of credit to support
increases in accounts receivable and inventory, net of accounts payable, and the
public sale of its securities.
On March 19, 1999, the Company announced that its Board of Directors had
approved a stock buyback program whereby it may repurchase up to one million
shares of its common stock. Such repurchases may be made from time to time in
open market transactions at prevailing prices or in privately negotiated
transactions on terms mutually agreed upon. As of May 11, 1999, the Company had
repurchased one million shares at an average price of $12.80 per share.
Cash provided by operating activities was $10.9 million during the nine months
ended September 24, 1999 compared to $1.4 million of cash provided by operating
activities during the corresponding period in 1998. Cash provided by operating
activities during the nine months ended September 24, 1999 consisted of $10.2
million of net income before adding back depreciation and amortization and other
non-cash charges, decreased $1.1 million by changes in operating assets and
liabilities. This primarily resulted from a $6.5 million increase in accounts
payable, accrued expenses and income tax payable as well as a $877,000 decrease
in inventory offset by an increase in accounts receivable of $8.5 million.
Cash used in investing activities during the nine months ended September 24,
1999 was $2.0 million, which consisted of approximately $1.4 million for the
purchase of property and equipment and $600,000 relating to the acquisition of
The Mini Blind Company.
Cash used in financing activities during the first nine months of 1999 was
approximately $13.9 million, consisting of approximately $1.2 million used for
repayment of notes, $12.8 million for the purchase of stock for treasury offset
by proceeds of $93,000 received from the exercise of stock options.
Capital expenditures were $1.4 million for the nine months ended September 24,
1999 compared to $1.2 million for the corresponding period in 1998. Capital
expenditures for the first nine months of 1999 were primarily for the
improvement and updating of the Company's distribution centers, and the
integration of its new supply fulfillment system. The Company intends to finance
its future capital expenditures with cash flow from operations and possibly with
a portion of the previous public offerings, term debt or capital leases.
Wilmar's credit facilities consist of two unsecured bank lines of credit
totaling $15 million. These lines of credit had zero balances at September 24,
1999. In 1999, the Company renewed an existing $10 million unsecured bank line
of credit, which bears interest at three quarter percent below the bank's prime
rate, as well as a $5 million unsecured bank line of credit, which bears
interest at the bank's prime rate. These credit facilities expire in December
1999. The Company anticipates renewing these credit facilities as they expire.
The Company believes it could increase the amount of these credit facilities if
needed, although there can be no assurance that it could do so on equally or
more favorable terms.
The Company believes that its existing cash balances, supplemented by borrowings
under the revolving line of credit, are adequate to meet planned operating and
capital expenditure needs at least through 1999. However, if the Company were
to make any significant acquisitions for cash, it might be necessary for the
Company to obtain additional debt or equity financing.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Year 2000 Compliance
The Company recognizes that the arrival of the Year 2000 ("Y2K") poses a
worldwide challenge to the ability of all systems to recognize the date change
from December 31, 1999 to January 1, 2000. The Company has completed its
assessment of in-house maintained software, third party software and systems.
All identification and remediation unit testing and system testing of Y2K
related systems issues have been completed.
All costs associated with the Y2K project to date have been expensed as
incurred. These costs have not been and are not anticipated to be material to
the Company's financial position, results of operations or cash flows in any
given year, and such cost has been and is expected to continue to be funded from
the Company's operations. The Company's total estimated cost of the Y2K
compliance program is approximately $50,000 to $100,000. A significant portion
of these costs are not likely to be incremental costs to the Company, but rather
will represent the redeployment of existing information technology resources.
The Company has the necessary resources in-house to complete all required Y2K
remediation.
Based on it's review, the Company does not believe the transition from 1999 to
2000 will have any adverse effect on operations attributable to any of its
computerized systems. However, there is no guarantee that computing systems and
associated applications of other companies with which the Company conducts
business will be converted on a timely basis or that a failure by said companies
to address their Y2K compliance problems would not have a material adverse
impact on the Company.
Contingency plans reflect analysis of risks associated with year 2000 related
issues pertaining to product supply, services and system support. In connection
with these analysis, the Company has identified alternative sources related to
product supply, services and system support. Surveys of key vendors and plans
for closely monitoring inventory levels at the close of 1999 gives the Company
confidence that merchandise stock levels and the Company's ability to ship
merchandise will not be adversely affected by vendors' Y2K systems issues.
<PAGE>
WILMAR INDUSTRIES, INC.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
----------
27* Financial Data Schedule
___________________
* Filed herewith
(b) Reports on Form 8-K
-------------------
The Company did not file a Form 8-K during the quarter ended September 24,
1999.
<PAGE>
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.
WILMAR INDUSTRIES, INC.
By: /s/ William Sanford
------------------------------------------
William Sanford
Senior Vice President and Chief Financial
Officer
(Duly authorized and Principal financial
officer)
Date: November 8, 1999.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-24-1999
<CASH> 25,893,389
<SECURITIES> 0
<RECEIVABLES> 37,443,356
<ALLOWANCES> (1,259,240)
<INVENTORY> 29,378,518
<CURRENT-ASSETS> 93,245,328
<PP&E> 10,221,664
<DEPRECIATION> (5,440,393)
<TOTAL-ASSETS> 124,493,645
<CURRENT-LIABILITIES> 23,158,789
<BONDS> 0
0
0
<COMMON> 103,725,914
<OTHER-SE> 10,412,505
<TOTAL-LIABILITY-AND-EQUITY> 124,493,645
<SALES> 58,616,006
<TOTAL-REVENUES> 58,616,006
<CGS> 41,783,146
<TOTAL-COSTS> 41,783,146
<OTHER-EXPENSES> 10,925,779
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 253,532
<INCOME-PRETAX> 6,160,613
<INCOME-TAX> 2,371,800
<INCOME-CONTINUING> 3,788,813
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,788,813
<EPS-BASIC> 0.31
<EPS-DILUTED> 0.30
</TABLE>
