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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment 4
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 25, 1996
THE PARTS SOURCE, INC.
d/b/a Ace Auto Parts
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(Exact name of registrant as specified in its charter)
FLORIDA 1-14308 59-3149403
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(State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification No.)
1751 S. Missouri Avenue, Clearwater, Florida 34616
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 588-0377
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N/A
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(Former name or former address, if changed since last report.)
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Amendment to File Acquisition Financial Statements
On October 30, 1996, The Parts Source, Inc. (d/b/a Ace Auto Parts) ("the
Company") filed a report on Form 8-K regarding its acquisition of the
businesses of six auto parts stores from A.P.S., Inc. and subsequently filed
amendments No. 1, 2 and 3 with respect thereto. By this amendment No. 4, the
Company is amending and restating the pro forma financial information included
in item 7 of the Form 8-K report as previously filed.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION.
The Parts Source, Inc. (d/b/a Ace Auto Parts) Pro Forma
Condensed Balance Sheet at September 30, 1996 (unaudited)
The Parts Source, Inc. (d/b/a Ace Auto Parts) Notes to Pro Forma
Condensed Balance Sheet at September 30, 1996 (unaudited)
The Parts Source, Inc. (d/b/a Ace Auto Parts) Pro Forma
Condensed Statement of Earnings for the year ended December 31,
1995 (unaudited)
The Parts Source, Inc. (d/b/a Ace Auto Parts) Notes to Pro Forma
Condensed Statement of Earnings for the year ended December 31,
1995 (unaudited)
The Parts Source, Inc. (d/b/a Ace Auto Parts) Pro Forma
Condensed Statement of Earnings for the nine months ended
Septemer 30, 1996 (unaudited)
The Parts Source, Inc. (d/b/a Ace Auto Parts) Notes to Pro Forma
Condensed Statement of Earnings for the nine months ended
September 30, 1996 (unaudited)
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THE PARTS SOURCE, INC.
(D/B/A/ ACE AUTO PARTS)
PRO FORMA CONDENSED BALANCE SHEET
September 30, 1996
(Unaudited)
The following unaudited pro forma condensed combined balance sheet is based on
the interim unaudited balance sheet of The Parts Source, Inc. (d/b/a Ace Auto
Parts) as contained in the Form 10-Q filed for the nine months ended September
30, 1996 and the unaudited balance sheet of A.P.S., Inc. ("Florida Store
Group") as of July 25, 1996, and has been prepared to reflect the acquisition
of Florida Store Group on October 25, 1996, after giving effect to the pro
forma adjustments described in Note 2 as if the acquisition had occurred on
September 30, 1996. In the opinion of management, all adjustments have been
made that are necessary to present fairly the pro forma information. This
statement should be read in conjunction with the aforementioned Form 10-Q, as
recently filed, and Florida Store Group financial statements and notes thereto,
which are included elsewhere in the Filing.
<TABLE>
<CAPTION>
ASSETS Historical Pro Forma
------------------------------- ----------------------------------
9/30/96 7/25/96 Note 2
The Parts Pro Forma Pro Forma
Source A.P.S.(*) Adjustments Combined
------------- ---------------- -------------------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 575,351 $ 2,450 $2,500,000 (a) $ 677,097
(2,400,704)(b)
Accounts receivable, net 2,212,358 739,418 (739,418)(c) 2,212,358
Inventories 9,624,492 1,614,791 - 11,239,283
Prepaid expenses and other 124,722 12,277 - 136,999
----------- ---------- ---------- -----------
Total current assets 12,536,923 2,368,936 (640,122) 14,265,737
PROPERTY AND EQUIPMENT, NET 2,066,593 130,984 - 2,197,577
OTHER ASSETS 190,545 12,614 1,163,770 (c) 1,354,315
(12,614)(c)
----------- ---------- ---------- -----------
$14,794,061 $2,512,534 $ 511,034 $17,817,629
=========== ========== ========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of long-term liabilities $ 256,699 $ - $ - $ 256,699
Accounts payable, trade 2,133,534 28,396 (28,396)(c) 2,133,534
Accrued liabilities 466,820 37,928 68,690 (b) 573,438
----------- ---------- ---------- -----------
Total current liabilities 2,857,053 66,324 40,294 2,963,671
LONG-TERM LIABILITIES 4,527,033 - 416,950 (b) 4,943,983
STOCKHOLDERS' EQUITY 7,409,975 2,446,210 2,500,000 (a) 9,909,975
(2,446,210)(c)
----------- ---------- ---------- -----------
$14,794,061 $2,512,534 $ 511,034 $17,817,629
=========== ========== ========== ===========
</TABLE>
(*) Balance Sheet as of July 25, 1996 for Florida Store Group which management
believes is reasonably representative of the September 30, 1996 balance sheet
that is not practicably available at this time.
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THE PARTS SOURCE, INC.
(D/B/A ACE AUTO PARTS)
PRO FORMA CONDENSED BALANCE SHEET
September 30, 1996
(Unaudited)
NOTES TO PRO FORMA CONDENSED BALANCE SHEET
NOTE 1 - ACQUISITION
In September 1996, while negotiating with APS for new terms on its supply
agreement, the Company utilized its line of credit to pay down its trade
payables to A.P.S., Inc. by $4 million. As a condition of this payment,
Autoparts Finance Company, Inc., a subsidiary of A.P.S., Inc. agreed to
purchase 227,273 shares of Common Stock of the Company in a private transaction
at $11.00 per share.
On October 25, 1996, The Parts Source, Inc. (d/b/a Ace Auto Parts) ("the
Company") acquired certain net assets of six auto parts stores from A.P.S.,
Inc. The purchase price was approximately $2.9 million. The Company made a
cash payment of $2.4 million on the closing date from the proceeds received
from the sale of 227,273 shares of unregistered stock to A.P.S., Inc., at
$11.00 per share. The remaining purchase price was funded through the
Company's line of credit. The Company acquired at each location the automotive
inventory, machinery, equipment, furniture, fixtures, signs, vehicles and
leasehold improvements, and prepaid expenses. In addition, the Company assumed
the liability related to vacation pay for existing employees at the stores.
NOTE 2 - PRO FORMA ADJUSTMENTS
(a) The Company paid $2.4 million of the purchase price of the acquisition
from the proceeds received from the sale of 227,273 shares of unregistered
stock to A.P.S., Inc. at $11.00 per share.
(b) A summary of the purchase price for the acquisition described in Note 1
is as follows:
<TABLE>
<S> <C>
Proceeds from sale of common stock $2,400,704
Proceeds from line of credit 416,950
Direct acquisition costs 68,690
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$2,886,344
==========
</TABLE>
(c) The total purchase price of the acquisition was allocated in accordance
with the provisions of APB Opinion No. 16, Business Combinations, and,
accordingly, was based on the fair value of the net tangible assets
acquired, as there was no specifically identifiable intangibles associated
with this transaction, the excess purchase price was allocated to Goodwill
as follows:
<TABLE>
<S> <C>
Net tangible assets (liabilities)
Cash and cash equivalents $ 2,450
Inventories 1,614,791
Prepaid expenses and other 12,277
Property and equipment 130,984
Accrued liabilities (37,928)
---------
1,722,574
Intangible assets - goodwill 1,163,770
---------
$2,886,344
==========
</TABLE>
The book and tax basis of the acquired assets were the same. Accordingly,
no deferred taxes have been recorded.
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THE PARTS SOURCE, INC.
(D/B/A/ ACE AUTO PARTS)
PRO FORMA CONDENSED STATEMENT OF EARNINGS
For the year ended December 31, 1995
(Unaudited)
The following unaudited pro forma condensed combined statement of earnings is
based on the audited statement of earnings of The Parts Source, Inc. (d/b/a Ace
Auto Parts) as contained in the Prospectus Form SB-2, filed on April 8, 1996,
for the year ended December 31, 1995, and the audited statement of earnings of
A.P.S., Inc. ("Florida Store Group") for the year ended January 27, 1996, after
giving effect to the pro forma adjustments described in Note 1 as if the
acquisition had occurred on January 1, 1995. In the opinion of management, all
adjustments have been made that are necessary to present fairly the pro forma
information. This statement should be read in conjunction with the
aforementioned Prospectus Form SB-2 and Florida Store Group financial
statements and notes thereto, which are included elsewhere in this Filing.
<TABLE>
<CAPTION>
Historical Proforma
-------------------------- -------------------------------
12/31/95 1/27/96 Note 1
The Parts Pro Forma Pro Forma
Source A.P.S. Adjustments Combined
------------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales $22,942,783 $7,326,104 $ - $30,268,887
Cost of goods sold 14,427,871 4,433,734 130,000 (4) 18,991,605
----------- ---------- --------- -----------
Gross profit 8,514,912 2,892,370 (130,000) 11,277,282
Operating, selling, general and administrative expenses 7,730,635 2,661,563 (107,232)(3) 10,355,838
70,872 (1)
----------- ---------- --------- -----------
Earnings from operations 784,277 230,807 (93,640) 921,444
Other income (expense) (631,892) 3,299 (44,800)(2) (673,393)
----------- ---------- --------- -----------
Net earnings before income taxes 152,385 234,106 (138,440) 248,051
Provision for income taxes * 42,800 93,219 (55,126)(5) 80,893
----------- ---------- --------- -----------
Net earnings $ 109,585 $ 140,887 $ (83,314) $ 167,158
=========== ========== ========= ===========
Net earnings per common share $ .05 $ .08
=========== ===========
Weighted average common shares outstanding 2,000,000 2,227,273(6)
=========== ===========
</TABLE>
(*) Reflects the Company's pro forma income tax expense for the year ended
December 31, 1995 as the Company was a Subchapter S Corporation for tax
purposes.
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THE PARTS SOURCE, INC.
(D/B/A ACE AUTO PARTS)
PRO FORMA CONDENSED STATEMENT OF EARNINGS
For the year ended December 31, 1995
(Unaudited)
NOTES TO PRO FORMA CONDENSED STATEMENT OF EARNINGS
NOTE 1
Reflects adjustments for the consummation of the acquisition as if it had
occurred on January 1, 1995:
1. Represents goodwill amortization expense (using the straight-line method
over a 15 year amortization period). The goodwill amortization period has
been determined based upon various factors including attainable sales
volumes, store locations and competition within the market.
2. Represents interest expense on the funds advanced against the Company's
credit line to fund the purchase, calculated at the Company's average rate
of interest for the period.
3. Represents a reduction of rent and related facility costs approximating
$37,000 related to a wholesale auto parts store that was not acquired, but
the operations were transferred to an existing Company store approximately
1 mile away and compensation expenses of approximately $70,000 related to
those employees not transferred. This was a wholesale store, selling
primarily to the professional installer with customer sales generated from
telephone calls. The telephone numbers along with customer accounts were
transferred to the nearby existing store. Sales for this wholesale
operation transferred were approximately $593,000 and net earnings before
income taxes were approximately $14,000 for the year ended December 31,
1995.
4. Represents a lower gross margin as a result of the higher cost of
inventory purchased by the Company as compared to that paid by Florida
Store Group.
5. Represents the income tax effect of the pro forma adjustments as set
forth above at the statuary rate.
6. The pro forma weighted average common shares outstanding includes the
effect of the sale of 227,273 shares of unregistered common stock to
A.P.S., Inc.
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THE PARTS SOURCE, INC.
(D/B/A/ ACE AUTO PARTS)
PRO FORMA CONDENSED STATEMENT OF EARNINGS
For the nine months ended September 30, 1996
(unaudited)
The following unaudited pro forma condensed combined statement of earnings is
based on the statement of earnings of The Parts Source, Inc. (d/b/a Ace Auto
Parts) as contained in the Form 10-Q for the nine months ended September 30,
1996, and the unaudited statement of earnings of A.P.S., Inc. ("Florida Store
Group") for the six months ended July 25, 1996, after giving effect to the
conforming adjustments described in Note 1 and the pro forma adjustments
described in Note 2 as if the acquisition had occurred on January 1, 1996. In
the opinion of management, all adjustments have been made that are necessary to
present fairly the pro forma information. This statement should be read in
conjunction with the aforementioned Form 10-Q and Florida Store Group financial
statements and notes thereto, which are included elsewhere in this Filing.
<TABLE>
<CAPTION>
Historical Pro Forma
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9/30/96 7/25/96 Note 1 9/30/96 Note 2
The Parts Conforming A.P.S. as Pro Forma Pro Forma
Source A.P.S. Adjustments Conformed Adjustments Combined
----------- ---------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $19,158,078 $3,767,576 $1,866,367 $5,633,943 $ - $24,792,021
Cost of goods sold 11,993,887 2,319,953 1,142,795 3,462,748 47,200(4) 15,503,835
----------- ---------- ---------- ---------- -------- -----------
Gross profit 7,164,191 1,447,623 723,572 2,171,195 (47,200) 9,288,186
Operating, selling, general and
administrative expenses 6,711,855 1,229,239 631,543 1,860,782 (80,424)(3) 8,545,367
53,154 (1)
----------- ---------- ---------- ---------- -------- -----------
Earnings from operations 452,336 218,384 92,029 310,413 (19,930) 742,819
Other income (expense) (200,322) 409 411 820 (31,300)(2) (230,802)
----------- ---------- ---------- ---------- -------- -----------
Net earnings before income taxes 252,014 218,793 92,440 311,233 (51,230) 512,017
Provision for income taxes * 94,610 79,231 34,179 113,410 (18,668)(5) 189,352
----------- ---------- ---------- ---------- -------- -----------
Net earnings $ 157,404 $ 139,562 $ 58,261 $ 197,823 $(32,562) $ 322,665
=========== ========== ========== ========== ======== ===========
Net earnings per common share $ .06 $ .11
=========== ===========
Weighted average common shares
outstanding 2,758,996 2,986,269(6)
=========== ===========
</TABLE>
(*) Reflects the Company's pro forma income tax expense for the for the nine
months ended September 30, 1996 as the Company was a Subchapter S
Corporation for tax purposes until April 8, 1996.
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THE PARTS SOURCE, INC.
(D/B/A ACE AUTO PARTS)
PRO FORMA CONDENSED STATEMENT OF EARNINGS
For the nine months ended September 30, 1996
(Unaudited)
NOTES TO PRO FORMA CONDENSED STATEMENT OF EARNINGS
NOTE 1
Reflects adjustments necessary to conform A.P.S., Inc., Florida Store Group
unaudited statement of earnings for the six months ended July 25, 1996 to The
Parts Source, Inc.'s accounting period (January 1, 1996 to September 30, 1996).
The conforming adjustments have been derived from the audited financial
statements for the year ended January 27, 1996 and the unaudited financial
statements for the six months ended July 25, 1996 which management believes
provides a reasonable and representative basis for determining the conforming
adjustments. Unaudited financial statements for August and September, 1996
from the Florida Store Group's accounting records is not practicably available
at this present time.
NOTE 2
Reflects adjustments for the consummation of the acquisition as if it had
occurred on January 1, 1996:
1. Represents goodwill amortization expense (using the straight-line method
over a 15 year amortization period). The goodwill amortization period has
been determined based upon various factors including attainable sales
volumes, store locations and competition within the market.
2. Represents interest expense on the funds advanced against the Company's
credit line to fund the purchase, calculated at the Company's average rate
of interest for the period.
3. Represents a reduction of rent and related facility costs approximating
$28,000 related to a wholesale auto parts store that was not acquired, but
the operations were transferred to an existing Company store approximately
1 mile away and compensation expenses of approximately $52,000 related to
those employees not transferred. This was a wholesale store, selling
primarily to the professional installer with customer sales generated from
telephone calls. The telephone numbers along with customer accounts were
transferred to the nearby existing store. Sales for this wholesale
operation transferred were approximately $496,000 and net earnings before
income taxes were approximately $18,000 for the nine months ended
September 30, 1996.
4. Represents a lower gross margin as a result of the higher cost of
inventory purchased by the Company as compared to that paid by Florida
Store Group.
5. Represents the income tax effect of the pro forma adjustments as set
forth above at the statuary rate.
6. The pro forma weighted average common shares outstanding includes the
effect of the sale of 227,273 shares of unregistered common stock to
A.P.S., Inc.
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SIGNATURES
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.
June 19, 1997
- ------------------------------ The Parts Source, Inc.
(Date) d/b/a Ace Auto Parts
----------------------------------------
(Registrant)
/s/ Robert B. Morgan
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Robert B. Morgan
Chief Financial and Accounting Officer
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