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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
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COMMISSION FILE NUMBER 333-61713
HEAFNER TIRE GROUP, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 56-0754594
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
2105 WATER RIDGE PARKWAY, SUITE 500 28217
CHARLOTTE, NORTH CAROLINA (Zip Code)
(Address of principal executive offices)
</TABLE>
(704) 423-8989
(Registrant's telephone number, including area code)
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 [ ]
Number of common shares outstanding at May 10, 2000: 5,286,917
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TABLE OF CONTENTS
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PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets -- April 1, 2000
(unaudited) and December 31, 1999......................... 1
Condensed Consolidated Statements of Operations
(unaudited) --
Quarters Ended April 1, 2000 and March 31, 1999........... 2
Condensed Consolidated Statements of Cash Flows
(unaudited) --
Quarters Ended April 1, 2000 and March 31, 1999........... 3
Notes to Condensed Consolidated Financial Statements........ 4
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 7
ITEM 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 10
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings........................................... 10
ITEM 6. Exhibits and Reports on Form 8-K............................ 10
Signatures.................................................. 11
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HEAFNER TIRE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS -- APRIL 1, 2000 AND DECEMBER 31, 1999
(in thousands, except share amounts)
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<CAPTION>
APRIL 1, 2000 DECEMBER 31, 1999
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(UNAUDITED)
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ASSETS
Current assets:
Cash and cash equivalents................................. $ 11,007 $ 6,497
Accounts receivable, net of allowances of $2,921 and
$2,385................................................. 98,100 88,911
Inventories, net.......................................... 150,400 148,865
Other current assets...................................... 28,106 39,228
-------- --------
Total current assets.............................. 287,613 283,501
-------- --------
Property and equipment, net................................. 47,823 47,624
Goodwill, net............................................... 105,157 107,112
Other intangible assets, net................................ 7,210 7,968
Other assets................................................ 13,736 13,041
-------- --------
$461,539 $459,246
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $174,235 $160,861
Accrued expenses.......................................... 29,570 29,437
Current maturities of long-term debt...................... 1,890 1,792
-------- --------
Total current liabilities......................... 205,695 192,090
-------- --------
Revolving credit borrowings................................. 67,070 74,688
Long-term debt.............................................. 159,315 160,112
Other liabilities........................................... 9,572 9,604
Preferred stock series A -- 4% cumulative, 7,000 shares
authorized, issued and outstanding........................ 7,000 7,000
Preferred stock series B -- variable rate cumulative, 4,500
shares authorized, issued and outstanding................. 4,094 4,094
Warrants.................................................... 1,137 1,137
Commitments and contingencies Stockholders' equity:
Class A Common stock, par value $.01 per share; authorized
10,000,000 shares; 5,286,917 shares issued and
outstanding............................................ 53 53
Class B Common stock, par value $.01 per share; authorized
20,000,0000 shares..................................... -- --
Additional paid-in capital................................ 23,981 23,981
Notes receivable from sale of stock....................... (1,046) (1,092)
Retained deficit.......................................... (15,332) (12,421)
-------- --------
Total stockholders' equity........................ 7,656 10,521
-------- --------
$461,539 $459,246
======== ========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
1
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HEAFNER TIRE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED APRIL 1, 2000 AND MARCH 31, 1999
(Unaudited)
(in thousands)
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QUARTERS ENDED
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APRIL 1, 2000 MARCH 31, 1999
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Net sales................................................... $254,428 $239,392
Cost of goods sold.......................................... 195,419 186,456
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Gross profit.............................................. 59,009 52,936
Selling, general and administrative expenses................ 57,820 50,275
-------- --------
Income from operations.................................... 1,189 2,661
-------- --------
Other income (expense):
Interest expense, net..................................... (5,829) (5,112)
Other income.............................................. 577 398
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Loss from operations before benefit for income taxes........ (4,063) (2,053)
Benefit for income taxes.................................... (1,152) (860)
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Net loss.................................................... $ (2,911) $ (1,193)
======== ========
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
2
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HEAFNER TIRE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED APRIL 1, 2000 AND MARCH 31, 1999
(Unaudited)
(in thousands)
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QUARTERS ENDED
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APRIL 1, 2000 MARCH 31, 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(2,911) $(1,193)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities, net of acquisitions --
Depreciation and amortization of goodwill and other
intangibles......................................... 4,867 4,239
Amortization of other assets......................... 282 217
Other, net........................................... (42) 86
Change in assets and liabilities:
Accounts receivable, net............................. (9,189) (16,066)
Inventories, net..................................... (1,535) (8,092)
Other current assets................................. 11,122 18,610
Accounts payable and accrued expenses................ 15,507 (8,779)
Other, net........................................... (37) --
------- -------
Net cash provided by (used in) operating
activities...................................... 18,064 (10,978)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of California Tire, net of cash acquired...... -- (3,950)
Payments on deferred purchase price of acquired
business............................................... (2,121) --
Purchase of property and equipment........................ (2,745) (3,210)
Proceeds from sale of property and equipment.............. 598 --
Other, net................................................ (142) (672)
------- -------
Net cash used in investing activities............. (4,410) (7,832)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in revolving credit borrowings........ (7,618) 20,219
Principal payments on long-term debt...................... (699) (1,436)
Other, net................................................ (827) (372)
------- -------
Net cash provided by (used in) financing
activities...................................... (9,144) 18,411
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NET INCREASE (DECREASE) IN CASH............................. 4,510 (399)
CASH, BEGINNING OF PERIOD................................... 6,497 6,648
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CASH, END OF PERIOD......................................... $11,007 $ 6,249
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION --
Cash payments for interest................................ $ 1,861 $ 858
======= =======
Cash payments for taxes................................... $ -- $ 76
======= =======
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
3
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HEAFNER TIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 1, 2000
1. NATURE OF BUSINESS:
Heafner Tire Group, Inc. and subsidiaries (the "Company") (formerly The J.
H. Heafner Company, Inc.), is a Delaware corporation primarily engaged in the
wholesale distribution of tires and tire accessories and the operation of retail
tire and auto service stores.
2. BASIS OF PRESENTATION:
The unaudited condensed consolidated balance sheet as of April 1, 2000, and
the condensed consolidated statements of operations and cash flows for the
quarters ended April 1, 2000 and March 31, 1999, have been prepared by the
Company and have not been audited. In the opinion of management, all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of the financial position of the Company, the results of its
operations and cash flows have been made. Certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's consolidated financial statements
reported on Form 10-K for the fiscal year ended December 31, 1999. The results
of the operations for the quarter ended April 1, 2000 are not necessarily
indicative of the operating results for the full fiscal year.
Effective January 1, 2000, the Company changed its fiscal year end to the
Saturday closest to December 31. Prior to 2000, the fiscal year ended on
December 31. Certain prior period amounts have been reclassified to conform with
current period presentation.
3. REVOLVING CREDIT FACILITY:
On March 6, 2000, the Company revised its revolver by amending the credit
facility (the "New Revolver"). The New Revolver provides for borrowings in the
aggregate principal amount of up to the lesser of $200.0 million or the
Borrowing Base, as defined in the agreement, based on 85% of eligible accounts
receivable, 65% of eligible tire inventory and 50% of all other eligible
inventory (of which up to $10.0 million may be utilized in the form of letters
of credit).
The New Revolver has a five-year term expiring in March 2005, extendable by
the Company and the banks for an additional five years. Indebtedness under the
New Revolver bears interest, at the Company's option, (i) at the Base Rate, as
defined, plus the applicable margin or (ii) at the Eurodollar Rate, as defined,
plus the applicable margin. The applicable margin for base rate loans is 0.25%
and the applicable margin for Eurodollar Rate Loans is 1.75%, subject in each
case to performance-based reductions.
The New Revolver requires the Company to meet certain financial
requirements, including minimum net worth and minimum loan availability and
contains certain covenants which, among other things, restrict the ability of
the Company to incur additional indebtedness; enter into guarantees; make loans
and investments; make capital expenditures; declare dividends; engage in
mergers, consolidations and asset sales; enter into transactions with
affiliates; create liens and encumbrances; enter into sale/leaseback
transactions; modify material agreements; and change the business it conducts.
The Company's obligations under the New Revolver are secured by all inventories
and accounts receivable.
4. EXIT COSTS:
In connection with the merger of ITCO Logistics Corporation and
subsidiaries, the acquisition of The Speed Merchant, Inc. and the acquisition of
Winston Tire Company, the Company recorded liabilities for estimated costs
related to employee severance, facilities closing expense and other related exit
costs in accordance with EITF 95-3, "Recognition of Liabilities in Connection
with a Purchase Business Combination." Charges of approximately $0.3 million,
$0.1 million and $0.1 million, respectively were made against these reserves
during the quarter ended April 1, 2000.
4
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HEAFNER TIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In the second quarter 1998, the Company recorded special charges of $1.4
million related to the restructuring of its southeastern wholesale business for
costs relating to the closing of selected distribution centers. The charges
include lease commitments for certain distribution centers, asset writedowns,
severance and employee related costs and costs to shut down certain facilities.
Charges of approximately $0.2 million were made against these reserves during
the quarter ended April 1, 2000.
5. SEGMENT INFORMATION:
The Company classifies its business interests into four fundamental
segments: southeastern wholesale distribution of tires and products, western
wholesale distribution of tires and products, western retail sales of tires,
products and services and corporate. The Company evaluates performance based on
several factors, of which the primary financial measure is income (loss) before
interest expense, income taxes, noncash amortization of intangible assets and
depreciation ("EBITDA").
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SOUTHEASTERN WESTERN WESTERN
WHOLESALE RETAIL WHOLESALE CORPORATE TOTALS
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<S> <C> <C> <C> <C> <C>
Quarter ended April 1, 2000 --
Revenues.................................. $162,668 $43,637 $48,049 $ 74 $254,428
EBITDA(1)................................. 6,125 (600) 2,644 (1,536) 6,633
Segment assets............................ 233,154 91,621 122,915 13,849 461,539
Expenditures for segment assets........... 555 1,211 699 280 2,745
Quarter ended March 31, 1999 --
Revenues.................................. $158,253 $36,652 $44,487 $ -- $239,392
EBITDA(1)................................. 5,609 (320) 3,150 (1,141) 7,298
Segment assets............................ 245,952 79,853 113,993 10,994 450,792
Expenditures for segment assets........... 639 1,894 627 50 3,210
</TABLE>
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(1) EBITDA represents income (loss) before interest expense, income taxes,
noncash amortization of intangible assets and depreciation. For the quarters
ended April 1, 2000 and March 31, 1999, interest expense in the condensed
consolidated statement of operations includes $0.3 million and $0.2 million,
respectively, of amortization expense related to deferred transaction fees.
6. SUBSIDIARY GUARANTOR FINANCIAL INFORMATION:
The Series D Notes are guaranteed on a full, unconditional and joint and
several basis by all of the Company's direct subsidiaries, each of which is
wholly owned. The combined summarized information of these subsidiaries is as
follows (000's):
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<CAPTION>
AS OF AND FOR AS OF AND FOR
THE QUARTER THE QUARTER
ENDED ENDED
APRIL 1, 2000 MARCH 31, 1999
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Current assets.............................................. $111,797 $95,077
Noncurrent assets........................................... 102,739 98,769
Current liabilities......................................... 61,311 60,594
Noncurrent liabilities...................................... 5,664 8,865
Net sales................................................... 91,686 81,139
Gross profit................................................ 31,011 27,430
Net loss.................................................... (779) (1,295)
</TABLE>
The above information excludes $59.9 and $36.6 million of net intercompany
payable and $14.2 and $14.1 million of intercompany sales of the Company's
subsidiary guarantors as of and for the quarters ended
5
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HEAFNER TIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
April 1, 2000 and March 31, 1999, respectively. In the preparation of the
Company's condensed consolidated financial statements, all intercompany accounts
are eliminated.
7. COMMITMENTS AND CONTINGENCIES:
See "PART II -- OTHER INFORMATION, Item 1. Legal Proceedings."
The Company is party to various lawsuits and claims, including purported
class actions, arising in the normal course of business. In the opinion of
management, these lawsuits and claims are not, singularly or in the aggregate,
material to the Company's financial position or results of operations.
8. SUBSEQUENT EVENT:
On April 14, 2000, the Company entered into a Stock Purchase Agreement with
the shareholders of T.O. Haas Holding Co., a tire wholesaler and retailer,
located in Lincoln, Nebraska. The net purchase price, subject to adjustment as
provided in the agreement, is expected to be approximately $28.0 million, of
which approximately $5.2 million is payable in the form of noncompete and
stayput payments over a period of 6 years.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion and analysis of the results of operations,
financial condition and liquidity of the Company should be read in conjunction
with the financial statements and the related notes included in this report.
OVERVIEW
The Company sells its products to a variety of markets, both in terms of
end-users and geography. The Company's distribution channels consist of (a)
Southeastern Wholesale, (b) Western Wholesale, and (c) Western Retail tires and
automotive service. For the quarter ended April 1, 2000, net sales through such
channels accounted for approximately 63.9%, 18.9% and 17.2%, respectively, of
consolidated net sales. The Company believes that the diversity of its markets
helps stabilize its sales and earnings.
RESULTS OF OPERATIONS
The following table sets forth each category of statements of operations
data as a percentage of net sales:
<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------
APRIL 1, 2000 MARCH 1, 1999
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Net sales................................................... 100.0% 100.0%
Cost of goods sold.......................................... 76.8 77.9
Gross profit................................................ 23.2 22.1
Selling, general and administrative expenses................ 22.7 21.0
Income from operations...................................... 0.5 1.1
Interest and other expense.................................. 2.1 2.0
Loss from operations before benefit for income taxes........ (1.6) (0.9)
Income taxes................................................ (0.5) (0.4)
Net loss.................................................... (1.1) (0.5)
</TABLE>
QUARTER ENDED APRIL 1, 2000 COMPARED TO QUARTER ENDED MARCH 31, 1999
Consolidated net sales increased by $15.0 million or 6.3% to $254.4 million
in the first quarter 2000 compared to $239.4 million in the first quarter 1999.
Market demand for all products was moderate in the first quarter 2000 compared
to high demand in the first quarter 1999. The sales increase in 2000 was due
primarily to better product line offerings and more focus on marketing programs.
Competition was strong across all segments in the first quarter 2000 as
competitors fought for limited sales dollars.
Gross profit increased from $52.9 million in the first quarter 1999 to
$59.0 million in the first quarter 2000. Gross profit as a percentage of sales
increased from 22.1% to 23.2%. Margin increases were due primarily to improved
product mix and price.
Selling, general, and administrative expenses increased by $7.5 million in
the first quarter 2000 representing 22.7% as a percentage of sales compared to
21.0% in 1999. Increased operating expenses were primarily due to wage,
occupancy and vehicle cost, a direct result of expanding operations in 2000.
Interest and other expenses increased in the first quarter 2000 by $0.5 million
to $5.3 million due to higher borrowings on the revolving credit line for
acquisitions and capital additions.
The income tax benefit in the first quarter 2000 was $1.2 million compared
to $0.9 million for the same quarter in 1999. The net loss for the first quarter
2000 was $2.9 million or (1.1)% of net sales compared to $1.2 million or (0.5)%
of net sales in the first quarter 1999.
7
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The following table sets forth certain selected information regarding the
Company's segments (in millions):
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QUARTERS ENDED
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APRIL 1, 2000 MARCH 31, 1999
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Net sales
Southeastern Wholesale.................................... $162.7 $158.3
Western Wholesale......................................... 48.0 44.5
Western Retail............................................ 43.6 36.7
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Consolidated.............................................. $254.4 $239.4
====== ======
EBITDA
Southeastern Wholesale.................................... $ 6.1 $ 5.6
Western Wholesale......................................... 2.6 3.2
Western Retail............................................ (0.6) (0.3)
Corporate................................................. (1.5) (1.1)
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Consolidated.............................................. $ 6.6 $ 7.3
====== ======
</TABLE>
Southeastern Wholesale Distribution.
Net sales in the Southeastern Wholesale Distribution segment increased $4.4
million, or 2.8% from net sales of $158.3 million in the first quarter 1999
compared to $162.7 million in the first quarter 2000. Sales growth in the
southeast was slower in the first quarter 2000 compared to the first quarter
1999 as a result of a somewhat softer market, increased competition and supply
issues in certain product lines. Sales of tires, supplies and equipment all
increased slightly from the comparable prior year period. Sales of custom
wheels, however, declined by $2.7 million from prior year levels primarily as a
result of limited supply of some wheel lines. The Company has a dominant market
share in the Southeast and is therefore subject to many competitive threats from
others in the industry. The Company expects to meet these market challenges by
aggressively marketing its programs and services for dealers, re-establishing
adequate sources of wheel supply and repositioning certain product lines to more
effectively compete.
EBITDA increased $0.5 million from $5.6 million in the first quarter 1999
to $6.1 million in the first quarter 2000 primarily as a result of improved
gross profit margins. The increase in gross margin is primarily the result of
improved sales mix, offset in part by weaker wheel sales. Selling, general and
administrative expenses increased slightly over the first quarter 1999 primarily
due to rising fuel costs and higher wages associated with sales volume.
Western Wholesale Distribution.
Net sales in the Western Wholesale Distribution segment increased by $3.6
million or 8.0% from $44.5 million net sales in the first quarter 1999 to $48.0
million in the first quarter 2000. Sales increased in all product categories
with the exception of automotive parts. Custom wheel and equipment sales were
very strong in the first quarter. Western Wholesale did not experience the
custom wheel supply issues found in Southeastern Wholesale Distribution due to
the abundance of custom wheel suppliers in California and the difference in
custom wheel styles preferred by customers in the western wholesale markets.
Sales growth was adversely impacted during the first quarter 2000 by a softer
commercial truck tire market.
EBITDA decreased from $3.2 million in the first quarter 1999 to $2.6
million in the first quarter 2000. Gross profit margins were up only slightly in
the first quarter due primarily to competitive pressure in expansion markets.
Operating expenses were up primarily due to the expansion into southern
California with the Carson, California warehouse facility. Substantially all of
the EBITDA decline in Western Wholesale Distribution can be attributed to start
up expenses and margin pressures associated with the Carson warehouse opening.
Some margin pressure will continue in future quarters as the Company attracts
new customers and builds its distribution business in southern California.
8
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Western Retail.
The Western Retail segment experienced an increase in net sales in the
first quarter of $7.0 million or 19.1%, up from $36.7 million in the first
quarter 1999 to $43.6 million in the first quarter 2000. Sales growth was aided
in 2000 by the acquisition of 17 store locations in the fourth quarter 1999.
Western Retail operated 204 retail stores as of April 1, 2000 compared to 189
stores as of March 31, 1999. Same store sales improved by approximately 5.0% for
Western Retail.
The Company has continued its plan to close or relocate under-performing
Winston retail locations and open new locations. The plan also included
substantially increasing the outside sales force and training during the first
quarter 2000. Also, the new Point-of-Sale ("POS") computer system purchased from
Distribution Systems Technology ("DST") is in all Winston Tire locations, and
the anticipated benefits of increased sales and cost control should be realized
in the coming quarters. Implementing these strategies has resulted in higher
operating costs and lower EBITDA in the first quarter 2000 compared to the first
quarter 1999. EBITDA fell in the first quarter from $(0.3) million in 1999 to
$(0.6) million in 2000. Gross profit margins remained relatively constant from
the first quarter 1999 compared to the first quarter 2000 with increased sales
volume yielding $2.9 million in additional gross profit offset by higher
selling, general, and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
At April 1, 2000, the combined net indebtedness (net of cash) of the
Company was $217.3 million compared to $200.2 million at March 31, 1999 and
$230.1 at December 31, 1999. On March 6, 2000 the revolving credit facility was
amended to provide, among other things, maximum borrowings thereunder up to
$200.0 million or a borrowing base comprised of specified percentages of
accounts receivable and inventory, whichever is less. As of April 1, 2000, $67.1
million was outstanding and $51.5 million was available for additional
borrowings under the credit facility.
The Company's principal sources of cash during the first quarters 2000 and
1999 were from operations and borrowings under the revolving credit facility.
Cash generated from (used in) operating activities totaled $18.1 million and
$(11.0) million respectively, during each of those periods. Net working capital
decreased in the first quarter 2000 by $9.5 million and increased by $14.9
million in the first quarter 1999. Trade accounts receivable increased $9.2
million in the first quarter 2000 due primarily to increased sales levels.
However, net trade accounts receivable of $98.1 million at April 1, 2000 remains
well below the March 31, 1999 level of $103.6 million. Increases in inventories
due to seasonal stocking total $1.5 million in 2000 and $8.1 million in 1999.
Decreases in other current assets, which are primarily due to reduction in
vendor rebates receivables, increased cash by $11.1 million in 2000. Trade
accounts payable and accrued expenses increased by $15.5 million in 2000 and
decreased by $8.8 million in 1999, as the Company heavily utilized anticipation
discounts offered by a major supplier in 1999, while in 2000 the Company is not.
Capital expenditures during the first quarter of 2000 and 1999 amounted to
$2.7 million and $3.2 million, respectively. Capital expenditures in 2000
included $1.2 million in Western Retail for new retail stores, existing retail
store refurbishment and relocations, and information systems. Western Wholesale
expended approximately $0.7 million in expansion and racking projects.
The Company anticipates that its principal use of cash going forward will
be to meet working capital and debt service requirements and to make capital
expenditures. Based upon current and anticipated levels of operations, the
Company believes that its cash flow from operations, together with amounts
available under the credit facility, will be adequate to meet its anticipated
requirements.
Certain minority stockholders of the Company have been granted redemption
rights commencing in 2004, subject to certain conditions, which if exercised
would obligate the Company to redeem the shares of capital stock held by such
stockholders at agreed valuations (based upon a multiple of EBITDA formula).
There can be no assurance that sufficient funds will be available to redeem the
shares of capital stock held by such stockholders if the Company is required to
do so or whether the terms of its outstanding indebtedness at such time will
permit such redemption.
9
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company does not consider its exposure to market risk to be material.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There have been no material developments in legal proceedings involving the
Company since those reported in the Company's Report on Form 10-K for the fiscal
year ended December 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<C> <S> <C>
(a) Exhibits --
Exhibit 11 Computation of Earnings per Share
Exhibit 12.1 Statement Regarding Computation of Earnings to Fixed Charges
and Preferred Stock Dividends
Exhibit 27.1-.2 Financial Data Schedules
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended April 1, 2000.
</TABLE>
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 16, 2000
HEAFNER TIRE GROUP, INC.
By: /s/ DAVID H. TAYLOR
------------------------------------
David H. Taylor
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as Principal Financial Officer)
11
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EXHIBIT 11
HEAFNER TIRE GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------
APRIL 1, 2000 MARCH 31, 1999
------------- --------------
<S> <C> <C>
Average shares outstanding during the period................ 5,286,917 5,087,667
Incremental shares under stock options and warrants computed
under the treasury stock method using the average market
price of issuer's stock during the period................. -- --
----------- -----------
Total shares for diluted EPS........................... 5,286,917 5,087,667
=========== ===========
Income applicable to common shareholders:
Net loss.................................................. $(2,911,000) $(1,193,000)
=========== ===========
Loss per basic common share:................................ $ (0.55) $ (0.23)
=========== ===========
Loss per diluted share:..................................... $ (0.55) $ (0.23)
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 12.1
HEAFNER TIRE GROUP, INC.
STATEMENT REGARDING: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(Amounts in thousands, except ratio amounts)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
APRIL 1, 2000 MARCH 31, 1999
(UNAUDITED) (UNAUDITED)
------------- --------------
<S> <C> <C>
Consolidated pretax income (loss) from continuing
operations................................................ $(4,063) $(2,053)
Interest.................................................... 5,829 5,112
Interest portion of rent expense............................ 2,488 2,179
------- -------
EARNINGS.................................................... 4,254 5,238
======= =======
Interest.................................................... 5,829 5,112
Interest portion of rent expense............................ 2,488 2,179
------- -------
FIXED CHARGES............................................... 8,317 7,291
======= =======
RATIO OF EARNINGS TO FIXED CHARGES.......................... -- --
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HEAFNER
TIRE GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> APR-01-2000
<CASH> 11,007
<SECURITIES> 0
<RECEIVABLES> 101,021
<ALLOWANCES> 2,921
<INVENTORY> 150,400
<CURRENT-ASSETS> 287,613
<PP&E> 67,682
<DEPRECIATION> 19,859
<TOTAL-ASSETS> 461,539
<CURRENT-LIABILITIES> 205,695
<BONDS> 161,205
11,094
0
<COMMON> 53
<OTHER-SE> 7,603
<TOTAL-LIABILITY-AND-EQUITY> 461,539
<SALES> 254,428
<TOTAL-REVENUES> 254,428
<CGS> 188,747
<TOTAL-COSTS> 253,239
<OTHER-EXPENSES> (577)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,829
<INCOME-PRETAX> (4,063)
<INCOME-TAX> (1,152)
<INCOME-CONTINUING> (2,911)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,911)
<EPS-BASIC> (0.55)
<EPS-DILUTED> (0.55)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HEAFNER
TIRE GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. CERTAIN 1999 AMOUNTS HAVE
BEEN RECLASSIFIED TO CONFORM WITH THE 2000 PRESENTATION.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,249
<SECURITIES> 0
<RECEIVABLES> 114,713
<ALLOWANCES> 3,115
<INVENTORY> 146,258
<CURRENT-ASSETS> 277,491
<PP&E> 60,005
<DEPRECIATION> 15,042
<TOTAL-ASSETS> 450,792
<CURRENT-LIABILITIES> 206,034
<BONDS> 162,225
11,353
0
<COMMON> 51
<OTHER-SE> 16,851
<TOTAL-LIABILITY-AND-EQUITY> 450,792
<SALES> 239,392
<TOTAL-REVENUES> 239,392
<CGS> 181,343
<TOTAL-COSTS> 236,731
<OTHER-EXPENSES> (398)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,112
<INCOME-PRETAX> (2,053)
<INCOME-TAX> (860)
<INCOME-CONTINUING> (1,193)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,193)
<EPS-BASIC> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
