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Previous: IREX CORP, 10-Q, 1995-05-15 |
Next: ACMAT CORP, 10-Q, 1995-05-15 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended March 31, 1995 Commission File Number 2-63880
ACE HARDWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-0700810
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2200 Kensington Court, Oak Brook, IL 60521
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (708) 990-6600
NONE
Former name, former address and former
fiscal year, if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES XX NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
Class Outstanding at March 31, 1995
Class A Voting Stock - $1,000 par value 3,892 shares
Class B Stock - $1,000 par value 3,192 shares
Class C Stock - $ 100 par value 1,625,897 shares
ACE HARDWARE CORPORATION
INDEX
Part I. - Financial Information: Page No.
Balance Sheet - March 31, 1995 and December 31, 1994 1
Statement of Earnings - Three Months Ended March 31,
1995 and 1994 2
Statement of Cash Flows - Three Months Ended
March 31, 1995 and 1994 3
Notes to Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II. - Other Information 6
<TABLE>
PART I FINANCIAL INFORMATION
ACE HARDWARE CORPORATION
BALANCE SHEET
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
(000'S OMITTED)
<S> <C> <C>
ASSETS
Current assets:
Cash and Cash Equivalents $ 104 $ 4,868
Accounts receivable, net 312,445 259,611
Merchandise inventory 302,926 270,391
Prepaid expenses and other current assets 7,574 6,810
Total current assets 623,049 541,680
Property and equipment, net 180,865 177,098
Other assets 8,023 6,703
Total assets $ 811,937 $ 725,481
LIABILITIES AND MEMBER DEALERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 7,363 $ 7,369
Short-term borrowings 91,000 30,000
Accounts payable 318,151 293,088
Patronage dividends payable in cash 32,703 27,302
Patronage refund certificates payable 12,784 1,315
Accrued expenses 32,373 38,627
Total current liabilities 494,374 397,701
Long-term debt:
Notes Payable 61,895 63,530
Industrial development revenue bonds
and variable rate bonds 393 500
Capitalized leases 169 257
Total long-term debt 62,457 64,287
Patronage refund certificates payable 51,550 63,666
Member dealers' equity:
Class A stock of $1,000 par value 3,970 3,924
Class B stock of $1,000 par value 6,499 6,499
Class C stock of $100 par value 164,996 164,666
Class C stock of $100 par value, issuable to
dealers for patronage dividends 27,964 21,766
Additional stock subscribed, net of unpaid portion 576 555
Retained Earnings 5,355 5,624
Contributed Capital 3,295 3,295
212,655 206,329
Less: Treasury stock, at cost 9,099 6,502
203,556 199,827
Total liabilities and member dealers' equity $ 811,937 $ 725,481
</TABLE>
See accompanying notes to financial statements.
-1-
<TABLE>
ACE HARDWARE CORPORATION
STATEMENT OF EARNINGS
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1995 1994
(000's omitted)
<S> <C> <C>
Net Sales $ 559,487 $ 515,830
Cost of Sales 518,121 477,718
Gross Profit 41,366 38,112
Operating expenses:
Warehouse and distribution 8,287 6,702
Selling, general and administrative 16,798 14,911
Total operating expenses 25,085 21,613
Operating income 16,281 16,499
Interest expense (3,066) (2,976)
Other income, net 1,146 626
Income taxes (373) (283)
Net earnings 13,988 13,866
Distribution of net earnings
Patronage Dividends $ 14,257 $ 14,474
Retained earnings (269) (608)
Net Earnings $ 13,988 $ 13,866
See accompanying notes to financial statements.
</TABLE>
-2-
<TABLE>
ACE HARDWARE CORPORATION
STATEMENT OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(000's OMITTED)
1995 1994
<S> <C> <C>
Operating Activities:
Net earnings $ 13,988 $ 13,866
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation 4,176 4,087
Loss on sale of property & equipment 1 118
Increase in accounts receivable, net (52,834) (52,868)
Increase in inventories (32,535) (13,963)
(Increase) Decrease in prepaids and other current assets (764) 1,058
Increase in accounts payable and accrued expenses 18,809 2,470
Net cash used by operating activities (49,159) (45,232)
Investing Activities:
Purchases of property and equipment (7,945) (5,850)
Proceeds from sale of property and equipment 1 0
Increase in other assets (1,320) (624)
Net cash used in investing activities (9,264) (6,474)
Financing Activities:
Proceeds from short-term borrowings 61,000 69,500
Principal payments on long-term debt (1,836) (8,599)
Payments on refund certificates and patronage
financing programs (3,306) (11,940)
Proceeds from sale of common stock 398 240
Repurchase of common stock (2,597) (1,637)
Net cash provided by financing activities 53,659 47,564
Decrease in cash and cash equivalents (4,764) (4,142)
Cash and cash equivalents at beginning of period $ 4,868 $ 4,142
Cash and cash equivalents at end of period $ 104 $ 0
See accompanying notes to financial statements.
</TABLE>
-3-
ACE HARDWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
1) General
The accompanying financial statements have not been examined
by independent public accountants except for the December 31,
1994 balance sheet but in the opinion of the Company reflect
all adjustments necessary to present fairly the financial
position as of March 31, 1995 and 1994 and the results of
operations and cash flows for the three months then ended.
These interim figures are not necessarily indicative of the
results to be expected for the full year.
2) Patronage Dividends
The Company operates as a cooperative organization and will
pay patronage dividends to member dealers based on the
earnings derived from business done with such dealers. It
has been the practice of the Company to distribute
substantially all patronage sourced earnings in the form of
patronage dividends.
Net earnings and patronage dividends will normally be the
same with approximately 99% of the Company's patronage
sourced net earnings being paid to consenting member dealers.
International dealers signed under an International Retail
Merchant Agreement are not eligible for patronage dividends
and related earnings are not included in patronage sourced
earnings.
3) Reclassifications
Certain financial statement reclassifications have been made
to prior year and prior quarter amounts to conform to
comparable classifications followed in 1995.
-4-
ACE HARDWARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 compared to Three Months Ended
March 31, 1994.
Results of Operations
Net sales increased 8.5% in 1995 primarily due to increases in
volume from existing dealers. International sales have decreased
4.4% exclusively related to the peso decline in Mexico and
resulting decreases in exports to that country.
Gross profit increased 8.5% paralleling first quarter sales growth
and remained comparable to 1994 as a percent of sales. A slight
shift in the mix of sales resulting in lower handling charges as
a percent of sales was offset by increased vendor allowances and
manufacturing gross profit.
Warehouse and distribution expenses increased vs. 1994 and as a
percent of sales due to reduced net traffic revenues, increased
building costs and labor cost increases to support the sales
growth.
Selling, general and administrative expenses increased vs. 1994
and as a percent of sales due to increased personnel costs for
field retail support, increased data processing costs and reduced
advertising income.
Interest expense increased as a result of higher interest rates
vs. the first quarter of 1994.
Other income increased due to increased income from dealer
financing programs.
Liquidity and Capital Resources
The Company expects that internally generated funds, along with
established lines of credit and long-term financing, will be the
primary financing sources for capital expenditures in the future.
The Company believes that those sources, along with retail growth
of the membership leading to patronage stock growth, will provide
adequate liquidity for the long-term.
-5-
PART II. OTHER INFORMATION
ACE HARDWARE CORPORATION
Item 6. Exhibits and Reports on Form 8-K.
(b) There were no reports on Form 8-K filed for the
three month period ended March 31, 1995.
-6-
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.
ACE HARDWARE CORPORATION
RITA D. KAHLE DATE
Rita D. Kahle
Vice President, Finance
(Principal Financial and Accounting Officer,
and duly authorized Officer of the registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from SEC Form 10-Q and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 104
<SECURITIES> 0
<RECEIVABLES> 314103
<ALLOWANCES> 1658
<INVENTORY> 302926
<CURRENT-ASSETS> 623049
<PP&E> 305504
<DEPRECIATION> 124639
<TOTAL-ASSETS> 811937
<CURRENT-LIABILITIES> 494374
<BONDS> 0
<COMMON> 204005
0
0
<OTHER-SE> 8650
<TOTAL-LIABILITY-AND-EQUITY> 811937
<SALES> 559487
<TOTAL-REVENUES> 559487
<CGS> 518121
<TOTAL-COSTS> 518121
<OTHER-EXPENSES> 25085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3066
<INCOME-PRETAX> 14361
<INCOME-TAX> 373
<INCOME-CONTINUING> 13988
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13988
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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