As filed with the Securities and Exchange Commission on April 21, 1998
Registration Statement No. 333-25285
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
Post-Effective Amendment No. 1
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
HANDY HARDWARE WHOLESALE, INC.
(Exact name of Registrant as specified in charter)
Texas 8300 Tewantin Drive 74-1381875
(State of Incorporation) Houston, Texas 77061 (I.R.S. Employer
(713) 644-1495 Identification No.)
(Address and telephone number of
Registrant's principal executive offices)
-------------------------
James D. Tipton Copy to:
President Donald W. Brodsky
Handy Hardware Wholesale, Inc. Bo C. Chandler
8300 Tewantin Drive Jenkens & Gilchrist,
Houston, Texas 77061 A Professional Corporation
(713) 644-1495 1100 Smith, Suite 1800
Houston, Texas 77002
(Name, address and telephone number of agent for service)
-------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: |X|
If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box: |X|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Proposed Maximum Proposed Maximum
Securities to be Number of Shares to Offering Price per Aggregate Offering Amount of
Registered be Registered Share Price Registration Fee
<S> <C> <C> <C> <C>
Class A Common Stock,
$100 par value 1,490 $100.00 $149,000 *
Class B Common Stock,
$100 par value 14,593 $100.00 $1,459,300 *
Preferred Stock,
$100 par value 14,341 $100.00 $1,434,100 *
TOTAL 30,424 $3,042,400 *
* Registration fee previously paid.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
CROSS-REFERENCE SHEET
Between Items of Form S-2 and the Prospectus
<TABLE>
<CAPTION>
Item No. Prospectus Caption
<S> <C>
1. Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus Cover Page
2. Inside Front and Outside Back Cover Page of Prospectus Table of Contents;
Available Information
3. Summary Information, Risk Factors and Ratio of Earnings The Company, Ratio of Earnings
to Fixed Charges to Combined Fixed Charges and
Preferred Stock Dividend Requirements
4. Use of Proceeds Cover Page; Use of Proceeds
5. Determination of Offering Price Determination of Offering Price
6. Dilution Inapplicable
7. Selling Security Holders Inapplicable
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Registered Dividend Policy; Description of
Capital Stock
10. Interests of Named Experts and Counsel Inapplicable
11. Information with Respect to the Registrant Available Information; The Company;
Description of Capital Stock; Incorporation
of Certain Documents by Reference
12. Incorporation of Certain Information by Reference Incorporation of Certain Docuemnts by
Reference
13. Disclosure of Commission Position on Indemnification for Inapplicable
Securities Act Liabilities
</TABLE>
<PAGE>
PROSPECTUS
HANDY HARDWARE WHOLESALE, INC.
1,490 Shares of Class A Common Stock ($100 par
value) 14,593 Shares of Class B Common Stock ($100
par value)
14,341 Shares of Preferred Stock ($100 par value)
There is no active trading market for any class of securities of HANDY
HARDWARE WHOLESALE, INC. (the "Company" or "Handy Hardware") offered hereby and
no market is expected to develop. The securities offered hereby are being
offered at their par value of $100 per share. See "Determination of Offering
Price." The securities are being offered in a continuous offering period through
April 30, 1999, unless extended by the Company.
<TABLE>
<CAPTION>
Underwriting Discounts
Class of Securities Price to Public and Commissions(1) Proceeds to Company(1)(2)
Per Share Total Per Share Total Per Share Total
<S> <C> <C> <C> <C> <C> <C>
Class A Common Stock $100 $ 149,000 -0- -0- $100 $ 149,000
Class B Common Stock $100 $1,459,300 -0- -0- $100 $1,459,300
Preferred Stock $100 $1,434,100 -0- -0- $100 $1,434,100
<FN>
(1) No sales commissions are being charged by the Company, no underwriter
has been employed by the Company, and no one will receive a commission
in connection with this offering.
(2) Before deduction of expenses payable by the Company estimated at $20,570.
</FN>
</TABLE>
Only holders of Class A Common Stock have voting rights. Holders of Class B
Common Stock and Preferred Stock have no voting rights. The holders of the
Preferred Stock have priority over holders of Class A and Class B Common Stock
upon liquidation of the Company and are entitled to a cumulative annual dividend
as declared by the Board of Directors of the Company of not less than 7% nor
more than 20% of the par value of such shares. After payments to the holders of
Preferred Stock, the holders of Class A Common Stock and Class B Common Stock
would share ratably in the assets of the Company in the event of its
liquidation.
The securities hereby are being offered, with no minimum amount of
securities to be sold, in a continuous offering period from the date hereof
through April 30, 1999, unless extended by the Company on a monthly basis
through no later than April 30, 2000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR STATE SECURITIES ADMINISTRATORS NOR HAS THE COMMISSION OR
ANY SUCH ADMINISTRATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
1
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION..........................................................2
THE COMPANY....................................................................3
THE OFFERING...................................................................3
USE OF PROCEEDS................................................................3
DIVIDEND POLICY................................................................4
DETERMINATION OF OFFERING PRICE................................................4
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS.......................................5
PLAN OF DISTRIBUTION...........................................................6
DESCRIPTION OF CAPITAL STOCK...................................................8
SUMMARY OF DEALER CONTRACT.....................................................9
LEGAL MATTERS..................................................................9
EXPERTS........................................................................9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................10
--------------------
No person has been authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made by this Prospectus. If given or made, such information or representation
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer of any securities other than the
registered securities to which it relates or an offer to any person in any
jurisdiction where such an offer would be unlawful. Neither the delivery of the
Prospectus nor sale hereunder shall create an implication that there has been no
change in the affairs of the Company since the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 5th Street, N.W., Room
1024, Washington, D.C. 20549, and at the Commission's regional offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048,
at prescribed rates. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission at http://www.sec.gov. The Company
has delivered to each purchaser of the securities offered hereby a complete and
legible copy of the Company's most recent annual report on Form 10-K and will
deliver its most recent quarterly report on Form 10-Q.
The Company has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of 1933, as amended, with
respect to the securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the
Registration Statement, reference is hereby made to the Registration Statement
and the exhibits thereto. Copies of the Registration Statement may be inspected
without charge at the principal office of the Commission in Washington, D.C.,
and copies of all or any part thereof may be obtained from the Commission upon
payment of the charges prescribed by the Commission.
2
<PAGE>
THE COMPANY
Handy Hardware was formed by 13 independent hardware dealers in 1961 for
the purpose of providing warehouse facilities and centralized purchasing
services that would allow interested independent hardware dealers
("Member-Dealers") to compete more effectively in areas of price and service.
The Company sells merchandise to its Member-Dealers at its cost plus a markup
charge, resulting generally in a lower price than the Member-Dealers could have
obtained on their own. The Company is owned entirely by its Member-Dealers (and
former Member-Dealers who have not sold their shares back to the Company) and is
operated for the benefit of those dealers. As of April 1, 1998, the Company had
994 active Member-Dealers. The Company utilizes a central warehouse and office
facility located in Houston, Texas, and maintains a fleet of 38 trailers owned
by the Company and 42 leased power units and trailers which are used for
merchandise delivery. At the date of this Prospectus, all of Handy Hardware's
Member-Dealers were located in Texas, Louisiana, Mississippi, Alabama, Florida,
Oklahoma, Arkansas, Mexico, Central America and Saudi Arabia. For a more
detailed description of the Company's business and operations, see Items 1 and 2
on pages 1-7 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
The Company's executive offices are located at 8300 Tewantin Drive,
Houston, Texas 77061, and its telephone number is (713) 644-1495.
THE OFFERING
Securities offered... 1,490 shares of Class A Common Stock ($100 par value)
14,593 shares of Class B Common Stock ($100 par value)
14,341 shares of Preferred Stock ($100 par value)
Price of each share
offered............ $100.00
Use of proceeds....... Expansion of inventory and purchase of equipment
USE OF PROCEEDS
The shares of capital stock of the Company offered hereby and remaining
available for sale are projected to be sold over a period of one year (unless
extended by the Company) on a monthly basis, beginning in May 1998. The gross
proceeds to the Company from the sale of the securities offered hereby is
$3,042,400, (before deduction of expenses of the offering, and without taking
into account any amounts paid to repurchase shares of capital stock of the
Company during this period). This estimate is based upon two assumptions: (1)
continuation of the current policy of stock purchases being made in amounts
equal to 2% of warehouse purchases; and (2) warehouse purchases for 1998 and
beyond remaining at the same levels as in 1997. The Company expects to utilize
proceeds from the offering in the following manner and priority order based upon
anticipated budgets and capital expenditures for 1998: approximately $2,157,400
would be used for expansion of inventory, $400,000 for upgrading computer
equipment, $350,000 for expansion and upgrading of warehouse equipment, $60,000
to upgrade company cars, $25,000 for upgrading office equipment and $50,000 for
building improvements. If gross proceeds of the offering are less than
$3,042,400, the Company will use working capital as required to provide the
necessary level of funding of the above-mentioned projects.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained on pages 9-12 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
3
<PAGE>
DIVIDEND POLICY
One of the goals of the Company is to provide its Member-Dealers with
quality merchandise at a low cost, together with services that will increase the
profit of the individual Member-Dealers as opposed to the profits of the
Company. For this reason, the Company has attempted to keep its net income as a
percentage of sales (and thus the funds that would be available for the payment
of dividends) relatively constant from year to year. It is the present policy of
the Company's Board of Directors to retain all earnings not needed for Preferred
Stock dividends to finance the development and growth of the Company's business.
The Company has not declared or paid a cash dividend on either class of its
Common Stock since its inception and does not anticipate doing so in the
foreseeable future. The Company's future dividend policy with respect to
Preferred Stock will depend upon its earnings, capital requirements, financial
condition and other relevant factors.
The Company is required by its Articles of Incorporation to pay a dividend
on its outstanding shares of Preferred Stock of not less than 7% and not more
than 20% of the par value of such shares each year, the exact rate to be
determined by the Board of Directors. The record date for payment of dividends
on Preferred Stock is January 31 of each year and only shareholders of record on
that date are eligible to receive the dividend. In February of each year listed
below the Board of Directors has declared such a dividend, which was paid in the
following month, at the percentages of par value indicated:
1998 -- 13%
1997 -- 13%
1996 -- 12%
1995 -- 10%
1994 -- 12%
DETERMINATION OF OFFERING PRICE
The offering price of $100 per share for the shares offered hereby is equal
to the par value of the stock, the price at which the Company always has sold
its shares. To the knowledge of the Company the only secondary trading in the
securities of the Company has been the transfer of Preferred Stock to certain
affiliates of its Member-Dealers and the repurchase of shares from retiring
Member-Dealers by the Company at a price of $100 per share. For more information
regarding the repurchase program, see "Plan of Distribution - Repurchases From
Overinvested Member-Dealers" below. There is no assurance that the Company will
continue to repurchase shares from retiring Member-Dealers in the future, or if
repurchases are made, that the repurchase price will be $100 per share. For more
information regarding the market for the Company's shares, see "Market for
Registrant's Common Equity and Related Stockholder Matters" on page 7 of the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
4
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The ratio of earnings to combined fixed charges and preferred stock
dividend requirements of the Company for each of the last five fiscal years is
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EARNINGS(1)
Pretax Earnings $ 2,169,718 $1,857,326 $1,568,634 $ 887,785 $ 766,101
Plus: Fixed Charges 197,367 333,464 338,758 352,012 409,074
----------- ---------- ---------- ---------- ----------
TOTAL EARNINGS $ 2,367,085 $2,190,790 $1,907,392 $1,239,797 $1,175,175
=========== ========== ========== ========== ==========
FIXED CHARGES(2)
Interest Expense 42,804 172,483 236,743 248,746 272,478
Rental Expense 154,563 160,981 102,015 103,266 101,596
Amortization of Debt Expense -0- -0- -0- -0- 35,000
----------- ---------- ---------- ---------- ----------
TOTAL FIXED CHARGES 197,367 333,464 338,758 352,012 409,074
PREFERRED DIVIDEND REQUIREMENTS(3) 955,095 792,352 617,162 685,397 771,611
----------- ---------- ---------- ---------- ----------
TOTAL FIXED CHARGES AND PREFERRED
DIVIDEND REQUIREMENTS $1,152,462 $1,125,816 $ 955,920 $1,037,409 $1,180,685
=========== ========== ========== ========== ==========
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED DIVIDEND
REQUIREMENTS 2.05 1.95 2.00 1.19 .99
=========== ========== ========== ========== ==========
Coverage Deficiency $ 5,510
==========
- -------------------------
<FN>
(1) "Earnings" include pretax earnings from continuing operations, to which has
been added back fixed charges.
(2) "Fixed charges" include interest expense, rental expense representative of
an interest factor, and amortization of debt expense.
(3) "Preferred dividend requirements" constitute the amount of pre-tax earnings
required to cover, after taxes, the dividends paid on all issued and outstanding
shares of Preferred Stock of the Company.
</FN>
</TABLE>
For the fiscal year 1993 earnings were inadequate to cover fixed charges
and Preferred Stock dividends, and the coverage deficiencies were $5,510. For
the fiscal years 1997, 1996, 1995 and 1994, earnings exceeded fixed charges and
preferred stock dividends. Fixed charges and Preferred Stock dividends were paid
from working capital in fiscal year 1993, which would be the source for payment
of fixed charges and/or dividends if future coverage deficiencies occur.
5
<PAGE>
PLAN OF DISTRIBUTION
The shares of Class A Common Stock, Class B Common Stock and Preferred
Stock offered hereby will be sold only to Member-Dealers of the Company. Each of
the Company's Member-Dealers is an independent hardware store that has entered
into a contract with the Company in order that it might buy some or all of its
merchandise through the Company. Prior to becoming a new Member-Dealer of the
Company, the independent hardware store enters into a Dealer Contract ("Dealer
Contract") and a Stock Subscription Agreement. Pursuant to these agreements,
each Member-Dealer agrees to make a fixed initial purchase of Class A Common
Stock followed by periodic purchases of Class B Common Stock and Preferred
Stock. At the time this Prospectus is delivered, it will be accompanied by a
Dealer Contract and a Stock Subscription Agreement if the investor is not
already a Member-Dealer and has not previously executed a Dealer Contract and a
Stock Subscription Agreement or if such investor is already a Member-Dealer but
has opened a new store that will also be a Member-Dealer.
Purchase of Class A Common Stock
At the time the investor becomes a Member-Dealer, he is required to
purchase, in cash, 10 shares of Class A Common Stock at $100 per share.
Purchases of Class B Common Stock and Preferred Stock
General. In approximately March of each fiscal year, the Company calculates
a minimum desired level of stock ownership for each Member-Dealer ("Desired
Stock Ownership"), based on (i) the dollar amount of Class A Common Stock, Class
B Common Stock and Preferred Stock owned by the Member-Dealer as of December 31
of the preceding fiscal year ("Actual Stock Ownership") and (ii) the
Member-Dealer's total purchases of merchandise from the Company during that
preceding fiscal year ("Total Purchases"). The minimum Desired Stock Ownership
for a Member-Dealer is $10,000. If the Member-Dealer's Actual Stock Ownership is
less than his Desired Stock Ownership, then throughout the period from April 1
of the current fiscal year to March 31 of the following fiscal year the Company
will collect funds from the Member-Dealer for the purchase of additional Class B
Common Stock and Preferred Stock ("Purchase Funds"). The Purchase Funds are
recognized by the Company as Class B Common, subscribed, and Preferred Stock,
subscribed. Until such time as the Purchase Funds are applied to purchase Class
B Common and Preferred Stock for a Member- Dealer, such Purchase Funds are used
by the Company for working capital and general corporate purposes. The period of
time for which Purchase Funds are held by the Company varies, depending on the
amount of Warehouse Purchases by the Member-Dealer. See "--Collection of
Purchase Funds."
Calculation of Desired Stock Ownership. Each Member-Dealer's Desired Stock
Ownership is calculated as set forth in the following table:
<TABLE>
<CAPTION>
Actual Stock Desired Stock Ownership(2)
Ownership(1)
<S> <C>
$1 to $31,249 $1.00 for every $8.00 of Total Purchases
$31,250 to $56,249 $1.00 for every $8.00 of Total Purchases from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases over $250,000
$56,250 to $74,999 $1.00 for every $8.00 of Total Purchases from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases from $250,000 to $500,000
+ $1.00 for every $13.33 of Total Purchases over $500,000
$75,000 to $87,499 $1.00 for every $8.00 of Total Purchases from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases from $250,000 to $500,000
+ $1.00 for every $13.33 of Total Purchases from $500,000 to $750,000
+ $1.00 for every $20.00 of Total Purchases over $750,000
6
<PAGE>
$87,500 and above $1.00 for every $8.00 of Total Purchases from $1 to $250,000
+ $1.00 for every $10.00 of Total Purchases from $250,000 to $500,000
+ $1.00 for every $13.33 of Total Purchases from $500,000 to $750,000
+ $1.00 for every $20.00 of Total Purchases from $750,000 to $1,000,000
+ $1.00 for every $40.00 of Total Purchases over $1,000,000
<FN>
(1) Including all Class A Common Stock, Class B Common Stock and Preferred
Stock owned by the Member-Dealer.
(2) The minimum Desired Stock Ownership is an aggregate of all classes of
capital stock of $10,000. In each case "Total Purchases" are measured as of
the end of the immediately preceding fiscal year.
</FN>
</TABLE>
Example.
In March 1998, the Company calculates that as of December 31, 1997, a
Member-Dealer's Actual Stock Ownership was $32,000 and his Total Purchases
during 1997 were $300,000. The Member-Dealer's Desired Stock Ownership will be
$36,250 ($1.00 for each $8.00 of the first $250,000 of Total Purchases [$31,250]
plus $1.00 for each $10.00 of the next $50,000 of Total Purchases [$5,000]).
Because the Member-Dealer's Actual Stock Ownership is less than his Desired
Stock Ownership, the Company will collect Purchase Funds throughout the period
from April 1, 1998 to March 31, 1999 for the purchase of additional Class B
Common Stock and Preferred Stock.
Collection of Purchase Funds. Each Member-Dealer receives from the Company
a semi-monthly statement of the Total Purchases made by the Member-Dealer during
the covered billing period. Total Purchases include purchases of inventory from
the Company's warehouse ("Warehouse Purchases") and purchases of inventory by
the Member-Dealer directly from the manufacturer which are billed through the
Company. If the Company has determined that Purchase Funds are to be collected
from a Member-Dealer for a particular April 1 to March 31 period, then each
statement sent to that Member-Dealer during that period will contain an
additional charge for Purchase Funds, in an amount equal to two percent (2%) of
the Warehouse Purchases invoiced on the statement.1 The Company will continue to
collect Purchase Funds throughout the April 1 to March 31 period, even though
the Member-Dealer attains his Desired Stock Ownership during the course of the
period. On a monthly basis, the Company reviews the amount of unexpended
Purchase Funds then being held for each Member-Dealer. If a Member-Dealer has
unexpended Purchase Funds in an amount of at least $2,000, the Company applies
$2,000 to the purchase of 10 shares of Class B Common Stock and 10 shares of
Preferred Stock at $100 per share.
Overinvested Member-Dealers. If at the end of any fiscal year a
Member-Dealer's Actual Stock Ownership exceeds his Desired Stock Ownership (an
"Overinvested Member-Dealer"), he will not be required to pay any Purchase Funds
during the following April 1 to March 31 period. An Overinvested Member-Dealer
may voluntarily continue to make additional purchases of Class B Common Stock
and Preferred Stock by paying Purchase Funds to the Company in amounts equal to
2% of Warehouse Purchases (subject to the same contractual provisions noted
above entitling the Company to collect 2% of Total Purchases).
Repurchases from Overinvested Member-Dealers. Since 1991 the Company has
repurchased certain shares of Class B Common Stock and Preferred Stock from
Overinvested Member-Dealers whose Actual Stock Ownership exceeded their Desired
Stock Ownership by $4,000 or more. The amount eligible for repurchase from each
Overinvested Member-Dealer in each year has been equal to one-fourth of the
excess amount, equally divided between shares of Class B Common Stock and
Preferred Stock. The repurchases have been made at the full initial sale price
of $100 per share. In 1997, approximately 16% of the shares eligible for
repurchase from Overinvested Member-Dealers were submitted for repurchase, for
which the Company expended $34,800. The Company currently intends, but is not
required, to repurchase from Overinvested Member-Dealers their entire
overinvested amounts. The Company's ability to conduct such repurchases,
however, will depend upon the Company's future results of operations, liquidity,
- ------------------------
1 The Subscription Agreement entitles the Company to collect 2% of Total
Purchases as Purchase Funds. At present, however, the board of directors has
determined to collect 2% of Warehouse Purchases only.
7
<PAGE>
capital needs and other financial factors. Accordingly, there can be no
assurance that repurchases will take place in the future, or if so, in what
amounts or over what time periods.
Affiliated Member-Dealers
If one or more individuals who control an existing Member-Dealer open a new
store which will also be a Member- Dealer, the new Member-Dealer is required to
make an initial purchase of 10 shares of Preferred Stock rather than 10 shares
of Class A Common Stock. In all other respects, however, the Company will treat
the new Member-Dealer as an entirely separate entity for purposes of determining
required stock purchases. The Company will calculate a separate Desired Stock
Ownership for the new Member-Dealer and will maintain a separate account for
Purchase Funds paid by the new Member-Dealer.
Manner of Offering
The securities offered hereby will be sold only in the states of Texas,
Louisiana, Mississippi, Alabama, Florida, Oklahoma and Arkansas, as well as in
Mexico, Central America, and Saudi Arabia through employees of the Company who
are licensed to sell securities in those states or are exempt from licensing
requirements. No underwriter will be used in connection with this offering. No
sales commissions will be charged or paid by the Company and no discounts will
be allowed.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized by its Articles of Incorporation to issue 20,000
shares of Class A Common Stock, par value $100 per share, 100,000 shares of
Class B Common Stock, par value $100 per share, and 100,000 shares of Preferred
Stock, par value $100 per share.
Class A Common Stock and Class B Common Stock
The holders of Class A Common Stock are entitled to one vote for each share
held of record on each matter submitted to a vote of shareholders. In accordance
with the bylaws of the Company, nine directors are to be elected for three-year
terms, and three of such directors are elected at each annual meeting of
shareholders. The tenth director of the Company, who serves as President of the
Company, is elected for a one-year term at each annual meeting of shareholders.
Holders of Class A Common Stock must be engaged in the retail sale of goods and
merchandise, and may not be issued or retain more than 10 shares of Class A
Common Stock at any time. The holders of Class B Common Stock are not entitled
to vote on matters submitted to a vote of shareholders except as specifically
provided by Texas law.
Shares of Class A and Class B Common Stock are neither redeemable nor
convertible, and the holders of Class A and Class B Common Stock have no
preemptive rights to purchase any securities of the Company. Subject to the
prior rights of holders of Preferred Stock, holders of Class A and Class B
Common Stock are entitled to receive such dividends as may be lawfully declared
by the Board of Directors and paid by the Company and, in the event of
liquidation, dissolution or winding up of the Company, are entitled to share
ratably in all assets remaining after payment of liabilities and a liquidation
preference of $100 per share payable to holders of the Preferred Stock. All
outstanding shares of Class A and Class B Common Stock of the Company are, and
the shares of Class A and Class B Common Stock to be outstanding upon completion
of this offering will be, validly issued, fully paid and nonassessable. As of
March 24, 1998, there were 885 holders of record of Class A Common Stock and 725
holders of record of Class B Common Stock.
Holders of Class A Common Stock may not sell those shares to a third party
without first offering to sell them back to the Company. There are no specific
restrictions on the transfer of the Company's Class B Common Stock; however, all
shares of Class A and Class B Common Stock are, to the best knowledge of the
Company, owned by Member-Dealers or former Member-Dealers of the Company.
Preferred Stock
The holders of Preferred Stock are entitled to cumulative dividends of not
less than 7% per year nor more than 20% per year of the par value ($100.00 per
share) of the shares of Preferred Stock, as fixed by the Board of Directors. The
8
<PAGE>
Preferred Stock has a liquidation value of $100 per share. This dividend on the
Preferred Stock is the only form of Member-Dealer payout by the Company. The
holders of Preferred Stock are not entitled to vote on matters submitted to a
vote of shareholders except as specifically provided by Texas law. The shares of
Preferred Stock are not convertible, but are subject to redemption (at the
option of the Company) by vote of the Company's Board of Directors, in exchange
for $100 per share and all accrued unpaid dividends. The Company has no
obligation to redeem the Preferred Stock or provide for a sinking fund for the
redemption of such shares.
There are no specific restrictions on the transfer of the Preferred Stock;
however, all shares of Preferred Stock are, to the best knowledge of the
Company, owned by Member-Dealers or former Member-Dealers of the Company or
affiliates of Member-Dealers. As of March 24, 1998, there were 789 holders of
record of Preferred Stock.
SUMMARY OF DEALER CONTRACT
The following is a summary of certain terms and conditions of the Dealer
Contract which each independent dealer must enter into prior to becoming a
Member-Dealer. All such information is qualified by reference to the forms of
Dealer Contract delivered to each investor prior to or contemporaneously with
the delivery of this Prospectus.
Under each Dealer Contract, the Company agrees to sell merchandise and
furnish services to the Member-Dealer at its laid in price (purchase price as
adjusted for freight costs), plus a mark-up to be set by the Company. The
merchandise sold by the Company to the Member-Dealers is f.o.b. the Company's
warehouse. The Dealer Contract provides that merchandise will be delivered by
the Company's trucks or common carrier, with charges to be set by the Company.
The Company also agrees in each Dealer Contract to permit the Member-Dealer the
use of the trade name "Handy Hardware Store" and to furnish to the Member-Dealer
signs, a general catalog and other materials for the Member-Dealer's operation
as a Handy Hardware Store.
Each Dealer Contract contains the agreement of the Member-Dealer to
purchase shares of the Company's securities in the manner set forth in a Stock
Subscription Agreement to be entered into between the Company and the Member-
Dealer. The Member-Dealer further agrees to pay an initial service charge
(currently set at $200) to defray in part the costs of establishing the new
account. In addition, the Member-Dealer agrees to maintain in confidence all
materials disclosed by the Company and, upon termination of the agreement, to
return all materials furnished by the Company. Member-Dealers also agree to pay
all invoices when due and to participate actively as a Company Member-Dealer.
Nothing in the Dealer Contract, however, is to be construed as placing a
requirement on the Member-Dealer for the purchase of any minimum amount of
inventory from the Company in order to remain a Member-Dealer. The Dealer
Contract is cancelable by either party upon 60 days notice to the other party.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby are
being passed upon for the Company by Jenkens & Gilchrist, A Professional
Corporation, Houston, Texas.
EXPERTS
The financial statements of the Company and its subsidiaries included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
have been examined by Clyde D. Thomas & Company, independent public accountants,
as stated in their opinion incorporated herein by reference. The financial
statements referred to above are incorporated herein by reference in reliance
upon such report and upon the authority of that firm as experts in accounting
and auditing.
9
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, which was delivered to the shareholders of the
Company as the Annual Report to Shareholders pursuant to Rule 14a-3
promulgated under the Exchange Act;
(2) all documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a) or 15(d) of the Exchange Act prior to
the termination of the Offering.
This Prospectus is accompanied by copies of document (1) listed above.
Any statement contained in a previously filed document incorporated by
reference shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
accompanying Prospectus supplement, or in any other subsequently filed document
which also is or is deemed to be incorporated by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
10
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Company in connection with the
issuance and distribution of the securities to be registered and offered hereby
are as follows:
SEC registration fee $ 0
Printing expense 570
Legal fees and expenses 0,500
Blue sky fees and expenses 7,500
Accounting fees and expenses 2,000
----------
TOTAL $ 20,570
==========
Item 15. Indemnification of Directors and Officers.
Article 2.02-1 of the Texas Business Corporation Act provides that a
corporation may indemnify its officers, directors, employees and agents for
expenses and costs incurred in certain proceedings arising out of actions taken
in their official capacity only if such persons were acting in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, except in relation to matters in which they have been found
liable (i) to the corporation, or (ii) on the basis that personal benefit was
improperly received regardless of whether or not the benefit resulted from
action taken in their official capacity. In the case of any criminal proceeding,
such persons must also have had no reasonable cause to believe such conduct was
unlawful. Article 2.02-1 further provides that a corporation shall indemnify its
officers and directors against reasonable expenses incurred in connection with
proceedings arising out of actions taken in their official capacity in which
such persons have been wholly successful, on the merits or otherwise, in the
defense of such actions.
Item 16. Exhibits.
The following is a list of exhibits filed as part of this Registration
Statement.
Exhibit
Number
4.1 Specimen copy of certificate representing Class A
Common Stock. (Filed as Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1983, and incorporated herein by
reference.)
4.2 Specimen copy of certificate representing Class B
Common Stock. (Filed as Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1983, and incorporated herein by
reference.)
4.3 Specimen copy of certificate representing Preferred
Stock. (Filed as Exhibit 4.3 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1983, and incorporated herein by reference.)
II-1
<PAGE>
4.4 Form of Subscription to Shares of Handy Hardware
Wholesale, Inc. for Class A Common Stock, Class B
Common Stock and Preferred Stock. (Filed as Exhibit
4.4 to this Registration Statement as originally
filed on May 5, 1994, and incorporated herein by
reference.)
(1) 5.1 Opinion of Jenkens & Gilchrist, A Professional
Corporation.
(2) 10.1 Employment Agreement as amended, between Handy
Hardware Wholesale, Inc. and James D. Tipton. (Filed
as Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1983, and
incorporated herein by reference.)
(2) 10.2 Second Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated July 19, 1985. (Filed as
Exhibit 10.2 to the Company's Annual Report on Form
10-K for the year ended December 31, 1985, and
incorporated herein by reference.)
(2) 10.3 Third Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated December 16, 1988. (Filed as
Exhibit 10.3 to the Company's Annual Report on Form
10-K for the year ended December 31, 1988, and
incorporated herein by reference.)
(2) 10.4 Fourth Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated September 20, 1991. (Filed as
Exhibit 10.4 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991, and
incorporated herein by reference.)
(2) 10.5 Fifth Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated September 7, 1993. (Filed as
Exhibit 10.8 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and
incorporated herein by reference.)
10.6 Split-Dollar Agreement dated November 13, 1991
between the Company and James D. Tipton. (Filed as
Exhibit 10.5 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991, and
incorporated herein by reference.)
10.7 Form of Dealer Contract (Alabama, Arkansas, Florida,
Louisiana, Oklahoma and Texas). (Filed as Exhibit
10.7 to this Registration Statement as originally
filed on May 5, 1994, and incorporated herein by
reference.)
10.8 Form of Dealer Contract (Mississippi). (Filed as
Exhibit 10.8 to this Registration Statement as
originally filed on May 5, 1994, and incorporated
herein by reference.)
10.9 Amendment and Restatement of Credit Agreement dated
April 30, 1996, between Texas Commerce Bank, N.A.,
and Handy Hardware Wholesale, Inc. (Filed as Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, and
incorporated herein by reference.)
(2) 10.11 Sixth Amendment to the Employment Agreement, as
amended, between Handy Hardware Wholesale, Inc. and
James D. Tipton dated November 14, 1995. (Filed as
Exhibit 10.11 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995, and
incorporated herein by reference.)
(2) 10.12 Seventh Amendment to the Employment Agreement, as
amended between Handy Hardware Wholesale, Inc. and
James D. Tipton dated September 30, 1996. (Filed as
Exhibit 10.12 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996, and
incorporated herein by reference)
II-2
<PAGE>
(2) 10.13 Eighth Amendment to the Employment Agreement, as
amended between Handy Hardware Wholesale, Inc. and
James D. Tipton dated December 24, 1997. (Filed as
Exhibit 10.13 to the Company's Annual Report on Form
10-K for the year ended December 31, 1997, and
incorporated herein by reference)
11.1 Statement re computation of per share earnings (Filed
as Exhibit 11.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.)
12.1 Statements re computation of ratios (omitted because
sufficiently described in this Registration Statement
under "Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements" in the
Prospectus).
13.1 Annual Report to Security Holders (incorporated by
reference from the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997 as
previously filed with the Commission).
23.1 Consent of Clyde D. Thomas & Company.
23.2 Consent of Jenkens & Gilchrist, A Professional
Corporation (contained in their opinion filed as
Exhibit 5.1 hereto).
- -----------------------------
(1) Previously filed.
(2) Management contract.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1993, as amended (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the 1933 Act,
each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act") (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the 1934 Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
II-3
<PAGE>
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirement of Rule 14a-3 or Rule 14c-3
under the 1934 Act; and, where interim financial information required to be
present by Article 3 of Regulation S-X are not set forth in the Prospectus, to
deliver or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report on Form 10-Q that is specifically
incorporated by reference in the Prospectus to provide such interim financial
information.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Handy Hardware Wholesale, Inc., certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-2
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Houston, State of
Texas on April 21, 1998.
HANDY HARDWARE WHOLESALE, INC.
/s/ James D. Tipton
-----------------------------
James D. Tipton
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- -------------------- -------------------------- --------------
/s/ James D. Tipton* President, Chief Executive April 21, 1998
- ------------------- Officer and Director
/s/ Tina S. Kirbie* Chief Financial and April 21, 1998
- ------------------- Accounting Officer
/s/ Weldon D. Bailey* Director April 21, 1998
- -------------------
/s/ Norman J. Bering, II* Director April 21, 1998
- -------------------
/s/ Susie Bracht-Black* Director April 21, 1998
- -------------------
/s/ Virgil H. Cox* Director April 21, 1998
- -------------------
<PAGE>
/s/ Samuel J. Dyson* Director April 21, 1998
- -------------------
/s/ Robert L. Eilers* Director April 21, 1998
- -------------------
/s/ Richard A. Lubke* Director April 21, 1998
- -------------------
/s/ Jimmy T. Pate* Director April 21, 1998
- -------------------
/s/ Leroy Wellborn* Director April 21, 1998
- -------------------
*By: /s/ James D. Tipton
---------------------------------------------
James D. Tipton
Attorney-in-Fact pursuant to power of
attorney contained in original filing of this
Registration Statement
II-6
<PAGE>
Exhibit 12.1
Statement re Computation of Ratios
Omitted because sufficiently described in the Prospectus under "Ratio
of Earnings to Combined Fixed Charges and Preferred Stock Dividend
Requirements."
<PAGE>
Exhibit 23.1
Consent of Clyde D. Thomas & Company
<PAGE>
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference herein of our report
included in Handy Hardware Wholesale, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997, and the reference to our firm under the heading
"Experts" in the Prospectus.
-------------------------------
CLYDE D. THOMAS & COMPANY
Certified Public Accountants
April 20, 1998
Pasadena, Texas
<PAGE>
