SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended September 30, 2000.
Commission File Number 0-15708
HANDY HARDWARE WHOLESALE, INC.
(Exact name of Registrant as specified in its charter)
TEXAS 74-1381875
(State of incorporation) (I.R.S. Employer
Identification No.)
8300 Tewantin Drive, Houston, Texas 77061
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number: (713) 644-1495
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- ------
The number of shares outstanding of each of the Registrant's classes of common
stock as of September 30, 2000, was 10,030 shares of Class A Common Stock, $100
par value, and 62,333 shares of Class B Common Stock, $100 par value.
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
INDEX
PART I Financial Information Page No.
-------
Item 1. Financial Statements
Condensed Balance Sheet September 30, 2000
and December 31, 1999 ...........................3-4
Condensed Statement of Earnings - Three Months
& Nine Months Ended September 30, 2000 and 1999....5
Condensed Statement of Cash Flows - Nine Months
Ended September 30, 2000 and 1999..................6
Notes to Condensed Financial Statements...............7-13
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations............14-18
Item 3. Quantitative & Qualitative Disclosures About
Market Risk.......................................18
PART II Other Information
Items 1-6 None 19
Signatures 20
2
<PAGE>
<TABLE>
<CAPTION>
HANDY HARDWARE WHOLESALE, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
--------------
Cash $ 2,935,646 $ 1,173,749
Accounts Receivable, net of
subscriptions receivable in
the amount of $79,876 for 2000
and $54,484 for 1999 15,927,787 10,631,282
Notes Receivable (Note 3) 9,463 12,748
Inventory 16,711,889 15,147,077
Other Current Assets 195,206 181,809
Prepaid Income Tax 36,990 100,335
------------ -----------
$ 35,816,981 $27,247,000
------------ -----------
PROPERTY, PLANT AND EQUIPMENT (NOTE 2)
--------------------------------------
At Cost Less Accumulated Depreciation
of $5,898,613(2000) and $5,162,434 (1999) $ 11,896,626 $10,756,483
------------ -----------
OTHER ASSETS
------------
Notes Receivable (Note 3) $ 310,325 $ 232,710
Deferred Compensation Funded 475,326 429,688
Other Noncurrent Assets -0- 15,149
------------ -----------
$ 785,651 $ 677,547
------------ -----------
TOTAL ASSETS $ 48,499,258 $38,681,030
------------ ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
-------------------
Notes Payable-Stock (Note 4) $ 80,000 $ 107,200
Notes Payable-Capital Lease 9,252 41,383
Accounts Payable - Trade 24,279,975 15,679,858
Other Current Liabilities 1,125,747 1,141,147
------------ -----------
$ 25,494,974 $16,969,588
------------ -----------
NONCURRENT LIABILITIES
----------------------
Notes Payable-Stock (Note 4) $ 804,560 $ 787,280
Notes Payable-Capital Lease 19,564 25,480
Notes Payable-Vendor 308,688 224,872
Deferred Compensation Payable 475,326 429,688
Deferred Income Taxes Payable (Note 5) 237,194 229,275
------------ -----------
$ 1,845,332 $ 1,696,595
------------ -----------
TOTAL LIABILITIES $ 27,340,306 $18,666,183
----------------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of the Condensed Financial
Statements.
3
<PAGE>
<TABLE>
<CAPTION>
HANDY HARDWARE WHOLESALE, INC.
CONDENSED BALANCE SHEET (CONTINUED)
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------ -----------
<S> <C> <C>
STOCKHOLDERS' EQUITY
--------------------
Common Stock, Class A,
authorized 20,000 shares, $100
par value per share, issued
10,350 & 9,190 shares $ 1,035,000 $ 919,000
Common Stock, Class B,
authorized 100,000 shares, $100
par value per share, issued
64,430 & 58,768 shares 6,443,000 5,876,800
Common Stock, Class B
Subscribed 4,970.38 & 4,498.24
shares 497,038 449,824
Less Subscription Receivable (39,938) (27,242)
Preferred Stock 10% Cumulative,
authorized 100,000 shares, $100
par value per share, issued
67,368.50 & 61,386.50 shares 6,736,850 6,138,650
Preferred Stock, Subscribed
4,970.38 & 4,498.24 shares 497,038 449,824
Less Subscription Receivable (39,938) (27,242)
Paid in Surplus 400,609 363,610
------------ -----------
$ 15,529,659 $14,143,224
Less: Cost of Treasury Stock
4,689.50 & -0- shares 468,950 -0-
------------ -----------
$ 15,060,709 $14,143,224
Retained Earnings exclusive of other
comprehensive earnings (Note 7) 5,967,124 5,765,441
Retained Earnings applicable to other
comprehensive earnings (Note 7) 131,119 106,182
------------ -----------
6,098,243 5,871,623
------------ -----------
Total Stockholders' Equity $21,158,952 $20,014,847
----------- -----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $48,499,258 $38,681,030
-------------------- =========== ===========
</TABLE>
The accompanying notes are an integral part of the Condensed Financial
Statements.
4
<PAGE>
<TABLE>
<CAPTION>
HANDY HARDWARE WHOLESALE, INC.
CONDENSED STATEMENT OF EARNINGS
(UNAUDITED)
QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------------------- ----------------------------------
2000 1999 2000 1999
---- ---- ---- ----
REVENUES
--------
<S> <C> <C> <C> <C>
Net Sales $ 45,842,797 $ 42,386,346 $132,414,227 $123,450,163
Sundry Income 546,562 545,612 1,518,961 1,223,228
------------ ------------ ------------ ------------
TOTAL REVENUES $ 46,389,359 $ 42,931,958 $133,933,188 $124,673,391
-------------- ------------ ------------ ------------ ------------
EXPENSE
-------
Net Mat'l. Costs $ 41,591,943 $ 38,712,201 $119,324,873 $111,822,717
Payroll Costs 2,094,641 1,846,607 5,934,978 5,395,149
Other Operating Costs 2,408,350 2,229,709 7,368,985 6,517,460
Interest Expense 29,227 16,956 79,086 49,726
------------ ------------ ------------ ------------
TOTAL EXPENSE $ 46,124,161 $ 42,805,473 $132,707,922 $123,785,052
------------- ------------ ------------ ------------ ------------
NET EARNINGS BEFORE
PROVISIONS FOR
ESTIMATED FEDERAL
INCOME TAX $ 265,198 $ 126,485 $ 1,225,266 $ 888,339
------------------- ------------ ----------- ------------ ------------
PROVISIONS FOR
ESTIMATED FEDERAL
INCOME TAX (NOTE 5) (96,320) (49,168) (437,658) (321,862)
------------------- ------------ ----------- ------------ ------------
NET EARNINGS $ 168,878 $ 77,317 $ 787,608 $ 566,477
------------
OTHER COMPREHENSIVE EARNINGS
----------------------------
Unrealized Gain (Loss)on
Securities (Note 7) $ (3,650) $ (1,380) $ 37,783 $ 22,133
Provision for Federal
Income Tax (Note 5) 1,241 469 (12,846) (7,525)
------------ ----------- ------------ ------------
Other Comprehensive
Earnings Net of Tax $ (2,409) $ (911) $ 24,937 $ 14,608
------------ ----------- ------------ ------------
TOTAL COMPREHENSIVE
EARNINGS $ 166,469 $ 76,406 $ 812,545 $ 581,085
------------------- ------------ ----------- ------------ ------------
LESS ACCRUED
DIVIDENDS ON
PREFERRED STOCK (146,481) (138,586) (439,443) (415,758)
--------------- ------------ ----------- ------------ ------------
NET EARNINGS
APPLICABLE
TO COMMON
STOCKHOLDERS $ 19,988 $ (62,180) $ 373,102 $ 165,327
------------ ============ =========== ============ ============
NET EARNINGS PER
SHARE OF
COMMON STOCK,
CLASS A &
CLASS B (NOTE 1) $ 0.26 $ (0.88) $ 5.04 $ 2.37
---------------- ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the Condensed Financial
Statements.
5
<PAGE>
<TABLE>
<CAPTION>
HANDY HARDWARE WHOLESALE, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITY
----------------------------------
Net Earnings $ 812,545 $ 566,477
------------ -----------
Adjustments to Reconcile Net
Earnings to Net Cash Provided by
Operating Activities:
Depreciation $ 780,437 $ 760,156
Increase (Decrease) in Deferred
Income Tax 7,919 (4,094)
Unrealized (gain) loss (increase or
decrease in fair market value of
securities) (37,783) 14,608
Changes in Assets and Liabilities
Increase in Accounts Receivable $ (5,296,505) $(5,320,005)
Increase in Notes Receivable (74,330) (26,855)
Increase in Inventory (1,564,812) (2,014,062)
Decrease in Other Assets 65,097 129,295
Increase in Note Payable-Vendor 83,816 31,802
Increase in Accounts Payable 8,600,117 7,405,574
Increase (Decrease) in Other Liabilities (15,400) 475,576
Increase in Deferred Compensation Payable 45,638 23,764
------------ -----------
TOTAL ADJUSTMENTS $ 2,594,194 $ 1,475,759
------------ -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 3,406,739 $ 2,042,236
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Capital Expenditures $(1,920,580) $(1,656,411)
Investment in Deferred Compensation Funded (6,170) (23,764)
Reinvested dividends, interest & capital gains (1,685) -0-
------------ -----------
NET CASH USED FOR
INVESTING ACTIVITIES $(1,928,435) $(1,680,175)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Increase (Decrease) in Notes Payable - Stock $ (9,920) $ 326,170
Decrease in Notes Payable - Capital Lease (38,047) (51,319)
Increase in Subscription Receivable (25,392) (26,563)
Proceeds From Issuance of Stock 1,411,827 1,219,009
Purchase of Treasury Stock (468,950) (708,925)
Dividends Paid (585,925) (554,346)
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES $ 283,593 $ 204,026
----------- -----------
NET INCREASE
IN CASH & CASH EQUIVALENTS $ 1,761,896 $ 566,087
CASH & CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,173,749 1,113,122
----------- -----------
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 2,935,645 $ 1,679,209
=========== ===========
ADDITIONAL RELATED DISCLOSURES TO THE STATEMENT OF CASH FLOWS
-------------------------------------------------------------
Interest Expense Paid $ 79,086 $ 49,726
Income Taxes Paid 479,575 464,365
</TABLE>
The accompanying notes are an integral part of the Condensed Financial
Statements.
6
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
(1) DESCRIPTION OF BUSINESS:
-----------------------
Handy Hardware Wholesale, Inc., ("Handy"), was incorporated as a Texas
corporation on January 6, 1961. Its principal executive offices and
warehouse are located at 8300 Tewantin Drive, Houston, Texas 77061.
Handy is owned entirely by its member-dealers and former
member-dealers.
Handy sells to its member-dealers products primarily for retail
hardware, lumber and home center stores. In addition, we offer
advertising and other services to member-dealers.
(2) GENERAL INFORMATION:
-------------------
The condensed consolidated financial statements included herein have
been prepared by Handy. The financial statements reflect all
adjustments, which were all of a recurring nature, and which are, in
the opinion of management, necessary for a fair presentation. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC). Handy believes that the
disclosures made are adequate to make the information presented not
misleading. The condensed consolidated financial statements should be
read in conjunction with the audited financial statements and the notes
thereto included in the latest Form 10-K Annual Report.
(3) CASH:
----
For purposes of the statement of cash flows, Handy considers all highly
liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
(4) INVENTORIES:
-----------
Inventories are valued at the lower of cost or market method,
determined by the first in, first out method, with proper adjustment
having been made for any old or obsolete merchandise.
(5) EARNINGS PER SHARE:
------------------
Net earnings per common share (Class A and Class B combined) are based
on the weighted average number of shares outstanding in each period
after giving effect to the stock issued, stock subscribed, accrued
dividends on Preferred Stock, and treasury stock, as set forth by
Accounting Principles Board Opinion No. 15 as follows:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- --------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
CALCULATION OF NET EARNINGS PER SHARE
OF COMMON STOCK
-------------------------------------
Net Earnings $ 166,469 $ 76,406 $812,545 $581,085
Less: Accrued Dividends
on Preferred Stock (146,481) (138,586) (439,443) (415,758)
--------- -------- -------- --------
$ 19,988 $(62,180) $373,102 $165,327
Weighted Average
Shares of Common Stock
(Class A & Class B)
outstanding 75,915 70,380 73,966 69,855
Net Earnings(Loss) Per Share
of Common Stock $ 0.26 $ (0.88) $ 5.04 $ 2.37
========= ======== ======== ========
</TABLE>
7
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(6) REVENUE RECOGNITION:
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles. Accordingly, revenues and
expenses are accounted for using the accrual basis of accounting. Under
this method of accounting, revenues and receivables are recognized when
merchandise is shipped or services are rendered, and expenses are
recognized when the liability is incurred.
(7) ACCOUNTING FOR DIVIDENDS ON PREFERRED STOCK:
Handy pays dividends on Preferred Stock during the first quarter of each
fiscal year. Only holders of Preferred Stock on the record date for the
payment of the dividend are entitled to receive dividends. Dividends are
prorated for the portion of the twelve-month period ending January 31,
during which the Preferred Stock was held.
Because Handy is unable to anticipate the amount of the Preferred Stock
dividends, it does not accrue a liability for the payment of those
dividends on its balance sheet. To more properly reflect net earnings,
however, on the Condensed Statement of Earnings included herein, Handy
shows an estimated portion of the dividends to be paid in the first
quarter of 2001 based on the dividends paid in the first quarter of 2000.
When dividends on Preferred Stock are actually paid, there is a reduction
of retained earnings. Retained earnings on the Condensed Balance Sheet for
the nine months ended September 30, 2000 contained herein, therefore, are
net of dividends actually paid during the first quarter of 2000 in the
amount of $585,925.
NOTE 2 - PROPERTY, PLANT & EQUIPMENT
Property, Plant & Equipment Consists of:
SEPTEMBER 30, DECEMBER 31,
2000 1999
----- ----
Land $ 3,207,866 $ 3,202,572
Building & Improvements 9,867,221 8,549,156
Furniture, Computer, Warehouse 4,059,294 3,740,954
Transportation Equipment 660,858 426,235
----------- -----------
$17,795,239 $15,918,917
Less: Accumulated Depreciation (5,898,613) (5,162,434)
----------- -----------
$11,896,626 $10,756,483
=========== ===========
8
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - NOTES RECEIVABLE
-------------------------
Notes receivable reflect amounts due to Handy from its member-dealers under a
deferred payment agreement and an installment sale agreement.
Under the deferred payment agreement, Handy supplies member-dealers with an
initial order of General Electric Lamps. The payment for this order is deferred
so long as the member-dealer continues to purchase General Electric lamps
through Handy. If a member-dealer ceases to purchase lamp inventory or sells or
closes his business, then General Electric bills Handy for the member-dealer's
initial order and the note becomes immediately due and payable in full to Handy.
In September 1999, virtually the same type of deferred agreement was put into
effect with Chicago Specialty, a manufacturer of plumbing supplies.
Under the installment sale agreement, we sell member-dealers computer hardware,
the purchase price of which is due and payable by member-dealers to us in
thirty-six monthly installments of principal and interest.
Notes Receivable are classified as follows:
<TABLE>
<CAPTION>
CURRENT PORTION NONCURRENT PORTION
--------------------------- ---------------------------
SEPT. 30, DEC. 31, SEPT. 30, DEC. 31,
-------- ------- -------- -------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Deferred Agreements $ -0- $ -0- $308,689 $224,871
Installment Sale Agreement 9,463 12,748 1,636 7,839
------- ------- -------- --------
$ 9,463 $ 12,748 $310,325 $232,710
======= ======== ======== ========
</TABLE>
NOTE 4 - NOTES PAYABLE STOCK
----------------------------
The five year, interest bearing notes payable - stock reflect amounts due from
Handy to former member-dealers for the repurchase of shares of Handy stock owned
by these former member-dealers. According to the terms of the notes, only
interest is paid on the outstanding balance of the notes during the first four
years. In the fifth year, both interest and principal are paid. Interest rates
range from 5.25% to 6.25%.
Notes Payable - Stock are classified as follows:
<TABLE>
<CAPTION>
CURRENT PORTION NONCURRENT PORTION
--------------------------- ---------------------------
SEPT. 30, DEC. 31, SEPT. 30, DEC. 31,
-------- ------- -------- -------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
$80,000 $107,200 $804,560 $787,280
</TABLE>
Principal payments due over the next five years are as follows:
2000 $ 71,000
2001 57,000
2002 32,800
2003 324,280
2004 363,200
--------
$848,280
========
9
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
-----------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------
NOTE 5 - INCOME TAXES
---------------------
Handy adopted FASB Statement No. 109, "Accounting for Income Taxes," effective
January 1, 1993. The adoption of this standard changed our method of accounting
for income taxes from the deferred method to the liability method.
The major categories of deferred income tax provisions are as follows (based on
FASB 109):
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -----------
<S> <C> <C>
Excess of tax over book depreciation $ 1,294,054 $ 1,257,673
Allowance for Bad Debt (7,195) (7,195)
Inventory - Ending inventory adjustment
for tax recognition of Sec. 263A
Uniform Capitalization Costs (299,222) (296,130)
Deferred Compensation (290,010) (280,010)
----------- -----------
Total 697,627 674,337
Statutory Tax Rate 34% 34%
----------- -----------
Cumulative Deferred Income Tax Payable $ 237,194 $ 229,275
=========== ===========
Classified as:
Current Liability $ -0- $ -0-
Noncurrent Liability 237,194 229,275
---------- -----------
$ 237,194 $ 229,275
=========== ===========
</TABLE>
Reconciliation of income taxes on the difference between tax and financial
accounting is as follows:
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -----------
<S> <C> <C>
Principal Components of Income Tax Expense
Federal:
Current
Income tax paid $ 379,240 $ 358,481
Carry-over of prepayment
from prior year 100,335 105,884
Refund received for overpayment
from prior year -0- -0-
---------- ------------
$ 479,575 $ 464,365
Federal Income Tax Payable -0- (130,884)
Carry-over to subsequent year (36,990) -0-
----------- -----------
Income tax for tax reporting
at statutory rate of 34% $ 442,585 $ 333,481
Deferred
Adjustments for financial reporting:
Depreciation 12,370 127
263A Uniform Capitalization Costs (1,051) (821)
Other (3,400) (3,400)
----------- -----------
Provision for federal income tax $ 450,504 $ 329,387
=========== ===========
</TABLE>
Handy is not exempt from income tax except for municipal bond interest
earned in the amount of $1,685.
Handy is not classified as a nonexempt cooperative under the provisions
of the Internal Revenue Code and are not entitled to deduct preferred dividends
in determining our taxable income.
10
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
-----------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------
NOTE 6 - STOCKHOLDERS' EQUITY
-----------------------------
(1) TERMS OF CAPITAL 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. 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 ten 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.
The holders of Preferred Stock are entitled to cumulative dividends.
Handy's Articles of Incorporation require the Board of Directors to
declare a dividend each year of not less than 7 percent nor more than
20 percent of the par value ($100.00 per share) of the shares of
Preferred Stock. The Preferred Stock has a liquidation value of $100
per share. 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 Handy) by
vote of Handy's Board of Directors, in exchange for $100 per share and
all accrued unpaid dividends.
(2) CAPITALIZATION
--------------
To become a member-dealer, an independent hardware dealer must enter
into a Subscription Agreement with us for the purchase of ten shares
of Handy Class A Common Stock, $100 par value per share, or ten shares
of Preferred Stock for any additional store, with an additional
agreement to purchase a minimum number of shares of Class B Common
Stock, $100 par value per share, and Preferred Stock, $100 par value
per share. Class B Common Stock and Preferred Stock are purchased
pursuant to a formula based upon total purchases of merchandise by the
member-dealer from Handy, which determines the "Desired Stock
Ownership" for each member-dealer. The minimum Desired Stock Ownership
is $10,000.
Each member-dealer receives from Handy a semimonthly statement listing
total purchases made during the covered billing period, with an
additional charge ("Purchase Funds") equal to 2 percent of the
member-dealer's warehouse purchases until the member-dealer's Desired
Stock Ownership is attained. Although the Subscription Agreement
entitles Handy to collect 2 percent of total purchases, since May 1,
1983, the Board of Directors has determined to collect 2 percent of
warehouse purchases only. On a monthly basis, we review the amount of
unexpended Purchase Funds being held for each member- dealer. If a
member-dealer has unexpended Purchase Funds of at least $2000, Handy
applies such funds to the purchase of ten shares of Class B Common
Stock and ten shares of Preferred Stock at $100 per share.
(3) TRANSFERABILITY
---------------
Holders of Class A Common Stock may not sell those shares to a third
party without first offering to sell them back to Handy. There are no
specific restrictions on the transfer of Class B Common or Preferred
Stock.
11
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
-----------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------
NOTE 6 - STOCKHOLDERS' EQUITY (CONTINUED)
(4) MEMBERSHIP TERMINATION
Following written request, Handy will present to the Board of Directors a
member-dealer's desire to have his stock repurchased and the
member-dealer's contract terminated. According to the current procedures
established by the Board of Directors, a member-dealer's stock may be
repurchased according to either of two options.
Option - I The member-dealer's Class A Common Stock is repurchased at
$100 per share. Any funds remaining in the member-dealer's
Purchase Fund Account will be returned at the dollar value
of such account. Twenty percent or $3000, whichever is
greater, of the total value of the Class B Common and
Preferred Stock will be repurchased. The remaining value of
the Class B Common and Preferred Stock is converted to a
five-year interest bearing note. During the first four
years, this note only pays interest. In the fifth year, both
interest and principal are paid. The interest rate is
determined by Handy's Board of Directors at the same time
they approve the repurchase.
Option - II Same as Option I except that the remaining value of the
Class B Common and Preferred Stock is discounted 15 percent
and reimbursed to the member-dealer immediately at the time
of repurchase.
12
<PAGE>
HANDY HARDWARE WHOLESALE, INC.
-----------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------
NOTE 7 - COMPREHENSIVE EARNINGS
-------------------------------
The following disclosures include those required by FASB 115 for financial
statements beginning after December 15, 1997.
1. Deferred compensation funded in the amount of $475,326 on the Balance
Sheet as a non-current asset at September 30, 2000, includes equity
securities classified as investments available for sale in the amount of
$422,406 at fair market value. The $422,406 includes $198,664 unrealized
gain on securities resulting from the increase in fair market value. The
cost of the equity securities is $223,742.
2. Changes in Equity securities
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 2000 Cumulative
------------------ ----------
<S> <C> <C>
Beginning Balance-January 1, 2000 $ 376,768 $ -0-
Purchases 6,170 111,230
Dividends, interest and capital gains 1,685 112,512
Unrealized gains on securities
resulting from increase in
fair market value 37,783 198,664
----------- ----------
Balance-September 30, 2000 $ 422,406 $ 422,406
=========== ==========
</TABLE>
3. Components of Comprehensive Earnings
<TABLE>
<CAPTION>
TOTAL OTHER COMPREHENSIVE NET EARNINGS EXCLUSIVE
COMPREHENSIVE EARNINGS-UNREALIZED OF OTHER
EARNINGS GAINS ON SECURITIES COMPREHENSIVE EARNINGS
------------- ------------------- ----------------------
<S> <C> <C> <C>
Net Earnings Before
Provision for
Federal Income Tax $ 1,263,049 $ 37,783 $1,225,266
Provision for
Federal Income Tax (450,504) (12,846) (437,658)
------------ ---------- ----------
Net Earnings $ 812,545 $ 24,937 $ 787,608
============ ========== ==========
</TABLE>
4. Components of Comprehensive Earnings
<TABLE>
<CAPTION>
RETAINED EARNINGS RETAINED EARNINGS
APPLICABLE TO OTHER EXCLUSIVE OF OTHER
TOTAL COMPREHENSIVE EARNINGS COMPREHENSIVE EARNINGS
----- ---------------------- ----------------------
<S> <C> <C> <C>
Balance-January 1, 2000 $5,871,623 $ 106,182 $5,765,441
Add: Net earnings nine
months ended 812,545 24,937 787,608
Sept. 30, 2000
Deduct: Cash Dividends on
Preferred Stock 585,925 -0- 585,925
---------- ---------- ----------
Balance-Sept. 30, 2000 $6,098,243 $ 131,119 $5,967,124
========== ========== ==========
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2000
-------------------------------------------------------------------------
We maintained our steady growth in the third quarter of 2000 while
continuing to meet our goal of providing quality goods to our member-dealers at
our cost plus a reasonable mark-up charge. Net sales in the third quarter of
2000 increased 8.2% ($3,456,451) over sales during the same period in 1999,
compared to a 6.9% growth rate ($2,743,921) in the third quarter of 1999 over
1998's third quarter.
Net sales during the first nine months of 2000 increased 7.3% ($8,964,064)
over sales during the same period in 1999, compared to a 9.5% increase in sales
($10,751,714) for the same period in 1999 over 1998.
Despite the increase in sales growth in the third quarter of 2000 over the
third quarter of 1999, sales growth during the first nine months of 1999 was
higher than the sales growth for the same 2000 period due to extremely
robust sales in the first quarter of 1999.
NET SALES. Although the overall economy continues to experience economic
growth and consumer confidence remains strong, the sales growth during the first
nine months of 2000 in several of our selling territories was not as robust as
in the first nine months of 1999. The softening sales can be attributed to the
decrease in purchases of several significant member-dealers in various selling
territories due to the continuing dry weather conditions, labor and material
shortages in the building industry and pressure from retail warehouses in these
markets.
The following table summarizes our sales during the first nine months of
2000 and 1999 by sales territory:
<TABLE>
<CAPTION>
First Nine Months 2000 First Nine Months 1999
---------------------------------------------- --------------------------
% Increase
in Sales
From First % of % of
Nine Months Total Total
Sales Territory Sales of 1999 Sales Sales Sales
--------------- ----- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Houston Area $31,671,111 1% 23.9% $ 31,251,054 25.5%
Victoria, San Antonio,
Corpus Christ &
Rio Grande Valley Area* 26,879,940 15% 20.3% 23,461,289 19.2%
North Texas, Dallas
& Fort Worth Area 15,896,937 20% 12.0% 13,267,519 10.8%
Austin, Brenham &
Central Texas Area 16,377,295 4% 12.4% 15,743,854 12.9%
Southern Louisiana Area 14,246,078 -10% 10.8% 15,737,760 12.9%
Baton Rouge, New Orleans,
Mississippi, Alabama &
Florida Area 10,523,653 4% 8.0% 10,104,765 8.3%
Arkansas Area 7,329,542 53% 5.5% 4,804,417 3.9%
Oklahoma Area 8,929,602 12% 6.8% 8,005,887 6.5%
West Texas Area (2) 408,538 N/A 0.3% N/A N/A
============ ==== ===== ============ ------
Totals: $132,262,696 (1) 100.0% $122,376,545(1) 100.0%
============ ===== ============ -----
</TABLE>
------------------------------------------------------
* Includes sales to Mexico and Central America member-dealers.
(1) Total does not include miscellaneous sales to employees.
(2) Sales for the West Texas Area, which includes portions of New Mexico,
commenced in June of 2000.
14
<PAGE>
During the first nine months of 2000 the Houston territory, the
Southern Louisiana territory and the Gulf Coast East territory each experienced
a continual decrease in sales due to several larger member-dealers reducing
their purchases during this period. Comparing their level of purchases in the
first nine months of 1999 to their purchases in the same 2000 period, these
Houston territory member-dealers collectively decreased sales in their territory
by $2,519,916, these Southern Louisiana territory member-dealers collectively
decreased sales in their territory by $787,730, and one significant
member-dealer in the Gulf Coast East territory decreased sales in its territory
by $335,790. In addition, dry weather conditions and significant declines in new
home construction negatively affected sales growth in the Austin, Brenham and
Central Texas territory, while independent hardware stores in Baton Rouge, New
Orleans and Gulf Coast East territory are beginning to feel the pressure from
retail warehouses in their market area.
Despite the reductions in purchases by member-dealers in some sales
territories, during the third quarter and the first nine months of 2000, we
added more than twice as many new member-dealers as we added in the same 1999
periods. These additions in both our current selling territories and in our
recently added territories of West Texas and New Mexico continue to offset the
decreased levels of purchases by some of our longer-term member-dealers.
NET MATERIAL COSTS AND REBATES. Net material costs for the third
quarter and first nine months of 2000 were $41,591,943 and $119,324,873,
respectively, compared to $38,712,201 and $111,822,717, respectively, for the
same periods in 1999. Net material costs for the third quarter and first nine
months of 2000 increased 7.4 percent and 6.7 percent, respectively, over the
same periods in 1999, which increases were slightly less than the increases in
net sales for the same periods (8.2% increase for the third quarter of 2000 and
7.3% increase for the first nine months of 2000). Net material costs were 90.7
percent of sales in the third quarter of 2000 as compared to 91.3 percent of
sales for the same period in 1999, while for the first nine months of 2000 and
1999 net materials costs were 90.1 percent and 90.6 percent of sales,
respectively. These slight decreases during these periods in 2000 compared to
1999 resulted from an increase during 2000 in the number of inventory items sold
our highest gross margin which consists of sales with a markup of 9 percent.
Such sales increased from $21,287,166 in the third quarter of 1999 to
$23,608,416 during the third quarter of 2000, while these sales for the first
nine months of 1999 and 2000 were $62,725,958 and $68,872,292, respectively.
Further, factory rebates which we took as a credit against material costs in
both the third quarters and first nine months of 2000 increased over amounts
credited for the same 1999 periods. Third quarter rebates for 2000 increased
$384,920 or 35.2 percent (2000 - $1,479,781 vs. 1999 - $1,094,861) while rebates
for the first nine months of 2000 increased $511,857 or 14.1 percent (2000 -
$4,138,314 vs. 1999 - $3,626,457).
PAYROLL COSTS. With unemployment at a three decade low, the U.S. labor
market has seldom been tighter. The increases in payroll costs for the third
quarter and first nine months of 2000 resulted from salary increases needed to
attract or retain high- quality employees. As a result, payroll costs for the
third quarter and first nine months of 2000 increased 13.4 percent and 10.0
percent, respectively, over the same periods in 1999.
Despite the pressure on wages, payroll costs as a percentage of both
total expenses and net sales remained fairly constant. Payroll costs for the
third quarter of 2000 constituted 4.5 percent of both net sales and total
expenses, compared to 4.3 percent of each for the same quarter of 1999. Payroll
costs were 4.4 percent of both net sales and total expenses for the first nine
months of 2000 and 1999. The relative stability in payroll costs has been a
result of a continuing effort to maintain employee productivity.
OTHER OPERATING COSTS. During the third quarter and for the first nine
months of 2000 other operating costs increased 8.0 percent and 13.1 percent,
respectively, compared to the same periods of 1999. Other operating costs were
5.2% of total expenses in the third quarters of both 2000 and 1999. For the nine
month period ending September 30, 2000, other operating costs were 5.6% of total
expenses as compared to 5.3% of total expenses during the same period in 1999.
In reviewing the first nine months of 2000, other operating costs have increased
by a significantly larger percentage (13.1%) than the percentage growths in net
sales and total expenses (7.3% and 7.2%, respectively). However, the 8.0%
increase in other operating costs in the third quarter of 2000 was in line with
the 8.2% and 7.8% increases in net sales and total expenses, respectively,
during this same period.
15
<PAGE>
More than 77.6% of the first nine months increases in other operating
costs resulted from increases in delivery expenses. Delivery expenses increased
from $1,754,157 in the first nine months of 1999 to $2,415,347 for the same
period in 2000, an increase of $661,190 over 1999 levels. In particular,
increases in gasoline prices, additions to our delivery routes and increases in
the number of member-dealer locations have resulted in a 47.1% increase in fuel
costs in the first nine months of 2000 as compared to the same period in 1999.
In addition, these conditions resulted in a 28.9% increase in rental truck
expenses for the same period due to increased delivery demand. Further, due to
the shortage of qualified truck drivers, contract delivery expenses have
increased significantly over 1999 levels, increasing more than twofold during
the first nine months of 2000. We expect delivery expenses to continue to
increase as we continue to expand our selling territories and add member-dealer
locations.
NET EARNINGS AND EARNINGS PER SHARE. Net sales for the third quarter
of 2000 increased $3,456,451 (8.2%) and net material costs for the third quarter
of 2000 increased $2,879,742 (7.4%) from levels of net sales and net material
costs in the third quarter in 1999, causing gross margin to increase by $576,709
(15.7%). This substantial increase in gross margin, was offset slightly by an
increase in payroll costs of $248,034 (13.4%) and an increase in other operating
costs of $178,641 (8.0%). Thus pretax net earnings increased 110.0 percent, from
$126,485 for the third quarter of 1999 to $265,198 in the same 2000 period,
while after-tax net earnings increased by 118.0 percent. Net earnings in the
third quarter of 2000 increased primarily due to more substantial increases in
gross margin, when compared to increases in expenses.
Net sales for the first nine months of 2000 increased $8,964,064
(7.3%) and net material costs increased $7,502,156 (6.7%) from levels in the
first nine months in 1999, resulting in gross margin increasing by $1,461,908
(12.6%). This increase in gross margin was offset by increases in payroll costs
(10.0%) and in other operating costs (13.1%). Thus pretax net earnings increased
37.9 percent, from $888,339 for the first nine months of 1999 to $1,225,266 in
the same 2000 period, while after-tax net earnings increased by 39.0 percent.
Net earnings in the first nine months of 2000 increased primarily due to an
increase in sales with markups of 9 percent, as previously discussed, with fewer
sales occurring with markups of 5 percent or less, as well as increases during
2000 in factory rebate income.
Our net earnings per share increased in the third quarter of 2000, as
compared to the same period of 1999. This increase was due to an increase in
total comprehensive earnings in the third quarter of 2000 compared to that
period of 1999. Further, dividends accrued decreased as a percentage of third
quarter net earnings in 2000 compared to 1999, resulting in an increase in net
earnings per share. In the first nine months of 2000 total comprehensive
earnings increased significantly over the 1999 level, causing dividends accrued
in the first nine months of 2000 to represent a smaller percentage of that
period's net earnings than dividends accrued in the first nine months of 1999
represented of that period's net earnings(54.1% in 2000 as compared to 71.5% in
1999). Thus net earnings per share for the nine month period ending September
30, 2000 increased 112.7% from the period ending September 30, 1999.
Quarter-to-quarter variations in our earnings per share (in addition
to the factors discussed above) reflect our commitment to lower pricing of our
merchandise in order to deliver the lowest cost buying program to our
member-dealers, even though this often results in lower net earnings. Because
virtually all of our stockholders are also member-dealers, these trends benefit
our individual stockholders who purchase our merchandise. Therefore, our
shareholders do not demand that we focus greater attention upon earnings per
share.
SEASONALITY. Our quarterly net earnings traditionally vary based on
the timing of events which affect our sales. First and third quarter earnings
have been negatively affected by the increased level of direct sales (with no
markup) resulting from our semiannual trade show always held in the first and
third quarters. However, net earnings per quarter may vary substantially from
year to year due to the timing difference in the receipt of discounts, rebates
and miscellaneous income which can positively affect net earnings. For example,
during the third quarter of 2000, net earnings were substantially affected by
the receipt of rebate income and an increase in sales with a high gross margin.
Secondly, sales during the fourth quarter traditionally have been lower, as
hardware sales are slowest during winter months preceding ordering for
significant sales in the spring. This decrease in sales, however, is offset in
most years by corrections to inventory made at year end, causing net earnings to
vary substantially from year to year in the fourth quarter.
16
<PAGE>
FINANCIAL CONDITION
-------------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
LIQUIDITY. During the period ending September 30, 2000, we maintained
our financial condition and ability to generate adequate amounts of cash while
continuing to make significant investments in inventory, warehouse and computer
equipment, software, and delivery equipment to better meet the needs of our
member-dealers. Net cash provided by our operating activities may vary
substantially from year to year. These variations result from (i) the timing of
promotional activities such as our spring trade show, (ii) payment terms
available to us from our suppliers, (iii) payment terms offered by us to our
member-dealers, and (iv) the state of the regional economy in our selling
territories.
During the first nine months of 2000 there was an increase of
$1,761,896 in our cash and cash equivalents as compared to an increase of
$566,087 in the same 1999 period. During this period, we generated cash flow
from operating activities of $3,406,739, as compared to $2,042,236 in the first
nine months of 1999. This increase in cash flow in the 2000 period was
principally attributable to an increase in accounts payable and smaller
increases in both accounts receivable and in inventory in the first nine months
of 2000 than in the first nine months of 1999. Further, net earnings increased
during these same periods by $246,068 (2000 - $812,545 versus 1999 - $566,477).
Accounts payable increased $8,600,117 during the first nine months of
2000 as compared to an increase of $7,405,574 during the same period in 1999.
This increase was due primarily to extended payment terms offered to us by
suppliers.
In the first nine months of 2000 and 1999, accounts receivable
increased $5,296,505 and $5,320,005, respectively. For both periods, these
increases of accounts receivable were mainly attributable to the strong economy
which gave member-dealers confidence to make significant purchases at the fall
trade show and to extended payment terms offered to member-dealers at this trade
show.
Inventory had 37,128 stockkeeping units in the period ending September
30, 2000, which were maintained in response to member-dealer demand for more
breadth of inventory. The increase in inventory of $1,564,812 in the first nine
months of 2000, was smaller than the increase in inventory of $2,014,062 in the
same period in 1999, due to the maximization of our warehouse space and the
maximization of leased warehouse space for stocking inventory.
Net cash used for investing activities increased in the first nine
months of 2000 and 1999 by $1,928,435 and $1,680,175, respectively. The
warehouse expansion project accounted for approximately 69% and 79% of cash used
for capital investments for the first nine months of 2000 and 1999,
respectively.
Net cash provided by financing activities was $283,593 in the period
ending September 30, 2000 as compared to net cash provided by financing
activities of $204,026 during the same period in 1999. The increase of net cash
provided in the 2000 period as compared to the same period in 1999 was
principally attributable to an increase of proceeds from the issuance of stock
and a decrease in the amounts used to repurchase shares from retiring
member-dealers during the 2000 period. In the periods ending September 30, 2000
and September 30, 1999, proceeds from the issuance of stock were $1,411,827 and
$1,219,009, respectively. In addition the repurchase of $468,950 of stock from
retiring member-dealers in the first nine months of 2000 had a positive effect
on cash flow of $239,975, when compared to the $708,925 used to repurchase stock
in the same 1999 period.
17
<PAGE>
Our continuing ability to generate cash to fund our activities is
highlighted by the relative constancy of our three key liquidity measures -
working capital, current ratio (current assets to current liabilities) and
long-term debt as a percentage of capitalization, as shown in the following
table:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2000 1999 1999
-------------- ------------- --------------
<S> <C> <C> <C>
Working Capital $10,322,007 $10,277,412 $10,061,527
Current Ratio 1.4 to 1 1.6 to 1 1.3 to 1
Long-term Debt as Percentage
of Capitalization 8.7% 8.5% 8.3%
</TABLE>
During the remainder of 2000, we expect to further expand our existing
customer base in Oklahoma and Arkansas, as well as expand further west in Texas
and into eastern New Mexico. We will finance this expansion, and related
delivery and other operating costs, with receipts from the sale of stock to new
and current member-dealers and with anticipated increased revenues from sales to
member-dealers in Oklahoma, Arkansas, West Texas and New Mexico. We expect that
this expansion will have a beneficial effect on our ability to generate cash to
meet our funding needs.
In the first nine months of 2000 and 1999, respectively, we maintained
a 94.8 and 94.9 percent service level (the measure of our ability to meet
member-dealers' orders out of current stock). Inventory turnover was 6.1 times
during the first nine months of 2000 and 6.0 times for the first nine months of
1999. This rate of inventory turnover, which is higher than the national
industry average of 3.8, is primarily the result of tight control of the product
mix, increase in depth of inventory and continued high service level.
CAPITAL RESOURCES. In the nine month periods ending September 30,
2000, and September 30, 1999, our investment in capital assets (net of
dispositions) was $1,920,580 and $1,656,411, respectively. Approximately 68.9
percent ($1,322,438) of the amount expended in the first nine months of 2000 was
used to construct an employee parking lot and to fund other capital
expenditures related to the future expansion of our warehouse. In addition, 7.7
percent ($148,373) was used to purchase trailers, 7.3% ($139,455) was used to
purchase warehouse equipment, 6.8% ($130,330) was used to upgrade our fleet of
automobiles, 7.3% ($140,089) was used to purchase computer equipment and 2.1%
($39,895) was used to purchase office furniture and equipment. By comparison, of
the total amount expended in the first nine months of 1999, $1,305,393 was used
to complete the purchase of thirty acres of land for future warehouse expansion
and $165,730 was used to purchase computer hardware and software.
In January, 1999 we purchased 29.96 acres of land located across the
street from our current warehouse facility for $1,174,774. The land has been
used to relocate our retention pond, provide additional parking facilities and
allow for future expansion of our current warehouse facility. The purchase was
funded by drawing down on our line of credit which has since been entirely
repaid from our cash flow. During the remainder of 2000 we expect to continue
our expansion project, expending an additional $1,800,000 to continue preparing
the site and to begin construction on an expansion to our current warehouse
facility. The total cost of the expansion is estimated at $5,667,655. We expect
to substantially complete this project by the end of the second quarter of 2001,
with expenditures being funded primarily from cash flow and draws on our line of
credit.
Under our unsecured $10 million revolving line of credit with Chase
Bank of Texas, used from time to time for our working capital and other
financing needs, there was no outstanding balance on September 30, 2000.
During the remainder of the year 2000, we anticipate significant cash
outlays for payment of accounts payable, increased inventory purchases and our
expansion project. Additional cash outlays anticipated for the remainder of the
year include: $25,000 to upgrade computer equipment and $35,000 to purchase
office furniture and equipment.
Our cash position of $2,935,646 at September 30, 2000, is anticipated
to be sufficient to fund all planned capital expenditures, although some third
party financing, including draws on our line of credit, may be needed to fund
all or a portion of the expansion project.
18
<PAGE>
QUANTITATIVE & QUALITATIVE DISCLOSURES
ABOUT MARKET RISKS
Not Applicable
FORWARD-LOOKING STATEMENTS
The statements contained in this report that are not historical facts
are forward-looking statements as that term is defined in Section 21E of the
Securities and Exchange Act of 1934, as amended, and therefore involve a number
of risks and uncertainties. Such forward-looking statements may be or may
concern, among other things, sales levels, the general condition of retail
markets, levels of costs and margins, capital expenditures, liquidity, and
competition. Such forward-looking statements generally are accompanied by words
such as "plan," "budget," "estimate," "expect," "predict," "anticipate,"
"projected," "should," "believe," or other words that convey the uncertainty of
future events or outcomes. Such forward-looking information is based upon
management's current plans, expectations, estimates and assumptions and is
subject to a number of risks and uncertainties that could significantly affect
current plans, anticipated actions, the timing of such actions and the Company's
financial condition and results of operations. As a consequence, actual results
may differ materially from expectations, estimates or assumptions expressed in
or implied by any forward-looking statements made by or on behalf of the
Company, including those regarding the Company's financial results, levels of
revenues, capital expenditures, and capital resource activities. Among the
factors that could cause actual results to differ materially are: fluctuations
of the prices received for or demand for the Company's goods, amounts of goods
sold for reduced or no mark-up, a need for additional labor or transportation
costs for delivery of goods, requirements for capital; general economic
conditions or specific conditions in the retail hardware business; weather
conditions; competition; as well as the risks and uncertainties discussed in
this report, including, without limitation, the portions referenced above and
the uncertainties set forth from time to time in the Company's other public
reports, filings, and public statements. Interim results are not necessarily
indicative of those for a full year.
19
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS & REPORTS ON FORM 8-K - NONE
20
<PAGE>
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.
HANDY HARDWARE WHOLESALE, INC.
/s/ James D. Tipton
----------------------------------------
JAMES D. TIPTON
President
(Chief Executive Officer)
/s/ Tina S. Kirbie
----------------------------------------
TINA S. KIRBIE
Senior Vice President, Finance
Secretary and Treasurer
(Chief Financial and Accounting Officer)
Date: November 14, 2000
------------------------
21
