SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For Quarter ended March 31, 1995 Commission file no. 0-6215
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Republic Automotive Parts, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 38-1455545
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(State of incorporation) (I.R.S. Employer Identification No.)
500 Wilson Pike Circle, Suite 115, Brentwood, Tennessee 37027
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(Address of principal executive offices) (Zip code)
(615) 373-2050
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, address and fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such short 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
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Number of shares (common) outstanding at March 31, 1995: 3,318,586
<PAGE> 1
Republic Automotive Parts, Inc.
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets as of
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Income and
Retained Earnings for the three months
ending March 31, 1995 and 1994. 4
Consolidated Statements of Cash Flows
for the three months ending March 31, 1995
and 1994. 5
Notes to Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation. 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 7
SIGNATURES 8
2
<PAGE> 2
PART I
Item 1. Financial Statements
Republic Automotive Parts, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(thousands) -------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,836 $ 2,675
Accounts and notes receivable, less allowance for
doubtful accounts of $531,000 and $518,000 13,171 12,289
Inventories 42,706 42,075
Deferred income taxes 2,536 2,424
Prepaid expenses and other current assets 2,287 1,098
------ ------
Total current assets 62,536 60,561
PROPERTY, PLANT AND EQUIPMENT, NET 6,652 6,785
LONG-TERM NOTES RECEIVABLE, less allowance for
doubtful accounts of $51,000 and $53,000 929 920
DEFERRED PENSION ASSET 3,185 3,140
GOODWILL AND OTHER INTANGIBLES, less accumulated
amortization of $1,369,000 and $1,275,000 6,642 6,852
------ ------
$79,944 $78,258
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and long-term debt due within one year $ 608 $ 625
Accounts payable 10,485 10,727
Accrued compensation and employee benefits 1,231 2,401
Accrued taxes and other liabilities 2,965 2,170
------ ------
Total current liabilities 15,289 15,923
LONG-TERM DEBT 20,619 18,925
DEFERRED INCOME TAXES 1,431 1,435
OTHER LONG-TERM LIABILITIES 1,863 1,860
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Preferred stock of $1.00 par value:
Authorized - 150,000, Issued - none
Junior Participating Cumulative
Preferred Stock at $1.00 par value
Authorized - 50,000 shares, Issued - none
Common stock of $.50 par value:
Authorized - 5,000,000 shares
Issued - 3,391,751 shares 1,696 1,696
Additional paid-in capital 23,948 23,948
Retained earnings 15,903 15,276
Treasury stock, at cost: 73,165 shares (805) (805)
------ ------
40,742 40,115
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$79,944 $78,258
====== ======
The accompanying notes are an integral part of these financial statements
3
<PAGE> 3
Item 1. Financial Statements: (Continued)
Republic Automotive Parts, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
Three months ended
March 31,
(in thousands, except per share data) 1995 1994
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NET SALES $32,908 $30,558
COSTS AND EXPENSES
Cost of products sold 20,529 19,768
Selling, general and administrative expenses 11,085 9,816
------ ------
OPERATING INCOME 1,294 974
Interest expense (373) (135)
Interest and other income 116 118
------ ------
INCOME BEFORE INCOME TAXES 1,037 957
PROVISION FOR INCOME TAXES 410 368
------ ------
NET INCOME 627 589
RETAINED EARNINGS at beginning of year 15,276 11,028
------ ------
RETAINED EARNINGS at end of quarter $15,903 $11,617
====== ======
EARNINGS PER COMMON SHARE:
Net income $ 0.18 $ 0.17
====== ======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,497 3,413
====== ======
The accompanying notes are an integral part of these financial statements
4
<PAGE> 4
Item 1. Financial Statements: (Continued)
Republic Automotive Parts, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended
March 31,
(in thousands) 1995 1994
------ ------
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 627 $ 589
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 437 359
Amortization 210 175
Provision for losses on accounts receivable 22 24
Provision for deferred pension income (45) (15)
Gain on disposal of property, plant and equipment 10 (8)
Deferred income taxes (112) (110)
Change in assets and liabilities net of
effects from acquisitions:
Accounts and notes receivable (904) (976)
Inventories (631) (2,030)
Prepaid expenses and other current assets (1,189) 182
Accounts payable (242) 2,052
Accrued compensation and employee benefits (1,170) (200)
Accrued taxes and other liabilities 795 692
Other long-term liabilities 3 (95)
----- -----
Net cash (used) provided by operating activities (2,189) 639
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment 38 22
Acquisitions, net of cash acquired (3)
Capital expenditures (356) (149)
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Net cash used in investing activities (318) (130)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings on revolving credit agreement 2,700 5,900
Payments under revolving credit agreement (1,000) (400)
Payments on long-term debt and notes payable (23) (5,680)
Increase in long-term notes receivable (9) (30)
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Net cash (used) provided by financing activities 1,668 (210)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (839) 299
Cash and cash equivalents at beginning of year 2,675 3,524
----- -----
Cash and cash equivalents at end of period $ 1,836 $ 3,823
===== =====
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense $ 391 $ 77
===== =====
Income taxes $ 88 $ 12
===== =====
Supplemental schedule of noncash investing and financing activities:
The Company purchased all of the outstanding common stock of Fenders & More,
Inc. in January 1994 for 255,000 shares of the Company's common stock. In
conjunction with this acquisition, liabilities were assumed as follows:
Fair value of assets acquired, other than cash $ 8,354
Common stock issued (2,805)
Liabilities assumed (5,546)
------
Cash paid $ 3
======
The accompanying notes are an integral part of these financial statements
5
<PAGE> 5
Item 1.Financial Statements: (Continued)
Republic Automotive Parts, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The financial information included herein is unaudited. In addition, the
financial information does not include all disclosures required under
generally accepted accounting principles because certain note information
included in the Company's annual report has been omitted; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary to a fair
statement of the results for the interim period.
The results of operations for the three months ended March 31, 1995 and 1994
are not necessarily indicative of the results expected for the full year.
Note 2 - Earnings Per Share
Earnings per share were computed by dividing net income (loss) by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the periods.
Notes 3 - Contingent Liabilities
In July 1991, a jury awarded $955,000 plus interest to be determined to a
former executive of the Company for an alleged beach of contract in
connection with his discharge by the Company in 1986. The Company has been
advised by its counsel in this action that it has meritorious grounds for
obtaining reversal of the jury verdict upon appeal. The Company, accordingly,
intends to take appropriate post-trial and appellate remedies and has posted
an appeals bond. Accordingly, the Company has not reflected this contingency
in the financial statements.
6
<PAGE> 6
PART II
Item 2.
Republic Automotive Parts, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS:
Results of Operations
Net sales increased 7.7% during the first quarter of 1994. The increase in
sales is primarily attributable to acquisitions made in January and April 1994.
Sales for units owned continuously during 1995 and 1994 decreased 3.9% due
partially to mild weather this period compared to the same period last year
which was especially severe. Cost of goods sold increased 3.8% in conjunction
with the increase in net sales during the first three months of 1995. Selling,
general and administrative expenses increased by 12.9%primarily due to
increased expenditures associated with acquired operations. Interest expense
was up 176.3% from last year due to increased levels of borrowings and higher
interest rates.
As a result of the above actions, income before income taxes increased by
$80,000 over the same period last year.
Financial Condition and Liquidity
The Company's ratio of current assets to current liabilities was 4.1 at the
end of the first quarter of 1995 as compared with 3.8 at December 31, 1994.
Working capital at March 31, 1995 was $47,247,000 compared with $44,638,000
at December 31, 1994.
Cash from operations and other financial resources available to the Company
are expected to be adequate to meet cash requirements for working capital and
capital expenditures in the future. At March 31, 1995, the company had
available cash resources of $26,000,000 of which $19,900,000 was being
utilized. A three year revolving credit agreement for $20,000,000 is the
foundation of these credit facilities.
The Company anticipates growth through possible acquisitions of new
distribution and jobber locations. Although no definitive agreements have
been reached, it is expected that cash generated from operations, other
changes in working capital and existing credit facilities will be sufficient
to support cash outlays for anticipated acquisitions, if any.
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.11 - Supplemental Executive Retirement Plan effective
January 1, 1995.
(b) Reports on Form 8-K
No reports of Form 8-K were filed by the registrant during the
quarter ended March 31, 1995.
7
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REPUBLIC AUTOMOTIVE PARTS, INC.
-------------------------------
(Registrant)
By /S/ KEITH M. THOMPSON May 12, 1995
-------------------------------------------
President, Chief Executive Date
Officer and Director
By /S/ DONALD B. HAUK May 12, 1995
-------------------------------------------
Executive Vice President, Chief Date
Financial Officer and Director
8
<PAGE> 8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REPUBLIC AUTOMOTIVE PARTS, INC. FOR THE QUARTER
ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,836
<SECURITIES> 0
<RECEIVABLES> 13,902
<ALLOWANCES> (531)
<INVENTORY> 42,706
<CURRENT-ASSETS> 62,536
<PP&E> 15,640
<DEPRECIATION> 8,988
<TOTAL-ASSETS> 79,944
<CURRENT-LIABILITIES> 15,289
<BONDS> 0
<COMMON> 1,696
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 79,944
<SALES> 32,908
<TOTAL-REVENUES> 32,908
<CGS> 20,529
<TOTAL-COSTS> 20,529
<OTHER-EXPENSES> 11,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 373
<INCOME-PRETAX> 1,037
<INCOME-TAX> 410
<INCOME-CONTINUING> 627
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 627
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
REPUBLIC AUTOMOTIVE PARTS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective January 1, 1995
<PAGE> 1
REPUBLIC AUTOMOTIVE PARTS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Page
ARTICLE 1 PREFACE
1.1 Effective Date 1
1.2 Purpose of the Plan 1
1.3 Governing Law 1
1.4 Gender and Number 1
ARTICLE 2 DEFINITIONS
2.1 Accrued Benefit 2
2.2 Eligible Employee 2
2.3 Final Average Earnings 2
2.4 Normal Retirement Date 2
2.5 Participant 2
2.6 Plan 2
2.7 Qualified Plan 2
ARTICLE 3 RETIREMENT AND DISABILITY BENEFITS 3
ARTICLE 4 VESTING 3
ARTICLE 5 DEATH BENEFITS 3
ARTICLE 6 DISTRIBUTION OF BENEFITS 4
ARTICLE 7 FUNDING AND ESTABLISHMENT OF ACCOUNTS
7.1 Unfunded 4
7.2 Limitation on Rights of Participants
and Beneficiaries 4
ARTICLE 8 MISCELLANEOUS
8.1 Liability of Employer 4
8.2 Assignment and Alienation 5
8.3 Amendment or Termination 5
8.4 No Guarantee of Employment 5
8.5 Claims Submission and Review Procedure 5
SCHEDULE A 6
<PAGE> 2
REPUBLIC AUTOMOTIVE PARTS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Republic Automotive Parts, Inc., herein referred to as
Employer, does hereby establish a Supplemental Executive
Retirement Plan for key executive Employees on the terms and
conditions described hereinafter:
ARTICLE 1
PREFACE
Section 1.1 Effective Date. The effective date of this Plan is
January 1, 1995.
Section 1.2. Purpose of the Plan. The purpose of this Plan is
to provide supplemental retirement benefits for Participants who
are in "a select group of management or highly compensated
employees" to replace potential retirement benefits lost by such
employees as a result of legislatively mandated changes in the
Republic Automotive Parts, Inc. Employees' Retirement Plan.
Section 1.3. Governing Law. This Plan shall be regulated,
construed and administered under the laws of the State of
Tennessee, except when preempted by federal law.
Section 1.4. Gender and Number. The masculine gender shall be
deemed to include the feminine, the feminine gender shall be
deemed to include the masculine, and the singular shall include
the plural unless otherwise clearly required by the context.
1
<PAGE> 3
ARTICLE 2
DEFINITIONS
Except as otherwise provided, the definitions set forth in
the Republic Automotive Parts, Inc. Employees' Retirement Plan
shall have the same meaning when used herein, unless a different
meaning is clearly required by the context of this Plan.
Section 2.1. Accrued Benefit of a Participant as of any date,
hereinafter called the accrual date, before his Normal Retirement
Date shall equal the Participant's retirement benefit provided in
Article 3 of this Plan.
Section 2.2. Eligible Employee shall mean those select
management Employees or highly compensated Employees deemed by
the Employer to be eligible to participate in this Plan. Such
Employees shall be listed on the attached Schedule A, which may
be amended from time to time.
Section 2.3. Final Average Earnings shall have the same meaning
as such term is used in the Qualified Plan.
Section 2.4. Normal Retirement Date shall have the same meaning
as such term is used in the Qualified Plan.
Section 2.5. Participant shall mean each Eligible Employee who
has been designated by the Employer to be eligible to participate
in this Plan. Such Employees shall be listed on the attached
Schedule A, which may be amended from time to time.
Section 2.6. Plan shall mean the Republic Automotive Parts, Inc.
Supplemental Executive Retirement Plan, as herein set forth, or
as duly amended.
Section 2.7. Qualified Plan shall mean the Republic Automotive
Parts, Inc. Employees' Retirement Plan, as it may be amended from
time to time.
2
<PAGE> 4
ARTICLE 3
RETIREMENT AND DISABILITY BENEFITS
In addition to the benefit payable under the Qualified Plan,
a Participant shall be entitled to an annual benefit under this
Plan, calculated in monthly amounts equal to the Accrued Benefit
of the Participant under the formula set forth in the Qualified
Plan, calculated without regard to the limitations under Sections
401(a)(17) and 415 of the Code, as defined in the Qualified Plan,
less the actual Accrued Benefit payable from the Qualified Plan
subject to the limitations under Section 401(a)(17) and 415 of
the Code. If the Participant receives an Early Retirement
Pension, the benefit payable under this Plan shall be reduced in
the same manner as the benefit under the Qualified Plan.
ARTICLE 4
VESTING
Each Participant's Accrued Benefit in this Plan shall be
vested at the same time and in the same manner as in the
Qualified Plan.
ARTICLE 5
DEATH BENEFITS
If a Participant dies, his Spouse, if any, shall be entitled
to receive a survivor annuity based on his Accrued Benefit in
this Plan calculated in the same manner as in the Qualified Plan.
3
<PAGE> 5
ARTICLE 6
DISTRIBUTION OF BENEFITS
Each retiring Participant shall receive payments under this
Plan in the same method of payment elected under the Qualified
Plan (without regard to the rules requiring spousal consent).
Benefits payable from this Plan shall be actuarially adjusted
using the same factors, methods, and assumptions as specified in
the Qualified Plan to reflect the method of payment elected under
the Qualified Plan.
ARTICLE 7
FUNDING AND ESTABLISHMENT OF ACCOUNTS
Section 7.1 Unfunded. This Plan is designed to be an unfunded,
non-qualified plan. The Employer shall accrue the projected
benefits payable under this Plan on its books identified as
deferred compensation. The Employer may use any reasonable
accounting policy in determining the method of this accrual.
Section 7.2 Limitation on Rights of Participants and
Beneficiaries. No Participant or Beneficiary shall have any
preferred claim on, or any beneficial ownership interest in, any
assets of the Employer prior to the time that any such assets are
paid to the Participant or Beneficiary as provided in Article 6.
The right of a Participant or beneficiary to receive a
distribution hereunder shall be an unsecured claim against the
general assets of the Employer.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Liability of Employer. Nothing in this Plan shall
constitute the creation of a trust or other fiduciary
relationship between the Employer and Eligible Employee, or
between the Employer and Beneficiary or any other person. The
Employer shall not be considered a trustee solely by reason of
this Plan.
4
<PAGE> 6
Section 8.2. Assignment and Alienation. No rights under this
Plan may be assigned, transferred, alienated, pledged, or
encumbered by an Eligible Employee or Beneficiary except by will
or by applicable intestate laws or other laws of descent and
distribution.
Section 8.3. Amendment or Termination. The Employer hereby
reserves the right, by written resolution of the Board, to amend
or terminate this Plan at any time. However, a Participant's
Accrued Benefit under this Plan may not be reduced by any such
amendment or termination without the consent of the Participant.
Section 8.4. No Guarantee of Employment. Nothing in this Plan
shall be construed as guaranteeing future employment to Eligible
Employees. An Eligible Employee continues to be an Employee of
the Employer solely at the will of the Employer.
Section 8.5. Claims Submissions and Review Procedure. All
claims for benefits under this Plan shall be governed by the
claims procedure set forth in the Qualified Plan.
IN WITNESS WHEREOF, the Republic Automotive Parts, Inc.
Supplemental Executive Retirement Plan is executed on behalf of
the Employer, the 15th day of December, 1994.
REPUBLIC AUTOMOTIVE PARTS, INC.
/s/ EDGAR R. BERNER
______________________________
Chairman of the Board
ATTEST:
/s/ RICHARD O. BERNER
____________________________________
Director
5
<PAGE> 7
SCHEDULE A
REPUBLIC AUTOMOTIVE PARTS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
PLAN PARTICIPANTS
Name Social Security Number
Keith M. Thompson ###-##-####
Donald B. Hauk ###-##-####
6
<PAGE> 8
