SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
Commission file number 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 or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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)
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(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such 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 June 30, 1996: 3,387,818
<PAGE>
Republic Automotive Parts, Inc.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995
Consolidated Statements of Income and Retained Earnings for the three
months and six months ending June 30, 1996 and 1995
Consolidated Statements of Cash Flows for the six months ending
June 30, 1996 and 1995
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
<PAGE>
PART I Item 1. Financial Statements
Republic Automotive Parts, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share data) June 30, December 31,
1996 1995
CURRENT ASSETS
Cash and cash equivalents $ 3,768 $ 2,798
Accounts and notes receivable, less allowance
for doubtful accounts of $682 and $490 16,006 14,063
Inventories 52,857 52,732
Deferred income taxes 3,508 2,972
Income taxes recoverable 1,452
Prepaid expenses and other current assets 2,594 1,031
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Total current assets 78,733 75,048
PROPERTY, PLANT AND EQUIPMENT, NET 9,497 9,266
LONG TERM NOTES RECEIVABLE 663 693
DEFERRED PENSION ASSET 3,370 3,298
GOODWILL AND OTHER INTANGIBLES, less accumulated
amortization of $2,167 and $1,802 10,844 11,483
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$103,107 $99,788
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and long-term debt due
within one year $ 810 $ 1,964
Accounts payable 15,157 15,800
Accrued compensation and employee benefits 2,775 2,467
Accrued taxes and other liabilities 3,614 3,076
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Total current liabilities 22,356 23,307
LONG-TERM DEBT 32,155 30,094
DEFERRED INCOME TAXES 1,739 1,682
OTHER LONG-TERM LIABILITIES 1,462 1,707
COMMITMENTS AND CONTINGENCIES
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 $0.50 par value:
Authorized - 5,000,000 shares
Issued - 3,460,983 shares 1,730 1,730
Additional paid-in capital 24,913 24,913
Retained earnings 19,557 17,160
Treasury stock, at cost: 73,165 shares (805) (805)
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45,395 42,998
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$103,107 $99,788
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The accompanying notes are an integral part of these financial statements.
<PAGE>
PART I Item 1. Financial Statements: (Continued)
Republic Automotive Parts, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(unaudited)
Three Months Six Months
(in thousands, except June 30, June 30,
per share data) 1996 1995 1996 1995
NET SALES $48,322 $36,413 $92,618 $69,321
COSTS AND EXPENSES
Cost of products sold 29,672 23,129 57,059 43,658
Selling, general and administrative
expenses 15,633 11,064 30,683 22,149
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45,305 34,193 87,742 65,807
OPERATING INCOME 3,017 2,220 4,876 3,514
Interest income 137 88 236 192
Interest expense (514) (374) (1,101) (747)
Other income and expense (Note 2) 29 (2,587) 60 (2,575)
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INCOME (LOSS) BEFORE INCOME TAXES 2,669 (653) 4,071 384
Provision (benefit) for income taxes 1,086 (258) 1,674 152
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NET INCOME (LOSS) 1,583 (395) 2,397 232
RETAINED EARNINGS at beginning
of period 17,974 15,903 17,160 15,276
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RETAINED EARNINGS at end of period $19,557 $15,508 $19,557 $15,508
====== ====== ====== ======
EARNINGS PER COMMON SHARE:
Net income (loss) $ 0.44 $ (0.11) $ 0.67 $ 0.07
==== ==== ==== ====
Weighted Average Common Shares
Outstanding 3,569 3,493 3,569 3,493
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The accompanying notes are an integral part of these financial statements.
<PAGE>
PART I Item 1. Financial Statements: (Continued)
Republic Automotive Parts, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six
months ended (Unaudited)
(in thousands) June 30,
1996 1995
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 2,397 $ 232
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation 1,315 889
Amortization of intangibles 639 421
Provision for losses on accounts receivable 224 118
Provision for deferred pension income (72) (90)
Loss on disposal of property, plant and equipment 14 3
Deferred income taxes (479) (1,218)
Change in assets and liabilities:
Accounts and notes receivable (2,167) (1,364)
Income taxes recoverable 1,452
Inventories (125) 545
Prepaid expenses and other current assets (1,563) (1,278)
Accounts payable (643) (372)
Accrued compensation and employee benefits 308 (687)
Accrued taxes and other liabilities 538 3,107
Other long-term liabilities (245) (186)
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Net cash provided by operating activities 1,593 120
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and equipment 83 65
Capital expenditures (1,643) (671)
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Net cash used in investing activities (1,560) (606)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing on revolving credit agreement 4,300 2,875
Payments under revolving credit agreement (2,200) (2,075)
Payments on long-term debt and notes payable (1,193) (30)
Decrease in long-term notes receivable 30 43
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Net cash provided by financing activities 937 813
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 970 327
Cash and cash equivalents at beginning of year 2,798 2,675
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Cash and cash equivalents at end of period $ 3,768 $ 3,002
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense $ 1,099 $ 751
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Income taxes $ 626 $ 972
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The accompanying notes are an integral part of these financial statements.
<PAGE>
PART I 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 six months ended June 30, 1996 and 1995 are
not necessarily indicative of the results expected for the full year.
Note 2 - Litigation
During the second quarter of 1995, the Company recognized a provision of
$2,600,000 ($1,573,000 or $0.45 per share after tax) for a damage award of
$955,000 (plus estimated interest and legal costs) affirmed by a Michigan
State Appellate Court. The litigation involved a former executive's claim
of breach of contract in connection with his discharge by the Company in
1986.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS:
Results of Operations
Net sales increased 33.6% for the first six months of 1996 compared to the
same period in 1995. Net sales increased 32.7% for the second quarter of 1996
compared to the same period in 1995. These sales increases are due
principally to acquisitions made in July 1995 (one distribution center and
twenty-three jobber stores) and August 1995 (three distribution centers).
Sales for units owned continuously during 1996 and 1995 increased 2.2%.
Cost of goods sold increased 30.7% during the first six months of 1996
compared to the same period in 1995. Gross margins improved in 1996 compared
to 1995 primarily a result of the change in sales mix between sales made by
the Company's distribution centers versus its jobber stores, the sales of
which are at higher gross profit margins. Selling, general and administrative
expenses increased by 38.5% for the first six months in 1996 compared to the
same period in 1995 due principally to the inclusion of expenses from the
aforementioned acquisitions and the opening in 1996 of additional distribution
centers by the Company's subsidiary, Fenders & More, Inc..
Interest expense increased 47.4% for the first six months of 1996 compared to
the same period in 1995 due to increased debt levels resulting from
acquisitions and higher interest rates. The results for the first six months
of 1995 include a charge related to an adverse decision during the second
quarter in an appeal of an earlier litigation verdict (see Note 2 above).
<PAGE>
As a result of the above actions, income before income taxes increased by
$2,165,000 for the first six months of 1996 over the same period last year.
Earnings of $0.67 cents per share were reported for the first six months of
1996 compared to $0.07 per share for the same period in 1995.
Financial Condition and Liquidity
The Company's ratio of current assets to current liabilities was 3.5 at
June 30, 1996 compared to 3.2 at December 31, 1995. Working capital at June
30, 1996 was $56,377,000 compared with $51,741,000 at December 31, 1995. Cash
increased by $970,000 from $2,798,000 at December 31, 1995 to $3,768,000 at
June 30, 1996.
Operating activities provided $1,593,000 of the Company's cash flows during
the first six months of 1996 compared to operating activities providing
$120,000 of cash flows for the same period in 1995. Investing activities
used $1,560,000 of the Company's cash flows during the first six months of
1996 compared to $606,000 for the same period in 1995. Normal replacement of
equipment including additional delivery trucks to support increased sales by
Fenders & More, Inc. accounted for most of the increase in cash flows used
by investing activities.
The Company anticipates future growth through possible acquisitions and
openings of new distribution and jobber locations. The Company opened its
eleventh Fenders & More, Inc. distribution center near Birmingham, Alabama
in April, 1996. Two additional distribution centers at this subsidiary
company are expected to be opened before the end of the third quarter.
Although no other 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 and openings, if any.
Financing activities provided $937,000 of the Company's cash flows during
the first six months of 1996 compared to $813,000 for the same period in 1995.
At June 30, 1996, the company had available cash resources of $35,000,000
under its revolving bank credit facility of which $30,100,000 was being
utilized.
Current financial resources (expected cash from operations, working capital
and short-term borrowing) available to the Company are expected to be
adequate to meet future cash requirements for capital expenditures and
anticipated debt reductions which are payable over the next several years
for various notes made in connection with acquisitions.
<PAGE>
PART II. OTHER INFORMATION
Item 4.
Submission of Matters to a Vote of Security Holders
On June 13, 1996 the Company held its annual meeting of stockholders.
The following directors' terms of office continued after the meeting:
William F. Ballhaus, Edgar R. Berner, Richard O. Berner, Nicholas A.
Fedoruk, Oliver R. Grace, Donald B. Hauk, Leroy M. Parker, M.D.,
Douglas R. Stern and Keith M. Thompson.
Item 6.
Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this report:
Exhibit 27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K: None.
<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.
REPUBLIC AUTOMOTIVE PARTS, INC.
(Registrant)
By /S/ KEITH M. THOMPSON August 9, 1996
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President, Chief Executive Date
Officer and Director
By /S/ DONALD B. HAUK August 9, 1996
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Executive Vice President, Chief Date
Financial Officer and Director
<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 JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<RECEIVABLES> 16,688
<ALLOWANCES> 682
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<TOTAL-ASSETS> 103,107
<CURRENT-LIABILITIES> 22,356
<BONDS> 32,155
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<COMMON> 1,730
<OTHER-SE> 43,665
<TOTAL-LIABILITY-AND-EQUITY> 103,107
<SALES> 92,618
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