<PAGE>
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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 April 25, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 33-66412
APS HOLDING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 76-0306940
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15710 JOHN F. KENNEDY BLVD., SUITE 700
HOUSTON, TEXAS 77032-2347
(Address of Principal Executive Offices)
(713) 507-1100
(Registrant's telephone number, including area code)
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
--- ---
There were 13,727,961 shares of the Registrant's Class A Common Stock
outstanding as of the close of business on June 5, 1996. There were no shares
outstanding of the Registrant's Class B Common Stock.
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APS HOLDING CORPORATION
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
APS HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
--------
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS APRIL 25, 1996 JANUARY 27, 1996
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,744 $ 7,886
Accounts and notes receivable, less allowance of $6,488 and $5,048 . . . . . 127,558 120,848
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308,430 295,379
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,874 13,390
Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . 26,239 30,817
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . 485,845 468,320
Property and equipment, less accumulated depreciation of $21,704 and $20,463 . 41,337 40,777
Notes receivable, less current portion . . . . . . . . . . . . . . . . . . . . 20,210 26,235
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,734 50,627
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509 681
Deferred costs and other assets. . . . . . . . . . . . . . . . . . . . . . . . 14,543 13,519
-------- --------
$611,178 $600,159
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Book overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,802 $ 8,314
Current maturities of long-term debt . . . . . . . . . . . . . . . . . . . . 13,952 13,453
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,350 103,214
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,357 40,655
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . 188,461 165,636
Long-term debt, less current maturities. . . . . . . . . . . . . . . . . . . . 290,394 302,512
Deferred income and other liabilities. . . . . . . . . . . . . . . . . . . . . 6,938 7,981
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 485,793 476,129
-------- --------
Commitments and contingencies (Note 4) . . . . . . . . . . . . . . . . . . . . - -
Stockholders' equity:
Class A common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 137
Class B common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 154,889 154,889
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,521) (30,876)
Treasury stock, at cost. . . . . . . . . . . . . . . . . . . . . . . . . . . (120) (120)
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . 125,385 124,030
-------- --------
$611,178 $600,159
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
APS HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
APRIL 25, 1996 APRIL 25, 1995
-------------- --------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . $ 217,566 $ 137,949
Cost of goods sold. . . . . . . . . . . . . . . . . . . . 141,735 89,880
--------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . . 75,831 48,069
Selling, general and administrative expenses. . . . . . . 68,280 39,977
--------- ---------
Operating income . . . . . . . . . . . . . . . . . . 7,551 8,092
Interest income . . . . . . . . . . . . . . . . . . . . . 1,363 1,261
Other income. . . . . . . . . . . . . . . . . . . . . . . 273 383
--------- ---------
Income before interest expense and income taxes. . . 9,187 9,736
Interest expense. . . . . . . . . . . . . . . . . . . . . 7,001 3,684
--------- ---------
Income before income taxes . . . . . . . . . . . . . 2,186 6,052
Provision for income taxes. . . . . . . . . . . . . . . . 831 2,294
--------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . $ 1,355 $ 3,758
--------- ---------
--------- ---------
Net income per share. . . . . . . . . . . . . . . . . . . $ 0.10 $ 0.27
--------- ---------
--------- ---------
Weighted average common shares outstanding. . . . . . . . 13,885 13,909
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
APS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED APRIL 25, 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK ADDITIONAL TREASURY TOTAL
---------------- PAID-IN ACCUMULATED STOCK, STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT AT COST EQUITY
------ ------ ------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period . . . . 13,728 $ 137 $ 154,889 $ (30,876) $ (120) $ 124,030
Net income for the period. . . . . . . - - - 1,355 - 1,355
------ ----- --------- --------- ------ ---------
Balance at April 25, 1996. . . . . . . 13,728 $ 137 $ 154,889 $ (29,521) $ (120) $ 125,385
------ ----- --------- --------- ------ ---------
------ ----- --------- --------- ------ ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
APS HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
APRIL 25, 1996 APRIL 25, 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,355 $ 3,758
Adjustments to reconcile net income to net cash
provided by (used in) activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . 2,756 1,906
Amortization of debt issue costs . . . . . . . . . . . . . . . 197 214
Provision for bad debts. . . . . . . . . . . . . . . . . . . . 1,481 905
Income from supply agreement . . . . . . . . . . . . . . . . . (273) (383)
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . 688 2,084
Change in operating assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . . . . (8,249) (10,912)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . (11,134) (13,816)
Prepaid expenses and other current assets. . . . . . . . . . 4,580 (2,241)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 24,136 11,081
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . 686 (4,680)
Other assets and liabilities . . . . . . . . . . . . . . . . (4,518) 3
-------- --------
Net cash provided by (used in) operating activities. . . . 11,705 (12,081)
-------- --------
Cash flows from investing activities:
Investment in notes receivable . . . . . . . . . . . . . . . . . . (1,547) (1,119)
Proceeds from repayment of notes receivable. . . . . . . . . . . . 7,630 1,218
Business acquisitions, net of cash acquired. . . . . . . . . . . . (2,286) (7,243)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . (2,013) (2,375)
Proceeds from sale of intangible assets. . . . . . . . . . . . . . 3,500 -
-------- --------
Net cash provided by (used in) investing activities. . . . 5,284 (9,519)
-------- --------
Cash flows from financing activities:
Change in book overdrafts. . . . . . . . . . . . . . . . . . . . . (2,512) -
Net borrowings under revolving credit agreement. . . . . . . . . . (8,300) 28,900
Retirement of long-term debt . . . . . . . . . . . . . . . . . . . (3,319) (2,830)
-------- --------
Net cash provided by (used in) financing activities. . . . (14,131) 26,070
-------- --------
Net increase in cash and cash equivalents. . . . . . . . . . . . . . . . 2,858 4,470
Cash and cash equivalents at beginning of period . . . . . . . . . . . . 7,886 15
-------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . $ 10,744 $ 4,485
-------- --------
-------- --------
Supplemental disclosures:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . $ 2,562 $ 3,163
-------- --------
-------- --------
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . $ 17 $ 146
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
APS HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
1. BASIS OF PRESENTATION:
The consolidated balance sheet of APS Holding Corporation and
subsidiaries (the "Company") at January 27, 1996 has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at April 25, 1996, the consolidated statements of
operations for the three months ended April 25, 1996 and 1995, the
consolidated statement of changes in stockholders' equity for the three
months ended April 25, 1996 and the consolidated statements of cash flows for
the three months ended April 25, 1996 and 1995 have been prepared by the
Company, without audit. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
consolidated financial position, results of operations and cash flows have
been made. The results of operations for the three months ended April 25,
1996 are not necessarily indicative of the operating results for a full year
or of future operations.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been omitted. The accompanying consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended January 27, 1996.
2. NEW ACCOUNTING PRINCIPLES:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, entitled "ACCOUNTING FOR THE STOCK-BASED
COMPENSATION" ("SFAS No. 123"), in October 1995. The Company is required to
adopt either the new accounting rules or the new disclosure rules of SFAS No.
123 for the fiscal year ending January 25, 1997. The Company has decided to
adopt the disclosure requirements of SFAS No. 123.
3. COST TO EXIT ACTIVITIES:
On January 25, 1996, the Company acquired all of the outstanding stock
of Parts, Inc. ("PI") from GKN Parts Industries Corporation (the "PI
Acquisition"). Since the PI Acquisition, the Company has implemented a
comprehensive plan for integrating PI's operations and administrative
functions with those of the Company. Such plan entails the closure of
certain PI distribution centers and stores and consolidation of these
operations into the Company's remaining facilities, as well as the
consolidation of certain administrative functions. The Company's financial
statements at January 27, 1996 included a liability of $9.2 million for costs
related to such plan. During the three months ended April 25, 1996, the
Company charged approximately $0.8 million against such liability. Such
charge consisted of approximately $0.7 million to close facilities (
including approximately $0.5 million of employee termination and relocation
costs) and approximately $0.1 million for future lease and related
obligations.
In connection with the PI Acquisition, the Company also embarked upon a
program during the fourth quarter of the fiscal year ended January 27, 1996
to review and rationalize its facilities. In conjunction with such program,
and in order to achieve its operating performance objectives, the Company has
begun to consolidate redundant operating and administrative facilities, owned
by the Company prior to the PI Acquisition, into existing facilities and to
close other nonperforming facilities. The Company expects to attain a
majority of the program's objectives during fiscal 1997 with completion of
the program during the fiscal year ending January 31, 1998. The Company's
financial statements at January 27, 1996 included a liability, in the amount
of $5.5 million for costs related to such program, including approximately
$0.5 million of employee severance benefits related to personnel reductions
of approximately 300 employees, primarily warehouse and store personnel.
During the three months ended April 25, 1996, the Company charged
approximately $0.7 million of
7
<PAGE>
APS HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
consolidation costs against such liability. Such costs included
approximately $0.4 million to close facilities (including $69,000 of employee
severance benefits for 85 terminated employees) and approximately $0.3
million for future lease and related obligations.
4. LITIGATION:
The Company is involved in various claims and disputes arising in the
normal course of business, including the matter of JO M. SMITH ET AL V.
A.P.S., INC. ET AL, which was filed in July 1994 and is now pending in the
District Court of Harris County, Texas. The plaintiffs (four former and one
existing employee) claim to have been the recipients of acts of intimidation
and/or retaliatory conduct as a result of their filing of workers'
compensation claims and have filed this suit against the Company and one of
its officers under various sections of Texas state statutes prohibiting such
actions claiming aggregate specified actual damages of $3.2 million, punitive
damages of $6.3 million and damages for emotional distress in the amount of
$5.0 million. In addition, as a result of the PI Acquisition, the Company
has become a party to a number of other existing litigation matters and
claims. Among those cases is the matter of KARON S. ADKISSON V. GKN PARTS
INDUSTRIES CORPORATION, a suit pending in the United States District Court
for the Western District of Oklahoma. The plaintiff, a former employee of
PI, alleges several claims against PI, including violation of Title VII of
the Civil Rights Act of 1964 and the negligent retention and supervision of
its employees as a result of being raped by a fellow employee, who has been
convicted of that crime.
While the outcome of this litigation is inherently uncertain, management
believes that the Company has meritorious defenses to both of these suits, as
well as to other pending litigation matters. In any event, the Company has
been contractually indemnified by the seller of PI for the costs of defense
and any adverse outcome (generally, subject to a $500,000 basket) relating to
various PI matters, including all PI litigation matters pending on the date
of the PI Acquisition. In addition, the Company has insurance or indemnity
coverage against various other pending claims and disputes.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Presented below is a summary of unaudited financial operating
information for the three months ended April 25, 1996 and 1995 (dollars in
thousands):
<TABLE>
THREE MONTHS THREE MONTHS
ENDED ENDED
APRIL 25, 1996 % APRIL 25, 1995 %
-------------- ----- -------------- -----
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . $ 217,566 100.0 $ 137,949 100.0
Cost of goods sold . . . . . . . . . . 141,735 65.1 89,880 65.2
Gross profit . . . . . . . . . . . . . 75,831 34.9 48,069 34.8
Selling, general and administrative
expenses. . . . . . . . . . . . . . . 68,280 31.4 39,977 29.0
Operating income . . . . . . . . . . . 7,551 3.5 8,092 5.9
Net income . . . . . . . . . . . . . . 1,355 0.6 3,758 2.7
</TABLE>
THE PI ACQUISITION
On January 25, 1996, the Company purchased all of the outstanding stock of
Parts, Inc. ("PI"), an automotive parts distributor, for a net purchase price of
$74.9 million (the "PI Acquisition").
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995
Net sales for the three months ended April 25, 1995 increased $79.6 million
or 57.7% from the corresponding period of the prior year. Such increase was
primarily attributable to the impact of the PI Acquisition and, to a lesser
extent, to increased sales generated by new Installers' Service Warehouse
("ISW") locations.
Cost of goods sold consists of the purchase cost of products sold. The
dollar increase in cost of goods sold principally resulted from increased sales
volume generated by the PI Acquisition and the growth of the ISW business.
While cost of goods sold for the three months ended April 25, 1996 (as a
percentage of net sales) was comparable to that of the corresponding period of
the prior year, such percentage reflects the sales mix containing more ISW
sales, which have higher gross profit margins than the Company's traditional
businesses (i.e., distribution centers and Company-owned stores), offset by
lower gross profit margins at the Company's traditional businesses. Such
decrease in gross profit margins at the Company's traditional businesses
primarily result from a reduction in selling prices to high volume jobbers and,
to a lesser extent, the absence in the current quarter of the benefit of one-
time incentives received in the prior period resulting from a change in a
supplier for certain product categories. The Company intends to continue adding
high volume jobbers and, consequently, gross profit margins at its traditional
businesses could decrease in future periods.
Selling, general and administrative expenses for the three months ended
April 25, 1996 increased $28.3 million or 70.8% compared to the corresponding
period of the prior year. The dollar increase in selling, general and
administrative expenses principally resulted from increased sales volume
generated by the PI Acquisition and the growth of the ISW business. Selling,
general and administrative expenses (as a percentage of net sales) increased
2.4% over the corresponding period of the prior year principally as a result of
the Company's operation of the PI business (which currently has higher
distribution center operating costs than those of the Company's other
traditional business operations) and, to a lesser extent, its operation of more
ISWs (which have higher operating costs (as a percentage of net sales) than the
Company's traditional businesses). The Company plans to continue adding new
ISWs as part of its overall business plan and expects future operating expenses
of its ISWs to continue to be higher (as a percentage of net sales) than the
related operating expenses of its traditional businesses. However, the Company
believes that, as certain PI distribution centers are consolidated into the
Company's other facilities, selling, general and administrative expenses (as a
percentage of net sales) for the Company's traditional businesses should decline
in corresponding future periods, although no assurance can be given in this
regard.
9
<PAGE>
Operating income for the three months ended April 25, 1996 decreased $0.5
million or 6.7%, compared to the corresponding period of the prior year,
primarily due to the increase in selling, general and administrative expenses
discussed above.
Interest income for the three months ended April 25, 1996 was $1.4 million,
an increase of $0.1 million or 8.1%, compared to $1.3 million for the
corresponding period of the prior year. The increase was due principally to
higher interest rates.
Other income for the three months ended April 25, 1996 was $0.3 million
(0.1% of net sales) compared to $0.4 million (0.3% of net sales) for the
corresponding period of the prior year. Such amounts represent the portion
allocable to such periods of a $6.0 million payment received from a supplier for
entering into a ten year supply agreement in April 1993. Such payment was
deferred and is being recognized as income on an accelerated basis over the term
of the agreement; thus the amount of revenue recognized from such payment is
declining.
Interest expense for the three months ended April 25, 1996 was $7.0 million
(3.2% of net sales) compared to $3.7 million (2.7% of net sales) for the
corresponding period of the prior year. The increase in interest expense for
such period is principally due to higher borrowing levels resulting from the
Company's investment in acquisitions (primarily the PI Acquisition) and the
expansion of its ISW business. The extent of future increases in interest
expense will depend on a number of factors, including the magnitude of increases
in borrowing levels, changes in interest rates and the Company's continued
access to sufficient sources of funding for its expansion efforts. The PI
Acquisition was financed through the private placement on January 25, 1996 of
$100.0 million principal amount of the Company's 11.875% senior subordinated
notes due 2006 (the "Notes"). Also, concurrently with the PI Acquisition, the
Company entered into an amended and restated senior bank credit agreement (the
"New Credit Agreement") which replaced the credit facilities previously made
available to the Company under a credit agreement entered into in September 1993
(as amended, the "Previous Credit Agreement") and increased, to $235.0 million,
the amount that may be borrowed (subject to a borrowing base limitation) under
the revolving credit facility of the New Credit Agreement. At April 25, 1996,
the Company had $201.8 million outstanding under such agreement. The Company
expects to utilize the additional borrowing availability under the New Credit
Agreement to fund the integration of PI with the Company's operations and to
fund the Company's further expansion efforts. The Company expects that, as a
result of such financing and increased borrowings, interest expense for future
periods will continue to increase significantly compared to the same periods of
the prior year.
Income taxes for the three months ended April 25, 1996 were $0.8 million
(an effective tax rate of 38.0%) compared to $2.3 million (an effective tax rate
of 37.9%) for the corresponding period of the prior year. The combined
applicable federal and state statutory tax rate is expected to approximate 38%
during the fiscal year ending January 25, 1997 ("fiscal 1997").
Net income for the three months ended April 25, 1996 was $1.4 million
(0.6% of net sales) compared to a net income of $3.8 million (2.7% of net sales)
for the corresponding period of the prior year. Such decrease in net income is
primarily a result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS. For the three months ended April 25, 1996, operating
activities provided net cash of approximately $11.7 million, resulting primarily
from increases in accounts payable offset by increases in accounts receivable
and inventories. Investing activities provided $5.3 million of cash, primarily
from proceeds from the repayment of notes receivable and from proceeds from the
sale of the Company's interest in the "Parts Plus" group of marks which had been
acquired by the Company in the PI Acquisition. See "Other Matters" below. Such
cash proceeds were partially offset by capital expenditures and business
acquisitions. Financing activities utilized $14.1 million of cash, principally
resulting from net repayments under the Company's revolving credit facility and
retirement of long-term debt.
For the three months ended April 25, 1995, operating activities utilized
net cash of approximately $12.1 million, reflecting substantial uses of cash
from operating activities in connection with increased accounts receivable,
inventories and other current assets, offset by the Company's net earnings and
increases in accounts payable. Investing activities utilized $9.5 million of
cash, principally consisting of the Company's investment in business
acquisitions and capital expenditures.
10
<PAGE>
Financing activities provided $26.1 million of cash, principally resulting
from net borrowings under the Company's revolving credit facility to finance
its business acquisitions and ISW expansion.
WORKING CAPITAL. At April 25, 1996, the Company had $297.4 million of
working capital, including $10.7 million in cash and cash equivalents, compared
to $302.7 million of working capital at January 27, 1996, including $7.9 million
of cash and cash equivalents. During the three months ended April 25, 1996,
current assets and current liabilities increased by $17.5 million and $22.8
million, respectively. Such increases are primarily attributable to increases
in accounts receivable, inventories and accounts payable resulting from seasonal
increases in business and the start-up of new ISWs. A significant portion of
the increase in accounts payable was attributable to deferred payment terms
negotiated with the Company's suppliers in order to offset the costs of
integrating PI and to improve liquidity during such integration. Such deferred
payment terms generally expire over a twelve to thirty-six month period. The
Company expects to continue adding ISWs and to continue making strategic
acquisitions from time to time (although it does not currently intend to make
any significant acquisitions until PI has been sufficiently integrated into the
Company's operations). As a result, the Company expects its working capital to
increase in future periods.
INTEREST RATE SWAP AGREEMENTS During the year ended January 27, 1996, the
Company entered into interest rate swap agreements to hedge interest costs and
risks associated with variable interest rates. Such agreements, which cover a
portion of the borrowings under the New Credit Agreement, effectively convert
variable-rate debt to fixed-rate debt with an effective per annum interest rate
of approximately 7.1%. The aggregate notional principal amount of these
agreements is $100.0 million, $75.0 million of which became effective in June
1995 and matures in June 1997 and $25.0 million of which became effective in
January 1996 and matures in January 1998. The counterparties to such agreements
are major financial institutions and, therefore, credit losses from counterparty
nonperformance is not anticipated.
CAPITAL EXPENDITURES AND ACQUISITIONS. Capital expenditures for the three
months ended April 25, 1996, excluding new business acquisitions, were
approximately $2.0 million compared to $2.4 million for the corresponding period
of the prior year. The decrease in capital expenditures was due primarily to
fewer openings of new ISWs during the three months ended April 25, 1996, as
compared to the corresponding period of the prior year, offset by continued
management information systems enhancements. In connection with the Company's
ongoing growth strategy and to facilitate other business needs, the Company
expects capital expenditures to increase in the remaining quarters of fiscal
1997 as a result of the PI Acquisition and management information system
enhancements.
In order to expand its business, the Company expects to continue to make
strategic acquisitions from time to time for cash and other consideration and to
continue adding new ISWs, in each case to the extent that its debt service
requirements, financing agreement covenants, financial performance and funding
availability permit. The Company does not currently intend to pursue
significant additional acquisitions until PI's business has been sufficiently
integrated into the Company's operations. To meet the cash funding requirements
for the Company's continuing expansion efforts, the Company expects to draw on
internally generated funds, borrowings under the New Credit Agreement, proceeds
from the disposition of non-strategic assets and other sources of liquidity, to
the extent available, as discussed below.
SOURCES OF LIQUIDITY. Since the completion of the Company's initial public
offering and debt refinancing in 1993, the Company has pursued more aggressive
acquisition and ISW expansion programs, resulting in increased funding
requirements. The principal sources of liquidity for the Company's business
expansion and operating requirements in prior years have been internally
generated funds from the operation of its traditional business, borrowings under
the Previous Credit Agreement and the proceeds from issuance of the Notes. The
Company expects that the principal sources of liquidity for its future operating
requirements and business expansion will be cash flows from the operation of its
traditional businesses and borrowings under the New Credit Agreement. In
addition, the Company has negotiated deferred payment terms and other changeover
and acquisition incentives with its major suppliers in order to offset the costs
of integrating PI and to improve its liquidity during such integration. While
the Company expects that such sources will provide sufficient working capital to
operate its business and finance the integration of the PI business into the
Company's distribution network and its currently planned expansion efforts,
there can be no assurance that such sources will prove to be sufficient or that
such additional vendor incentives will be fully attained. Further, the Company
expects such sources will provide sufficient funds to meet its regularly
scheduled debt service obligations (which have been significantly increased as a
result of the PI Acquisition and related financing) prior to maturity of the
revolving credit facility under the New Credit Agreement. The Company currently
does not expect, however, to generate cash flow sufficient to fund the repayment
of borrowings due under
11
<PAGE>
such revolving credit facility upon its maturity on December 31, 2000 and,
accordingly, expects that it will seek to refinance such amounts prior to
such maturity. No assurance can be given that such refinancing can be
successfully accomplished.
GROWTH STRATEGY AND INTEGRATION OF PI
As indicated above, the Company plans to continue growing by adding ISWs
and making strategic acquisitions, in each case to the extent that its debt
service requirements, financing agreement covenants, financial performance and
availability of funding permit.
During the three months ended April 25, 1996, the Company increased the
total number of ISW locations from 252 to 255. The Company plans to add
approximately 40 to 50 new ISWs throughout fiscal 1997. Looking forward, the
Company remains convinced of the viability of the ISW concept and is continuing
to refine and improve the execution of this division's business strategy.
However, operating results have experienced and are expected to continue to
experience earnings and cash flow pressure due to the large number of less
mature ISWs and the rapid growth of the ISW base, the costs of opening
additional ISWs and the expiration, generally after a period of six to fifteen
months, of deferred payment terms extended to the Company by vendors in
connection with the opening of new ISW locations. Operating margins for the
ISWs are currently below those of the Company's traditional businesses.
Full realization of the potential benefits of the PI Acquisition will be
dependent upon a variety of factors, including (i) retention of a substantial
portion of PI's sales, particularly sales to higher volume associated jobbers;
(ii) obtaining significant reductions in cost of goods sold resulting from
purchasing economies extended to the Company by suppliers; (iii) achieving
significant reductions in selling, general and administrative expenses through
the consolidation or closure of certain operating and administrative facilities
and functions; and (iv) obtaining deferred payment terms and other one-time
changeover incentives from suppliers that will be sufficient to offset certain
significant one-time cash costs and expenses that the Company expects to incur
in connection with the PI Acquisition and will provide additional liquidity
during the integration of PI's business into that of the Company. There can be
no assurance as to the extent to which the Company will be able to realize the
potential benefits of the PI Acquisition or the timing of such realization.
Failure to achieve a substantial portion of these benefits within the time frame
expected by the Company could materially and adversely affect the Company's
future results of operations and financial position.
SEASONALITY; INFLATION
Historically, the Company's net sales have been higher during April through
September of each year than during the other months of the year. In addition,
the demand for automotive products is somewhat affected by weather conditions
and, consequently, the Company's results of operations from period to period may
be affected by such conditions. Temperature extremes tend to enhance sales by
causing a higher incidence of parts failure and increasing sales of seasonal
products, while milder weather tends to depress sales.
The Company's management does not believe that its operations have been
materially affected by inflation. In general, the Company has been able to pass
on to its customers any increases in the cost of its inventory.
NEW ACCOUNTING STANDARD
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 123, entitled "ACCOUNTING FOR STOCK-BASED
COMPENSATION" ("SFAS No. 123"), in October 1995. The Company is required to
adopt either the new accounting rules or the new disclosure rules of SFAS No.
123 for Fiscal Year 1997. The Company has decided to adopt the disclosure
requirements of SFAS No. 123.
FORWARD LOOKING INFORMATION
The statements contained in this Report on Form 10-Q ("Quarterly Report")
which are not historical facts, including, but not limited to, statements found
under the captions "Results of Operations"," Liquidity and Capital Resources"
and "Growth Strategy and Integration of PI" above, are forward-looking
statements that involve a number of risks and uncertainties. The actual results
of the future events described in such forward-looking statements in this
Quarterly Report
12
<PAGE>
could differ materially from those contemplated by such forward-looking
statements. Among the factors that could cause actual results to differ
materially are the risks and uncertainties discussed in the Quarterly Report
and in the Company's Annual Report on Form 10-K for the year ended January
27, 1996, including without limitation, the portions of such reports under
the captions referenced above, and the uncertainties set forth from time to
time in the Company's other public reports and filings and public statements.
OTHER MATTERS
In February 1996, the Company sold its interest in the "Parts Plus" group
of marks, which had been acquired by the Company in the PI Acquisition, to the
Association of Automotive Aftermarket Distributors ("AAAD") for cash
consideration of $3.5 million. PI had previously licensed the same marks to
AAAD for a small yearly license fee.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
None.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS
<TABLE>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- - ------- ----------------------- -------------------
<C> <S> <C>
10.5.37 First amendment, dated as of April 23, 1996, to the
Amended and Restated Credit Agreement dated as of
January 25, 1996, among A.P.S., Inc., the several
lenders from time to time parties thereto, and
Chemical Bank, as agent
11.1 Statement re Computation of Income Per Share
12.0 Statement re Computation of Earnings to Fixed Charges
</TABLE>
B. REPORTS ON FORM 8-K
On February 9, 1996, the Company filed a Form 8-K reporting the
acquisition of Parts, Inc., including financial statements for Parts, Inc.
for the years ended December 31, 1994 and 1993 and the nine months ended
September 30,1995 and pro forma financial information for the Company's
acquisition of Parts, Inc. An amendment to such Form 8-K was filed on March
29, 1996 refiling Exhibit 2.2 to denote that certain sections of such exhibit
had been redacted and filed separately with the Securities and Exchange
Commission.
14
<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.
APS HOLDING CORPORATION
Date: June 10, 1996 By: /S/ Mark S. Hoffman
---------------------------------
Mark S. Hoffman
Director, President and Chief
Executive Officer
Date: June 10, 1996 By: /S/ Thomas T. McEntire
---------------------------------
Thomas T. McEntire
Controller
<PAGE>
EXHIBIT 10.5.37
FIRST AMENDMENT, dated as of April 23, 1996 (this "AMENDMENT"), to the
Amended and Restated Credit Agreement dated as of January 25, 1996 (as the
same may be further amended, supplemented, waived or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among A.P.S., INC., a Delaware
corporation (the "BORROWER"), the several banks and other financial
institutions from time to time parties thereto (collectively, the "LENDERS";
individually a "LENDER") and CHEMICAL BANK, a New York banking corporation,
as agent for the Lenders (in such capacity, the "AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Credit Agreement;
WHEREAS, the Borrower has requested that the Lenders amend the Credit
Agreement in the manner provided for herein;
WHEREAS, the Agent and the Lenders are willing to agree to the requested
amendments, but only upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises contained herein, the
parties hereto agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein are so used as so defined.
Unless otherwise indicated, all Section, subsection and Schedule references
are to the Credit Agreement.
2. AMENDMENT TO EXHIBIT K-1. The Credit Agreement is hereby amended by
deleting Exhibit K-1 thereto (the "BORROWING BASE CERTIFICATE") in its
entirety and inserting in lieu thereof a new Exhibit K-1 in the form of Annex
A hereto.
3. AMENDMENT TO EXHIBIT K-2. The Credit Agreement is hereby amended by
deleting Exhibit K-2 thereto in its entirety and inserting in lieu thereof a
new Exhibit K-2 in the form of Annex B hereto.
4. ADDITIONAL INFORMATION. The Borrower hereby agrees that at the
request of the Agent the Borrower shall use reasonable best efforts to
deliver such additional information as the Agent shall require in order to
monitor the borrowing base, including, without limitation, the information
required by Exhibits K-1 and K-2 prior to their being amended her by.
<PAGE>
2
5. REPRESENTATIONS AND WARRANTIES. On and as of the date hereof and
after giving effect to this Amendment, the Borrower hereby confirms,
reaffirms and restates the representations and warranties set forth in
Section 5 of the Credit Agreement MUTATIS MUTANDIS, except to the extent that
such representations and warranties expressly relate to a specific earlier
date in which case the Borrower hereby confirms, reaffirms and restates such
representations and warranties as of such earlier date, PROVIDED that the
references to the Credit Agreement in such representations and warranties
shall be deemed to refer to the Credit Agreement as amended prior to the date
hereof and pursuant to this Amendment.
6. EFFECTIVENESS. This Amendment shall become effective as of the date
hereof upon receipt by the Agent of counterparts of this Amendment duly
executed and delivered by the Borrower and the Required Lenders.
7. CONTINUING EFFECT; NO OTHER AMENDMENTS. Except as expressly amended
hereby, all of the terms and provisions of the Credit Agreement are and shall
remain in full force and effect. The amendment provided for herein is limited
to the specific subsection of the Credit Agreement specified herein and shall
not constitute an amendment of, or an indication of the Agent's or the
Lenders' willingness to amend, any other provisions of the Credit Agreement
or the same subsection for any other date or time period (whether or not such
other provisions or compliance with such subsections for another date or time
period are affected by the circumstances addressed in this Amendment).
8. EXPENSES. The Borrower agrees to pay and reimburse the Agent for all
its reasonable costs and out-of-pocket expenses incurred in connection with
the preparation and delivery of this Amendment, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent.
9. COUNTERPARTS. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Amendment
signed by all the parties shall be delivered to the Borrower and the Agent.
10. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
<PAGE>
- - ---------------------------
ANNEX A-AMENDED EXHIBIT K-1 APS, Inc. Exhibit K-1
- - --------------------------- Monthly Borrowing Base Certificate (Page 1 of 2)
As of______________________
Total Borrowing Base (per detailed calculations below)
Available receivables (Section II, Line H.)
-----------
Plus:
Available Inventory (Section III, Line F)
-----------
Total Availability
-----------
-----------
<TABLE>
<CAPTION>
COMBINED APS PARTS, INC.
I. COMPUTATION OF A/R: DC A/R DC A/R DC A/R
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Beginning of month receivables per aging report
----------- ----------- -----------
Plus:
----------- ----------- -----------
Gross sales
----------- ----------- -----------
Other debit adjustments
----------- ----------- -----------
Less:
----------- ----------- -----------
Payments
----------- ----------- -----------
Returns
----------- ----------- -----------
Chargeoffs
----------- ----------- -----------
Other credit adjustments
----------- ----------- -----------
A. End of month receivables per aging report
----------- ----------- -----------
----------- ----------- -----------
II. CALCULATION OF ACCOUNTS RECEIVABLE AVAILABILITY:
ISW & SPECIAL
COMBINED DC A/R STORES OTHER A/R TERMS A/R
----------- ----------- ----------- ----------- -----------
A. End of month receivables per aging report
----------- ----------- ----------- ----------- -----------
B. Less Ineligibles:
Intercompany receivables
----------- ----------- ----------- ----------- -----------
Greater than 30 days past original statement due date
----------- ----------- ----------- ----------- -----------
Chargeback
----------- ----------- ----------- ----------- -----------
Defaulted/Disputed Receivable
----------- ----------- ----------- ----------- -----------
Cross Age (50%)
----------- ----------- ----------- ----------- -----------
Bankrupt
----------- ----------- ----------- ----------- -----------
Foreign
----------- ----------- ----------- ----------- -----------
Write-off (Charge-off)
----------- ----------- ----------- ----------- -----------
Chargeback
----------- ----------- ----------- ----------- -----------
Contra
----------- ----------- ----------- ----------- -----------
AFCO Loan chargebacks
----------- ----------- ----------- ----------- -----------
Government
----------- ----------- ----------- ----------- -----------
Advance/Deposit
----------- ----------- ----------- ----------- -----------
Changeover
----------- ----------- ----------- ----------- -----------
Finance Charges
----------- ----------- ----------- ----------- -----------
C. Total ineligibles
----------- ----------- ----------- ----------- -----------
D. Subtotal (Line A minus Line C)
----------- ----------- ----------- ----------- -----------
E. Dilution Reserve (25% x Line D) X
----------- ----------- ----------- ----------- -----------
F. Eligible A/R (Line D minus Line E)
----------- ----------- ----------- ----------- -----------
G. Rate of advance 85% 85% 88% 50%
H. Available receivables (Line F x Line G)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
Note: Both gross collateral balances and intangibles should be revised on
a monthly basis with the exception of the cross age which should be
calculated quarterly
Pursuant to the Amended and Restated Credit Agreement dated 1/25/96, the
undersigned certifies the information provided in this report to Chemical
Bank, as Agent, a complete and accurate based on the accounting records of
APS, Inc.
_______________________________
Title:
APS, Inc.
<PAGE>
APS, Inc Exhibit K-1
Monthly Borrowing Base Certificate (Page 2 of 2)
- - ---------------------------
ANNEX A-AMENDED EXHIBIT K-1
- - ---------------------------
<TABLE>
<CAPTION>
SLOW OTHER
COMBINED DC INV.* MOVE INV. STORE INV. ISW INV INV.
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
III. CALCULATION OF INVENTORY AVAILABILITY:
A. Gross inventory as of __/__/__
---------- ---------- ---------- ---------- ---------- ----------
B. Less ineligibles:
Consigned/Leased
---------- ---------- ---------- ---------- ---------- ----------
In-Transit
---------- ---------- ---------- ---------- ---------- ----------
"Prince-Oracle" Inventory
---------- ---------- ---------- ---------- ---------- ----------
Canadian - greater than $10MM (no first priority lien)
---------- ---------- ---------- ---------- ---------- ----------
Shrink Reserve (ISW acct # 1158-00000 & #1158-10000)
---------- ---------- ---------- ---------- ---------- ----------
Reserves
---------- ---------- ---------- ---------- ---------- ----------
C. Total ineligibles
---------- ---------- ---------- ---------- ---------- ----------
D. Eligible Inventory (Line A minus Line C)
---------- ---------- ---------- ---------- ---------- ----------
E. Rate of advance 60% 50% 50% 50% 50%
F. Available Inventory (Line D x Line E)
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
* Excludes Slow Move Inventory
Note: Both gross collateral balances and ineligibles should be revised on
a monthly basis.
Pursuant to the Amended and Restated Credit Agreement dated 1/25/96, the
undersigned certifies the information provided in this report to Chemical
Bank, as Agent, is complete and accurate based on the accounting records of
APS, Inc.
_______________________________
APS, Inc.
<PAGE>
ANNEX B. AMENDED EXHIBIT K-2 APS, INC.
EXHIBIT K-2
DOCUMENTS TO BE SUBMITTED TO THE BANK
A. MONTHLY
THE FOLLOWING REPORTS SHOULD AGREE OR RECONCILE TO THE INFORMATION REPORTED
ON THE MONTHLY BORROWING BASE CERTIFICATES FOR EACH PERIOD. INFORMATION
REQUESTED SHOULD BE PROVIDED FOR EACH OF THE DIVISIONS, I.E., APS and Parts
Inc. DCs, stores and ISW's.
1) Summarized Accounts Receivable Aging Report for the ISW chain. Summarized
by store and by region, produced in the Denver accounting location, with
supporting A/R aging report summaries by customer for the five regions
with the largest A/R balances at month end. Others may be requested at
the Agent's discretion.
2) Break down of Credits
3) Schedules of Write-offs, for (i) DCs; (ii) the ISW chains; and (iii)
Retail Store chains
4) Total A/R by Division and by Location
5) Inventory by Division
6) Inventory by Distribution Center
7) Inventory by Retail Store District and by ISW District
8) Inventory by Product Line
9) Reconciliation of month end A/R Aging Report Balances to Monthly
Borrowing Base Certificate balance (Brown Book) to G/L
10) Supporting Schedules for the following Ineligibles
A/R Inventory:
--- ----------
Changeover Report Inventory Reserves
Special Terms A/R DC and Stores Slow-
50% Cross Age Report -moving Inventory
Bankruptcy
Schedule of AFCO Loans Charged Back
Schedule of Monthly Finance Charges
11) A/R Rollforward Information to include sales, collections, credits and
adjustments
12) Accounts Payable Brown Book schedule.
13) Consolidating financial statements and supporting individual financial
statements for the following: APS and Parts Inc DCs, ISWs, and stores.
14) With respect to #13 above, provide supporting detail for the following
line items for each of the individual financial statements provided:
- returns, allowances and other adjustments to gross sales
- breakdown of cash versus credit sales
15) Same store sales, gross margin and inventory analysis for the ISW chains
and Retail Store chains.
16) Rollforwards of accounts receivable activity for selected ISWs and Stores.
B. QUARTERLY:
Gross Profit Margin Report by Division and by Product Line for DCs, Stores
and ISW chains
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
A.P.S., INC.
By: /s/ E. Eugene Lauver
-----------------------------------
Title: Vice President
CHEMICAL BANK, as Agent and as a Lender
By: /s/ Julie S. Long
-----------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Alan F. Lyster, Jr.
-----------------------------------
Title: Vice President
BANK ONE, COLUMBUS, N.A.
By: /s/ Douglas H. Klamfoth
-----------------------------------
Title: Vice President
BANQUE PARIBAS
By: /s/ Pierre-Jean de Filippis
-----------------------------------
Title: General Manager
By: /s/ Grant Moyer
-----------------------------------
Title: Assistant Vice President
BANK OF AMERICA ILLINOIS
By: /s/ J. Stephen Mernick
-----------------------------------
Title: Senior Vice President
<PAGE>
4
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Valerie B. Carlson
--------------------------------------------
Title: Vice President
FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/ Kevin P. Cronin
--------------------------------------------
Title: Sr. Vice President
THE FUJI BANK, LIMITED HOUSTON AGENCY
By: /s/ David Kelley
--------------------------------------------
Title: Senior Vice President
NATIONAL BANK OF CANADA
By: /s/ [signature illegible]
--------------------------------------------
Title: Group Vice President
By: /s/ [signature illegible]
--------------------------------------------
Title: Asst. Vice President
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION
By: /s/ F. Scott Singhoff
--------------------------------------------
Title: Sr. Vice President
NBD BANK
By: /s/ William J. McCaffrey
--------------------------------------------
Title: Second Vice President
SOCIETE GENERALE
By: /s/ Richard A. Gould
--------------------------------------------
Title: Vice President
<PAGE>
5
WELLS FARGO BANK, N.A.
By: /s/ Mary Jo Hoch
----------------------------
Title: Vice President
FIRST AMERICAN NATIONAL BANK
By: /s/ Corey Napier
----------------------------
Title: V.P.
AMSOUTH BANK OF ALABAMA
By: /s/ R. Mark Graf
----------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ Yusushi Satomi
----------------------------
Title: E.V.P.
<PAGE>
Each of the undersigned hereby consents to the foregoing Amendment and
hereby confirms, reaffirms and restates that its obligations under or in
respect of the Credit Agreement and the documents related thereto to which it
is a party are and shall remain in full force and effect after giving effect
to the foregoing Amendment.
APS HOLDING CORPORATION
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
BIG A AUTO PARTS, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
AUTOPARTS FINANCE COMPANY, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
APS SUPPLY, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
AMERICAN PARTS SYSTEM, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
A.P.S. MANAGEMENT SERVICES, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
<PAGE>
2
PARTS, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
PRESATT, INC.
By: /s/ E. Eugene Lauver
---------------------------
Title: Vice President
<PAGE>
EXHIBIT 11.1
APS HOLDING CORPORATION
COMPUTATION OF INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED APRIL 25,
----------------------------
1996 1995
------------ ------------
Weighted average shares of common
stock outstanding 13,728 13,722
Shares issuable on assumed exercise
of stock options 157 187
------------ ------------
Weighted average shares for primary
net income per share 13,885 13,909
Incremental shares issuable on assumed
exercise of stock optons to reflect
maximum dilutive 14 0
------------ ------------
Weighted average shares for fully diluted
net income per share 13,899 13,909
------------ ------------
------------ ------------
Net income $1,362 $3,758
------------ ------------
------------ ------------
Primary net income per share $0.10 $0.27
------------ ------------
------------ ------------
Fully diluted net income per share $0.10 $0.27
------------ ------------
------------ ------------
<PAGE>
EXHIBIT 12.0
APS HOLDING CORPORATION
COMPUTATION OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
QUARTER ENDED QUARTER ENDED
APRIL 25, 1996 APRIL 25, 1995
-------------- --------------
Earnings before income taxes and interest $ 9,187 $ 9,736
Portion of operating rents deemed
representative of an interest factor 2,339 1,276
------- -------
Earnings before fixed charges $11,526 $11,012
------- -------
------- -------
Interest expense $ 7,001 $ 3,684
Portion of operating rents deemed
representative of an interest factor 2,339 1,276
------- -------
Fixed charges $ 9,340 $ 4,960
------- -------
------- -------
Earnings to fixed charges 1.2 2.2
------- -------
------- -------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FOLLOWING FINANCIAL STATEMENTS OF APS HOLDING CORPORATION: CONSOLIDATED BALANCE
SHEET AS OF APRIL 25, 1996 (UNAUDITED) CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE MONTHS ENDED APRIL 25, 1996 (UNAUDITED) 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> JAN-25-1997
<PERIOD-START> JAN-28-1996
<PERIOD-END> APR-25-1996
<CASH> 10,744
<SECURITIES> 0
<RECEIVABLES> 127,558
<ALLOWANCES> 6,488
<INVENTORY> 308,430
<CURRENT-ASSETS> 485,845
<PP&E> 41,337
<DEPRECIATION> 21,704
<TOTAL-ASSETS> 611,178
<CURRENT-LIABILITIES> 188,461
<BONDS> 290,394
0
0
<COMMON> 137
<OTHER-SE> 125,248
<TOTAL-LIABILITY-AND-EQUITY> 611,178
<SALES> 217,566
<TOTAL-REVENUES> 217,566
<CGS> 141,735
<TOTAL-COSTS> 141,735
<OTHER-EXPENSES> 68,280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,001
<INCOME-PRETAX> 2,186
<INCOME-TAX> 831
<INCOME-CONTINUING> 1,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,355
<EPS-PRIMARY> .10
<EPS-DILUTED> 0
</TABLE>
