SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1996
Commission File Number 0-20984
HAHN AUTOMOTIVE WAREHOUSE, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 16-0467030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
415 West Main Street Rochester, New York 14608
(Address of principal executive offices) (Zip Code)
(716) 235-1595
(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
Number of shares outstanding of the registrant's common stock,
par value $.01 per share, on May 14, 1996; 4,562,513.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance
Sheets - March 31, 1996 and
September 30, 1995
Condensed Consolidated Statements
of Income - for the six months and three months
ended March 31, 1996 and March 31, 1995
Condensed Consolidated Statements
of Cash Flows - for the six months
ended March 31, 1996 and
March 31, 1995
Notes to Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands except share data)
<CAPTION>
ASSETS 3/31/96 9/30/95
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $198 $205
Accounts receivable:
Trade, net of allowance
for doubtful accounts 18,751 17,919
Inventory 71,540 72,156
Other Current Assets 1,930 2,921
Total Current Assets 92,419 93,201
Property, Equipment, and
Leasehold Improvements, Net 14,817 15,269
Other Assets 2,216 2,010
$109,452 $110,480
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term
debt and capital lease
obligations $2,968 $6,881
Current portion - Notes Payable -
Officers and Affiliates 1070 500
Accounts payable 17,765 23,020
Compensation related liabilities 2,980 3,139
Other accrued expenses 1,780 3,932
Total Current Liabilities 26,563 37,472
Long-term Debt 48,818 40,476
Capital Lease Obligations 705 892
Notes Payable - Officers and Affiliates 1,935 0
Total Liabilities 78,021 78,840
Shareholders' Equity:
Common stock (par value
$.01 per share:
authorized 20,000,000 shares
issued and outstanding
4,562,513 and 4,387,032, respectively) 46 44
Additional paid-in capital 24,608 23,161
Retained earnings 6,777 8,435
Total Shareholders' Equity 31,431 31,640
$109,452 $110,480
</TABLE>
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(In Thousands except per share data)
(Unaudited)
<CAPTION>
For The 6 Months For The 3 Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $104,756 $107,275 $52,079 $52,007
Cost of Products Sold 60,937 64,448 29,831 31,141
Gross Profit 43,819 42,827 22,248 20,866
Selling, General
Administrative
Expense 40,622 40,660 20,934 20,762
Depreciation and
Amortization 1,605 1,537 801 774
Income (Loss) from
Operations 1592 630 513 (670)
Interest Expense (2,189) (2,155) (1,114) (1,149)
Interest and Service
Charge Income 251 251 134 144
Income (Loss)
Before Taxes (346) (1,274) (467) (1,675)
Income Taxes
(Refundable) (138) (510) (186) (670)
Net Income (Loss) $(208) $(764) $(281) $(1,005)
Net Income (Loss)
Per Share $(.05) $(.17) $(.06) $(.22)
Weighted Average
Shares
Outstanding 4,562,513 4,560,415 4,562,513 4,562,079
</TABLE>
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(In Thousands except per share data)
(Unaudited)
<CAPTION>
6 Mo. Ended 6 Mo. Ended
03/31/96 03/31/95
<S> <C> <C>
Cash Flows from Operating
Activities:
Net Income (Loss) $(208) $(764)
Adjustments to Reconcile
Net Income (Loss) to Net
Cash Used In Operating
Activities:
Depreciation and
Amortization 1,605 1,537
Provision for Doubtful
Accounts and Notes 396 427
Changes in Assets and Liabilities:
Trade Receivables (1,228) (499)
Inventory 616 (605)
Other Assets 376 (265)
Accounts Payable and Other Accruals (7,566) (11,491)
Net Cash Provided By (used in)
Operating Activities (6,009) (11,660)
Cash Flows from Investing Activities:
Proceeds from Sale of Fixed Assets 0 87
Additions to Property, Equipment and
Leasehold Improvements (744) (1,321)
Net Cash used in Investing Activities (744) (1,234)
Cash Flows from Financing Activities:
Net Borrowings Under (payment of)
Line of Credit 5,259 13,364
Proceeds from Stock Options 0 44
Proceeds from Long-Term Debt and
Demand Notes 2,671 179
Payment of Long-Term Debt and Demand
Notes (784) (523)
Payment of Notes Payable -
Officers and Affiliates (145) (40)
Payment of Capital Lease Obligations (255) (224)
Net Cash Provided By Financing
Activities 6,746 12,800
Net Increase (Decrease) in Cash (7) (94)
Cash at Beginning of Year 205 304
Cash at End of Period 198 210
Supplemental Disclosures of Cash
Flow Information:
Cash Paid During the Six Mo. For:
Interest $2,188 $1,924
Income Taxes $191 $1,649
</TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The condensed interim consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. The interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to
fairly present such information. Although the Company believes
that the disclosures included on the face of the interim
consolidated financial statements and in the other footnotes
herein are adequate to make the information presented not
misleading, certain information and footnote disclosures,
including significant accounting policies, normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that all
condensed consolidated financial statements contained herein be
read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report for the fiscal
year ended September 30, 1995 on Form 10-K, filed with the
Securities and Exchange Commission, Washington, D.C. 20549.
Operating results for the six month period ended March 31, 1996
are not necessarily indicative of the results that may be
expected for the entire fiscal year.
2. Stockholders' Equity
On December 13, 1994, and January 31, 1995 two employees
exercised options for 4,160 shares of the Company's common stock.
The Company realized net proceeds of approximately $44,000, which
were used in the general operations of the business.
On March 15, 1996, the Board of Directors declared a 4% stock
dividend on the Company's common stock, payable May 1, 1996 to
shareholders of record as of April 10, 1996. Accordingly,
amounts equal to the fair market value of the additional shares
issued have been charged to retained earnings and credited to
common stock and additional paid-in capital at March 31, 1996.
Earnings per share and weighted average shares outstanding have
been presented as if the stock dividend had occurred at the
beginning of fiscal year 1995.
3. Debt (in thousands)
Long-term debt consists of the following:
<TABLE>
<CAPTION>
03/31/96 9/30/95
<S> <C> <C>
Term Loan $12,567 $13,000
Revolving Credit 28,938 21,724
Senior Secured Notes 8,550 8,550
Other Long-term Debt 1,320 3,605
Notes Payable - Officers and Affiliates 2,150 0
Capitalized Lease Obligations 1,116 1,371
Less Current Maturities (3,183) (6,881)
$51,458 $41,369
(/TABLE)
The Senior Secured Notes are due June 15, 1999. The note
agreement requires single annual sinking fund payments of
$2,150,000 which commenced June 15, 1993 with a final payment of
$2,100,000 due June 15, 1999. The Senior Secured Notes may be
prepaid, subject to a prepayment penalty. Interest at 10.25% is
payable semi-annually in June and December.
The Company's Amended and Restated Credit Facility Agreement
("Credit Agreement") provides for $32,000,000 of revolving credit
availability, which expires January 31, 1997, and a $13,000,000
term loan. The Company used the proceeds of the $13,000,000 term
loan to purchase the outstanding shares of AUTOWORKS, Inc. (f/k/a
Autoworks Holdings, Inc.). The term loan requires monthly
principal payments of $216,667 which began on February 1, 1996.
As of April 10, 1996, the Company had obtained commitments from
four banks to convert its existing revolving line of credit, term
loan, and certain other loans, into a new $47.5 million revolving
credit facility. The new facility will be collateralized in the
same manner as the Credit Agreement and will bear interest based
generally upon the Company achieving certain funded debt to cash
flow ratios. The new facility will be for a period greater than
12 months. In accordance with the provisions of Financial
Accounting Standards Board Statement No. 6, borrowings
outstanding under the Company's existing revolving credit have
been classified as long-term debt as of March 31, 1996.
The interest rate on the present revolving line of credit is 1.5%
above the LIBOR Rate. The interest rate on the present term loan
is 1.75% above the LIBOR Rate.
The Credit Agreement and Senior Secured Notes are collateralized
by substantially all of the Company's assets and contain
covenants and restrictions, including limitations on
indebtedness, liens, leases, mergers and sales of assets, and
investments, and on dividends, stock purchases and other payments
in respect of capital stock and cash flow coverage requirements.
At March 31, 1996, the Company was in compliance with all
covenants under the Senior Secured Notes agreement or the
appropriate waiver was obtained; however, at September 30, 1995,
the Company failed to meet its cash flow coverage covenant of 1.2
to 1 under the Credit Agreement. As a result, the Company will
default under the Agreement unless on or before June 30, 1996, it
receives $4,000,000 or more in net proceeds from the issuance of
either (a) subordinated debt or (b) stock. The Company may also
obtain waivers, amendments or engage in a refinancing so that it
is not required to issue subordinated debt or equity in order to
avoid a default.
On December 14, 1995, the Company entered into an agreement with
its Chief Executive Officer and principal shareholder whereby he
will, upon request of a Special Committee of disinterested
directors of the Company's Board of Directors ("Special
Committee"), purchase from the Company subordinated debt up to a
maximum aggregate principal amount of $4,000,000 on terms and
conditions to be negotiated with, but ultimately determined by
the Special Committee. Such terms and conditions will be
comparable to those that could otherwise be obtained from
independent third parties. This obligation to purchase
subordinated debt from the Company will terminate upon the first
to occur of the following: (a) the Company obtaining a waiver or
amendment which removes the possibility of a default under the
Credit Agreement any time prior to October 1, 1996; (b) the
closing of a refinancing; or (c) the sale of $4,000,000 or more
of subordinated debt or equity to one or more third parties which
yields net proceeds of $4,000,000 or more.
Upon the failure of the Company to comply with any covenant
contained in the Amended and Restated Credit Facility Agreement
or upon the occurrence of an event of default, the rate of
interest may be increased to a rate at all times equal to two
percent (2%) above the rate of interest which would be in effect
absent such failure of compliance or default. Such increased
rate is to remain in effect, through and including the end of the
fiscal quarter in which such failure of compliance is remedied
and the Borrower is in compliance with the covenant, whereby in
the case of an event of default, such increased rate is to remain
in effect through and including the earlier to occur of payment
in full of all obligations and cancellation of further
commitments to lend under the Agreement, or written waiver of
such event of default by the Bank.
5. Contingencies
The Company is a defendant in a lawsuit filed in the Federal
District Court for the District of Maryland by AP Parts
International, Inc. on May 31, 1995. The Company is a co-defendant
with an employee of the Company, Arvin Industries, Inc. and an
employee of Arvin Industries, Inc. The complaint alleges a
conspiracy in restraint of trade with the co-defendant, Arvin
Industries, Inc., in violation of certain antitrust statutes and
also that the employee of the Company misappropriated certain trade
secrets of AP Parts International, Inc. It seeks damages against
the Company in the antitrust action of $3,000,000 (subject to being
trebled when permitted by statute) and $3,000,000 against the
Company and its employee for the alleged misappropriation of trade
secrets. The Company is vigorously defending this action and
management believes the Company has no liability under these
claims.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Hahn Automotive Warehouse, Inc. (the "Company") operates its
business both through the Company and its wholly-owned
subsidiaries, AUTOWORKS, Inc. and Meisenzahl Auto Parts, Inc.
Unless otherwise indicated, the discussion herein refers to the
financial condition and results of operation of the Company on a
consolidated basis.
Results of Operations
The Company's net sales were $52.1 million in the second quarter
of fiscal 1996, (ended March 31, 1996), a $72,000 increase over
the second quarter sales of $52.0 million in the second quarter
of fiscal 1995, (ended March 31, 1995). During the current
quarter, Direct Distribution sales, (which includes two new
centers), increased $978,000 and Advantage Stores sales increased
$866,000, while Distribution Center sales decreased $192,000 and
AUTOWORKS sales declined by $1.6 million. The majority of the
AUTOWORKS sales decrease resulted from a net reduction of 17
retail stores. On a comparable store basis, AUTOWORKS sales fell
by 1.6%; the decline in AUTOWORKS sales was slightly offset by
new selling prices discussed below. As a percentage of net
sales, contributions by each division for the current quarter
were as follows: AUTOWORKS - 38.1%, Distribution Centers -
29.4%, Advantage Stores - 26.2%, and the Direct Distribution
Centers - 6.3%.
Gross profit increased $1.3 million to $22.2 million for the
current quarter, or 42.6% of net sales from $20.9 million or
40.1% of net sales, in the same quarter last year. These
increases are mainly due to new pricing strategies implemented in
the AUTOWORKS division during the first quarter of the current
fiscal year. To a lesser extent, these increases are
attributable to the growth in the net sales of the Advantage
Stores and Direct Distribution Centers as a percentage of total
Company net sales.
Selling, general and administrative expense for the current
quarter increased by $172,000 over the same quarter in fiscal
1995. As a percentage of net sales, selling, general and
administrative expense increased to 40.2% compared to 39.9% for
the same quarter a year ago. These increases reflect the opening
of two Direct Distribution Centers, the continued increase of
Advantage Store sales as a percentage of Company net sales and
the continuing effort to relocate and/or close unprofitable
stores and open new stores in both the Advantage Auto and
AUTOWORKS division. These increases were partially offset by
cost cutting efforts in the AUTOWORKS division.
Depreciation and amortization increased $26,000 in the quarter
ended March 31, 1996, to $801,000 from $775,000 for the same
period of the prior fiscal year. This increase is primarily due
to the opening of two Direct Distribution Centers and five
AUTOWORKS stores during the past year.
Interest expense declined by $35,000 for the current quarter
compared to the same quarter last year. This decrease is due to
slightly lower interest rates on the Company's outstanding
borrowings in the second quarter of fiscal 1996.
As a result of the factors discussed above, the Company's net
loss declined from $1.0 million or $.22 per share for the second
fiscal quarter of 1995, to $281,000 or $.06 per share for the
second fiscal quarter this year.
Results of Operations - six months ended March 31, 1996, compared
to six months ended March 31, 1995.
The Company's net sales decreased $2.5 million or 2.3% from
$107.3 million for the six months ended March 31, 1995 to $104.8
million for the corresponding fiscal six months of 1996. This
was due to a decrease in sales of $3.8 million and $1.1 million
at the AUTOWORKS division and the Distribution Centers,
respectively; these increases were partially offset by increases
of $932,000 and $1.5 million in sales in the Advantage stores and
the Direct Distribution Centers, respectively. The major factor
in the AUTOWORKS sales decline was the net reduction of 17 retail
stores since March 31, 1995. On a comparable store sale basis,
AUTOWORKS sales declined by 3.8% from the previous fiscal year;
this decline was slightly offset by price increases during the
first quarter of this fiscal year. As a percentage of Company
net sales, contributions by each division for the first six
months of fiscal 1996 were as follows: AUTOWORKS - 40.0%,
Distribution Centers - 28.7%, Advantage stores - 25.4% and Direct
Distribution Centers - 5.9%.
Gross profit increased for the first six months of the current
fiscal year by $1.0 million to $43.8 million from $42.8 million
for the same period of the previous fiscal year. As a percentage
of sales, gross profit increased to 41.8% from 39.9% for the
previous year. This percentage increase is primarily due to the
new pricing strategies implemented in the AUTOWORKS division
during the first quarter of the current fiscal year, and, to a
lesser extent, the increase in Advantage Store sales as a
percentage of total Company net sales.
Selling, general and administrative expense declined $38,000 from
the comparable period of the previous fiscal year. This is
primarily the result of cost cutting efforts in the AUTOWORKS
division in the second quarter, the closing of unprofitable, low
volume AUTOWORKS stores, all of which was offset by expenses
related to store closings and the addition of two new Direct
Distribution Centers.
Depreciation and amortization increased $68,000 from $1.5 million
in fiscal 1995 compared to $1.6 million for the same period in
the present fiscal year. This increase is due to the opening of
two Direct Distribution Centers and five new AUTOWORKS stores.
Interest expense increased $34,000, in the first six months of
fiscal 1996, to $2.2 million. This increase is attributable to
higher average borrowings during the first quarter of fiscal
1996, which was partially offset by lower interest rates.
As a result of these factors the Company's net loss for the six
month period ended March 31, 1996, was reduced to $208,000 or
$.05 per share, compared to $764,000 or $.17 per share for the
six months ended March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended March 31, 1996, net earnings adjusted for
non-cash items, including depreciation and bad debt, increased to
$1.8 million from $1.2 million for the same six month period last
year, or an increase of 50.0%, which is generally attributable to a
decline in the Company's net loss. Net cash used by operating
activities declined to $6.0 million for the current six months from
$11.7 million for the same period last year. This decline is
primarily due to a lesser reduction in payables this year than for
the same period last year, and to a lesser extent, the increase in
adjusted net earnings. This decline in payable reductions reflects
mainly a significant payment made by the Company last year in
connection with the termination of an extended payment program with
AUTOWORKS' vendors.
During the six months ended March 31, 1996, the Company's capital
expenditures totaled $744,000 compared to $1.2 million during the
first two quarters of fiscal 1995. The decline in capital
expenditures is attributable to the increased number of operating
leases entered into by the Company during the first half of fiscal
1996. The Company expects to continue its increased use of
operating leases during the remainder of this fiscal year and
during the term of the new credit facilities discussed below.
Financing activities produced $6.7 million during the six months
ended March 31, 1996. These funds were generally derived from net
borrowings under the Company's revolving credit line and from the
$2.5 million subordinated demand loan made by the Futermans to the
Company on February 13, 1996. As of May 1, 1996, the Company has
outstanding $25.2 million in its revolving line of credit, leaving
$5.4 million of availability.
As of February 1, 1996, the Company began to make principal
payments on its $13.0 million term loan from its commercial lender.
The Company anticipates that this term loan will be refinanced with
the new revolving credit facility discussed below and that these
payments will cease upon the closing of such new facility. During
the next quarter, the Company is required to make a $2.1 million
payment on its Senior Secured Notes. The Company expects to make
this payment with funds generated from operations and net
borrowings under its revolving line of credit.
The Company has obtained commitments from four banks to convert its
existing revolving line of credit and term into loan into a new
$47.5 million revolving credit facility. The new facility will be
collateralized by all of the Company's assets and will bear
interest based generally upon the Company achieving certain funded
debt to cash flow ratios. The new facility will be for a period
greater than 12 months. In accordance with the provisions of
Financial Accounting Standards Board Statement No. 6, borrowings
outstanding under the Company's existing revolving credit have been
classified as long-term debt as of March 31, 1996.
Although there can be no assurance, the Company anticipates closing
on the new revolving credit facility prior to June 30, 1996, which
is the last day ("Default Date") by which the Company must raise
$4.0 million in net proceeds through the issuance of equity or
subordinated debt in order to avoid a default under the 1.2 to 1.0
cash flow covenant in the Company's credit agreement which the
Company failed to meet as of September 30, 1995. To fulfill a
condition to closing under the new credit facility, the Futermans
have agreed that $2,150,000 of the demand loans previously made by
them to the Company will be converted into a five year term loan,
with the principal payments not to begin until after October 1,
1996.
The Company expects to incur additional interest expense during
fiscal 1996 as a result of higher interest rates under the new
credit facility and the borrowings made from the Futerman family.
The Company's principal sources of liquidity are internally
generated funds, borrowings under its revolving credit facility,
leasing arrangements and vendor financing. Subject to the closing
of its new credit facilities discussed above, the Company
anticipates that these sources will provide sufficient working
capital to operate the Company's business, make expected capital
expenditures, continue implementation of the AUTOWORKS operational
and organizational changes and to meet its other short-term and
long-term liquidity needs for at least the next 12 months.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company held an Annual Meeting of Shareholders
on March 15, 1996.
(b) At said Annual Meeting of Shareholders the following
nominees were elected to the Board of Directors:
Michael Futerman
Eli N. Futerman
Gordon E. Forth
Robert I. Israel
The terms of the following directors continued after the
meeting:
Daniel J. Chessin
Ira D. Jevotovsky
Stephen B. Ashley
E. Philip Saunders
(c) Shareholders did not vote on any other matters at
the Annual Meeting. The number of votes cast for the election of
directors was as follows:
Votes
Votes For Withheld
Michael Futerman 4,114,384 20,424
Eli N. Futerman 4,114,384 20,424
Gordon I. Forth 4,114,384 20,424
Robert I. Israel 4,114,384 20,424
There were no broker non-votes.
Item 5. Other Information.
On March 15, 1996, the Company's Board of Directors voted to
declare a 4% stock dividend for shareholders of record on April 10,
1996. The stock dividend distribution was made on May 1, 1996. As
a result, the Company issued 175,481 shares of its common stock on
that date.
On April 30, 1996, the Company and its commercial lender entered
into an Amended and Restated Credit Agreement Number 2 (Amendment
No. 2"). Pursuant to Amendment No. 2, the Bank extended the first
date on which the Company must make a payment of $7,500 to extend
the Default Date from April 30, 1996 to May 15, 1996. Amendment
No. 2 further provides that if such financing is not consummated by
May 30, 1996, then Registrant may further extend the Default Date
to June 30, 1996 upon payment of another $7,500.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amended and Restated Credit Agreement Amendment
Number Two, dated April 30, 1996, between Hahn
Automotive Warehouse, Inc. And Fleet Bank.
27 Selected financial information as required for Edgar
electronic filing for the six months ended March
31, 1996.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated
April 12, 1996 with the Securities and Exchange
Commission. In the Form 8-K, the Company reported the
extension of the Default Date referred to in the
Liquidity and Capital Resources Section of Item 2 of Part
I of the Quarterly Report on Form 10-Q
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.
HAHN AUTOMOTIVE WAREHOUSE, INC.
(Registrant)
By:s//Mike Futerman
Mike Futerman
Chief Executive Officer
By:s//Eli N. Futerman
Eli N. Futerman
President
By:s//Albert J. Van Erp
Albert J. Van Erp
Vice President - Finance
Dated: May 14, 1996
EXHIBITS
Exhibit 10.1
AMENDED AND RESTATED CREDIT FACILITY AGREEMENT
AMENDMENT NUMBER 2
THIS AMENDED AND RESTATED CREDIT FACILITY AGREEMENT
AMENDMENT NUMBER 2 is made as of the 30th day of April, 1996 by
and among HAHN AUTOMOTIVE WAREHOUSE, INC., a corporation formed
under the laws of the State of New York with offices at 415 West
Main Street, Rochester, New York 14608 ("Hahn") and AUTOWORKS,
INC., a corporation formed under the laws of the State of
Delaware with offices at 415 West Main Street, Rochester, New
York 14608 for itself and as successor to Auto Works Holdings,
Inc. ("AWI", with Hahn and AWI collectively called "Borrower"),
and FLEET BANK, a bank and trust company formed under the laws of
the State of New York with offices at One East Avenue, Rochester,
New York 14638 and successor by merger to Fleet Bank of New York
("Bank").
WHEREAS, the parties are parties to a certain Amended
and Restated Credit Facility Agreement dated as of September 30,
1994 among Hahn, AWI, Auto Works Holdings, Inc., and the Bank, as
amended by Amended and Restated Credit Facility Agreement
Amendment Number 1 (collectively, the "Credit Agreement"), and
WHEREAS, the parties desire to amend the Credit
Agreement,
NOW THEREFORE, the parties hereby agree as follows:
1. Section 10.4 of the Credit Agreement is hereby
amended to add the following language at the end thereof:
Notwithstanding the foregoing,
during 1996 only, Second Quarter (i) shall be
deemed to mean the period ending on May 15,
1996, or (ii) at the option of the Borrower,
shall be deemed to mean the period ending on
May 30, 1996, such option to be exercised by
payment to the Bank of an extension fee of
$7500 on or before May 15, 1996, and at the
further option of the Borrower, shall be
deemed to mean the period ending on June 30,
1996, such further option to be exercised by
payment to the Bank of an additional
extension fee of $7500 on or before May 30,
1996.
2. All other terms of the Credit Agreement shall
remain unchanged and in full force and effect. All references to
the Credit Agreement in documents, agreements, and instruments
related to the Credit Agreement shall be deemed to be references
to the Credit Agreement as amended by this Amendment Number 2.
3. Borrowers represent and warrant that (a) each of
the representations and warranties, except for the representation
set forth in Section 6.6 of the Credit Agreement, is true and
correct as of the date hereof, provided that for purposes of the
representations and warranties set forth in Section 6.5 of the
Credit Agreement or referencing such Section 6.5, the financial
statements referred to therein shall mean the financial
statements of the Borrowers dated 12/31/95; (b) the
representation set forth in Section 6.6 of the Credit Agreement
is true and correct as of the date hereof except for litigation
previously disclosed to the Bank, provided that the reference to
financial statements therein shall mean the financial statements
of the Borrowers dated 12/31/95; and (c) no Event of Default or
event that, with the giving of notice or the passage of time or
both would constitute an Event of Default, has occurred and is
continuing.
4. The parties may sign this Amendment and the
Consent hereto in any number of counterparts, each of which shall
be an original but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AUTO WORKS, INC. HAHN AUTOMOTIVE WAREHOUSE, INC.
By:s// Eli N. Futerman By: s// Eli N. Futerman
Title: President Title: President
FLEET BANK
By: s// Jeffrey Holmes
Title: Vice President
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 198
<SECURITIES> 0
<RECEIVABLES> 18,751
<ALLOWANCES> 0
<INVENTORY> 71,540
<CURRENT-ASSETS> 92,419
<PP&E> 14,817
<DEPRECIATION> 0
<TOTAL-ASSETS> 109,452
<CURRENT-LIABILITIES> 28,498
<BONDS> 0
0
0
<COMMON> 46
<OTHER-SE> 31,385
<TOTAL-LIABILITY-AND-EQUITY> 109,452
<SALES> 104,756
<TOTAL-REVENUES> 104,756
<CGS> 60,937
<TOTAL-COSTS> 42,227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,189
<INCOME-PRETAX> (346)
<INCOME-TAX> (138)
<INCOME-CONTINUING> (208)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (208)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
