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, 1999
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 Identification No.)
incorporation or organization)
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)
<PAGE> 1
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, 1999; 4,745,014.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1999 and September 30, 1998
Condensed Consolidated Statements of Operations -
for the six months and three months ended March 31,
1999 and March 31, 1998
Condensed Consolidated Statements of Cash Flows -
for the six months ended March 31, 1999
and March 31, 1998
Condensed Consolidated Statements of Comprehensive
Income - for the six months and three months ended
March 31, 1999, and March 31 1998
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
<PAGE> 2
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, except share data)
<CAPTION>
ASSETS 3/31/99 9/30/98
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $114 $329
Marketable Securities $721 $789
Trade Accounts Receivable (Net of
Allowance for Doubtful Accounts) 15,637 15,595
Inventory 44,212 44,037
Other Current Assets 2,538 2,567
Total Current Assets 63,222 63,317
Property, Equipment, and Leasehold
Improvements, net 7,161 7,613
Other Assets 7,291 7,381
77,674 78,311
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt
and capital lease obligations 2,706 2,810
Accounts payable 10,682 10,718
Compensation related liabilities 1,760 1,758
Discontinued Operations 547 1,142
Other accrued expenses 5,403 4,391
Total Current Liabilities 21,098 20,819
<PAGE> 3
Obligations Under Credit Facility 35,179 35,190
Notes Payable-Officers and Affiliates 791 1,129
Long-Term Debt 1,824 1,810
Capital Lease Obligations 3,386 3,564
Other Liabilities 2,213 2,238
Total Liabilities 64,491 64,750
Shareholders' Equity:
Common stock (par value $.01 per share;
authorized 20,000,000 shares;
issued and outstanding 4,745,014) 47 47
Additional Paid-in Capital 25,975 25,975
Retained Earnings (12,954) (12,619)
Accumulated Other Comprehensive Income 115 158
Total Shareholders' Equity 13,183 13,561
$77,674 $78,311
</TABLE>
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In Thousands, except for share
and per share data)
(Unaudited)
<CAPTION>
For the 6 Months Ended
March 31, March 31,
1999 1998
<S> <C> <C>
Net sales $62,216 $63,852
Cost of Products Sold 38,917 39,689
Gross Profit 23,299 24,163
Selling, General and
Administrative Expense 21,384 21,435
<PAGE> 4
Depreciation and Amortization 807 810
Operating Income 1,108 1,918
Interest Expense (1,805) (1,904)
Interest and Service Charge
Income 156 225
Income (Loss) Before Taxes (541) 239
Income Taxes (Refundable) (206) 86
Net Income (Loss) ($335) $153
Basic and Diluted Earnings
Per Share:
Net Income (Loss) ($0.07) $0.03
Basic and Diluted Weighted
Average Number of Shares 4,745,014 4,745,014
</TABLE>
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In Thousands, except for share and per share data)
(Unaudited)
<CAPTION>
For the 3 Months Ended
March 31, March 31,
1999 1998
<S> <C> <C>
Net sales $32,347 $32,313
Cost of Products Sold 20,433 20,279
<PAGE> 5
Gross Profit 11,914 12,034
Selling, General and
Administrative Expense 10,801 10,658
Depreciation and Amortization 419 413
Operating Income 694 963
Interest Expense (885) (957)
Interest and Service Charge
Income 83 113
Income (Loss) Before Taxes (108) 119
Income Taxes (Refundable) (41) 43
Net Income (Loss) ($67) $76
Basic and Diluted Earnings
Per Share:
Net Income (Loss) ($0.01) $0.02
Basic and Diluted Weighted
Average Number of Shares 4,745,014 4,745,014
</TABLE>
<TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In Thousands)
(Unaudited)
<CAPTION>
6 Mo. Ended 6 Mo. Ended
3/31/99 3/31/98
<S> <C> <C>
<PAGE> 6
Cash flows from operating activities:
Net income (Loss) ($335) $153
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 807 810
Provision for doubtful accounts and
notes 314 289
Change in assets and liabilities:
Trade receivables (356) 566
Inventory (175) 2,456
Other assets 56 2,076
Accounts payable and other accruals 383 (4,734)
Net cash provided by (used in) operating
activities 694 1,616
Cash flows from investing activities:
Additions to property, equip. and
leasehold improvements, net (292) (70)
Net cash used in investing activities (292) (70)
Cash flows from financing activities:
Net borrowings under (payment of) line (446) (1,163)
of credit
Proceeds from long-term debt and demand
notes 182 62
Payments of long-term debt and demand
notes (115) (174)
Payment of notes payable-officers and
affiliates (73) (384)
Payment of capital lease obligations (165) (187)
Net cash provided by (used in) financing
activities (617) (1,846)
<PAGE> 7
Net increase (decrease) in cash (215) (300)
Cash at beginning of year 329 632
Cash at end of period 114 332
Supplemental disclosures of cash flow
information
Cash paid during the quarter for:
Interest $1,630 $2,071
Income taxes paid $12 $50
In January, 1998 the company renewed
capital lease agreements relating
to
the rental of Distribution Centers $0 $3,136
</TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)
For the Six Months For the Three Months
ended March 31 ended March 31
1999 1998 1999 1998
Net Income (Loss) ($335) $153 ($67) $76
Unrealized Gain (Loss) on
Marketable Securities,
Net of Tax ($43) $0 ($26) $0
Comprehensive Net
Income (Loss) ($378) $153 ($93) $76
<PAGE> 8
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 condensed consolidated balance sheet at September
30, 1998 has been derived from the Company's audited financial
statements at that date. 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, 1998, on Form 10-K, filed with the
Securities and Exchange Commission, Washington, D.C. 20549. This
information may be obtained through the web site of the
Securities and Exchange Commission, EDGAR Filing section at
http://www.sec.gov.
Operating results for the six month period ended March 31, 1999
are not necessarily indicative of the results that may be
expected for the entire fiscal year.
<PAGE 9>
2. Comprehensive Income
Effective October 1, 1998, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." This Statement requires that companies
disclose comprehensive income, which includes net income and
unrealized gains and losses on marketable securities classified
as available-for-sale. The unrealized loss on marketable
securities for the six months ended March 31,1999 is net of a tax
benefit of $25,000.
3. Earnings Per Share
The Company presents earnings per share ("EPS") in accordance
with Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings per Share". SFAS No. 128 requires dual
presentation of basic EPS and diluted EPS on the face of the
statements of operations. Basic EPS is computed using net income
(loss) divided by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential
dilution that could occur from common shares issuable through
stock-based compensations including stock options.
Six Months
Ended March 31
1999 1998
BASIC AND DILUTED EARNINGS PER SHARE
Basic and Diluted Shares Outstanding:
Weighted average number of
shares outstanding 4,745,014 4,745,014
Net income (Loss) ($335) $153
Basic and Diluted EPS ($.07) $.03
The exercise of outstanding stock options has not been included
in the calculation of diluted EPS since the effect would be
antidilutive because all outstanding options were out of the
money as of March 31, 1999.
5. Debt (in thousands)
Long-term debt consists of the following:
<PAGE> 10
3/31/99 9/30/98
Credit Facility Agreement 36,119 36,566
Notes Payable-Officers and Affiliates 1,920 1,993
Other Long-term Debt 2,107 2,038
Less Current Maturities (2,351) (2,468)
$37,795 $38,129
The Company's credit facility agreement, which expires on October
22, 2002, provides for a revolving credit facility subject to a
borrowing base, up to a maximum of $50.0 million. Borrowings
under the Credit Facility Agreement bear interest at an annual
rate equal to, at the Company's option, either (a) LIBOR plus
1.75% to 2.5%, dependent upon the Company's financial
performance, or (b) the bank prime rate plus 0% to .75%,
dependent upon the Company's financial performance. LIBOR and the
prime rate were 5.0% and 7.75%, respectively, on March 31, 1999.
As of May 12, 1999, the Company had an outstanding balance of
$35.4 million under the Credit Facility Agreement with an
availability of $4.5 million.
Borrowings outstanding under the Credit Facility Agreement are
collateralized by substantially all of the Company's assets. The
Credit Facility Agreement contains covenants and restrictions,
including limitations on indebtedness, liens, leases, mergers and
sales of assets, investments, dividends, stock purchases and
other payments in addition to tangible net worth, fixed charge
ratio, minimum tangible net worth and minimum fixed charge
coverage ratio requirements. The Company was in compliance with
all covenants, as amended, at the end of the second fiscal
quarter of 1999.
On December 14, 1995, the Company entered into an agreement with
its then Chief Executive Officer and principal shareholder whereby
he would, 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 $4.0 million on terms and
conditions to be negotiated with, but ultimately determined by, the
Special Committee. As a result, the Company executed promissory
notes ("Notes") with the then Chief Executive Officer and the
President of the Company, on February 1 and January 24, 1996,
respectively, in the aggregate amount of $2,150,000. The Notes
bear interest, which is payable monthly, at an annual rate of
12%. The Notes provide for monthly principal repayments with
possible mandatory prepayments if the Company's net income exceeds
certain defined
<PAGE 11>
amounts. Final principal and interest payments are due February 1,
2001. The remaining balance of notes payable due to officers and
affiliates is comprised of a number of notes to related parties
with varying terms.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The discussions set forth in this Form 10-Q may contain forward-
looking comments. Such comments are based upon the information
currently available to management of the Company and management's
perception thereof as of the date of this report. Actual results
of the Company's operations could materially differ from those
indicated in the forward-looking comments. The difference could be
caused by a number of factors identified by the
Company in press releases, other communications with the Company's
shareholders and the Company's filings with the Security and
Exchange Commission from time to time including, but not limited
to, those discussed under the heading "Important Information
Regarding Forward-Looking Statements" in the Company's Annual
Report on Form 10-K, dated December 22, 1998, which has been filed
with the United States Securities and Exchange Commission (the
"Commission"). That Annual Report may be obtained by contacting
the Commission's public reference operations or through the
worldwide web site at http://www.sec.gov, EDGAR Filing section.
Readers are strongly encouraged to obtain and consider all such
factors listed in the December 22, 1998, Annual Report and any
amendments or modifications thereof when evaluating any forward-
looking comments concerning the Company. The Company assumes no
obligation to update forward looking statements to reflect events
or circumstances after the date on which such statements were made.
Results of Operations - three months ended March 31, 1999, compared
to three months ended March 31, 1998.
The Company's net sales of $32.3 million for the fiscal quarter
ended March 31, 1999 were approximately equal to the net sales for
the same fiscal quarter last year. The Advantage Auto Stores
benefited from the acquisition of two new stores during fiscal
1999, however the Distribution Centers were unfavorably affected
because these two jobbing stores were their customers prior to
acquisition. For the quarter, on a comparable location basis and
in comparison to the same quarter last year, net sales decreased by
1.2% at the full service Distribution Centers, 1.6% at the
Advantage Auto Stores, while the Direct Distribution Centers showed
an increase of .6%
<PAGE> 12
Gross profit for the current quarter decreased $120,000 as
compared to the second quarter of fiscal 1998. Gross profit
expressed as a percentage of net sales decreased to 36.8% from
37.2%. This decrease in gross profit percentage is attributable
to various factors, which include improved vehicle manufacturing
and performance, longer warranties, leased vehicles and increased
competition at all segments of distribution.
Selling, general and administrative expense increased $143,000
from $10.7 million in the first quarter of fiscal 1998, to $10.8
million for the comparable quarter of fiscal 1999. This dollar
increase is primarily the result of the operating expenses
related to the two new Advantage Stores and costs related to the
closing of two non-performing Advantage Stores during the current
quarter. As a percentage of net sales, selling, general and
administrative expense increased to 33.4% from 33.0%.
Depreciation and amortization increased $6,000 from $413,000
during the corresponding quarter last year, to $419,000 during
the second quarter of the current fiscal year. This increase is
attributable to the negative goodwill, which resulted from an
acquisition in 1988, being fully amortized as of January 1999.
Interest expense declined $72,000 to $885,000 from $957,000 for
the same quarter of the previous fiscal year. This decline is
the result of lower average borrowings outstanding.
As a result of the factors discussed above, the Company had a net
loss of $67,000 in the current fiscal year's second quarter,
compared to net income of $76,000 for the same quarter of the
previous fiscal year.
Results of Operations - six months ended March 31, 1999, compared
to six months ended March 31, 1998.
The Company's net sales decreased $1.6 million or 2.6% from $63.9
million for the six months ended March 31, 1998 to $62.2 million
for the corresponding six months of fiscal 1999. The major
factor causing the net sales decline of 2.6% was the general
softness in the auto parts industry caused by various factors,
which include improved vehicle manufacturing and performance,
longer vehicle warranties, leased vehicles and increased
competition in all segments of distribution. During this six
month period the Company closed three non-performing Advantage
Auto Stores and acquired two new stores. The two stores acquired
were previously independent customers of the Distribution
Centers. Thus the Distribution Centers net sales were negatively
<PAGE> 13
impacted by these acquisitions. On a comparable location basis,
compared to the same period during the previous fiscal year, net
sales declined by 3.5% at the Distribution Centers, 4.0% at the
Advantage Auto Stores and 2.2% at the Direct Distribution
Centers.
Gross profit for the first six months of the current fiscal year
decreased by $864,000 to $23.3 million from $24.2 million for the
same period of the previous fiscal year. As a percentage of net
sales, gross profit decreased to 37.4% from 37.8% for the
previous year. This percentage decrease is primarily due to the
consolidation, increased competition and the factors discussed
above, in the aftermarket industry.
Selling, general and administrative expense declined $51,000 from
$21.4 million for the first six months of fiscal 1998 compared to
the same period of fiscal 1999. This is primarily due to the
Company's efforts to control and reduce expenses. As a
percentage of sales, selling, general and administrative expense
increased to 34.4% from 33.6% in the previous fiscal year. This
percentage increase was largely due to a decline in sales as
discussed above.
Depreciation and amortization decreased $3,000 from $810,000 in
fiscal 1998 compared to $807,000 for the same period in the
present fiscal year. This decrease is the result of a decrease in
capital expenditures during the previous fiscal year as a result
of the Company's policy of generally leasing certain fixed asset
replacements (i.e. vehicles and computers) instead of purchasing
them, partially offset by an increase in amortization resulting
from the negative goodwill of a 1988 acquisition being fully
amortized as discussed above.
As a result of the factors discussed above, operating income
declined from $1.9 million for the first six months of fiscal
1998 to $1.1 million for the first six months of fiscal 1999. As
a percentage of net sales, operating income declined to 1.8% from
3.0% in the same six month period of fiscal 1998.
Interest expense decreased $99,000, in the first six months of
fiscal 1999, to $1.8 million. This decrease is attributable to
lower average borrowings outstanding during the current six month
period compared to the same period during the previous fiscal
year.
As a result of these factors the Company showed a net loss of
$335,000, or $.07 per share for the six month period ended March
31, 1999, compared to net income of $153,000 or $.03 per share
for the first six months of fiscal 1998.
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of fiscal 1999, operations provided
net cash of $694,000. This is largely due to an increase in
accounts payable and other accrued expenses of $383,000, non cash
items of depreciation and amortization and provision for doubtful
accounts of $807,000 and $314,000, respectively. These were
partially offset by increases in accounts receivables of $356,000
and inventory of $175,000.
Investing activities consist mainly of capital expenditures
relating to the two Advantage Store acquisitions and for routine
replacement of computer equipment and store fixtures. Capital
expenditures, were $292,000 during the first six months of fiscal
1999 compared to $70,000 during the same period of the previous
fiscal year. During the same period of fiscal 1998 there were no
Advantage Store acquisitions.
Financing activities during the six months of fiscal 1999
consumed $617,000 of cash, due to decreased net borrowings under
the Company's credit facility and payments on long-term debt. As
of May 12,1999 the Company had $4.5 million available under its
revolving credit facility.
In the future, the Company expects to make minor strategic
acquisitions of jobbing stores to the extent that its debt
service and other funding requirements permit. The Company's
ability to open new distribution centers will depend on its
ability to negotiate extended payment terms with vendors, which
initially minimizes additional working capital requirements. The
Company believes that it will be able to continue to obtain such
financing.
The Company's principal sources of liquidity for its operational
requirements are internally generated funds, borrowings under its
revolving credit facility, leasing arrangements and extended
payment terms from vendors. In the absence of unanticipated
circumstances, the Company anticipates that these sources will
provide sufficient working capital to operate its business, make
expected capital expenditures and to meet its other short-term
and longer-term liquidity needs.
Year 2000
The Year 2000 issue is the result of computer software programs
being written using two digits rather than four to define the
applicable year. Any of the Company's software programs,
computer hardware or equipment that have date-sensitive software
<PAGE 15>
or embedded chips may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in
miscalculation or system failures. The Company's plan is to
devote the necessary resources required to resolve any
significant Year 2000 issues in a timely manner.
The Company has developed a year 2000 plan to ensure that all of
its significant date-sensitive computer software and hardware
systems and other equipment utilized in its various distribution
and administrative activities (utilizing embedded chips or
software), will be Year 2000 compliant and operational on a
timely basis. The plan addresses all of the Company's locations
and includes a review of computer applications that connect
elements of the Company's business directly to its customers and
suppliers. The plan also includes an assessment process to
determine that the Company's significant customers and suppliers
("Third-Party Activities") will also be Year 2000 compliant.
The Company's plan to resolve the Year 2000 issue includes four
major phases - assessment, remediation, testing, and
implementation. The Company has made substantial progress in all
phases of its plan for significant information technology and
operating equipment that it believes could be affected by the
Year 2000 issue. Based upon its assessment, the Company
concluded that it would be necessary to reprogram and/or replace
certain of its information technology. The Company also has
determined that certain of its operating equipment would also
require modifications to make certain they remain operational.
As of March 31, 1999 the remediation of operating equipment was
approximately 75% complete, and the Company is targeting
completion of its related remediation efforts by June 30, 1999.
Certain desktop personal computers that were Year 2000 deficient
have been replaced as part of the Company's scheduled rotation
replacement program, the cost of which does not impact the Year
2000 project. Testing and implementation of the affected
equipment is targeted to be substantially completed by June
30, 1999.
To date, the Company has not identified any Information
Technology ("IT") or non-IT system that presents a material risk
of not being Year 2000 ready or for which a suitable alternative
cannot be implemented. However, as the initiative moves further
into the final phase, it is possible that the Company may
identify potential risks of Year 2000 disruption. It is also
possible that such a disruption could have a material adverse
effect on the Company's financial condition and results of
<PAGE> 16
operations. The Company is still in the process of modifying or
replacing certain time-sensitive software programs and other date
sensitive devices to avoid a potential inability to process
transactions or engage in other normal business activities.
With respect to Third-Party Activities, the Company has made
inquiries of its significant customers and suppliers and, at the
present time, has not been notified of any significant or
substantial difficulties that would materially impact the
Company's operations. However, the Company has no means of
ensuring that these customers and suppliers (and in turn their
customers and suppliers) will be Year 2000 compliant in a timely
manner. The inability of these parties to successfully resolve
their Year 2000 issues could have a material adverse effect on
the Company.
Software modification to the Company's mainframe computer system
has been completed, and testing is in process. The vendor of the
system has commenced the distribution of Year 2000 software
upgrades. It is anticipated that all upgrades will be
implemented and tested by June 30, 1999. There will be no
expense to the Company, as modified Year 2000 software is a part
of the Company's software maintenance agreement. Personnel
expense has and will continue to be incurred for the implement-
ation and testing phases.
Substantially all of the Company owned remote store systems have
been upgraded with modified Year 2000 software without cost to
the Company, as these costs are also covered under the software
maintenance agreement for these systems. Personnel and implement-
ation expenses will be incurred for these upgrades.
The Company is utilizing both internal and external resources to
reprogram or replace, test, and implement the required Year 2000
modifications. The Company plans to complete the Year 2000
project including remediation, testing and implementation by
June 30, 1999. The Company's total cost to address the Year 2000
issue is estimated at $150,000 and is being funded through
operating cash flow. The elements of such costs are as follows:
Amounts in Thousands of Dollars
Incurred
Through Costs Yet Total
March 31, to be Estimated
1999 Incurred Cost
Capital expenditures related to
new systems and equipment $39 $61 $100
<PAGE> 17
Operating expenses related to
modifications of existing
systems and equipment $9 $41 $50
Total capital and expense $48 $102 $150
The Company could potentially experience disruptions to some
aspects of its various activities and operations as a result of
non-compliant systems utilized by the Company or unrelated third
parties. Contingency plans are, therefore, under development to
mitigate the extent of any such potential disruption to business
operations.
The costs of the Year 2000 project and the date which the Company
plans to complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing
numerous assumptions of future events including the continued
availability of certain resources, third party modification plans
and other factors. There can be no guarantee that these
estimates will be achieved and actual results could differ
materially from those plans. Specific factors that might cause
such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes and
similar uncertainties.
Seasonality
The Company's business is somewhat seasonal in nature, primarily
as a result of the impact of weather conditions on the demand for
automotive aftermarket products. Historically, the Company's net
sales and gross profits have been higher in the second half of
each Fiscal year than in the first half.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Shareholders
on March 15, 1999.
(b) At said Annual Meeting of Shareholders the following
nominees were elected to the Board of Directors:
Daniel J. Chessin
Stephen B. Ashley
E. Philip Saunders
<PAGE> 18
The number of votes cast for the election of directors were as
follows:
Votes
Votes For Withheld
Daniel J. Chessin 4,348,008 397,006
Stephen B. Ashley 4,348,008 397,006
E. Philip Saunders 4,351,511 393,503
There were no broker non-votes
The terms of the following directors continued after the
meeting:
Mike Futerman
Eli N. Futerman
William A. Buckingham
Robert I. Israel
Item 5. Other
On February 1, 1999 the NASDAQ National Market notified the
Company that its common stock failed to meet the NASDAQ National
Market listing maintenance standard minimum public market float
requirement of $5 million or greater and that the Company's stock
would be delisted unless it achieved such float prior to May 3,
1999. The Company's common stock did not meet this requirement
since the notification date; the Company, however, has requested a
hearing on NASDAQ's delisting decision. A hearing date has been
set for June 10, 1999. Until a final decision is made on the
delisting by a panel authorized by NASDAQ's Board of Governors (
the "Panel"), the Company's common stock will remain listed on the
Nasdaq National Market. There can be no assurance as to when a
decision will be reached by the Panel or that such a decision will
be favorable to the Company. An unfavorable decision by the Panel
would result in the immediate delisting of the Company's common
stock from the Nasdaq National Market. The Company anticipates
that if this were to occur, its common stock would trade on
either the Small Cap Market or on the Over the Counter (OTC)
Bulletin Board and that this would have an adverse impact on the
liquidity of the Company's common stock.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<PAGE> 19
10.1 Amendment to Lease Agreement between Eli N. Futerman, Daphne
Futerman and Rina Chessin, as landlord, and Hahn Automotive
Warehouse, Inc., as tenant, dated January, 1999 (filed
herewith).
10.2 Third Amendment to Lease Agreement between Eli N. Futerman, as
landlord, and Hahn Automotive Warehouse, Inc., as tenant,
dated January, 1999 (filed herewith).
(b) Reports on Form 8-K
None
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
Chairman of the Board
By: s//Eli N. Futerman
Eli N. Futerman
President and C.E.O.
By: s//Peter J. Adamski
Peter J. Adamski
Vice President - Finance
Dated: May 14, 1999
<PAGE> 20
Exhibit Index
10.1 Amendment to Lease Agreement between Eli N. Futerman, Daphne
Futerman and Rina Chessin, as landlord, and Hahn Automotive
Warehouse, Inc., as tenant, dated January, 1999.
10.2 Third Amendment to Lease Agreement between Eli N. Futerman, as
landlord, and Hahn Automotive Warehouse, Inc., a tenant, dated
January, 1999.
27 Selected financial information as required for Edgar
electronic filing for the six months ended March 31, 1999.
Exhibit 10.1
AMENDMENT TO LEASE AGREEMENT
BETWEEN
ELI N. FUTERMAN, DAPHNE FUTERMAN AND RINA CHESSIN
AND
HAHN AUTOMOTIVE WAREHOUSE, INC.
THIS AGREEMENT is made as of this day of January, 1999,
by and between ELI N. FUTERMAN, DAPHNE FUTERMAN and RINA CHESSIN
("Landlord") and HAHN AUTOMOTIVE WAREHOUSE, INC. ("Tenant").
Recitals
A. Landlord and Tenant are parties to a Lease Agreement
acknowledged June 11, 1992 between Eli N. Futerman, Daphne
Futerman and Rina Chessin and Hahn Automotive Warehouse, Inc.
(the "Lease Agreement").
B. The purpose of this Amendment is to extend the lease
term of the Lease Agreement as it pertains to 238 Main Street W.,
Batavia, NY.
Provisions
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties agree as follows:
1. Extension. The lease term for 238 Main Street West,
Batavia, NY is hereby extended through January 31, 1999, on all
of the terms and subject to all of the conditions and limitations
set forth in the Lease Agreement.
<PAGE> 21
2. No Other Changes. Except as expressly set forth
herein, the Lease Agreement shall remain in full force and effect
without amendment or modification and as such is expressly
reaffirmed and ratified.
s/s Eli N. Futerman, Daphne
Futerman, and Rina Chessin
LANDLORD
ELI N. FUTERMAN, DAPHNE FUTERMAN
and RINA CHESSIN
TENANT HAHN AUTOMOTIVE WAREHOUSE, INC.
By:
Its:
Exhibit 10.2
THIRD AMENDMENT TO LEASE AGREEMENT
BETWEEN
ELI N. FUTERMAN
AND
HAHN AUTOMOTIVE WAREHOUSE, INC.
THIS AGREEMENT is made as of this day of January, 1999,
by and between M&E REALTY ("Landlord") and HAHN AUTOMOTIVE
WAREHOUSE, INC. ("Tenant").
Recitals
A. Landlord and Tenant are parties to a Lease Agreement
acknowledged June 10, 1992 between Eli N. Futerman and Hahn
Automotive Warehouse, Inc. (the "Lease Agreement").
B. The purpose of this Third Amendment is to extend the
lease term of the Lease Agreement as it pertains to the location
listed on Exhibit "A".
Provisions
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties agree as follows:
1. Extension. The lease terms for the location listed
on Exhibit "A" is hereby extended through December 31, 2003, on
all of the terms and subject to all of the conditions and
limitations set forth in the Lease Agreement, excepting that the
rent shall be as stated and shown on Exhibit "A".
<PAGE> 22
2. No Other Changes. Except as expressly set forth
herein, the Lease Agreement shall remain in full force and effect
without amendment or modification and as such is expressly
reaffirmed and ratified.
LANDLORD s/s Eli N. Futerman
ELI N. FUTERMAN
TENANT HAHN AUTOMOTIVE WAREHOUSE, INC.
By:
Its:
EXHIBIT "A"
M&E REALTY
STORE # PROPERTY LEASE TERM RENT/MO RENT/YR
183 ONTARIO, NY 1/1/99 - 12/31/03 $3,120.00 $37,440.00
Exhibit 27
Selected financial information as required for Edgar
electronic filing for the six months ended March 31, 1999.
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