SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: Commission File Number
September 30, 2000 0-20984
HAHN AUTOMOTIVE WAREHOUSE, INC.
(Exact name of Registrant as specified in its Charter)
New York 16-0467030
(State of Incorporation) (I.R.S. Employer Identification No.)
415 West Main Street, Rochester, New York 14608
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,including area code:
(716) 235-1595.
Securities registered pursuant to Section 12(b) of the Act
and the Exchange on which such securities are registered:
COMMON STOCK, PAR VALUE $0.01 PER SHARE NASDAQ SMALLCAP
MARKET
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 or
No
<PAGE 1>
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Registrant's Common Stock
held by non-affiliates of the Registrant as of December 7, 2000,
(based upon the closing price of $0.625 on that day, as
reported on the NASDAQ SMALLCAP MARKET) was approximately
$1,069,214. For the sole purpose of making this calculation, the
term "non-affiliate" has been interpreted to exclude the
directors and corporate officers. Such interpretation is not
intended to be, and should not be construed as an admission by
the Registrant or such directors or corporate officers that such
directors or corporate officers are "affiliates" of the
Registrant, as that term is defined in the Securities Act of
1933.
The number of shares of Registrant's Common Stock, par value $.01
per share, outstanding as of December 15, 2000: 4,745,014.
Documents Incorporated By Reference
Portions of the Registrant's definitive Proxy Statement for
its 2001 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission pursuant to
Regulation 14A, not later than 120 days after September 30,
2000, are incorporated by reference in Part III (Items 10, 11,
12, and 13) of this Form 10-K.
PART I
Item 1. BUSINESS
(a) General Development of Business
This Annual Report on Form 10-K ("Form 10-K") contains forward
looking statements. Forward-looking statements, which were based
upon certain assumptions and describe future plans, strategies
and expectations of the Company are generally identifiable by use
of the word "believes", "expects", "intends", "anticipates",
"plans to", "estimates", "projects" or similar expressions. Hahn
Automotive Warehouse, Inc. desires to take advantage of the "safe
harbor" which is afforded such statements under the Private
Securities Litigation Reform Act of 1995 when they are
accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ
materially from those in the forward-looking statements. Such
cautionary statements are set forth under the heading "Important
Information Regarding Forward-Looking Statements" located in Item
7 "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of this Form 10-K. All references to
a "Fiscal" year refer to the twelve (12) month period ended
September 30 of such year.
<PAGE 2>
Hahn Automotive Warehouse, Inc. was incorporated in the State of
New York in 1958. Its principal executive offices are located in
Rochester, New York. Unless the context indicates otherwise, the
term "Company" refers to Hahn Automotive Warehouse, Inc. and its
consolidated subsidiaries.
The Company is engaged in the sale of automotive aftermarket
products to commercial service establishments on a regional basis
and to consumers via the internet. The Company's traditional
business is conducted through ten full-service distribution
centers, four specialty distribution centers, seven direct
distribution centers and 77 jobbing stores that operate in the
same areas as the Company's full-service distribution centers
generally under the name Advantage Auto Stores, except in the
Dayton, Ohio area, where the Company's jobbing stores operate
under the name Genuine Auto Parts. The Company's operations are
located along the Eastern Seaboard and in the Midwest.
The Company, through its wholly-owned subsidiary iAutoparts,
Inc. ("iAutoparts"), operates iAutoparts.com, an online
automotive parts store. iAutoparts extended the Company's reach
directly to the consumer, entering new geographical and customer
markets, and further expanded its distribution mix. To date,
iAutoparts has had a nominal financial impact on the Company.
The Company's wholly owned subsidiary, H.F.V. Inc. owns debt
and a 37.5% equity investment in Autoworks, Ltd. a
distributor of automotive aftermarket products, based in Tel Aviv,
Israel.
(b) Narrative Description of Business
The Company's operations are contained in two industry
segments: wholesale sale of automotive aftermarket
products through traditional and direct distribution
methods. Below is a description of each segment.
Industry Overview
The market is composed of two basic segments: Passenger car
and light truck products and heavy duty truck products. The
Company operates in the passenger car and light truck
market, and currently has a minor presence in the heavy duty
truck market. The market for passenger car and light truck
products has two basic sales channels: (i) wholesale or
installed parts service, serving professional installers,
vehicle dealers, retail auto parts stores and other
distributors, and (ii) retail, serving doit-yourself ("DIY")
retail customers.
<PAGE 3>
The wholesale segment is the Company's primary area of
focus. Traditionally, the wholesale segment has distributed
automotive parts using a three-step or full-service
distribution process. With full-service distribution, parts
manufacturers deliver parts to warehouse distributors, who then
deliver to local jobbers who sell individual parts to end
users for installation. Fullservice distribution allows
jobbers to provide rapid parts availability to local area
professional installers, including service stations, garages
and major accounts. The Company's fullservice distribution
centers and jobbing stores operate in this market.
The two-step or direct distribution process has evolved
in response to increasing capital needs and shrinking margins,
and to date, has been more successful in metropolitan areas
where there are higher concentrations of professional
installers. Direct distributors eliminate a level of
distribution from the traditional full-service distribution
process. Thus, a large jobber may purchase directly from
manufacturers and sell directly to professional installers,
thereby eliminating the warehouse distributor level, or a
warehouse distributor may skip the jobber level and sell
parts directly to installers. The Company's direct
distribution division targets this market.
Distribution Business
The Company purchases nearly 150,000 automotive aftermarket
stock keeping units ("SKUs"), consisting predominately of
nationally branded automotive hard parts, as well as
maintenance items, accessories and private label products,
from 240 manufacturers, and distributes these products through
its distribution network to approximately 1,050 independent
jobbing stores and 77 Companyowned jobbing stores, which
operate principally under the Advantage Auto Stores name.
These jobbers supply automotive parts to commercial establishments
performing automotive services and, to a much lesser extent, the DIY
market. The Company's distribution network consists of ten
full-service distribution centers, four specialty
distribution centers, seven direct distribution centers and
77 Advantage Auto jobbing stores located along the Eastern
Seaboard and in the Midwest. The Company generally does
not sell tires or perform automobile repairs or installations
through either its distribution centers or jobbing operations.
Distribution Strategy
The Company's distribution strategy is based on five key
elements:
Rapid Delivery From Extensive Inventory - The Company
maintains a broad product inventory consisting of
approximately 150,000 stock keeping units (SKU's) throughout
its full-service distribution network, from which it
generally delivers products to customers within 24 hours of
receipt of an order. The Company believes that speed of
delivery is essential for a jobber to meet the time
constraints of its service establishment customers and to
manage its own inventory.
<PAGE 4>
Strong Customer Relationships and Trained Work Force - The
Company is a customer driven company built on strong, long-
term relationships. The Company provides operational support
to its customers on a regular basis to assist them in many
aspects of their businesses. In addition, the Company
maintains trained and experienced sales and distribution
center personnel to assist jobbers in selecting parts and
filling their inventory needs.
Growth in Existing Markets - The Company seeks to build its
revenue base in existing markets by (i) adding new jobbing
store customers within territories presently served,
and (ii) encouraging existing accounts to purchase additional
product lines from the Company.
Leadership in Aftermarket Auto Parts Alliance Programmed
Distribution Group - Aftermarket Auto Parts Alliance,
Inc. ("AAPA") (formerly Auto Value Associates, Inc. ("Auto
Value")) is an independent national purchasing and marketing
program in the automotive aftermarket. The Company seeks
to convert its independent jobbing customers to the AAPA
Auto Value program, as the Company believes AAPA's Auto
Value purchasing and marketing programs are beneficial to
the jobbers and result in such customers purchasing the
preponderance of their inventory needs from the Company.
Operating Efficiencies - The Company's operations are
structured to realize operating efficiencies both for itself
and for its customers, to benefit from economies of scale in
product purchasing, information systems and employee
training and to provide an efficient distribution system
with the objectives of ease of order placement and speed of
delivery.
Products
The Company's distribution centers and Company-owned
jobbing stores, operating as Advantage Auto Stores (and Genuine
Auto Parts in the Dayton, Ohio, area) (herein collectively
referred to as "Advantage Auto Stores"), generally offer a
wide selection of predominantly nationally branded automotive
products for domestic and foreign cars, vans and light
trucks. The Company stocks a wide range of automotive
aftermarket products throughout its distribution
network, consisting principally of new and
remanufactured automotive hard parts, as well as maintenance
items and accessory products. Hard parts include, among
others, brake parts, exhaust components, engine parts,
suspension parts and fuel systems.
<PAGE 5>
The Company's customers purchase name-brand products and
privatelabel products which carry a larger gross profit
margin. These private-label products, marketed under the Parts
Master label, are manufactured by a variety of vendors for
members of the AAPA Auto Value programmed distribution
group. Parts Master products accounted for approximately
21.1%, 19.9% and 17.8% of the Company's net sales, in Fiscal
2000, 1999 and 1998, respectively, with the remainder of
net sales derived from manufacturer's branded products.
Since Parts Master brand products have higher profit
margins than name brand products, the Company continually
seeks ways to expand sales of Parts Master products, in some
instances by having national brand manufacturers supply
products under this label.
Distribution Centers
Central to the Company's strategy of
providing rapid distribution of a broad variety of parts is a
distribution network comprised of three varieties of
distribution centers: full-service, direct distribution and
specialty (which consist of pick-up and accessory distribution
centers).
Full-Service Distribution Centers
Full-service distribution centers distribute to jobbers
within a radius of approximately 150 miles, and nine of them
serve as hubs for a surrounding network of Company-owned
Advantage Auto Stores. The Company extends the distribution
area of three of its fullservice distribution centers with
smaller pick-up distribution centers. These pick-up
distribution centers carry specialized inventory categories,
with lower inventory turns, for customer pickup when needed,
to supplement regular deliveries from the fullservice
distribution center. The Company also operates a specialty
distribution center to centralize the purchasing and
distribution of accessory items.
The Company, in total, operates ten full-service
distribution centers, three pick-up distribution centers
and one accessory distribution center. The inventory
carried by full-service distribution centers generally range
from approximately 33,500 to over 75,500 SKUs, while the pick-
up distribution centers stock, on average, approximately
19,000 SKUs and the accessory distribution center stocks
selected items.
Each full-service distribution center employs a General
Manager, sales force, clerical, stock-handling and
delivery employees. Customers may place their stock orders by
computer, telephone, fax or in person at service counters.
<PAGE 6>
Direct Distribution Centers
The Company operates seven (7) direct distribution centers, one
of which does business under the Professional Auto Warehouse
("PAW") name in Albany, New York. The Company has
selected direct distribution center locations that it has
acquired or has opened based upon a high concentration of
repair bays and competitive rent. On September 22, 2000,
the Company closed its Professional Auto Warehouse location in
Harrisburg, Pennsylvania. The Company has no plans to replace
the PAW Harrisburg location.
The Company believes that its direct distribution centers
carry a more complete inventory selection than most other
national direct distributors. The average Company
direct distribution center stocks approximately 23,000
SKU's, with the largest stocking approximately 51,000
SKU's. In addition to parts, the direct distribution
centers also supply professional installers with equipment
and tools. Each direct distribution center maintains a
delivery fleet to provide professional installers with
rapid delivery of parts orders.
Aftermarket Auto Parts Alliance Program
The Company is a member of AAPA (formerly Auto Value
Associates, Inc.), an independent corporation which was
created by a merger with All Pro/ Bumper to Bumper, another
large programmed automotive parts buying group, in July 1999.
This union increased the size and buying power of Auto
Value, which provides to its shareholders the benefits of
collective purchasing power under arrangements which it
negotiates with vendors from whom its shareholders may
purchase inventory. AAPA neither purchases nor sells
automotive parts and is not involved in the chain of
distribution.
AAPA offers its shareholders value-added marketing,
merchandising, advertising and promotion and interior and
exterior design layout for delivery to the participating
jobber customers of its shareholders. AAPA also offers its
shareholders access to privatelabel products under the Parts
Master name.
AAPA requires its shareholders to participate in its
purchasing programs to a specified degree and to contribute
equally toward its operating expenses. Shareholders, whose
jobber customers participate in the marketing service of the
Auto Value program, are required to pay a basic fee plus
charges for goods and services provided under the program.
Eli N. Futerman, President and Chief Executive Officer of
the Company, is a past Chairman and currently a director and
Treasurer of AAPA. The Company does not believe that any
material conflicts of interests exist as a result of Mr.
Futerman's positions in the Company and AAPA.
<PAGE 7>
Jobber Services
The Company's extensive inventory line provides jobber
customers with the opportunity to purchase aftermarket
products from a single source, which affords its jobber
customers the opportunity to reduce operating expenses and
improve inventory planning and control.
The Company provides support to its customers through its
account executives who visit them on a regular basis,
advising such customers on products and services,
assisting in solving logistical, marketing, merchandising
and other problems, as well as soliciting increased
purchases from the Company. These customer support
services are supplemented by manufacturers' sales
representatives who periodically call on the Company's
customers on behalf of the Company and by annual trade shows
at Company locations. In Fiscal 2000, the Company held
trade shows in Dayton, Ohio and Goldsboro, North Carolina.
The Company provides value-added services to its jobber
customers that participate in the AAPA programmed
distribution group. Through the AAPA program, the Company
assists its participating jobber customers in marketing,
merchandising, inventory management and control, store
appearance, advertising and product promotion.
During Fiscal 2000, 29 of the Company's independent
jobber customers joined the AAPA program through the
Company and 24 independent jobber customers resigned or were
terminated from the program. As of October 31, 2000, 273 of
the Company's independent jobber customers and all of the
Company-owned jobbing stores participated in the AAPA
marketing program.
Advantage Auto Stores
To support its distribution center business, the Company
operates a chain of jobbing stores under the Advantage Auto
Stores name, except for certain Company-owned jobbing
stores which operate under "Genuine Parts Company" in
Dayton, Ohio, "Finn Auto Parts" in Canandaigua, New York and
"Eagle Auto Parts" in East Rochester, New York. References
to Advantage Auto Stores in this report include these
jobbing stores. The Advantage Auto Stores are located
only in regions supplied by the Company's full-service
distribution centers. As of October 31, 2000, the Company
owned and operated a total of 77 Advantage Auto Stores.
As the Advantage Auto Stores are members of the AAPA program,
they typically feature certain consistent appearances and
merchandising programs. The stores emphasize knowledgeable
sales people and rapid availability of parts with daily
truck deliveries. Approximately nine years ago, the Company
embarked on a jobbing store remodeling project. During
Fiscal 2000, the Company remodeled nine jobbing stores,
leaving seven stores to be remodeled. The Company plans
to remodel or relocate six more jobbing stores in the next
fiscal year.
<PAGE 8>
iAutoparts
On July 6, 1999, the Company, through its wholly-owned
subsidiary, iAutoparts, Inc., launched iAutoparts.com, its
online automotive parts store available 24 hours a day.
iAutoparts.com was the first online automotive parts store
powered by the industry's leading CCI/Triad ePartExpert
electronic parts catalog. The Web site guides users
through a logical search to ensure accurate automotive parts
selection. ePartExpert provides technical tips, parts
specifications and suggestions for related parts.
iAutoparts.com is operated by iAutoparts, Inc., a wholly-
owned subsidiary of the Company, with the assistance of its
information technology service provider, CCI/Triad, located in
Austin, Texas. iAutoparts has a direct relationship with
parts manufacturers which enables it to provide rapid delivery
of hard-to-find parts. All iAutoparts.com orders have been
fulfilled from the Company's full service distribution center
in Rochester, New York. To date, iAutoparts has had a
nominal financial impact on the Company.
iAutoparts, Inc., has joined in the formation of
Internet Autoparts, Inc., ("IAP") a new internet company that
will provide the automotive aftermarket's first industry-
sponsored, web-based parts ordering and communications
platform linking automotive service providers and the
wholesale distributors who supply them with automotive
aftermarket products. IAP intends to focus on three major
initiatives in the automotive aftermarket parts industry:
business-to-business ("B2B") from the professional service
dealer to local auto parts stores and warehouses,
business-to-consumer ("B2C") from the "do-it-yourselfer" to
local auto parts stores and other suppliers; and B2C from the
"do-itfor-me" consumer to service dealers. IAP's primary
objective is the creation and launch of a quality B2B
service. No specific date has been announced for the
launch of IAP's internet parts ordering and communications
site.
H.F.V. Inc.
A subsidiary of the Company, H.F.V. Inc. owns a 37.5% interest
in Autoworks, Ltd., a corporate joint venture, which
distributes automotive aftermarket products in Tel-Aviv,
Israel. (See Note 4, in Part III of the Financial Statements
and comments in Item 7 of Results of Operations in Fiscal
2000.)
<PAGE 9>
Purchasing
All product selection and purchasing functions for the
distribution centers and the jobbing stores are centralized
at the Company's headquarters in Rochester, New York, except
for accessory products which are purchased by management
of the specialty distribution center. The Company
purchases its products from approximately 240 suppliers which
ship directly to the Company's direct and full-service
distribution centers. In most areas, the Company sources
each of its product lines from one supplier, although most
automotive parts categories have more than one competitive
supplier. Inventory purchases are based upon quality,
price, service, market conditions and, where appropriate,
brand recognition. Suppliers' programs are reviewed
periodically to evaluate product mix, quality, pricing
and service.
The manufacturers of automotive aftermarket products
typically provide replacement warranties, which the Company
extends to its customers. In general, the Company has
certain privileges with most of its suppliers that enable it
to return slower moving or overstocked items for full
credit, which minimizes inventory obsolescence. The
Company extends a return policy to its stocking
customers. Periodically, the Company's suppliers permit it to
defer payments for certain product lines.
In Fiscal 2000, the Company's 15 largest suppliers accounted
for approximately 76.2% of its total distribution center
purchases, and its largest supplier accounted for approximately
16.4% of its distribution center purchases. The Company
considers its relationships with its suppliers to be good and
believes that alternate sources of supply exist at
substantially similar costs for substantially all products
which it stocks. The Company's suppliers are generally able
to meet its demand for products.
Inventory Control and Management Information System
The Company's management information system is an
important element in its strategy of maintaining margins while
offering its customers competitive prices and rapid delivery of
a wide variety of products. The fully integrated, real-time
system, which was designed for general use by distributors in
the automotive parts aftermarket, operates on mainframe
computers located at the Company's Rochester, New York,
headquarters and links all of the Company's distribution
centers. The system enables the Company's Advantage Auto
Stores and independent jobbing customers to
telecommunicate directly with the Company. A majority of
the Company's independent jobber customers have the
capability to access pricing and product availability
information from the Company's computer system. This
automated electronic link streamlines and hastens the
order process by enabling the Advantage Auto Stores, as
well as the independent jobbing customers to determine
product availability and electronically order products,
eliminating the need to telephone or visit a distribution
center directly to place an order.
<PAGE 10>
Advertising
The Company's Advantage Auto Stores promote broad
product availability, competitive prices and customer
service through direct mail and local media, including
newspapers, yellow pages and radio. Direct distribution
centers are promoted through yellow-page advertising
and direct mail. Full-service distribution centers
provide the AAPA's Auto Value Marketing Program to
affiliated jobbers and their installer customers.
Trademarks
The Company owns and has registered its Advantage Auto
Stores trademark in the United States Patent and Trademark
Office. In addition, the Company is a licensee of the Auto
Value and Parts Master trademarks pursuant to a trademark
license agreement which provides for termination upon the
occurrence of certain events. Under the trademark license
agreement, the Company has the right to use and permit its
jobber customers to use the Auto Value and Parts Master
trademarks. The Company believes that these trademarks
are material to the Company's business. In addition, the
Company owns and has registered the iAutoparts.com name and
design with the United States Patent and Trademark Office,
in connection with the sale of automotive parts via the
internet.
Competition
The automotive replacement parts market is highly fragmented
and extremely competitive. The Company competes most directly
with national, regional and local warehouse distributors. The
Company believes that two of the largest warehouse
distribution networks are National Automotive Parts
Association, headquartered in Atlanta, Georgia, the largest
member of which is Genuine Parts Company (which is not
affiliated with the Company's Dayton, Ohio, area jobbing
stores of the same name), which distributes under the NAPA
trademark, and General Parts, Inc. headquartered in Raleigh,
North Carolina, trading under the Carquest name. The
wholesale distribution market contains numerous other
participants, including programmed buyer groups. The
Company competes with these groups on the basis of product
availability, service and price.
Through its chain of Advantage Auto Stores and its
iAutoparts.com website, the Company also competes directly
with other independent jobbing stores, automotive specialty
retail chains and discount and general merchandise stores.
The Company also competes indirectly with various original
equipment manufacturers and other manufacturers, distributors
and retailers who sell aftermarket products in alternative
distribution channels. Some of the Company's current and
potential competitors are larger and have far greater financial
resources.
<PAGE 11>
Employees
As of October 31, 2000, the Company had 1,142 employees (of
which 856 were full-time and 286 were part-time), in full-
service, direct-distribution centers and jobbing operations,
of whom 60 were distribution center and jobbing store account
executives, 59 were headquarters personnel, 160 were
distribution center and jobbing store management personnel
and the remaining 863 were distribution center workers,
jobbing store employees, drivers, counter persons, data entry
and other personnel. As of October 31, 2000, a total of 14
employees at two distribution centers were represented under
collective bargaining agreements. The Company has never
experienced any material labor disruption and is unaware of
any efforts or plans to organize additional employees.
Management believes that its labor relations with its employees
are good.
Item 2. PROPERTIES
Distribution Center and Jobbing Facilities The Company's
principal executive office is located in Rochester, New York,
and presently occupies approximately 22,000 square feet.
<PAGE 12>
As of October 31, 2000, the Company operated the
following distribution center locations:
Approximate Gross
Ground Level
Location Square Feet TYPE
New York
Rochester 40,000 Full-Service
Rochester-North 37,000 Direct
Rochester-South 11,400 Direct
Rochester-Greece 5,000 Distribution
Rochester-Gates 4,500 Direct
Farmington 5,000 Distribution
Bronx 35,000 Direct
Syracuse 34,500 Distribution
Buffalo 27,800 Direct
Buffalo 8,000 Distribution
Newburgh 22,000 Full-Service
Batavia 5,700 Full-Service
Albany 12,900 Full-Service
Ohio
Dayton 59,800 Full-Service
Independence 33,500 Full-Service
North Carolina
Goldsboro 39,000 Full-Service
Virginia
Richmond 37,300 Full-Service
Norfolk 6,500 Pick-Up
Maryland
Bladensburg 18,100 Full-Service
Baltimore 10,700 Pick-Up
Indiana
Indianapolis 13,000 Pick-Up
The Company owns the Independence, Ohio site; leases its
Albany, New York and Norfolk, Virginia sites from
unaffiliated parties under leases which expire on December
31, 2002 and March 31, 2005, respectively; leases its
Rochester-Greece direct distribution site from an
unaffiliated party which expires in December 2002; and
leases its Rochester-North, Rochester-South and the Buffalo
direct distribution locations from unaffiliated parties under
leases which expire in September 2004. The Company leases its
direct distribution center in Gates, New York and
Farmington, New York from FCA Associates, a partnership
comprised of Daniel J. Chessin, (Executive Vice President and
Secretary of the Company) and an unaffiliated party, under
leases which expire on October 31, 2001. The Company
leases the remaining distribution facilities from members of
the Futerman and Chessin families or their affiliates under
leases which expire between 2001 and 2008. Except for the
Independence, Ohio, site (which is subject to a first
mortgage), none of the Company's facilities are subject to any
encumbrance.
As of October 31, 2000, there were 77 Advantage Auto Stores
served by the Company's distribution centers located in or near
the following cities:
<PAGE 13>
Distribution Advantage Distribution Advantage
Center Auto Store Center Auto Store
Location Serviced Location Serviced
Rochester, New York 13 Dayton, Ohio 22
Syracuse, New York 10 Goldsboro, North Carolina 7
Buffalo, New York 6 Richmond, Virginia 12
Newburgh, New York 3 Bladensburg, Maryland 2
Cleveland, Ohio 2
As of October 31, 2000, the Company leased 73 and owned
four Advantage Auto Stores sites. The leases on 13 store
sites were month-to-month, leases on 40 store sites had
remaining terms of three years or less, and leases on 20
store sites had remaining terms of more than three years,
excluding renewal options. The Company leases 33 of these
sites from members of the Futerman and Chessin families or
their affiliates under leases which expire between October
31, 2001 and October 31, 2004.
Item 3. LEGAL PROCEEDINGS
On October 31, 1995 a complaint was filed against the
Company by 27 former employees of Autoworks, Inc.
seeking class action status in the United States
District Court, Southern District of Ohio, Western
Division (Case Number C-3-95-904). The complaint
requests compensatory damages, liquidated damages and
attorney's fees available under the Fair Labor
Standards Act based on an alleged failure to pay
overtime wages to certain individuals classified as
exempt employees. The Company is vigorously
defending this action and maintains that the
plaintiffs were employees of its wholly-owned
subsidiary Autoworks, Inc. (which previously filed
for reorganization under Chapter 11 of the
Bankruptcy Code), and that Autoworks' conduct was
appropriate and not wrongful. The Company's motion
for summary judgment was denied and the trial court
has found the Company liable on the plaintiffs'
claim. Following the commencement of the hearing on
damages, and before the hearing was completed,
the parties entered into a stipulation on damages so
that the Company could appeal the finding of
liability. On November 23, 1999, the Company filed
its Notice of Appeal and on December 1, 1999, the
Company filed its Designation of Record for
Appeal and Certification Regarding the Transcript with
the United States Court of Appeals for the Sixth
Circuit. Principal briefs and reply briefs have
been filed by the parties. No date has been set for
oral argument on the appeal. In the event that the
Company is successful in obtaining a reversal of
the trial court's determination of liability, then
there will be no damages payable by the Company. In
the event that the Company's appeal is unsuccessful,
then the parties will resume and continue with the
hearing on damages until completed. While the
outcome of this appeal, and any subsequent
determination of damages is inherently uncertain,
the Company believes that it is unlikely that any
adverse verdict would have a material adverse effect
on its financial condition; however it could
materially adversely affect net income or cash flow
depending upon the fiscal year in which a final
judgment is entered against the Company.
<PAGE 14>
The Company is involved in various other claims and
disputes arising in the normal course of business. The
Company's management believes that it has meritorious
defenses and/or insurance coverage against such matters and
that the outcome of all pending proceedings, individually and
in the aggregate, will not have a material adverse effect
upon the Company's business, results of operations, cash flows
or financial position except as stated in the above paragraph
of this Item 3 - Legal Proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of Fiscal
2000 to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED SECURITY HOLDER MATTERS
The Company's Common Stock is traded on the NASDAQ
SmallCap Market. Its trading symbol is HAHN. The table below
shows the range of the high and low actual closing prices for
the Company's common stock during each quarterly period of
Fiscal Years 2000 and 1999:
Fiscal Year Ended Fiscal Year Ended
September 30, 2000 September 30, 1999
High Low High Low
1st Quarter $2.47 $1.00 1st Quarter $5.44 $2.00
2nd Quarter $2.22 $1.06 2nd Quarter $2.81 $2.00
3rd Quarter $1.34 $0.81 3rd Quarter $1.88 $0.50
4th Quarter $1.38 $0.75 4th Quarter $6.25 $1.00
The Company did not pay any cash dividends during the last
two fiscal years. The Company does not intend to pay any
cash dividends for the foreseeable future and intends to
retain earnings, if any, for the future operation and expansion
of the Company's business. Any determination to pay
dividends in the future will be at the discretion of the
Company's Board of Directors and will be dependent upon the
Company's results of operations, financial condition,
contractual restrictions and other factors deemed relevant
by the Board of Directors. The Company's revolving credit
facility agreement prohibits the Company from paying cash
dividends on its common stock, provided, however, for each
fiscal year ending after September 30, 1997, the Company may
distribute dividends if it is not in default and would not be
put in default by virtue of such dividends and the dividend
does not exceed the Company's adjusted net earnings, as
defined in such agreement, for the fiscal year.
<PAGE 15>
Beginning in the quarter ended September 30, 2000, the bid
price for the Company's shares declined to less than the $1.00 per
share minimum bid price required for continued listing on the NASDAQ
SmallCap Market. The Company was notified by NASDAQ, in a
letter dated November 7, 2000, that it is subject to possible delisting as
a result of its common stock trading below the minimum bid price for
30 consecutive trading days. The Company has until February 5, 2001,
to regain compliance with this rule by having its common stock trade
over the minimum bid price for a least 10 consecutive trading days.
On December 14, 2000, the Company's Board of Directors approved,
subject to shareholder approval, a one-for-two reverse stock split.
The Company plans to seek shareholder approval for the reverse stock
split at its annual meeting, which is scheduled to be held on
March 15, 2001. If approved by shareholders, shareholders will receive
one new share for every two that they own. Following the reverse split,
the Company will have 2,372,507 shares of common stock issued and
outstanding.
If the Company is unable to regain compliance with the NASDAQ's minimum bid
requirement by February 5, 2001, its common stock will be delisted from
the NASDAQ SmallCap Market unless the Company is able to demonstrate
to a NASDAQ hearing panel that the Company's future plans and actions,
including the reverse stock split, will likely result in an increase
in the Company's stock price. If a hearing is required, there can be
no assurances that the NASDAQ hearing panel will agree that the Company's
plans will likely achieve the required trading price increase and allow
the Company's listing to continue or that the Company will be able to
satisfy all NASDAQ listing requirements on a continuing basis. If NASDAQ
does delist the Company's shares, the marketability of the shares will
decline, making it more difficult to achieve improvements in the price
performance of the shares and for the shareholders to purchase and sell
shares when they want or need to do so.
On December 1, 2000, the Company had 70 registered holders
of record of its common stock.
Item 6. Selected Financial Data
The following table sets forth selected consolidated
financial information of the Company for each of the five
Fiscal Years for the period ended September 30th. This table
should be read in conjunction with the audited consolidated
financial statements of the Company and the related notes
thereto included elsewhere herein and Item 7.
"Management's Discussion and Analysis of Financial Condition
and Results of Operations".
<PAGE 16>
<TABLE>
<CAPTION>
Years Ended September 30,
(In thousands, except share and per share data)
<S> <C> <C> <C>
2000 1999 1998
Income Statement Data:
Net sales $125,575 $130,998 $133,503
Cost of Products sold 77,071 82,002 82,778
Gross profit 48,504 48,996 50,725
Selling, general and
administrative expense 42,587 43,512 44,059
Depreciation and 1,789 1,775 1,602
amortization expense
Income from operations 4,128 3,709 5,064
Interest expense (3,796) (3,650) (3,771)
Service charge and other
income 509 399 631
Gain on sale of marketable
security 196 -- --
Income (loss) from equity
investment 189 (27) (220)
Income before provision
for income taxes 1,226 431 1,704
Provision for income taxes 450 151 665
Income from continuing
operations 776 280 1,039
Loss from discontinued
operations:
Write-down of investment in
subsidiary, net of tax -- -- --
Loss from discontinued
operations, net of tax -- -- --
Total loss from discontinued
operations -- -- --
Net income (loss) $776 $280 $1,039
Income from continuing
operations per share $0.16 $0.06 $0.22
Loss from discontinued
operations per share -- -- --
Basic and diluted net
income (loss) per share $0.16 $0.06 $0.22
Weighted average shares
outstanding 4,745,014 4,745,014 4,745,014
Balance Sheet Data:
Working capital $43,684 $44,919 $42,212
Total assets 78,951 79,723 78,311
Long-term obligations 44,043 45,484 44,645
Stockholders' equity 14,459 13,773 13,561
</TABLE>
<TABLE>
<CAPTION>
Years Ended September 30,
(In thousands, except share and per share data)
<S> <C> <C>
1997 1996
Income Statement Data:
Net sales $142,242 $138,395
Cost of Products sold 86,967 86,077
Gross profit 55,275 52,318
Selling, general and
administrative expense 46,717 41,657
Depreciation and 2,005 1,756
amortization expense
Income from operations 6,553 8,905
Interest expense (4,670) (4,402)
Service charge and other
income 719 600
Gain on sale of marketable
security -- --
Income (loss) from equity
investment -- --
Income before provision
for income taxes 2,602 5,103
Provision for income taxes 1,011 1,950
Income from continuing
operations $1,591 $3,153
Loss from discontinued
operations:
Write-down of investment in
subsidiary, net of tax (18,789) (1) --
Loss from discontinued
operations, net of tax (3,937) (1,294)
Total loss from discontinued
operations (22,726) (1,294)
Net income (loss) ($21,135) $1,859
Income from continuing
operations per share $0.34 $0.66
Loss from discontinued
operations per share (4.79) (0.27)
Basic and diluted net
income (loss) per share ($4.45) $0.39
Weighted average shares
outstanding 4,745,014 4,745,014
Balance Sheet Data:
Working capital $45,485 $65,452
Total assets 77,792 97,819
Long-term obligations 45,908 40,893
Stockholders' equity 12,364 33,499
(1) On July 24, 1997, Autoworks filed for
protection under Chapter 11 of the United
States Bankruptcy Code. In connection with
the filing, the Company recorded a onetime
after tax charge of $18.8 million and restated
all of its financial statements to reflect
Autoworks as a discontinued business.
</TABLE>
<PAGE 17>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information in this Item 7 contains forward-looking
statements. The Company desires to take advantage of the "safe harbor"
which is afforded such statements under the Private Securities
Litigation Reform Act of 1995 when they are accompanied by
meaningful cautionary statements identifying important factors that could
cause results to differ materially from those in the forward-looking
statements. Such cautionary statements are set forth under the heading
"Important Information Regarding Forward-Looking Statements" below in this
Item 7.
The discussion contained in this Item 7 should be read in
conjunction with the Selected Financial Data, the Consolidated Financial
Statements and accompanying notes elsewhere in this Form 10-K.
In all periods discussed herein, the Company's Fiscal Years ended
on September 30.
Results of Operations
Fiscal Year 2000 Compared to Fiscal Year 1999
Net sales for Fiscal 2000 decreased $5.4 million, or
4.1% from the prior fiscal year, to $125.6
million. This decrease is attributable to net
sales decreases of 6.9% at the direct
distribution centers and 6.8% at the full-service
distribution centers, partially offset by a net
sales increase of .2% at the Advantage Auto
Stores.
The Advantage Auto Stores net sales
increase was the result of the acquisition of two
former jobbing store customers and a 1.7% increase
in comparable store sales which were partially
offset by the closing of three Advantage Auto
Stores. The net sales decreases in the
direct distribution and full service
distribution centers are attributable to the
softness in the automotive aftermarket parts
industry. This softness is the result of
factors such as leasing, improved vehicle
performance, warranties and increased
competition in the industry. Additionally,
direct distribution sales were affected by the
closing of one direct distribution center while the
full service distribution decrease was compounded
by the purchase of two jobbing customers that
are now operated as Advantage Auto Stores. Sales on
a comparable location basis improved by 1.7% in
the Advantage Auto Stores, 3.0% in the direct
distribution division and declined by 6.8% in the
full service distribution.
Gross profit declined $492,000 or 1.0% to $48.5
million in Fiscal 2000 from $49.0 million in the
previous fiscal year. The gross profit decrease was
due to the decline in net sales and partially offset
by an increase in the gross profit margin. Gross
profit margin increased to 38.6% in Fiscal 2000
from 37.4% in Fiscal 1999.
Selling, general and administrative expenses
decreased $925,000 from $43.5 million in Fiscal
1999 to $42.6 million, in the current fiscal
year. The expense reduction is net of an increase in
fuel costs of approximately $349,000 in Fiscal
2000 when compared to Fiscal 1999. This dollar
decrease is generally due to the Company's
expense control programs, the closing of one
direct distribution center and the closing of one
Advantage Auto Store, net of openings. Due to the
decrease in net sales, the selling, general and
administrative expense, as a percentage of net
sales, increased to 33.9% in Fiscal 2000, from 33.2%
in Fiscal 1999.
<PAGE 18>
Depreciation and amortization expense increased
$14,000 and remained at $1.8 million for both
Fiscal Years ending September 30, 2000 and 1999.
As a percentage of net sales, depreciation and
amortization increased to 1.42% in Fiscal 2000,
compared to 1.35% for the previous fiscal year.
As a result of the factors discussed above,
income from operations for Fiscal 2000, increased
$419,000 from $3.7 million or 2.8% of net sales in
the prior fiscal year to $4.1 million or 3.3% of net
sales in the current fiscal year.
Interest expense increased $146,000 in Fiscal
2000 to $3.8 million from $3.7 million for
Fiscal 1999. This increase is attributable to the
increase in interest rates during the Fiscal 2000,
as compared to Fiscal 1999.
In Fiscal 2000 the Company realized a one-time
gain resulting from the sale of its only marketable
security. It also recorded, under the equity
method of accounting, income of $189,000 from the
debt and equity investments of H.F.V. Inc., a
wholly owned subsidiary of the Company, in
Autoworks, Ltd. There are no assurances that
Autoworks, Ltd. will achieve similar results in the
future due to the political instabilities in Israel.
In Fiscal 2000 the provision for income taxes on
income was $450,000, an effective rate of 36.7%, as
compared to $151,000, an effective rate of 35.0%, in
Fiscal 1999.
As a result of the factors discussed above, the
Company had net income for Fiscal 2000 of
$776,000, or $.16 per share, as compared to
$280,000, or $.06 per share, of net income for
Fiscal 1999.
Fiscal Year 1999 Compared to Fiscal Year 1998
Net Sales for Fiscal 1999 decreased $2.5 million,
or 1.9% from the prior fiscal year, to $131.0
million. This decrease is attributable to net
sales decreases of 3.3% at the direct
distribution centers and 3.7% at the full-service
distribution centers, partially offset by a net
sales increase of 1.1% at the Advantage Auto
Stores.
<Page 19>
The Advantage Auto Stores net sales increase was
the result of the acquisition of two former
jobbing store customers and partially offset by
the closing of five Advantage Auto Stores and a
1.8% decrease in comparable store sales. The
Net Sales decreases in the direct distribution
and full -service distribution centers are
attributable to the softness in the automotive
aftermarket parts industry. This softness is
the result of factors such as leasing, improved
vehicle performance, warranties and increased
competition in the industry. Sales on a comparable
location basis declined by 1.8% in the Advantage
Auto Stores, 3.3% in the direct distribution
division and 3.7% in the full service distribution.
Full service distribution decrease was compounded by
the purchase of two jobbing customers that are now
operated as Advantage Auto Stores.
Gross profit declined $1.7 million or 3.4% to $49.0
million in Fiscal 1999 from $50.7 million in the
previous fiscal year. Gross profit decrease was
due to the decline in net sales and the gross
profit margin. Gross profit margin declined to
37.4% in Fiscal 1999 from 38.0% in Fiscal 1998.
Selling, general and administrative expenses
decreased $547,000 from $44.1 million in Fiscal
1998 to $43.5 million, in the current fiscal
year. This dollar decrease is generally due to a
net reduction of three Advantage Auto Store
locations. Due to the decrease in net sales the
selling, general and administrative expense as a
percentage of net sales increased to 33.2% in Fiscal
1999 from 33.0% in Fiscal 1998.
Depreciation and amortization expense increased
$173,000 from $1.6 million in Fiscal 1998 to $1.8
million in the Fiscal Year ending September
30, 1999. This increase is primarily
attributable to negative goodwill being fully
amortized in January of Fiscal 1999.
As a result of the factors discussed above,
income from operations before interest and taxes
for Fiscal 1999, decreased $1.4 million from $5.1
million or 3.8% of net sales in the prior fiscal
year to $3.7 million or 2.8% of net sales in the
current fiscal year.
Interest expense decreased $121,000 in Fiscal
1999 to $3.7 million from $3.8 million for
Fiscal 1998. This decrease is attributable to
slightly lower outstanding debt balances during
Fiscal 1999 as compared to Fiscal 1998.
In Fiscal 1999, the provision for income taxes on
income was $151,000, an effective rate of 35.0%, as
compared to $665,000, an effective rate of 39.0%, in
1998.
As a result of the factors discussed above, the
Company had net income for Fiscal 1999 of $280,000
or $.06 per share as compared to $1.0 million or
$.22 per share of net income for Fiscal 1998.
<PAGE 20>
Liquidity and Capital Resources
The Company's principal sources of liquidity for
its operational and capital requirements are
internally generated funds, borrowings under
its revolving credit facility, leasing
arrangements and extended terms from vendors.
During Fiscal 2000, 1999 and 1998, operating
activities provided net cash of $1.6 million,
$300,000 and $2.4 million, respectively,
including non-cash items for depreciation and bad
debt of $2.2 million, $1.9 million and $2.1
million, respectively. These were partially
offset by increases in inventory of $1.7
million, $500,000 and $1.5 million for Fiscal Years
2000, 1999 and 1998, respectively.
During Fiscal 2000, 1999 and 1998, investing
activities consisted mainly of routine capital
expenditures for delivery vehicles, computer
equipment, and store and warehouse fixtures.
Net capital expenditures were $600,000,
$800,000, and $300,000, respectively. Excluding
minor strategic acquisitions, the Company expects
to make capital expenditures of approximately
$900,000 in Fiscal 2001.
Financing activities during Fiscal 2000
consumed cash of approximately $1.7 million,
during Fiscal 1999 financing activities
generated approximately $300,000, and in Fiscal
1998 financing activities consumed approximately
$2.5 million. The cash used in financing
activities during both Fiscal 2000 and Fiscal
1998 reflect the payment of long term debt. The
funds generated by financing activities during
Fiscal 1999 resulted from the increased use of the
Company's line of credit, partially offset by
paydowns on other long term notes payable.
During Fiscal 2000, the Estate of Michael Futerman,
(the former Chairman of the Board and majority
shareholder of the Company), and Eli Futerman,
(the President and Chief Executive Officer of
the Company), deferred principal payments due them
from the Company under the subordinated notes
until 2003. As a result, in Fiscal 2000, the
Company made interest payments only on the
subordinated notes.
The Company has a Loan and Security Agreement
(the "Credit Facility") with Fleet Capital
Corporation ("Fleet"), which matures on October
22, 2002. The facility provides for, among other
things, a revolving credit facility with $50
million in maximum availability subject,
however, to borrowing base restrictions, and a
$2.5 million term loan, a $3.5 million
supplemental availability line and a $2.0
million letter of credit sub-facility. The
obligations of the Company under the credit
facility are collateralized by a first priority
security interest on substantially all present and
future assets of the Company and is guaranteed up
to a maximum amount of $2.5 million by the Estate
of Michael Futerman. Mortgages on certain real
estate were pledged as collateral for the
estate's guarantee. These obligations are now
guaranteed by the Estate of Michael Futerman.
The credit facility contains restrictive
covenants, including, without limitation,
restrictions on changes in thecharacter of the
business, mergers, sales or transfers of assets,
acquisitions, capital expenditures, liens,
indebtedness, restricted payments or repurchases
of other indebtedness, dividends and transactions with
affiliates. (See Note 5 to Company's Consolidated Financial
Statements.) The Company is required to meet a
fixed charge coverage ratio of .50 for the first three
quarters and .7 for the fourth quarter of Fiscal 2000, which will be
measured on a rolling twelve month basis. As of
December 15, 2000, the Company had an outstanding
balance of $35.1 million under the credit facility,
with availability of an additional $2.5 million
due to borrowing base restrictions.
<PAGE 21>
On July 24, 1997, the Company's wholly owned
subsidiary, Autoworks, Inc., filed for bankruptcy
protection under Chapter 11 of the United States
Bankruptcy Code. On April 22, 1998, a Settlement
Agreement and Release ("Settlement Agreement")
was negotiated between the Company and the
Official Unsecured Creditors' Committee
("Committee"). The Settlement Agreement was
approved by the bankruptcy court on June 18, 1998.
Under the Settlement Agreement, as amended on
November 18, 1999, the Company agreed to make
certain payments in exchange for the Committee's
release of the Company from all claims. In
Fiscal 2000, the Company paid $353,333 to the
Creditor Trust and is due to make payments of the
same amount in both Fiscal 2001 and 2002. Such
payments are appropriately reserved for by the
Company. The Company has also reserved for the
present value of future minimum rental payments of
Autoworks, Inc. that were guaranteed by the
Company. During Fiscal 2000 the bankruptcy court
approved the Autoworks, Inc. Plan of
Reorganization which included establishing a
Creditor Trust to make distributions to creditors
under the plan.
In the future the Company may make minor strategic
acquisitions and open new direct distribution
centers and Advantage Auto Stores to the
extent that its debt service and other funding
requirements permit. The Company's ability to open
new direct distribution centers depends on the
Company's ability to negotiate extended payment
terms with vendors, (which initially minimizes
additional working capital requirements) and on
consents from the Company's lender.
The Company anticipates that its sources of
cash flow will provide sufficient working capital
to operate its business, make expected capital
expenditures and meet its other short-term and
longer-term liquidity needs at least through the
end of Fiscal 2001.
Inflation
The Company 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.
<PAGE 22>
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.
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements contained in this Form 10-K
which are not historical facts, including but not
limited to (i) anticipated trends in the
Company's business and the automotive replacement
parts industry, (ii) the sufficiency of cash
to fund the Company's debt service requirements
and working capital needs (iii) certain
statements found under the captions "Results of
Operations" and "Liquidity and Capital Resources",
are forwardlooking statements within the meanings
of Section 27A of the Securities Act of 1933
and Section 21E of the Exchange Act of 1934, as
amended; such statements are typically identified by
the words "believe," "expect," "anticipate,"
"intend," "estimate," "plan" and similar
expressions. These statements involve a number of
risks and uncertainties, certain of which are
beyond the Company's control. The actual results
of the future events described in the forward-
looking statements in this Form 10-K could
materially differ from those contemplated in the
forwardlooking statements in this Form 10-K. In
addition to the risks and uncertainties of
ordinary business operations, some of the factors
that could cause actual results to differ materially
are the risks and uncertainties (i) discussed
herein, (ii) contained in the Company's other
public reports and filings and public statements
from time to time and (iii) set forth below:
<PAGE 23>
1. The Company is highly leveraged, with
substantial existing indebtedness. The Company's
ability to make scheduled payments of principal
or interest on, or to refinance, its
indebtedness will depend on its future operating
performance and cash flow, which are subject to
prevailing economic conditions, prevailing interest
rate levels, and financial, competitive, business
and other factors beyond its control. The degree
to which the Company is leveraged could have
important consequences, including (i) the Company's
future ability to obtain additional financing for
working capital or other purposes may be limited
because of the existence of this indebtedness and
the borrowing advance terms thereof; (ii) a
substantial portion of the Company's cash flow
from operations will be dedicated to the payment
of principal and interest on its indebtedness until
its term loan and supplemental line of credit have been paid in
full, thereby reducing funds available for
operation; (iii) certain of the Company's
borrowings are at variable rates of interest, which
could cause the Company to be vulnerable to
increases in interest rates; and (iv) the Company
may be more vulnerable to economic downturns and
may be limited in its ability to respond to changes
in the automotive parts industry and
competitive pressures. Failure to comply with the
Company's payment, covenant or other obligations
under its credit facilities could result in a
default thereunder that, if not cured or
waived, could result in acceleration of the
relevant indebtedness or of other
indebtedness governed by agreements or
instruments containing cross default provisions.
2. The Company operates in a highly
competitive environment and its dollar sales and
unit volume could be negatively affected by
its ability to maintain or increase prices,
changes in sales mix and changes in the demand
for automotive products and changes in the
automotive replacement parts industry generally,
including pricing and other changes by the
Company's competitors. The Company competes
directly and indirectly with numerous
distributors, retailers and manufacturers of
automotive aftermarket products, some of which
distribute in channels that may be expanding in
terms of market share relative to the channels in
which the Company distributes its products. In
addition, some of the Company's current and
potential competitors are larger, have
greater financial resources, and are less
leveraged than the Company. Furthermore,
particularly in light of the trend in the
automotive parts industry toward increasing
consolidation at the warehouse and jobber levels,
the Company's financial performance may be
significantly affected by the Company's ability
to compete successfully for associated jobber
customers and otherwise take advantage of
consolidation opportunities and other trends.
3. The Company's financial performance is
subject to and could be negatively impacted by
changes in economic conditions, vehicle quality,
extension of new parts warranties and
maintenance, vehicle scrappage rates and weather
conditions, which can cause seasonal variations in
the Company's results of operations. The occurrence
of violent weather or mild weather may result in
significant fluctuations in operating results.
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.
<PAGE 24>
4. In light of the trend in the automotive
parts industry toward increasing consolidation at
the warehouse and jobber levels, the Company's
financial performance may be significantly affected
by the Company's ability to compete successfully
for associated jobber customers and otherwise
take advantage of consolidation opportunities
and other industry trends.The Company's ability
to do so depends on its ability to secure the
consent of its lender to future acquisitions and
its ability to finalize such transactions. If
such a transaction is effected, the Company's
financial performance will depend on its ability to
conclude the acquisitions on favorable terms and to
enhance those acquisitions and integrate them
into its operations. Full realization of the
potential benefits of any significant acquisition
will be dependent upon a variety of factors,
including (i) retention of a substantial portion of
sales, (ii) achieving sales volumes sufficient to
utilize reductions in cost of goods sold (as a
percentage of net sales), (iii) achieving
significant reduction in selling, general and
administrative expenses by, among other things,
consolidating redundant operating and
administrative facilities and closure of non
performing facilities and (iv) obtaining deferred
payment terms and other changeover incentives from
suppliers. There can be no assurance as to the
extent to which any such benefits may be realized
from any acquisitions or the timing of any
such realization. Failure to achieve a substantial
portion of such potential benefits within time
frames anticipated by the Company could materially
and adversely affect the Company's future
results of operations and financial position.
5. The Company's past success has been
largely dependent on certain key personnel of
the Company, including Eli N. Futerman and
Daniel J. Chessin. The loss of the services of
these individuals could have a material adverse
impact on the Company's business and results of
operations. Additionally, in order to implement
and manage its growth strategy, the Company will
be dependent upon its ability to continue to
attract and retain qualified personnel. There can
be no assurance that the Company will be able
to continue to secure or retain such personnel.
6. The Company is a defendant in various
lawsuits. There can be no assurance that the Company
will prevail in any of these lawsuits. To the extent
that the Company sustains losses growing out of any
pending litigation which are presently not reserved or
otherwise provided for, its earnings and
liquidity could be materially adversely affected.
7. Other risks and uncertainties which may
affect actual results include, but are not limited to,
failure of the auto parts e-commerce industry to
develop at anticipated rates, failure of the
Company's e-commerce products and services to gain
significant market acceptance, competition, the
ability of the Company to protect its
proprietary rights, the continued development
and viability of the Internet and e-commerce and
the volatility of stock prices of Internet-focused
companies, and the Company, in particular, and the
traffic and usage levels of the iAutoparts.com web
site.
<PAGE 26>
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISKS
The Credit Facility and other financial
obligations of the Company at September 30,
2000 are sensitive to changes in interest
rates. At September 30, 2000, approximately 84.0%
of the Company's debt and capital lease obligations
are subject to changes in market interest rates
and are sensitive to those changes. The Company
currently has no derivative instruments to offset
the risk of interest rate changes. The Company's
weighted average of interest rates on the total
debt outstanding as of September 30, 2000 was
9.3%.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The financial statements and supplementary
financial data required by this Item 8 are listed
at Part IV, Item 14 and are filed herewith
immediately following the signature page hereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in accountants or reported
disagreements on accounting principles or
practices or financial statement disclosures.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
The information required under this Item 10 shall be
included in the Company's definitive Proxy
Statement for its 2001 Annual Meeting of
Shareholders to be filed with the Commission
pursuant to Regulation 14A on or before January
29, 2001, and the appropriate information
therefrom is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information required under this Item 11 shall be
included in the Company's definitive Proxy
Statement for its 2001 Annual Meeting of
Shareholders to be filed with the Commission
pursuant to Regulation 14A on or before January
29, 2001, and the appropriate information
therefrom is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required under this Item 12 shall be
included in the Company's definitive Proxy
Statement for its 2001 Annual Meeting of
Shareholders to be filed with the Commission
pursuant to Regulation 14A on or before January
29, 2001, and the appropriate information
therefrom is incorporated herein by reference.
<PAGE 27>
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The information required under this Item 13 shall be
included in the Company's definitive Proxy
Statement for its 2001 Annual Meeting of
Shareholders to be filed with the Commission
pursuant to Regulation 14A on or before January
29, 2001, and the appropriate information
therefrom is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) List of documents filed.
(1) Financial Statements:
Report of Independent Accountants
Balance Sheets at September 30, 2000, and
1999
Statements of Operations for the Years
Ended September 30, 2000, 1999 and 1998
Statements of Changes in Stockholders'
Equity for the Years Ended September 30, 2000,
1999 and 1998
Statements of Cash Flows for the Years
Ended September 30, 2000, 1999 and 1998
Notes to Financial Statements
(2) Financial Statement Schedule
Report of Independent Accountants on
Financial Statement Schedule
Schedule II Valuation and Qualifying
Account Reserves for the
Years Ended September 30,
2000, 1999 and 1998
(3) Exhibits
None
<PAGE 28>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Date: December 19, 2000 By: *S// Eli N. Futerman
Eli N. Futerman, President and Chief Excutive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by
the following persons on behalf of the registrant and in the capacities
and on the date indicated.
Date: December 19, 2000 *S// Eli N. Futerman
Eli N. Futerman, Director
Date: December 19, 2000 *S// Albert J. Van Erp
Albert J. Van Erp
Vice President - Controller
(Principal Financial Officer)
Date: December 19, 2000 *S// Daniel J. Chessin
Daniel J. Chessin, Director
Date: December 19, 2000 *S// Stephen B. Ashley
Stephen B. Ashley, Director
Date: December 19, 2000 *S// William A. Buckingham
William A. Buckingham,Director
Date: December 19, 2000 *S// Gordon E. Forth
Gordon E. Forth, Director
Date: December 19, 2000 *S// Nathan Lewinger
Nathan Lewinger, Director
Date: December 19, 2000 *S// E. Philip Saunders
E. Philip Saunders, Director
<PAGE 29>
* By: S// Eli N. Futerman
Eli N. Futerman, Attorney-in-Fact
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FINANCIAL STATEMENTS AND SCHEDULES
September 30, 2000
FORMING A PART OF
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
OF
HAHN AUTOMOTIVE WAREHOUSE, INC.
Hahn Automotive Warehouse, Inc. and Subsidiaries
Index To Consolidated Financial Statements
September 30, 2000
Page
Report of Independent Accountants
Consolidated Balance Sheets at September 30,
2000 and 1999
Consolidated Statements of Operations for the
Years Ended September 30, 2000, 1999 and 1998
Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
September 30, 2000, 1999 and 1998
<PAGE 30>
Consolidated Statements of Cash Flows for the
Years Ended September 30, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Report of Independent Accountants on Financial
Statement Schedules
Schedule II - Valuation and Qualifying Account
Reserves
Report of Independent Accountants
To the Board of Directors and Stockholders of
Hahn Automotive Warehouse, Inc. and Subsidiaries
In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of operations,
changes in stockholders' equity and cash flows present
fairly, in all material respects, the financial position
of Hahn Automotive Warehouse, Inc. and Subsidiaries at
September 30, 2000 and 1999, and the results of their
operations and their cash flows for the three fiscal years
ended September 30, 2000, in conformity with accounting
principles generally accepted in the United States of
America. These financial statements are the responsibility
of the Company's management; our responsibility is to
express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We
believe that our audits provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Rochester, New York
November 21, 2000
<PAGE 31>
<TABLE>
<CAPTION>
Hahn Automotive Warehouse, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
September 30,
2000 1999
<S> <C> <C>
Assets
Current Assets:
Cash $80 $81
Marketable securities -- 685
Trade receivables, net of allowance for doubtful
accounts of $2,197 in 2000 and $2,015 in 1999 16,062 17,577
Inventory 46,192 44,501
Other current assets 1,799 2,541
Total current assets 64,133 65,385
Property, equipment and leasehold improvements, net 6,016 6,892
Other assets 8,802 7,446
$78,951 $79,723
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term debt and capital
lease obligations $1,253 $1,541
Accounts payable 13,266 12,377
Compensation related liabilities 1,613 1,673
Discontinued operations 392 604
Other accrued expenses 3,925 4,271
Total current liabilities 20,449 20,466
Obligations under credit facility 35,739 36,611
Notes payable - officers and affiliates 1,445 1,445
Other long-term debt 1,896 1,995
Capital lease obligations 2,787 3,196
Other liabilities 2,176 2,237
Stockholders' equity:
Common stock (par value $.01 per share; authorized
20,000,000 shares; issued and outstanding
4,745,014 shares in 2000 and 1999) 47 47
Additional paid-in capital 25,975 25,975
Retained deficit (11,563) (12,339)
Accumulated other comprehensive income:
Unrealized gain on marketable securities, net of
deferred taxes -- 90
Total stockholders' equity 14,459 13,773
$78,951 $79,723
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE 32>
Hahn Automotive Warehouse, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
For the
Years Ended
September 30
2000 1999 1998
<S> <C> <C> <C>
Net sales $125,575 $130,998 $133,503
Cost of product sold 77,071 82,002 82,778
Gross profit 48,504 48,996 50,725
Selling, general and
administrative expense 42,587 43,512 44,059
Depreciation and
amortization expense 1,789 1,775 1,602
Income from operations 4,128 3,709 5,064
Interest expense (3,796) (3,650) (3,771)
Service charge and other
income 509 399 631
Gain on sale of marketable
security 196 -- --
Income (loss) from equity
investment 189 (27) (220)
Income before provision
for income taxes 1,226 431 1,704
Provision for income taxes 450 151 665
Net income $776 $280 $1,039
Basic and diluted net
income per share $0.16 $0.06 $0.22
Weighted average shares
outstanding 4,745,014 4,745,014 4,745,014
The accompanying notes are an integral part of the financial
statements
</TABLE>
<TABLE>
<CAPTION>
<PAGE 33>
Hahn Automotive Warehouse, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
(In thousands, except share data)
<S> <C> <C> <C>
Common Common Additional
Stock Stock Paid-In
Shares Amount Capital
Capital
Balance at September 30, 1997 4,745,014 $47 $25,975
Components of Comprehensive
Income:
Net Income
Unrealized gain on investment
Total Comprehensive Income
Balance at September 30, 1998 4,745,014 $47 $25,975
Components of Comprehensive
Income:
Net Income
Unrealized loss on investment
Total Comprehensive Income
Balance at September 30, 1999 4,745,014 $47 $25,975
Components of Comprehensive
Income:
Net Income
Unrealized loss on investment
Total Comprehensive Income
Balance at September 30, 2000 4,745,014 $47 $25,975
The accompanying notes are an integral part of the
financial statements.
</TABLE>
<TABLE>
<CAPTION>
Hahn Automotive Warehouse, Inc.
and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity
(In thousands, except share data)
<S> <C> <C> <C>
Accumulated
Other
Retained Comprehensive
Earnings Income Total
Balance at September 30, 1997 ($13,658) $-- $12,364
Components of Comprehensive
Income:
Net Income 1,039 1,039
Unrealized gain on investment $158 158
Total Comprehensive Income 1,197
Balance at September 30, 1998 ($12,619) $158 $13,561
Components of Comprehensive
Income:
Net Income 280 280
Unrealized loss on investment (68) (68)
Total Comprehensive Income 212
Balance at September 30, 1999 ($12,339) $90 $13,773
Components of Comprehensive
Income:
Net Income 776 776
Unrealized loss on investment (90) (90)
Total Comprehensive Income 686
Balance at September 30, 2000 ($11,563) $-- $14,459
The accompanying notes are an integral part of the financial
statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE 34>
Hahn Automotive Warehouse, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
<S> <C> < <C> <C>
For the years ended
September 30,
2000 1999 1998
Cash flows from operating activities:
Net income $776 $280 $1,039
Items to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,789 1,775 1,602
Provision for doubtful accounts 447 142 453
Change in assets and liabilities:
Trade receivables 1,068 (2,124) 947
Inventory (1,691) (464) (1,521)
Other assets (950) (260) 1,983
Accounts payable and other accruals 210 951 (2,058)
Net cash provided by operating
activities 1,649 300 2,445
Cash flows from investing activities:
Additions to property, equipment and
leasehold improvements, net: (577) (833) (279)
Sale of marketable security 595 -- --
Net cash provided by (used in)
investing activities 18 (833) (279)
Cash flows from financing activities:
Net borrowings under line of credit (275) 1,965 (996)
Proceeds from long-term debt and
demand notes 249 544 6,119
Payment of long-term debt and
demand notes (1,193)(1,737) (6,555)
Payment of notes payable - officers
and affiliates (77) (149) (711)
Payment of capital lease obligations (372) (338) (326)
Net cash (used in) provided by
financing activities (1,668) 285 (2,469)
Net decrease in cash (1) (248) (303)
Cash at beginning of year 81 329 632
Cash at end of year $80 $81 $329
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest $3,961 $3,656 $3,916
Income taxes $43 $72 $95
Supplemental disclosure of non-cash
investing activities:
Debt issued in connection with
acquisitions $248 $137 --
Supplemental disclosure of non-cash
financing activities:
In January, 1998 the company renewed
capital lease agreements relating
to the Rental of Distribution Centers -- -- $3,768
The accompanying notes are an integral part of the financial
statements.
</TABLE>
<PAGE 35>
Hahn Automotive Warehouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Amounts in Thousands, Except Share and Per Share Data)
September 30, 2000
1. Summary of Accounting Policies
The Company
The Company sells and distributes automotive aftermarket parts
in the wholesale market through its network of warehouses and
jobber facilities along the Eastern Seaboard and in the
Midwest.
Principles of Consolidation
The consolidated financial statements include the accounts
of Hahn Automotive Warehouse, Inc. and its wholly-owned
subsidiaries (the "Company"). All significant intercompany
transactions have been eliminated.
Marketable Security
In Fiscal 1999, the Company classified its marketable security
as available-for-sale, as defined by the Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Prior
to the sale of this security, unrealized holding gains and
losses, net of deferred income taxes, were reflected as a
separate component of stockholders' equity accordingly.
Inventory
Inventory consists primarily of automotive replacement parts
and accessories and is stated at the lower of cost, on a
last-in, first-out ("LIFO") basis, or market. The replacement
cost of the inventory exceeded the LIFO value by
approximately $2,879 and $2,992 at September 30, 2000 and
1999, respectively.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements are stated at
cost and are depreciated over their estimated useful lives
using the straight-line method. Major renewals and
betterments are capitalized. Maintenance, repairs and
minor renewals are expensed as incurred. When properties are
retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the accounts.
<PAGE 36>
Assets Under Capital Leases
Leases which meet the capital lease criteria of SFAS No.
13, "Accounting for Leases", are recorded as assets and
obligations at the lesser of the present value of future
rental payments or the fair market value of the leased
property at the inception of the lease. Amortization of
capitalized leased property has been provided using the
straight-line method over the estimated useful lives of the
assets.
Intangible Assets
Goodwill is amortized using the straight-line method over
lives ranging from 20 to 30 years. Deferred financing costs
are being amortized using the straight-line method over the
term of the Credit Facility Agreement (see Note 5). The
Company expenses preopening costs at new stores as they are
incurred. Included in Other assets at September 30, 2000
and 1999 was approximately $1,253 and $922, respectively, of
accumulated amortization on goodwill and deferred financing
costs.
Revenue Recognition
The Company recognizes revenue upon shipment of product.
Advertising
Advertising expenses are charged to operations during the year
in which they are incurred and were approximately $548, $702
and $786 for the years ended September 30, 2000, 1999 and
1998, respectively.
Comprehensive Income
During Fiscal 1999, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income". This statement establishes
rules for the reporting of comprehensive income and
its components. Comprehensive income consists of net income
and unrealized gains (losses) on an investment held as
available-for-sale and is presented in the Consolidated
Statements of Changes in Stockholders' Equity.
<PAGE 37>
Income Taxes
The Company accounts for income taxes under SFAS No.
109, "Accounting for Income Taxes". This statement
requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
Net Income Per Share
The Company calculates net income per share in accordance
with SFAS No. 128, "Earnings Per Share". Basic EPS is computed
as net earnings 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 compensation including
stock options.
Impairment of Long-Lived Assets
In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", the Company continually evaluates the
existence of impairment of long-lived assets based
upon projected, undiscounted net cash flows of the respective
operation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements, in conformity
with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Disclosure about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which
it is practicable to estimate that value.
Current Assets and Liabilities - The carrying amount of cash
and equivalents, other assets and accrued liabilities
approximate fair value because of the short maturity of those
instruments.
Long-Term Debt - The carrying value of the Company's long-term
debt approximates fair value at the balance sheet date.
<PAGE 38>
Concentration of Credit Risk
The Company provides credit, in the normal course of business,
to jobber customers in the automotive aftermarket. The
Company's customers are not concentrated in any one geographic
region nor does any single customer account for a
significant amount of sales or accounts receivable. The
Company performs credit evaluations of its customers and
maintains allowances for potential credit losses which,
when realized, have been within the range of management's
expectations.
Reclassifications
The Fiscal 1999 and 1998 financial statements and related
footnote amounts have been made to conform to the Fiscal 2000
presentation.
2. Marketable Security
During Fiscal 2000, the Company sold its only
marketable security, a zero coupon bond purchased as
collateral against liability claims for which the Company
is self-insured. The marketable security held at September
30, 1999 was classified as available-for-sale and is
summarized as follows:
Market Unrealized
Cost Value Gain
September 30, 1999
Debt Security:
Zero Coupon Bond $550 $685 $135
3. Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements consist of
the following:
September 30, Useful
Lives
2000 1999 (Years)
Land $25 $25 -
Building 887 880 10 - 30
Building under capitalized leases 4,422 4,422 10
Leasehold improvements 2,175 2,251 10
Computer equipment 2,489 2,484 6
Furniture and fixtures 3,980 4,314 8
Vehicles 2,632 2,996 4 - 5
16,610 17,372
Less - Accumulated
depreciation and
amortization 10,594 10,480
6,016 6,892
<PAGE 39>
Depreciation and amortization expense related to
property, equipment and leasehold improvements for the
years ended September 30, 2000, 1999 and 1998 was
approximately $1,453, $1,554 and $1,440, respectively.
Included in accumulated depreciation and amortization at
September 30, 2000 and 1999 was approximately $1,557 and
$1,115, respectively, of accumulated amortization on capital
leases.
4. Investment in Equity Affiliate
The Company owns a 37.5 percent interest in Autoworks Ltd.,
a corporate joint venture, which is located in Tel Aviv,
Israel. The Company accounts for its investment under the
equity method of accounting because the Company is not
able to exercise effective control over the operations.
The Company's proportionate share of shareholder's equity as
of September 30, 2000 and 1999 was $469 and $6, respectively,
and is included in Other assets.
In addition, the Company has issued debt to Autoworks
Ltd. in the form of a note receivable. The balance
outstanding was $874 and $827, including accrued interest,
and is classified in Other assets as of September 30, 2000 and
1999, respectively.
Summarized financial information for Autoworks Ltd. is as
follows:
September 30,
2000 1999
Current assets $4,142 $2,729
Noncurrent assets 114 113
Total assets $4,256 $2,842
Current liabilities $1,253 $1,602
Noncurrent liabilities 265 871
Shareholders loans and
equity 2,738 369
Total liabilities and
equity $4,256 $2,842
<PAGE 40>
Fiscal Years ended September 30,
2000 1999 1998
Revenues $5,422 $3,527 $2,643
Gross profit $1,608 $978 $624
Net income (loss) $378 ($72) ($587)
For the Fiscal Years ending September 30, 2000, 1999
and 1998, respectively, Income (loss) from Equity Investment
includes the Company's proportionate share of Autoworks Ltd.
net income (loss) of $142, ($27) and ($220), and interest
income on the outstanding note receivable of $47 in Fiscal
2000.
5. Long-Term Debt
Long-term debt includes the following:
September 30,
2000 1999
Credit Facility Agreement $36,239 $37,113
Notes payable-officers
and affiliates 1,445 1,522
Other long term debt 2,240 2,585
39,924 41,220
Less - Current portion 844 1,169
Long-term portion $39,080 $40,051
The Company is subject to a Credit Facility Agreement
that expires on October 22, 2002 and provides a revolving
credit note, subject to a borrowing base, up to a
maximum of $50,000. 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 prime were 6.62%
and 9.5%, respectively, at September 30, 2000.
The Credit Facility Agreement is collateralized by a
first priority security interest on substantially all
present and future assets of the Company and is guaranteed up
to a maximum amount of $2.5 million by the Estate of
Michael Futerman. Mortgages on certain real estate were
pledged as collateral for the estate's guarantee. These
obligations are now guaranteed by the Estate of Michael
Futerman. 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 accordance
with capital stock and cash flow coverage
requirements. Restrictive covenants include maintenance of
a minimum tangible net worth and a minimum fixed charge
coverage ratio. The Company was in compliance with all
covenants or appropriate waivers were obtained.
<PAGE 41>
The Company has outstanding promissory notes ("Notes") with
the former Chairman of the Board of Directors and with the
President and Chief Executive Officer of the Company. The
Notes which are due in October, 2003, bear interest which is
payable monthly, at the annual rate of 12%. The Company is
also subject to a number of other debt agreements, including
mortgages, which comprise the balance of long-term debt.
Annual maturities of long-term debt for subsequent fiscal
years are approximately: 2001 - $844; 2002 - $1,615; 2003 -
$35,749; 2004 - $1,539; 2005 - $86; and thereafter - $91.
6. Commitments and Contingencies
Leases
The Company leases facilities from unrelated and related
parties. Certain of the related party leases have been
accounted for as capital leases under SFAS No. 13.
Payments made for capital leases amounted to $681, $683 and
$540 for the Fiscal Years ended September 30, 2000, 1999, and
1998, respectively.
The Company also leases warehouse and jobber facilities
under noncancellable operating lease agreements, which expire
through 2008. Most of these operating leases include
provisions for rent escalations and increases in operating
expenses (real estate taxes, insurance and maintenance).
Rent expense related to all facility operating leases totaled
approximately $2,775, $2,850 and $2,911, which included
approximately $1,835, $1,873, and $1,616 of payments to
related parties for the years ended September 30, 2000,
1999 and 1998, respectively.
In addition, the Company leases various equipment
under noncancellable operating lease agreements expiring
through 2005. Rent expense related to all equipment
operating leases totaled approximately $189, $293 and $460,
for the years ended September 30, 2000, 1999 and 1998,
respectively.
<PAGE 42>
Future minimum rental payments under noncancellable leases
for fiscal years subsequent to September 30, 2000 are as
follows:
Capital Operating
Leases Leases
Related Related
Parties Parties Other
2001 $681 $1,605 $1,296
2002 575 1,414 952
2003 575 1,236 743
2004 575 874 449
2005 575 598 47
Thereafter 1,383 1,365 4
4,364 $7,092 $3,491
Less- Interest portion 1,168
3,196
Less - Current portion 409
Long-term portion $2,787
Contingencies
The Company is a defendant in certain lawsuits which have
arisen in the ordinary course of business. Management is of
the opinion that such lawsuits will not result in any material
liability to the Company. Accordingly, no provision for loss
has been made in the financial statements related to these
matters.
<PAGE 43>
Uncertainties Related to the Bankruptcy of Autoworks, Inc.
On July 24, 1997, the Company's wholly owned
subsidiary, Autoworks, Inc., filed for bankruptcy protection
under Chapter 11 of the United States Bankruptcy Code. On
April 22, 1998, a Settlement Agreement and Release
("Settlement Agreement") was negotiated between the
Company and the Official Unsecured Creditors' Committee
("Committee"). The Settlement Agreement was approved by the
bankruptcy court on June 18, 1998. Under the Settlement
Agreement, as amended on November 18, 1999, the Company
agreed to make certain payments in exchange for the
Committee's release of the Company from all claims. In
Fiscal 2000, the Company paid $353 to the Creditor Trust and
is due to make payments of the same amount in both fiscal
2001 and 2002. Such payments are appropriately reserved for
by the Company. The Company has also reserved for the present
value of future minimum rental payments of Autoworks, Inc.
that were guaranteed by the Company. The current portion
of such reserves is presented on the Discontinued operations
line of current liabilities and the long-term portion in Other
liabilities. The combined reserve was $1,077 and $1,372
as of September 30, 2000 and 1999, respectively. During Fiscal
2000 the bankruptcy court approved the Autoworks, Inc.
Plan of Reorganization which included establishing a
Creditor Trust to make distributions to creditors under the
plan.
7. Income Taxes
Income tax expense (benefit) is comprised of the following
for the years ended September 30:
2000 1999 1998
Current:
Federal $ - $ - $ -
State 20 20 33
Deferred: 430 131 632
Total provision for
income tax $450 $151 $665
Temporary differences which give rise to deferred tax assets
and liabilities at September 30 are as follows:
2000 1999
Accounts receivable $522 $470
Inventory (1,034) (993)
Accrued liabilities 1,293 1,490
Deferred compensation 163 174
Other 68 98
Net operating loss carry forwards 2,402 2,679
Net deferred tax assets $3,414 $3,918
The Company believes it will have adequate future income
to offset all deferred tax assets. The net operating
loss carryforwards are available to use through 2019.
Actual tax expense differs from the expected tax expense
computed by applying the Federal statutory rate to income from
continuing operations before income taxes due principally to
state income taxes.
<PAGE 44>
8. Employee Retirement Plan
The Company has a 401(k) profit sharing plan for all
eligible employees. Under the plan, employees are entitled to
contribute up to 15% of their base salary, and the Company
will match up to 15% of the employee's contributions. The
Company may also make a discretionary contribution at year
end. The Company's matching contribution under the plan will
be approximately $96 for the Fiscal Year ended September
30, 2000, and was $105 and $99 for the years ended September
30, 1999 and 1998, respectively.
9. Net Income Per Share
Net income per share was calculated as follows for the Fiscal
Years ended September 30:
2000 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 4,745,014
Net income $776 $280 $1,039
Basic and Diluted EPS $0.16 $0.06 $0.22
The potential exercise of outstanding stock
options of 354,207, 419,258, and 550,450 at
September 30, 2000, 1999 and 1998,
respectively, has not been included in the
calculation of diluted EPS since the effect would
be antidilutive.
10. Stockholders' Equity and Stock Options
The Company has two stock option plans which
provide for the granting of options of up to
750,000 shares of stock to officers and key
employees of the Company and an aggregate of
40,000 shares to non-employee directors at the
fair value of the common stock at the date of
grant. The options have a maximum duration of
ten years and may be exercised in cumulative
annual increments of 33 1/3% commencing one
year after the date of grant. During Fiscal
1998, the stockholders of the Company approved a
plan to reduce the exercise price of 202,780
outstanding options from the original exercise
prices ranging from $8.00 to $12.50 to a range
of $6.80 to $9.38. During Fiscal 1999 the plan
related to nonemployee directors expired.
Company management is in the process of
evaluating an amendment to the pre-existing
plan or the creation of a new plan.
<PAGE 45>
The following table summarizes the Company's
stock option transactions:
Option
Price
Range
Shares Per Share
Options outstanding -
October 1, 1997 560,329 $7.50 to $30.69
Exercised - -
Expired (65,649) $6.00 to $15.25
Granted 55,770 $6.00 to $ 6.25
Options outstanding -
September 30, 1998 550,450 $6.00 to $30.69
Exercised - -
Expired (176,192) $6.00 to $30.69
Granted 45,000 $2.25 to $ 3.50
Options outstanding -
September 30, 1999 419,258 $2.25 to $13.75
Exercised - -
Expired (65,051) $2.25 to $12.75
Granted - -
Options outstanding -
September 30, 2000 354,207 $3.50 to $13.75
Options exercisable -
September 30, 2000 337,040 $3.50 to $13.75
SFAS No. 123, "Accounting for Stock Based
Compensation", requires companies to recognize
compensation expense for grants of stock
options, or provide pro forma disclosures
relative to what the effect of such
accounting recognition would have been. The
Company has elected to continue using Accounting
Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees".
Therefore, in accordance with SFAS No. 123,
no compensation expense has been recorded,
however pro forma disclosures of net income and
earnings per share have been provided below as if
SFAS No. 123 had been adopted.
Pro forma income and income per share
information has been determined as if the
Company had accounted for employee stock
options under SFAS No. 123's fair value method.
The fair value of these options was estimated
at grant date using a BlackScholes option
pricing model with the following weighted-average
assumptions for 2000 and 1999, respectively:
<PAGE 46>
2000 1999
Dividend yields 0% 0%
Volatility factors of the expected
market price of the Company's
common stock 75.34% 75.34%
Expected option life 5 years 5 years
Interest rates on the dates
of the grant, with the maturity
equal to the expected term 4.56%-4.60% 4.56%-4.60%
For purposes of pro forma disclosures, the
estimated fair value of the options is
amortized to expense over the options' vesting
period (3 years). The weighted average exercise
price of options outstanding was $8.46 and $7.44
at September 30, 2000 and 1999, respectively.
There were no options granted in Fiscal 2000.
The weighted average fair value of options
granted in Fiscal 1999 and Fiscal 1998 was $2.94
and $5.88, respectively, for options whose stock
price on the date of grant equaled the exercise
price. The pro forma compensation expense the
Company would have recognized before applicable
tax benefits was $64, $132 and $274 in 2000,
1999 and 1998, respectively. The Company's pro
forma information is as follows:
2000 1999 1998
Pro forma net income $735 $194 $872
Pro forma basic and diluted
net income per share $0.15 $0.04 $0.18
This disclosure is not likely to be
representative of the effects on reported income
for future years, since options fully vest over
three years and additional options have
historically been granted each year.
<PAGE 47>
11.Business Segment Information
Effective September 30, 1999, the Company
has adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise
and Related Information." This statement
establishes annual and interim reporting
standards for an enterprise's operating
segments and related disclosures about its
products, services, geographic areas and major
customers. Adoption of this statement had no
impact on the Company's consolidated financial
position, results of operations or cash
flows. Comparative information for earlier
years has been restated. Restatement of
comparative information for interim periods in
the initial year of adoption
is to be reported for interim periods in the
second year of application. The Company reports its
operating results in two segments: direct
distribution and full service distribution.
Segment selection was based on internal
organizational structure, the way in which the
operations are managed and their performance
evaluated by management and the Company's
Board of Directors, the availability of
separate financial results, and materiality
considerations. The accounting policies of
the segments are the same as those described
in the summary of significant accounting
policies. The Company evaluates performance
based on operating profits of the respective
business units.
Information concerning the Company's Business
Segments for Fiscal 2000, 1999, and 1998 is as
follows:
2000 1999 1998
Net Sales to Customers
Full Service Distribution $107,653 $111,744 $113,584
Direct Distribution 17,922 19,254 19,919
Total Net Sales to Customers $125,575 $130,998 $133,503
Income from Operations
Full Service Distribution $4,085 $3,243 $4,388
Direct Distribution 43 466 676
Total Income from Operations $4,128 $3,709 $5,064
Interest Expense (3,796) (3,650) (3,771)
Other Income 894 372 411
Consolidated Pre Tax Income $1,226 $431 $1,704
Identifiable Assets
Full Service Distribution $72,434 $73,152 $72,383
Direct Distribution 6,517 6,571 5,928
Total Identifiable Assets $78,951 $79,723 $78,311
Capital Expenditures
Full Service Distribution $594 $846 $406
Direct Distribution 26 20 38
Total Capital Expenditures $620 $866 $444
Depreciation and Amortization
Full Service Distribution $1,632 $1,584 $1,417
Direct Distribution 157 191 185
Total Depreciation and
Amortization $1,789 $1,775 $1,602
<PAGE 49>
12.Quarterly Financial Data
The following tables set forth the unaudited
quarterly results of continuing operations for
each of the fiscal quarters in the years ended
September 30, 2000 and 1999:
Dec. 31 Mar. 31 June 30
Fiscal 2000
Net Sales $29,498 $30,927 $33,464
Gross profit $11,433 $11,862 $12,580
Net Income (loss) ($194) $59 $288
Net income (loss)
per share ($0.04) $0.01 $0.06
Fiscal 1999
Net Sales $29,869 $32,347 $35,044
Gross profit $11,385 $11,914 $12,871
Net income (loss) ($268) ($67) $293
Net income (loss)
per share ($0.06) ($0.01) $0.06
Sept. 30 Year
Fiscal 2000
Net sales $31,686 $125,575
Gross profit $12,629 $48,504
Net income (loss) $623 $776
Net income (loss)
per share $0.13 $0.16
Fiscal 1999
Net sales $33,738 $130,998
Gross profit $12,826 $48,996
Net income (loss) $322 $280
Net income (loss)
per share $0.07 $0.06
<PAGE 50>
Report of Independent Accountants
on Financial Statement Schedule
To the Board of Directors and Shareholders of
Hahn Automotive Warehouse, Inc. and Subsidiaries
Our audits of the consolidated financial statements referred
to in our report dated November 21, 2000, appearing in this
Annual Report on Form 10-K, also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information
set forth therein when read in conjunction with the
related consolidated financial statements.
PricewaterhouseCoopers LLP
Rochester, New York
November 21, 2000
<PAGE 51>
Hahn Automotive Warehouse, Inc.
Schedule II - Valuation and Qualifying Account Reserves
For the Years Ended September 30, 2000, 1999 and 1998
(Amounts in thousands)
Additions
Balance at Charged to
Beginning Costs and
of Period Expenses
Description
2000 Allowance for doubtful accounts
and notes receivable $2,015 $447
1999 Allowance for doubtful accounts
and notes receivable $2,719 $142
1998 Allowance for doubtful accounts
and notes receivable $3,230 $453
Hahn Automotive Warehouse, Inc.
Schedule II - Valuation and Qualifying Account Reserves
For the Years Ended September 30, 2000, 1999 and 1998
(Amounts in thousands)
Deductions Balance at
Description End of Period
2000 Allowance for doubtful accounts
and notes receivable ($265) $2,197
1999 Allowance for doubtful accounts
and notes receivable ($846) $2,015
1998 Allowance for doubtful accounts
and notes receivable ($964) $2,719
<PAGE 52>
EXHIBITS FILED WITH
FORM 10-K
OF
HAHN AUTOMOTIVE WAREHOUSE, INC. FOR FISCAL
YEAR ENDED
September 30, 2000
FORMING A PART OF
ANNUAL REPORT PURSUANT TO SECTION 13 OF OR
15(d) THE SECURITIES EXCHANGE ACT OF 1934
EXHIBIT INDEX
Exhibit 3.1 Restated Certificate of Incorporation
of Hahn (Exhibit 3.1 to The Company's
registration Statement on Form S-1 (No. 33-
48694) as filed with the SEC on January 19,
1993)*
Exhibit 3.2 Amended and Restated By- Laws of Hahn
(Exhibit 3 to Hahn's Quarterly Report on Form
10-Q for quarterly period ended March 31,
1994)*
Exhibit 4.1 Shareholders' Agreement, dated
September 30, 1994, between Hahn and David
Appelbaum (Exhibit 4.1 to Hahn's Annual Report
on Form 10K for the Fiscal Year ended
September 30, 1994)*
Exhibit 10.1 1992 Stock Option Plan (Exhibit 10.1
to Hahn's Registration Statement on Form S-1
(No. 33-48694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.2 Amendment No. 1 to 1992 Stock Option
Plan (Exhibit A to Hahn's 1995 Proxy Statement)*
Exhibit 10.3 Amendment No. 2 to 1992 Stock Option Plan
(Exhibit A to Hahn's 1996 Proxy Statement)*
Exhibit 10.3 Amendment No. 2 to 1992 Stock Option Plan
(Exhibit A to Hahn's 1996 Proxy)*
Exhibit 10.4 Stock Option Agreement, dated April 29,
1994, between Hahn and Eli N. Futerman
(Exhibit 10.3 to Hahn's Quarterly Report on
Form 10-Q for the quarterly period ended June
30, 1994)*
Exhibit 10.5 1993 Stock Option Plan for Non-Employee
Directors (Exhibit 4 to Hahn's Quarterly
Report on Form 10-Q for the quarterly
period ended March 31, 1994)*
Exhibit 10.6 Amended and Restated Selective Incentive
Plan Agreement, dated June 9, 1992,
between Hahn and Eli N. Futerman (Exhibit
10.2 to Hahn's Registration Statement on Form
S-1 (No. 33-48694) as filed with the SEC on
January 19, 1993)*
<PAGE 53>
Exhibit 10.7 Amended and Restated Selective Incentive
Plan Agreement, dated June 9, 1992,
between Hahn and Timothy Vergo (Exhibit 10.3
to Hahn's Registration Statement on Form S-1
(No. 3348694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.8 Amended and Restated Selective Incentive
Plan Agreement, dated June 9, 1992,
between Hahn and Albert J. Van Erp (Exhibit
10.4 to Hahn's Registration Statement on Form
S-1 (No. 33-48694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.9 Amended and Restated Selective Incentive
Plan Agreement, dated June 9, 1992,
between Hahn and Daniel J. Chessin (Exhibit
10.5 to Hahn's Registration Statement on Form
S-1 (No. 33-48694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.10 Deferred Compensation Agreement, dated
April 1, 1990, between Naftali Futerman
and Hahn (Exhibit 10.7 to Hahn's
Registration Statement on Form S-1 (No. 33-
48694) as filed with the SEC on January 19,
1993)*
Exhibit 10.11 Lease Agreement, executed June 10, 1992,
between Michael Futerman as landlord and
Hahn as tenant, as amended (Exhibit 10.89 to
Hahn's Registration Statement on Form S-1
(No. 3348694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.12 Letter Agreement Lease Amendment dated
September 30, 1993 between Michael Futerman
and Hahn Automotive Warehouse, Inc. (Exhibit
10.13 to Hahn's Annual Report on Form 10-K for
the Fiscal Year ended September 30, 1998)*
Exhibit 10.13 Second Amendment to Lease Agreement, dated
May 1997, between Michael Futerman and
Hahn Automotive Warehouse, Inc. (Exhibit
10.14 to Hahn's Annual Report on Form 10-K
for the Fiscal Year ended September 30,
1998)*
<PAGE 54>
Exhibit 10.14 Second Amendment to Lease Agreement, dated
May, 1997 between the Michael
Futerman Irrevocable Trust and Hahn
Automotive Warehouse, Inc. (Exhibit 10.15 to
Hahn's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 1998)*
Exhibit 10.15 Third Amendment to Lease Agreement between
Michael Futerman and Hahn Automotive
Warehouse, Inc. (Exhibit 10.16 to Hahn's
Annual Report on Form 10-K for the Fiscal
Year ended September 30, 1998)*
Exhibit 10.16 Fourth Amendment to Lease Agreement
between Michael Futerman and Hahn
Automotive Warehouse, Inc. (Exhibit 10.17 to
Hahn's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 1998)*
Exhibit 10.17 Amendment to Lease Agreement between
Michael Futerman and Sara Futerman as
Landlord and Hahn Automotive Warehouse, Inc.,
as tenant. (Exhibit 10.18 to Hahn's Annual
Report on Form 10-K for the Fiscal Year
ended September 30, 1998)*
Exhibit 10.18 Lease Agreement between the Michael
Futerman Living Trust as Landlord, and
Hahn Automotive Warehouse, Inc., as tenant.
(Exhibit 10.19 to Hahn's Annual Report on
Form 10-K for the Fiscal Year ended
September 30, 1998)*
Exhibit 10.19 Lease Agreement, executed June 10, 1992,
between Eli N. Futerman as landlord and Hahn
as tenant, as amended (Exhibit 10.9 to
Hahn's Registration Statement on Form S-1
(No. 3348694), as filed with the SEC on
January 19, 1993)*
Exhibit 10.20 Letter Agreement Lease Amendment, dated
October 4, 1993, between Eli N. Futerman
and Hahn Automotive Warehouse, Inc. (Exhibit
10.21 to Hahn's Annual Report on Form 10-K for
the Fiscal Year ended September 30, 1998)*
Exhibit 10.21 Letter Agreement Lease Amendment, dated
September 30, 1996, between Eli N. Futerman
and Hahn Automotive Warehouse, Inc. (Exhibit
10.22 to Hahn's Annual Report on Form 10-K for
the Fiscal Year ended September 30, 1998)*
Exhibit 10.22 Third Amendment to Lease, between Eli N.
Futerman, as landlord and Hahn
Automotive Warehouse, Inc., as tenant
(Exhibit 10.2 to Hahn's Quarterly Report
on Form 10-Q for the quarter ended March
31, 1999)*
<PAGE 55>
Exhibit 10.23 Lease Agreement, executed June 11,1992,
between EDR Associates as landlord and Hahn
as tenant (Exhibit 10.10 to Hahn's
Registration Statement on Form S-1 (No. 33-
48694) as filed with the SEC on January 19,
1993)*
Exhibit 10.24 Letter Agreement Lease Amendment dated
September 1, 1993, between EDR Associates
and Hahn Automotive Warehouse, Inc. (Exhibit
10.24 to Hahn's Annual Report on Form 10-K for
the Fiscal Year ended September 30, 1998)*
Exhibit 10.25 Amendment to Lease Agreement between EDR
Associates, as landlord, and Hahn
Automotive Warehouse, Inc., dated November
17, 1998. (Exhibit 10.1 to Hahn's
Quarterly Report on Form 10-Q for the
quarter ended December 31, 1998)*
Exhibit 10.26 Lease Agreement, fully executed June 11,
1992, between Eli Futerman, Daphne Futerman
and Rina F. Chessin as landlord and Hahn as
tenant (Exhibit 10.11 to Hahn's Registration
Statement on Form S-1 (No. 33-48694) as
filed with the SEC on January 19, 1993)*
Exhibit 10.27 Amendment to Lease Agreement between Eli
Futerman, Daphne Futerman and Rina F. Chessin,
as landlord, and Hahn Automotive
Warehouse, Inc., dated January, 1999.
(Exhibit 10.1 to Hahn's Quarterly Report
on Form 10-Q for the quarter ended March
31, 1999)*
Exhibit 10.28 Lease Agreement, executed June 12, 1992,
between Futerman Associates as landlord
and Hahn as tenant (Exhibit 10.12 to
Hahn's Registration Statement on Form S-1
(No. 3348694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.29 Sublease Agreement, executed June 10,
1992, between 415 West Main St., Inc.
as landlord and Hahn as tenant (Exhibit
10.13 to Hahn's Registration Statement on
Form S-1 (No. 33-48694) as filed with the
SEC on January 19, 1993)*
Exhibit 10.30 Amendment to Sublease Agreement, dated
December 21, 1994, between 415 West Main
St., Inc. and Hahn (Exhibit 10.15 to Hahn's
Annual Report on Form 10-K for the Fiscal
Year ended September 30, 1994)*
<PAGE 56>
Exhibit 10.31 Lease Agreement, dated October 1, 1989,
between Eli N. Futerman as lessor and Hahn
as lessee for lease of computer
equipment, as amended and assigned (Exhibit
10.19 to Hahn's Registration Statement on Form S-1 (No.
3348694), as filed with the SEC on January
19, 1993)*
Exhibit 10.32 Master Equipment Lease Agreement, dated
April 19, 1994, between Hahn, Autoworks
Holdings, Inc., Autoworks, Inc. and Fleet
Bank (Exhibit 10.22 to Hahn's Annual Report
on Form 10-K for the year ended September 30, 1994)*
Exhibit 10.33 Amendment to Addendum to Master Lease
Agreement dated June 26, 1996 between
Fleet Bank of New York as lessor and
Hahn and Autoworks as lessees dated June 26,
1996*
Exhibit 10.34 Trademark License and Marketing Agreement,
effective May 1, 1988, between Auto
Value Associates, Inc. and Hahn (Exhibit
10.22 to
Hahn's Registration Statement on Form S-1
(No. 33-48694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.35 Shareholders' Agreement, dated as of
December 15, 1983, among Auto Value Associates, Inc.
and the shareholders of Auto Value
Associates, Inc., including Hahn, as
amended (Exhibit 10.23 to Hahn's Registration Statement
on Form S-1 (No. 33-48694) as filed with
the SEC on January 19, 1993)*
Exhibit 10.36 Hahn's Promissory Note, dated April 1,
1992, in the principal amount of $250,000
in favor of Eli N. Futerman (Exhibit10.27
to Hahn's Registration Statement on Form S-1
(No. 33-48694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.37 Hahn's Promissory Note, dated April 1,
1992, in the principal amount of $250,000
in favor of Michael Futerman (Exhibit10.28
to Hahn's Registration Statement on Form S-1
(No. 33-48694) as filed with the SEC on
January 19, 1993)*
<PAGE 57>
Exhibit 10.38 Hahn's Promissory Note, dated April 1,
1992, in the principal amount of $250,000
in favor of Naftali Futerman (Exhibit 10.29
to Hahn's Registration Statement on Form S- 1
(No. 33-48694) as filed with the SEC on
January 19, 1993)*
Exhibit 10.39 Hahn's Amended and Restated Promissory
Note, dated as of February 1, 1996, in
the original principal amount of
$1,650,000 in favor of Michael Futerman
(Exhibit 10.2 to Hahn's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1996)*
Exhibit 10.40 Hahn's Amended and Restated Promissory
Note, dated as of February 1, 1996, in
the original principal amount of $500,000 in
favor of Eli Futerman (Exhibit 10-3 to
Hahn's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996)*
Exhibit 10.41 Deferred Compensation Agreement, dated
November 30, 1992, between Hahn and
Michael Futerman (Exhibit 10.37 to Hahn's
Registration statement on Form S-1 (No. 33-
48694) as filed with the SEC on January 19, 1993)*
Exhibit 10.42 Hahn Automotive Warehouse, Inc. Health
Benefit Retirement Plan (Exhibit 10.38
to Hahn's Registration Statement on Form S-1
(No. 33-48694) as filed with the SEC on
January 19, 1993)*
Certain instruments respecting long-term debt of the
Company and its subsidiaries have been omitted pursuant to
Regulation Item 601. The Company hereby agrees to furnish a
copy of any such instrument to the Commission upon request.
Exhibit 10.43 Settlement agreement and Release dated
June 29, 1998 between Autoworks, Inc.,
The Committee, Fleet Bank, Manufacturers
and Traders Trust, Sumitomo Bank Ltd.,
Chase Manhattan Bank and Massachusetts Mutual
Life Insurance Company. (Exhibit 3.1 to
Hahn's Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1998)*
Exhibit 10.44 Buyer's Trademark License Agreement, dated
November 28, 1993, between Northern
Automotive Corporation and Autoworks
(Exhibit 28.3 to Hahn's Current Report
on Form 8-K, dated December 10, 1993 (File No. 0-20984)*
<PAGE 58>
Exhibit 10.45 Credit Facility Agreement, dated October
22, 1997 between Hahn and Fleet Capital
Corporation . (Exhibit 10.43 to Hahn's
Annual Report on Form 10-K for the Fiscal
Year ended September 30, 1997.)*
Exhibit 10.46 Amendment to Loan and Security Agreement
dated February 10, 1999, between Hahn and
Fleet Capital Corporation (Exhibit 10.46 to
Hahn's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 1999)*
Exhibit 10.47 Second Amendment to Loan and Security
Agreement dated September 30, 1999 between
Hahn and Fleet Capital Corporation (Exhibit
10.47 to Hahn's Annual Report on Form 10-
K for the Fiscal Year ended September 30,
1999)*
Exhibit 10.48 Letter Agreement, dated August 5, 1997
between Schottenstein Bernstein Capital
Group, LLC, HLCO Trading Company, Inc. and
Garcel, Inc. d/b/a Great American Asset
Management, as joint ventures and
Autoworks, Inc. (Exhibit 10.2 to Hahn's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997) (as
modified by Gordon Brothers Partners, Inc.
and Autoworks, Inc. on August 20, 1997 with
respect to store disposition and liquidation
pricing).*
Exhibit 10.49 Lease Agreement dated September 30, 1994,
between Meisenzahl and David Appelbaum
(Exhibit 10.47 to Hahn's Annual Report on
Form 10-K for the Fiscal Year ended
September 30, 1994)*
Exhibit 10.50 Lease Agreement, dated September 30, 1994,
between Meisenzahl and David Appelbaum
(Exhibit 10.45 to Hahn's Annual Report on
Form 10-K for the Fiscal Year ended
September 30, 1994)*
Exhibit 10.51 Non-Competition Agreement, dated September
30, 1994, between Hahn and David Appelbaum (Exhibit
10.49 to Hahn's Annual Report on Form
10-K for the Fiscal Year ended September
30, 1994)*
Exhibit 10.52 Tax Procedures and Indemnity Agreement,
dated September 30, 1994, between Hahn
and David Appelbaum (Exhibit 10.50 to Hahn's
Annual Report On Form 10-K for the Fiscal
Year ended September 30, 1994)*
<PAGE 59>
Exhibit 10.53 Indemnification Agreement, dated as of
September 30, 1994, executed by David Appelbaum
in favor of Hahn, Meisenzahl and Regional (Exhibit
10.51 to Hahn's Annual Report on Form
10-K for the Fiscal Year ended September
30, 1994)*
Exhibit 10.54 Letter Agreement, dated December 14, 1995,
between Hahn and Michael Futerman
(Exhibit 10.53 to Hahn's Annual Report on
Form 10-K for Fiscal Year ended September
30, 1995)*
Exhibit 10.55 Lease Assignment for Nu-Way Properties
(Exhibit 10.55 to Hahn's Annual Report on Form
10-K for Fiscal Year ended September 30, 1999)*
Exhibit 21 List of Subsidiaries (filed herewith)
Exhibit 23 Consent of PricewaterhouseCoopers LLP with
respect to Financial Statements and
Financial Statement Schedule (filed herewith)
Exhibit 24 Powers of Attorney for Directors
(filed herewith)
*These exhibits are incorporated herein by reference to the
registration statement or report referenced after each exhibit
which an asterisk appears.
Indicates executive compensation plans and arrangements.
EXHIBIT 21
LIST OF SUBSIDIARIES
Autoworks, Inc. Michigan
H.F.V. Inc. Delaware
iAutoparts, Inc. New York
<PAGE 60>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by
reference in the Registration Statement on Form S-
8 (File nos. 333-85533, 33-64100 and 333-81854)
of Hahn Automotive Warehouse, Inc. and
Subsidiaries of our report dated November 21, 2000
relating to the financial statements, as of
September 30, 2000 and 1999 and for the three
Fiscal years ended September 30, 2000, which is
included in this Annual Report on Form 10-K. We
also consent to the incorporation by reference of
our report dated November 21, 2000 relating to
the financial statement schedule, which appears in
this Form 10-K.
PricewaterhouseCoopers LLP
Rochester, New York
December 19, 2000
EXHIBIT 24
POWERS OF ATTORNEY FOR DIRECTORS
POWER OF ATTORNEY
The undersigned director of Hahn Automotive
Warehouse, Inc. (The "Corporation"), does hereby
constitute and appoint Eli N. Futerman, my
true and lawful attorney and agent, to execute the
Corporation's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 2000, and any and
all amendments thereto, and to do any and all acts
and things in my name and on my behalf in my
capacity which he may deem necessary or
advisable to the Corporation to comply with the
Securities and Exchange Act of 1934, as amended,
and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection
therewith.
Date: November 29, 2000
<PAGE 61>
By: s// Stephen B. Ashley
Stephen B. Ashley, Director
POWER OF ATTORNEY
The undersigned director of Hahn Automotive
Warehouse, Inc. (The "Corporation"), does hereby
constitute and appoint Eli N. Futerman, my
true and lawful attorney and agent, to execute the
Corporation's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 2000, and any and
all amendments thereto, and to do any and all acts
and things in my name and on my behalf in my
capacity which he may deem necessary or
advisable to the Corporation to comply with the
Securities and Exchange Act of 1934, as amended,
and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection
therewith.
Date: November 29, 2000
By: s// William A. Buckingham
William A. Buckingham, Director
POWER OF ATTORNEY
The undersigned director of Hahn Automotive
Warehouse, Inc. (The "Corporation"), does hereby
constitute and appoint Eli N. Futerman, my
true and lawful attorney and agent, to execute the
Corporation's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 2000, and any and
all amendments thereto, and to do any and all acts
and things in my name and on my behalf in my
capacity which he may deem necessary or
advisable to the Corporation to comply with the
Securities and Exchange Act of 1934, as amended,
and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection
therewith.
Date: November 29, 2000
By: s// Gordon E. Forth
Gordon E. Forth, Director
<PAGE 62>
POWER OF ATTORNEY
The undersigned director of Hahn Automotive
Warehouse, Inc. (The "Corporation"), does hereby
constitute and appoint Eli N. Futerman, my
true and lawful attorney and agent, to execute the
Corporation's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 2000, and any and
all amendments thereto, and to do any and all acts
and things in my name and on my behalf in my
capacity which he may deem necessary or
advisable to the Corporation to comply with the
Securities and Exchange Act of 1934, as amended,
and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection
therewith.
Date: November 29, 2000
By: s// Nathan Lewinger
Nathan Lewinger, Director
POWER OF ATTORNEY
The undersigned director of Hahn Automotive
Warehouse, Inc. (The "Corporation"), does hereby
constitute and appoint Eli N. Futerman, my
true and lawful attorney and agent, to execute the
Corporation's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 2000, and any and
all amendments thereto, and to do any and all acts
and things in my name and on my behalf in my
capacity which he may deem necessary or
advisable to the Corporation to comply with the
Securities and Exchange Act of 1934, as amended,
and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection
therewith.
Date: November 29, 2000
By: s// E. Philip Saunders
E. Philip Saunders, Director
POWER OF ATTORNEY
The undersigned director of Hahn Automotive
Warehouse, Inc. (The "Corporation"), does hereby
constitute and appoint Eli N. Futerman, my
true and lawful attorney and agent, to execute the
Corporation's Annual Report on Form 10-K for the
Fiscal Year ended September 30, 2000, and any and
all amendments thereto, and to do any and all acts
and things in my name and on my behalf in my
capacity which he may deem necessary or
advisable to the Corporation to comply with the
Securities and Exchange Act of 1934, as amended,
and any rules, regulations, and requirements of the
Securities and Exchange Commission, in connection
therewith.
<PAGE 63>
Date: November 29, 2000
By: s// Daniel J. Chessin
Daniel J. Chessin,
Executive Vice
President, Secretary
and Director
EXHIBIT 27
Selected Financial Data
