-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FDR6tGLvyI7v1HOS1s+BHdOYTBOFXyfEvK+iagMhcIlzjY/gWdEbgtmKhTUYsAIU WPZZOdOZOAJX6ogp/3nCtg== 0000950109-96-005676.txt : 19960903 0000950109-96-005676.hdr.sgml : 19960903 ACCESSION NUMBER: 0000950109-96-005676 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960708 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960830 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILMAR INDUSTRIES INC CENTRAL INDEX KEY: 0001003956 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [5070] IRS NUMBER: 222232386 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-27424 FILM NUMBER: 96624642 BUSINESS ADDRESS: STREET 1: 303 HARPER DR CITY: MOORESTOWN STATE: NJ ZIP: 08057 BUSINESS PHONE: 6094391222 8-K/A 1 FORM 8-K/A-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A-1 Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 8, 1996 ------------ WILMAR INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant specified in its charter) New Jersey 0-27424 22-2232386 - -------------------------------------------------------------------------------- (State or other (Commission (IRS Employee jurisdiction of File Number) Identification No.) incorporation) 303 Harper Drive Moorestown, New Jersey 08057 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone, including area code: (609) 439-1222 -------------- - -------------------------------------------------------------------------------- (Former name and former address, if changed since last report) Item 7. Financial Statements and Exhibits --------------------------------- (a) Consolidated Financial Statements of HMA Enterprises, Inc. and its Subsidiaries. (1) Independent Auditors' Reports. (2) Consolidated Balance Sheets of HMA and its Subsidiaries as of February 29, 1996 and February 28, 1995. (3) Consolidated Statements of Income of HMA and its Subsidiaries for the year ended February 29, 1996 and the year ended February 28, 1995. (4) Consolidated Statements of Cash Flows of HMA and its Subsidiaries for the year ended February 29,1996 and the year ended February 28, 1996. (5) Consolidated Statements of Stockholders' Equity of HMA and its Subsidiaries for the year ended February 29, 1996 and the year ended February 28, 1995. (6) Notes to Consolidated Financial Statements. (b) Pro Forma Financial Information (Unaudited). (1) Unaudited Pro Forma Balance Sheet as of March 29, 1996. (2) Unaudited Pro Forma Statements of Operations for the year ended December 29, 1995. (3) Unaudited Pro Forma Statements of Operations for the three months ended March 29, 1996. (c) Exhibits. 27.1+ Financial Data Schedule. _________________________ + Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 28, 1996. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to the report to be signed on its behalf by the undersigned hereunto duly authorized. WILMAR INDUSTRIES, INC. (Registrant) By /s/ William S. Green --------------------------------- William S. Green Chairman, President and Chief Executive Officer Dated: August 30, 1996 INDEPENDENT AUDITORS' REPORT The Board of Directors HMA Enterprises, Inc.: We have audited the accompanying consolidated balance sheet of HMA Enterprises, Inc., and subsidiaries (the "Company") as of February 29, 1996, and the related consolidated statements of income, stockholders equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HMA Enterprises, Inc., and subsidiaries as of February 29, 1996, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Deloitte & Touche LLP Houston, Texas May 30, 1996 INDEPENDENT AUDITORS REPORT The Board of Directors HMA Enterprises, Inc.: We have audited the accompanying consolidated balance sheet of HMA Enterprises, Inc., and subsidiaries (the "Company") as of February 28, 1995, and the related consolidated statements of income, stockholders, equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HMA Enterprises, Inc., and subsidiaries as of February 28, 1995, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP April 21, 1995 HMA ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, FEBRUARY 29, 1995 1996 ------------ ------------ ASSETS CURRENT ASSETS: Cash............................................... $ 206,973 $ 211,876 Accounts receivable: Trade, less allowance for doubtful accounts of $213,518 and $239,832, respectively............. 2,412,686 3,543,773 Related party and other.......................... 101,003 53,281 Inventory.......................................... 2,509,905 3,073,661 Investment in trading securities................... 150,892 1,166 Prepaid expenses and other current assets.......... 147,892 267,526 ---------- ---------- Total current assets............................. 5,529,351 7,151,283 PROPERTY AND EQUIPMENT, NET.......................... 316,564 310,023 DEFERRED TAX ASSETS.................................. 48,482 115,500 ---------- ---------- TOTAL................................................ $5,894,397 $7,576,806 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable...................................... $1,430,100 $1,830,100 Trade accounts payable............................. 1,496,651 1,955,688 Accrued expenses................................... 379,848 454,617 Current portion of long-term debt and capital leases............................................ 76,591 63,499 Federal income taxes payable....................... 33,801 170,795 ---------- ---------- Total current liabilities........................ 3,416,991 4,474,699 LONG-TERM DEBT AND CAPITAL LEASES, EXCLUDING CURRENT PORTION............................................. 105,147 65,664 ---------- ---------- Total liabilities................................ 3,522,138 4,540,363 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 1,000,000 shares authorized; 115,170 shares issued and outstanding....................................... 1,152 1,152 Additional paid-in capital......................... 156,656 156,656 Retained earnings.................................. 2,214,451 2,878,635 ---------- ---------- Total stockholders' equity....................... 2,372,259 3,036,443 ---------- ---------- TOTAL................................................ $5,894,397 $7,576,806 ========== ==========
See notes to consolidated financial statements. HMA ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED YEAR ENDED FEBRUARY 28, FEBRUARY 29, 1995 1996 ------------ ------------ SALES............................................... $20,641,719 $24,858,213 COST OF SALES....................................... 15,381,560 18,530,571 ----------- ----------- GROSS PROFIT........................................ 5,260,159 6,327,642 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES........ 4,997,868 5,262,985 ----------- ----------- 262,291 1,064,657 ----------- ----------- OTHER INCOME (EXPENSE): Interest expense, net............................. (130,729) (154,941) Other income...................................... 159,998 44,272 Gain on sale of property and equipment, net....... 8,696 ----------- ----------- Total........................................... 29,269 (101,973) ----------- ----------- INCOME BEFORE INCOME TAXES.......................... 291,560 962,684 INCOME TAXES........................................ (98,119) (298,500) ----------- ----------- NET INCOME.......................................... $ 193,441 $ 664,184 =========== ===========
See notes to consolidated financial statements. HMA ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR YEAR ENDED ENDED FEBRUARY 28, FEBRUARY 29, 1995 1996 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income.......................................... $ 193,441 $ 664,184 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation...................................... 160,070 144,383 Employee stock ownership plan contribution........ 156,700 Gain on sale of property and equipment............ (8,696) (Gain) writedown on investment in trading securities....................................... 10,620 (19,055) Deferred income taxes............................. (48,482) (67,018) Change in assets and liabilities: Accounts receivable--trade........................ (154,425) (1,131,087) Accounts receivable--related party and other...... 472 47,722 Inventory......................................... (749,101) (563,756) Prepaid expenses and other current assets......... (36,592) (119,634) Federal income tax receivable..................... 120,485 Trade accounts payable............................ 424,577 459,037 Accrued expenses.................................. 51,776 74,769 Federal income taxes payable...................... 33,801 136,994 --------- ----------- Net cash provided by (used in) operating activities..................................... 163,342 (382,157) --------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net of proceeds of disposals.. (35,838) (129,146) Purchase of trading securities...................... (161,512) Sales of trading securities......................... 168,781 --------- ----------- Net cash (used in) provided by investing activities..................................... (197,350) 39,635 --------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury shares......................... (200,000) Principal payments on notes payable................. (103,400) (400,000) Principal payments on long-term debt and capital leases............................................. (56,541) (70,056) Proceeds from notes payable......................... 7,500 800,000 Proceeds from long-term debt and capital leases..... 17,481 --------- ----------- Net cash provided by (used in) financing activities..................................... (352,441) 347,425 --------- ----------- NET INCREASE (DECREASE) IN CASH....................... (386,449) 4,903 CASH AT BEGINNING OF YEAR............................. 593,422 206,973 --------- ----------- CASH AT END OF YEAR................................... $ 206,973 $ 211,876 ========= =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest payments................................... $ 139,136 $ 191,253 Income tax payments................................. 102,500 228,524 NONCASH INVESTING AND FINANCING ACTIVITIES: Capital leases assumed in acquisitions of property and equipment...................................... $ 89,354 Retirement of treasury shares....................... 210,000
See notes to consolidated financial statements. HMA ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 -------------------------------------------------------- ADDITIONAL TOTAL COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS' STOCK CAPITAL EARNINGS STOCK EQUITY ------- ---------- ---------- --------- ------------- BALANCE AT FEBRUARY 28, 1994................... $ 2,204 $2,229,914 $ (10,000) $2,222,118 Net income............ 193,441 193,441 Issuance of common stock................ 44 $156,656 156,700 Purchase of treasury shares............... (200,000) (200,000) Retirement of 1,096 treasury shares...... (1,096) (208,904) 210,000 ------- -------- ---------- --------- ---------- BALANCE AT FEBRUARY 28, 1995................... 1,152 156,656 2,214,451 2,372,259 Net income............ 664,184 664,184 ------- -------- ---------- --------- ---------- BALANCE AT FEBRUARY 29, 1996................... $ 1,152 $156,656 $2,878,635 $ $3,036,443 ======= ======== ========== ========= ==========
See notes to consolidated financial statements HMA ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business--HMA Enterprises, Inc. was incorporated in the state of Texas in May 1983. Operating primarily in Texas, HMA Enterprises, Inc., and subsidiaries (the "Company") acquire and distribute fixtures, hardware, household items and supplies to apartment complexes and building contractors. The Company's locations include Houston, Arlington and, as of April 1996, San Antonio, Texas. Most of the Company's customers are located in Texas. No single customer accounted for more than five percent of the Company's sales, and no accounts receivable from any customer exceeded $186,000 at February 29, 1996. Principles of Consolidation--The consolidated financial statements include the accounts of HMA Enterprises, Inc., and its wholly owned subsidiaries, Gulf Coast Supply, Inc., and One Stop Supply, Inc. All intercompany accounts and transactions have been eliminated in consolidation. Investment in Equity Securities--The Company adopted the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," ("Statement 115") effective March 1, 1994. Under Statement 115, marketable investment securities are classified in three categories: trading, available for sale, or held to maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. In accordance with Statement 115, the Company classifies its investments in equity securities as trading securities. Trading securities are recorded at fair value. Unrealized holding gains and losses on trading securities, net of the related tax effect, are included in earnings. A decline in the market value of any trading security below cost is charged to earnings, resulting in the establishment of a new cost basis for the security. Dividend and interest income are recognized when earned. Realized gains and losses for securities classified as trading are included in earnings and are derived using the specific identification method for determining the cost of securities sold. Inventory--Inventory is stated at the lower of cost or market using the average cost method. Inventory consists entirely of finished goods. Property and Equipment--Property and equipment are stated at cost. Equipment under capital lease is stated at the present value of future minimum lease payments at the date of acquisition. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 7 years. Equipment under capital leases and leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the asset. Federal Income Taxes--The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. HMA ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Use of Estimates--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, the 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. Reclassifications--Certain reclassifications have been made to the prior year financial statements to conform to the presentation and classification used in fiscal 1996. 2. PROPERTY AND EQUIPMENT Property and equipment consisted of the following:
1995 1996 -------- ---------- Vehicles................................................ $474,881 $ 478,945 Furniture and equipment................................. 356,988 418,746 Leasehold improvements.................................. 120,496 130,973 -------- ---------- Total............................................... 952,365 1,028,664 Less accumulated depreciation and amortization.......... 635,801 718,641 -------- ---------- Property and equipment, net............................. $316,564 $ 310,023 ======== ==========
3. NOTES PAYABLE Notes payable consisted of the following:
1995 1996 ---------- ---------- Notes payable to bank, interest at prime plus 0.5% (8.75% at February 29, 1996), due September 1, 1996.. $1,400,000 $1,800,000 Notes payable to related parties, interest at 10%, maturities vary through February 1997................ 30,100 30,100 ---------- ---------- Total............................................. $1,430,100 $1,830,100 ========== ==========
At February 29, 1996, $1,800,000 was outstanding under the Company's $2,500,000 revolving line of credit which matures on September 1, 1996. Interest payments are due monthly on the first day of each month and accrue at the bank's prime rate plus 0.5%. The Company has pledged its accounts receivable, inventory, and property and equipment as collateral for this obligation. The line of credit facility contains certain financial covenants which require the Company to maintain a minimum net worth and ratio of debt to net worth. Compliance with covenants has been met. 4. LONG-TERM DEBT AND CAPITAL LEASES Long-term debt and capital leases consist of the following:
1995 1996 -------- -------- Obligations under capital leases, interest rates ranging from 6.0% to 13.6%, varying payments..................... $166,334 $129,163 Long-term debt collateralized by certain equipment, interest at prime plus 1%, payable in monthly installments of $483..................................... 15,404 -------- -------- Total long-term debt and capital leases............... 181,738 129,163 Less current portion...................................... 76,591 63,499 -------- -------- Long-term debt and capital leases, excluding current portion.................................................. $105,147 $ 65,664 ======== ========
HMA ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The aggregate maturities of long-term debt and capital leases for each year subsequent to February 29, 1996 are: 1997, $63,499; 1998, $50,018; and 1999, $15,646. 5. INCOME TAXES The Company's income tax provision for the years ended February 29, 1996 and February 28, 1995 comprised the following:
1995 1996 -------- -------- Current.................................................. $146,601 $365,518 Deferred................................................. (48,482) (67,018) -------- -------- Total.................................................. $ 98,119 $298,500 ======== ========
The provision for income taxes differs from the amount of income taxes computed by applying the U.S. federal income tax rate of 34% to pretax income as a result of limitations on the deductibility of meals and entertainment and the nontaxable income on officers' life insurance policies for fiscal 1995 and 1996. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at February 29, 1996 and February 28, 1995 are presented below:
1995 1996 -------- -------- Deferred tax assets: Allowance for doubtful accounts........................ $ 72,596 $ 81,543 Differences between book and tax depreciation.......... 24,858 25,718 Accrued vacation....................................... 14,067 8,239 -------- -------- Total gross deferred tax assets...................... 111,521 115,500 Less valuation allowance................................. (63,039) -------- -------- Net deferred tax assets.................................. $ 48,482 $115,500 ======== ========
6. EMPLOYEE STOCK OWNERSHIP PLAN The Company adopted the Employee Stock Ownership Plan (the "Plan") during 1995 to enable eligible employees to participate in the growth of the Company. Employees who have been employed with the Company for one or more years and have completed a minimum of 1,000 hours of service are eligible to become participants in the Plan. Employer contributions to the Plan are held in trust in each participants individual account. The contributions are allocated to the participant accounts based on each participant's covered compensation, which is the total wages paid to the participant by the Company for each plan year. The realized and unrealized gain or loss on the Plan's assets, as well as dividends on the Company's stock not distributed to participants, are allocated to each participant's account in the same manner. In fiscal 1995, the company recognized $156,700 in compensation expense related to the Plan, which represents the estimated fair market value of the 43.7 shares (prior to stock split--see Note 8) of Company stock contributed to the Plan. In fiscal 1996 the Company recognized $100,000 in compensation expense related to a cash contribution. 7. RELATED-PARTY TRANSACTIONS Included in trade receivables as of February 28, 1995 and February 29, 1996 was $255,845 and $249,717, respectively, from a related party which has common shareholders with the Company. Sales to this related party for fiscal 1995 and 1996 were $255,845 and $94,916, respectively. HMA ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 8. COMMON STOCK In June 1994 the Company purchased 96 shares of its common stock from a shareholder at a cost of $200,000. In December 1994 the Company retired 1,096 shares of common stock previously held in treasury. In December 1994 the Company effected a 100 for 1 stock split for each issued and outstanding share of its common stock, and decreased the par value per share of common stock from $1 to $.01. There was no change in the authorized number of shares. 9. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash, investment in trading securities, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturities of these items. Interest rates which are currently available to the Company for new issuances of debt with similar terms and maturities are used to estimate the fair value of long-term debt and capital leases which at February 29, 1996 approximated the recorded amount. 10. COMMITMENTS AND CONTINGENCIES Until December 1995 the Company participated in a self-insurance pool for health care costs. The Company is liable for claims up to $12,500 per employee annually and Company claims aggregate up to $45,000 annually. The Company has funded the insurance pool to cover the annual aggregate claims. Claims exceeding these limits are covered by a stop loss policy covering claims up to $2,000,000 annually. Based on historical experience, management does not anticipate potential future claims would have a material impact on the Company's consolidated financial statements. The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a materially adverse effect on the Company's consolidated financial statements. The Company is obligated under certain noncancelable operating leases (with initial or remaining lease terms in excess of one year). These leases generally contain renewal options for periods ranging from three to five years and require the Company to pay executory costs such as maintenance and insurance. The future minimum lease payments under such leases as of February 29, 1996 are:
YEARS ENDING ------------ 1997........................................................ $ 315,704 1998........................................................ 265,236 1999........................................................ 188,686 2000........................................................ 162,000 2001........................................................ 162,000 ---------- Total..................................................... $1,093,626 ==========
The Company recognized rent expense of $227,062 and $233,044 during fiscal 1995 and 1996, respectively. 11. SUBSEQUENT EVENT Subsequent to February 29, 1996 the shareholders of the Company entered into a letter of intent to sell all of the common stock to a publicly held company for an amount in excess of book value. Closing is expected to be the end of June 1996. UNAUDITED PRO FORMA COMBINED FINANCIAL DATA The following unaudited pro forma combined balance sheet gives effect to the HMA Acquisition as if the acquisition had occurred on March 29, 1996. The unaudited pro forma combined statements of operations for the year ended December 29, 1995 and the three months ended March 29, 1996 give effect to the HMA Acquisition as if it had occurred on January 1, 1995. Amounts shown for the three months ended February 29, 1996 for HMA are also included in amounts shown for the year ended February 29, 1996. The pro forma combined financial data should be read in conjunction with the notes included herewith, the Company's Financial Statements, HMA's Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The pro forma combined data do not purport to represent what the Company's results of operations or financial position actually would have been had such transactions and events occurred on the dates specified, or to project the Company's results of operations or financial position for any future period or date. The pro forma adjustments are based upon available information and certain adjustments that management believes are reasonable. In the opinion of management, all adjustments have been made that are necessary to present fairly the pro forma data. UNAUDITED PRO FORMA BALANCE SHEET AS OF MARCH 29, 1996 (IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL HISTORICAL ACQUISITION PRO FORMA WILMAR HMA(a) ADJUSTMENTS(b) COMBINED ---------- ---------- -------------- --------- ASSETS Current assets: Cash and cash require- ments................. $ 4,310 $ 212 $(3,564) $ 958 Cash--restricted....... 200 200 Short-term investment-- available for sale se- curities.............. 1,765 1,765 Short-term investment-- trading securities.... 1 1 Accounts receivable-- trade, net............ 10,205 3,544 13,749 Accounts receivable-- related party and other................. 53 53 Inventory.............. 12,978 3,074 16,052 Prepaid expenses and other current assets.. 511 267 778 Deferred income taxes.. 486 486 -------- ------ ------- -------- Total current as- sets................ 30,455 7,151 (3,564) 34,042 Property and equipment, net.................... 1,385 310 1,695 Deferred income taxes... 116 116 Other assets............ 2,152 2,744 4,896 -------- ------ ------- -------- Total assets............ $ 33,992 $7,577 $ (820) $ 40,749 ======== ====== ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Notes payable.......... $1,830 $ 608 $ 2,438 Current portion of long-term debt and capital leases........ 63 63 Accounts payable....... $ 6,514 1,956 8,470 Accrued expenses and other current liabili- ties.................. 1,622 455 2,077 Income taxes payable... 949 171 1,120 -------- ------ ------- -------- Total current liabil- ities............... 9,085 4,475 608 14,168 Long-term debt and capi- tal leases............. 66 66 -------- ------ ------- -------- Total liabilities.... 9,085 4,541 608 14,234 -------- ------ ------- -------- Stockholders' Equity: Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued........... Common stock, no par value--50,000,000 shares authorized; 10,374,545 shares issued and outstanding........... 51,289 1,608 52,897 Common stock, $.01 par value, 1,000,000 shares authorized; 115,170 shares issued and outstanding....... 1 (1) Additional paid-in cap- ital.................. 157 (157) Retained earnings (accumulated deficit).............. (26,382) 2,878 (2,878) (26,382) -------- ------ ------- -------- Total stockholders' equity (deficit).... 24,907 3,036 (1,428) 26,515 -------- ------ ------- -------- Total Liabilities and Stockholders' Equity... $ 33,992 $7,577 $ (820) $ 40,749 ======== ====== ======= ========
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 29, 1995
PRO HISTORICAL HISTORICAL ACQUISITION FORMA WILMAR HMA(c,e) ADJUSTMENTS COMBINED ---------- ---------- ----------- -------- Net sales............... $60,823 $24,858 $85,681 Cost of sales........... 41,835 19,411 (8)(f) 61,238 ------- ------- ------ ------- Gross profit.......... 18,988 5,447 8 24,443 Operating expenses Operating and selling expenses............. 9,099 2,353 (51)(g) 11,401 Corporate general and administrative expenses............. 3,985 2,030 1 (h) 6,016 ------- ------- ------ ------- 13,084 4,383 (50) 17,417 ------- ------- ------ ------- Operating income...... 5,904 1,064 58 7,026 Other income............ 53 53 Interest expense, net... (1,164) (155) (55)(i) (1,374) ------- ------- ------ ------- Income before income taxes.................. 4,740 962 3 5,705 Pro Forma Data (m): Income tax provision.. 1,896 299 87 2,282 ------- ------- ------ ------- Net income............ $ 2,844 $ 663 $ (84) $ 3,423 ======= ======= ====== ======= Net income per common share................ $ 0.36 $ 0.43 ======= ======= Weighted average common shares outstanding (n)...... 7,937 68 (o) 8,005 ======= ====== =======
THREE MONTHS ENDED MARCH 29, 1996
PRO HISTORICAL HISTORICAL ACQUISITION FORMA WILMAR HMA (d,e) ADJUSTMENTS COMBINED ---------- ---------- ----------- -------- Net sales........................... $19,309 $5,661 $24,970 Cost of sales....................... 13,373 4,269 $ (2)(j) 17,640 ------- ------ ---- ------- Gross profit...................... 5,936 1,392 2 7,330 ------- ------ ---- ------- Operating expenses Operating and selling expenses.... 2,987 564 (13)(j) 3,538 Corporate general and administrative expenses.......... 1,242 509 (1)(k) 1,752 ------- ------ ---- ------- 4,229 1,073 (12) 5,290 ------- ------ ---- ------- Operating income.................. 1,707 319 14 2,040 Other income........................ 13 13 Interest expense, net............... (81) (39) (14)(l) (134) ------- ------ ---- ------- Income before income taxes........ 1,626 293 1,919 Income tax provision.............. 666 91 26 783 ------- ------ ---- ------- Net income........................ $ 960 $ 202 $(26) $ 1,136 ======= ====== ==== ======= Pro Forma Data: Net income per common share....... $ 0.10 $ 0.11 ======= ======= Weighted average common shares outstanding (n).................. 9,946 68 (o) 10,014 ======= ==== =======
- -------- (a) Balance Sheet as of February 29, 1996. (b) Represents adjustments for the acquisition of HMA (the "HMA Acquisition") based on a purchase price of $7,610 (including $1,830 of HMA debt repaid by Wilmar). The HMA Acquisition has been accounted for using the purchase method. The purchase price has been allocated on a preliminary basis to the assets acquired based on the fair values of such assets which are estimated to equal their book value. The balance of the purchase price was allocated as follows: $1,180 to intangible assets (including covenants-not-to-compete and customer lists) and $1,564 to goodwill. This results in total other assets of $2,744. The other assets will be amortized on a straight-line basis over the following lives: the covenants-not-to-compete will be amortized over three years; the customer lists will be amortized over 20 years; and the goodwill will be amortized over 30 years. (c) Statement of Operations for year ended February 29, 1996. (d) Statement of Operations for three months ended February 29, 1996. (e) Certain amounts in the historical financial statements of HMA have been reclassified to conform with the Wilmar presentation. (f) Represents $8 of expense related to the HMA Employee Stock Ownership Trust ("HMA ESOP"), which was terminated after the HMA Acquisition. (g) Represents $51 of expense related to the HMA ESOP, which was terminated after the HMA Acquisition. (h) Adjustments to reflect: (i) $41 of expense related to the HMA ESOP, which was terminated after the HMA Acquisition, (ii) $100 of compensation paid to an officer of HMA in excess of the compensation due under the officer's employment contract effective after the HMA Acquisition, offset by: (iii) additional expenses of $142 which represent the amortization of intangible assets, including goodwill, covenants-not-to-compete and customer lists acquired by Wilmar in the HMA Acquisition. (i) Represents interest expense on amounts drawn on the Company's line of credit to finance the HMA Acquisition as if the acquisition had occurred on January 1, 1995. (j) Adjustments to reflect the HMA ESOP, which was terminated after the HMA Acquisition as follows: (i) $2 of cost of sales and (ii) $13 of operating and selling expenses. (k) Adjustments to reflect: (i) $10 of expenses related to the HMA ESOP, which was terminated after the HMA Acquisition and (ii) $25 of compensation paid to an officer of HMA in excess of the compensation due under the officer's employment contract effective after the HMA Acquisition, offset by (iii) additional expenses of $36 which represents the amortization of intangible assets, including goodwill, covenants-not-to-compete and customer lists acquired by Wilmar in the HMA Acquisition. (l) Represents interest expense on amounts drawn on the Company's line of credit to finance the HMA Acquisition as if the acquisition had occurred on January 1, 1995. (m) Prior to March 1, 1995, the Company elected to be taxed as an S Corporation for federal (and certain state) income tax purposes. Pro forma information has been computed as if the Company had been subject to federal income tax and all applicable state corporate income taxes for each period presented. (n) See Note 3 of Notes to Consolidated Financial Statements for a description of the determination of weighted average common shares outstanding. (o) Represents shares of Common Stock issued in connection with the HMA Acquisition as if the acquisition had occurred on January 1, 1995. -----END PRIVACY-ENHANCED MESSAGE-----